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H.I.S. Achieves Record First Half Results

Tokyo, June 6, 2014 - (JCN Newswire) - H.I.S. Co., Ltd. (TSE1: 9603), a leading travel and airline ticket agency, has announced results for the first half ended April 30, 2014. The H.I.S. Group recorded net sales of 252,634 million yen, an increase of 12.5% from the previous fiscal year, operating income of 8,381 million yen, an increase of 38.4% from the previous fiscal year, ordinary income of 9,641 million yen, an increase of 22.9% from the previous fiscal year, and net income of 4,360 million yen, a decrease of 6.9% from a year earlier.

During the first half of the fiscal year under review, the Japanese economy saw gradual recovery overall, despite that recovery slowed in April when the consumption tax increased.

Foreign affairs issues and political unrest, mainly in Asia, as well as a weak yen trend still exert some influence on those traveling overseas, but the demand for overseas travel remains firm, due to two contributing factors: a recovery in consumer spending and an expansion of international flights at Haneda Airport in Tokyo starting on March 30, 2014. According to the Japan National Tourist Organization (JNTO), the estimated number of Japanese departing Japan in the first half of this fiscal year is forecast to have fallen by 2.8% compared with the previous year to approximately 8,320,000. Domestic travel remains steady with the background of improved convenience with LCC prevailing and its route expansion, as well as increasing demand for major tourist destinations including Okinawa and Hokkaido. Demand for foreign travelers visiting Japan remains strong, with an increasing number of foreign travelers from Southeast Asian countries with loosened visa requirements, including Thailand. Additionally, the number of travelers from China significantly improved. According to JNTO, the estimated number of foreign travelers visiting Japan in the first half of this fiscal year is expected to rise by 28.7% compared with the previous year to approximately 5,810,000.

Under these business conditions, the Group strived to improve on its standards of "safety, security, service and quality", and has implemented a range of original measures to expand its business in Japan and overseas.

- Travel Business
In overseas travel departing Japan, the Group has launched new services, including "travel concierge", which provides peace of mind and personal assistance in the field for independent travelers, and "restaurant reservation agent". The Group further expanded service locations and scope of target travelers, thus strengthening its line of independent travel products, the Group's foundation. The Group launched original products, including a special accommodation plan at "Doraemon room" in Hawaii equipped with special amenities, and a package deal incorporating chartered plans to enjoy popular destinations such as Vatican Museums & Sistine Chapel in Vatican City, in addition to La Sagrada Familia in Barcelona, Spain, which has been well received. Additionally, we have implemented special measures including "Pay-as-you-get-promoted campaign", which stimulates demand for overseas travel among students, and "one coin optional tour". Furthermore, the Group has worked to boost the range of demands by creating new courses associated with an expansion of international flights at Haneda Airport in Tokyo starting on March 30, 2014, and actively leveraging charter flights departing and arriving in each district.

As for sales channels, we enhanced the network of our branches with emphasis on production efficiency. We opened sales branches mainly in shopping centers nationwide, namely in Aeon Town Nagano Miwa (in Nagano prefecture), Aeon Mall Wakayama (in Wakayama prefecture) and Kuzuha Mall (in Osaka prefecture), as well as in developing metropolitan areas, including Sasazuka (in Tokyo) and Musashi Kosugi (in Kanagawa prefecture). We further deployed limited branches with mobility in accordance with demand during the peak period.

As for initiatives in the area of online sales, we have upgraded our "air ticket and hotel" website, allowing simultaneous reservation for optional tours and pick-up services on PCs as well as smartphones. We have also worked to expand our contact with customers and further improve convenience by strengthening product delivery by use of SNS including LINE. At our reservation website "Sumayado", we made efforts to increase the number of contracted facilities and users.

Our group travel activity is strong due to the increase in orders for large scale group travel, including corporate incentive travels, the range of events and school trips. Our implementation of the Sochi Olympic package tours has also been successful. Turning to corporate travel, or business travel, the demand is on a recovery trend, with our corporate clients signing comprehensive contracts, and sales remain firm.

Furthermore, we have been conscious about providing more fulfilling stay plans in terms of contents of the plans and hotel grades among others, and promoted value-added products. This contributed to an increase in our share in the volume of overseas travel by major travel agencies, compiled by the Tourism Authority.

