President's Message. Hirotada Seyama

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3 President's Message The Japan Expressway Holding and Debt Repayment Agency was established in October 25 with six privatized expressway companies within the privatization framework of the highway public corporations. The missions are to hold and maintain the expressway assets in a good condition and to repay inherited debts from the highway public corporations as well as incremental debts due to new construction of expressway assets. We commit to the steady and full repayment of the debts as well as maintaining the safety and high quality of expressway assets by working closely with the six expressway companies. The repayment scheme is based on utilization of the fees paid by the expressway companies for the lease of the expressway assets. Further, in cooperation with the expressway companies, we exercise our authority as road administrator in a timely and appropriate manner to ensure the safe and efficient operation of the expressways. For regional assets we also oversee the detailed maintenance and management works appropriate to local conditions thus ensuring that we hand over safe and high quality expressways to the next generation. Interest rate rises are the most critical risk for longterm repayment schedules. We have dealt carefully with this risk by effective liability management such as issuing ultralongterm bonds during the recent historically low interest rate period in Japan. As a result, we have been outperforming the debt repayment with the current balance well below the original forecast. Through our website we actively disclose business and operational information such as debt repayment plans, performance comparison tables, annual maintenance reports, as well as the revenue and expenditure results of each route. Our conscientious disclosures exceed the statutory requirements to ensure the transparency and accountability of our operation. The Shin Tomei Expressway between HamamatsuInasa junction and ToyotaHigashi junction was opened in February, 216. The opening made us to extend double expressway networks of Tomei Expressway and Shin Tomei Expressway by 2 km, and has significantly reduced the congestion of Tomei Expressway. New expressway toll system was established in Tokyo metropolitan area in April, 216. The system accompanying with the development of network in a beltway around greater Tokyo area have led to a decrease of the heavy traffic in central Tokyo. Additionally, these have led to a positive outcome such as an increase of many new distribution facilities built along the beltway. We will do our utmost to realize a successful and efficient operation of the expressway business to enrich everyone's lives. With your continuous support and guidance, every efforts will be made to meet our commitments. Hirotada Seyama President, Japan Expressway Holding and Debt Repayment Agency October 216

4 Agency Overview Agency Overview 1.About the Agency The objectives of the Agency are to reduce the burden of the general public relating to expressways and to support the successful implementations of the expressway business by the Companies, by holding and leasing expressway assets related to expressways and repaying debts in a reliable and swift manner. 2.Establishment of the Agency The Japan Expressway Holding and Debt Repayment Agency (hereafter referred to as the Agency ) was established on October 1, 25, along with six expressway companies (hereafter referred to as the Companies ), under four laws regarding the privatization of four highway public corporations, which were enacted in accordance with the Japanese Government's policy of privatizing the four public corporations, as spelled out in the Reorganization and Rationalization Plan for Special Public Corporations (approved in a Cabinet meeting on December 19, 21) Framework of the Privatization of Highway Public Corporations Objective of Privatization To secure the repayment of interestbearing debts amounting to about trillion To construct, without delay, genuinely needed expressways with minimum fiscal burden on the general public, while paying due respect to the autonomy of the Companies To offer diverse and flexible prices and services to expressway users by utilizing the private sector s knowhow Companies: Construction, renewal and management of expressways and collection of tolls 1

5 3.Operation of the Agency The Agency concludes agreements with each of the Companies, receives approval by the Minister of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), and formulates business implementation plans that include lease fees and a debt repayment plan. On the basis of this agreement, the Agency will fully repay the debts inherited from the public corporations and new Agency Overview debts accepted from the Companies before the expiration date of toll collection duration*, with the lease fees paid by the Companies. Upon full repayment of the debts, the expressways will be transferred to the Companies, which are the original road administrators. Until the handover of expressway management, the Agency will exercise statutory rights on behalf of them. Scheme for the Implementation of Expressway Business Activities by Agency and Companies Funds raised Authorization by the minister of MLIT *Partial revision of the Road Law, etc. that was executed on June 3, 21 changed the expiration date of collection duration of expressway tolls leasedby the Agency to before September 3, 265, to allow prompt and deliberate renewals(construction such as specified renewal)corresponding to the aging of expressways. Scope of Business Activities (prescribed in Article 12 of the Japan Expressway Holding and Debt Repayment Agency Law) 1. Holding of expressway assets and their leasing to the Companies 2. Repayment of inherited debts 3. Acceptance of debts borne by any the companies to pay the cost of new construction, reconstruction, repair or restoration of expressways following disasters under the Agreement, and the repayment of such debts. Provision of interestfree loans, financed with subsidies granted by the national government or local public entities as prescribed by Cabinet order, to Metropolitan Expressway Co., Ltd., and/or Hanshin Expressway Co.,Ltd., to partially cover funds to pay the cost of new construction or reconstruction of the Metropolitan Expressway and/or Hanshin Expressway 5. Provision of interestfree loans, financed with subsidies granted by the national government, to the Companies to partially cover funds to pay the cost of the restoration of expressways damaged by disasters 6. Provision of interestfree loans, financed with subsidies granted by the national government, to the Companies to partially cover funds to pay the cost of construction of junctions connecting the said expressways and roads(excluding expressways) specified by the Ordinance of the Ministry of Land, Infrastructure and Transport and Tourism. 7. Provision of interestfree loans, financed with subsidies granted by local public entities, as prescribed by Cabinet order, to Metropolitan Expressway Co., Ltd., and/or Hanshin Expressway Co., Ltd., to partially cover funds to pay the cost of new construction, reconstruction, repair or restoration of Metropolitan Expressway Co., Ltd., and/or Hanshin Expressway Co., Ltd., following disasters 8. Subsidization required to facilitate a reduction in costs of the new construction, reconstruction, maintenance, repair and other aspects of management of expressways through the Companies own effort 9. Where any of the Companies is to engage in new construction work, reconstruction, maintenance, or repair work or perform other aspects of expressway management, the Exercise of Statutory Powers on Behalf of Road Administrators under the Law concerning Special Measures for Highway Improvement 1. Operations prescribed under the Law Concerning Special Measures regarding general marine passenger liner service operations, etc., in relation to the construction of the HonshuShikoku Bridge 11. Management of railway facilities linking Honshu and Shikoku 12. Making available railway facilities under item 11 above for use by the railway service operator for the charging of fees 2

