AIRPORT FACILITIES CO., LTD. (AFC) Company name: Stock exchange listed on: Tokyo Stock Exchange (First Section) URL: http://www.afc.jp 8864 Company code: Representative: Masaaki Kai, President and CEO Inquiries: Takahiro Hama, Corporate Officer, General Manager of Accounting Dept. August 1, 2019 The date of filing the quarterly securities report: l The date of the dividend payment start: Preparation of quarterly earnings presentation material: No Holding of quarterly earnings announcement: No TEL: +81-3-3747-0251 (Figures are rounded off to the nearest million yen.) 1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 2020 (April 1, 2019 - June 30, 2019)
3. Forecast of Consolidated Earnings for the Year Ending March 2020 (April 1, 2019 - March 31, 2020)

* Notes
(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting from changes in scope of consolidation): No (2) Application of specific accounting treatments in preparing the quarterly consolidated financial statements: Yes Note: For details, please refer to "2. Quarterly Consolidated Financial Statements and Major Notes (3) Notes on Quarterly Consolidated Financial Statements (Application of Specific Accounting Treatments in Preparing the Quarterly Consolidated Financial Statements)" on page 9. (3) Changes in accounting policies, changes in accounting estimates, and restatement of revisions 1) Changes in accounting policies with revision of accounting standards, etc. : No 2) Changes in accounting policies other than 1) above: No 3) Changes in accounting estimates: No 4) Restatement of revisions: No
* Financial Results report is outside the scope of a quarterly review by certified public accountants or an audit corporation. * Explanation of the proper use of earnings forecasts and other special notes (Remarks on forward-looking statements) The statements about future described on this report such as earnings forecasts have been made based on information currently available and certain assumptions considered reasonable, and it is not intended to assure that we will achieve such results. Actual earnings may differ significantly from the above forecasts for various reasons. For the assumptions for carnings forecasts and cautions regarding the use of the earnings forecasts, please refer to "1. Qualitative Information on Consolidated Financial Results for the Quarter Ended June 30, 2019 (3) Qualitative Information on Consolidated Earnings Forecast" on page 4.
1. Qualitative Information on Consolidated Financial Results for the Quarter Ended June 30, 2019
(1) Explanation about Business Results
During the three months ended June 30, 2019, the Japanese economy continued to show a gradual recovery supported by a pickup of personal consumption and an increase in capital investment under the continuing monetary easing policy by the Bank of Japan, but export and production were tending weaker due to the impact of the U.S.-China trade friction. Stock prices and exchange rates remain unstable under the continuing global monetary easing policy. There are concerns over the impact on the Japanese economy of uncertain outlook for the U.S.-China trade friction, the economic slowdown in China, growing tension in the Middle East stemming from the U.S.-Iran conflict and the deteriorating Japan-Korea relations. In the aviation industry, strong passenger demand continued due to the effect of the 10-day Golden Week holiday associated with the Imperial era change, in addition to the ongoing upward trend of the number of foreign passengers visiting Japan. Tokyo International Airport is now working on the functional enhancement including an expansion of annual arrival and departure slots for international flights by 39 thousand before the 2020 Tokyo Olympic and Paralympic Games. Meanwhile, airline companies are striving to enhance cost competitiveness because of concerns over unstable movement of crude oil prices and fluctuations in exchange rates while implementing advanced equipment, expanding network, and strengthening LCC business. Under such economic conditions, the Group (the Company and its consolidated subsidiaries) recorded net sales of ¥6,109 million (up 4.2% from the same period of the previous year) and operating income of ¥1,219 million (up 11.2%) due to full-year operation of the hotel in Kyoto acquired in 2018. Ordinary income was ¥1,236 million (up 25.8%) and profit attributable to owners of parent was ¥768 million (up 35.9%) due to a decrease in non-operating expenses.
Performance by business segment is as follows:
(i) Real Estate Business
Real Estate Business recorded net sales of ¥4,633 million (up 5.9% from the same period of the previous fiscal year) due to an improved occupancy ratio of our tenants in Tokyo International Airport, full-year operation of the hotel in Kyoto that started leasing in late June in 2018 and inclusion of income from leasing training planes to Civil Aviation College. Operating income was ¥906 million (up 24.9%).
(ii) Area Heating & Cooling Business
Net sales of Area Heating & Cooling Business operated by our consolidated subsidiary Tokyo Airport Heating & Cooling Co., Ltd. remained almost unchanged year-on-year at ¥751 million (down 0.5% from the same period of the previous fiscal year) despite relatively low temperatures in April. However, because fuel costs for electricity and gas remained at high levels, operating income was ¥229 million (down 20.5%).
(iii) Water Supply & Drainage Service and Other Business
Net sales of Water Supply & Drainage Service and Other Business remained almost unchanged year-on-year at ¥724 million (down 0.5% from the same period of the previous fiscal year) due to a steady increase in sales of exclusive lines in shared telecommunications network service, which increased in the second half of the previous fiscal year, despite a decrease in sales of water supply and drainage usage due to a decrease in water supply for constructions at Tokyo International Airport. Operating income was ¥83 million (up 3.1%).
(2) Qualitative Information on Consolidated Financial Position
(Assets)
Total assets as of June 30, 2019 amounted to ¥103,290 million, an increase by ¥1,905 million compared to March 31, 2019, due to an increase in construction in progress resulting from extension or reconstruction of ARC Building for in-flight meal factory to prepare for an expansion of airport slots for international flights at Tokyo International Airport and the extension of a hangar at Kobe Airport, and also due to recording of prepaid expenses for annual usage fee of national property.
(Liabilities)
Liabilities as of June 30, 2019 amounted to ¥47,361 million, an increase by ¥1,717 million from March 31, 2019, due to recording of accrued expenses for annual usage fee of national property. (Net assets) Net assets as of June 30, 2019 increased by ¥188 million compared to March 31, 2019 to ¥55,928 million mainly due to an increase in retained earnings. As a result, equity ratio as of June 30, 2019 decreased by 0.8 points to 51.8% compared to March 31, 2019.
(3) Qualitative Information on Consolidated Earnings Forecast
There is no change as to Consolidated Earnings Forecast for the Year Ending March 2020 which was announced in the Financial Results for the Year Ended March 31, 2019 [J-GAAP] dated May 10, 2019.
(3) Notes on Quarterly Consolidated Financial Statements (Notes on Premise of Going Concern) Not applicable. (Notes on Significant Changes in Shareholders' Equity) Not applicable. (Changes in Accounting Policies) Not applicable. (Application of Specific Accounting Treatments in Preparing the Quarterly Consolidated Financial Statements) Tax expenses are calculated as income before income taxes for the period multiplied by the estimated effective tax rate. The effective tax rate is reasonably estimated taking into consideration deferred tax accounting as the rate applicable to income before income taxes for the consolidated fiscal year including the period ended June 30, 2019.