Fiscal year ended March 31, 2017 Earnings Announcement Sotetsu Holdings, Inc. April 27, 2017 http://www.sotetsu.co.jp/ir/index.html TSE securities code: 9003
Financial Highlights (Balance Sheet) Consolidated balance sheet As of March 31, 2016 As of March 31, 2017 Amount % Current assets 61,966 73,808 +11,842 +19.1 Cash and deposits: +9,252 Non-current assets 501,277 505,891 +4,613 +0.9 Total assets 563,244 579,699 +16,455 +2.9 Current liabilities 132,232 143,423 +11,190 +8.5 Non-current liabilities 317,620 307,741-9,879-3.1 Short-term loans payable: +18,541, Current portion of bonds: -14,520 Long-tern loans payable: -27,077, Bonds payable: +18,000 Total liabilities 449,853 451,165 +1,311 +0.3 Total net assets 113,390 128,534 +15,144 +13.4 Total liabilities and net assets 563,244 579,699 +16,455 +2.9 Equity 110,912 125,965 +15,052 +13.6 Equity ratio (%) 19.7 21.7 +2.0pp Interest-bearing debt 314,856 309,799-5,056-1.6 1
Financial Highlights (Statement of Income) Consolidated statement of income FY3/2016 Operating revenue 258,430 253,363 Operating income 31,129 30,510 Ordinary income 27,916 27,558-5,067 Transportation: +138, Merchandising: -1,245 [-2.0%] Real estate: -6,009, Hotel: +2,807, Other: -669-619 Transportation: +480, Merchandising: +252 [-2.0%] Real estate: -1,309, Hotel: +218, Other: -277-358 Non-operating income: -15 [-1.3%] Non-operating expenses: -277 Profit attributable to owners of parent 13,693 17,061 +3,367 [+24.6%] Net income per share +27.95 yen +34.82 yen +6.87 yen Capital expenditure 20,403 20,678 Depreciation 15,889 16,011 +274 [+1.3%] +121 [+0.8%] Transportation: +3,162, Merchandising: -825 Real estate: -4,644, Hotel: +2,548, Other: -33 2
Segment Information (Transportation) Transportation FY3/2016 Operating revenue 38,777 38,916 Operating income 7,911 8,392 +138 Increase in revenue due to a rise in the number of [+0.4%] passengers transported by train +480 Increase in income due to a decline in the cost of electric [+6.1%] power and utilities as well as increased revenue Capital expenditure 5,397 8,559 Depreciation 6,226 6,134 Railway +3,162 [+58.6%] -91 [-1.5%] (Major expected expenditures in ) Hoshikawa-Tenno-cho elevated tracks project, renewal of Izumino station and Minamimakigahara station, renewal of railway vehicles and stations in the Design Brand-up Project No. of passengers (1,000) Non-commuter Commuter Total 80,245 148,786 229,032 80,107 149,969 230,077-0.2% +0.8% +0.5% Commuter: Regular +1.1% Student -0.3% Passenger revenue (million yen) Non-commuter Commuter Total 15,697 15,346 31,043 15,674 15,477 31,151-0.1% +0.9% +0.3% Commuter: Regular +1.0% Student +0.1% 3
Segment Information (Merchandising) Merchandising FY3/2016 Operating revenue 110,511 109,266-1,245 [-1.1%] Operating income 2,010 2,262 +252 [+12.6%] Decrease in revenue in the sand and gravel business Sales of the supermarket business increased Increase in income due to an increase in the revenue of the supermarket business Capital expenditure 1,737 912 Depreciation 782 875-825 [-47.5%] +92 [+11.8%] Supermarket sales growth (existing stores): +2.4% 4
Segment Information (Real Estate) Real estate FY3/2016 Operating revenue 63,914 57,905 Operating income 16,299 14,989 Sales/Leasing breakdown -6,009 [-9.4%] -1,309 [-8.0%] Real estate sale Operating revenue 23,776 19,271-4,505 Operating income 2,145 1,686-458 Real estate lease Operating revenue 40,346 38,844-1,502 Operating income 14,154 13,303-850 Decrease in revenue due to a decline in the number of condominiums sold and the sale price per unit Decrease in revenue due to a backlash against the revenue from the sale of land for business in the previous year Capital expenditure 11,082 6,437 Depreciation 6,499 6,798-4,644 [-41.9%] +299 [+4.6%] Number of condominiums and houses sold FY3/2016 ( 戸 ) Condominiums 339 275-63 Houses 29 44 +14 Total 368 319-48 5 (Major properties delivered) Gracia Ebina and Gracia City Kawasaki Daishigawara
