Promotion of Tobu Group Medium-Term Business PlanMedium-Term Business Plan. Status of Progress on...

TOBU RAILWAY CO., LTD.

November 15, 2019

Promotion of Tobu Group Medium-Term Business Plan

Status of Progress on Medium-Term Business Plan

1. Progress on Medium-Term Business Plan

All rights reserved. Copyright © TOBU RAILWAY CO., LTD. 2019

・・・・・・・・・・・・・・ P14 - 162. Three Pillars of Management Strategy

1

(1) Unification of Asakusa/Tokyo Skytree Town area

and preparations for making Tokyo 2020 a success

(2) Becoming a railway line to which people want to move and stay

(5) New initiatives for further expansion of profits

(3) Hotel business

(4) Inbound

(6) Creation of new tourist attractions

in collaboration with local communities

・・ P7 - 9

・・・・・・・・・・・・・・・・・・・・・・・・・・ P10

・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P11

・・・・・・・・・・・ P12

・・・・・・・・・・・・・・ P13

・・・・・・・・・ P3 - 6


Progress on Medium-Term Business Plan

FY2017 FY2019FY2018 FY2021 and laterFY2020

Nikko/Kinugawa

area

Asakusa/Tokyo

Skytree area

Ikebukuro area

Ginza/Yaesu/Coastal area

Facility development

centered on stations

Provision of

luxurious

lifestyle services

Improvement of

transportation

services

Construction of Wakoshi

south exit station building

●Opening of facility

●Opening of station building

●Construction commenced

●Opening of hotel●2018.2

Construction commenced

●2018.3 Construction commenced

●Shinkoshigaya VARIE Renovation of 4F/5F

Station store/building plan ●Opening of Kitasenju center zone

●Soka VARIE 2 renovation

Condominium/

detached houses

●Opening of Shin-Funabashi childcare facility

Rental condominium

●Completion of Solaie Narimasu

Child-raising/senior care

●Opening of Soka-city Takasago rental condominium

●Opening of Shingashi Ekimae housing complex

●Opening of Kitasenju childcare facility

●Opening of Hikifune childcare facility

Launch of

operations

●2017.8 SL launch of operations

Introduction of new limited

express for sightseeing

Development of Kitajukken River waterfront space

(under elevated railway)

Construction of

THE RITZ-CARLTON NIKKO

SL operations

Promotion of redevelopment project

for west exit of Ikebukuro Station

Construction of AC Hotels

by Marriott Tokyo Ginza

●Completion of double-track line between Mutsumi and Sakasai, expansion of express operation sections

●Opening of Kitasenju South Exit stores

●Completion of Solaie Nagareyama Otaka no Mori

Shimizu-koen detached houses (2017-2020)

●Opening of Solaie I’ll Nerima Kitamachi

●Opening of Solaie I’ll Shimoakatsuka

Plan

●●Completion of

Solaie Katsushika Kosuge

Imp

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Expansion of the hotel business

●Opening of hotel

Sumida River

pedestrian bridge

●2018.11 Launch of second SL restoration

●Restoration complete

●Opening of Tokiwadai Station North Exit stores

Introduction of seating service

for Hibiya Line through trainsLaunch of operations

●Completion of Solaie Gran Nagareyama Otaka no Mori

●Completion of Solaie City The Park/The Garden

Establishment of

lifestyle services

Multifaceted development

of hotels

Inbound initiatives Inbound

●Opening of Asakusa/Kawagoe

Further promotion of Group inbound activities

●Sapporo rebranding

●Opening of Shin-Funabashi childcare facility

●Opening of Minami-Sakurai childcare facility

●Completion of Solaie Soka Matsubara City Terrace

Discussion/coordination with area stakeholders/government officials for promotion of redevelopment

●Completion

●Opening of hotel

●Opening of Iwatsuki rental housing for senior citizens

Group point

●Establishment of Asia Sales Branch

Urban planning decision

Period covered by Medium-Term Business Plan

Launch of new Group point


All rights reserved. Copyright © TOBU RAILWAY CO., LTD. 2019 2

Maxim

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investm

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Expansion of express operation

sections on URBAN PARK Line

Creating No. 1 tourist destination in Tokyo by unifying Asakusa/Tokyo Skytree Town area

Sports studio/café

General stores with casual atmospheres

Sumida Park

New town where bridge, under elevated railway, park, and waterfront area are integrated

Spring 2020 Opening

12 stores (goods, food and drink, etc.) and hotel

Roadside commercial facility consisting of unique stores and a hostel, taking advantage of waterfront and park environment

