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Copyright © AGP Corp. All Rights Reserved. 1
Financial Results Briefing for Fiscal Year Ended March 2018
&Review Summary and Progress Report
of Medium-Term Management Plan
2018.5.22
証券コード:9377
Copyright © AGP Corp. All Rights Reserved. 2
Contents
Company Profile
FY2017 Results
(FY15~19)
FY2018 Forecasts
(Reference)
p3
p22
p32
p39
p47
Review Summary and Progress Report ofMedium-Term Management Plan
Copyright © AGP Corp. All Rights Reserved. 3
Company Profile
Copyright © AGP Corp. All Rights Reserved. 4
Profile Company Name AGP CORPORATION
AGP(Airport Ground Power*)*Changed company name from Japan Airport Ground
Power Co., Ltd. (September 1, 2000) Date founded December 1965 Head office Airport Facilities Sogo Building No.2, 1-7-1
Haneda Airport, Ota-ku, Tokyo Capital 2,038,750,000yen Major shareholders Japan Airlines Co., Ltd. (33.3%)
Mitsubishi Corporation (26.8%)ANA Holdings Co., Ltd. (20.0%)
Number of shareholders 1,279 (Consolidated as of March 31, 2018) ← FY16 2,093 Number of employees 699 (Consolidated as of March 31, 2018) ← FY16 654 Airport offices 3 branch offices, 5 branches, 2 sub-branches
Narita Airport, Haneda Airport, Kansai, New Chitose Airport,Chubu Airport, Osaka Airport,Fukuoka Airport, Naha Airport, Kobe Airport, Hiroshima Airport
Copyright © AGP Corp. All Rights Reserved. 5
(注) GPU:Ground Power Unit
Corporate philosophy and long-term vision outline
Corporate philosophyAGP group is enhancing the technical capabilities, and contributing to the
environmental and social.- Contributing to environmentally friendly, safe and prosperous society- Honestly providing technology and services of choice, and enhancing the
enterprise value- Growing along with the employees with glowing ambitions
Long-term vision 2025 (outline)AGP group will become a trusted company that is responsible for airport infrastructure function by enhancing technology and contributing to environmental and social, and deliver the technology developed for protecting the airport safety to all over Japan and overseas. To achieve the vision, over the next 10 years- Became a company stably achieve 20 billion yen sales, and 10% or more operating income ratio- Aim at 30% or more sales ratio outside the airport- Contribute to prevent the increase of global warming with 135,000 tons of CO2-reduction in major airport, by promoting use of GPU* through the realization of the Eco-Airport.
Copyright © AGP Corp. All Rights Reserved. 6
FY15 FY16 FY17 FY18 FY19 FY20
Tokyo Olympics
The environment surrounding our company
Financial environment
World economy at a standstill/declining interest rates
Continuous development of the Asian economy/ gentle incline in interest rates
Crude oil price slump Round of oversupply/increased demand in emerging nations/cheap yen ⇒ Increase in electric power rates
Airport data
Haneda 447,000 times
Haneda 300,000 times
Tokyo area airport slot expansion
Chitose airport terminal renovationsInternational air routes expand
Fukuoka airport terminal renovationsItami airport terminal renovations
Haneda 486,000 times(+39,000 times)
Haneda 340,000 times(+40,000 times)
★Okinawa 2nd runway opened for use
Development of Eco Airport policies/Reduction in C02 emission volumes
Business environment
Development of domestic airport concessions
Increase in international routes, domestic LCC/overseas LCC business scale expanding, local airport networks expanding
Social environment
Expansion of aging population/reduction in workforce★Paris Agreement goes into effect★ ICAO’s Carbon Offsetting and Reduction Scheme
★Rugby world cup★Consumption tax 10%
Visit to Japan19.73 million
people
Visit to Japan24.04 million
people
Visit to Japan28.69 million
people
Increase in foreigners visiting Japan
Visit to Japan40 million
people
Copyright © AGP Corp. All Rights Reserved. 7
Further improvement of proportion of sales outside airport
Income and expenditure improvement through a review which requires a new business strategy
Capital adequacy ratio of 50% or greater
Top line expansion through proactive expansion into non-airport and new business
Further productivity improvement by work style reforms
→Early achievement of 10%operating profit ratio
Strengthening of sales activities based in branch offices
Business development to overseas (Thailand etc.)
Contribution to Eco Airport→ Via increased GPU usage rate
Reduction of CO2 emissions
Aggressive expansion of environmentally conscious business
Accomplishment of Medium-Term Management Plan by accelerating the growth strategy
Achievement and maintenance of 10% operating profit ratio through acceleration of growth plan and further productivity improvements
Securing and reinforced training of human resources who can support unstable business strategies and growth strategies
The positioning and Strategy of 2018 fiscal year
Expansion of profitability Strengthen aviationevent risk tolerance
Contribution to environmental and social
Operatingprofit margin
Sales ratio of outside airportCapital adequacy ratio CO2 emissions
Copyright © AGP Corp. All Rights Reserved. 8
ESG Major issues Key effort details
Environment
contributing to the
environmental and social
●Reduction in C02 emission volumes in the aviation field Our goal: 107thousand ton reduction compared to FY14 by the end of FY19
●Business expansion with consideration for the environment・Progressing with the adoption of battery vehicle EVs and fuel cell vehicle
FCVs・Progressing with the adoption of energy-saving machines, renewable
energy, etc.