In domestic travel business, which maintains a high growth rate, we have implemented a special program including night safari on Ishigaki Island, a remote island in Okinawa, and launched courses utilizing LCCs. Additionally, we have expanded our bus tours with new arrival and departure stops in Chiba and Saitama prefectures among others. Consequently, the domestic travel business continues to remain strong.

Turning to business overseas, we have promoted operations in multi branches in Southeast Asia in the overseas outbound business, and increased the number of branches to 14 in Bangkok, Thailand, and 10 in and around Jakarta, Indonesia. We will further strengthen our promotional activities for local customers and raise our brand recognition. To enhance our distribution network and to increase our ability to attract customers, we entered into a business alliance agreement, or an agency agreement, with a major Indonesian telecommunication company in the travel business. Also, we have aggressively deployed at new locations in developing countries, including Croatia and Greece. In total, we have an overseas network of sales in 56 countries, 117 cities and 169 branches as of April, 2014. We operate 41 online reservation websites for local customers abroad in 39 countries, and we have launched package tours services and "air ticket and hotel" websites. As a result of these measures, our outbound business continues to expand mainly in Asia. In parallel, we sought to enhance travel visiting Japan, and focused on accepting travelers from Thailand, with rapidly growing market, as well as corporate incentive travelers in each country, thereby strengthening ties with overseas locations and expanding our business.

In our inbound travel business, we have launched the original "Direct-from-the-farm products" which our local H.I.S. expatriate staff planed by visiting tourist destinations and hotels themselves. We have also improved a procedure at the time of local hotel check-in in Hawaii, by allowing for direct check-in/check-out from our local H.I.S. lounges. Additionally, we are acting as wholesalers to other travel businesses (BtoB business), so that we can offer our customers the services and activities of overseas branches, and increase our sales activity. Furthermore, our business between international locations has been attracting additional customers, ie. our Russian branch sells charter flights to Guam, departing from Vladivostok, to outgoing travelers, and our Guam branch receives incoming travelers.

As a result of these measures, net sales for the first half increased 11.7% year on year to 224,260 million yen, and operating income rose by 9.2% year on year to 3,977 million yen.

- Hotel Business
In the hotel business, the Group recorded net sales of 2,789 million yen, an increase of 31.5% compared with the previous fiscal year, and an operating income of 193 million yen, an increase of 656.5% from a year earlier, and achieved increases both in sales and profits. This owes to the Group's efforts to improve customer satisfaction and profitability by implementing measures to strengthen services and please its customers.

- Theme Park Business
HUIS TEN BOSCH Co. Ltd., which operates the theme park business, focused on events of only one or No. 1 value. Various scaled up events were held, including the popular "The Kingdom of Light Series", in which "Cube of Light" was created, and the "Tulip Festival", for which 650 varieties of tulips were planted, the most seen in Japan. Additionally, we have launched an experience-based "Masquerade Ball Carnival 2014" and new initiative of "MUSE HALL" which brings a full-blown entertainment experience. We have also established "Fuwafuwa Land" for children at Adventure Park. As the first measure taking place outside of the theme park, "Osaka Castle 3D Mapping Super Illumination" was held, and has been well received. As a result, visitors in the first half of the fiscal year increased 16.2% year on year to 1,501,000, and the Group recorded good business results. Net sales increased 34.9% to 14,014 million yen, and operating income increased 83.3% year on year to 5,121 million yen.

- Transportation Business
ASIA ATLANTIC AIRLINES CO., LTD., an international charter carrier, began operation on a route from Suvarnabhumi Airport, Bangkok to Narita International Airport in August, 2013, and continues operations on the same route, striving to improve safety and on-time performance. As a result, the Group recorded net sales of 1,934 million yen, and an operating loss of 552 million yen compared with an operating loss of 326 million yen a year earlier.

- Kyushu Sanko Group
In response to a new eco-friendly emission standard, KYUSHU INDUSTRIAL TRANSPORTATION Group, in its core bus business, implemented a new vehicle complete with safety equipment, including a collision mitigation brake system, and addressed a safe, secure and comfortable bus journey. As a result, net sales increased 3.4% to 12,829 million yen, and operating income decreased 13.6% year on year to 661 million yen due to the surge in fuel prices.