6 Agency Overview.Agreements with Expressway Companies and Business Implementation Programs When intending to undertake a business operation, under Article 13, Item 1 of the Japan Expressway Holding and Debt Repayment Agency Law (hereafter referred to as the Agency Law ), the Agency is required to enter in advance into an agreement with the Company concerned, prescribing the lease fees and other conditions of lease regarding the expressway assets the Agency is to lease to the Company for each expressway belonging to the national expressway network, the regional expressway networks or independent general toll roads. When an agreement has been entered into, under Article 1, Item 1 of the Agency Law, the Agency is required to formulate a business implementation program that specifies details of the income and expenditure budget(debt repayment plan)of the Agency, in addition to the item prescribed in the agreement(excluding the toll amounts to be collected by the Company and the duration of collection), and submit it to the Minister of Land, Infrastructure and Transport for his or her approval. A Company that enters into an agreement with the Agency is required to carry out its business activities under the agreement subject to approval by the Minister of Land, Infrastructure and Transport with regard to construction details, toll amounts, and other items. Business Unit As of October 216 National expressway network Regional expressway networks Independent general toll roads * Agreement / Approval for Business Activities Expressways within the national expressway network for East Nippon Expressway Co., Ltd., Central Nippon Expressway Co., Ltd., West Nippon Expressway Co., Ltd., HonshuShikoku Bridge Expressway Co., Ltd., : agreements Metropolitan Expressway, Hanshin Expressway (Hanshin area) Hanshin Expressway (Kyoto area) : 3 agreements Respective independent general toll roads outside the national expressway network : 9 agreements Business Implementation Programs Expressways within the national expressway network : 1 program Metropolitan Expressway Hanshin Expressway (Hanshin area) Hanshin Expressway (Kyoto area) : 3 programs Respective independent general toll roads outside the national expressway network : 9 programs List of Agreements National expressway network Regional expressway networks Independent general toll roads * Made free of charge Name of Agreement Agreement Regarding the National Expressway Hokkaido Crossing Route, HakodateNayoro Line Agreement Regarding the National Expressway Chuo Expressway FujiYoshida Line Agreement Regarding the National Expressway Chuo Expressway Nishinomiya Line Agreement Regarding General National Road Route 28 (HonshuShikoku Expressway (KobeNaruto Route)) Agreement Regarding the Metropolitan Expressway Line 1 Agreement Regarding the Osaka Prefectural Expressway OsakaIkeda Line Agreement Regarding the Kyoto City Expressway Line 1 Agreement Regarding General National Road Route 158 (Chubu Crossing Route, Abotoge Road) Agreement Regarding General National Road Route 31 (HiroshimaKure Road) Agreement Regarding General National Road Route 165 and 166 (MinamiHanna Road) Agreement Regarding General National Road Route 5 (Sanriku Jukan Expressway (between NaruseOkumatsushima and IshinomakiKanan)) * January 2, 28 As of October 216 Party to the Agreement with the Agency East Nippon Central Nippon West Nippon HonshuShikoku Metropolitan Hanshin Hanshin Central Nippon West Nippon West Nippon East Nippon Agreement Regarding General National Road Route 1 (Hakone Bypass) * July 16, 211 Central Nippon Agreement Regarding General National Road Route 16 (Hachioji Bypass) * October 31, 215 Central Nippon Agreement Regarding General National Road Route 139 (NishiFuji Road) * April 1, 212 Central Nippon Agreement Regarding General National Road Route 21 (Yakiyama Bypass) * October 1, 21 West Nippon Agreement Regarding General National Road Route 56 (Naha Airport Expressway (Haebaru Road) * March 28, 29 West Nippon (*) indicates the start date of tollfree For information on individual agreements and business implementation programs, please see the Agency website ( kyouteigyoumujisshi.html) 3

7 5.Procedural Flow Agency Overview For individual agreement and implementation programs, please refer to the Agency's website ( 6.Expressway Management Agency and companies share management roles and closely communicate with each other to manage the expressway system based on Special Measures Act on Road Preparation. Companies play a role in maintenance and repair of road condition, and charging fee to keep the expressway s function satisfactory all the time. On the other hand, the Agency plays a role in exerting public authorities that were delegated from the original administrators (the Minister of Land, Infrastructure, Transport and Tourism, and leaders of local authorities), specifically, administrative measures such as prohibition and restriction of traffic (mostly prohibition), providing special permissions (road occupancy/passage permission of special vehicles), issuing orders (orders for action toward the violation of vehicle restriction and etc.,). Also the Agency receives reports on implementation status of road management from the companies, and checks on the employment implementation situation as necessary. The collected information regarding the implementation of expressway management will be shared to develop the management system.

