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1 Japan Railway Construction, Transport and Technology Agency (Incorporated Administrative Agency) (Construction Account) 1. Summary of operations implemented using FILP funds 2. Amount of lending under FY2017 FILP FY2017 FILP Estimated policy (subsidy) cost analysis of the project Estimated outstanding amount of FILP lending at the end of FY2016 1,063.1 (1) Policy (subsidy) cost (3) YeartoYear comparison analysis Category FY2016 FY2017 Fluctuation Category FY2016 FY2017 Fluctuation 4. Fluctuation in retained losses Total ( =policy cost(a)) 1, , Under the private railway project, Japan Railway Construction, Transport and Technology Agency undertakes the construction and major improvement of private railway systems in major urban regions to increase commuter transportation capacity, reduce congestion rates, increase the convenience of transportation, and maintain and improve urban functions. Under the Shinkansen new bullet train line project, JRTT constructs and leases Shinkansen lines to form nationwide highspeed railway networks to contribute to developing the national economy, expanding the national life sphere and promoting regional development. Note: Major nonfilp projects include an urban railway convenience promotion project. 1. Subsidies, etc. from the Government 1, ,040.1 (A) Policy cost (previously cited) (A') Policy cost obtained by recalculating (A) 2. Money transferred to the Government using the same assumed interest rate as in the Subtotal (1+2) 1, , Opportunity cost of capital investments, etc. from the Government Subtotal (1+2+3) 1, ,040.1 FY2016 analysis (B) Policy cost of (A') generated in FY2017 or later The FY2017 policy costs of billion yen represent the Shinkansen project that was newly subjected to the policy cost analysis. In addition to the Shinkansen project policy cost, no policy cost will be generated in FY2017 This is because no interest subsidies will be generated in the private railway project in the future according to the estimation at the presently set interest rate Analysis period (years) (2) Breakdown of policy cost by the time of the provision of funds (4) Sensitivity analysis (cases where assumptions change) Category FY2016 FY2017 Fluctuation Changed assumption and extent of change Policy Cost (Fluctuation) (A) Policy cost (previously cited) 1, ,040.1 Funds raised +1% 970.4(69.6) 1) Opportunity cost of capital investments, etc. provided before the beginning of the analysis period 2) Policy cost expected to be newly accrued during the analysis period 1, ,040.1 Subsidies from the Government 1, ,040.1 Money transferred to the Government Policy cost accrued with a change in surplus funds Opportunity cost of capital investments, etc. <Reference> Budgeted amounts of subsidies and capital investment in FY2017 Subsidies: 71.8 billion yen Capital investment: billion yen 4. Outline of estimation and project prospect employed in the analysis [Outline of estimation] Fluctuation in opportunity cost Subject to the estimation are the private railway project for the construction, major improvement and transfer of private railways subjected to FILP and the Shinkansen project for the construction and leasing of Shinkansen lines. (As for the Shinkansen project, only three portions of three new lines under construction are subjected to the estimation.) The estimation is made based on the current system (cost collection method). Under the system, a part of the funds for the construction of railways that is considered as interestbearing loans will be collected in full through of the payments for the transfer collected after the transfer from the railway operator by the principalinterest equal semiannual repayment system. The length of analysis period is 27 years (28 years in FY2016), during the project will be completed. Fiscal loans are planned to cover the construction of three portion of three new lines under construction and be repaid with rent income. The analysis period covers 28 years (to FY2044) in which the fiscal loans will be repaid. The future business was simulated based on the preconditions given under the abovementioned presuppositions. The results of the simulation were used to calculate the necessary policy cost to carry out the projects. * Components in each column may not add up to the total because of rounding.