Society
Cultivation of diverse human resources to
respond to the aging society(Diver city)
●Participation by airport technicians in education and training projects●Promotion of hiring older workers [Expand the number of workers 60 and
older](FY14 year end:22 workers⇒FY16 year end:18 workers⇒FY19 year
end:25 workers)●Promoting women's activities [Expansion of female employees](FY14 year end:13 workers⇒FY16 year end:20 workers ⇒FY19 year
end :30workers)●Training and utilization of foreign technicians
Governance
Corporate governance
●Stronger governance of group companies●Stronger management transparency and IR activities to increase fairness●Decision to execute investments with regulations
Riskmanagement
●Responses to new risks inherent in overseas business expansion●Responses to new risks inherent in new business expansion (food-related,
etc..)
Promotion of ESG management which takes care of the environment and humans
Copyright © AGP Corp. All Rights Reserved. 9
Strive to reduce C02 emission volumes in the aviation field by 10.7 by 2019 compared with 2014 (of which 46 thousand tons will be reduced by promoting the use of GUPs in major airports).
実績
0
100,000
200,000
300,000
400,000
500,000
FY14 FY16 FY17 FY18 FY19 FY25
ton
Efforts and goals to the environment
Our reduction target for the civil aviation sector CO2 emissions
Civil aviationemissions 952thousand-ton
Eight majorairports emissions
763thousand-ton(*)
Our reductiontarget
FY19:400thousand-tonFY25:428thousand-ton
(*)Approximate value multiplied by the arrival and departure times ratio in aviation emissions
<Commitment to the environment in all business areas>
Power supplybusiness
Maintenance, facilities and security business
Food system solution
New business
As a further environmental impact reduction measures at airports and airports around●Introduce electric vehicles (EV) and research on fuel cell vehicles (FCV)●Promote energy-saving equipment and introduce new technologies such as renewable energy
● Proposal and the introduction of energy-saving operation and energy-saving components, such as reduction of parts replacement number of times
● Participation in the maintenance business of photovoltaic power generation to reduce CO2
● Sale of energy-saving and space-saving AGP food cart
●Production of Vegetables pesticide-free, low viable bacteria, wash-free, and long-lastingin a fully closed factory
Copyright © AGP Corp. All Rights Reserved. 10
__________________* 2018年3⽉末現在
__________________* EDS: Explosives Detection Systems* ETD: Explosives Trace Detection Systems* AIT : Advanced Imaging Technology
Individual average number of qualifications: 7 qualifications / person
Qualification name HoldersElectrical chief engineer 45Electrical worker 398Electrical work construction management engineer
54
Tube constructionmanagement engineer
28
Energy management officer 25Boiler engineer 147High pressure gas Production Safety Officer(Refrigeration Safety Officer)
259
Hazardous materials handlers
324
X-ray Operations Chief 114Fire protection engineer 70Building environmental sanitation managementEngineer
13
Elevator inspection qualified 14Health administrator 28
● National qualification (Excerpt)
● Manual labor safety training engineer qualifications. , Special training lectures ,Special driverʻs license , Maker license( Some excerpt)
Qualification name Holders
Oxygen deficiency Operations Chief
239
Organic solvent work chief 87Specific chemical substances such as operations chief
38
Small mobile craneDriving skills
221
Forklift driving skills 350Aerial driving skills 395Slinging skills 290Scaffolding assembly work chief 87
Gas welding skills 304Arc welding special education 387Grinding wheel special education
356
Large automobile driver's license
367
Towing car driver's license 40
Qualification name Holders
X-RAY Smiths 16X-ray baggage inspection equipment
IHI 24
Manufacturers license Astrophysics 12Rapiscan 4L3:VIS,Examiner 26
EDS*
Manufacturers license
Reveal:CT,DR+ 10Morpho:CTX 6
Metal detectorManufacturers license
CEIA 36
ETD* SmithsHeiman 12
Manufacturers license
MorphoDetection 56Implant Sciences 9
Smart lane Smiths Heiman
2
Body scanner(AIT*) L3 2
Many of the employees have a wide range of basic knowledge and skills of the mechanical, electrical and control system, and also hold professional qualifications.
Our technical capabilities
Copyright © AGP Corp. All Rights Reserved. 11
Factory vegetable production/sales operations(Factory administration, manufacture and sales
utilizing our unique equipment maintenance know-how
①Establishment of A Relief, airporttechnicians dispatching firm
②Participation in training and practice operations in Thailand
●We have located our operation centers in/near the airports, and we have earned the strong trust of the airline companies as well as airport companies who are our major customers.●We plan to make use of the high technologies that we have developed to expand our business outside of airports.
Airport techniciansTraining/dispatch operations
Strategy matrix
New
Market
Existing
Existing Projects, products and technologies
Maintenance and Facility business & Security business(Development of the market
that take advantage of existing technology)
Power Supply business
(Improvement of utilization rate tailored to the Eco-Airport Promotion)
(Optimization of investments by such as improvements of facilities)
Food system solution business
(Sales of Food carts and product developments)
(Business jets support,Retail Electricity Business,
etc.)
New
Copyright © AGP Corp. All Rights Reserved. 12
Power Supply operationsPercent of FY17 sales: 40.7%
Provision of electric power/air conditioning/compressed air which are required by aircraft,
and design, execution, operation, management, etc. of power supply facilities
● We have deployed our company's power facilities in 9 domestic airports (Narita, Haneda, Kansai, New-Chitose, Osaka, Fukuoka, Naha, Kobe, Hiroshima)
We do provide maintenance management for Cubu Airport. ● Development support for power-supply vehicles/air-conditioner vehicles for airplanes● Operation/maintenance management of power supply facilities/equipment
288 fixed power equipment units, 154 fixed air conditioning equipment units, 95 power-supply vehicles, 34 air-conditioner vehicles, 12 engine starters (as of the end of 2017) with very unique business model in Japan.