8 Status of Business Execution in FY215 Status of Business Execution in FY215 1.Holding and Leasing of Expressway Assets (1) Holding and Leasing of Expressway Assets In FY215, 7.5km of holding and leasing of expressway assets increased because the use of Shin Tomei expressway was started, and.5km decreased because of expansion of feefree area for Hachioji bypass. As a result, the holding and leasing of expressway assets became 1,61km for opened section and 1,159km for combined total length including new sections. Status of Holding and Leasing of Expressway Assets Total East Nippon Expressway Co.,Ltd. Central Nippon Expressway Co.,Ltd. West Nippon Expressway Co.,Ltd. Metropolitan Expressway Co.,Ltd. Hanshin Expressway Co.,Ltd. Hanshin area Kyoto area As of March 31, 216 (Unit: km) HonshuShikoku Bridge Expressway Co.,Ltd. Length of holding and leasing 1,159 [1] 3,863 [1] 2,37 [5] 3,92 [] 321 [] 263 [] 1 [] 173 [] Of which are a length opened to traffic 1,61 [7] 3,8 [21] 2,29 [5] 3,9 [] 311 [] 29 [] 1 [] 173 [] Of which are a length under construction (92) 98 [75] [6] (16) 23 [21] [6] (211) 8 [5] [5] (12) 3 [] [] (19) 11 [] [3] (1) 1 [] [] (Breakdown) National expressway netwotk National expressways Highways other than national expressways 9,531 8,295 1,236 [1] [] [1] 3,863 3, [1] [] [1] 2,31 1, [] [] [] 3,6 3,9 37 [] [] [] [] [] Of which are a length opened to traffic 9,57 [75] 3,8 [21] 2,23 [5] 3,21 [] 173 [] National expressways 8,228 [5] 3,36 [] 1,821 [5] 3,7 [] Highways other than national expressways 1,229 [21] 8 [21] 22 [] 37 [] 173 [] Of which are a length under construction (59) 7 [75] [6] (16) 23 [21] [6] (211) 8 [5] [5] (12) 3 [] [] National expressways (32) 67 [5] [5] (83) 16 [] [] (135) 8 [5] [5] (12) 3 [] [] Highways other than national expressways (139) 7 [21] [6] (63) 7 [21] [6] (76) [] [] () [] [] Regional expressway networks 59 [] 321 [] 263 [] 1 [] Of which are a length opened to traffic 57 [] 311 [] 29 [] 1 [] Of which are a length under construction (33) 25 [] [] (19) 11 [] [] (1) 1 [] [] Independent general toll roads 3 [5] 6 [5] 28 [] Of which are a length opened to traffic 3 [5] 6 [5] 28 [] Of which are a length under construction Note1 : Figures in parentheses denote the increase or decrease in value over figures for March 31, 215 Note2 : Length figures have been obtained by totaling all the sections that contain assets held by the Agency with the distance between ICs as the minimum unit. However, figures in parenthesis for "Of which are a length under construction" are the total distance of length for expressway sections undergoing new construction by expressway companies under agreements with the Agency, including sections for which the Agency already holds assets. Note3 : There may be discrepancies in figure totals due to the treatment of fractions. (2) New Opened Section The following Expressway sections newly opened in FY215. February 13th, 216 ShinTomei Expressway (between HamamatsuInasa JCT and ToyotaHigashi JCT) General National Road Route 68 (KenOExpressway) Kanzaki IC Daiei JCT 9.7km General National Road Route 68 (KenOExpressway) OkegawaKitamoto IC ShiraokaShobu IC 1.8km National Expressway Daini Tokai Expressway YokohamaNagoya Line HamamatsuInasa JCT ToyotaHigashi JCT 5.km Total 7.5km 5

9 2.Status of Debt Repayment (1) Changes in the Debt Balance(Financial Statement Basis) Changes in the debt balance of the Agency in FY216 are shown in the table below. The total amount of debt as of the beginning of the term(april 1, 215)was trillion yen, but decreased to trillion yen at the end of the term(march 31, 216)as the result of acceptance of billion yen in debt(debt accepted from expressway companies together with expressway assets), repayment of 3.35 trillion yen in debt and the issuance of trillion yen in bonds. Changes in debt balance in FY215 FY215 (1 million yen) (Reference)FY21 Debt balance at start of the period A 293, ,829 Debt accepted B 1,981 9,881 Debt repaid C 33,5,63 Fund raised D 16,21 2,75 Increase in book value from the amort ization of the discount on bonds payable E Debt balance at end of the period A+BC+D+E 288, ,925 Note1: The above figures do not include capital and inherited accounts payable relating roads (9.7 billion yen at the end of FY21, 5.7 billion yen at the end of FY 215). Note2: There may be discrepancies in figure due to rounding of fractions. Status of Business Execution in FY215 Changes According to Debt Category (1 million yen) Loans payable and bonds (face value) Debt Category Balance at start of period Increase during period New loan Debt accepted Decrease during period Repayme nt Balance at end of period Balance in discount on bonds payable Book in discount on bonds payable (Reference) At time of establishment Longterm loans payable Government borrowing (interestfree) Government borrowing (Interestbearing) 3,55 5 3,5 3,5 7,8 3, ,35 3,35 87,693 Private borrowing 5, ,66 3,9 5,298 5,298 31,78 Total 12, ,66,521 11,382 11, ,276 Government guaranteed bonds 215,96 12, ,89 26, ,325 59,2 Bonds Government subscribed bonds 15,832 FILP agency bonds 53,819 3,35 3,65 53, ,7 23,925 Privately offered bonds 18,8 Other bonds 8,3 7,675 3,5 12,925 12,925 Total 277,215 15,86 8,336 28,59 272, ,995 27,261 Longterm accounts payable (Longterm accounts payable relating to the construction of Tokyo Wan AquaLine),796 2,775,775 7,239 Total debt 29,917 16,21 1,983 33,5 289, , ,775 (Of which interestbearing debts) 291,362 16,21 1,983 32,55 286, ,13 373,976 Capital 55, ,7 55,7 3,712 Total of debts and capital 39,952 27,565 33,5 3, ,559 25,87 Note1: The above figures do not include inherited accounts payable relating roads. Note2: Capital in terms of the expressway account is shown in the Capital section. Note3: There may be discrepancies in figure due to rounding of fractions. 6