2 [Project prospect] Private railway construction projects which are being built now under the direction of the work execution plan will be completed by FY2018, and the cumulative amount of work costs from FY2017 on will be approximately 4.1 billion. Values for the transfer of private lines shall be collected an equal semiannual installment basis for 25 years after transfer, and will be totally redeemed by FY2043. No prepayment is expected from railway operators. Result Estimated Assumptions for calculation Planned FY Construction cost As noted in an agreement between the government and ruling parties on Handling of New Shinkansen Railway Lines on January 14, 2015, new Shinkansen lines will form nationwide highspeed railway networks to contribute to developing the national economy, expanding the national life sphere and promoting regional development and should be opened to produce their effects as early as possible for the national economy. While three new lines three portions now under construction are expected to take much time to be completed for opening, it is significant for the national economy to accelerate and intensify investment within the planned cost range to early produce the effects of their opening. On the assumption of relevant local governments maximum efforts, their completion and opening should be frontloaded, according to the agreement. (Schedules for opening of three new lines three portions under construction) *Hokkaido Shinkansen (ShinhakodatehokutoSapporo portion): Scheduled to open at the end of FY2030. *Hokuriku Shinkansen (KanazawaTsuruga portion): Scheduled to open at the end of FY2022. *Kyushu Shinkansen (Takeo OnsenNagasaki portion): Scheduled to open in FY2022 To use future rent income in advance for funding for frontloading their completion, JRTT will utilize longterm, fixedlowinterest FILP funds to reduce interest cost and accelerate the development of new Shinkansen lines. Construction cost Estimated Planned Assumptions for calculation FY Hokkaido Shinkansen (ShinHakodateHokuto Sapporo) ,562.6 Hokuriku Shinkansen (Kanazawa Tsuruga) Kyushu Shinkansen (TakeoOnsen Nagasaki) Total , Reasons for granting of subsidies, mechanism and underlying laws The Agency receives subsidies from general accounts for loans and a part of the interest payable of railway construction bonds, to ease the burden of transfer prices on private railway operators. (Underlying laws and regulations) As for subsidies, each operator receives half of what exceeds beyond the interest rate specified in the annual budget for funds financed in each year. There are no underlying laws. (they are budgetary measures) Based on the Nationwide Shinkansen Railway Development Act, the minister of land, infrastructure, transport and tourism designated JRTT as the builder of three new Shinkansen lines Hokkaido Shinkansen (AomoriSapporo), Hokuriku Shinkansen (TokyoOsaka) and Kyushu Shinkansen (FukuokaNagasaki) for which a construction plan was decided on in Based on an agreement between the government and ruling parties in December 2004 and that in December 2011 on Handling of New Shinkansen Railway Lines, three new Shinkansen lines three portions Hokkaido Shinkansen s ShinhakodatehokutoSapporo portion, Hokuriku Shinkansen s KanazawaTsuruga portion and Kyushu Shinkansen s Takeo OnsenNagasaki portion totaling about 393 kilometers are now under construction. (Underlying laws and regulations) Part of the subsidies are covered by rent income from the Japan Railway group. Of the remaining subsidies, twothirds are provided by the central government and onethird by local governments under Article 13 of the Nationwide Shinkansen Railway Development Act and Article 8 of an ordinance for the enforcement of the Act. Payments to the National Treasury are defined for in the Japan Railway Construction, Transport and Technology Agency (Incorporated Administrative Agency) Act. [Japan Railway Construction, Transport and Technology Agency (Incorporated Administrative Agency) Act] (Exceptions to profit and loss deposition, etc.) Article 18: The Agency may allocate funds approved by the Minister of Land, Infrastructure, Transport and Tourism equivalent to the amount of reserves (if such exist) provided for in Article 44, Paragraph 1, of the Law for development implemented as provided for in Article 44, Paragraph 1 or 2, relevant to the final project year of the mediumterm target period) provided for in Article 29, Paragraph 2, 1, of the Act ("mediumterm target period" in this and the following paragraph) in Grant Account to the financing of operations provided for in Article 13 (including transfers provided for in the foregoing article, Paragraph 3, and supplementary provisions, Article 3, Paragraph 11) based on the stipulations of the approved mediumterm plan of Article 30, Paragraph 1, of the Act (the plan subsequent to revision in the event that revision has been authorized as provided for in the latter section of the Paragraph 1) for the mediumterm target period subsequent to said mediumterm target period. 2 The Agency's railway facility subsidies account may establish the reserve fund which is defined in the same paragraph in the mediumterm target period subsequent to current mediumterm target period if there is still remaining balance (if such exists) of funds approved by the Minister of Land, Infrastructure, Transport and Tourism derived by deducting funds approved. 3 The Agency shall pay the remaining balance (if such exists) to the National Treasury derived by deducting the amount approved as provided for in preceding two paragraphs from an amount equivalent to reserves as provided for in Paragraph 1.

