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H.I.S. Reports Results for the Full Year Ended October 2012

Tokyo, Dec 14, 2012 - (JCN Newswire) - H.I.S. Co., Ltd. (TSE1: 9603), a leading travel and airline ticket agency, has announced results for the full year ended October 31, 2012. As the Group actively sought to increase share in the industry, consolidated net sales for the period rose 13.3% to 431,483 million yen, operating income rose 20.3% to 11,316 million yen, ordinary income rose 22.5% to 13,479 million yen, and net income also rose 12.4% to 9,331 million yen.

Within the travel industry, demand for overseas travel trended upward, supported by the continuing historically strong yen and growing travel opportunities for seniors. According to the Japan National Tourist Organization (JNTO), the (estimated) number of Japanese who departed the country from November 2011 through October 2012 is expected to have increased 10.9% year on year to a historically high of around 18,573,000 people, an increase of approximately 1,831,000 people.

Under these business conditions, the Group strove to improve the quality of its services and implemented various measures so that it could ensure strong demand in the travel business, the Group's main business segment.

- Travel Business

As for initiatives in the area of online travel sales, the Group completely renewed its online overseas airline ticket reservation site in November 2011 in order to strengthen ticket sales. In addition, several new services were introduced, such as a website that integrates reservations for overseas airline tickets and hotel booking in May 2012. Improvements were also made such as making the search and reservation pages more user friendly and simplifying procedures. In order to increase convenience, the Group also enhanced its smartphone application (e.g. H.I.S. overseas ticket reservations) and services provided through SNSs such as Facebook and LINE. Internet-based sales were firm.

As for sales channels, in East Japan, the Group restructured its network of branches with a focus on productivity and introduced mini-branches. In West Japan, the Group reinforced its sales system through various endeavors including opening a specialty branch in the headquarters in Umeda, Osaka. Moreover, efforts were made to further strengthen its sales system for overseas weddings by establishing overseas wedding/honeymoon counters at all of the Group's hundred branches throughout Japan and other measures.

Turning to group travel, the overall business was firm as sales of tours to see events at the London Olympics, which H.I.S. has become the official travel agent of for the first time, were extremely strong and orders for large-scale group trips (for corporate clients, various events, school trips, etc.) grew. As for corporate travel (corporate business trips), the Group has steadily increased the number of corporate clients through various endeavors including linking the corporate reservation system SFIDA-online to the overseas ticket search system, increasing convenience, and dispatching sales staff throughout the world to expand corporate contracts globally.

As for product development, the Group strengthened sales for charter flights (Jet Asia Airway flights to Bangkok, flights from areas throughout Japan to Hawaii, etc.), and these flights were used by many customers. Working to improve the "impresso" brand of guided tours, the Group developed extremely creative products, including one plan that involved renting out the Louvre Museum, and they were well received by customers. Efforts such as a commercial that Sei Hiraizumi, a popular Japanese actor, appeared in were used to strengthen marketing of its three-generation travel products to new groups of customers. The Group has worked to fully enter Japan's domestic travel industry, and within this business, the Group launched sales of not only tours that make use of low-cost carriers (LCC) that started flights this year but also products related to the business tie-up with All Nippon Airways at all the Group's branches. Furthermore, the domestic lodging reservation website Sumayado was launched in March 2012.

Turning to the business expansion overseas, the Group made further improvements to both its H.I.S VACATION business and the overseas out-bound business. The H.I.S. VACATION business involves Internet-based direct sales of products such as overseas hotel bookings and optional tours created or obtained by overseas offices to both Japanese and overseas travelers while the overseas out-bound business covers sales of locally-departing flights to non-Japanese customers, mainly in Asia. Furthermore, the Group launched an online reservation site for local overseas clients in Singapore, following the introduction of a similar site in Thailand. The Group will move forward with constructing sites that are closely tied to the local community throughout the world. In addition, the BtoB business, wholesale sales to other travel companies, steadily grew as staff conducted aggressive sale activities. As for branches, the Group continued to actively reinforce its network of branches, which included efforts such as expanding lounges in its branches in Nairobi, Kenya; Pusan, Korea (out-bound operations), and Guam.

As a result of the various measures discussed above and despite the effect of travel postponements and cancellations due to some diplomatic problems, the travel business was able to increase the number of passengers departing Japan that it handled during the current fiscal year. Therefore, the Group recorded an increase in both sales and income for the business, with sales rising 11.4% year on year to 407,304 million yen and operating income increasing 13.6% year on year to 11,384 million yen, which was for various reasons including sales activities that stressed productivity.

- Hotel Business

In the hotel business, the Group had two hotels in Australia and one in Sapporo, and added two new hotels during the fiscal year. The Watermark Hotel Nagasaki located in Nagasaki's HUIS TEN BOSCH and the Guam Reef Hotel located along the Tamon Bay on Guam were newly included in the scope of consolidation. The Group strove to improve customer satisfaction and profitability at all hotels, and sales rose 24.5% year on year to 2,784 million yen for the business, but the Group recorded an operating loss of 232 million yen for the business.

- Theme Park Business

HUIS TEN BOSCH Co. Ltd. which celebrated the twenty-year anniversary of its founding, worked to increase the quality of the theme park, improved its customer draw, and reduced expenses. The company enhanced well received events that were designed to attract customers. These events included Gardening World Cup, Kingdom of Light, and the Rose Festival. Furthermore, events that have remained extremely popular, such as the Hanabi (Fireworks) World Cup, contributed to stronger customer draw. As for new attractions, in addition to winning a bid for the White Ferris Wheel in November 2011, HUIS TEN BOSCH introduced Adventure Park in March 2012, the Thriller Fantasy Museum in May, and ONE PIECE Ride Cruise - FOR THE NEW WORLD - in Huis Ten Bosch in July 2012, increasing the value of visiting the park. The Huis Ten Bosch Art Museum hosted Visionary Art the Gogh Exhibition since July in commemoration of the twenty-year anniversary of the opening of the museum, and the exhibition has been warmly received. As a result, sales rose 19.3% year on year to 15,957 million yen and operating income increased 166.9% year on year to 2,639 million yen for the business.