10 Status of Business Execution in FY215 (2)Status of Raised Funds The Agency's strategy for fundraising is characterized as "long term and fixed" to reduce the risk of increased interest rates and to ensure debt repayment. In line with the current climate of lowinterest rates, the Agency has also decided to increase the proportion of ultralongterm loans (i.e. over 1 years) to its fundraising measures. Implementing a large range of IR and exploring of new investors, several years bonds were issued for the first time in six years. And the borrowing limit was extended for twenty years. As a result, though the ratio of long term debt is increased, average procurement interest rate for the total amount of 1,621, million yen stably scored at low interest,.88%. Moreover, the average fundraising cost of interestbearing debt at the end of that period decreased to 1.37%. Status of raised funds in FY 215 Category Government guaranteed bonds Private borrowing FILP agency bonds Term Number of issuance Amount of fund raised (Unit: 1million yen) Interest rate (average) 1years 12 7,11.37% 2years 12, 1.7% 3years 1,2 1.1% years % Total 3 12,51.71% 2years % 15years 2 2.9% 2years 1 1,3 1.2% 3years % years 3 1,1 1.89% Total 2 3,35 1.9% Total 53 16,21.88% Average financing period Average remaining period of outstanding debts 18.years 7.8years (5.1years at the time of establishment) Note1: Interest rate (average) is presented as the simple weighted average of funds raised and the average subscriber's yield at the time of bond issuance. Note2: There may be discrepancies in figure totals due to rounding of fractions. Average fundraising costs for interestbearing debt Total amount (Unit: 1million yen) Cost Balance of interestbearing debt at time of Agency establishment (October 1,25) 373, % Balance of interestbearing debt at the start of FY ,371 1.% Debts accepted 1,981.51% Changes Debts redeemed or repaid 32,55 1.5% during the Raised funds 16,21.88% period Increase in book value from the amortization of the discount on bonds payable 86 Balance of interestbearing debt at the end of FY , % Note1: The above figures do not include inherited accounts payable relating to roads. Note2: Costs for loan financing shown in the above Balance of interestbearing debt are presented as the simple weighted average of the loan amount and the loan interest rate, while the funding cost of bonds is presented as the simple weighted average subscriber's yield at the time of bond issuance (funding cost of bonds included in "Debts accepted" is indicated by the simple weighted average of accepted book value and coupon rates.) Note3: There may be discrepancies in figure totals due to rounding of fractions. 7

11 3.Interestfree Loans to Companies We accepted 37,2 million yen of subsides from the national government or local public entities to partially cover funds to pay the cost of new construction and/or reconstruction of Metropolitan Expressway and/or Hanshin Expressway and provided interestfree loan to Metropolitan Expressway Co., Ltd., and/or Hanshin Expressway Co., Ltd. Also accepted 12 million yen of subsides from the national government to partially cover funds to pay the cost of development of Smart Interchange system to East Nippon Expressway Co., Ltd., Central Nippon Expressway Co., Ltd., and West Nippon Expressway Co., Ltd... Arrangements to Facilitate Reduction in Costs for New Construction, Reconstruction, Maintenance, Repairs and other Expressway Maintenance (1) Utilization of Subsidy Program Subsidization Program is established to encourage the companies to reduce their expense. Subsidy is provided to the company that makes a great effort on reducing their expense. In FY215, meeting called Subsidy program for reducing expense on new construction of expressway was held for three times.33 projects were recognized for their management effort, and 18 of those projects were completed its entire project and determined that approximately 9 million yen of the expense was reduced. (*see page 2 Subsidies Granted in FY215 for subsidy provision record) Status of Business Execution in FY215 Cost reduction achieved (27 216) Number of Projects recognized Cost reduction Amount 2 projects Approximately 11, million Also, the recognized project including ones have new technics are publicized on Website so the other companies can learn the method. Additionally, some of the methods are incorporated into their standard and positively utilized to reduce the cost. Subsidy Program Proccess Limit on Debt Assumption Subsidy Standard Amount Cost Reduction Breakdown of cost reduction Debt Assumption Case1 Cost Reduction not resulting from Managing Effort Cost Reduction by the Management E.g..) Change of soil and or ground condition assisted Case2 Cost Reduction not resulting from Managing Effort Cost Reduction by the Management A e.g. resulted by new technique applied Provision of Subsidy Plan Outcome The amount of subsidy to the companies shall be 1 2 the amount of reduction resulted by the management effort recognized out of the amount that is lower than the standard amount shall be the reduction resulted by the management effort (Case1) if A Subsidy A 2 (Case2) if A Subsidy 2 (2) Improvement on Subsidy Program Regarding repair projects, it is harder than new/renovation projects to utilize the program, we revised the system, reconsidering submission due of plan and its contents at March, 216. In addition, control measures for future maintenances are revised to encourage the utilization of the program for Special upgrade construction projects 8

