Seibu : FY2022 First Quarter Teleconference Q&A

Seibu Holdings Inc. Financial Results Teleconference

for the Three Months Ended June 30, 2022

Record of Questions and Answers

The following is a summary of the question and answer session from the teleconference for the financial results of the three months ended June 30, 2022, held on August 4, 2022.

Q1. Financial results for 1Q were higher than expected. Which were the main businesses that exceeded the forecast, and by how much?

A1. In the Urban Transportation and Regional business, sales from railway transportation for both commuter passes and non-commuter passes was lower than expected. On the other hand, in the Hotel and Leisure business, both operating revenue and operating profit exceeded the forecast, mainly reflecting leasing out of hotels for accepting mildly ill COVID-19 patients, extremely good performance in the Hawaii business, and a decrease in expenses due to bonus reductions and so forth. As a result of these factors, 1Q results exceeded the forecast overall, but we have not disclosed the specific amounts.

Q2. In the section on Domestic hotel operations on page 8 of the overview of financial results, it says that some hotel buildings located in Tokyo were leased due to a request from administrative agencies. I think that it was probably this hotel leasing that enabled the Hotel and Leisure business to report a profit. Approximately how much profit did this contribute? Was this factored into the initial plan?

Could you also tell us about the number of hotels that are being leased, for example which specific hotels, and how long the current lease agreements are going to continue?

A2. I'm afraid that I can't talk about specific amounts for the leases to the administrative agencies, partly because government-related reasons. We did partially factor this into the initial plan, but actually the lease period has been extended and more hotels were leased than expected.

I am unable to give all of the information regarding the number of hotels leased, the specific names, and the lease periods. However, we are leasing out multiple facilities, including three hotels, Sunshine City Prince Hotel, Tokyo Bay Shiomi Prince Hotel, and Shinagawa Prince Hotel East Tower, and the websites of Sunshine City Prince Hotel and Tokyo Bay Shiomi Prince Hotel have notices saying that the facilities are leased until the end of August at the request of administrative agencies.

Q3. I would like to confirm the assumptions for RevPAR in the Domestic hotel operations in the earnings forecasts for the fiscal year ending March 31, 2023. How much of a recovery compared to pre-COVID-19 levels are you anticipating?

A3. Our assumed full-year RevPAR for the earnings forecast is 10,232 yen for the fiscal year ending March 31, 2023, compared to an actual result of 11,635 yen for the fiscal year ended March 31, 2020, as described on page 29 of the "Overview of financial results for the fiscal year ended March 31, 2022 and the progress of 'FY2021-FY2023 Seibu Group's Medium-term Management

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Plan,'" announced on May 12, 2022. For the time being, although some areas have underperformed compared to our expectation, overall 1Q results have been at the level we anticipated.

Q4. Based on your answers in A2 and A3 above, is it correct to understand that the 1Q results for the Hotel and Leisure business have been as expected overall, but that there has been some positive impact from the period and amount of leasing the hotels at the request of administrative agencies?

A4. That is the correct way to understand this.

Q5. I would like to confirm the status of current business trends described on page 30 of the overview of financial results.

(Railway operations)

For non-commuter passes, the number of gate passages in July (vs FY2019) dropped compared to June. So did the drop widen after the three-day holiday in July (July 16-18)?

(Domestic hotel operations)

1. RevPAR for July does not seem to be so bad compared to FY2019, and looking at the graph for booking trends, it appears solid with few cancellations. Is this performance actually lower than expected?
2. The average daily rate (ADR) for July was down 34% YoY. Is it correct to think that this reflects a fallback after the Olympics in the previous fiscal year, and that you have factored

that in to the plan for this year?

A5.

(Railway operations)

Looking at the trend for each day in non-commuter passes for July, the number of gate passages trended gradually downward from early July to the end of the month, rather than the drop widening due to the three-day holiday.

(Domestic hotel operations)

1. This is presented in the materials disclosed in May (page 29 of the materials described in A3). In the earnings forecast, the occupancy rate for 2Q (July to September) was expected to be 62%, and compared to the actual rate for July and the status of bookings for August and September, the occupancy rate has not been as high as we expected. Looking ahead, depending to some degree on how the seventh wave of COVID-19 infections subsides, we believe that after it does, there may be some government measures to support national travel, and we aim to firmly capture demand toward recovery.
2. The major year-on-year decline has been the significant fallback in ADR after a surge due to the Olympics in the previous fiscal year. We did factor this into our original forecast, but the actual ADR result for July was lower than we had expected. RevPAR in July was also lower than expected, as with occupancy rates and ADR.

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Q6. I would like to confirm today's disclosure regarding the use of the barrier-free fare system at railway stations.

1. Can you confirm that an additional fare of 10 yen per ride will be basically added on top of the passenger fare, then that the amount to be collected annually will be 4.9 billion yen?
2. Am I correct to think that while revenue will increase by around 5.0 billion yen per year, on

the cost front depreciation expense will increase in the future with progress on upgrades, so that in the end result, the increase in revenue will have a positive impact on profit in the short term?

A6. (1) That is correct.

• 1. The idea is that we will receive fares from the customers and use these to make capital investments in platform doors and so forth then, we will depreciate these non-current assets over the appropriate number of years of their useful life. In this way, the facilities recorded as non-current assets will be recorded as expenses when they are depreciated after the investment is made.
• Please be advised that this content is not a full transcription but rather a simple summary of the questions and answers at the financial results presentation meeting.

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