CENTRAL JAPAN RAILWAY COMPANY ANNUAL REPORT 2014

CENTRAL JAPAN RAILWAY COMPANY Annual Report 2014 For the Year Ended March 31, 2014

Contents A Message from the Management Key Measures and Management Strategy

Management Philosophy ● Contribute

to community development by adhering to sound management principles ● Provide modern, friendly, and reliable services ● Establish a cheerful, fresh, and active corporate culture

General Principles of Safety ● Safety

is the most important mission in transportation ● Security is based on observance of rules and exact works and is constructed of ceaseless practice ● Enforcement of confirmation and contact is most important for security ● For security we should cooperate unitedly beyond our official responsibility ● When we are open to doubt we should go a way to safe considering thoroughly

Profile

Key Measures and Capital Investment

4

Safety and Reliability

6

Transportation Service

10

The Chuo Shinkansen using the Superconducting Maglev System

14

Sales and Marketing

16

Technological Development and Enhancement of Technical Capability / Overseas Deployment of 18 High-Speed Rail Systems Affiliated Business

20

Engagement in Global Environment Preservation, etc. Engagement in Global Environment Preservation

22

Cooperation with JR Central and Local Communities

27

Corporate Governance

Central Japan Railway Company (JR Central, also known as JR Tokai) commenced operations in April 1987 upon the privatization and breakup of the Japanese National Railways (JNR). The core of JR Central’s operations is the Tokaido Shinkansen, the main transportation artery linking Japan’s principal metropolitan areas of Tokyo, Nagoya, and Osaka, and a network of conventional lines centered on the Nagoya and Shizuoka areas. JR Central and its consolidated subsidiaries also develop affiliated businesses that are expected to generate synergic effects with the railway business. JR Central is steadily moving forward with efforts aimed at the early completion of the Chuo Shinkansen using the Superconducting Maglev system in order to carry out its mission continually.

28

Corporate Data

Consolidated Operating Revenues Composition

CENTRAL JAPAN RAILWAY COMPANY Annual Report 2014

2

Merchandise and Other

30

Organization Chart

30

Operating Area

31

Company History

32

Board of Directors, Audit and Supervisory Board Members and Corporate Officers

33

Summary of Performance

Real Estate

2.4%

Profile

Other Services

8.2%

12.9%

Financial Highlights

34

Summary of Performance

36

Financial Section

38

Appendices Transportation

Percentages of Japan as a whole JR Central’s Market Area

Area

other

23.7%

( As of October 2013 )

Population

76.3% 59.9%

( As of the end of March 2013 )

Prefectural GDP

Note: Consolidated composition is based on the revenues from outside of JR Central's group

40.1%

64.4%

( nominal ) ( FY2012.3 )

76.5%

Non-Consolidated Operating Revenues Composition

35.6%

0

50

4.2%

100

Japan

100 (Base)

JR Central’s Market Area

253 0

100

200

0.7%

Conventional Line

7.9%

Population Density (As of the end of March 2013)

(as a whole)

Affiliated Businesses

Miscellaneous

Note : JR Central’s market area includes the following prefectures: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Shizuoka, Yamanashi, Nagano, Aichi, Mie, Gifu, Shiga, Osaka, Kyoto, Hyogo, Nara : Area data to calculate Population Density is as of October 2013 Sources : Area – Statistical Reports on the Land Area by Prefectures and Municipalities in Japan, Geospatial Information Authority of Japan Population – Basic Resident Registration, Ministry of Internal Affairs and Communications Prefectural GDP – Annual Report on Prefectural Accounts, Cabinet Office, Government of Japan

Tokaido Shinkansen

87.2%

Financial and Transportation Data

66

Operating Environment

70

International Railway Comparison

70

Financial Comparison of Three JR Companies

72

Stock Information

73

Forward-Looking Statements

In this annual report, forward-looking statements, such as those regarding business plans, strategies, and financial forecasts, are based on assumptions that reflect information available at the time of writing. The accuracy of such statements, therefore, is inherently uncertain because it is affected by future macroeconomic trends and business environment developments, notably, consumption trends, competitive challenges, and changes in relevant laws and legal provisions. This report is compiled based on information available as of the end of May 2014. Notes: 1. Fiscal 2013, the year under review, refers to the one-year period ended March 31, 2014 (FY2014.3 / FY2013). 2. In this report, figures of financial information are truncated, while statistical data and all percentages are rounded.

FY 2014.3 data

1

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In the railway business, JR Central sets the highest priority on maintaining safe and reliable transportation service. Based on this primary principle, JR Central firmly maintains its fundamental policy, which is to carry out its long-term mission: maintaining and developing both the

that we bear the cost of its rail construction and operate it in an integrated manner along with the Tokaido Shinkansen. While promoting this project, we will make necessary investments to ensure safe and reliable transportation service and to enhance competitiveness. We will maintain

Tokaido Shinkansen, which serves as Japan’s main transportation artery,

sound management in which we can continue to provide stable dividends.

and the conventional line network in Tokai region (such as Nagoya or

We will also surely and steadily engage in various efforts aimed at the

Shizuoka) in an integrated manner. We constantly strive to provide services chosen by the customers and improve the efficiency of its operations.

realization of the Chuo Shinkansen, first from Tokyo to the Chukyo metropolitan areas , and thereafter to the Kinki metropolitan areas . Specifically, we will promote the preparation for the construction plan between Tokyo and Nagoya as the first phase by the publication of

Since railway business, which is the core business of the JR Central Group, requires long-term massive capital investments and technological development with considerable lead times, the time base for recovering investments becomes extremely long. Due to such business structure, it is vital that we manage our railway business strategically based on a long-term perspective, not on a short-term profitability-based view. Therefore, we are further improving the quality of our daily railway services and promoting mid- and long-term