3 4 In regard to the application of the proviso of Article 44, Paragraph 1, of the Act in the account relating to operations described in Paragraph 1, s 1 to 3, of the foregoing article, the text "in the event of allocation to uses of Paragraph 3 as provided for in the same paragraph" in said paragraph shall read "in the event of the payment to the National Treasury of an amount calculated as stipulated by government ordinance or allocation to uses of Paragraph 3 as provided for in the same paragraph." 5 The stipulations of Paragraphs 1 and 3 shall apply correspondingly to the accounts of the foregoing paragraph. In such event, "Article 44, Paragraph 1, of the Act" shall read "Article 44, Paragraph 1, of the Act upon revision as provided for in Paragraph 4." 6 In addition to the stipulations of the foregoing paragraphs, items required for payment procedures for payments and the disposal of other reserves shall be stipulated by government ordinance. [Act on General Rules for Incorporated Administrative Agencies] Article 44 For each business year, when profits have accrued as a result of the calculation of profits and losses, an Incorporated Administrative Agency must offset any losses carried forward from the preceding business year, and if there is a remainder, it must record the amount of the remainder as reserve funds; provided, however, that this does not apply if it appropriates the amount of the remainder for the use referred to in paragraph (3) pursuant to the provisions of the paragraph. 2 For each business year, an Incorporated Administrative Agency must, when losses have occurred as a result of the calculation of profits and losses, record the losses by reducing the amount of the reserve funds under the provisions of the preceding paragraph, and if there is still a shortfall, it must dispose of the amount of the shortfall as a loss carried forward. 3 When there is a remainder provided for in paragraph (1), an Agency Managed under the Mediumterm Objectives and a National Research and Development Agency may appropriate all or a part of the amount of the remainder for the use of a surplus referred to in Article 30, paragraph (2), item (vii) for a Mediumterm Plan (meaning a Mediumterm Plan referred to in Article 30, paragraph (1) as authorized under same paragraph (or a revised plan if the agency obtains authorization for revision under the provisions of the second sentence of same paragraph); the same applies hereinafter) or the use of a surplus referred to in Article 355, paragraph (2), item (vii) for a Medium to Longterm Plan (meaning a Medium to Longterm Plan referred to in Article 355, paragraph (1) as authorized under the paragraph (or a revised plan if the agency obtains authorization for revision under the provisions of the second sentence of the paragraph); the same applies hereinafter), by obtaining the approval of the competent minister. 4 The disposal of reserve funds under the provisions of paragraph (1) is specified by the relevant Individual Act. 6. Special remarks The Corporation for Advanced Transport and Technology was integrated with the Japan Railway Construction Public Corporation on October 1, 2003, and subsequently reestablished as the Japan Railway Construction, Transport and Technology Agency (Incorporated Administrative Agency) based on the Reorganization and Rationalization Plan for Special Public Corporations. Policy costs of the Agency are required to promote the railway improvement in response to urgent issues, such as the demand for increased transportation capacity of work and social commuters and eased congestion in metropolitan areas, improved traffic flow, and maintenance and enhancement of urban functions. Since all the costs to raise funds for the projects shall be collected from railway operators on a longterm installment basis, the reduction of such costs through the investment of FILP would reduce construction costs, and consequently ease the burden on railway operators, and eventually on the general public, as ultimate users. As for additional FILP measures under the second supplementary budget for FY2016, the government built on the Economic Measures for Realizing Investment for the Future (Cabinet Decision on August 2, 2016) to take advantage of the current low interest situation for providing superlongterm funds for infrastructure development to accelerate