As a result of these measures, the Group recorded net sales of 252,634 million yen, an increase of 12.5% from the previous fiscal year, operating income of 8,381 million yen, an increase of 38.4% from the previous fiscal year, and ordinary income of 9,641 million yen, an increase of 22.9% from the previous fiscal year. The Group achieved record results in the fourth consecutive year for net sales and ordinary income, and record result in the third consecutive year for operating income. The Group recorded net income of 4,360 million yen, a decrease of 6.9% from the previous fiscal year, with an increase in tax expenses due to the near elimination of tax loss carryforwards for HUIS TEN BOSCH Co. Ltd.

Forecast for the Full Year

The global economic environment will likely remain uncertain, but in the travel industry, the Group expects the travel demand to remain firm from this summer onward, with the recovery in consumer spending and the activities of the senior generation, together with the increase in arrival and departure slots in the Tokyo region airports. On the other hand, there could be more intense competition from a more diverse range of competitors, both domestic and international, including airline companies, who seek for diversified customer contact and deal with direct sales, so it is important to keep a close eye on market trends.

Under these business conditions, the Group will strive to improve on its standards of "safety, security, service and quality" in its main segment, the travel industry. With the anticipation for the synergy effects, the Group promotes vertical integration business strategies, and actively leverages charter flights, including international charter airlines. The Group will thus respond sensitively to its customers' needs, create the original products and services in the global market, and expand and develop its inbound and outbound travel businesses. Furthermore, 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 conduct promotions to generate demand based on an awareness of the medium's characteristics.

HUIS TEN BOSCH Co., Ltd. will scale up and hold popular events, including the "Hydrangea Festival" where 800 varieties of its kind are planted, the most seen in Japan. In summer, "Kingdom of Water" and "Summer Kingdom of Lights" will take place. Also, we will launch a new "Kingdom of Games", and strive to impress and satisfy our customers.

For the reasons above, our projections for the full fiscal year have not been changed from those announced on December 13, 2013.

Based on the resolution approved by the board on March 7, 2014, the Group executed a stock split from 1 common share to 2 common shares. This is reflected in the forecast for dividend per share and net income per share.
Consolidated Financial Results for the First Half Ended April 30, 2014

Operating Results                                  (millions of yen)
---------------------------------------------------------------------
Ended April 30,                      2014      %        2013       %
---------------------------------------------------------------------
Net Sales                         252,634   12.5     224,633    11.6
Operating Income                    8,381   38.4       6,056    20.2  
Ordinary Income                     9,641   22.9       7,847    21.9
Net Income                          4,360   (6.9)      4,681    13.1
Net Income/Share (y)                67.24              72.18        
--------------------------------------------------------------------- 

Consolidated Financial Position
---------------------------------------------------------------------
As of April 30,                      2014         10/31/2013
--------------------------------------------------------------------- 
Total Assets                      223,476            215,913
Net Assets                         96,345             90,680
Shlders' Eqty Ratio (%)              37.3               36.6  
Shlders' Eqty/share (y)          1,286.30           1,219.42
--------------------------------------------------------------------- 

Consolidated Cash Flows (CF)
--------------------------------------------------------------------- 
Ended April 30,                      2014               2013 
---------------------------------------------------------------------  
CF from Operating Activities        7,492              2,167 
CF from Investing Activities        1,766                 50 
CF from Financing Activities       (2,563)            (2,874)
Cash and Cash Equiv / Period End   68,618             37,750
--------------------------------------------------------------------- 

Dividends                                                      (yen)
---------------------------------------------------------------------
Year Ended                  2014 (Forecast)             2013
---------------------------------------------------------------------
                                    18.00              34.00
---------------------------------------------------------------------

Forecast for the Full Year                         (millions of yen)
---------------------------------------------------------------------
Year Ending October 31,              2014                  %
---------------------------------------------------------------------
Net Sales                         539,000               12.4    
Operating Income                   15,700               32.6 
Ordinary Income                    17,200               13.1
Net Income                          9,000                1.1
Net Income/Share (y)               138.78
---------------------------------------------------------------------


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 95 subsidiaries and 9 affiliated companies around the world, and has become a leader in the Japanese travel industry. For more information, please visit http://www.his.co.jp/english/ .



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

Contact:
H.I.S. Co., Ltd.
Satoshi Umemoto
Corporate Planning Division
Tel: +81-3-5908-2070
Email: [email protected]


Copyright 2014 JCN Newswire. All rights reserved. www.japancorp.net

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