Copyright © AGP Corp. All Rights Reserved. 13
Maintenance Servicing operationsPercent of FY17 sales: 28.4%
Servicing and maintenance management of special equipment inside and outside the airport such as
passenger boarding bridges, baggage handling systems, distribution warehouse transport equipment, etc.
●Planning, design, operation, and maintenance management for long-term service of passenger boarding bridges (PBB) and baggage handling systems (BHS)
Airports with large-scale automatic sorting equipment installed: Narita, Kansai, Chubu, and Haneda Airports
●Training for maintenance management and operation of PBB
85 in Narita Airport, 54 in Kansai Airport, 30 in Chubu Airport
●Installation construction management for BHS/PBB, determining of maintenance specifications, instruction manuals, etc. for BHS/PBB●Maintenance checks and repair work for distribution center transport systems
Copyright © AGP Corp. All Rights Reserved. 14
Facilities Servicing operationsPercent of FY17 sales: 14%
Servicing and maintenance of aircraft hangars, cargo sheds, in-flight meal factories, waste water processing equipment,
cold and heat supply equipment, high-voltage transformer substations, and various facilities inside and outside airports such as hotels
●Planning/design of long-term renovation/maintenance plans for facilities/equipment
Facilities management of airline company buildings, aircraft hangars, equipment/engine servicing factories, cargo buildings, in-flight meal factories mainly inside airports, distribution centers outside airports, etc.
●Maintenance management of high voltage substation equipment, uninterruptible power supplies, large-scale boilers/refrigerators, air-conditioning equipment, sanitation equipment, etc.
●Renovation/repair, servicing construction for electrical equipment and machines
Copyright © AGP Corp. All Rights Reserved. 15
●Creation of agreement with distributor of walk-through dangerous material detectors and start of equipment sales
Security Servicing OperationsPercent of FY17 sales: 3.3%
Maintenance of important security equipment supporting airport safety
Maintenance management of inspection equipment which automatically conduct inspections of baggage kept on the aircraft on the luggage transport conveyer belts (inline screening systems)
Technology to support the world's inspection machinesMaintenance management for security equipment inside and outside the airport●X-ray inspection equipment (288 units) ● Metal detectors (150 units)● Explosives detection equipment (237units)● Liquids inspection (25 units)● Body scanner (8units)
Copyright © AGP Corp. All Rights Reserved. 16
No. 1 domestic share with sales of approximately 4,800 units (total at the end of March 2018)
Efforts toward vigorous repeat demands (86% repeat rate) andCultivation of new markets by participating in the in-cart cooking business
¥
(当社調べ)
¥
¥¥¥
¥
Solutions for Food Systems operationsPercent of FY17 sales: 4.6%
Eco/energy-savingConsume just the electricity of the
heated tableware1.Main dish2.Side
dish
3.Soup bowl
Heating time/heat strength (IH) can be adjusted depending on the menu. Providing a natural layout on the dish, with the warm food warm and the cold food cold.
AGP'sfood cart
Tableware only
PinpointHeating
Hot-air type cart
Heat the entireinsidewith hot air
AGP'sfood cart
Electricity cost per 1 unit per year
Less than 1/5
Hot-air type cart
Space reductionUtilizing in-flight meal technology
forSpace reduction
Increased maneuverability and safety so that even women can handle them easily. Featuring space reduction with kitchen carts which occupy little space.
AGP'sfood cart
Cart spaceLess
than 1/2
Hot-air type cart
Copyright © AGP Corp. All Rights Reserved. 17
A cart system that enables heat cooking by "simply placing the raw ingredients on it"
About the new in-cart cooking meal system
IH Heating part
Main dish
Soup bowl
Side dish
IH:Induction Heater
It is a meal system which utilizes the heat maintenance of an IH heating cart to automatically cook the food placed on the trays using different temperatures and times for each dish. Maintaining a cooking temperature of 85℃ or higher within the food container for 90 seconds allows safe and secure provision of food.
Staplefood
Cold
【Foodstuff】【Foodstuff】 【Cooked rice】【Cooked rice】
■What is the in-cart cooking system?
[Specialized Heated Food Containers ICS Specs]
[IH28 Food Heating Cart ICS Specs]
Copyright © AGP Corp. All Rights Reserved. 18
Opened hangar for business jets at Narita in February 2015Expansion of business jet support services
●Handling work on the ground, machine provision・Aircraft power supply service・Cleaning service (inside and outside aircraft)・Towing service (towing of aircraft)・Crew pickup service・Nitrogen (N2) refilling service・ Water supply and drainage service
→Currently planning to purchase the equipment・Aircraft maintenance support service
→ currently reparing/reviewing・Other (parts management, etc.)
→ currently preparing/reviewing
● Making maximum use of large-scale aircraft parking space, attract many business jets● Expand operations in the cleaning service, where there is little competition in Japan● Expand operations in the cleaning service, where there is little competition in Japan
Business jet support operations
Business contentsPhoto: Towing service Photo: Cleaning service (Brightwork)
●Provision of parking space (size: 7,655㎡)※ Ensuring of privacy
Important points
Policies
・Starts a parking space providing service and aircraft power supply service from February 1, 2015・Starts a towing service from August 20, total of 10aircraft, execution of 46 towings・Starts a cleaning service from September 20, total of 6aircraft, executed cleaning of 13 aircraft・Starts a crew pickup service and aircraft tire nitrogen (N2)refill service from February 1・FY16 Activity record
Towing service : 268timesCleaning service: 44 times
Copyright © AGP Corp. All Rights Reserved. 19
Factory vegetable production and sales operations
As of the end of March, we are harvesting 25,000 heads of lettuce per week and selling ourlow-potassium lettuce to retailers and our commercial lettuce as sandwich ingredients, etc..
