The 12th Business TermBusiness Report
From April 1, 2017
to March 31, 2018

I. Business Report
II. Balance Sheet
III. Income Statement
IV. Statement of Changes in Net Assets
V. Notes to Non-Consolidated Financial Statements※ This document has been translated from the Japanese original,for reference purposes only.
If there is any discrepancy between this translated document and the Japanese original,
the original shall prevail.

Tokyo International Air Terminal Corporation-1-

Business Report
From April 1, 2017
To March 31, 20181.

Matters Concerning the Company’s Status(1) Progress and Results of Operations
During this fiscal year, the Japanese economy in general continued to recover gradually including
the continuous recovery of consumer spending and improvement of corporate earnings. Amongthe overseas economies, the U.S. economy is continuing to recover steadily, the European
economy has also gradually recovered, and China's economy is continuing to get better. The
global economy including Japan has continued to gradually recover as a whole. Under suchcircumstances, while the number of outbound Japanese travelers exceeded last year's number, thenumber of inbound international travelers, especially those from East Asia, continued to increasesignificantly and approached 30 million people a year.
Regarding international flights and routes, new flights to Oakland have been added and flights forexisting routes to New York, London, Jakarta, etc. have been increased, while the passenger
demand has increased steadily, the actual number of inbound and outbound travelers in the fiscal
year increased to 109% year-on-year, and as a result, the monthly number of travelers in March,
the fiscal year-end, reached a record high.
Against this backdrop, in the interest of the management of international passenger terminals andputting safety and security first in all cases, and in consideration of disaster prevention and safety,
Tokyo International Air Terminal Corporation (hereinafter referred to as "the Company")
established a special structure to enhance security during the period when the president of the U.S.
came to Japan in November and during high seasons, such as Golden Week, summer vacation,
Silver Week in autumn, and year-end and New Year holidays, in response to the increasing
number of passengers. Moreover, the Company has been striving to secure the safety of customers
while increasing security cameras and expanding the areas in which patrol guards use wearable
cameras. Given that crisis management necessitates preparations and drills for various emergency
situations, the Company has been striving to enhance its readiness for contingency situations,conducting stress tests in the assumption of acts of terrorism and fires while continuing to receive
external expert advice. Also, in pursuance of prompt on-site responses to the occurrence ofdisasters, the Company held 23 drills assuming the occurrence of disasters near the workplaces of
employees working in the terminal as part of the general disaster prevention drills conducted
throughout the entire international terminal area. In addition, the Company has been dealing withincreasing the awareness of fire and disaster prevention at the airport for employees working in-2-

the building through meetings within the terminal with its local fire brigade team. In terms ofaviation security, in order to confirm the awareness of crisis management and fully disseminate
security measures to all employees working in the building, the Company conductededucation/training for newly appointed employees, and re-education/training for existing
employees regarding aviation security. Additionally, the Company is promoting the introductionof advanced inspection equipment with the Airline Operators' Committee (AOC) in an effort toupgrade security checks at airports as part of the anti-terrorism initiatives promoted by theJapanese government. In the fiscal year, body scanner type inspection equipment at security
checkpoints that connect between international flights has been installed, and furthermore CT(computed tomography) type inspection equipment for carry-on baggage also has been installed at
the north security checkpoint and security checkpoints that connect between international flights.
This is in preparation for the development of smart security on a full-scale basis from the next
fiscal year.

In terms of facilities related to passenger services, the Company continues to improve andenhance environments for the use of mobile devices as many customers, especially inboundinternational travelers, have requested such services, including strengthening the Wi-Fi
environment in the terminal building, in order to continuously improve the convenience for andcomfort of customers. Moreover, increasing the amount of flight information boards in seatingareas/restaurant food courts in the departure area has enabled customers who are relaxing before
departure to easily check flight information.
Furthermore, to maintain and improve its service quality, the Company continues to strive to
identify and take response measures for issues by regularly conducting comprehensive customer
surveys evaluating a wide range of aspects from the building facilities and services to customer
services and anonymous investigations. In addition, the Company holds role-playing contests for
its employees attending to customers at stores and service facilities in the building. It also
continues to offer regular training in conversation with customers in English, Chinese and Korean
and in cross-cultural understanding for improving customer services for travelers from overseas.
In consideration of customer entertainment, the Company decorated the terminal to produce
Japan's four seasons, including winter illuminations, and carried out various campaigns. In thesummer, under the theme of Japanese traditions and culture in the Edo period, the Company and
the National Museum of Japanese History co-hosted an exhibition of paintings on folding screensand picture scrolls, and events in which customers were exposed to the lifestyle and leisureactivities of the Edo period. Moreover, in the beginning of the year, various activities unique toHaneda Airport were prepared for customers to enjoy the New Year season, such as performancesand hands-on attractions set in an immersive Edo atmosphere in the event called "New Year
Haneda Edo Festival."
Furthermore, as part of an effort to stimulate inbound international customers' demand, providing
information booths at international tourism expos held in Beijing, Jakarta, Taipei, Manila, and-3-

