Nankai Electric Railway. Company Profile 2017

Transcription

1 Nankai Electric Railway Company Profile 2017

2 Corporate Philosophy Based on our Corporate Philosophy, which we have adapted to the latest social trends, and the message of our corporate symbol, the Company considers itself a comprehensive lifestyle provider centered on railway operations. As such, we aim to help build prosperity and contribute to society through broad-based businesses that support every aspect of people s lifestyles. Corporate Philosophy (Drawn up April 1, 1993) With expertise and dynamism, forging the way to the future Contribution to the Community Justifying public trust as an all-round lifestyle provider and building a better society Putting the Customer First Providing excellent services for the customer and bringing living comfort and cultural enrichment Future Challenges Meeting the needs of coming generations with bold energy and creativity A Dynamic Workplace Creating a workplace brimming with vitality and harnessing the expertise and personal strengths of every employee Corporate Symbol Our logo symbolizes our striving for the future as a comprehensive lifestyle company. It features two wings, one vivid red and one bright orange. The red, like the sun shining on the southern seas, represents our passion, and the orange the optimism of the human heart. Contents Message from the Management 2 Business Area 3 Route Map 4 Segment Information 5 Transportation 7 Real Estate 9 Retail 11 Leisure and Services 13 Construction and Other 13 Corporate Social Responsibility 14 The 3-Year Management Plan Shinten 133 Plan 15 Strengthen Semboku-related business 17 Expand the Kansai International Airport and inbound tourism business 19 Increase the drawing power of the Namba area 21 Creating attractive areas along our railway lines 24 Financial Data 25 Investor Information 30 1

3 Message from the Management President and CEO Teruhiko Achikita Founded in 1885, the Nankai Electric Railway Co., Ltd. was the first railway company in Japan to be established purely by private capital. It currently operates three main lines from its landmark terminal in Namba, Osaka: the Nankai Line to Wakayama, the Koya Line to the Koyasan (Mount Koya) World Heritage Site and a line running to the Kansai International Airport. While focused mainly on railway, bus and other transportation operations, the Nankai Group is also involved in real estate (rental office space and residential developments), retail (shopping center management), amusement park and golf course management, office building maintenance and other leisure and service businesses, as well as construction and other operations. The Nankai Group implemented various measures in fiscal 2016 in accordance with the basic policies (priority items) of the Shinten 133 Plan, our medium-term management plan, which completed its second year. First of all, to strengthen Semboku-related business, the Nankai Group as a whole has been working to improve the convenience and amenities provided in the Semboku area, beginning with renovations to Izumigaoka Station and the commercial district fronting the station. Going forward, we will continue these efforts, which are aimed at revitalizing the entire area. In addition, we will work to increase the capacity of the Nankai Group s logistics business through development of mixed-use logistics facilities at the Kitaosaka logistics center that organically fuse a truck terminal (transport function) with a distribution center (warehousing/ logistics processing function), and through other initiatives. To expand the Kansai International Airport and inbound tourism business, we will convert to multilingual signage at stations, on passenger cars and in commercial facilities in order to further enhance systems for accommodating inbound travelers, whose number is steadily rising, and also more actively utilize social media to reinforce communications aimed at people outside Japan. We will continue in this way to draw greater numbers of inbound travelers to areas served by the Nankai Group. To increase the drawing power of the Namba area, a medical clinic actively involved in advanced cancer therapies will be on the medical floor, it has been decided, of the New Nankai Kaikan Building (tentative name) that is currently under construction and scheduled for completion in September of next year. The floor is a key part of the building, and to make the building a new center for the Namba area that will be used by people from around the world, as will be typified by the clinic, we plan to leverage its location, which is highly accessible from points inside and outside Japan, to further accelerate the process of luring exceptional tenants. Further, in Wakayama City, one of the Nankai Group s key business areas, we will steadily move forward on the Wakayamashi Station revitalization project, which is tentatively slated for completion in 2020, and also expand the Kurashi Garden experiential farming facility that opened this past spring. In doing so, we will further promote integrated development of stations and station districts through collaboration with municipal governments and other bodies, and conduct other activities to create attractive areas along our railway lines. In addition, we will further strengthen collaboration within the Nankai Group, for example by enhancing the Group s shared point service, and work in all respects to strengthen our business base. By advancing these and other initiatives, all of us at the Nankai Group will work together to complete the Shinten 133 Plan, which is in its final year. We appreciate the continued support and encouragement of all of our shareholders in this effort. June 2017 Teruhiko Achikita President and CEO 2

4 Business Area Main Business Area Osaka Wakayama Tokyo Japan Population 127 million GDP 537,000 billion Nankai Business Area (Osaka + Wakayama Prefectures) 9.8 million 42,000 billion Ratio 7.7% 7.8% Source: Population figures were announced by the Statistics Bureau of the Ministry of Internal Affairs and Communications. GDP is the nominal GDP announced by the Cabinet Office. Both are the latest figures as of October

5 Route Map Osaka (Umeda) Nankai Line Koya Line Airport Line Nankai Ferry Route JR Semboku Line Lines Owned by Other Companies Nankai Terminal Building Namba Sakai Tennoji Shin Imamiya Tengachaya Sakaihigashi Nakamozu Awaji Island Osaka Bay Kansai International Airport Courtesy of Kansai International Airport Land Development Co., Ltd. Kansai International Airport Rinku Town Airport Line Nankai Line Izumiotsu Izumisano Semboku Rapid Railway Izumi-chuo Izumigaoka Koya Line Misaki Park Osaka Prefecture Rinkan Den-entoshi Wakayama Prefecture Hashimoto Tokushima Prefecture Wakayamashi Wakayama Nankai Shikoku Route Koya-san The World Heritage Site Koya-san Wakayama Castle Koya-san 4

