Japan Airport Terminal : Financial Report for the First Quarter of the Fiscal Year Ending March 31, 2018 (FY2017)

Financial Report for the First Quarter of the Fiscal Year Ending March 31, 2018 (FY2017) [J-GAAP] (Consolidated)

August 9, 2017

This document has been translated from the Japanese original, for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Company name:	Japan Airport Terminal Co., Ltd.	Listed stock exchange: Tokyo, 1st Section
Code number:	9706	URL: http://www.tokyo-airport-bldg.co.jp/
Representative:	Nobuaki Yokota, President and COO
Contact:	Kazuhito Tanaka, Managing Director
TEL [phone]

Scheduled date of filing securities report: August 14, 2017

Scheduled date of commencing dividend payment: －

Supplementary materials on financial results (yes/no) No Holding of quarterly earnings announcement (yes/no) No

(Figures are rounded down to the nearest million yen.)

1. Consolidated Financial Results for the First Three Months of FY2017 (April 1, 2017 to June 30, 2017)

2. Consolidated Business Results (Cumulative) (%: Change from the same period of the previous year)

   Operating revenues		Operating income		Ordinary income		Net income attributable to owners of the parent
   First Three Months of	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
   FY2017	51,759	5.9	2,787	61.6	3,758	39.5	2,640	45.3
   FY2016	48,896	1.0	1,724	(40.7)	2,694	(24.0)	1,816	(25.3)

   (Note) Comprehensive income: First three months of FY2017 ¥3,257 million (52.3%) First three months of FY2016 ¥2,138 million (-31.4%)

   Net income per share	Diluted net income per share
   First Three Months of	Yen	Yen
   FY2017	32.50	31.01
   FY2016	22.37	21.33

3. ) Consolidated Financial Position

4. Total assets	Net assets	Equity capital to total assets	Net assets per share
   As of June 30, 2017	Millions of yen	Millions of yen	%	Yen
   	210,662	127,280	59.2	1,534.54
   As of March 31, 2017	213,026	125,438	57.7	1,511.92

   (Reference) Equity capital: As of June 30, 2017 ¥124,648 million As of March 31, 2017 ¥122,811 million

5. Dividends

   	Dividends per share
   Q1-End	Q2-End	Q3-End	Year-End	Annual
   FY2016	Yen	Yen	Yen	Yen	Yen
   	-	16.00	-	17.00	33.00
   FY2017	-
   FY2017 (Forecast)	18.00	-	18.00	36.00

   (Note) Revisions to the most recently announced dividends forecast for FY2017: None

6. Forecast of Consolidated Financial Results for FY 2017 (April 1, 2017 to March 31, 2018)

7. (%: Change from the same period of the previous year)

   Operating revenues		Operating income		Ordinary income		Net income attributable to owners of the parent		Net income per share
   First half	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
   	103,400	3.6	5,200	16.5	6,600	5.8	4,700	9.4	57.86
   Full-year	208,600	1.8	10,500	10.6	12,800	(0.3)	8,900	29.2	109.57

   (Note) Revisions to the most recently announced forecast of consolidated financial results for FY2017: None

   * Notes

8. ) Significant changes in subsidiaries during the period under review (changes in specified subsidiaries involving changes in scope of consolidation): None

   New: None Excluded: None

9. Adoption of special accounting methods for preparation of quarterly consolidated financial statements: Yes

   (Note) For details, please refer to page 9 of the appendix materials "2. Quarterly Consolidated Financial Statements and Notes

10. ) Notes on Quarterly Consolidated Financial Statements: Adoption of Special Accounting Methods for Preparation of Quarterly Consolidated Financial Statements".

1. ) Changes in accounting policies, accounting estimates, and restatement of revisions

2. Changes in accounting policies due to revisions of accounting standards, etc.: None

3. Changes in accounting policies other than 1) above: None

4. Changes in accounting estimates: None

5. Restatement of revisions: None

6. ) Number of shares outstanding (common stock)

   As of June 30, 2017

   84,476,500 shares

   As of March 31, 2017

   84,476,500 shares

7. Number of shares outstanding at the period-end (including treasury stock):

   As of June 30, 2017

   3,247,675 shares

   As of March 31, 2017

   3,247,541 shares

8. Number of treasury stock at the period-end:

9. Average number of shares outstanding (quarterly consolidated cumulative period):

10. First quarter of FY2017

    81,228,895 shares

    First quarter of FY2016

    81,229,029 shares

    • This quarterly financial report is not subject to the quarterly review procedure.
    • Statements regarding the proper use of financial forecast and other special remarks

    The forecast of the business results reported herein was prepared based on information the Company had in its possession as of the time this report was prepared and on certain assumptions judged to be reasonable. The Company makes no guarantee that these figures will be achieved. Actual results may differ significantly from forecasts due to various factors. For the assumptions used in financial forecast and precautionary statements regarding the use of the forecasts, please refer to page 3 of the appendix materials "1.Qualitative Information on Consolidated Financial Results for the First Three Months of FY2017 (3) Explanation of Consolidated Financial Forecasts and Other Forward-looking Statements".