Paris has encouraged people to use Haneda Airport as the gateway to Japan's local tourist
resources. In order to increase demand for international travel, in cooperation with the Japan
Association of Travel Agents (JATA), the "Travel abroad more in 2018! From Haneda to theworld" event, which included exhibitions and travel seminars from 23 countries and regions
worldwide, as well as airlines/government agencies, was held in the building.
With respect to the universal design (UD) that the Company has emphasized since its foundation,
the UD Committee, comprised of academics, experts with their own disabilities, airport-related
operators, and the Company's employees, has continued to conduct evaluations and verifications,and also in the fiscal year, the Company has steadily engaged in the improvement of various newissues which were brought up from the perspective of the use of wheelchairs and users with visualand hearing disabilities in the “Spiral-up” which was implemented last year. In consideration of
upgrading and diversifying the guidance in the building, which has been using information andcommunications technologies (ICT) as information UD since fiscal year 2015, the Company has
made efforts for demonstration experiments and the full-scale introduction of various measures.
Regarding display guidance by projection mapping for congestion levels at security checkpoints,
the accuracy was improved by automatically discriminating passenger dynamics with camera
images, etc. Based on the demonstration experiments, voice articulation technologies which guidevisually-impaired people through the building's facilities have been adopted and introduced in thecurrent year for the purpose of automated voices in restrooms in certain parts of the building. In
addition, since fiscal year 2015, the Company has been conducting demonstration experimentswith technologies that enable customers to obtain more detailed intra-building guidance
information simply by having the customers themselves take photos of direction boards with theirsmartphones or other mobile devices, and in this fiscal year, the Company expanded theexperiment targets to items on restaurant menus and exhibits in the terminal building, and ismaking efforts to verify the results in order to improve the convenience for passengers.
In the terminal building, in order to continue to provide high-quality services and hospitality, theemployees working in the building continuously implement customer satisfaction (CS) activities
while sharing the CS philosophy. Also in the fiscal year, the Haneda Airport International Area
Passenger CS Liaison Committee planned and operated the CS award system, held CS seminars
and campaigns, and issued CS bulletins, promoting relevant activities throughout the internationalterminal area. In addition, the Company has been developing understanding and empathy among
employees beyond organizational, occupational and operational frameworks by further promotinginternal branding activities through staff exchange meetings attended by employees working in
the building as well as activities involving government bodies related to Haneda Airport's
international flights and airport-related companies. At the same time, the Company has beenworking to convey a unified feeling of hospitality to the customers. Also in the fiscal year, an
exhibit featuring scenes of various working employees with the slogan, "WE ARE TOKYO,"
created a synergistic effect in our internal branding activities.

-4-

These various efforts and activities have been recognized by external rating agencies. Ourinternational and domestic terminals have received the 5 Star Airport ranking in the Global
Airport Ranking by Skytrax, a U.K.-based service research firm, for four consecutive years.
Furthermore, in awards by category, our airport ranked first in the World's Cleanest Airport
category for three consecutive years and five times in total.
While terminal business management was expanding against the backdrop of strong passenger
demand, the second TIAT building was built in the location next to the first existing TIAT
building and its construction was completed in December of the fiscal year. Regarding the second
TIAT building, the Company responded to an increased demand for office spaces used by airlines,
outsourcing contractors, etc., and at the same time, in order to improve the work environment for
employees working in the building, the Company expanded the infrastructure system for terminalbuilding management including the addition of facilities such as break rooms for employees.

As a result of the Company's above-mentioned implementation measures to improve facilities andservices, the steady operation of the terminal, and business execution with cost awarenesscombined with the increase in customers, the Company reported an operating revenue of 89,539
million yen (up 15.0% year-on-year) in the fiscal year, an operating profit of 12,484 million yen(up 15.2% year-on-year), an ordinary profit of 7,970 million yen (up 12.0% year-on-year), and a
net current profit of 5,440 million yen (up 0.4% year-on-year).
The business performance by each business segment is as follows:<Facilities Management and Operation Business Segment>
The international passenger terminal generated a passenger service facility charge (PSFC) revenue,
which the Company receives from air travelers at departure and during transit for connecting
flights, of 19,856 million yen (up 9.1% year-on-year), reflecting an increase in passengers, etc.
The facility usage fee revenue from air transport service operators' use of facilities, including
boarding bridges, the luggage handling system, and gates dedicated for business jet airplanes,
totaled 3,557 million yen (up 1.8% year-on-year).
The rent revenue generated from renting offices for airlines and shop spaces for tenants was 4,808
million yen (up 2.7% year-on-year).
Consequently, the operating revenue of the Facilities Management and Operation Businesses
Segment was 28,221 million yen (up 7.0% year-on-year).
<Directly-Managed Business Segment>
In the Merchandise Sales Business, the sales of goods generated from general duty-free stores andbranded boutiques totaled 54,217 million yen (up 19.3% year-on-year).
The sales from the Restaurant Business totaled 2,749 million yen (up 17.6% year-on-year).
Among the other businesses, the revenues from the parking lot business and other businesses, suchas the lounge business and advertising in the building, were, respectively, 1,631 million yen (up-5-2.6% year-on-year) and 2,719 million yen (up 29.1% year-on-year).
Consequently, the Directly-Managed Business Segment reported an operating revenue of 61,317
million yen (up 19.1% year-on-year).

(2) Status of Capital Expenditure
During the fiscal year, the Company made capital expenditures of 14,382 million yen in total,
which included 8,119 million yen for renovation and reconstruction works for the international
passenger terminals, etc., 2,326 million yen for the new construction of the second TIAT
building, 465 million yen for the upgrade construction work for the integrated backbone network
equipment, 216 million yen for the upgrade construction work for the ITV facility equipment,
and 207 million yen for the installation construction work for the CT type inspection equipment
for carry-on baggage, etc.

(3) Status of financing
As the funds for the work to extend and reconstruct the international passenger terminals, etc.
under the Alteration Contract of Limited Loan Contract signed with the loan syndication as ofDecember 28, 2017, the borrowing of 12,050 million yen was conducted on January 25, 2018.
As a result, the outstanding balance of the loan from the syndication stood at 98,952 million yen
as of the end of the fiscal year.