6 Segment Information The Nankai Group at a Glance The Nankai Group is one of the major railway operators in Japan, and a commercial developer based in the southern Osaka area. The prosperity of this area was formerly based on textile industries. Now, it is being revitalized with the development of advanced distribution facilities. The Nankai Group s businesses fall into six segments: Transportation, Real Estate, Retail, Leisure and Services, Construction, and Other. We are developing our business in each of these segments by pursuing greater efficiency and the expansion and growth of business. The main pillars of our operations are the railway business and our real estate operations: rental businesses around the Namba terminal area, one of the two major railway terminals in Osaka, and residential development projects in the southern Osaka area. Transportation (Millions of yen) Sales by Segment 36 Companies (Millions of yen) Operating Income by Segment 100,000 98,729 99,551 20,000 16,500 16, % 50, % 10,000 0 FY2015 FY FY2015 FY2016 Railways Tramway Buses Nankai Electric Railway Semboku Rapid Railway Hankai Tramway Nankai Bus Wakayama Bus KANSAI AIRPORT TRANSPORTATION ENTERPRISE Kumano Kotsu Tokushima Bus Ferries Freight Transportation Rolling Stock Maintenance Nankai Ferry Southern Transport Services Nankai Express Nankai Vehicles Service Engineering 24 Other Companies As of March 31, 2017 Real Estate (Millions of yen) Sales by Segment 5 Companies (Millions of yen) Operating Income by Segment 40,000 33,744 33,922 10,000 9,379 8, % 20, % 5,000 0 FY2015 FY FY2015 FY2016 Rentals Nankai Electric Railway Semboku Rapid Railway Sales Nankai Electric Railway Nankai Fudosan 2 Other Companies As of March 31,

7 Retail (Millions of yen) Sales by Segment 11 Companies (Millions of yen) Operating Income by Segment 40,000 35,200 35,794 4,000 3,163 3, % 20, % 2,000 0 FY2015 FY FY2015 FY2016 Management of Shopping Centers Nankai Electric Railway Panjo Station Premises Business Nankai Shoji 8 Other Companies As of March 31, 2017 Leisure and Services (Millions of yen) Sales by Segment 23 Companies (Millions of yen) Operating Income by Segment 40,000 38,863 39,571 2,000 1,841 1, % 20, % 1,000 0 FY2015 FY FY2015 FY2016 Amusement Travel Hotels Rental of Motorboat- Racing Facilities Nankai Electric Railway NANKAI TRAVEL INTERNATIONAL Hotel Nakanoshima Suminoe Kougyou Building Maintenance Funeral Business Nankai Building Service Nankai Grief Support 17 Other Companies As of March 31, 2017 Construction (Millions of yen) Sales by Segment 5 Companies (Millions of yen) Operating Income by Segment 50,000 44,830 45,275 3,000 2,953 1, % 25, % 1,500 0 FY2015 FY FY2015 FY2016 Construction Nankai Tatsumura Construction Nichiden Shokai 3 Other Companies As of March 31, 2017 Other (Millions of yen) Sales by Segment 4 Companies (Millions of yen) Operating Income by Segment 3,000 2, % 1,500 1, % FY2015 FY2016 FY2015 FY2016 Information System Nankai Management Service 3 Other Companies As of March 31,

8 Segment Information Transportation Segment business operations Railways Tramway Buses Ferries Freight Transportation Rolling Stock Maintenance The Transportation segment consists of the Group s core railway business and its tramway, bus and ferry operations, through which we provide convenient and popular public transportation services to the community. Railway Business The railway business is based in Namba, one of the two major terminal stations in Osaka along with Umeda. From here, our main line serves Wakayama, the administrative center of Wakayama Prefecture, while the Koya Line terminates at the Koya-san World Heritage Site. A branch line gives direct access from Namba to Kansai International Airport. This network covers a wide area south of Osaka, and is used for work and school commuting, as well as leisure and tourist travel. With a total of eight main and branch lines, Operating revenue (FY2016): 67,618 million we operate a total track length of km. We manage a total of 100 stations including Namba Station, which has around 250,000 passengers per day, as well as around 700 items of rolling stock. As a public transportation service provider, passenger safety is of course our main priority. Rigorous safety measures are in place for rolling stock, amenities and facilities, and personnel attend strict training programs. In further measures to provide high-quality services, we are making our entire network barrier-free. Revenue from Railway Passengers and Passengers Carried (Nankai Electric Railway) Revenue from Airport Line Passengers and Passengers Carried Revenue (Millions of yen) Passengers (Thousands) Revenue (Millions of yen) Passengers (Thousands) 223, ,129 51,596 52, ,862 53,532 53, ,031 55, ,301 57, ,153 9,034 13,830 7,699 12,085 4,301 7,243 5,116 8,402 5,596 9,119 6,272 10,076 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 7

9 Segment Information Limited Express Rapi t Koya Southern Rinkan The Nankai Group s railway network further expanded with the addition of Semboku Rapid Railway as a consolidated subsidiary in July Semboku Rapid Railway had previously engaged in mutual direct operation with the Koya Line and has played a role in linking Osaka s city center with Semboku New Town, a suburban housing area straddling the communities of Sakai and Izumi. These services play the role of a vitally important regional transportation artery. Looking ahead, we will cooperate with Nankai Group companies to increase convenience and revitalize the areas along our railway lines. Semboku Liner Bus Operations Operating revenue (FY2016): 26,475 million Our well-established bus route network covers Osaka Prefecture (south), Wakayama Prefecture and Tokushima Prefecture on neighboring Shikoku Island. We also operate high-speed routes linking our service areas with major cities throughout Japan, giving us a very broad-based network. A limousine bus also connects major cities in the Kansai region with Kansai International Airport. Nankai Bus Ferry Operations and Other We provide convenient ferry connections between Kansai and Shikoku, through services linking Wakayama with Tokushima, the nearest major port on the island. Other transportation-related service businesses run by Group companies include tramway operation in populous Osaka and Sakai, freight transportation, and rolling stock and vehicle maintenance primarily for the Group. Nankai Ferry Nankai Express Nankai Vehicles Service Engineering 8

