PRESS RELEASE
May 31, 2017

Kansai Airports: Revenue and Profit Increase after
One Year of Operations

Kansai Airports today announced its financial results for the 2nd fiscal term from October
2016 to March 2017, posting operating revenue of JPY 91.1 billion, operating income of JPY
17.6 billion, ordinary income of JPY 11.9 billion and net profit1 of JPY 7.8 billion, due partly
to strong air traffic which continued from the first term.
For one year after taking over the operations of Kansai International Airport (KIX) and Osaka
International Airport (ITM) in April 2016, Kansai Airports posts operating revenue of JPY
180.2 billion and ordinary income of JPY 26.2 billion. The operating income represents a
3.2% increase on a like-for-like basis2 from the New Kansai International Airport Company,
Ltd. (NKIAC) results, and the ordinary income increased by 3.6% on the same basis2.
“Since we started operating KIX and ITM in April 2016, we have been able to welcome many
passengers and operate these airports smoothly. We are delighted to report an increase bothin revenue and profit in the financial results for the first year. We look forward to further
contributing to the Kansai economy by striving to enhance airport functions so that we will beable to serve even more passengers,” commented Yoshiyuki Yamaya, Representative Director& CEO and Emmanuel Menanteau, Representative Director & Co-CEO, Kansai Airports.

Consolidated Profit & Loss Statement
The 2nd Term

<Reference>

Oct. 2016 – Mar. 2017

Apr. 2016 – Sep. 2016

Apr. 2016 – Mar. 2017

(JPY billion)(JPY billion)(JPY billion)

Operating Revenues

91.1

89.1

180.2

Operating Costs

53.6

49.7

103.3

37.5

39.5

76.9

EBITDA Margin

44.3％

41.1％

42.7％

Depreciation & Amortization

19.9

19.3

39.1

Operating Income

17.6

20.2

37.8

Ordinary Income

11.9

14.3

26.2

Net Profit1

7.8

9.2

16.9

EBITDA

1”Net Profit” represents “Net Profit Attributable to Parent Company Shareholders”.

2

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

NKIAC FY2015 results to take into account the impact of the concession in order to have comparable
numbers.

Air Traffic
As a result of the increase in the number of international commercial flights to Asia includingSouth Korea and Hong Kong, Kansai Airports achieved a record number of aircraft
movements at KIX for FY2016 (April 2016 to March 2017). Moreover, the total number ofaircraft movements at both KIX and ITM marked a record high of 317,000 for the fiscal year.
Passenger traffic at KIX also reached a record high of 25.72 million over the same period,
following the last year, as the number of foreign passengers on international flights increased
from the previous year and Japanese passengers on international flights outnumbered that ofthe previous year as well for the first time in 4 years. The total passenger traffic at KIX andITM was 40.82 million, surpassing 40 million for the first time as a fiscal year result.
Apr. 2015 –Apr. 2016 –Increase/

ChangeMar. 2016

Mar. 2017

Decrease%

ATM (thousand movements)

309

317

8

3％

KIX

169

178

9

5％

ITM

140

139

(1)

(1％)

38.69

40.82

2.13

6％

KIX

24.06

25.72

1.66

7％

ITM

14.63

15.10

0.47

3％

PAX (million persons)

Consolidated Balance Sheet
Total net assets stand at JPY 1,876.5 billion as of March 31, 2017, out of which approx. 80%
are Right to Operate Public Facility, etc. (non-current assets). Total liabilities are JPY 1,810.4
billion, out of which approx. 80% are long-term accounts payable (non-current liabilities) to
NKIAC.
As of March 31, 2017
(JPY billion)
Current Assets
Non-current Assets

TOTAL ASSSETS
Current Liabilities
Non-current Liabilities

TOTAL LIABILITIES

240.2
1,636.3

1,876.5
63.6
1,746.8

1,810.4

Shareholders Equity

65.1

Other Comprehensive Income

0.1

Non-controlling Interests

0.9

TOTAL NET ASSETSTOTAL LIABILITIES & NET ASSETS

66.1
1,876.5

Contact information for Inquiries
Kansai Airports Corporate Communication Dept.
tn0010@kansai-airports.co.jp TEL：+81-72-455-2212