(4) Issues to Be Addressed
Against the backdrop of strong passenger demand, as the maintenance and improvement of safety
and service quality under congested situations during high seasons and peak hours has beenrecognized as an issue to be addressed, the Company will further strengthen precautions andsecurity in the terminal building, aviation security against terrorism, and disaster prevention
measures, including measures against large-scale disasters, in order to further ensure customers'
safety and security. Moreover, accompanying the designation of critical infrastructure of the
airport building by the Japanese government, the Company will further improve and enhancecyber security measures.
In Haneda Airport, based on the Japanese government's policy for strengthening the functions of
the airports in the Tokyo metropolitan area, consideration and preparation are being conducted forthe review of flight paths and the enhancement of airport functions and facilities with the aim toincrease Haneda Airport's capacity by approx. 39 thousand arrivals/departures by 2020. To copewith an increase in international passengers reflecting the increase in the number of flights, theCompany is proceeding with a plan to expand the international passenger terminal building, andstarted construction to extend the existing international terminal building and add boarding
bridges in January this year. The Company continues to maintain its service level and quality,
while also expanding all possible means to secure safety during the construction period. In
addition, as part of the financing project required for expanding the facility, after formulating a
project to finance the expansion by issuing new shares to shareholders as the third-party allocation-6-

of shares, the project was approved in the extraordinary general meeting of shareholders on
October 26 in the fiscal year and the payments were completed on April 27, 2018. The
shareholding of Japan Airport Terminal Co., Ltd. representing the shareholders of the Company
increased to 51% due to the recent underwriting of capital increase, which changed the status of
the Company to a consolidated subsidiary of Japan Airport Terminal Co., Ltd. Also, in thedomestic area of Haneda Airport, Japan Airport Terminal Co., Ltd. is promoting the renovation ofa facility for international flights on the south side of the international terminal building in
Terminal 2 with the aim of opening in March 2020. The Company is planning to manage theinternational passenger terminal business with the current international passenger terminalbuilding after renting the facility. Upon expanding the international terminal business based on
our status change to a consolidated subsidiary of Japan Airport Terminal Co., Ltd., in order tofurther improve the service level of Haneda Airport as a whole by leveraging hub functions fordomestic and international flight networks, which are Haneda Airport's major advantage, and tocontribute to strengthening the international competitiveness of the airports in the Tokyo
metropolitan area, the Company will further promote the facility development and the
management plan while building an integrated relationship in the terminal business between thedomestic flights and international flights.
Furthermore, in order to contribute to smooth and safe hosting of the Tokyo Olympic andParalympic Games in July 2020, as a member of the Immigration Liaison Meeting of the Tokyo
Organizing Committee of the Olympic and Paralympic Games, the Company will not only
prepare incessantly for serving the customers who are visiting Japan during the period as
participating athletes, officials, and spectators, but we will also build a legacy in terms of the
facilities and services in accordance with the Tokyo 2020 Olympic and Paralympic Accessibility
Guideline, including UD and hospitality.
The Company will share information more closely than ever not only with the government, loan
syndication and other related parties but with related companies and our shareholders and ensure
detailed and sufficient consultation and coordination to robustly handle these tasks.
Fully recognizing Haneda Airport’s roles and significance as an international airport located inTokyo metropolitan area, the Company will continue to provide facilities and services ofoutstanding quality (safety, convenience and comfort), including relentlessly making efforts indaily operation and maintenance management and steadily responding to customers’ opinions,feedback surveys and matters pointed out by Skytrax.

-7-

(5) Changes in Assets and Income
Category

The 9th term
FY2014

The 10th term
FY2015

The 11th term
FY2016The 12th term
FY201757,35770,81977,84789,539million yen

million yen

million yen

million yen

2,924

4,316

5,417

5,440

million yen

million yen

million yen

million yen

824,014

1,186,638

1,491,682

1,497,353

yen

yen

yen

yen

2,833

6,348

15,84322,021

million yen

million yen

million yen

million yen

Operating revenue

Net income

Net income per share

Net assets(6) Main Businesses(i) Management and operation of the international passenger terminal building(ii) Leasing of offices and shop spaces for air transport service operators and businesses operating in
the premises of the airport(iii) Provision of various services including guiding the users of the international passenger terminalbuilding, operation of lounges and rental meeting rooms and operation of parking lots(iv) Sales of merchandise to the users of the international passenger terminal building(v) Operation of restaurants and coffee shops for the users of the international passenger terminal(7) Status of employees
Number of employees

Increase/decrease from the end of theprevious fiscal year

55 (11)

Increased by 5 (Decreased by 5)(Note) The numbers indicate employed workforce. The numbers in parentheses are those of
non-regular employees and not included in the numbers before them.

-8-(8) Main lenders(Millions of yen)
LenderAmountDevelopment Bank of Japan Inc.

22,994

Mizuho Bank, Ltd.

15,752The Bank of Tokyo-Mitsubishi UFJ, Ltd.

12,831

Sumitomo Mitsui Banking Corporation

6,404

The Bank of Yokohama, Ltd.

5,800

Shinkin Central Bank

5,608

-9-

2. Status of the Company’s shares(1) Total Number of Shares Outstanding: 3,600 shares(2) Number of Shareholders: 13(3) Shareholders

Name of shareholder

Number of shares

Japan Airport Terminal Co., Ltd.

1,396

Japan Airlines Co., Ltd.

697

ANA Holdings Inc.

697

Narita International Airport Corporation

162

TEPCO Energy Partners Incorporated

126

Secom Co., Ltd.

108

Tokyo Gas Co., Ltd.

108

Keikyu Corporation

72

Tokyo Monorail Co., Ltd.

72

NTT Data Corporation

54

Development Bank of Japan Inc.

36

Mizuho Bank, Ltd.

36

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

36

Total

3,600

(4) Other Important Matters Regarding the SharesAmong the Company’s 3,600 outstanding shares, the 36 shares held by Development Bank ofJapan Inc., Mizuho Bank, Ltd., and The Bank of Tokyo-Mitsubishi UFJ, Ltd. each are preferredshares with preferred dividends.

