December 8, 2016

Kansai Airports Revenue and Profits Increase in First
Fiscal Year (Dec 2015 - September 2016)
Kansai Airports today announces that its Operating Revenue reached JPY 89.1 billion for the firstfiscal results from December 2015 to September 2016, a 2.9% increase on a like-for-like basis1
from the New Kansai International Airport Company (NKIAC) results for the first half of theprevious fiscal year. Ordinary Income increased by 2.6% on the same basis.
“We are delighted to report an increase in revenue and profit for our first results as Kansai
Airports for our fiscal year ending September 30, 2016. This is on the back of increased
passenger traffic at Kansai International Airport (KIX), with a record number of foreign visitors,
and an increase at Osaka International Airport (ITM). We look forward to further contributing to
the Kansai economy as we continue to grow capacity at our airports,” commented Kansai
Airports Representative Director & CEO, Yoshiyuki Yamaya.
Business Results (December 2015 to September 2016)
First Fiscal Year
(Dec. 2015 - Sep.
2016)
JPY billion(Dec. 2015 - Mar.
2016)
JPY billion(Apr. 2016 - Sep.
2016)
JPY billion

Operating Revenue

89.1

-

89.1

Operating Costs

50.3

0.7

49.7

EBITDA

38.8

(0.7)

39.5

43.5%

-

44.3%

Depreciation & Amortization

19.3

-

19.3

Operating Income

19.5

(0.7)

20.2

Ordinary Income

11.5

(2.8)

14.3

Net Profit

7.5

(1.9)

9.3

EBITDA Margin

Due to the preparatory expenses involved in the period from the establishment of the company
to the start of operations at KIX and ITM, Kansai Airports recorded a loss attributable toshareholders of JPY 1.9 billion up to March 2016. After taking over the operations of KIX and
ITM, aero traffic remained firm which resulted in the firm recording a profit attributable toshareholders of JPY 9.3 billion from April to September 2016, and JPY 7.5 billion for the firstfiscal year.
Emmanuel Menanteau, Kansai Airports Representative Director & Co-CEO, continued, “We havemade significant progress in our first fiscal year of operations, on the back of increasing aerodemand. Our goal is to ensure that we not only attract more traffic through our airports by
maximizing the customer experience, but we also strive to play a significant and increasing rolein the local economy.”1

As the accounting standards for NKIAC and Kansai Airports with the concession are different, Kansai Airports has revised the

NKIAC FY 2015 results to take into account the impact of the concession in order to have comparable numbers

Aero Traffic
As a result of the increase in the number of international commercial flights to Asia includingSouth Korea and Taiwan, Kansai Airports achieved a record number of aircraft movements at
KIX from April to September 2016. The number of aircraft movements at ITM remained similar
to the previous year.
The number of passengers at KIX also reached the record high over the same period as thenumber of international foreign passengers grew from last year. The number of passengers at
ITM exceeded last year for the first time over the past two years.
April - September2015
ATM (thousand
movements)

154

April September 2016

Increase/
Decrease

Change
%

160

6

4%

KIX

83

90

6

7%

ITM

70

70

(1)

(1%)

19.33

20.30

0.97

5%

KIX

11.98

12.81

0.83

7%

ITM

7.35

7.50

0.15

2%

PAX (million persons)

Balance Sheet
Total net assets stand at JPY 1,865.7 billion as of September 30, 2016, out of which approx.
80% are Right to Operate Public Facility etc. (non-current assets). Total liabilities are JPY
1,808.5 billion, out of which approx. 80% are long-term accounts payable (non-current
liabilities) to NKIAC.
As of September 30, 2016
(JPY billion)
Current Assets

231.0

Non-current Assets

1,634.7

TOTAL ASSETS
Current Liabilities

1,865.7
58.8

Non-current Liabilities

1,749.7

TOTAL LIAIBILITIES

1,808.5

Shareholders Equity

57.3

Other Comprehensive Income(0.9)

Non-controlling Interests
TOTAL NET ASSETSTOTAL LIAIBILITIES & NET ASSETS

0.8
57.2
1,865.7【Contact information for inquiries】
Kansai Airports Corporate Communication Dept.
tn0010@kansai-airports.co.jp TEL: +81-72-455-2212