Consolidated Financial Results for
the Fiscal Term ending in March 2017
May 31, 2017

AgendaConsolidated Results Highlights
Revenue Explanation & Investment Plan
Overview of the Consolidated Financial Results for the Fiscal Term
ending in March 2017
Comparison with NKIAC’s FY2015 Consolidated Results
Appendix 1: Background to the Concession
Appendix 2: Terms and Conditions for the Concession

Appendix 3: Accounting for Concessions
1

Consolidated Results Highlights
2

Operating Revenues Reach JPY 180.2 billion;
Net Profit1 is JPY 16.9 billion for 1 year of Operations
 Kansai Airports established on December 1, 2015

The 2nd
Fiscal Term
(6 months)

The 1st Fiscal Term

(10 months)
2015
Dec. 1

Part of 1st
2nd Fiscal Term
Fiscal Term
Oct. 2016 –Apr. 2016 - Sep.
Mar. 2017
2016(JPY billion)(JPY billion)

2016
2016
Apr. 1: Airport Operation began Oct. 1

2017Mar. 31

1 year ofOperations
Apr. 2016 –Mar. 2017(JPY billion)

Operating
Revenues

89.1

91.1

180.2

EBITDA

39.5

37.5

76.9

EBITDA Margin

44.3%

41.1%

42.7%

Ordinary
Income

14.3

11.9

26.2

Net Profit1

9.2

7.8

16.9

1 year Operating revenues reached JPY 180.2 billion
 Ordinary income was JPY 26.2 billion
 Net profit1 was JPY 16.9 billion

1 “Net Profit” represents “Net Profit Attributable to Parent Company Shareholders”

3Operating Revenues Increased 3.2% and Ordinary Income
Increased 3.6% on Revised Comparative Basis Direct comparisons with NKIAC are
difficult: this comparison takes into
account the effects of the concession（JPY billion）

Comparison of Operating Revenues

190.0

10.4
180.0

 On this revised basis, operating revenues
increased by 3.2％, and ordinary income
170.0
by 3.6％, compared with thecomparative NKIAC figures for theprevious fiscal year

190.5
180.2

184.6

160.0

 Operating Income increased due tostrong passenger traffic at both KIX and
ITM, exceeding 40 million pax for the
first time

150.0
Kansai Airports'

Railway business,

Adjusted Operating

NKIAC'sOperating Revenues

Difference in method of

Revenues

Operating Revenues

Apr. 2016 -reporting sales, etc.

Mar. 2017

Apr. 2015 -Mar. 2016

4

Revenue Explanation & Investment Plan
5

Record High Passenger Traffic of KIX and ITM Combined
Contributed to Revenue Increase KIX air traffic movements andpassenger traffic both reached arecord high Aircraft movements were 178,000, up by
5% year-on-year whereas passenger
traffic was 25.72 million, up by 7% yearon-year, both hitting a record high Driven by the record breaking number offoreign passengers on international flightsof 12.42 million pax
 Increasing number of foreign passengers
on international flights from Asia Japanese passengers on international
flights of 6.51 million exceeded theprevious year for the first time in 4 years

 ITM passenger traffic outnumberedthat of the previous year for the 5 thconsecutive year

Apr. 2015 –Mar. 2016

Apr. 2016 –Mar. 2017

Increase/ Change
Decrease％ATM(thousand movements)

309

317

8

3%

KIX

169

178

9

5%

ITM

140

139

(1)

(1%)

Pax (million pax)

38.69

40.82

2.13

6%

KIX

24.06

25.72

1.66

7%

International Pax

17.28

19.15

1.87

11%

Japanese Pax

6.10

6.51

0.41

7%

Foreign Pax

11.0

12.42

1.42

13%

14.63

15.10

0.47

3%

ITM

6

Non-Aero Revenues on the Path of Recovery
 For the April-September period, directly-managed
duty-free store sales, one of major Non-Aero revenue
sources, were down year-on-year due partly to theslowdown of Bakugai, or explosive buying

Year-on-year sales for directly-managed duty free shops
130%

120%

 For the October-March period, directly-managed dutyfree store sales were on the path of recovery withforeign visitors on international flights reaching theprevious year’s level