- Transportation Business

On February 29, 2012, the Ocean Rose, which is operated by HTB CRUISE Co., Ltd., made its maiden cruise from Nagasaki to Shanghai. Although full operations were launched with higher quality cruises on July 25, the Group recorded 157 million yen in sales and an operating loss of 1,142 million yen for the business because of diplomatic problems.

- Kyushu Sanko Group

In order to strengthen domestic travel in Japan and promote travel to Japan, H.I.S. purchased additional shares of KYUSHU INDUSTRIAL TRANSPORTATION HOLDINGS CO., LTD., turning the company into a consolidated subsidiary. The Kyushu Sanko Group, the holding company of KYUSHU INDUSTRIAL TRANSPORTATION HOLDINGS CO., LTD., recorded 6,137 million yen in sales and recorded 275 million yen in operating income. The company has only been included in the scope of consolidation for three months, July-September 2012.

I. Consolidated Financial Results for the Full Year Ended October 31, 2012

Consolidated Operating Results (millions of yen)
Full year ended October 31, 2012 % 2011 %
Net Sales 431,483 13.3 380,805 9.4
Operating Income 11,316 20.3 9,407 49.8
Ordinary Income 13,479 22.5 11,005 119.2
Net Income 9,331 12.4 8,300 145.2

Net Income/Share (y) 287.77 255.96
Fully Diluted
Net Income/Share (y) -- --

Return on Equity (ROE) 14.3 14.0
Return on Assets (ROA) 8.6 8.5
Ordinary Income to
Operating Revenue Ratio 2.6 2.5
Consolidated Financial Position
As of October 31, 2012 2011
Total Assets 173,497 139,018
Shareholders' Equity 76,763 65,589
Shlders' Eqty Ratio (%) 39.0 45.3
Shlders' Eqty/share (y) 2,088.35 1,942.32
Consolidated Cash Flows
Full year ended October 31, 2012 2011
Cash Flow from Operating Activities 9,577 18,464
Cash Flow from Investing Activities (18,250) (18,147)
Cash Flow from Financing Activities (295) (1,843)
Cash and Cash Equivalents at Period End 35,821 44,703

II. Forecast for the Fiscal Year Ending October 31, 2013
Interim % Full year %

Net Sales 230,000 14.3 490,000 13.6
Operating Income 6,500 29.0 15,000 32.5
Ordinary Income 7,500 16.5 17,000 26.1
Net Income 4,300 3.9 10,000 7.2
Net Income / Share (y) 132.61 308.39

The global economic environment will likely remain uncertain due to some diplomatic problems, but within the travel industry, travel demand is expected to rise for various reasons including the spread of LCCs in Japan, new routes from overseas, and greater travel opportunities for seniors. On the other hand, we project that it will become more important to respond to market changes, such as diversification of points of contact with customers and fiercer competition within the industry both in Japan and overseas that includes airline companies that are promoting direct sale of products.

Under these business conditions, within the travel business, the Group's core segment, the Group will strive to improve its safety, security, service, and quality; focus on generating synergies within the group; deftly respond to customer needs, including making a foray into the cruise business and aggressively using charter flights; develop original products and services for the global market; and rapidly implement measures in order to expand and broaden the travel business for both flights departing from Japan and locally overseas. In addition, the Group will promote expansion with a greater awareness of productivity and efficiency and further increase earnings, and this will involve various activities including sales operations that take into consideration sales channels and conducting promotions to generate demand based on an awareness of the medium's characteristics.

HUIS TEN BOSCH Co., Ltd. will exert its originality and creativity to develop entertainment and events and move forward various new projects. The company will strive to realize further growth through various endeavors, including holding the From No.1 of the East to No.1 of the world - Kingdom of the Light with 10 million illumination bulbs (from November 23, 2012 - March 10, 2013); opening i-4, a dome theater with 360 degrees panoramic view on November 23, 2012; and introducing The Maze, a massive five-story maze that is on one of the largest in the world, in the spring of 2013 (expected to open March 1, 2013).

In addition, the Group announced the founding of an international charter airline company on December 4, 2012, and the company plans to make its first flight in the summer of 2013 and is in preparation for this flight.

III. Dividends
Year ended 2013 (Forecast) 2012 2011
34.00 34.00 32.00

The Company expects to pay a year-end dividend of 34 yen per share. As for the dividend for the next fiscal year, the Group plans to pay an annual common dividend of 34 yen per share to ensure sustainable and stable profit sharing. However, the Company will remain flexible in responding to the situation, if performance worsens in uncertain market conditions.

About H.I.S. Co., Ltd.

H.I.S. Co., Ltd. was founded in 1980 and pioneered the Japanese discount airline ticket industry. Today the H.I.S. Group is comprised of 89 subsidiaries and 9 affiliated companies around the world, and has become a leader in the Japanese travel industry. For more information, please visit .

Source: H.I.S. Co., Ltd.

H.I.S. Co., Ltd.
Manabu Shimizu
Corporate Planning Division
Tel: +81-3-5908-2070
Fax: +81-3-5908-2423
Email: [email protected]

Copyright 2012 JCN Newswire. All rights reserved.

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