Medium-term Management Plan

Tokyu Corporation (hereinafter "the Company") has recently prepared a three-year medium-term management plan (for fiscal 2018 to fiscal 2020; hereinafter "the plan") beginning in fiscal 2018.

The Company and its consolidated subsidiaries launched its current three-year medium-term management plan in April 2015 and has been implementing initiatives that utilize the Group’s management resources such as pursuing railway safety through the installation of platform doors, further developing areas served by Tokyu's railway lines, including fully opening Futako-Tamagawa Rise and opening Shibuya Cast, entering the retail electricity and airport operation businesses, and launching the IZU tourist train service. As a result of these initiatives, we expect to be able to achieve our management targets.

In the meantime, our business environment has changed considerably. We urgently need to address changes in the business environment such as serious labor shortages arising from demographic change and other factors, changes in consumer behavior and customer contact points largely due to the rise of e-commerce, the emergence of new business opportunities thanks to technological advances, and the intensification of global competition.

Under this plan, we will work to ensure safe and secure transportation and improve comfort by easing congestion in the railway business, and we are committed to completing installation of platform doors on the Toyoko, Den-en Toshi and Oimachi Lines during FY2019. In addition, large development properties such as Shibuya Stream, Shibuya Scramble Square East Building and Minami Machida Grandberry Park will gradually be opened. We will celebrate the 100th anniversary of our founding in FY2022 and, during the three-year period covered by the plan, we will lay the foundations for the next 100 years while at the same time becoming a Group that creates new added value.

Under the slogan “Make the Sustainable Growth,” the plan sets out three basic policies: sustainable urban development, sustainable corporate development and sustainable HR development. Under the plan, we aim to become a company that, despite the dramatically changing times, continues to achieve sustainable growth over the next 100 years by strengthening our existing businesses and our network outside areas served by Tokyu's railway lines and by actively advancing into new areas where we can utilize our strengths.

The overview of the three-year medium-term management plan of Tokyu Corporation is described as follows.

Overview of the Three-Year Medium-Term Management Plan of Tokyu Corporation

1. Period
Three years starting from fiscal 2018 (fiscal 2018 to fiscal 2020)
2. Basic Policies
“Make the Sustainable Growth”
  Sustainable urban development
  Sustainable corporate development
  Sustainable HR development
3. Key Initiatives
[1] Tirelessly pursue “safety,” “security” and “comfort.” (Strengthen core railway business.)
We will strengthen systems to prevent accidents and ensure early recovery to achieve safe transportation and will also reduce and eliminate delays and congestion through facility measures, such as the installation of platform doors and new rolling stock, and system measures, such as the communication of information and promotion of off-peak travel.

[2] Increase SHIBUYA’s global appeal. (Realize “Entertainment City SHIBUYA.”)
We will steadily pursue and open large-scale developments such as Shibuya Stream and Shibuya Scramble Square East Building, and we will also work on area branding to increase the appeal of Shibuya. We also aim to expand earnings by actively capturing business opportunities in Greater Shibuya.

[3] Continuously improve the TOKYU area’s value and life value. (Demonstrate Group’s all-round strength.)
(i) Development of the TOKYU area
We will seek to further enhance the TOKYU area’s value with comprehensive development in cooperation with local communities and governments. We will also make the TOKYU area a well-balanced area that is home to diverse generations through the remodeling of the suburbs.

(ii) Rebuilding of the retail business
We will focus on improving efficiency and profitability by promoting business consolidation and structural reform and strengthening functions across retail business divisions. We will also improve the value of the TOKYU area and contribute to population growth in the TOKYU area through further cooperation with railway and real estate businesses, etc.

(iii) Enhancement of Services in ICT and Media Business
We will strengthen contact points with customers by enhancing and expanding home services such as “Kurashi No IoT” and physical store services such as credit settlement solutions of smartphones.

[4] Expand business through strategic alliances. (Pursue collaborative creation with partners both inside and outside the Group.)
We will pursue business expansion not only in the TOKYU area but also other network areas in Japan and cities throughout Asia through cooperation with consolidated companies, group companies and parties outside the Group.
(i) Initiatives for Non-Resident Population
We will join forces with best partners to open new Tokyu hotels and expand the airport operation business, and to identify and commercialize tourism resources and promote tourism and expand the non-resident population in the network area.

(ii) Overseas expansion
We will achieve a balanced portfolio while capturing new business opportunities with a focus on Vietnam, Thailand and Australia, where we are already operating.

(iii) Exploration of new business fields and business models
We will create new businesses using new technologies to further enrich lifestyles and working styles in existing urban areas including the TOKYU area, aiming for new age urban development.

[5] Make progress on workstyle innovation. (Deploy TOKYU workstyle reforms.)
We will become No. 1 company in Japan for retaining its employees by developing rewarding work and a comfortable working environment and improving productivity and creating innovation, and we will expand the reforms we have put into practice ourselves into society.

4. Companywide Management Indicators

(Billion yen)

Management indices FY2017
(Forecast)
FY2018
(Plan)
FY2019
(Plan)
FY2020
(Plan)
TOKYU EBITDA* 174.3 175.0 184.5 206.4
Operating profit 83.0 77.0 78.0 97.0
Interest-bearing Debt /
TOKYU EBITDA Multiple (times)
5.6 6.2 6.1 5.3

* Operating profit + Depreciation + Amortization of goodwill + Disposal cost of fixed assets + Interest and dividend income + Investment gains from equity method

(Reference Indicator)

Return on Equity (ROE) 10.6% 7.2% 7.2% 8.4%

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