In February 2018 we drastically reviewed our business plan and transitioned to a direct-from-factory sales system
•Because we grow it in a hygienic environment where there are few microbes, the Long Life Lettuce stays fresher longer.
Low viable
Bacteria count
•By growing it slowly over time we reduced the bitterness and acridity.Delicious texture
•No pesticides used, which is only possible in a closed environment
•We used advanced quality control techniques to realize the low potassium content
Cultivation without the use of agricultural
chemicalsLow potassium
Business contents: Production of low-potassium lettuce Dr.VegetableLocation: Yokoshibahikarimachi in Sanbu-gun, Chiba Start of operations: August 2014Production scale: 4,000 heads per day of Frill lettuce
Copyright © AGP Corp. All Rights Reserved. 20
お客様"AGP Denki"
For estimates and inquiries please contactus as below.
Phone:03-3747-0071email : agpdenki@agpgroup.co.jp
Classification
Contract agreement
sNumber of
cases
Estimate completionsNumber of
cases
Estimate requests
Number of cases
High voltage
28 230 298Low voltage
148 303 455
*TOPICS●We have currently expanded our electric power
distributor agreements to 7 companies. ●Starting our telecommunications business
(sale of internet lines, electricity, phones, etc..)centered around our retail electricity business as well as BEMS distributor sales
●We are also currently preparing to enter the gas retail business.
Retail electricity businessOn the occasion of the April 2016 full liberalization of retail electricity and for the purpose of optimizing electricity provision in the power business, we completed our registration as retail electricity operator in August 2016 and started supplying retail electricity via AGP from November.
The supply area covers the entire country excluding Okinawa. Plans to expand added value service.
Scheme illustration (Note)
Balancing groupGeneral electricity operator backup power sourceJapan Electric Power Exchange(JEPX)
Marubeni Shindenryoku・F-PowerSupply and demand management
Electrical power provision
Electricity
(Note) This is a scheme to reduce risk as much as possible by not possessing a power plant at AGP and entering a balancing group of major new power companies for supply and demand management as well.
*Application status (Up to the end of March 2018)
Electricity
Customers
Copyright © AGP Corp. All Rights Reserved. 21
GSE等販売事業
【エアコン⾞ 110USRT】
A vehicle which provides electricity to parked aircraft.
Power assist suit sold by InnophysCo., Helps prevent back pain with support by artificial muscles. Our company is currently selling them as distributor. (Including leases)
Expansion / exit passage for customers to walk safely, safely, comfortably without stress from the terminal to the aircraft.[Scheduled to be commercialized in July 2018]
【GPU 180kVA】
【Passenger boarding roof(PBR)】
[Overseas GSE Import Sales]Start of import sales of new overseas airport equipment considering the trends in mechanization and manpower saving with the addition of the technical support which is our company's strength.
A vehicle which provides electricity and conditioned air to parked aircraft.
[Catering vehicles] [Belt loader] [Aircraft towing tractor]
[Brake Cooling Cart]Cool brakes in the short period of time from when aircraft land until they depart. Total sales in Japan of 659 units achieved.
[Self-propelled power-supplyvehicles for aircraft]
[Self-propelled air-conditioner vehicles for aircraft] [Muscle Suits]
Copyright © AGP Corp. All Rights Reserved. 22
FY2017 Results
Copyright © AGP Corp. All Rights Reserved. 23
Executive SummaryIn FY17 performance, income and profits have increased over the previous year, with sales, operating profits, ordinary profits, and current term net profits belonging to the parent company stockholders all at record highs.
Operating profits 10% and ROE achieved 10%.It has maintained a sound financial state . ( Capital adequacy ratio has exceeded 60% )
While maintaining a balance with operating profit ratio improvement, we have expanded new business fields such as developing our retail electricity operations while also reviewing our less-profitable operations.
The issues of further improving supply rates in the power business and stabilizing income and expenditures in non-airport business remain, butwe have completed the first half of our medium-term management plan (2015-2019) and are
progressing smoothly overall.
Taking everything into consideration including underfoot achievements and financial structure, we plan for interim dividends of 5 yen in FY17 and 10 yen by the end of the period. (Plans for 12 yen dividends per year at first)(However, this presumes the stockholders‘ approval at the 53nd annual meeting of stockholders)
●
●
●
●
●
Copyright © AGP Corp. All Rights Reserved. 24
FY2016 FY2017 y -o-y
Operating cash flow 1,577 1,954 +376
Investing cash flow ▲995 ▲642 +352
Free cash flow 582 1,311 +729
Financial cash flow ▲504 ▲573 ▲69
EBITDA 1,944 2,195 +251
Cash reserves increase or decrease
2,9363,673
+0
2017 Financial Results
FY2016 FY2017 y-o-y
Operating revenues 12,291 13,196 +904
Operating costs 11,176 11,792 +616
Operating income 1,115 1,403 +288Operating margin (%) 9.1% 10.6% +1.5pt
Ordinary income 1,132 1,389 +257
Quarter income 754 914 +160
Consolidated income statement (unit: million yen) Consolidated cash flows statement (unit: million yen)
Consolidated Balance sheet (unit:million yen)
FY2016 FY2017 y-o-yTotal assets 13,196 13,625 +429
Interest-bearing debt 1,339 949 ▲390
Equity capital 7,737 8,471 +734
Equity ratio (%) 58.6% 62.2% +3.5pt
ROE (%) 10.2% 11.3% +1.1pt
Equity ratio > 50%, ROE achieved 10%.