10 Segment Information Segment business operations Rentals Sales Real Estate Our real estate operations help to create a fulfilling living environment for residents along our lines. With two pillars, rentals and sales, this segment constitutes a major component of the Group s total operations. Rentals The Nankai Group s real estate business goes back to 1932 when the Nankai Building housing Namba Station and its integrated concourse was opened. It remains a much-loved landmark, with key tenants including Takashimaya Co., Ltd., one of Japan s leading department store operators, and various financial institutions. It is one of the principal terminals of Osaka. Our rental business is centered in the Namba area of the city. We also own the Nankai Kaikan Building, which we plan to finish rebuilding in 2018, and the PARKS Tower office annex of the NAMBA PARKS mall. Additionally, at major terminals along our railway lines, we lease out Company-owned land, buildings and rental spaces within the structures supporting overhead railways. These operations, combined with the department stores and banks forming our key rental tenants, contribute to the prosperity of communities along our lines, while leveraging the characteristics of these areas. PARKS Tower In addition, Semboku Rapid Railway operates the Higashiosaka and Kitaosaka logistics centers located within the strategically important transport areas of Higashiosaka and Ibaraki. These logistics centers provide truck terminal facilities and warehouses, which serve as logistic nodes, to logistics service companies. These centers have become preeminent among logistics facilities in Osaka Prefecture. Higashiosaka logistics center Operating revenue (FY2016): 25,323 million 9

11 Segment Information Major Leasing Facilities Facility Name Location Rentable Area (m 2 ) Amenities Nankai Building Namba, Osaka 49,827 Takashimaya, banks, shops, etc. Nankai Kaikan Building Namba, Osaka 48,585 (plan) Now under reconstruction (planned to open in September 2018) Swissôtel Nankai Osaka Namba, Osaka 61,557 Hotel and shops WINS Namba Namba, Osaka 20,531 Japan Racing Association PARKS Tower Namba, Osaka 36,500 Offices and shops Fraser Residence Nankai Osaka Namba, Osaka 7,332* 1 Serviced apartments Nankai Sakai Station Building Sakai, Osaka 9,474 Banks, offices, shops, station facilities, etc. Nankai Sakai Higashi Building Sakai, Osaka 80,678 Takashimaya, banks, shops, station facilities, etc. Nankai Wakayamashi Station Building Wakayama 4,432 Offices and shops Nankai Tokyo Building Ginza, Tokyo 12,115 Offices and shops Kitaosaka logistics center Ibaraki, Osaka 272,017* 2 Logistics leasing facility (Truck terminal, distribution warehouse) Higashiosaka logistics center Higashiosaka, Osaka 187,935* 2 Logistics leasing facility (Truck terminal, distribution warehouse) Note: The rental areas indicated include areas used by the Nankai Group. *1 Total floor area *2 Site area Sales Operating revenue (FY2016): 8,959 million The main focus of the Group s real estate sales business is large-scale residential projects. We are developing largescale, line-side residential zones and single-family home subdivisions in Nankai Hashimoto Rinkan Den-entoshi in Wakayama Prefecture and Nankai Kumatori Tsubasagaoka in Osaka Prefecture. Both developments have helped to increase value along our lines thanks to our careful attention to creating a rich, natural living environment while providing the convenience of urban amenities. We have also recently taken measures to attract business facilities to our area, including introduction of fully equipped office zones, in efforts to create balanced, broad-based communities where people can live and work. We also market condominiums, principally in areas around our stations. Recent condominium construction and subdivision projects are underway in downtown Osaka, Sakai, Kobe and Muko in Kyoto Prefecture, where the Nankai Group is involved in independent projects and a joint development and subdivision project with a major condominium building developer. Aya No Dai residential project in Nankai Hashimoto Rinkan Den-entoshi Nankai Kumatori Tsubasagaoka VERITE Kawachinagano BRANZ VERITE Sakai Shichido Major Large-Scale Residential Development Projects Residential Land Name Location Planned Area (ha) Planned Number of Lots Planned Population Nankai Hashimoto Rinkan Den-entoshi Hashimoto, Wakayama ,350 23,400 Nankai Kumatori Tsubasagaoka Kumatori, Sennan, Osaka ,300 4,800 10

12 Segment Information Retail Segment business operations Management of Shopping Centers Station Premises Business Other Retail Operations The Retail segment comprises shopping center management and merchandise sales at station premises. Management of Shopping Centers The principal shopping centers operated by the Company are the NAMBA PARKS and NAMBA CITY malls in the famous Namba commercial area of Osaka, as well as PLATPLAT in Sakai and other upmarket shopping centers. The Shop Nankai chain has outlets in our stations and in the structures supporting overhead railways. NAMBA CITY Operating revenue (FY2016): 14,909 million PLATPLAT NAMBA PARKS NAMBA PARKS Shops&Diners, which opened for business in 2007, is a shopping complex comprising some 254 fashion, home appliance and accessory stores and restaurants. On the roof of the building, we have created the 11,500 m 2 Parks Garden, surrounded by some 70,000 trees and flowers of some 300 different species. Parks Garden offers a restful space as an urban oasis to shoppers and other visitors. In addition, this development contributes to alleviating the heat island effect, saving energy, and reducing CO2 emissions. It has been well evaluated for its consideration of the environment, and won numerous awards. In 2015, CNN, the U.S. TV network, judged NAMBA PARKS Parks Garden to be one of the 10 most beautiful sky gardens in the world. In 2017, we celebrated the facility s tenth anniversary by renovating the shopping zone and Parks Garden. This included creating an outdoor barbeque area and taking other steps to make Parks Garden an even more enjoyable destination and further attract new customers. NAMBA PARKS Shops&Diners 11