    Contents of the Appendix Materials

    1. QUALITATIVE INFORMATION ON CONSOLIDATED FINANCIAL RESULTS FOR THE FIRST THREE MONTHS OF FY2017 (APRIL 1, 2017 TO JUNE 30, 2017) ............................................................................................ - 2 -

    (1) EXPLANATION OF OPERATING RESULTS..................................................................................................................... - 2 -

    (2) EXPLANATION OF FINANCIAL POSITION..................................................................................................................... - 3 -

    (3) EXPLANATION OF CONSOLIDATED FINANCIAL FORECASTS AND OTHER FORWARD-LOOKING STATEMENTS............... - 3 -

    2. QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND NOTES ...................................................... - 4 -

    (1) QUARTERLY CONSOLIDATED BALANCE SHEETS ........................................................................................................ - 4 -

    (2) QUARTERLY CONSOLIDATED STATEMENTS OF INCOME AND QUARTERLY CONSOLIDATED STATEMENTS OF

    COMPREHENSIVE INCOME ..................................................................................................................................... - 6 -

    Quarterly Consolidated Statements of Income .........................................................................................................- 6 -

    Quarterly Consolidated Statements of Comprehensive Income ................................................................................- 8 -

    (3) NOTES ON QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS ............................................................................. - 9 -

    (NOTES ON THE PREMISE OF A GOING CONCERN) ........................................................................................................... - 9 -

    (NOTES ON A SIGNIFICANT CHANGE IN SHAREHOLDERS' EQUITY).................................................................................. - 9 - (ADOPTION OF SPECIAL ACCOUNTING METHODS FOR PREPARATION OF QUARTERLY CONSOLIDATED FINANCIAL

    STATEMENTS) ........................................................................................................................................................ - 9 -

    (SEGMENT INFORMATION, ETC.)...................................................................................................................................... - 9 -

    1. Qualitative Information on Consolidated Financial Results for the First Three Months of FY2017 (April 1, 2017 to June 30, 2017)

    (1) Explanation of Operating Results

    During the first three months of the fiscal year ending March 31, 2018, the Japanese economy has continued a gradual trend of recovery. Looking ahead, continuing improvement in employment and income, coupled with various government policies, is expected to support moderate economic recovery, though it is important to prudently monitor the uncertainty in overseas economies and volatility of capital markets.

    The airline industry needs to further strengthen its competitiveness for a number of reasons that are transforming our business environment, including increased competition caused by industry liberalization (open skies agreements) and expansion of routes by low-cost carriers (LCCs), reform of airport management structures aimed at enhancing efficiency by integrating airport land and terminal building operations, and movements aimed at strengthening functions of metropolitan airports. Furthermore, the Japanese government revised upward its target for annual inbound tourists to Japan in 2020 from its previous target of 20 million to 40 million in order to meet the new challenge of a tourism-oriented developed nation, and the annual number of inbound tourists for 2016 exceeded 24 million.

    A review of passenger volume during the first quarter shows that passengers on domestic flights at Haneda Airport and on international flights at Haneda Airport, Narita International Airport, and Kansai International Airport rose year-on-year.

    Under these circumstances, JAT Group has laid out its long-term vision of "To be a World Best Airport" so that we can achieve sustainable growth through the creation of new businesses and the generation of profits, while aiming to be an airport that satisfies the needs of all stakeholders. Based on this long-term vision, the new medium-term business plan (FY2016 to FY 2020) identifies three strategic pillars: 1) Pursuit of the ideal of Haneda Airport, 2) Expansion of our business domain utilizing our strengths and the diversification of profits, and 3) Reconstruction of our profit base and the building of competitive advantages. We will continue to reposition and strengthen our organizational and governance structure to ensure that we effectively implement these strategies.

    As part of our efforts to expand and diversify our business domain and profit base by leveraging our strengths, airport lounges at Haneda's domestic terminal 1 and 2 have newly opened Power Lounge in April 2017 after having been renovated. In addition, as the first phase of the business mall project targeting business people, Regus Express, equipped with rental offices, meeting rooms, and a business lounge, has opened in May 2017 on the fifth floor at Market Place at terminal 1. Furthermore, Air BIC CAMERA, which offers electronics and other products popular among foreign tourists to Japan, has opened in Odaiba, the third outlet of this store after Haneda's international terminal and Narita airport. Also, airport-style in-city duty-free shop (Japan Duty Free GINZA) has performed well as a result of various marketing efforts. We will continue to generate profits by taking advantage of opportunities created by inbound tourists that are expected to grow in the mid- to the long-term.

    As a result, consolidated operating revenues for the cumulative fiscal first quarter (April 1, 2017 - June 30, 2017) increased 5.9% compared with the same period of the previous year to ¥51,759 million. Operating income rose to ¥2,787 million (up 61.6% year-on-year), ordinary income to ¥3,758 million (up 39.5% year-on-year) and net income (attributable to owners of the parent) to ¥2,640 million (up 45.3% year-on-year).

    In the Skytrax (UK) World Airport Awards in 2017, Haneda Airport's passenger terminals were awarded second place in the World's Best Airports category, which comprehensively evaluates various aspects of international airports. This represents a significant jump from fourth place last year. We were also awarded first place in the World's Cleanest Airports (the fourth time, for the second year in a row) and World's Best Domestic Airports (for the fifth consecutive year). In a bid to further enhance our reputation, we will work cooperatively as an entire airport to move together in our preparations for the 2020 Tokyo Olympics and Paralympics Games. With the highest priority placed on airport customers, we will ensure the safety of the airport and will provide services that offer exceptional customer convenience, comfort, and functionality. Aiming to be the world's best passenger terminal and to earn the long-term trust of customers, we are committed to contributing to the advancement of air transportation.

    The following is a breakdown of earnings by segment. Note that the figures for operating income are equivalent to those for segment income.

    [Facilities Management]

    Rental revenue rose from the same period during the previous year due to an increase in rental spaces to airlines and general tenants.

    Revenue from facility user charges rose from the same period during the previous year because a growth in domestic passenger volume increased user charges revenue for domestic terminal facilities.