investment for the future. The JRTT construction account was then set to utilize lowinterest FILP loans for the construction of new Shinkansen lines to reduce interest cost and accelerate the construction. (Reference) Outcome and social and economic benefits of operations Expansion of existing lines to meet the increased demand of transportation capacity of commuting in metropolitan areas and their surrounding areas, construction of lines extending into city centers directly through underground lines, and construction of new lines for large scale new town development, intended to reduce commuting time and ease congestion. Transfer result (As of the end of FY2016) Transfer lines: 25 sections: 154.8km/extension Reduced traveling time and eased congestion Odakyu Odawara Line (Higashi Kitazawa Izumitamagawa: Quadruplication) (Setagayadaita Shimokitazawa) Decreased congestion rate: 208 % 166% Albeit the difficulty to obtain the quantitative measurement of the benefits generated by the operations, the benefit of the reduction of the time required and the moderation of congestion rate related to the operations currently under way can be estimated as follows based on a certain condition; in the case where the social discount factor is set to 4% and the longest analysis period is set to 30 years: 1,199.2 billion yen. in the case where the social discount factor is set to that of the policy cost analysis: 1,698.5 billion yen. Note: The quantitative benefit is estimated by the Agency Based on assumptions for the policy cost analysis, JRTT estimates users benefits from Shinkansen development (improvement of convenience for users through shorter traveling time and fewer transfers), supplier benefits (a gap between railway operators profits based on the absence and presence of Shinkansen development) and environment improvement benefits (environment improvement through users switch from aircraft or automobiles to railways). Case for an analysis period of 50 years after Shinkansen opening with the social discount factor assumed at 4%: 3,176.3 billion yen Portions for development Hokkaido Shinkansen (ShinHakodateHokuto Sapporo) Hokuriku Shinkansen (Kanazawa Tsuruga) Kyushu Shinkansen (TakeoOnsen Nagasaki) Total Total benefits 1, , ,176.3 in the case where the social discount factor is set to that of the policy cost analysis: 3,480.5 billion yen.

4 1,200 (Reference) Changes in Policy Costs by Component <Japan Railway Construction, Transport and Technology Agency (Incorporated Administrative Agency) (Construction Account)> Policy costs (total amount) Of which, subsidies, etc. from the government Of which, money transferred to the government Of which, opportunity cost of capital investments, etc. from the government 1, , FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Note: Policy costs for each fiscal year differ in assumptions including interest rates applied to estimates. (Point) The JRTT policy had been generated through interest subsidies from the government to mitigate costs for the transfer of private railway lines. Under the estimates at interest rates set between FY2007 and FY2016, no interest subsidies were estimated for the future, with no policy cost generated. Regarding additional FILP measures under the second supplementary budget for FY2016, the government built on the Economic Measures for Realizing Investment for the Future (Cabinet Decision on August 2, 2016) to utilize lowinterest FILP loans for the construction of new Shinkansen lines and subject the Shinkansen project to the policy cost analysis in FY2017. As a result, the policy costs increased by billion yen from the previous analysis.

5 (Reference) Financial Statements Balance Sheet (Construction Account) (Unit: million yen) End of FY2015 End of FY2016 End of FY2017 End of FY2015 End of FY2016 End of FY2017 (Result) (Estimated) (Planned) (Result) (Estimated) (Planned) (Assets) (Liabilities and equity) Current assets 1,690,933 2,264,700 2,304,122 Current liabilities 520, , ,081 Cash and bank deposits 254, , ,962 Shortterm loans payable 118,381 Securities 23,000 44,000 44,000 Japan Railway Construction, 153, , ,500 Transport and Technology Agency Installment sales receivables 1,353,867 1,285,240 1,234,522 bonds to be redeemed within one Disbursements for uncompleted construction 27,279 26,578 28,996 year Accrued income Discount on bonds