Segment Information (Hotel) Hotel FY3/2016 Operating revenue 36,031 38,839 Operating income 4,195 4,414 Capital expenditure 2,084 4,632 Depreciation 1,996 1,918 +2,807 [+7.8%] +218 [+5.2%] +2,548 [+122.3%] -78 [-3.9%] Increase in revenue due to the openings of Hotel SUNROUTE Osaka Namba, Sotetsu FRÉSA INN Ginza 7-chome and Sotetsu FRÉSA INN Shimbashi-Hibiya-guchi Annex Increase in income due to factors contributing to an increase in revenue ((Details of expenditure for FY2017/3) Sotetsu FRÉSA INN Kyoto Station Hachijo-guchi, Sotetsu FRÉSA INN Shimbashi-Hibiya-guchi Annex, etc. Room occupancy rate/ Average revenue per room Room occupancy rate (%) FY3/2016 Sotetsu FRÉSA INN 90.6 88.4-2.2pp SUNROUTE * 86.8 85.0-1.8pp Yokohama Bay Sheraton 92.1 87.2-4.9pp * The room occupancy rate and average revenue per room for SUNROUTE are for directly operated hotels and hotels managed for other companies. Total of 17 locations (16 locations for the previous year). Average revenue per room (Yen) Sotetsu FRÉSA INN 9,392 9,478 SUNROUTE * 10,079 10,353 Yokohama Bay Sheraton 17,832 18,190 6 +86 [+0.9%] +274 [+2.7%] +358 [+2.0%]
Segment Information (Other) Other FY3/2016 Operating revenue 22,085 21,416 Operating income 632 355-669 [-3.0%] -277 [-43.8%] Decrease in revenue, mainly reflecting a decline in revenue due to the withdrawal from the day-care center business and a decline in revenue in the building maintenance business Decrease in income, mainly reflecting an increase in expenses in the water filter business Capital expenditure 169 135 Depreciation 512 409-33 [-19.8%] -103 [-20.1%] 7
Forecast for FY3/2018 (Statement of Income) Consolidated statement of income FY3/2018 (Forecast) Forecast vs. Actual Operating revenue 253,363 267,600 Operating income 30,510 29,000 Ordinary income 27,558 26,700 +14,236 Transportation: -16, Merchandising: -1,066 [+5.6%] Real estate: +11,694, Hotel: +2,760, Other: +383-1,510 Transportation: -292, Merchandising: -162 [-4.9%] Real estate: -489, Hotel: -514, Other: +44-858 Non-operating income: -90 [-3.1%] Non-operating expense: -742 Profit attributable to owners of parent 17,061 16,600-461 [-2.7%] Net income per share 34.82 yen 33.88 yen -0.94 yen Capital expenditure 20,678 41,158 Depreciation 16,011 16,278 +20,480 [+99.0%] +266 [+1.7%] Transportation: +2,004, Merchandising: +1,112 Real estate: +16,413, Hotel: +482, Other: +467 8
Forecast for FY3/2018 (Transportation) Transportation FY3/2018 (Forecast) Operating revenue 38,916 38,900 Operating income 8,392 8,100 Forecast vs. Actual -16 [-0.0%] -292 [-3.5%] Decrease in income, mainly reflecting an increase in electric power costs Capital expenditure 8,559 10,563 Depreciation 6,134 6,355 Railway +2,004 [+23.4%] +220 [+3.6%] (Details of expenditure for FY2018/3 forecasts) Replacement of trains, renewal of railway vehicles and stations in the Design Brand-up Project, extension work on Futamatagawa Station, renewal of Yayoidai Station, Hoshikawa-Tenno-cho elevated tracks project, etc. No. of passengers (1,000) Non-commuter Commuter Total 80,107 149,969 230,077 79,731 150,202 229,934-0.5% +0.2% -0.1% Commuter: Regular +0.1% Student +0.2% Passenger revenue (million yen) Non-commuter Commuter Total 15,674 15,477 31,151 15,606 15,501 31,107-0.4% +0.2% -0.1% Commuter: Regular +0.1% Student +0.6% 9
Forecast for FY3/2018 (Merchandising) Merchandising FY3/2018 (Forecast) Forecast vs. Actual Operating revenue 109,266 108,200 Operating income 2,262 2,100-1,066 [-1.0%] -162 [-7.2%] Decrease in revenue due to a decline in orders in the sand and gravel business Decrease in income due to factors contributing to a decrease in revenue Capital expenditure 912 2,024 Depreciation 875 931 +1,112 [+121.9%] +56 [+6.4%] (Details of expenditure for FY2018/3 forecasts) Establishment of new Rosen stores (Yayoidai Store), etc. Supermarket sales growth (existing stores): +0.1% 10