12 Status of Business Execution in FY215 5.Exercise of Statutory Authority on Behalf of Road Administrators (1) Prohibition and restriction of traffic (Road Act No.6) For expressway, traffic prohibition standard is established based on regional characteristics and the road structure. Upon occurrences of accident or disaster, The Agency exerts the prohibition of traffic after receiving of the traffic prohibition request from the company designated by the standard. In the event of earthquake or heavy weather, traffic prohibition method and request procedure are determined before head and this allows the proper action to be implemented when the condition reaches a certain point determined. Furthermore, for the area where the risk of secondary disaster is high, more strict reference value will be set to prevent expansion of damage. (2) Permission for passage of special vehicles (Road Act No.72) Road Act (vehicle restriction) regulates limitation (standard limit) for weight, length, width, and height of vehicles. For those vehicles that exceed the standard limit need to meet the requirement (specified time for passing and etc.) and obtain permission (permission for passage of special vehicle)from the administrator to prevent any potential hazards to the traffic and the road structure. The companies are in charge of receiving application and The Agency issues the permission. (3) Regulations for the control of special vehicle violating restriction (Road Act No. 7) The Agency implements a control of vehicles violating the regulation and restriction in cooperation with the companies. The Agency executes orders for nonconforming vehicles to leave the expressway and implements instructions as Regulations for the control of necessary. special vehicle violating restriction 1 Development and enhancement of administrativeorder In addition to the original regulation, new standards such as limit of passage and order to reduce their load to establish much severe regulation. 2 Enhancement on instruction towards those who often violates the regulation In order to enhance the instruction towards those who often violated the regulation, The Agency issues warning letters for malicious cases and implement interview and give them a corrective action instruction after reviewing of violation records (numbers of time violated, and its contents) with 6 companies. For those personnel who does not comply the instruction, the system which publicized the correction instruction/order on the website is developed. And also severer order that can cancel the passage permission for more vicious cases is established. 3 Implement of immediate accusation Accusation had only been implemented upon serious accident, however, it is revised to be implemented for very vicious case as weight exceeds more than double of the regulation. This case is reported to police when the Agency confirms this vicious violation. Enhancement on instruction towards those who often violates the regulation 9

13 () Permission for road occupancy (Road Act No.32) Permission for road occupancy is provided to those who have physical facility within the expressway area. Entrustment of administrative affairs for occupancy has been started in 215.Local company that is familiar with road condition is assigned to inspect the adequacy. The Agency issues the permission based on the inspection result. This system helps the operation efficiently. Additionally, for popular cases prospected to be competitive, bidding system is applied. (5) Coupling permission (Road Act No.8, National Expressway Law No. 11) Entrustment of administrative affairs for occupancy Coupling permission is provided to private business personnel who operate rest station, gas service station, commercial facility and recreation facility at SA and/or PA at expressway. The fee for coupling has been revised based on national government and The Agency s operating procedure in 215. Status of Business Execution in FY215 Main cases of exercise of statutory authority on behalf of road administrators Measures Number of cases Prohibition and restriction of traffic Annual number : 2,17 Permission for passage of special vehicles Annual number : 3,368 Order for action against violation of the Cabinet Order on Vehicle Restriction Permission for road occupancy Annual number : 6,59 Total number of permission outstanding at the end of fiscal year : 16,93 Annual number of permissions given : 3,25 Coupling permission Total number (as of the end of FY215) : 71 6.Management of Railway Facilities Connecting Honshu and Shikoku Honshu Shikoku Highway (Hayashima Sakaide) straight is a road and railway bridge (hereinafter commonuse space), and the operation of railway facility is managed by The Agency. The Agency charges administration fee from West Japan Railway Company and Shikoku Railway Company (hereinafter JRShikoku),to operate the facility within the commonuse space with a cooperation from HonshuShikoku Bridge Expressway Company. Additionally, seismic strengthening project for railway leased facility and railway limited part within commonuse space was steadily conducted upon agreement between The Agency and JRShikoku. 1

14 Comparison of Debt Repayment Plan and Performance Comparison of Debt Repayment Plan and Performance 1.Compasrison of FY 215 Debt Repayment Plan and Performance Comparison of FY 215 Debt Repayment Plan and Performance (General Overview) Agency Unit : 1 million yen Outstanding balance (start of FY 215) Debts excluding construction such as specified renewal Difference (B) (A) Debt balance (start of FY 215) Difference (B) (A) Interestbearing debt Difference (B) (A) Infrastructure debt Difference (B) (A) Interestfree debt Difference (B) (A) Capital Difference (B) (A) Debts related to construction such as specified renewal Difference (B) (A) Debt balance (start of FY 215) Difference (B) (A) Interestbearing debt Difference (B) (A) Debt accepted from Companies Debts excluding construction such as specified renewal Difference (B) (A) Interestbearing debt Difference (B) (A) Infrastructure debt Difference (B) (A) Interestfree debt Difference (B) (A) Debts related to construction such as specified renewal Difference (B) (A) Interestbearing debt Difference (B) (A) Debts related to construction such as specified renewal Difference (B) (A) Other debts Difference (B) (A) Debts related to construction such as specified renewal Amount of consumption tax pertaining to obligated assumption before the repayment of debts Difference (B) (A) Amount equivalent to interests before debt repayment started Difference (B) (A) Total 36,79 36, , , , , ,231 2,231 1,3 1,3 55,1 55,35 6 1,938 1,63,38 1,85 1,52, National expressway network 257, ,863 22,932 22, , ,628 1,3 1,3 36,931 36,931 13,952 9,519,33 13,952 9,519, Metropolitan Expressway 51,578 51,89 89,918, ,73 38, ,188 2,188 1,66 1, Hanshin Expressway (Hanshin area) 35,57 35, ,583 28, ,5 28, ,992 6, Hanshin Expressway (Kyoto area) 1,511 1, ,53 1, ,53 1, Independent general toll roads