110%

100%

90%

80%

70%

60%
4月
Apr

5月
May

6月
Jun

7月
Jul

8月
Aug

9月
Sep

10月
Oct

11月
Nov

12月
Dec

1月
Jan

2月
Feb

3月
Mar

7

Investment Plan Capital Investment is one of our key obligations to match theincrease in traffic
 JPY 96.1 billion is planned for proactive investment over the next
5 years (FY2017 - FY2021)
 This reflects that investment is a priority for safety and security,
as well as bringing KIX and ITM to world-class level•

ITM renovations•

Introduction of Smart Security Lanes in KIX T1 & ITM•

Enhancement of baggage security screening equipment in KIX & ITM•

Regulatory compliance8Overview of the Consolidated Financial Results for the
Fiscal Term ending in March 20179

Business Performance
2nd Fiscal Term
Oct. 2016 - Mar. 2017
(JPY billion)

Aeronautical:

Operating Revenue

91.1

Aero1

40.3

Non-Aero1

50.8

EBITDA

37.5

EBITDA Margin

41.1%

Operating Income

17.6

Net Profit2

7.8

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, ground handling revenue, etc.

Non-Aeronautical: Direct management revenue (duty free, retail, etc.), building & land rent fees, car parking fees, etc.
1 Part of Non-Aeronautical operating revenue is re-allocated to Aeronautical revenue from this term
2 “Net Profit” represents “Net Profit Attributable to Parent Company Shareholders”

10Business Performance(JPY billion)

Part of 1st Fiscal Term
2nd Fiscal Term
Apr. 2016 - Sep. 2016 Oct. 2016 - Mar. 2017

1 year of Operations
Apr. 2016 - Mar. 2017

Operating Revenue

89.1

91.1

180.2

Aero1

40.0

40.3

80.3

Non-Aero1

49.1

50.8

99.8

Operating Costs

49.7

53.6

103.3

EBITDA

39.5

37.5

76.9

EBITDA Margin

44.3%

41.1%

42.7%

Depreciation & Amortization

19.3

19.9

39.1

Operating Income

20.2

17.6

37.8

Ordinary Income

14.3

11.9

26.2

Net Profit2

9.2

7.8

16.9

 Net profit2 for 1 year of operations reached JPY16.9 billion thanks to strong air traffic
1 Part of Non-Aeronautical operating revenue is re-allocated to Aeronautical revenue from this term.
2 “Net Profit” represents “Net Profit Attributable to Parent Company Shareholders”

11Balance Sheet
As of March 31, 2017
(JPY billion)
Current Assets
Non-current Assets
TOTAL ASSETS
Current Liabilities
Non-current Liabilities
TOTAL LIABILITIES

240.2
1,636.3
1,876.5
63.6
1,746.8
1,810.4

Shareholders' Equity

65.1

Other Comprehensive Income

0.1

Non-Controlling Interests

0.9

TOTAL NET ASSETSTOTAL LIABILITIES AND NET ASSETS

Right to Operate
Public Facilities, etc.
1,475.3

Long Term Payables
1,493.6

66.1

1,876.5
12

Comparison with NKIAC’s FY2015
Consolidated Results

13Comparable Revenues Increased 3.2％
Comparison of Operating Revenues(Reflecting factors such as removal of railway business, difference in method of recording sales, etc.)
Comparison of Operating Revenues（JPY billion）
190.0

3.2％UP

10.4
180.0

190.5

170.0

180.2

184.6

160.0

150.0

Kansai Airports'

Railway business,

Adjusted

NKIAC'sOperating Revenues

Difference in method ofOperating Revenues

Operating Revenues

Apr. 2016 - Mar. 2017

reporting sales, etc.

Apr. 2015 - Mar. 2016

14

Comparable Profit Increased 3.6％
Comparison of Ordinary Income(Reflecting factors such as accounting for concessions, removal of railway business, different financing structure)
60.0（JPY billion）
50.0

1.0

40.0

3.0

-0.5

5.0

-7.9

3.6％UP

22.6

30.0

49.4

47.7

20.0

10.0

26.2

0.0
Kansai Airports'①Consideration②Revenue③Provision for④Performance⑤Profit/Loss⑥Interest

Adjusted

NKIAC'sOrdinary Income

for Operating

Sharing Fee

Special Repairs

Guarantee Deposit

from Railway

Expense, etc.