-10-

3. Status of Company Executives(1) Directors and corporate auditors
Corporate position

Name

Supervising area; and important position held
concurrently

Representative Director andKatuji Doi

Director, Japan Airport Terminal Co. Ltd.

President & CEO
Managing Director

Junichiro Kitamura

Managing Director

Arata Yasujima

In charge of Finance Department
In charge of Passenger Service Department andDisaster Prevention and Security Department

Managing Director

Kensuke Oyama

In charge of Administration Department andPlanning Department

Managing Director

Hiroto Kuniwake

In charge of Facilities Department, Sales
Department, and International Operation Office

External Director

Toshihiro Kawasaki

Representative Director and President, TEPCOEnergy Partners Incorporated; and Director,
Tokyo Electric Power Company Holdings,
Incorporated

External Director

Futoshi Osada

Representative Director and Senior Executive
Vice President, Narita International Airport
Corporation

Corporate Auditor

Masakazu Owashi

External Corporate Auditor

Fumiya Akai

External Corporate Auditor

TsutomuManaging Executive Officer, Tokio Marine &Terabayashi

Nichido Fire Insurance Co., Ltd.

Notes:
1. Toshihiro Kawasaki and Futoshi Osada are external directors stipulated in Article 2-15 of theCompanies Act.
2. All three corporate auditors are external corporate auditors stipulated in Article 2-16 of theCompanies Act.
3. Masakazu Owashi, Corporate Auditor, is a certified public accountant and has adequate knowledge
about finance and accounting.
4. Fumiya Akai, External Corporate Auditor, is an attorney-at-law specializing in corporate laws and has
adequate knowledge about finance and accounting.

-11-

(2) Amount of Compensation etc. for Directors and Corporate Auditors for the Fiscal Yearunder Review
10 directors

100 million yen(of whom, 4 external directors:

7 million yen)

3 corporate auditors

18 million yen(of whom, 3 external directors:

18 million yen)

Note: The above-mentioned compensations etc. include the retirement benefits paid to directors andcorporate auditors who retired at the closure of the 11th General Shareholders Meeting.

(3) Matters Concerning External Officers(i) Directors
Toshihiro Kawasaki and Futoshi Osada attend the board of directors meeting held every month andoffer appropriate remarks including necessary opinions and questions concerning the Company’s
overall management.
(ii) Corporate auditors
Masakazu Owashi, Fumiya Akai and Tsutomu Terabayashi offer appropriate counseling andsuggestions from the standpoint of ensuring legal compliance and fairness at the monthly board of
directors meeting and the board of auditors meeting held as necessary.

4. Accounting Auditor(1) Name of the Accounting Auditor
Ernst & Young ShinNihon LLC(2) The Amount of Compensation, etc. for the Accounting Auditor for the Fiscal Year under
Review
Audit and attestation services compensation stipulated in Article 2, Paragraph 1 of the Certified
Public Accountants Act: 14 million yen(3) Reasons for the Board of Auditors Consent to the Compensation, etc. of the Accounting
Auditor
The Company’s board of auditors, after considering the accounting auditor’s audit plan details,
the status of the accounting auditing work executed and the grounds for the calculation of quoted
compensation amount, consents under Paragraph 1, Article 399 of the Companies Act, to theamount of compensation, etc. for the accounting auditor.

(4) Policy on Dismissal or Refusal of Reappointment of the Accounting Auditor
The Company’s board of auditors may, in accordance with provisions stipulated in items of
Paragraph 1, Article 340 of the Companies Act, dismiss the accounting auditor, and if appropriate
auditing is deemed difficult due to the occurrence of situations that hinder the competence and-12-independence of the accounting auditor, shall submit a proposal for dismissing or refusing thereappointment of the accounting auditor to the General Meeting of Shareholders based on a
resolution of the board of auditors.