to be 0 Accounts receivable 30,841 7,103 7,249 written off within one year ( Other current assets 1,019 ) Longterm debts payable to 153, , ,055 Fixed assets 5,834,428 5,991,337 6,129,875 be repaid within a year Tangible fixed assets 5,594,843 5,741,338 5,889,532 Longterm loans from other 30,560 29,705 28,373 Buildings 191, ,437 accounts to be repaid within a year 173,436 Structures 3,994,521 3,877,544 3,746,317 Accrued payments 35,078 19,637 17,802 Machinery and equipment 224, , ,674 Accrued expenses 1,572 2,388 2,803 Vehicles and transportation equipment Advances received 10,129 10,059 9,989 Tools furniture and fixtures Advance received for entrusted business 16,973 11,841 28,438 Land 669, , ,512 Reserves Construction in progress 515, , ,313 Reserve for bonuses Intangible fixed assets 157, , ,658 Other current liabilities Perpetual lease 56,567 56,567 56,567 Fixed liabilities 6,321,420 7,118,789 7,226,278 Software Asset collateral liabilities 4,244,427 4,310,377 4,428,480 Facilities usage rights 100, , ,943 Asset collateral subsidies 3,473,191 3,390,061 3,258,909 Other intangible fixed assets Asset collateral expenses 38,574 36,558 33,809 Investment and other assets 82,489 81,198 79,684 Collateral subsidies for 302, , ,115 Longterm accounts due 49,117 47,754 46,245 construction in progress Expected value of receivable loan fees Collateral expenses for cons 292 Collateral reserve for retirement pensions 32,125 32,125 32,125 Shinkansen asset collateral liabilities 430, , ,648 Security deposit and guarantee Japan Railway Construction 706, , ,517 Transport and Technology Agency bonds Discount on bond () Longterm loans payable 667,523 1,432,765 1,357,409 Longterm loans of other accounts 154, ,246 96,873 Longterm advances received 210, , ,293 Reserves Reserve for retirement pensions 40,833 40,617 41,550 Collateral account for continuing debt 296, , ,156 Other fixed liabilities 24 Reserves based on law Reserves for adjustments on leased assets 114, , ,105 (Total liabilities) 6,956,395 7,569,112 7,747,463 Capital Financing by the Governmen 51,967 51,709 51,709 Capital surplus 505, , ,574 Capital surplus 517, , ,980 Accumulated depreciation 11,694 12,528 13,406 outside of profit and loss () Accumulated impaired loss outside of profit and loss () Retained earnings 11,216 11,805 12,250 Reserve carried forward during 8,880 8,880 8,880 former mediumterm target period Reserve fund 1,682 2,336 2,926 Unappropriated income for the current year (Of this, gross profit) (Total equity) 568, , ,534 Total assets 7,525,361 8,256,038 8,433,997 Total liabilities and equity 7,525,361 8,256,038 8,433,997 Notes 1. The balance sheet includes costs for projects other than those subject to the policy cost analysis. 2. Components may not add up to the total because of rounding. Income Statement (Construction Account) FY2015 FY2016 (Result) (Estimated) (Losses) FY2017 (Planned) FY2015 (Result) FY2016 (Estimated) (Unit: million yen) FY2017 (Planned) (Profits) Ordinary expenses 360, , ,772 Ordinary income 361, , ,217 Construction administrative expenses 344, , ,240 Railway facility transfer revenue 87,219 79,776 76,322 General and administrative expenses 1,334 1,367 1,236 Railway facility lease revenue 111, , ,441 Finance expenses 14,702 16,820 12,214 Revenue from cargo adjustment project 11,236 14,907 14,907 Miscellaneous losses Revenue from entrusted business 4,138 15, Temporary losses 3,782 Revenue from subsidies for Loss on retirement of fixed assets 2 railway improvement projects Loss on sale of fixed assets 58 Revenue from financial assistance Transfer to the special business account 3,723 for railway improvement projects Net profit Reversal of asset collateral subsidies 127, , ,727 Gross profit Reversal of asset collateral expenses 5,721 3,101 3,147 Reversal of collateral subsidies 749 for construction in progress Reversal of money transferred to the special business account collateral liabilities 23 Reversal of collateral account for continuing debt 11,206 10,335 10,331 Financial income Miscellaneous income 1, Temporary profits 3,723 Reversal of money transferred to the special business account collateral liabilities 3,723 Total 365, , ,217 Total 365, , ,217 Notes 1. The income statement includes costs for projects other than those subject to the policy cost analysis. 2. Components may not add up to the total because of rounding.