13 Segment Information NAMBA CITY NAMBA CITY is one of Osaka s leading shopping malls, with about 260 famous specialty shops located on the seven floors of the Main and South buildings. The mall has a prime location, directly connected to Nankai Namba Station, and is used by customers drawn from a wide area that includes the Nankai railway lines, Osaka City, and out towards Nara. The second basement level of the Main Building was renewed in March 2016, and the South Building was renewed in April The South Building s renewal was the largest such renovation since the opening of the entire building in 1980, and has been very well received by our customers. NAMBA CITY South Building SEMBOKU AREA In 2014, we acquired and now run Panjo and Izumigaoka HIROBA Shops & Restaurants (formerly Shop Town Izumigaoka), two shopping centers in front of Izumigaoka Station, a major station on the Semboku Rapid Railway. In 2016, we carried out a large-scale renovation of the two shopping centers. Going forward, we will leverage know-how fostered in the Group s real estate and commercial development business to redevelop the area in front of Izumigaoka Station in an integrated manner. Panjo Station Premises Business We operate merchandise retailing and food and drink outlets within station premises and around stations, as well as convenience stores at Namba terminal and other stations along our lines. In addition, we have recently developed commercial facilities under the ekimo brand name within three stations on the Osaka Municipal Transportation Bureau s Midosuji Operating revenue (FY2016): 21,308 million Line Tennoji, Namba, and Umeda. In April 2013, we opened ekimo Tennoji, followed by ekimo Namba in October 2013 and ekimo Umeda in April In this way, we will continue to strengthen our operation of commercial facilities inside stations along railway lines other than those operated by the Nankai Group itself. The Ansulee convenience store The nasco+ station kiosk ekimo Umeda 12

14 Segment Information Leisure Amusement Travel and Services Hotels Segment business operations Rental of Motorboat- Racing Facilities Building Maintenance Funeral Business Other Services The Leisure and Services segment includes operation of the Misaki Park amusement park, travel agency services, and hotel and Japanese-style guesthouse operations, as well as motorboat-racing stadium rental, building management and maintenance services, funeral services and golf course management. Through these businesses, we provide our customers with a more fulfilling daily lifestyle. Building Management and Maintenance Business Operating revenue (FY2016): 24,523 million We have expanded our integrated building management and maintenance, which covers equipment management, security and cleaning of various facilities, from Tokyo to Shikoku, as well as in Osaka. Equipment maintenance inspection Monitoring at a disaster prevention center Construction and Other The Construction segment comprises the construction and maintenance of apartment buildings and residential and other facilities. The Other segment includes the Information System business. 13

15 Corporate Social Responsibility CSR Initiatives The perspective of corporate social responsibility is essential to the sustained growth and development of a company in harmony with society. The Nankai Group engages in CSR based on four overarching themes that serve as business guidelines: Assurance of safety and peace of mind, Emphasis on the environment, Rigorous compliance and Pursuit of customer orientation. For details on these activities, please refer to our Corporate Social Responsibility Report, which is published separately. Assurance of safety and peace of mind The Company regards the rigorous provision of safety and reliability in our Nankai railway and all other businesses as its topmost priority in earning the full trust of the communities we serve and offering customers the best possible services. In the Nankai railway business, in addition to creating a Safety Policy for all of our business activities and alerting every employee of the Company from the President down to the importance of safety, we are ensuring safe transportation through comprehensive measures covering our railway facilities, rolling stock and employees. Total Amount Invested in Safety in the Nankai Railway Business (Millions of yen) 6,688 6,497 FY2011 FY2012 6,091 FY2013 7,026 FY2014 7,942 FY2015 Emphasis on the environment 6,866 FY2016 Nankai Group companies work together to conduct initiatives that embody the Nankai Group Environmental Principles. In March 2010, we acquired ISO certification for the Chiyoda Workshops. Then, in March 2012, we acquired ISO certification for the Nankai Headquarters. We are also working aggressively to reduce CO2 emissions. From fiscal 2015, we aim to reduce the average CO2 emissions over three years by 3% from the baseline of CO2 emissions of approximately 315,000 tons by 45 Group companies over the period from fiscal 2011 to fiscal For many years, we have also cultivated forestland through our Nankai no Mori project, and as part of our carbon offset efforts, in 2013 we obtained certification from the Ministry of the Environment for offset credits (J-VER) based on the amount of CO2 absorbed through that forestland. Through cooperation with municipal governments and others along our railway lines, including the signing of a Green Partner Accord with Osaka Prefecture in 2009, we hold a variety of citizen participation type environmental events, and work together with our communities to carry out local environmental preservation activities. Rigorous compliance For the Nankai Group to fulfill its social responsibilities, it must fully justify the trust of its many stakeholders. It goes without saying that this is conditional on observance of laws and social norms. In 2001, the Company compiled its Code of Business Ethics to uphold and promote compliance-based management as a means of entrenching corporate ethics within the organization. To consolidate our corporate ethics framework, we also compiled a compliance manual, laid down guidelines for conduct by executives and all employees and provided ongoing training. Through these measures we foster awareness of compliance issues. Pursuit of customer orientation For the Nankai Group, which provides a variety of services centering on rail, the pursuit of services that are satisfactory to customers is a very important issue. We regard opinions and requests received from customers as an invaluable management resource and utilize this feedback in training and guidance for crew members and station staff and to improve services and enhance quality in each of our businesses. In addition, we conduct customer questionnaires and interviews to more broadly grasp the expectations of customers with respect to the Nankai Group. In recent years, with the acquisition of Semboku Rapid Railway, we worked to increase transportation convenience in the Semboku area by revising train schedules and strengthening connections between trains and buses, among other initiatives. In addition, to make the Group s services more convenient for inbound travelers, who have been increasing each year, we have expanded multilingual signage and announcements at stations and inside trains, and are conducting initiatives such as establishing duty-free counters at NAMBA CITY and NAMBA PARKS. 14

