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To Our Shareholders

We are working to maximize corporate and shareholder value while constantly taking on challenges with a vision for the Seibu Group.

Financial results in fiscal 2017

First of all, I would like to take this opportunity to thank the Company's shareholders for their consistent support.

With the aim of maximizing corporate and shareholder value, we created the Seibu Group's Medium-Term Management Plan—“Challenge Targets”—, as a three-year roadmap spanning the period from fiscal 2017 to 2019 to achieve our long-term objectives and targets, “Challenge Target.” With a view to ensuring sustainable and dynamic growth going forward under the slogan, “Sustainability & dynamism,” the plan is founded on the two basic policies, pursue innovations, from a new viewpoint and with speed and establish a growth platform from a long-term perspective. Based on these policies, we are working on the key issues of creating new business areas and expanding existing business fields.

In an effort to create new business fields, we set up the Seibu Laboratory in April 2017 as an internal organization to creatively explore ways to launch new lines of business. Then, in November, Seibu Holdings joined an open innovation program called “Biz Lab Accelerator 2017” with an eye to establishing new business fields together with start-up companies. By continually taking on the challenge of getting new business fields off the ground, we intend to offer even newer value and excitement in the future.

In October 2017, Prince Hotels, Inc., completed procedures to acquire the operations of StayWell Holdings Pty Limited, which operates a network of hotels primarily in Australia. Prince Hotels will make full use of the operational expertise and global development capabilities it has gained through this new acquisition in order to boost earnings from the Seibu Group's international hotel business and to rapidly expand hotel operations in Oceania, Southeast Asia and other parts of Asia, as well as the Middle East and Europe.

Turning to financial results in the six-month period ended September 30, 2017, the Company reopened the Tokyo Prince Hotel, boosted rental revenue from Tokyo Garden Terrace Kioicho, and made Yokohama Arena Co., Ltd., a consolidated subsidiary. Owing to the contribution of these factors, consolidated operating revenue totaled ¥266.3 billion, up 6.0% compared with the same period of the previous fiscal year. Operating profit rose 25.7% year on year to ¥37.8 billion, mainly due to the growth in revenue along with the absence of one-time costs associated with the opening of Tokyo Garden Terrace Kioicho in the same period of the previous fiscal year. On the other hand, profit attributable to owners of parent decreased 7.6% year on year to ¥23.2 billion, due to the recording of deferred tax assets associated with Prince Hotels, and absence of gain on sales of non-current assets associated with the sale of land in the same period of the previous fiscal year. Nevertheless, the amount of profit exceeded our forecast of ¥1.3 billion, which we announced in May 2017.

Payment of dividends

As a basic policy, we maintain stable payments of dividends while reinforcing our financial structure by ensuring ample internal reserves, and work to raise corporate value and enhance the operational foundations of the Group as a whole.

Moreover, as part of the Seibu Group's long-term strategies, an important financial strategy is achieving an optimal balance between the return of profits to shareholders and investment in long-term growth. Accordingly, we will strive to distribute the earnings to shareholders based on a consolidated payout ratio of 15%, while actively pursuing investment that contributes immediate growth as set out in the new Medium-Term Management Plan.

In consideration of the above, we decided to pay an annual dividend of ¥23 per share for fiscal 2017, comprising an interim and fiscal year-end dividend of ¥11.5 per share, respectively.

We will continue carrying out reforms in an effort to maximize corporate and shareholder value. As we pursue these endeavors, we ask for the understanding and support of all of our shareholders.

Takashi Goto
President
SEIBU HOLDINGS INC.

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