About Kansai Airports
As of April 1, 2016, Kansai Airports succeeded the operating rights Kansai International Airport (“KIX”) and Osaka
International Airport (“ITM”) from New Kansai International Airport Company (“NKIAC”) and commenced business as an
operating company for the two airports. Kansai Airports was established by a consortium made up of VINCI Airports and
ORIX Corporation as its core members. Kansai Airports shares the common goal of maximizing the potential of the KansaiInternational Airport and Osaka International Airport, improving services to passengers and ensuring the highest levels ofsafety and security, investment to enhance safety, convenience and comfort to increase value, as well as enhancing
community relations in the neighborhoods of the airports and benefiting the Kansai regional economy. On December 15,
Kansai Airports signed a concession contract with the New Kansai International Airport Company ("NKIAC") for an
operating period of 44-years. For more information, please visit: www.kansai-airports.co.jp/en/
Location
Company
Representatives
Business Scope

1 banchi, Senshu kuko kita, Izumisano-shi,
Osaka
Representative Director & CEO, Yoshiyuki
Yamaya, Representative Director & CoCEO, Emmanuel Menanteau
Operation and management services, etc.
of Kansai International Airport and Osaka
International Airport

Capital

25,000 million yen

Date of
Incorporation

December 1, 2015

Shareholders

ORIX 40%, VINCIAirports 40%, 2Other
investors 20%

ORIX Corporation is a financial services group which provides innovative products and services to its customers byconstantly pursuing new businesses. Established in 1964, from its start in the leasing business, ORIX has advanced intoneighboring fields and at present has expanded into lending, investment, life insurance, banking, asset management,
automobile related, real estate and environment and energy related businesses. Since entering Hong Kong in 1971, ORIX
has spread its businesses globally by establishing locations in 36 countries and regions across the world. ORIX celebrates
its 50th anniversary in 2014 and moving forward it aims to contribute to society while continuing to capture new business
opportunities and sustain growth by promoting acceleration of its corporate strategy “Finance + Services” and “Embracing
Growth in Emerging Markets including Asia.” Please refer to www.orix.co.jp/grp/en/

VINCI Airports, a top 5 global player in the international airport sector, manages the development and operations of 35
airports: 13 in France, 10 in Portugal (including the hub of Lisbon), 3 in Cambodia, 2 in Japan, 6 in Dominican Republic andSantiago airport in Chile. Served by more than 170 airlines, VINCI Airports’ network handles more than 130 million
passengers annually. Through its expertise as a comprehensive integrator and the professionalism of its 10,600 employees,
VINCI Airports develops, finances, builds and operates airports, leveraging its investment capability, international networkand know-how, to optimize management and performance of existing airport infrastructure, facility extensions and new
construction. More comprehensive information is available on www.vinci-airports.com

2

ASICS Corporation; Iwatani Corporation; Osaka Gas Co., Ltd.; Obayashi Corporation; OMRON Corporation; The Kansai Electric Power Company,
Incorporated; Kintetsu Group Holding Co., Ltd.; Keihan Holdings Co., Ltd.; Suntory Holdings Limited; JTB Corp.; Sekisui House , Ltd.; Daikin Industries, Ltd.;
Daiwa House Industry Co., Ltd.; Takenaka Corporation; Nankai Electric Railway Co., Ltd.; NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION;
Panasonic Corporation; Hankyu Hanshin Holdings, Inc.; Rengo Co., Ltd.; The Senshu Ikeda Bank, Ltd.; Kiyo Holdings, Inc.; The Bank of Kyoto, Ltd.; THE
SHIGA BANK，LTD.; The Nanto Bank, Ltd.; Nippon Life Insurance Company; Mizuho Bank, Ltd.; Sumitomo Mitsui Trust Bank, Limited; The Bank of TokyoMitsubishi UFJ Ltd.; Resona Bank, Limited; and the Private Finance Initiative Promotion Corporation of Japan.

Financial Results for
The Year Ending in
September 2016
December 8, 2016

Copyright © Kansai Airports. All Rights Reserved.

AgendaResults Highlights and Important Considerations
Revenue Explanation & Investment Plan
Terms and Conditions for the Concession
Overview of the Financial Results
Comparison with Interim NKIAC Results, FY2015

Appendix 1: Background to the Concession
Appendix 2: Accounting for Concessions
Copyright © Kansai Airports. All Rights Reserved.

1

Results Highlights and Important
Considerations
Copyright © Kansai Airports. All Rights Reserved.

