During the fiscal year from April 1, 2008, to March 31, 2009 (fiscal 2008), the turmoil in financial markets affected the real economy, resulting in a sharp deterioration of the world economy. The Japanese economy was in an especially feeble state in the second half of the fiscal year, reflecting a rapid weakening of the labor market and falling personal consumption amid a steep, across-the-board decline in corporate earnings.

In these challenging circumstances, the Keikyu Group promoted selection and focus through further review of its businesses to enhance operational efficiency while maintaining vigorous marketing for each business. Following a review of the effectiveness of internal control systems, we made improvements to establish a transparent management structure.

As a result, on a consolidated basis, operating revenues edged up 1.1% year on year to ¥317,875 million. However, operating income decreased 8.6% to ¥29,377 million, recurring income dropped 12.3% to ¥21,772 million, and net income plunged 47.0% to ¥7,101 million.

We are resolved to step up our efforts to increase enterprise value and meet the expectations of all our stakeholders.

1.Key Management Policy

Inspired by the Keikyu Group philosophy—“To contribute to the development of society by creating new value through businesses that support urban lifestyles”—we are striving to provide high-quality services and products through the mainstay rail and bus transportation business as well as other businesses, including real estate, operation of hotels, leisure services and retailing. As a group closely linked to regional communities and lifestyles, we are strengthening Group management primarily along Keikyu railway lines with the goal of maximizing enterprise value.

2.Management Strategies

In order to ensure safety of not only the Group’s core transportation business but also all of the Group’s services and products, we will strive to enhance our safety initiatives and human resource training, while at the same time continuing to invest in safety measures.

Also, we will work to further enhance value along Keikyu railway lines by promoting new businesses and strengthening marketing of existing businesses at the Group’s key strategic locations: Shinagawa, Haneda Airport, Yokohama, and the Miura Peninsula.

Moreover, we will emphasize compliance and strive to contribute to local communities. We will also vigorously address social issues, such as environmental protection and barrier-free measures.

Furthermore, we will step up our efforts to bolster the foundation of the business through ongoing review of businesses and organizations, efficient use of resources, and maximization of asset efficiency in response to changes in the operating environment. Also, we will work to enhance efficiency of Group management by promoting personnel exchanges within the Group while at the same time strengthening the financial position.

3.Basic Policy on the Distribution of Profits and Cash Dividends for Fiscal 2008 and Fiscal 2009

The Company regards the return of profits to shareholders as one of the most important management priorities. The Company’s policy on the distribution of profits is to maintain stable dividend payments, taking into consideration financial performance and the financial position.

Adhering to this policy, the Company maintained payment of annual dividends of at least ¥5 per share, consisting of an interim dividend of ¥2.5 and a year-end dividend of ¥2.5, for 26 consecutive fiscal years since 1982. In order to promote return of profits to shareholders, the Company paid cash dividends of ¥6 per share, consisting of an interim dividend of ¥3 and a year-end dividend of ¥3, for fiscal 2008. Although the economic environment is harsh, the Company intends to maintain stable dividend payments for fiscal 2009.

Internal reserves are earmarked for capital investment in safety-related projects and for investment in strategic business locations, notably Shinagawa and Haneda Airport, as well as for repayment of interest-bearing debts in order to bolster the foundation of the business and strengthen the financial position. Also, in order to implement a flexible capital measure in response to changes in the operating environment, we will consider share buyback.