(unit:million yen)
Beginning
cash on hand
Operating
CF
InvestmentC
F
Financial CF
(existing)
New
procurement
Year-end cash on
hand
Copyright © AGP Corp. All Rights Reserved. 25
2017 performance summary(plan comparison)
FY2017Initial plan
FY2017Act.
y-o-y Remarks
Operating revenues 14,000 13,196 ▲804food carts▲272Factory vegetable production sales▲271Retail electricity operations ▲233
Operating costs 12,700 11,792 ▲908Electricity charges▲80、
Material cost ▲560
Operating income 1,300 1,403 +103
Operating margin (%) 9.4% 10.6% +1.2pt
Ordinary income 1,300 1,389 +89
Net income 770 914 +144Sales outside the airport such as production and
sale of factory vegetables and food cart sales were lower than originally anticipated, and sales declined by about 800 million yen. On the other hand, due to reduced raw material costs and improved profit ratios thanks to declining crude oil prices compared with the plan profits increased +103million yen, ordinary profits increased +89million yen, and current period net profits increased +144 yen.
Dividends are planned to be 15 yen (dividend payout ratio of 22.9%).
【 Performance Summary 】・ Record high sales > FY16 12,291・ Record high operating profits > FY16 1,115・ Record high ordinary profits > FY16 1,132・ Record high current term profits > FY16 754・ ROE 10% achieved (2nd straight)・Record high operating profit> FY13 9.6%
Consolidated income statement (unit: million yen)
Copyright © AGP Corp. All Rights Reserved. 26
XxxxxxxxxxFY2016 FY2017 y-o-y Remarks
Power supply business 5,205 5,370 +165 Demand+1.5%、Supply rate 63%
Unit revenue +1.0%Maintenance business 3,317 3,742 +425 Airport renewal construction, Increasing
opportunities for maintenanceFacilities business 1,962 1,848 ▲113 Decrease of opportunity due to aging facilities
Security business 424 440 +15 Increasing the needs at the airports.
Food system solutionbusiness
410 605 +195 Sales of food carts 282(vs PY +67)
New business 511 643 +131 Retail electricity operations, Increase in
number of parked aircraftOther Business 459 544 +85
合計 12,291 13,196 +904
With bullish aviation demand, increased sales from airline companies and airport companies. The sales in facilities operations and other construction operations have been sluggish, but thanks to expansion in ournew retail electricity operations and the increase in business jet aircraft contracts we have achieved a new record high in sales.
Operating revenue breakdown(unit:million yen)
Copyright © AGP Corp. All Rights Reserved. 27
FY16 Demand Supply rate Unit Revenue FY17
4,350
4,487+1.5% +0.6% +1.0%
(times) FLT&Supply Rate
0%20%40%60%80%
020,00040,00060,00080,000
FLTSupply…
(times) FLT&Supply Rate
0%
20%
40%
60%
020,00040,00060,00080,000
100,000
FLTSupply…
Electric Power Sales
0
200
400
600
800
FY14 FY15 FY16 FY17 FY18Plan
Electric Power Sales
0
50
100
150
200
FY14 FY15 FY16 FY17 FY18Plan
Sales analysis in power operations●Factor Analysis on Power Electric Sales In keeping with the increase in aviation
demand, supply opportunities and Unit price increase due to increased demandfor A380, B787, A350unit cost (usage time per flight) increased , leading to power electric revenue of +3.1% over the previous year. The supply rate is 63%, roughly the same as the previous year.
●Status for 787(million yen)
● Status for LCC
(million yen)
●Movement equipment: Deployed to 6 locations(total of 26 units deployed)
●Fixed equipment: NRT (37 units), HND (37 units), ITM (2 unit), KIX (7 units)Installation completed
(As of the end of 2017)
Expansion of LCC-geared business policies
●Conclusion of contracts with 5 domestic LCC companies●In addition to individual approaches to ocean-going LCCs, currently expanding proposal-based business via ground handling trustee companies including JAL and ANA
Copyright © AGP Corp. All Rights Reserved. 28
050
100150200250300350
FY16 FY17 FY18Plan
OthersEHIH
FY17/FY18Plan(117%)
We have had large-scale sales of re-heating carts (IH and EH carts) in new hospital operations, and the number of food carts sold in 2017 increased over the previous year. We will also promote sales in elderly housing/home-care and small-scale nursing facilities to cultivate new markets through our new in-cart cooking business with plans for large-scale repeat orders in 2018.
FY16/FY17(131%)
(Number of cases/units)
FY16 FY17 Fluctuation Remarks
Hospital(Breakdown repeat)
10cases/131units( 6cases/65units)
11cases/234units(6cases/73units)
+1cases/+103units(±0cases/+8units)
New hospital IHcart74
Outside the hospital(Breakdown repeat)
16cases/84units( 7cases/41units)
17cases/48units( 13cases/35units)
+1cases/-36units( +6cases/-6units)
Total(Breakdown repeat)
26cases/215units( 13cases/106units)
28cases/282units( 19cases/108units)
+2cases/67units( +6cases/+2units)
State of food cart sales(Number of units)
Copyright © AGP Corp. All Rights Reserved. 29
0200400600800
1,0001,2001,400
Retal electricitysales
Business jetsupport
Factory vegetableproduction salesbusiness
We conducted a drastic review of our factory vegetables production andsales business and re-started in February 2018 with a direct-from-factory sales system. Business has been kept in the black, with an increased number of contracts with jets in the business jet support operation and the startup of the cleaning service, etc. We fully started retail electricity operations from 2017 and are aiming to expand our clients.