Operating Revenue Reaches JPY 89.1 billion;
Net Profit is JPY 7.5 billion
Kansai Airports established on
December 1, 2015

First Fiscal
Year (Dec2015 toSep 2016)(JPY billion)

December 1 ~ March 31:Preparation for
operational start
Operations began on April 1, 2016

Operating revenue reached 89.1 billion
yen

Operating Revenue

89.1

EBITDA

38.8

Ordinary income was 11.5 billion yen,

EBITDA Margin

43.5%

Net profit was JPY 7.5 billion

Ordinary Income

11.5

Strong start for the next 44 years

Net Profit

7.5

3

Operating Revenue Increased 2.9% and Ordinary Income
Increased 2.6% on Revised Comparative Basis
Direct comparisons with NKIAC
are difficult: this comparison
takes into account the effects ofthe concession
On this revised basis, operating
revenue increased by 2.9% fromthe previous year, and ordinary
profit by 2.6%, compared withthe revised comparative NKIAC
figures for the first half of theprevious fiscal year
Operating income increased due
to strong passenger numbers at
KIX, with the number offoreigners recording record highs（JPY billion）

Comparison of Operating Revenues

95.0

2.9％UP

5.1

90.0

85.0

94.2
80.0

89.1

91.6

75.0

70.0
Kansai Airports'

Railway business,

Operating Revenue Difference in method
in FY2016

Adjusted Operating Operating Revenues
Revenues

in FY2015of reporting sales,
etc.

4Important Considerations
Safety and Security are our top priorities
Continue to place top priority on safety andsecurity while leveraging growth of Asia
Extension of Terminal 2 at KIX brings latest
in security

We can operate smoothly thanks toclose cooperation with business circles
and key stakeholders in KansaiStrive to contribute to economic growth in
the entire Kansai Region

Kansai Airports operates as “one” Kansai
Airports GroupOne Airport System of the Kansai Region5

Revenue Explanation & Investment Plan
Copyright © Kansai Airports. All Rights Reserved.

Record High Passenger Traffic Contributed to Revenue
Increase
Air Traffic Demand

KIX air traffic movements andpassenger traffic both increased 7%
year-on-year

Apr
2015~
Sep
2015

Apr 2016
~ Sep
2016

154

160

6

4%

KIX

83

90

6

7%

ITM

70

70

(1)

(1%)

19.33

20.30

0.97

5%

KIX

11.98

12.81

0.83

7%

ITM

7.35

7.50

0.15

2%

Increased air traffic movements – thehighest for first half ever

Increase in international passengers
from Asian countries
Record high number of passengers forthe first half for 2 consecutive years

New airlines and new routes added in
Winter Schedule
Growth initiatives include:
Increasing outbound demand
Attracting medium and long distanceroutesIntroducing strategic landing charge
systemATM(thousandmovements)

PAX (million
persons)

Increase/% ChanDecrease

7

Investment Plan
Facility Investment (CAPEX) is one of our
key obligations to match the increase intraffic

93.2 billion yen is planned for proactive
investment over the next 5 years (FY2016 2020)
This reflects that investment is a priority not
only for safety and security, but as we bring
KIX and ITM to world-class levelTerminal 2 expansion

Introduction of Smart Security Lanes

“Walk-through” shopping area

ITM renovation

Regulatory compliance8

Terms and Conditions for the Concession
Copyright © Kansai Airports. All Rights Reserved.

Terms and Conditions for the Concession
Concession period: April 1, 2016 – March 31, 2060 (44 years)
Consideration for the operating rights and related costs
1) Consideration for the operating rights (annual amount) JPY 37.275 billion
2) Property taxes sharing fees (amount equivalent to actual costs)
3) Revenue sharing fees 3% of the amount by which the Approved Revenue for such Fiscal Yearexceeds JPY 150 billion (within 6% of fund returnable to shareholders)4) Consideration for assets to be transferred to the operating rights holder JPY 31.4 billion

The amount of Performance Guarantee Deposit JPY 175,000,000,100

10Overview of the Financial Results
Copyright © Kansai Airports. All Rights Reserved.

Business PerformanceFirst Fiscal Year (Dec2015 to Sep 2016)(JPY billion)
Operating Revenue

89.1

Aero

34.8

Non-Aero

54.4

EBITDA

38.8

EBITDA Margin

43.5%

Operating Income

19.5

Net Profit ※7.5※”Net profit attributable to parent company’s shareholders” was JPY 7.3 billion for the first fiscal year.