Ordinary

Ordinary Income

Apr. 2016 -RightsIncomeApr. 2015 -Mar. 2017

Business, etc.

Mar. 2016

15

Q&A
16

Appendix 1: Background to the Concession
17

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 JPY 1.3 trillion as of the end of FY2010

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

18

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

Manage Osaka International Airport that used to be managed by the national
government together with Kansai International Airport 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 aninternational hub airport, expand air transport demand in Kansai leveraging
appropriate and effective use of both airports in order to contribute to
rejuvenation of Kansai economy
19

Timeline
April 2012

New Kansai International Airport Company (NKIAC) established

July 2012

Integrated management of KIX and ITM airports by NKIAC

July 2014

NKIAC started 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
20Appendix 2: Terms and Conditions for theConcession

21Terms and Conditions for the Concession
Concession period: April, 2016 – March 31, 2060 (44 years)
Consideration for the Operating Rights and related costs
1) Consideration for the Operating Rights (annual amount)

JPY37.275 billion

2) Property taxes sharing fee (amount equivalent to actual costs)
3) Revenue sharing fees 3% of the amount by which the Approved Revenue for such fiscal year
exceeds JPY150 billion (within 6% of fund returnable to shareholders)4) Consideration for assets to be transferred to the Operating Rights holder JPY31.4 billion

The amount of Performance Guarantee Deposit JPY175,000,000,100
22Appendix 3: Accounting for Concessions
23

Accounting for Concessions:
Consideration for the Operating Rights (1)The Consideration for the Operating Rights paid to NKIAC, JPY 37.3 billion every year, is not recorded as
direct expense
The amount discounted to present value (JPY 1 trillion 440.5 billion) based on the payment schedule(annual cash-out of JPY 37.3 billion) shall be recorded as the Right to Operate Public Facilities, etc. underintangible assets and be amortized by straight-line method over 44 years. The amount discounted (JPY199.6 billion) shall be recorded as interest expense that will be smaller over time as we pay theConsideration for Operating Rights
When operating right is

As a result, expense
recorded exceeds theamount of annual payment
at the beginning ofconcession period, whereas
it will be less than theannual payment towards the
final phaseestablished

Annual payment

Right to operate public facilities

Present value
JPY 1.4405 trillion
Amortization

・・・・・・・・

JPY 37.3 billion × 44

44 years

years

Total amount of amortization= JPY 1.4405 trillion
Total amount of interest expense

Interest expense=

JPY 199.6 billion

24

Accounting for Concessions:
Consideration for the Operating Rights (2)Amortization of Operating Rights (intangible assets) and interest expense(April 2016 – March 2017)

The amount of expense recorded for the period: JPY34.9 billion as amortization and JPY8.6 billion asinterest expense including amortization of ancillary fees required for acquiring the Operating Rights

While expenses related to large sum of the Consideration for the Operating Rights
are recorded as stated above, majority of assets remain to be owned by NKIAC in
the concession. This is why depreciation cost deriving from assets owned by KAPGroup is JPY 2.9 billion, which is far less than the figure of NKIAC group for the last
fiscal year (JPY 23.8 billion)

Year-on-year effect (difference) : 34.9 + 8.6 + 2.9 - 23.8 = JPY 22.6 billion
25

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 fiscal year
Revenue Sharing Fee of JPY 1 billion was recorded for the period between April
2016 and March 2017

Year-on-year effect (difference) : JPY 1.0 billion
26

Accounting for Concessions:
Provision for Special Repairs
Provision to prepare for the payment of costs required for special repairs of runways,
taxiways and aprons was posted for the fiscal term based on the estimattion of suchcosts in the future
Recording of Provision for Special Repairs (Apr. 2016 – Mar. 2017)
Based on the estimated repair cost for large-scale maintenance/repair works in future,
we recorded JPY 2 billion for the period

Provision for Special Repairs to be recorded at the beginning of the term
As the Provision for Special Repairs to be recorded at the start of the operations was estimated at JPY 40.2 billion,
they were recorded as liabilities, and the Right to Operate Public Facilities, etc. was recorded as its corresponding account