New business sales(million yen)
Copyright © AGP Corp. All Rights Reserved. 30
FY2016 FY2017 y-o-y Items of Note
Labor cost 4,348 4,542 +194 Staffs FY16 654→FY17 699Depreciation and amortization
829 792 ▲36
electric expense 765 813 +48 Unit price increase due to increase in
electricity price and increase in crude oil priceOther 5,234 5,247 +342
Total 11,176 11,792 +616
Increase in labor costs to support business expansion. In capital investment, airport reorganization construction is behind originally expected schedule, suppressing FY17.The increase in electricity consumption and the rise in oil prices have caused an
increase in electricity costs over the previous year. Decrease in depreciation costs over previous year
The results of promoting efforts toward cost controls were about 46million yen.
Operating Expenses breakdown(unit:million yen)
Copyright © AGP Corp. All Rights Reserved. 31
Major production efficiency goals over the previous year
100 100
90
95
100
105
110
Labor profitability per hour
FY16 FY17
62.462.8
60.0
61.0
62.0
63.0
64.0
65.0
Supply Rate
FY16 FY17
億円 億円
8.6%
10.4%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
ROIC
FY16 FY17
Although some of our production efficiency goals were sluggish compared to the previous year,our profit ratio against our invested assets is on the increase. In the future we aim for strong management with high profitability by efficiently utilizing our limitedmanagement resources and making thorough efforts in "maximizing sales and minimizing costs".
Operating ratio of power supply facilities
Profit ratio compared to invested assets Labor profitability per hour
(%)
Copyright © AGP Corp. All Rights Reserved. 32
Review Summary and Progress Report of Medium-Term
Management Plan
Copyright © AGP Corp. All Rights Reserved. 33
Background of review
■ Long-term vision 2025(FY15-FY25)
■
0
●Expansion of profitability
Expansion of fields of operations (growth strategy)
●Strengthen aviation event risk resistance
Expand non-airport sales ratio
●Contribution to environmental society
Promotion of Eco Airport
2015〜 2018 〜 2019 〜 2025
Current Medium-Term Management Plan
Sales 15 billion yen
Expand non-airport and overseas business fields to become a company that can contribute to
the environmentalsociety with our
advanced technology
Revised plan
Sales 20 billion yen
[Environmental changes surrounding us]Further expansion in aviation demandDevelopment of airport maintenance planAccelerating IT technologyIncreased oil prices, etc..
Long-term vision 2025
In order to lead into the next-term Medium-Term Management Plan after FY20, accomplish the current Medium-Term Management Plan up to FY19 and then conduct review to accelerate our growth strategy. At the same time, review new business (factory vegetable production and sales operations, retail electricity sales) which was not started at the time the current Medium-Term Management Plan was established.
[Positioning]Establish a business foundationand accelerate the growth strategy over 2 years
An action plan for the first 5 years toward acquisition of new business opportunities after 2020 and realization of our long-term vision. Aim for sales of 15 billion yen over ten years, operating profits of 10% or greater, and 20% or more sales coming from non-airport sources.
Medium-termmanagement plan
(FY15-FY19)*Announced January 2015
By contributing to advanced technology and an environmental society,aim for sales of 20 billion yen over ten years, operating profits of 10%or greater, and 30% or more sales coming from non-airport sources.
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Review points
Future
Fields of operations
Business management
Securing of human resources
Training of human resources
Stockholder returns
Business expansion through proactive investment including business investments
Portfolio management with unevennessIncreased productivity through the start of smart projects
Utilization of affiliated companies that handle human resource training and dispatchParticipation in training and practice operations
Stable dividends + stockholder returns
By establishing a business foundation through proactive investment and also accelerating our growth strategy, revise sales goal for the last year of the medium-term (FY19) from 15 billion to 16 billion yen. Other management goal values remain the same as now.
Management goal values Goal values as of FY19 Goal values as of FY25Consolidated sales 16 billion yen 20 billion yen
Consolidated operating profit ratio More than 10%Capital adequacy ratio More than 50%
ROE More than 10%
Existing
Strengthening of airport operations foundation, cultivation of fields of operation, taking part in concessions, promotion of strategic collaborations
Efforts to maximize sales and minimize costs (increase profits) and contribute to the environment
Proactive adoption including carrier adoption, promotion of increased employee technical and other abilities
Stable dividends
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[Ideas for growth]While maintaining and strengthening a stable profit base, proceed with review of less-profitable operations and engage in proactive investments in the operations and bases with high profit ratios.
Portfolio per operation(FY16)
Profit Rate
Sales growth rate
Portfolio per operation(FY19)
(Note) The size of the bubble denotes the invested assetsSales growth rate
Profit Rate
Future image of the portfolio per operation
Business jet support(53)
Facilities Servicing(485)
Solutions for Food Systems(658)
Factory vegetable production sales(515)
Profit Rate10%
Security Servicing(117)
GSE etc(129)
Power Supply
(6,198)
Maintenance Servicing(917)
Security Servicing(423)
Facilities Servicing(364)
Solutions for Food Systems(891)
Business jet support(641)
GSE etc(177)
Retalelectricity sales(151)
Profit Rate10%
Factory vegetable production
sales(334)
Power Supply
(7,582)
Maintenance Servicing(1,390)
(unit: million yen) (unit: million yen)
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FY14 FY15 FY16 FY17 FY18 FY19CO2 amount reduced 29.3 31.8 36.2 37.9 39.1 40.0
*Medium-Term Management Plan Initial goal values
*Results/plans (FY14-17 are results, FY18-19 plans)
(Unit:10000 tons)
・Strive to reduce C02 emission volumes by107 thousand tons by 2019 compared to 2014 by promoting the adoption of GPU at major airports.