Aeronautical:

Landing fees, parking charges, security fees, passenger service facility charge (PSFC),
passenger security service charge (PSSC), baggage handling system (BHS) usage fee,passenger boarding bridge (PBB) usage fee, fueling service revenue

Non-aeronautical: Direct management revenue (duty free, retail, etc.), building & land rent fees, carparking fees, etc.
12Business PerformanceFirst Fiscal Year
(Dec 2015 to Sep
2016)(JPY billion)

Dec 2015 ~ Mar
2016

Apr 2016 ~ Sep
2016

Operating Revenue

89.1

-

89.1

Operating Costs

50.3

0.7

49.7

EBITDA

38.8

(0.7)

39.5

EBITDA Margin

43.5%

-

44.3%

Depreciation &Amortization

19.3

-

19.3

Operating Income

19.5

(0.7)

20.2

Ordinary Income

11.5

(2.8)

14.3

Net Profit
7.5
(1.9)
9.3
The net loss of JPY1.9 billion from December 2015 to March 2016 was due to the
preparation expenses from the establishment of the company until the start of operationsof both airports

Since the start of operations in April 2016, demand has remained steady with a net
income of JPY 9.3 billion

13

Most Assets & Liabilities Related toOperation Rights
Balance Sheet

As of September 30, 2016
(JPY billion)
Current Assets

231.0

Non-current Assets

1,634.7

TOTAL ASSETS

1,865.7

Current Liabilities

58.8

Non-current Liabilities

1,749.7

TOTAL LIABILITIES

1808.5

Shareholders’ Equity

57.3

Other Comprehensive Income(0.9)

Non-Controlling Interests

0.8

TOTAL NET ASSETS

57.2

TOTAL LIABILITIES AND NET
ASSETS

Rights to Operate
Public Facilities
1,469.9Long term Payables
1,509.2

1865.7
14

Comparison with Interim NKIAC Results,
FY2015
Copyright © Kansai Airports. All Rights Reserved.

Comparable Revenue Increased 2.9%
Comparison of operating revenues(Reflecting factors such as removal of railway business, difference in method of recording sales, etc.)（JPY billion）

95.0

5.1

90.0
85.0
80.0

94.2

89.1

91.6

75.0
70.0
Kansai Airports' Operating

Railway business,

Adjusted Operating

Operating Revenues in

Revenue in FY2016

Difference in method of

Revenues

FY2015recording sales, etc.
16Comparable Profit Increased 2.6%
Comparison of Ordinary Income(Reflecting factors such as accounting for concessions, removal of railway business, different fund-raising structure)（JPY billion）

300

-0.3

0.5
1.5

250

200

2.5

-4.1

11.0

150
100

50

25.4

24.8

Adjusted

NKIAC's

14.3

0
Kansai①②Revenue ③Provision for④⑤Profit/loss

Airports'

Consideration

sharing fee special repairs Performance from railway expense, etc.

ordinary

ordinary

Ordinaryfor operating

guarantee

incomeincome inincome inrightdepositbusiness, etc.

⑥Interest

FY2015FY201617

Appendix 1: Background to the Concession
Copyright © Kansai Airports. All Rights Reserved.

Background to the Concession
September 1994

Kansai International Airport opened(Established/managed by Kansai International Airport Company(KIAC) )Enormous amount of construction cost was required to build an airport on the sea.

KIAC came to have liabilities worth approximately 1.3 trillion JPY as of the end of
fiscal 2010.

It was difficult to implement strategic management and forward-looking investment
leveraging the superiority the airport should have as international hub airport.

20

Creation of the Concession
May 2011“Act concerning Integrated and Efficient Establishment
and Management of Kansai International Airport andOsaka International Airport” was enacted

Manage Kansai International Airport together with Osaka International Airport thatused to be managed by the national government in an integrated manner
Implement concession in order to expedite and ensure repayment of debts
required for building Kansai International Airport

In addition to revitalizing/reinforcing Kansai International Airport as an international
hub airport, expand air transport demand in Kansai leveraging appropriate andeffective use of both airports in order to contribute to activation of Kansai economy.
21

Timeline
April 2012

New Kansai International Airport Company (NKIAC) established

July 2012

Integrated management of KIX and ITM airports by NKIAC

July 2014

NKIAC starts procedures for accepting applications/screening
for implementing concession

Dec. 2015

Kansai Airports establishedDec. 2015

Project Agreement concluded with NKIAC

April 2016

Kansai Airports started operating both airports

22Appendix 2: Accounting for Concessions
Copyright © Kansai Airports. All Rights Reserved.

Accounting for Concessions:
Consideration for the Operating Rights(1)Although the consideration for the operating rights paid to NKIAC is stated as JPY 37.3 billion every
year, it is not that this amount is recorded as direct expense.