5. Company Structure and Policy(1) Structure to Ensure the Directors’ and Employees’ Execution of Duties in Compliance with
the Laws and Regulations and the Articles of Incorporation and as well as theAppropriateness of Other Operations(i) Structure to Ensure the Directors’ and Employees’ Execution of Duties in Compliance with theLaws and Regulations and the Articles of Incorporation
1) The director in charge of Administration Department is placed in charge of compliance, whoestablishes the compliance structure, strives to understand the issues. The Administration
Department ensures the maintenance and improvement of the compliance structure.
2）The Internal Audit Department monitors the operational status of the compliance structure andreports the result regularly to the representative director and president & CEO and the board ofcorporate auditors.
(ii)Structure related to storage and management of information concerning the execution of duties bydirectors
Information related to the execution of duties by directors is recorded, stored and managed inaccordance with the Regulations of the Board of Directors and Document Management
Regulations, and the stored and managed information is accessible to the directors and auditorsat all times.
(iii) Regulations and other structures concerning the management of risk of losses
1) A risk management structure will be established, with supervising departments determined
respectively for individual risks related to compliance, disaster, business, information security, etc.
2) The Audit Department conducts internal audit of departments regularly, points out any mattersthat need to be improved with respect to the management of risk of losses, and reports the results to
the representative director and president & CEO and corporate auditors(iv) Structure for ensuring efficient execution of duties by directors
1) With the Regulations of the Board of Directors established, the board of directors meeting is held,
in principle, once a month and when needed to ensure communication between the directors andmutually monitor the execution of duties in accordance with laws and ordinances.
2) The important matters that must be resolved at the board of directors meeting are stipulated in theRegulations of the Board of Directors. Such matters will be resolved at the board of directors
meeting after being deliberated at the Managing Directors’ Meeting, which comprises the president& CEO and the standing directors.
3) A supervising director is assigned to each of the organizational units. Organizational Regulations
and Regulations for Official Authority have been established that specify the duties and authorities oforganizational units and employees.
-13-(v) Matters relating to employees who assist corporate auditors in their duties in the case of such
request made by the corporate auditor
1) The representative director and president & CEO assigns employees, who are independent ofbusiness execution departments, to assist the audit conducted by the board of auditors and thecorporate auditors.
2) Pursuant to the Regulations of the Board of Auditors, the employees appointed to assist in theduties of the corporate auditors in accordance with the provisions stipulated in the preceding
paragraph conduct administrative work related to the operation of the board of auditors such as
convocation-related work and the preparation of minutes of meetings.
(vi) Matters concerning the independence of the employees assigned to assist in the duties of thecorporate auditors from directors
1) The transfer and evaluation of the employees assigned to assist in the corporate auditors’ duties as
stipulated in the above article require a consent of the board of auditors.
(vii) Structure of reporting to the corporate auditors, including the structure of reporting by directors
and employees to them
1) In addition to statutory matters, the Company is establishing a structure where directors andemployees report any matters that might have a significant impact on the Company to the board ofauditors in a timely manner.
2) Pursuant to the Regulations of the Board of Auditors, the board of auditors may seek reports asnecessary from accounting auditors, directors, and employees in the internal audit departments etc.,
and others.
(viii) Structure to ensure the effectiveness of audits conducted by the corporate auditors
1) The Company has a structure in place where the corporate auditors attend the board of directors
meeting and, when necessary, offer opinions. They also attend important meetings including theManaging Directors’ Meeting to directly grasp important matters deliberated and/or reported.
2) The board of corporate auditors exchanges opinions with, and make requests deemed necessary to,
the representative director regarding matters to be addressed by the Company, the status ofreadiness for audits by corporate auditors, and important audit-related issues.

(2) Overview of the Operational Status of the Structure for Ensuring the Appropriateness of
Operations
The Company’s board of directors is comprised of seven directors (of whom two are external
directors) and meets once a month in accordance with the Regulations of the Board of Directors.
At the board of directors meetings, which are attended by the directors and corporate auditors,
each director reports the status of business execution. The board of directors meetings also
discuss and resolve important matters.
At the meetings, the external directors participate in the resolutions from an independent
perspective and supervise and monitor the management, with the corporate auditors also
monitoring the management in a similar manner.
Corporate auditors attend not only the board of directors meetings but other important internal-14-meetings such as the Managing Directors’ Meetings. Furthermore, they directly interview
directors regarding the status of business execution and monitor on a daily operational basis any
issues concerning the status of business execution and compliance. With these structures in place,
the Company seeks to strengthen and improve its management monitoring function.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Note: The amounts stated in this Business Report are rounded down to the nearest unit indicated.

-15-

Balance Sheet(As of March 31, 2018)(Thousands of yen)

Assets
Account title
Current assets

Liabilities
AmountAccount title

54,374,119

AmountCurrent liabilities

17,262,779

Cash and deposits

44,231,832

Accounts payable-trade

3,563,357

Accounts receivable - trade5,143,493

Current portion of long-term loans payable

5,796,700

Merchandise

3,350,135

Accounts receivable - other

1,264,720

Accounts payable - other989,433

Prepaid expenses

109,559

Accrued expenses

3,862,287

Deferred tax assets (current)

256,740

Income taxes payable

2,142,648

Other current assets

17,639Accrued interest expenses

26,475

Other current liabilities

881,876( 5,796,700)(Preferred loan)

Noncurrent assets

117,271,019

Tangible assets

113,252,645

Shareholder subordinated bonds

14,580,000

Buildings

92,749,669

Long-term loans payable

111,155,690

Structures

1,169,401(Preferred loan)( 93,155,690)

M achinery and equipment

5,819,450(Shareholder subordinated loans)( 18,000,000)

VehiclesNoncurrent liabilities

3,150

132,360,677

Long-term lease deposit received

484,176
53,725Tools, furniture and fixtures

5,391,613

P rovision for directors' retirement benefits

Construction in progress

8,119,359

Interest rate swap liabilities

Total liabilities
Intangible assets

1,036,763

Software1,036,763

6,087,085
149,623,457

Net assets
Shareholders' equity

26,244,902

Capital stock

9,000,000

Capital surplus

9,000,000

2,981,610

Capital reserve

9,000,000

Deferred tax assets (noncurrent)

1,981,610

Retained earnings

8,244,902

Separately managed penalty in trust

1,000,000

Investments and other assets

Other retained earnings
Retained earnings brought forward

8,244,902

Valuation and translation adjustments△ 4,223,220

Deferred gains or losses on hedges

Total assets

8,244,902

171,645,139-16-△ 4,223,220

Total net assets

22,021,681

Total liabilities and net assets

171,645,139

Income Statement
From April 1, 2017
To March 31, 2018
(Thousands of yen)Account title