Reduction measures FY14 FY15 FY16 FY17 FY18 FY19
GPU adoption promotion 28.9 29.7 30.4 31.2 31.8 33.5
Other - - - - 7.3 6.5
CO2 amount reduced Total 28.9 29.7 30.4 31.2 39.1 40.0
(Unit:10000 tons)
Amount reduced Implement review of breakdown
・Strive to reduce C02 emission volumes in the aviation field by 10.7 by 2019 compared with 2014(of which 46 thousand tons will be reduced by promoting the useof GUPs in major airports).
Review of CO2 emission volume reduction goals
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778 740 887 900
1,115
1,3801,404
1,600
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
(million yen)■Operating Profit
10,67111,400
11,582 12,08012,291 13,352
13,196
16,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
FY14
Act.
FY15
Mid-
term
FY16
Act.
FY17
Mid-
term
Power supply Maintenance Facility SecurityFood system New Other
In 2017 sales, operating profits, and ordinary profits were all at record highs for 2 consecutive periods. Compared to the medium-term management plan (issued in January 2015), sales, operating profits, and ordinary profits all exceed the plan and are generally favorable. In order to lead into the next-term Medium-Term Management Plan after FY20, accomplish the current Medium-Term Management Plan up to FY19 and conduct a review of the current Medium-Term Management Plan to secure profit ratios while striving to accelerate our growth strategy.
FY14Act.
FY15Mid-term
FY15Act.
FY16Mid-tarm
FY16Act.
FY19Mid-term
FY17Mid-tarm
FY17Act.
FY14Act.
FY15Mid-term
FY15Act.
FY16Mid-term
FY16Act.
FY19Mid-term
FY17Mid-term
FY17Act.
7.3%7.7%
9.1%
10.6%10.0%
4.0%
6.5%
9.0%
11.5%
14.0%Operating margin
Progress of Mid-term plan
(million yen)
<Sales> <Profit>
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13.8 14.0
0
5
10
15
20
Operating profit
FY17Mid-termFY17Results
x 10 thousand ton
37.9
31.2
20.0
25.0
30.0
35.0
40.0
45.0
Reduction of CO2
FY17Mid-termFY17Results
18.7%
12.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Sales rario outside airport
FY17Mid-termFY17Results
10.3% 10.6
%
5.0%
7.5%
10.0%
12.5%
15.0%
Operating margin
FY17Mid-termFY17Results
133.5 131.9
100
110
120
130
140
150
160
Sales
FY17Mid-termFY17Results
9.6%
11.3%
5.0%
7.5%
10.0%
12.5%
ROE
FY17Mid-termFY17Results
Comparison with Mid-term plan at FY17x 0.1 ¥billion x 0.1 ¥billion
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FY18 Forecasts
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Executive Summary
Although yields continue to increase over the previous year in 2018, profits are expected to remain the same as the previous year. Plan to proceed with income and expenditure improvements striving for a 10% operating profit ratio during the current term. are promoting productivity improvements by increasing facility operating ratios in power operations, reorganizing food system solutions operations and new business, and reviewing ways of working.
Strengthen proactive investment (facilities investment and business investments) and risk management systems. Focus on asset efficiency and strive for investment profit ratio exceeding 10%.
Expansion of cooperation with local companies through collaborations with the Thai ministry of industry, and establishment and promotion of a base in Thailand for participation in the Thai aviation university's training center.
Fully and comprehensively taking into consideration returns to investors to fit our profit growth as well as internal reserves for the future, results, states of financial affairs, dividend payout ratio, etc.., and continue mid-term dividends and term-end dividends twice annually. Dividends in the next term are expected to reduce to 1 yen temporarily, but due to income improvements during the term we plan to fulfill returns to stockholders.
●
●
●
●
●
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power operations Servicing
operationsSecurity
Operations
Food system
SolutionsOperations
Businessjet support operations
Retail electricity business
Facilities Servicing
operations
Factory vegetable productio
n sales
GSE and other sales
Basic Policy
・ Operational stabilitythrough full compliance with airport maintenance plan and strengthened foundation
・ Operational growththrough the expansion of our business investment strategies, etc..
・ Business cultivation through review of business model
・ Selection and concentration of fields of operations
• Operation income and expenditures in the black
・Expanding the horizons of the sale of goods business
Primary m
easures
• Implementation of measures to improve power sharing ratios for each airline company
• Cultivation of new bases
• Strengthened cooperation with GSE and logistics systems manufacturers, etc..