15 Income Difference (B) (A) Leasing fees Difference (B) (A) Charges for occupation* Difference (B) (A) Capital* Difference (B) (A) Expenditure Difference (B) (A) Management expenses* Difference (B) (A) Paid interest Difference (B) (A) Interestfree debt Difference (B) (A) Income / expenditure difference Difference (B) (A) Outstanding balance (start of FY 216) Debts excluding construction such as specified renewal Difference (B) (A) Debt balance (start of FY 216) Difference (B) (A) Interestbearing debt Difference (B) (A) Infrastructure debt Difference (B) (A) Interestfree debt Difference (B) (A) Capital Difference (B) (A) Debts related to construction such as specified renewal Difference (B) (A) Debt balance (start of FY 216) Difference (B) (A) Interestbearing debt Difference (B) (A) Total unpaid amount Difference (B) (A) Debt balance (start of FY 216) Difference (B) (A) Interestbearing debt Difference (B) (A) Infrastructure debt Difference (B) (A) Interestfree debt Difference (B) (A) Capital Difference (B) (A) Total 19,77 21,81 2,733 18,532 21,16 2, ,969 5, ,198, ,18 16,578 2,7 37,823 3,5 7, ,1 285, 7, , ,9 7,366 National expressway network 15,113 17,971 2,858 15,6 17,653 2, ,387 3, ,181 3, ,726 1,2 2,519 26,9 253,138 6, , ,27 6, ,29 215,77 6,952 Metropolitan Expressway 2,26 2, ,988 1, ,35 1,36 1 5,85 5, ,883 39, ,12 37,55 59 Hanshin Expressway (Hanshin area) 1,598 1, ,37 1, , ,282 35, Unit : 1 million yen Hanshin Expressway (Kyoto area) ,98 1, , ,219 1, 1,116 28,16 28, , 1, Independent general toll roads ,95 1, ,95 1, ,13 1,13 1,13 1,13 55,13 55, ,61 3,87 7, ,8 285,81 7,967 29,13 282,6 7,967 36,931 1,922 7, ,931 1,922 7, ,3 253,153 7, , ,222 7, ,23 215,92 7,151 1,95 1, ,1 5,365 78,222 39, ,351 37, ,13 1,13 1,13 1,13 55,13 55, ,366 35, ,265 28, ,231 28, ,98 1, , , , 1, , , ,931 1,922 7, ,931 1,922 7, Note1 : The outstanding balance at the beginning of FY 216 includes capital invested and fluctuation in infrastructure debt during the term. Note2 : There may be discrepancies in figure totals due to rounding of fractions. " Charges for occupation" refer to charges for occupation defined in Article 3 of the Order for Enforcement of the Agency Law,consolidation fees, income from selling land, etc., "Capital" refers to capital from the national government and subsidies for the disaster recovery defined in the Article 25 of the Agency Law, etc., and "Management expenses" refer to Agency's management expenses and consumption tax Comparison of Debt Repayment Plan and Performance 12

16 Comparison of Debt Repayment Plan and Performance (1) Debts excluding construction such as specified renewal The debt balance at the beginning of FY 215 was trillion yen. As a result of the income/ expenditure difference of trillion yen and the debt accepted from expressway companies of 1.52 trillion yen, the debt balance at the beginning of FY 216 was 28.5 trillion yen, which was 63.6 billion yen lower than at the beginning of FY 215 and was billion yen less than planned for FY 21. A summary of income and expenditure in the debt repayment is as follows: (Debt accepted from Companies) The debt accepted from expressway companies (debt accepted upon attribution of road assets excluding interestfree debt) was 1.52 trillion yen, which was 3.8 billion yen less than planned. This was because the completion of the ShinMeishin Expressway (between Yokkaichi JCT and Shin Yokkaichi JCT) was changed from FY 215 to FY 216, and also because some projects in previously opened sections are still due. (Income) With the gradual recovery of the economy, there was increase in leasing fee income due to the solid increase of expressway use, the total income was trillion yen, which was billion yen higher than planned. (Expenditure) Due to the low interest rate of the fund raised, paid interest was lower than planned. On the other hand, management expenses, etc. were higher than planned, because debt accepted from expressway companies was lower and the lease fee income was higher than planned. As a result, the total expenditure was billion yen, falling the plan by 26.3 billion yen. (2) Debts related to construction such as specified renewal Assumption of obligation was newly started for specified renewal projects in FY 215. In FY 215, obligated assumption form the companies resulted billion yen and amount of consumption tax pertaining to obligated assumption before the repayment of debts was minus.3 billion yen so the total amount of outstanding obligations resulted 3.7 billion yen for FY 216 which is 6.1 billion yen lower than the plan. (3) The gross amount of debt Results of the above, the gross amount of debt became 28,58.1 billion yen which is billion yen lower than the plan. Specified Renewal Project Specified renewal work is performed for the hazardous part that can lead serious damages such as traffic prohibit. The work includes largescale renewal and/or largescale repair. Largescale renewal is to reconstruct bridges and civil structure. It develops the entire structure. Largescale repair is to repair entirestructure for damage, corrosion or any kind of degradation. 13

17 2. Transition of the Debt Repayment Plan and Performance (Since the Agency was established) The following is a comparison between planned and actual figures since the Agency was established. Total amount of outstanding obligations was 28.5 trillion yen in 216 (the amount is a result as of the end of FY215). The debt repayment made by the balance of an account since the establishment of the Agency scored 1.1 trillion yen, and net reduction debt amount scored 6.8 trillion yen from the acceptance commitment of 7.3 trillion yen since the establishment of the Agency As a result of considering the debt assumption to the national government of 2.9 trillion yen for convenience improvement projects (note), the gross reduction debt amount since the establishment of the Agency resulted 9.7 trillion yen. Transition of the debt repayment plan and performance (outstanding obligations) Comparison of Debt Repayment Plan and Performance. trillion yen Plan Performance Debt accepted from companies +7.3 trillion yen Debt repayment 1.1 trillion yen Net decrease in obligations 6.8 trillion yen Succession obligation to the National government due to the Project to Promote the Effective Utilization of Expressways 2.9 trillion yen trillion yen Establishment the end the end the end the end the end the end the end the end the end the end the end of the Agency of 25 of 26 of 27 of 28 of 29 of 21 of 211 of 212 of 213 of 21 of 215 October 25 * Some part of debt repayment plan has deferent calculating system than the others. Therefore when you compare with plan and performance value, you need to correct closing account value based on debt repayment plan. For example, cash, outstanding account, and outstanding unpaid account are treated differently. Also, consumption tax, and depreciation expense are treated differently for individual items. (note) Expressway convenience improvement project is to encourage the development project such as conduction of additional function construction for smart interchange and rate cutting of expressway basing on the Act on Special Financial Measures for Expressway Convinience Improvement Project (revised on May 28) 1