AmountOperating revenue
Rents

4,808,114

Facility rental income

23,413,865

Sales of goods

54,217,715

Restaurant sales

2,749,667

Other revenue

4,350,393

89,539,756

Cost of sales
Cost of goods sold

37,730,822

Operating gross profit

51,808,933
39,324,100

Selling, general and administrative expenses

Operating income

12,484,833

Non-operating income
Interest income

406

Miscellaneous income

327,062

327,468

Non-operating expenses
Interest expenses

3,813,555

Miscellaneous loss

1,027,784

Ordinary income

4,841,339
7,970,962

Extraordinary loss
17,763

Loss on retirement of noncurrent assets

17,763

Income before income taxes

7,953,199

Income taxes-current

2,569,058

Income taxes-deferred△ 56,311

Net income

5,440,453-17-

Statement of Changes in Net Assets
From April 1, 2017
to March 31, 2018

(Thousands of yen)
Shareholders' equity
Retained earnings

Capital surplus

Other retained earnings
Capital stock

Total shareholders' equity
Legal capital surplus

Total capital surplus

9,000,000

9,000,000

9,000,000

2,804,448

2,804,448

20,804,448

Net income

－

－

－

5,440,453

5,440,453

5,440,453

Net changes of items otherthan shareholders’ equity

－

－

－

－

－

－

Total changes during the period

－

－

－

5,440,453

5,440,453

5,440,453

9,000,000

9,000,000

9,000,000

8,244,902

8,244,902

26,244,902

Balance as of April 1, 2017

Total retained earnings

Retained earnings
brought forward

Changes during the period

Balance as of March 31, 2018

Valuation and translation adjustments

Deferred gains or losses Total valuation andon hedges
translation adjustments

Total net assets△4,960,790△4,960,790

15,843,658－－

5,440,453

Net changes of items otherthan shareholders’ equity

737,570

737,570

737,570

Total changes during the period

737,570

737,570

6,178,023

Balance as of March 31, 2018

△4,223,220△4,223,220

22,021,681

Balance as of April 1, 2017

Changes during the period

Net income-18-Notes to Non-Consolidated Financial Statements
I.

Notes on Matters Related to Important Accounting Policies
1.

Criteria and methods for evaluating assets(1) Derivatives: Market value method(2)

Inventory assets: Based on cost method using retail method (balance sheet values are calculatedusing method of reducing book value when the contribution of inventories to profitability
declines)2.

Method of depreciation of noncurrent assets(1) Property, plant and equipment: Straight line method(2) Intangible assets: Straight line method
As for the software used in-house, the Company adopts the straight-line method based on an
expected usage period of five years for internal use.

3.

Criteria for recording reserves
Provision for directors’ retirement benefits: The Company records required allowance as of the endof the term in accordance with internal rules on payment of directors’ retirement benefits to prepare
for the payment of retirement benefits to directors.

4.

Treatment of consumption tax, etc.
The accounting treatment of consumption tax and local consumption tax is based on tax exclusion
method.

5.

Inclusion of interest payable, etc. in noncurrent assets acquisition cost
The interest payable and loan-related ancillary cost incurred during the construction of thepassenger terminal building have been added to the acquisition cost (for the fiscal year underreview – 742.909 million yen; cumulative at the end of the fiscal year under review -- 4,125.623
million yen) and recorded as part of noncurrent assets.

6.

Hedge accounting method(1) Hedge accounting method: Deferred hedge treatment(2) Hedge procedure and hedge target
Hedge procedure: Derivative trading (interest swap trading)Items hedged: Borrowings based on variable interest rate(3) Hedge policy: It is carried out with the aim of avoiding risks rising from future fluctuation ofinterest rate and the Company’s policy is not to carry out any speculative transactions.
(4) Method to evaluate the hedge effectivenessThe assessment on the effectiveness is omitted, as the important conditions for hedge proceduresand hedge target are the same and it is assumed in advance to fully offset the risk of interest rate
fluctuations from the start of the hedge and continuously thereafter.

-19-

II. Notes on Balance Sheet
1.

The amounts are rounded down to the nearest thousand.

2.

Pledged assets(Thousands of yen)

Assets pledged as collateral
Ordinary deposits

43,987,666

Accounts receivable – trade51,668

Buildings

92,749,669

Structures

1,169,401

Machinery and equipment

5,819,450

Separately managed penalty in trust

1,000,000

Liabilities corresponding to the above
Current portion of long-term loans payable

5,796,700

Long-term loans payable

93,155,690

3.

Total depreciation of property, plant and equipment

4.

Monetary claims and obligations to subsidiaries and affiliates
Monetary claims

Monetary obligations

61,156,337

Accounts receivable – trade400,367

Accounts receivable – other

21,822

Accounts payable – trade

3,563,357

Accrued expenses

3,173,463

Shareholder subordinated bonds

6,660,000

Long-term loans payable

6,660,000

Long-term lease deposit received

III. Notes on Income Statement262,321(Thousands of yen)1.

Reported amounts are rounded down to the nearest thousand yen.

2.

Transactions with subsidiaries and affiliates

Operating transactions
Non-operating transactions

58,845,493
446,676

IV. Notes on Statement of Change in Net Assets
1. The amounts are rounded down to the nearest thousand.
2. Type and total number of the Company’s shares outstanding as of the last day of the fiscal year underreview
Common stock

3,492 shares

Preferred stock

108 shares

-20-

V.

Notes on Tax Effect Accounting
Breakdown of main causes for deferred tax assets(Deferred tax assets)(Thousands of yen)Accrued enterprise tax, etc.

133,542

Provision for directors' retirement benefits

16,450

Deferred losses on hedges

1,863,865

Other240,942

Deferred tax assets subtotal

2,254,801

Valuation reserve△16,450

Deferred tax assets total

2,238,350

VI. Notes on Financial Instruments
1. Matters regarding the status of financial instruments
The Company manages funds only in short-term deposits and procures funds through loans fromfinancial institutions such as banks as well as from the shareholders and corporate bonds issued to theshareholders.
The funds procured through loans and corporate bonds are mainly used as funds for capital investment
and stabilizing the interest expenses by carrying out interest rate swap trading against the interest rate
fluctuation risk of part of loans.
Derivative trading is limited to interest rate swap trading to avoid interest rate fluctuation risk of loans.
2. Matters regarding market value of the financial instruments
The values on the balance sheet, market value and the difference between them as of March 31, 2018(the Company’s account settlement date for the relevant fiscal year) are as follows.