• Expansion of fields of operations
• Promotion of strategic cooperation with other companies and increasing of business strength
• Expansion of non-airport and overseas transactions
• top line expansion and profitability improvement through peripheral business efforts
• Expanded business collaborators, increased business strength, and expanded services
• Drastic review of cost structure
• Improved profits through sales strategy review
・Conclusion of distributor contracts with overseas manufacturers
・Review of sales strategy
• Securing of human resources and reduction of fixed costs by utilizing the firm A Relief which dispatches technicians within the group• Application of human resource training know-how → Participation in _______ and promotion of smart projects
• Strengthened group administration ・Strengthened response to business risks ・Support for bills to improve ways of working
Further top line expansion and improved profit ratios with thorough maximization of sales and minimization of costsSecuring and reinforced training of human resources who can support unstable business strategies and growth strategies
Each business strategy
Training and practice operations
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FY18 income and expenditures/financial plan
FY2017 FY2018 y-o-y
Total assets 13,625 16,400 +2,775
Interest-bearing debt 949 1,350 +401
Equity capital 8,471 9,180 +709
Equity ratio (%) 62.2% 55.7% ▲6.5pt
ROE (%)2 11.3% 9.6% ▲1.7pt
FY2017 FY2018 y-o-y
Operating cash flow 1,954 1,490 ▲464
Investing cash flow ▲642 ▲2,830 ▲2,188
Free cash flow 1,311 ▲1,344 ▲2,655
Financial cash flow ▲573 440 +1,013
ROIC3 10.4% 9.3% ▲1.1pt
EBITDA4 2,195 2,160 ▲35
(百万円) FY2017 FY2018 y-o-y
Operating revenues 13,196 14,300 +1,103
Operating costs 11,792 12,900 +1,108
Operating income 1,403 1,400 ▲3Operating margin (%) 10.6% 9.8% ▲0.8pt
Ordinary income 1,389 1,380 ▲9
Net income 914 850 ▲64
Beginning cash
on hand
Operating CF
Inbestment CF
Financial
CF(existing)
New procurem
ent
Year-end cash on
hand
3,673 2,770+1,000
Strive for 10% or higher operating profit ratio through improved income and expenditures during the term
Consolidated income statement (unit: million yen)
Consolidated Balance sheet (unit:million yen)
(unit: million yen)
Cash reserves increase or decrease (unit: million yen)
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動⼒事業を始めとした既存事業の増収と空港外売上拡⼤に向け、営業⼒・販売体制を強化
<事業別売上>FY2017 FY2018 y-o-y Remarks
Power supply business 5,370 5,460 +90 Supply rate 63%→66%Maintenance business 3,742 3,750 +8 Increasing business opportunitiesFacilities business 1,848 1,950 +102 Addition of other construction projects
Security business 440 540 +100Food system solution business 605 720 +115 Start of in-cart sales
New business 643 1,070 +427 Expanded sales of retail electricity
GSE 544 800 +256 Start of sales of GSE, PBR, etc..
Total 13,196 14,300 +1,103
(単位:百万円)
While working to increase revenue in existing business in airports which are a favorable business environment, expand non-airport operations such as food carts and new business, and aim for sales of 14.3 billion yen.
Operating revenue breakdownStrengthening of business power and sales system
toward increased profitsin existing business including power operations as well as the expansion of non-airport sales
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56.7%28.5%
14.9%
Airlines
Airport companies
Other(Except airlines and airport companies)
58.7%29.3%
12.0%
AirlinesAirport companiesOther(Except airlines and airport companise
Sales ratio of outside airportExpanding the business with such as food cart or new business
other than existing customers such as airlines, airport companies
<FY17 Sales ratio> <FY18 Sales ratio>
Sales14.3 ¥ billion
Sales13.1 ¥ billion
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In FY18, plan for the renovation of the Fukuoka Airport terminal including the time lag and increasing the capacity of the power equipment (changing to 180KVA), the proactive promotion of renewing air conditioners, and strengthening of the business foundation. Also establish business investment frames which lead to growth
0
20,000
40,000
60,000
80,000
100,000
0
100
200
300
400
500
FY14 FY15 FY16 FY17 FY18
Labour Costs Direct Expenses
Times Participants
(times, people)
500
700
900
1,100
1,300
1,500
1,700
FY14 FY15 FY16 FY17 FY18Plan
CAPEX
Depreciation and amortization
Business investment frames 2 billion yen(FY18.19)
+Investment leading to continued growth
The FY17 training and practice cost results (labor costs + direct costs) were 13.9 million yen. In FY18, we plan to conduct investments targeting obtaining security equipment certifications and qualifications for construction management engineers, etc.., in order to enhance our technical training, and expect a total (labor costs + actual costs) of 164 million yen.
Investments<CAPEX>
(unit: million yen)
<Education and Training>(unit: times, participants)
Copyright © AGP Corp. All Rights Reserved. 46
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0123456789
10111213141516
Net profit(100 million \) Dividends(\)
dividend payout ratio(%)
(100 million yen, Yen)
(FY)
15 yen dividends
We plan for interim dividends of 5 yen in FY17 and 10 yen by the end of the period. We plan for 15 yen dividends to fit with the mid-term and end-of-term dividends. (12 yen expected at the first of the term)
Dividend achievements and prospects
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Fulfill returns to investors to fit our profit growth
(Unit: yen)
0
5
10
mid-term end-of-term
+α Added returns
In the medium term up to F19, as a general rule current net income belonging to the parent company is:≦ 700 million yen:Stable dividends of 10 yen annually (mid-term and end-of-term 5 yen)>700 million yen:Implement additional return to stockholders aiming for 30% of the excess by the end of the term
Dividends*Current net income=amount
exceeding 700 million yen
*Current net income=up to 700 million yen
Stable dividends*Current net income=Current net income
belonging to parent company
[Dividend Policy]Recognizing stable return on investment to our stockholders as one of our most important issues, we generally work to fulfill returns on investments twice annually in the form of mid-term and end-of-term dividends after making judgments comprehensively taking into account the internal reserves required for future business expansion, the financial and performance conditions, dividend payout ratios, etc..
Copyright © AGP Corp. All Rights Reserved. 49
We mention the name of businesses as described below, in the consolidated financial statements or separate financial statements of our company, giving consideration to the property of the current business and the quantitative importance etc., though the names are different from this document.Maintenance business and facilities business are put together into "maintenance business", and security business, food cart business, new business, and other business are put together into "incidental business".
In this document, we describe the outlooks based on current plans, estimates, strategies, and beliefs of our company. Those are based on our judgment and hypothesis obtained from currently available information.
Our operating results in the future, that may changes by trends in technology, demand, prices and economic environment, may differ significantly from the forecasts described in this document.Therefore, the goal that we have set, does not guarantee that it is all achieved.
Contact InformationCorporate Planning & Finance Department, AGP Corporation
TEL: 81-3-3747-1638FAX: 81-3-3747-0707
URL: http: //www.agpgroup.co.jp/.en/(Please see our introduction video)
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