Forecast for FY3/2018 (Real Estate) Real estate FY3/2018 (Forecast) Operating revenue 57,905 69,600 Operating income 14,989 14,500 Capital expenditure 6,437 22,851 Depreciation 6,798 6,891 Sales/Leasing breakdown Real estate sale Operating revenue Operating income Real estate lease Operating revenue Operating income 19,271 1,686 38,844 13,303 30,100 1,700 39,700 12,800 Forecast vs. Actual +11,694 [+20.2%] -489 [-3.3%] +16,413 [+255.0%] +92 [+1.4%] +10,828 +13 +855-503 (Details of expenditure for FY2018/3 forecasts) Redevelopment of the area around the south exit of Futamatagawa Station, renovation of the streets in front of Yayoidai Station, etc. Increase in revenue due to a rise in the number of condominiums sold Increase in revenue due to revenue from the sale of land for business Decrease in income due to an increase in expenses Number of condominiums and houses sold FY3/2018 (Forecast) Forecast vs. Actual Condominiums 275 367 +91 Houses 44 20-24 (Major properties) The Parkhouse Nishi Shinjuku Tower 60 and Gracia Ebina Sagamino II Total 319 387 +67 11
Forecast for FY3/2018 (Hotel 1) Hotel FY3/2018 (Forecast) Operating revenue 38,839 41,600 Operating income 4,414 3,900 Capital expenditure 4,632 5,115 Depreciation 1,918 1,998 Forecast vs. Actual +2,760 [+7.1%] -514 [-11.7%] +482 [+10.4%] +79 [+4.2%] Increase in revenue due to the openings of new hotels (6 hotels including Sotetsu FRÉSA INN Kyoto Shijo-karasuma ) Decrease in income, mainly reflecting an increase in expenses for renovations and preparations for new hotel openings (Details of expenditure for FY2018/3 forecasts) Establishment of new hotels such as Sotetsu FRÉSA INN Osaka Yodobashi Kitahama and Sotetsu FRÉSA INN Yushima Ueno-Hirokoji Room occupancy rate/ Average revenue per room FY3/2018 (Forecast) Forecast vs. Actual Room occupancy rate (%) Sotetsu FRÉSA INN 88.4 88.6 +0.2pp SUNROUTE * 85.0 86.9 +1.9pp Yokohama Bay Sheraton 87.2 88.2 +1.0pp Average revenue per room (Yen) Sotetsu FRÉSA INN 9,478 9,661 SUNROUTE * 10,353 10,391 Yokohama Bay Sheraton 18,190 19,809 +183 [+1.9%] +38 [+0.4%] +1,619 [+8.9%] * The room occupancy rate and average revenue per room for SUNROUTE are for directly operated hotels and hotels managed for other companies. Total of 17 locations. 12
Forecast for FY3/2018 (Hotel 2) FRÉSA INN to open Name Rooms Date #20 Sotetsu FRÉSA INN Yushima Ueno-Hirokoji (provisional name) 155 Autumn 2017 #21 Sotetsu FRÉSA INN Ginza 3-chome (provisional name) 147 Winter 2017 #22 Sotetsu FRÉSA INN Roppongi (provisional name) 201 Autumn 2017 #23 Sotetsu FRÉSA INN Kinshicho (provisional name) 281 Autumn 2017 #24 Sotetsu FRÉSA INN Osaka Yodoyabashi Kitahama (provisional name) 244 Autumn 2018 #25 Sotetsu FRÉSA INN Kanda Station Minami-guchi (provisional name) 115 Spring 2018 #26 Sotetsu FRÉSA INN Osaka Shinsaibashi (provisional name) 176 Winter 2018 #27 Sotetsu FRÉSA INN Osaka Namba (provisional name) 276 Summer 2019 * The Company opened Sotetsu FRÉSA INN Kyoto Shijo-karasuma (140 rooms) on April 1, 2017 and Sotetsu FRÉSA INN Kyoto Station Hachijo-guchi (138 rooms) on April 15, 2017. 13
Forecast for FY3/2018 (Other) Other FY3/2018 (Forecast) Forecast vs. Actual Operating revenue 21,416 21,800 Operating income 355 400 +383 [+1.8%] +44 [+12.4%] Increase in revenue in the renovation and water filter businesses Increase in income due to factors contributing to an increase in revenue Capital expenditure 135 603 Depreciation 409 221 +467 [+344.7%] -187 [-45.9%] 14
Forecasts for results of operations are based on information that was available when this presentation was released. Actual performance may differ from these forecasts for a number of reasons.