16 The 3-Year Management Plan Shinten 133 Plan To further solidify the business foundation built thus far in terms of both quantitative growth (revenue growth) and qualitative improvement (improved financial soundness), we are pushing forward with the Shinten 133 Plan, our medium-term management plan covering the three-year period from fiscal 2015 through fiscal The Shinten 133 Plan Concept Taking the opportunity of our 130th anniversary, we will further strengthen the business foundation we have built thus far. * The expression shinten in our Shinten 133 Plan denotes the activity of deeply exploring our business foundation and developing it further. * 133 refers to the fact that fiscal 2017, the final year of the medium-term management plan, is the 133rd year of the founding of the Nankai Electric Railway Co., Ltd. 3 Basic Policies in the Shinten 133 Plan 1 Strengthen Sembokurelated business Basic Policies Having welcomed Semboku Rapid Railway and the Izumigaoka Station s commercial facilities into the Nankai Group, we will actively work to revitalize the entire Semboku area. Moreover, we will quickly bring about synergies throughout the entire Group including the Nankai railway business while aiming to expand business opportunities and increase revenue. Further, with the newly acquired logistics center business as our core, we will expand the logistics business within the Group. Major Initiatives 1. Increase the convenience and amenities of our freight transportation service 2. Make our core area (area in front of Izumigaoka Station) more attractive and able to draw more customers 3. Encourage more people to reside in or visit the Semboku area 4. Expand the revenue base of the logistics business 5. Reinforce efficiency and competitiveness 2 Expand the Kansai International Airport and inbound tourism business Basic Policies The Nankai Group will steadily capture the increasing inbound tourism demand for the 2020 Tokyo Olympics and Paralympic Games. First, we will promptly develop a barrier-free infrastructure in hard and soft ways, including by providing information and signs in multiple languages. In the future, we will not only provide airport access, but accelerate the expansion of other income-generating opportunities. To that end, we will make the entire Kansai area more attractive and disseminate information by cooperating externally with municipal governments and other entities. We will take the initiative to establish Osaka as an inbound tourism gateway city and encourage an increase in visitors engaging in the Nankai Group s business areas. In response to the changing environment surrounding Kansai International Airport, we will strive to maintain and expand the Group s Kansai International Airport-related revenue base. Major Initiatives 1. Enhance information dissemination and business infrastructure and develop a comfortable operating environment 2. Encourage tourism in the Namba area and expand revenue opportunities 3. Expand Kansai International Airport access 4. Expand services at Kansai International Airport 15

17 The 3-Year Management Plan Shinten 133 Plan 3 Increase the drawing power of the Namba area Basic Policies The Nankai Group is pushing forward with the reconstruction plan for the New Nankai Kaikan Building (tentative name), the culmination of the Nankai Building restoration, as the core project to meet the needs of customers and contribute to increasing the area s potential. We will strive to raise the value and enhance the lineup of our real estate, retail and other businesses, and preserve and enhance the vigor of the Namba area to differentiate it from other areas. Major Initiatives 1. Push forward with the New Nankai Kaikan Building Reconstruction Plan 2. Enhance the value and lineup of our facilities and content 3. Promote urban development activities through area collaboration 2 priority items that we will continue to work on 1 Creating attractive areas along our railway lines Basic Policies Taking the opportunity of our 130th anniversary, we will launch a variety of promotions aimed at raising the brand image of the Nankai area and the Nankai Group. We will also create the means for our many customers to travel around the area along our railway lines, enhance our lifestyle-related services, and make the area along the Nankai Line attractive by improving the functioning of our major stations. Major Initiatives 1. Launch a variety of promotions aimed at developing a new brand image 2. Centralize and unify information dissemination along our transport lines 3. Develop content and create tour programs 4. Push forward with our plan to enhance lifestyle-related services 5. Promote development projects around stations and improve station functioning 2 Strengthen the Group business foundation Basic Policies As we invest money and personnel in future growth fields, such as inbound tourism and logistics businesses, to develop them as the next-generation pillars of our business, we will take drastic countermeasures as regards unprofitable businesses in light of current financial conditions and future changes in the business environment. Specifically, while maintaining an awareness of cash flow, we will ensure that investments and budget planning are carried out so that the balance of interest-bearing debt to EBITDA is improved. We will aggressively develop and utilize core personnel to drive Group growth and diverse personnel to be responsible for new value creation. Major Initiatives 1. Focus on growth fields 2. Drastic countermeasures as regards unprofitable businesses 3. Priority allocation of business resources 4. Rigorous cash flow management 5. Establish system for implementation Numerical targets for the Shinten 133 Plan Targets for the final year (FY2017; consolidated) ❶ Operating Income: ❷ Balance of Interest-Bearing Debt/EBITDA Ratio: EBITDA = Operating Income + Depreciation and Amortization Initial Target 30.0 billion 8 9 times Revised Oct billion 7 8 times 16