18 Overview of FY 215 Financial Statements Overview of FY 215 Financial Statements 1.Profit and Loss Statement Income from expressway asset lease fees was trillion yen. Financial expenses amounted to 1.8 billion yen, a decrease of 27.6 billion yen over the previous fiscal year. Account items FY21 (A) FY 215 (B) Increase /decrease (B)(A) Ordinary expenditures 1,677 1,1 275 Account item details Unit : 1 million yen Expressway asset leasing expenses 9,657 9,88 Depreciation expenses, fixed asset disposal expenses, and taxes and +222 dues etc. related to leased expressway assets Managerial effort support activity expenses 11 3 Subsidy expenses for managerial efforts to encourage reduction of 7 expressway construction costs Railway facility utilization expenses Depreciation expenses, taxes and dues, and expenses for + outsourcing payment management related to railway facilities General administrative expenses 15 1 (Personal expenses) (9) (9) (+) (Other expenses) (5) (5) ( ) Financial expenses,29, Expenses required for procuring and repaying funds and interest Expressway asset acquisitionrelated expenses Sundry losses Among personnel expenses, other expenses, and interest incurred by expressway companies during the construction of expressways, the amount that is attributable to the Agency at the time of the transfer of assets Ordinary income 19,85 2, Expressway asset leasing income 19,79 19, Lease fee income related to Expressway assets Railway facility utilization income Usage fee income related to railway facilities Other income Earinings such as occupation fee income, and SA/PA coupling fee income. Refunds of asset collateral debts Collateral debts equivalent to depreciation on collateralized highways that were withdrawn and accounted as income Reduction of debts as contra to railway facility construction Financial income Interest received Sundry income Ordinary profit 5,167 5, Collateral debts for railway facility construction equivalent to the depreciation on those facilities that were withdrawn and accounted as income Nonrecurring losses Losses from transferring fixed assets Nonrecurring profit Net income 5,215 5, Return of reserves for Project to Promote the Effective Utilization of Expressways Reversal of carriedover provision from previous midterm target period + Gross Profit 5,215 5, Note : There may be discrepancies in total amounts because unit fractions have been disregarded. Ordinary expenditures The total amount for ordinary expenditures was 1.1 trillion yen, most of which comprised (1) expressway asset leasing expenses of 988 billion yen, which are mainly depreciation expenses on expressway assets, and (2) financial expenses of 1.8 billion yen, which is interest paid on debentures and debts, amounting to trillion yen, approximately 96% of total ordinary expenditure. Ordinary income The total amount for ordinary income was 2.3 trillion yen, most of which comprised expressway asset leasing income of trillion yen, approximately 97% of total ordinary income. This expressway asset leasing income corresponds to the amount projected in the agreements with expressway companies ( trillion yen) plus the amount subject to the variable lease fee system (238.2 billion yen). Ordinary profit or loss As a result, an ordinary profit of billion yen was posted. Nonrecurring losses Nonrecurring losses amounted to 2 billion yen, mostly comprised of an 22.7 billion yen "Losses from transferring fixed assets" by delivering the complete product, Hachioji Bypass to the national government. Nonrecurring profit Nonrecurring profit amounted to 29.8 billion yen, most of which comprised a return of 29.1 billion yen of reserves for the Project to Promote the Effective Utilization of Expressways, which was intended to compensate for a reduction in leasing fee income under the project. Gross profit Gross profit amounted to billion yen, which was an aggregate total of billion yen in ordinary income, 2 billion yen in nonrecurring losses, 29.8 billion yen in nonrecurring profit and 6 million yen in reversal of carriedover provision from previous midterm target period. 15