Amortization of Operating Rights (intangible assets) pertaining to Provision for Special Repairs(Apr. 2016 – Mar. 2017)
Right to Operate Public Facilities, etc. is to be amortized over 44 years of concession period
Amortization cost of JPY 1 billion was recorded for the period

Year-on-year effect (difference) : 2.0 + 1.0 = JPY 3.0 billion
27

Accounting for Concessions:
Performance Guarantee Deposit
Pledge of Performance Guarantee Deposit
We pledged JPY 175 billion as Performance
Guarantee Deposit to NKIAC. Based on
Deposit repayment schedule (Cash inflowof JPY 13.9 billion for the first 5 years,
followed by annual cash inflow of JPY 2.7
billion every fiscal year), the amountdiscounted to the present value when thedeposit was made (JPY 160.9 billion) wasrecorded 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 amount andthe amount recorded as asset, which isworth JPY 14.1 billion, was recorded as the
Right to Operate Public Facilities, etc.
28
28

Accounting for Concessions:
Performance Guarantee Deposit (2)Repayment of Performance Guarantee Deposit (Apr. 2016 – Mar. 2017)
NKIAC repaid JPY13.9 billion, out of which JPY13.1 billion was recognized as guarantee deposit. Remaining JPY 0.8
billion was recorded as interest income for accounting treatment although no interest is to be paid based on theagreement with NKIAC

Amortization of Operating Rights (intangible asset) pertaining to Performance Guarantee Deposit(Apr. 2016 – Mar. 2017)
Right to Operate Public Facilities, etc. will be amortized over the 44 years concession period.
JPY 0.3 billion was recorded as amortization cost for the period.

This gives positive impact
on profit/loss at a time ofoperation start, whereas it
gives negative impact
towards the final phase of
the concession

Total amount ofinterest income
JPY 14.1 billion

・・・・・・・・
44 years

Total
amortization fee

Year-on-year effect (difference) : 0.3 - 0.8 = (JPY 0.5 billion)29

As of April 1, 2016, Kansai Airports succeeded the operating rights of Kansai International Airport (“KIX”)
and Osaka International Airport (“ITM”) from New Kansai International Airport Company (“NKIAC”) andcommenced business as an operating company for the two airports. Kansai Airports was established by aconsortium made up of VINCI Airports and ORIX Corporation as its core members. Kansai Airports sharesthe common goal of maximizing the potential of the Kansai International Airport and Osaka International
Airport, improving services to passengers and ensuring the highest levels of safety 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

BusinessScope

1-banchi, Senshu-kuko kita, Izumisano-shi,
Osaka
Representative Director and CEO:Yoshiyuki Yamaya
Representative Director and Co-CEO:
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%,VINCI Airports 40%,
Other investors 20%1

ORIX Corporation (TSE: 8591; NYSE: IX) is an opportunistic, diversified, innovation-driven global
powerhouse with a proven track record of profitability. Established in 1964, ORIX at present operates adiverse portfolio of businesses in the operations, financial services, and investment spaces. ORIX’s highly
complementary business activities span industries including: energy, private equity, infrastructure,
automotive, ship and aircraft, real estate and retail financial services. ORIX has also spread its businessglobally by establishing locations in a total of 37 countries and regions across the world. Through its businessactivities, ORIX has long been committed to corporate citizenship and environmental sustainability. For moredetails, please visit our website: http://www.orix.co.jp/grp/en/

VINCI Airports, a top 5 global player in the international airport sector, manages the development andoperations of 35 airports: 13 in France, 10 in Portugal (including the hub of Lisbon), 3 in Cambodia, 2 inJapan, 6 in Dominican Republic and Santiago airport in Chile. Served by more than 200 airlines, VINCIAirports’ network handled 132 million passengers in 2016.
Through its expertise as a comprehensive integrator and the professionalism of its 11,000 employees, VINCIAirports develops, finances, builds and operates airports, leveraging its investment capability, international
network and know-how to optimize the management and performance of existing airport infrastructure,facility extensions and new construction. In 2016, its consolidated revenue amounted to €1.05 bn.
More comprehensive information is available on www.vinci-airports.com
1

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 Tokyo-Mitsubishi UFJ Ltd.; Resona Bank, Limited; and the Private Finance Initiative
Promotion Corporation of Japan.