Tokyo mizumachi

Shortest connection between Asakusaand Tokyo Skytree Town

Sumida Park/Waterfront development

Commissioning entity: Sumida City, Tokyo

Creation of liveliness through operation by private businesses (planned for FY2021)

Tokyo Skytree®/Asakusa pedestrian connecting bridge

Sumida River Walk

Stores facing Sumida Park

Strong promotion of area town development (such as area

management)



New spot centered on sports

Community hostel creating liveliness

(Tentative name) Wise Owl Hostels

0

200

400

600

800

1,000

1,200

1,400

1,600

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021

Tokyo Skytree Number of inbound visitors (estimates)

Tokyo Skytree contributes to excitement of Tokyo 2020

Strengthening of inbound sales capabilities

■Strengthening of online sales through overseas OTAs

■Strengthening of communications and advertising

targeting China and other countries

■Expansion of sales locations at airports and other travel

hubs

PR for Tokyo 2020 (laser mapping/special lighting)

Promotions to ensure success

■Continued PR for Tokyo 2020

■Related events at Tokyo Skytree Town, including events

to mark two years until Olympics

■Invitations to overseas media to come and cover

TEMBO DECK

Aiming for 4.5 million visitors to Tokyo Skytree

1 facility(End of FY2018)

14 facilities(2019.10)

Aim for dramatic increase in inbound

visitors on occasion of Tokyo 2020Further expansion in future

(1,000 people)



Our initiatives during Tokyo 2020 (effective utilization of land in Ariake)

Narita Airport

Making working-class culture and Tokyo Skytree a symbol of Tokyo and Japan

Haneda Airport

Increase convenience of spectators at Tobu Ariake Field



10 events to be held nearby

Tobu Ariake FieldPlanned site of

Tobu Ariake Field

Ariake Coliseum

Tokyo SkytreeTown Asakusa

Asakusa/Tokyo Skytree Town area

Connecting both areas

AriakeVolleyball

Gymnastics

Tennis

BMX/Skateboarding

Ariake-Tennis-no-mori Station

To tourist spots along railway lines and areas

all over Japan

Direct

Directions

• Installing platform doors at

stations nearest to venues

• Counter-terrorism training

• Installation of surveillance

cameras in train cars, etc.

Safety

measures

• Renovations at four stations

nearest to venues

• Promotion of multilingual support

(Ticket machine guidance in 8 languages,

English conversation classes, etc.)

• Promotion of smooth business, etc.

Improved

convenience

Preparing an environment for taking in visitors for Tokyo 2020

Renovation at Kitakoshigaya Station

Asaka Station platform door



Omiya Kasukabe

Kashiwa

Funabashi

Nagareyama Otaka no Mori

Shinkamagaya

Tokyo (JR)

Express operations launched

(March 2016)

Kita

senju

/Asakusa

(TO

BU

SK

YT

RE

E L

ine

)

Unga

Takayanagi

Becoming a railway line to which people want to move and stay

■Increased speed

■Improved convenience

■Pursuit of comfort

Morning rush hours Kashiwa Funabashi

31 min 22 min (9-minute reduction)

Evening rush hours Kashiwa Funabashi


Daytime Omiya Funabashi


Last train at each junction station postponed up to 30 minutes

New limited express Urban Park Liner from Kashiwa to Shimizu-koen / Kasukabe

*New express stops in red

TOBU URBAN PARK LineTimetable revision (March 2020)March 2020

Launch of express

operations

Iwatsuki

Aiming to become the most used railway in the area

Aiming to increase TOBU URBAN PARK Line revenues by approx. 1 billion yen





EQUiA Tokiwadai

Condominiums

Solaie City The Park/The Garden(Dokkyodaigakumae [Soka Matsubara] Station)

・Solaie Soka Matsubara City Terrace

・Solaie City The Park/The Garden

・Solaie Nagareyama Otaka no Mori

・Solaie Gran Nagareyama Otaka no Mori, etc.