18 The 3-Year Management Plan Shinten 133 Plan Strengthen Semboku-related business Acquisition of Shares of Semboku Rapid Railway Co., Ltd. On July 1, 2014, the Nankai Group acquired the shares of Semboku Rapid Railway Co., Ltd. The Semboku Rapid Railway is a mutual through-train service that operates with the Koya Line. This railway provides commuter train services that directly link Osaka s city center with Semboku New Town, a large suburban housing area straddling the communities of Sakai and Izumi, and these services play the role of a vitally important regional transportation artery. In making the company a subsidiary, we will work to achieve more integral timetables and greater cost efficiencies, improving convenience for our customers and aiding in the further development of areas along our railway lines. In addition, the Semboku Rapid Railway operates the Higashiosaka and Kitaosaka logistics centers, located in one of Osaka Prefecture s key strategic transport areas, from which we offer truck terminal facilities and warehouses for use by logistics service companies. These centers have become pre-eminent among logistics facilities in Osaka Prefecture. We will work to promote efficient utilization of the distribution facilities at these two logistics centers, thereby further increasing their profitability. Overview of Semboku New Town Semboku New Town Senri New Town* Population Semboku New Town 136,444 98,282 Tri-vert Izumi 18,022 Time Distance Namba ~ Izumigaoka Umeda ~ Senri-chuo 23 minutes 20 minutes *Located in the northern part of Osaka Prefecture, this was the first of Japan s new towns to be developed. Overview of the Semboku Rapid Railway (railway business) Semboku Rapid Railway Nankai Electric Railway Passengers (A) (thousand) 48, ,153 Businesskilometers (B) 14.3 km km A/B (thousand) 3,391/km 1,526/km Hanshin Expressway Route 5 Bayshore Line Chugoku Expressway Hanshin Expressway Route 13 Higashiosaka Line Osaka Bay Meishin Expressway Namba Nakamozu Second Keihan Highway Kitaosaka Logistics Center Higashiosaka Logistics Center Kinki Expressway Airport Line Nankai Line Hanwa Expressway Semboku Rapid Railway Koya Line Kitaosaka Logistics Center Site area 272,017 m 2 Operations rate 97.0% Higashiosaka Logistics Center Site area 187,935 m 2 Operations rate 100% 17

19 The 3-Year Management Plan Shinten 133 Plan Urban Development Facing Izumigaoka Station Simultaneous to our acquisition of the shares of Semboku Rapid Railway on July 1, 2014, the Nankai Group also purchased land adjacent to Izumigaoka Station, a major stop on the Semboku Rapid Railway line, for use in the construction of large-scale commercial facilities. The property in question is situated in an area with a heavy concentration of urban facilities, including Panjo, a shopping center operated by the Semboku Rapid Railway Group, as well as large-scale public facilities. Following renovations, in 2016 the property was reopened as the Izumigaoka HIROBA Shops & Restaurants. We also carried out a large-scale renovation of Panjo for the first time in 21 years. In 2023, the Kindai University Faculty of Medicine, along with Kindai University Hospital, plan to relocate to Izumigaoka, a move which is expected to increase the area s nonresident population. Utilizing the expertise accumulated through our real estate and commercial development businesses, and working with government and other related institutions, the Nankai Group will work to revitalize Izumigaoka and the rest of the Semboku area. Property Overview Izumigaoka HIROBA Shops & Restaurants Specialty Shop Building (South) (Commercial facilities) Central Building (Commercial facilities, partially used as business offices) Parking Building (Part of the premises is included in the Central Building) Izumigaoka HIROBA Shops & Restaurants Panjo Site area: 12,000 m 2 Total floor area: 9,000 m 2 Site area: 8,000 m 2 Total floor area: 10,000 m 2 Site area: 34,000 m 2 Total floor area: 34,000 m 2 Capacity: 1,785 parking spaces Shop/Restaurant area Approx. 4,000 m 2 Key tenant Semboku Takashimaya Izumigaoka HIROBA Shops & Restaurants Potential relocation site for Kindai University Faculty of Medicine, etc. (Approx. 10 ha) Izumigaoka Station Parking Building No.4 Parking Building No.5 Central Building Parking Building No.3 Panjo Specialty Shop Building (South) Panjo 18

20 The 3-Year Management Plan Shinten 133 Plan Expand the Kansai International Airport and inbound tourism business Transportation Services Accommodating an Increasing Number of Foreign Travelers The Nankai Group operates both railway and limousine bus services, and these act as valuable transportation options linking Osaka and other Kansai regions with Kansai International Airport. The Limited Express Rapi:t connects Namba with Kansai International Airport in as short a time as 34 minutes, and offers an enhanced on-board experience with reserved seats to meet the needs of travelers wanting both speed and comfort. This is the least expensive option for getting into Osaka and is often chosen by travelers looking for reasonably priced transportation. Our limousine bus service runs between Kansai International Airport and points in the Kansai region, including Umeda, Kyoto, Kobe, Nara and Universal Studios Japan. Since around 2013 there has been a large increase in the number of foreign visitors to Japan and people using Kansai International Airport against a backdrop of yen depreciation, relaxed visa requirements for people from Southeast Asian countries, and an increase in LCC airlines using the airport. In conjunction with this there has also been a major increase in users of the Nankai Group s transportation services. To take advantage of this opportunity, in the railway business, we revised train schedules in 2014 and 2017 and increased Limited Express Rapi:t and Airport Express trains. In the limousine bus business, we began operating buses between the airport and Osaka on a 24-hour basis in 2015 to accommodate travelers arriving or departing in the early morning hours or late at night. Going forward, inbound travelers are expected to continue to steadily increase as Asian economies develop further, so we will continue conducting initiatives to meet the needs of these customers. Limousine bus stop Change in number of foreign visitors to Japan and Osaka and government targets (Unit: thousand) 24,039 19,737 13,413 8,611 8,358 10,364 9,408 6,219 7,164 2,349 1,583 2,028 2,625 3, Targets for arrivals and number of passengers at Kansai International Airport Number of arrivals (thousand) Number of passengers (million people) Source: ORIX Corporation website 40,000 13, (target) 60, (target) Produced by Nankai using materials published by the Japan Tourism Agency, Japan National Tourism Organization, Osaka Prefecture, and Osaka Convention & Tourism Bureau 2014 results Fiscal 2059 targets Expanding Sales Routes for Tickets for Foreign Travelers The Nankai Group is focusing on efforts to enable visitors to purchase our tickets prior to their arrival in Japan. These efforts have been highly effective, and include working with travel agencies outside Japan to have them offer discounted tickets exclusively for foreign visitors to Japan; partnering with low-cost carriers worldwide, including Peach Aviation Limited and the Jetstar Group, for in-flight sales of discounted railway tickets; and introducing a system for purchasing discounted railway tickets in advance over the Internet. We are also able to counter JR, with its wide-ranging railway network, by partnering with Osaka s subway system and other private railways to sell discounted tickets for travel between Kansai International Airport and various Kansai destinations, including Osaka, Kyoto, Nara and Kobe. Namba Access Rapi:t Ticket Yokoso! Osaka Ticket 19