(Thousands of yen)
Category

Value on theMarket value (*)

Difference

balance sheet (*)(1) Cash and deposits

44,231,832

44,231,832－

20,739,145)

6,159,145
7,603,877(2) Shareholder subordinated bonds((3) Long-term loans payable( 116,952,390)( 124,556,267)(4) Derivative trading((

14,580,000)

6,087,085)(

6,087,085)(*) Items that are recorded as liability are shown in parenthesis (－).

Note: Matters regarding the calculation method of market value of financial instruments and derivative
trading(1) Cash and deposits
They are settled in a short period of time and their market values are roughly equivalent to the bookvalues. Therefore, the concerned book values are used
(2) Shareholder subordinated bonds
The market value of shareholder subordinated bonds is calculated by discounting the sum of the-21-

principal and interest using the rate assumed in case of new issue.
(3) Long-term loans payable
The market value of long-term loans payable is calculated by discounting the sum of the principal andinterest using the rate assumed in case of taking out new loans.
(4) Derivative trading(i) The trading for which hedge accounting is not applied: Not applicable.
(ii) The trading for which hedge accounting is applied: The amount equivalent to the principal
stipulated by the contract amount or contract as of the settlement day for each hedge accounting
method is as follows.
Method ofhedge
accounting

Type ofderivative
trading

Main items
hedgedContract
amount, etc.

Market value

Fundamental
processing
methodInterest rate
swap trading:
Fixed interest
payment,
variable interest
receipt

Long-term loans
payable86,388,200△6,087,085(Thousands of yen)Calculation
method of thesaid market
value
The price, etc.
indicated by thecounterparty
financial
institution

VII. Notes on Real Estate for Rent, etc.
1. Matters regarding the condition of the real estate for rent, etc.
The Company owns a passenger terminal building that includes office spaces and commercial
facilities for rent as well as a multilevel, pay-by-the-hour parking lot in Haneda Kuko, Ota-ku, Tokyo.

2. Matters regarding the market value of the real estate for rent, etc.
(Thousands of yen)

Property that includes theValue on the balance sheet

Market value

93,919,071

158,770,000

portion that is used as realestate for rent, etc.

Note 1. The value includes offices, etc. used by the Company.
Note 2. The market value of important properties as of the end of the fiscal year underreview is the amount based on the actuary reports by real estate appraisers.

-22-

VIII.

Notes on Related Party Transaction

1.

Main corporate shareholders etc.
(Thousands of yen)Type

Other relatedcompany

Name of thecompany etc.

Japan Airport
Terminal Co.,Ltd

Ratio ofvotingrights andotherownership

38.78%
directly
held

Japan Airlines
Co., Ltd.

19.36%
directlyheld

Mainshareholder

ANA HoldingsInc.

19.36%
directly
held

Director

Toshihiro
Kawasaki
Representative
Director andPresident,
TEPCO Energy
Partner,
Incorporated

Director

Futoshi Nagata
Representative
Director andSeniorExecutive
President,
NaritaInternational
Airport
Corporation

Main
shareholder

Relationshipwith the party

Procurementof goods andconsignmentof operationof stores etc.:
anddouble-hattin
g of directors

Transactions

Transaction
value

Account title

Balance attheterm-end

Financing(Note 1)-6,600,000

Borrowing offunds (Note 2)
Businessconsignment(Note 3)
Procurement ofgoods (Note 4)-

Shareholder
subordinatedbonds
Long-termloans payable
Accruedexpenses
Accounts
payable—trade

3,563,357

Shareholder
subordinatedbonds
Long-term
loans

3,330,000

Shareholder
subordinatedbonds
Long-term
loans

3,330,000

1,260,000

19,451,541

37,642,607

Financing(Note 1)-

Borrowing offunds (Note 2)-

Financing(Note 1)
Borrowing offunds (Note 2)

-

-

-

-

Borrowing offunds

Borrowing offunds(Note 2)
(Note 5)Long-termloans-

Borrowing offunds

Borrowing offunds(Note 2)
(Note 6)Long-term
loans

6,660,000
3,137,463

3,330,000

3,330,000

1,620,000

Terms and conditions of transactions and policy on determining them
Note 1: Financing terms and conditions are in accordance with the Shareholder Subordinated Bond Agreement
signed between the Company and its six shareholders including the above three companies on March 30,
2012 following the approval by the Board of Directors Meeting on February 23, 2012 (prepared based on
the loan terms of the Shareholders Agreement agreed among the shareholders as of the establishment of
the Company).
As for the repayment of the principal, it has been agreed that the order of the settlement of claims is afterthat of repayment of preferred loans from the lenders based on the Limited Loan Contract Alteration
Contract signed with the lenders.
Note 2: Loan terms and conditions are in accordance with the Shareholder Subordinated Loan Agreement signed
between the Company and its nine shareholders including the above three companies on March 27, 2008
following the approval by the Board of Directors Meeting on March 18, 2008 (prepared based on the loan
terms of the Shareholders Agreement agreed among the shareholders as of the establishment of the-23-Company). As for the repayment of the principal, it has been agreed that the order of the settlement ofclaims is after that of repayment of preferred loans from the lenders based on the Limited Loan Contract
Alteration Contract signed with the lenders.
Note 3: The business consignment terms and conditions are determined as in the cases of any other similartransactions conducted generally.
Note 4: The terms and conditions for procurement of goods are determined as in the cases of any other similartransactions conducted generally.

Note 5: This transaction was conducted for a third party by Toshihiro Kawasaki, a director at our company,in the capacity of a representative of TEPCO Energy Partner, Incorporated.
Note 6: This transaction was conducted for a third party by Futoshi Osada, a director at our company, in thecapacity of a representative of Narita International Airport Corporation.
Note 7: Among the amounts indicated in the table above, transaction amounts do not include consumption tax.
Note 8: The ratios of voting rights and other ownership are rounded down to the nearest two decimal places.