November 29, 2019 Grand opening

Five in-station stores to open on December 12, 2019 Including food stores for daily use

March 2020: Station building grand opening

Expansion of EQUiA stores into more stationsDevelopment of quality living

environment

Detached houses・Solaie Shimizu-koen Urban Park Town

EQUiA PREMIE Wako

Solaie Hiroshimaマルシェ写真

Urban development for vibrant local communities

Station building with commercial facilities and hotel

Aiming for a commercial facility suited to those who want to take comfort to the next level in their daily living while emphasizing natural, personal expression

Bringing total number ofEQUiA locations to 13


Continue to develop as appealing in-station facility for further expansion of profits

8

New EQUiA brand


■Solaie I’ll Nerimakitamachi Obtain our first certified design under Tokyo

child-care housing certification system (To be completed in January 2020)

■Development of satellite offices

■Work spaces inside station Considering introducing private

offices for businesspeople to use their time effectively

■Establishment of nursery schools near stations along railway linesOpening in Shin-Funabashi (Spring 2020)

Child-raising support business

Work style reform support business

■Company housing with childcare

facilities“kanowa Tobu-dobutsu-koen”

■Company-led childcare facility

“Solaie Kids Tobu-dobutsu-koen”

Creation of working environments comfortable for women, too

Connecting generations and creating the happiest living environment in Japan through stronger collaboration with municipalities

Enrichment of child-raising support and lifestyle services

Opened in September 2019

Accumulate know-how and develop company housing business

Support for unique shift pattern of railway businessChildcare on weekends, holidays, and overnight

Registered

companiesRegistrants

September 2018 117 3,834

September 2019 233 6,448

Bringing total to 15 locations

■Solaie Gran Nagareyama Otaka no Mori Condominium with on-premises

childcare/After-school facility to be invited and after school care center (to be completed in September 2021)

Effective utilization of empty space at station



Maximization of hotel business revenue by capturing robust demand

Promotion of accommodation-type hotel development

Aim for operating margin of 10% or higher

Occupancy rate

94.0% (-0.5%)

86.9% (-1.1%)

87.6% (+4.2%)

*YoY comparison in parenthesis

Main hotels1H FY2019 Results

Improving product value at existing hotels

Fairfield by Marriott Sapporo

opening after rebranding

(planned for 2020 spring opening)

Work to capture rapidly increasing

inbound demand within Sapporo Asakusa Tobu HotelGuest room

Hotels under constructionNo. of

guest roomsNet sales Operating income

AC Hotels by Marriott Tokyo Ginza 296

¥5.5 billion ¥0.55 billionAsakusa Tobu Hotel 253

Wako City Tobu Hotel 158

Kawagoe Tobu Hotel 168

ADR

Ginza ¥24,100 (+4.0%)

Kinshicho ¥16,200 (+5.7%)

Narita ¥9,900 (+2.0%)

THE RITZ-CARLTON NIKKO

May 22, 2020 Opening

Outside of Kawagoe Tobu Hotel



8.0

10.5

13.1

7.6

0

2

4

6

8

10

12

14

2016 2017 2018 1H 2019 2020

Trend in Inbound Revenue

Promotion of efforts to attract inbound customers

Tobu Group inbound operating revenue1H FY2019 Results

¥7.6 billion + 21.7% (YoY)

■Further increase in revenue with effective sales promotions

Implementing effective promotions for sustainable growth while taking the latest situation overseas into account

Trend in inbound revenue

Inbound initiatives

• Ramp up promotions for markets where interest in Tokyo 2020 is high (United States and China)

■Initiatives for Tokyo 2020

■Ongoing ad placements

+55.4%Tobu Department Store Ikebukuro

transaction amount (YoY)

Placement in overseas travel magazines

■Inviting overseas media

Media tour coinciding with Rugby World Cup



billion

billion

billion

billion

¥14.0 billion

Target

(Billions of yen)

¥

¥

¥

¥

• Tobu Group Alipay campaign

11

New initiatives to further expand profits

Enhancement of profitability through modal shift to railway

■New station between Tobu-Takezawa and Obusuma

Autumn 2020 opening (planned)

Promotion of railway use on commute to Honda plant

■Cooperation with Utsunomiya City MaaS social experiment

Implemented as first step for improving public transportation share in Utsunomiya area

Provide free passes for Tobu Utsunomiya Line (between Nishi-Kawada and Tobu-Utsunomiya)

Labor savings through utilization of new technologies

■Cooperation with TOBU BUS auto driving experiments

Auto driving (level 2) experiment on public roads between Kashiwanoha Campus Station West Exit and University of Tokyo Kashiwa Campus

[Overview]

• Company: TOBU BUS EAST CO., LTD

• Start date: November 1, 2019

• Driving distance: Approx. 2.6km

• Description: Automatic control via installation of

GPS and magnetic markers on road

Experimental vehicle Operating routeMap data ©2019 Google

Anticipation of level 4 auto driving in future



Will also contribute to easing traffic congestion

Verify changes in transportation behavior by participants and utilize for future expansion of use