21 The 3-Year Management Plan Shinten 133 Plan Tourist Services The Nankai Group is also working to make our services easier for foreign visitors to use. On our railway facilities, these steps include multilingual signage and announcements at stations and on our trains, tourist information interpretation services using ipads, and offering free WiFi access at major stations. In our retail facilities, we have set up service counters to provide one-stop reimbursement of taxes on duty free purchases, introduced separate prayer rooms for Muslim visitors, and are working to provide halal menus and other accommodations. In 2016, we opened a Nankai Ticket Information booth exclusively for Nankai Ticket Information inbound passengers at our Kansai International Airport Station. Multilingual staff offer information on tourist sites, help visitors with transportation options and the purchasing of railway tickets to their destinations, and sell tickets tailored to the needs of each visitor. Public Relations Targeting Foreign Tourists In March 2013, we completely redesigned and updated our global website ( The website is now available in English, Chinese (traditional and simplified characters), and Korean, providing tourist information to foreign visitors. By publicizing the tourism resources of the Nankai Group, we will strive to encourage even more customers to use the Nankai Group s products and services. In February 2015, we created the promotional character rapi:tldier, who actively participates in events held in Japan and overseas and exhorts everyone to use the Limited Express Rapi:t for travel to Osaka. The promotional character rapi:tldier Kansai International Airport Kansai International Airport originally commenced operations in 1994 as an offshore airport located in Osaka Bay, 5 km from shore. In August 2007, the airport opened a second runway and became the first airport in Japan to boast two long runways and operate fully 24 hours a day. The annual total of arrivals and departures (international and domestic) has risen to over 170,000, and the number of passengers passing through annually stands at 25 million. Serving 82 destination cities in 24 countries and connecting Kansai with Asia and rest of the world, Kansai International Airport has a nearly 26% share of the market for international passengers in Japan, and is second only to Narita International Airport in size. With the increase in LCC flights in recent years, passenger numbers have grown significantly, and a second terminal dedicated to LCC use opened in Moreover, in 2016 the Nankai Group also invested in establishing Kansai Airports, which has taken over the right to operate Kansai International Airport, together with ORIX Corporation, VINCI Airports S.A.S. of France, and others in the Kansai business community. Expectations are for even greater growth as these stakeholders bring their expertise to the airport operations. Change in number of international LCC flights at Kansai International Airport (Plan for September as of the release of the summer schedule) (Flights/week) (%) Significant increase Ratio of LCC flights as a percentage of all 17.1 planned passenger flights Plan Source: Kansai Airports press release

22 The 3-Year Management Plan Shinten 133 Plan Increase the drawing power of the Namba area Osaka s Landmark Terminal, Namba Eight railway lines feed into the Namba area, carrying approximately 800,000 passengers a day. Namba is one of the leading railway terminals in western Japan, and is the counterpart to Umeda terminal in central Osaka. For the Nankai Group, Namba is the birthplace of our business. Furthermore, it has always been our largest business base, with facilities that extend over 550,000 m 2. We regard it as our mission to develop the Namba area, which is linked with the outside world through Kansai International Airport, into an even more attractive city-center space. Nankai Building In the pursuit of this objective, the Nankai Group owns and operates assets such as Namba Station, NAMBA CITY and NAMBA PARKS, and has sought to enhance the functions of the Namba area by attracting major tenants, such as the Takashimaya Osaka Department Store and the Swissôtel Nankai Osaka, to its properties. As of fiscal 2016, about 30% of foreign visitors to Japan visit Namba and the adjacent Shinsaibashi area, resulting in the area experiencing the largest influx of foreign tourists of any major tourist destination in Kansai.* In both name and reality, Namba has established itself as a gateway city for Osaka. * According to a survey by the Mitsubishi Research Institute. Namba Station The Group will continue working to further increase value in the Namba area by coordinating urban planning projects that will develop the competitive edge Namba has over its neighboring rivals. The Namba Area Expands Southward By shifting the heart of activity in Namba southwards, where many of our properties are congregated, the Nankai Group aims to create a ripple effect for NAMBA PARKS and NAMBA CITY and create an urban environment in the surrounding area that is much easier to get around. In 2010, we opened Fraser Residence Nankai Osaka (114 rooms), the first international serviced apartments to be supported by Osaka Prefecture. In April 2012, the live performance hall Zepp Namba (OSAKA) opened, and in April 2013, Osaka Prefecture University opened its new I-site branch. Since April 2014, we have been moving forward with our Namba EKIKAN Project, through which we are developing a series of unique, highly intriguing stores in spaces under our railway overpasses with the goal of establishing the area as a popular gathering spot for people of refined Nanba EKIKAN Project tastes. Fraser Residence Nankai Osaka 21