IX. Notes on data per share
1.

Net asset per share:

5,872,767.18 yen

2.

Current net profit per share:

1,497,353.71 yen

X. Matters concerning important subsequent events(Issuance of Shares for Subscription by a Third-Party Allotment)
The Company decided to issue shares for subscription by a third-party allotment in an extraordinary
general meeting of shareholders held on October 26, 2017. Moreover, in the board of directors meeting heldon the same day, the allotment of shares for subscription was resolved, and the payment was completed on
April 27, 2018. As a result, the capital stock and the total number of shares outstanding respectively
amounted to 13,265 million yen and 5,306 shares.
Moreover, Japan Airport Terminal Co., Ltd. came to own 51.00% of the voting rights of the Company due
to capital increase through third-party allocation, and the Company became a consolidated subsidiary of a
related company and an equity method affiliate of Japan Airport Terminal Co., Ltd.
1.

Type and number of shares to be issued：Common stock 1,706 shares

2.

Issuance price：5 million yen per share

3.

Total issue amount：8,530 million yen

4.

Amount of capital incorporation：4,265 million yen

5.

Payment date

：April 27, 20186.

Allottee and number of shares to be allotted：Japan Airport Terminal Co., Ltd. 1,310 shares

7.

Japan Airlines Co., Ltd.

198 shares

ANA Holdings Inc.

198 shares

Purpose of funds
The funds will be applied to renovation and reconstruction works for the international passenger
terminals, etc. and repair works to improve the function of existing facilities.

-24-Supplementary Statements forthe 12th Business Term
From April 1, 2017
To March 31, 2018

Ⅰ．Supplementary Statement of the Business Report

Ⅱ．Supplementary Statement of the Financial Statements

Tokyo International Air Terminal Corporation-25-

Supplementary Statements for the 12th Business Term(from April 1, 2017 to March 31, 2018)

I Supplementary Statement of the Business Report
1. Important positions, such as business executive director, held at another company

Description of theCategory

Name

Concurrent position held at

positionconcurrently held

TEPCO Energy Partner
External

Toshihiro

Director

Kawasaki

Incorporated;Tokyo Electric Power
Company Holdings,
Incorporated

Representative
Director andPresident;
Director
Representative

External
Director

Futoshi Osada

Narita International Airport

Director andCorporation

Senior Executive
Vice President

External
Corporate
Auditor

TsutomuTokyo Marine & Nichido

Managing

Terabayashi

Fire Insurance Co., Ltd.

Executive Officer-26-

RelationshipII Supplementary Statement of the Financial Statements
1. Details of tangible and intangible non-current assets

Category(Thousands of yen)Book value at theType of assets

beginning of the

Increase in theterm underreview

Decline in the

Depreciation interm under

the term underperiodreviewBook value at theTotal

end of the period

depreciation

Acquisition cost at
the end of the period

review

Buildings

95,744,231

3,739,581

26,712

6,707,430

92,749,669

41,734,243

134,483,913

Structures

1,286,359

52,644－

169,603

1,169,401

847,8032,017,205

5,822,076

498,879－

501,505

5,819,450

2,767,732

8,587,182

6,895

－

－

3,744

3,150

165,313

168,4646,251,926

1,027,222

31,122

1,856,412

5,391,613

15,641,243

21,032,857(109,111,490)(5,318,327)(

57,835)(9,238,696)(105,133,285)(61,156,337)(166,289,623)

736,374

8,894,989

1,512,004－

8,119,359－

8,119,359

Total

109,847,864

14,213,316

1,569,840

9,238,696

113,252,645

61,156,337

174,408,983

Software

1,121,299

169,578291

253,823

1,036,763

591,556

1,628,324

Machinery andTangible assets

equipment

VehiclesTools, furnitureand fixtures(Subtotal)
Construction

Intangible
assetsin progress

Note 1: The main factors contributing to the increase in the term include 8,119 million yen for thework to extend and reconstruct the international passenger terminal building, etc., 2,326
million yen for the new construction of the second TIAT building, 465 million yen for the
upgrade construction work for the integrated backbone network equipment, 216 million
yen for the upgrade construction work for the ITV facility equipment, and 207 million yen
for the installation construction work for the CT type inspection equipment for carry-on
baggage, etc.

-27-

2. Details of the allowance(Thousands of yen)
Decline during the term under
Increase

review

Balance at
Category

the beginning

Balance at theduring theterm underof the period
reviewend of theUsed for the
relevant

periodOther

purpose
Provision for directors'
retirement benefits

44,475

16,338

7,088－

53,725

Note: The reason for the provisioning and the calculation method for the amounts are describedin the item 3 under the section I “Notes on Matters Related to Important Accounting
Policies” of “Notes to Non-Consolidated Financial Statements.”

3. Details of selling, general and administrative expenses(Thousands of yen)Account title

AmountRemarks

Directors' compensations

111,000

Employees' salaries

467,304

Provision for directors' retirement benefits

16,338Legal welfare expenses

16,479Welfare expenses

4,135Transportation expenses

64,152

Supplies expenses

20,448

Furniture and fixtures

23

Utilities expenses

71,299Communication expenses

580,034

Insurance expenses

93,089Repair expenses

350,416

Rent expenses

313,209

Conference expenses

4,430,498

Entertainment expenses

11,999Taxes and public charges

19,512

Donation expenses

1,287,013

Advertising expenses

10

Cleaning expenses

602,469

Business consignment expenses

20,842

Miscellaneous expenses

20,906,345

Depreciation

444,958

Total

39,324,100-28-