Based on the payment schedule (annual cash-out of JPY 37.3 billion), the amount discounted topresent value (JPY 1 trillion 440.5 billion) shall be recorded as right of operating public facilities,
which is an intangible asset, and amortize by straight-line method. The amount discounted (JPY199.6 billion) shall be recorded as interest expense that will be reduced as we pay consideration for
operating rights.
As a result, expense
recorded exceeds theAnnual payment
・・・・・・・・
JPY 37.3 billion × 44
amount of annual payment
Present value
44 years
years
JPY 1.4405 trillion
at the beginning ofAmortization
Total amount of amortization
concession period, where as= JPY 1.4405 trillion
the amount will be less in
Total amount of interest expense= JPY 199.6 billion
the final phase.
When operating right isestablished

Right to operate public facilities

Interest expense

24

Accounting for Concessions:
Consideration for the Operating Rights (2)Amortization of operating rights(intangible assets)and interest expense (April
2016 – September 2016)

The amount of expense recorded during the said period: JPY 17.4 billion as amortization and
JPY 4.3 billion as interest expense including amortization fee of ancillary fee required for
acquiring the operating rights.

As stated above, while expense related to large sum of consideration for theoperating rights is recorded, majority of assets remain to be owned by NKIAC
in the concession. This is why depreciation cost deriving from assets owned by
KAP Group is JPY 1.4 billion, which is far less than the figure of NKIAC group
last year (JPY 12.1 billion).

Year-on-year effect (difference) : 17.4+4.3+1.4-12.1 = JPY 11.0
billion25

Accounting for Concessions:
Revenue Sharing Fee
If the amount of the Approved Revenue for a fiscal year exceeds JPY 150
billion,

3% of the amount by which the Approved Revenue for such fiscal year exceeds JPY 150 billion(provided, the amount is within 6% of the cash returnable to shareholders)shall be paid to NKIAC as Revenue Sharing Fee for the said fiscal year.
We have recorded JPY 0.5 billion, the amount for 6 months, as Revenue
Sharing Fee, assuming that Approved Revenue will be approximately JPY 180
billion/year.

Year-on-year effect (difference) : JPY 0.5 billion

26

Accounting for Concessions:
Provision for Special Repairs
To prepare for the payment of costs required for special repairs of runways,
taxiways, aprons, we are recording the amount for the fiscal year based on theestimated repair costs in the future.
Recording of provision for special repairs(April – September, 2016)
Based on the estimated repair cost for large-scale maintenance/repair works in future, we are recording JPY 1.2
billion this year.

Provision for special repairs to be recorded at the beginning of the year
As the provision for special repairs to be recorded when the operation started was estimated at JPY 23.1 billion,
they are recorded as liabilities, and the right to operate public facilities is recorded as corresponding account.

Amortization of operating rights (intangible asset)(April – September 2016)
Right to operate public facilities is to be amortized over 44 years of concession period. We are recording JPY 0.3
billion as amortization cost for this year.

Year-on-year effect (difference) :1.2+0.3 = JPY 1.5 billion
27

Accounting for Concessions:
Performance Guarantee Deposit
Pledge of Performance Guarantee Deposit
We are pledging JPY 175 billion as
Performance Guarantee Deposit to
NKIAC. Based on Deposit repayment
schedule (Cash inflow of JPY 13.9
billion for the first 5 years, followed byannual cash inflow of JPY 2.7 billion
every year), the amount discounted tothe present value when the deposit ismade (JPY 160.9 billion) is recorded
as guarantee deposit paid.

JPY 13.9 billion × 5 years
JPY 2.7 billion × 39 years
・・・・・・・・= JPY 175 billion

When guarantee deposit is
paidFirst 5 years: repay JPY 13.9 billion

After 5 years: repay JPY 2.7 billion

Present value
JPY 160.9 billion

Gurantee deposit paid

Difference between the paid amountand the amount recorded as asset,
which is worth JPY 14.1 billion, isrecorded as the rights to operate
public facilities, etc.
28

Accounting for Concessions:
Performance Guarantee Deposit (2)Repayment of Performance Guarantee Deposit (April - September 2016)
This year, NKIAC repaid JPY 7 billion, out of which JPY 6.5 billion worth guarantee deposit is reduced. Remaining
JPY 0.5 billion will be recorded as interest income, although no interest is to be paid based on the agreement with
NKIAC.

Amortization of operating rights (intangible asset) (April - September 2016)
Right to operate public facilities, etc. will be amortized over the 44 years concession period. This year, JPY 0.2
billion is recorded as amortization cost.

When the businessstarted, it gives
positive impact on
profit/loss, whereas it
gives negative impact
in the final phase.

Year-on-year effect (difference) :Total amount ofinterest income
JPY 14.1 billion

・・・・・・・・
44 years

Total
amortization fee

0.2-0.5 = (JPY 0.3 billion)29