19 2.Balance Sheet The interest bearing debt balance at the end of FY 215 was trillion yen, a decrease of billion yen from the previous fiscal year. Account items End of FY 21 (A) End of FY 215 (B) Increase /decrease (B)(A) Account item details Unit : 1 million yen Assets Ⅰ Current assets 5,33 6,823 +1,519 Cash and deposits Marketable securities Accrued revenue including expressway asset leasing 3,692,16 Accounts receivable related to expressway assets and charges for +5 occupation Other 9 1,869 Amounts receivable, shortterm loans, inventory goods, and +1,778 deposits Ⅱ Fixed assets 3,971 1,96 2,2 Tangible fixed assets 399,63 399,7 Buildings, structures and equipment, land, and construction 556 suspense accounts related to expressway assets and railway facilities Intangible fixed assets 2,62 2,62 + Leaseholds and utility rights Investments and other assets 1, ,68 (Longterm loans) (1,71) (27) Noninterest bearing loans provided from the national and/or ( 1,67) local governments (Deposit) (1) () ( 1) Total assets 9,27 8,77 5 Debts Ⅰ Current debts 3,682 3,85,597 Agency bonds redeemable within 1 year 28,16 26,73 1,363 Bond redeemable within a year Longterm debt payable within 1 year,52 1,78 2,772 Debt repayable within a year Other 2,55 1,59 61 Accounts payable, expenses payable, and amounts deposited Ⅱ Fixed debts 26, ,992 1,669 Agency bonds 28,116 25,251 2,86 Bonds with a redemption period exceeding one year Longterm debts 8,385 9,633 +1,27 Debt with a payment period exceeding one year Longterm accrued expenses,775,75 Outstanding balance on installment payment debt for the Tokyo 21 Wan AquaLine Other 3,383 3,352 Asset collateral debts and debts collateralized by the construction 31 of railway facilities Ⅲ Reserves, etc., required by law 6,931 6, Reserve for optimizing the Agency s periodical accounting of Reserves for the Project to Promote the 6,81 6, profit and loss, toward the implementation of the Project to Effective Utilization of Expressways Promote the Effective Utilization of Expressways Reserve for equalizing railway facility usage fees collected from Reserve for railway facilities management railway service operations in regard to the management fee for a railway facility ( Seto Ohashi Bridge ). Total debts 36, ,713 6,562 Equity Ⅰ Capital 55,3 55, Funds contributed by national and local governments Ⅱ Capital surplus 8,32 8,26 5 Ⅲ Retained earnings 39,226,916 +5,69 Total shareholders equity 12,999 19,57 +6,57 Total debts and shareholders equity 9,27 8,77 5 Overview of FY 215 Financial Statements Note : There may be discrepancies in total amounts because unit fractions have been disregarded. Assets Total amount of assets was.877 trillion yen, mostly comprised of tangible fixed assets of trillion yen (approximately 97% of the total). Assets decreased by 5. billion yen from the previous fiscal year. The main reasons for this were a decrease of 55.6 billion yen in tangible assets (including 1 A 1.8 trillion yen due to depreciation and 2 An increase of 95.2 billion yen in assets transferred from the Companies). Debt Total debts were trillion yen mostly comprised of Agency bonds of trillion yen (including those redeemable within one year), and long term debts of trillion yen (including those payable within one year), adding up to trillion yen, which is approximately 9% of the total. Debts decreased by billion yen from the previous fiscal year, mainly owing to (1) a decrease of trillion yen due to redemption of Agency bonds and repayment of long term loans, (2) a decrease of 291. billion yen by the reversal of reserves for "Project to Promote Effective Utilization of Expressways", (3) an increase of trillion yen arising from issuance of new Agency bonds, () an increase of trillion yen from the acceptance of debts from expressway companies. Totale quity The total amount of equity was trillion yen, marking an increase of 65.7 billion yen over the previous fiscal year. The reasons for this were an increase billion yen in retained earnings via accumulation of gross income. Retained earnings, the accumulation of net income of each business year, and the cumulative total of depreciation are the resources for debt repayment. Therefore, along with the increase in the amount of debt repayment, retained earnings will also increase. This is shown on the Balance Sheet as though the expressway assets owed by debts are owed by retained earnings (capital) instead. 16

20 Present Condition of Expressways Present Condition of Expressways The Agency establishes the common objective indicator between companies 機構は (Outcome indicator: comprehensive customer satisfaction, fatal and injury accident ratio, and etc.) for users and customer to see the management status of each accompanies, and compares the results between companies and confirms and reviews the status to develop management standard and the convenience of the system they have. Outcome Indicators of Plan and Performance Indicator definitions Degree of overall customer satisfaction [Unit : Points] Degree of satisfaction indication by results of CS surveys, etc. (5level evaluation) Yearly number of users by vehicles [Unit : 1, vehicles hours per year] Number of vehcles which passed the tollgates. *2 Time lost due to mainline traffic congestion [Unit : Hours per km year] Loss of time per year of highway users due to traffic congestion. *3 East Nippon Central Nippon West Nippon Honshu Shikoku Metropolitan Hanshin FY 21 Results FY 215 Targets (Midrange target *1 ) (3.7) (3.6) (3.5) ( ) (3.5) (3.7) FY 215 Results FY 21 Results FY 215 Results 1, FY 21 Results 662 1, ,32 8 FY 215 Results 618 1, , FY 21 Results Users Perspective Roadwork time [Unit : Cases per 1 million vehicles km] Time per year of traffic restrictions due to roadworks per kilometer of road. (Excluding intensive construction * ) < congestion loss time occurred by construction > FY 215 Results (77) <23> 83 (83) <225> 118 (96) <39> 15 (17) 115 (23) 21 (17) <26> 17 congestion loss time occurred by construction [unit:1, vehicles per hour] (Excluding intensive construction * ) (83) (113) (9) (115) (212) (17) < congestion loss time occurred by construction > <16> <188> <62> < > < > <2> FY 21 Results Disaster/ weather, Hours of closure [Unit : Hours] Yearly number of hours of closure due to rain, snow, accidents, constructions, etc. *5 Accident and the others Construction FY 215 Results Disaster/ weather, Accident and the others Construction 1: Fiscal year shown for midrange target: FY 216 for East Nippon Expressway Co., Ltd.; FY 217 for Central Nippon Expressway Co., Ltd.; FY 215 for West Nippon Expressway Co., Ltd.; FY 217 for Metropolitan Expressway Co., Ltd.; FY 216 Hanshin Expressway Co., Ltd. (only comprehensive customer satisfaction). 2: The numbers of vehicle were counted as one time if the same vehicle go through the tollgate multiple times for Metropolitan Expressway Co., Ltd. and Hanshin Expressway Co., Ltd. 3: As for East Nippon, Central Nippon and West Nippon, the data collection period was from January 1 to December 31. As for HonshuShikoku, Metropolitan, Hanshin, the data collection period was from April 1 to March 31. : Shown times in excluding intensive construction are calculated excluding the time for road construction which had been publicized of its project before head so that the customers could avoid going into construction area. 5: The numbers were calculated by the following formula. (Hours of closure for both tracks) (Distance)=Yearly total hours, distance (Yearly total hours, distance) (Length of routes in service)=total hours of closure