Illustration of new station

Construction to start within year

12

Creation of new tourist content in cooperation with community

Creation of infrastructure tourismthrough public-private collaboration

66,054

Aiming to become a railway line that creates new flows of people for regional revitalization and prosperity

Concluded collaboration agreement with Council for Utilization of Metropolitan Area Outer Underground Discharge Channel

TOBU TOP TOURS CO., LTD.Launch of Metropolitan Area Outer Underground Discharge Channel tours Create non-resident population in Kasukabe area

Received 11th Japan Tourism Agency Commissioner’s AwardReceived 5th Japan Tourism Award

Total number of visitors(August 2018-September 2019)

*Not carried out in January and

February 2019

Creation of new tourist attractions

■Ranzan Town Lavender Field (Sennen no Sono)

■Straw art at Tobu-Dobutsu-Koen Station West Exit

• TOBU TOP TOURS received contract from Ranzan Town for attracting customers

• Drew customers to 8ha lavender field (June 8-July 7, 2019)

• Collaboration with Miyashiro Town

+20.8%Number of users of

Musashi-Ranzan Station(Year-on-year comparison)

Approx.

75,000Visitors

(+238.5% compared to

FY2017)



Dragon straw art exhibit

Agricultural town of Miyashiro

Also famous as cosplay mecca

13

0

500

1000

1500

2000

2500

ToFY2018

To 1HFY2019

Acquisition of shares

Strategic investments forgrowth

Investments in maintenanceand updates

Promotion of growth investment

Total investment: Approx. ¥202 billion(including shares)

Total investment: Approx. ¥177 billion(including shares)

TOBU STORE Share acquisitionTOBU TOWER SKYTREE

Share acquisition

THE RITZ-CARLTON NIKKOconstruction

Construction of Wakoshi South Exit station building

Introduction of seating service on through trains to and from Hibiya Line

Expansion of express operation sections on URBAN PARK Line



250

200

150

100

50

0

14

(Billion of yen)

7,500

8,000

8,500

Maintenance of financial strength

[Medium-Term Business Plan 2017-2020]

Interest-bearing debt/EBITDA multiple of

around 6.5x-7x

24.6%

23.5%

26.4%

28.1%

(Billion yen)

Shareholders equity ratio

Interest-bearing debt balance

Interest-bearing debt balance (forecast)

Interest-bearing debt balance

(Medium-Term Business Plan)

FY2014 FY2015 FY2016 FY2020Medium-Term Business Plan

(revision)

FY2017 FY2019forecast

FY2018

27.6%

2QFY2019

29.0%

Interest-bearing debt/EBITDA

multiple6.5x7.9x 7.0x 6.6x 6.6x 6.5x6.6x －

¥830.0billion

¥823.5billion

¥799.7billion

¥790.3billion

¥793.1billion

¥799.7billion

¥819.9billion

¥780.6billion



850

800

750

15

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2014年度 2015年度 2016年度 2017年度 2018年度 2019年度予想

Further enhancement of shareholder return

[Medium-Term Business Plan 2017-2020]

Treasury shares acquired Number of shares: 4 million ¥10 billion (upper limit)Acquisition period: November 1, 2019 – February 28, 2020

*1 Dividend per share reflects the impact of the reverse stock split (5 for 1 basis, ordinary shares) implemented on October 1, 2017

¥30.0 ¥30.0 ¥35.0¥32.5

¥10 billion

Amount of treasury shares acquired

Total annual dividend

Dividend per share

¥35.0

Establish a total return ratio of around 30% for the period average of the Medium-Term

Business Plan while keeping a basic policy of providing

steady dividends¥40.0

¥6.4billion

¥7.0billion

¥6.4billion

¥7.4billion

¥7.4billion

¥8.5billion

¥10 billion



FY2014 FY2015 FY2016 FY2017 FY2018 FY2019forecast

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Facility names in this document are registered trademarks of TOBU RAILWAY CO., LTD. and TOBU TOWER SKYTREE Co., Ltd.


Important Notes Concerning This Document

The Company’s profit plans and other goals set forth in this document are based on projections of industry trends related to the business of the Company and Group companies and other such factors that impact business results, including the economy in Japan and other countries, which are made based on the information currently available to the Company.As such, the reader is asked to note that actual business results may differ from the forecasts within this document due to changes in the business environment and other such factors.

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