23 Midosuji The 3-Year Management Plan Shinten 133 Plan Major Railway Map of Osaka To Fukuoka Shin Osaka Subway (Midosuji Line) Shinkansen To Tokyo To Kobe Hanshin Line Subway (Yotsubashi Line) Osaka (Umeda) Yodoyabashi Hommachi Hankyu Line JR Line Keihan Line To Kyoto Shinsaibashi Subway (Sennichimae Line) Osaka Loop Line JR Namba Namba Tennoji Kintetsu Line To Nara Nankai Line To Wakayama Namba Area Map Osaka Namba Station (Hanshin Line/Kintetsu Line/ Sennichimae Line) To Osaka (Umeda) N JR Namba Station Yotsubashi Line Namba Station Midosuji Line Namba Station Namba Marui Nipponbashi Station (Kintetsu Line/ Sennichimae Line/ Sakaisuji Line) Nankai Kaikan Building Nankai Building (Takashimaya) Swissôtel Nankai Osaka Fraser Residence Nankai Osaka NAMBA CITY Nankai Namba Station Yotsubashisuji Osaka Prefectural Gymnasium PARKS Tower NAMBA PARKS The Namba Tower Sakaisuji Yamada- Denki Namba EKIKAN Project Zepp Namba (OSAKA) Namba Grand Masters Tower Nankai Namba Bldg. No. 1 22

24 The 3-Year Management Plan Shinten 133 Plan Nankai Kaikan Building Reconstruction Plan We are reconstructing the Nankai Kaikan Building, which has been used as the building for the Head Office of Nankai Electric Railway, with the aim of promoting the sustained growth of Namba, which is the most important site of the Nankai Group. The New Nankai Kaikan Building (tentative name) will link directly to the Namba terminal, and is expected to be completed in September It will serve as a Landmark Tower facing the south side of Midosuji, an iconic street in Osaka. The building has a favorable central location offering access to the Kansai International Airport, Osaka International Airport, and Shin-Osaka Station by train or limousine bus without having to transfer. It also provides office functions that accommodate diverse needs with the highest standard of earthquake countermeasures as well as BCP functions. Moreover, Namba is acquiring a host of new city functions as a result of the building s facilities such as a medical center providing advanced and preventive medical treatment, a central, urban convention center, and a variety of salons for tourists from both Japan and overseas. This building project is the cornerstone for the further stimulation of the Namba area, and will continue to serve to maximize the area s potential. Building overview Offices, stores, Building applications hall, conferences rooms, medical facilities Total floor area Approx. 84,125 m 2 31 floors above ground; No. of floors 2 floors below ground; 1 rooftop structure Scheduled completion Sept Total project costs Approx billion Revenues: Approx. 3.6 billion Assumed balance of payments EBITDA: Approx. 2.8 billion Floor configuration (Cross-sectional view) Overall view of Namba Terminal Artist s impression of the completed New Nankai Kaikan building (Viewed from Midosuji) 10th floor: Sky Lobby 7th floor: Hall 23

25 The 3-Year Management Plan Shinten 133 Plan Creating attractive areas along our railway lines Attracting Tourists to Visit Koya-san The Nankai Group is working to attract tourists to visit the Koya-san (Mount Koya) World Heritage Site, which is the most important tourist attraction located near our railway lines. Some 1,200 years ago, Koya-san was a spiritual and physical training ground for the followers of Kukai, better known as Kobo Daishi of the Shingon sect of esoteric Buddhism in Japan. Koya-san rises 900 m above sea level. There are as many as 117 temples in the mountains, of which a notable example is Kongobuji, the main temple of Danjo Garan the Shingon sect on Koya-san. The plateau at the top, Danjo Garan, is regarded as a sacred area. Visitors will find a variety of religious halls and towers and Buddhist and mandala images. In 2004, Koya-san was registered as a World Heritage Site and included in the Sacred sites and pilgrimage routes in the Kii mountain range. Koya-san was awarded three stars by the Michelin Green Guide for Japan, and attracts the attention of visitors from Japan and all over the world. In 2015, for 50 days from April through May, the Koya-san 1,200-Year Commemoration Ceremony was held to celebrate the twelve-hundredth anniversary of Kongobuji the first building of a temple on the Koya-san site. During this period, the Commemoration Ceremony attracted around 600,000 visitors from all over Japan and overseas, and the Koya-san temple grounds had an extremely festive atmosphere. The Tenku Tourist Trains In addition to promoting Koya-san as a destination, we are partnering with local residents to make the journey itself part of the experience, a pleasurable ride visitors will look forward to, through a project to reinvent the line as the Koya-san Hana (Flower) Railway. In July 2009, we launched our operation of the Tenku tourist trains with observation decks, running along the stretch of railway line between Hashimoto and Gokurakubashi stations, and it has been well received by our customers. Offering a change of mode concept, the cars are equipped with large windows along the sides, and evoke the forests with their deep green hue. Our passengers can enjoy a 180- degree view of one of the country s finest examples of mountain scenery from the One View seating in the observation deck car, the only such vehicle of its kind Tenku tourist train One View seating operated by a major private railway company in Japan. Development Around Core Stations The Nankai Group is promoting development in areas along our lines, principally around our core stations, and we are working to increase the resident population in those areas. In-station stores originally targeted train passengers, but the N. KLASS brand was launched with the aim of transforming the stores into appealing commercial facilities that would also be frequented by people living in the area. Since 2014 we have renovated existing stores and worked to develop new commercial facilities in spaces under railway overpasses that have been created as a part of continuous grade separation projects. At Wakayamashi Station, we have begun working with the city of Wakayama on joint redevelopment of the terminal building there, creating a trigger for revitalization of the surrounding community. By carrying out a large-scale renovation of the station, our goal is not only to improve transportation convenience, but to create a vibrant urban area by developing additional offices, commercial facilities, hotels, municipal libraries and other facilities. N.KLASS Izumiotsu The planned revitalization of Wakayamashi Station 24