CENTRAL JAPAN RAILWAY COMPANY ANNUAL REPORT CENTRAL JAPAN RAILWAY COMPANY Annual Report 2013 For the Year Ended March 31, 2013

Transcription

1 CENTRAL JAPAN RAILWAY COMPANY ANNUAL REPORT 2013 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2013 For the Year Ended March 31, 2013

2 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 continually carry out its mission. Percentages of Japan as a whole Area ( As of October 2012) Population ( As of the end of March 2012) Prefectural GDP ( nominal ) ( FY ) JR Central s Market Area other SAPPORO Area: Approx. 380,000 km 2 Population: 126 million (As of the end of March 2012) Shinkansen Conventional Lines JR Central Other JR A Message from the Management 2 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 High-Speed Rail Systems 18 Affiliated Business 20 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 Population Density (As of the end of March 2012) Japan (as a whole) JR Central s Market Area (Base) 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 2012 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 SHIN-AOMORI Real Estate Merchandise and Other Hokkaido Railway Company Consolidated Operating Revenues Composition Other Transportation 22 Profile 28 Organization Chart 28 Operating Area 29 Company History 30 Board of Directors, Corporate Auditors and Corporate Officers 31 Corporate Governance 32 Summary of Performance Financial Highlights 34 Summary of Performance 36 Financial Section 38 Appendices NIIGATA East Japan Railway Company Financial and Transportation Data 66 Operating Environment 70 International Railway Comparison 70 West Japan Railway Company NAGANO Note: Consolidated composition is based on the revenues from outside of JR Central's group Financial Comparison of Three JR Companies 72 Stock Information 73 HAKATA KAGOSHIMA-CHUO HIROSHIMA Kyushu RailwayCompany OKAYAMA TAKAMATSU Shikoku Railway Company KYOTO SHIN- OSAKA NAGOYA SHIZUOKA Central Japan Railway Company TOKYO Miscellaneous Conventional Line FY data Non-Consolidated Operating Revenues Composition Affiliated Businesses Tokaido Shinkansen 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 Notes: 1. Fiscal 2012, the year under review, refers to the one-year period ended March 31, 2013 (FY / FY2012). 2. In this report, figures of financial information are truncated, while statistical data and all percentages are rounded. 1

3 A Message from the Management Yoshiyuki Kasai Chairman In regard to the railway business, JR Central prioritizes maintaining safe and reliable transportation in its fundamental policy. Based on this primary principle, we also continue its fundamental policy of stably and sufficiently fulfilling its long-term mission to maintain and develop, in an integrated fashion, both the Tokaido Shinkansen, which serves as Japan s main transportation artery, and the conventional line network in the Tokai (such as Nagoya or Shizuoka) region, and we constantly strive to provide services that are chosen by the customers and improve the efficiency of its business operation. 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 frame for recovering investments is extremely long. Due to such business structure, it is vital that we manage our railway business strategically based on a long-term perspective, rather than overemphasize short-term profitability. Therefore, we are further improving the quality of our regular railway services and promoting mid- and long-term projects in a systematic manner while enhancing our financial strength. Railway Businesses Safety Measures For our railway business, we started the large-scale renovation to keep and improve the safety of civil engineering structures of Tokaido Shinkansen. Also we will steadily promote earthquake measures to avoid derailments and deviations of Tokaido Shinkansen, renovation of the Hamamatsu Workshop, reinforcement of earthquake resistance of bridge supports on the conventional lines, reconstruction of an earthquake-proofing structure of Mishima Station and so on. Furthermore, we are systematically maintaining and renewing tracks and equipment including replacing sleepers on the Tokaido Shinkansen. Additionally, we try to further enhance measures for Tsunami by referring to hazard maps published by each local government. Improving Transportation Service In regard to the Tokaido Shinkansen, while proceeding with introduction of a new train set, Series N700A, which has adopted the newest technology, we will promote the conversion of Series N700 to equip technologies adopted by Series N700A. We will also strive to set a flexible train schedule during busy seasons and hours by using the track #27 of Shin-Osaka Station which opened when the Shinkansen timetable changed in March The major renovation work of Shin-Osaka Station which began seven years ago will be completed by the end of FY2013. We are making efforts to further improve the transportation service of conventional lines by promoting the projects to electrify the Taketoyo Line and to plan the replacement with new diesel railcars. As far as sales are concerned, we are promoting efforts to expand the use and increase the members of Express Reservation service and PULS EX service. In addition, we will strive to promote our marketing policy by developing travel products and tourist promotion campaigns using attractive tourism resources such as Kyoto, Nara, Tokyo, Hida and Ise, where Shikinen Sengu Ceremony of Ise Jingu (Shrine) is held, and by increasing tour packages for foreign visitors. Furthermore, while we will establish the nationwide mutual use of IC cards, we will try to promote the use of the railway and electronic money service by TOICA. In regard to passenger-related facilities, we are advancing installation of new movable platform fences at Tokyo Station and Nagoya Station and continue to set smoking rooms at all stations of Tokaido Shinkansen. We will also continuously provide barrier-free facilities including installation of elevators, multipurpose toilets and new Braille blocks that have lines to indicate the direction of the edge of the platform as warning blocks on platforms. Promoting the Chuo Shinkansen using the Superconducting Maglev System Currently, the Tokaido Shinkansen, which is vital to our business, is in its best state ever in terms of equipment and service. We aim to continue their further improvement through the efforts mentioned above. The Chuo Shinkansen that utilizes the Superconducting Maglev system will enable us to continue our mission of operating high-speed railway linking the Tokyo Metropolitan areas, Chukyo regions and Kinki regions, which is vital to our business, and will provide the future foundation for the company. It has been 48 years since the inauguration of the Tokaido Shinkansen which presently fulfills the mission, and we have entered a time when we must think of drastic ways to deal with aging and large-scale disasters based on the fact that it takes a very long time to construct and realize a railway. In the wake of the Great East Japan Earthquake, the need for redundancy in our main transportation arteries has become even more important. It is for this reason that we will realize to construct as quickly as possible the bypass that can substitute the role of the Tokaido Shinkansen and that utilizes the Superconducting Maglev system, which we have developed, under the condition that we bear the cost of rail construction and operate it in an integrated manner along with the Tokaido Shinkansen. While promoting this project, we shall make a necessary investment in to enhance competitiveness and ensure safe and reliable transportation as well as ensure sound management in which we will continue to provide stable dividends. We will also surely and steadily engage in various efforts aimed at the realization of the Chuo Shinkansen first from Tokyo to the Chukyo metropolitan area and thereafter to the Kinki metropolitan area. Specifically, we will promote the preparation for construction by proceeding with the procedures of environmental impact assessment, such as publication of the Draft Environmental Impact Statement between Tokyo and Nagoya, as the first phase. With regard to Yamanashi Maglev test line, after completing the extension of the test line to 42.8km and equipment renewal, we will restart test runs with the new Series L0 (L zero). Furthermore, we will continuously brush up the technology of Superconducting Maglev for which the technical criterion has been set and which has been completed as a practical technology. Since we decided to bear the cost of rail construction, we plan to reduce thoroughly the cost of construction, operation and maintenance, which will be inspected by the Commission for Cost Reduction of Chuo Shinkansen Construction, while ensuring safety. We will flexibly distribute resources in an optimum fashion in accordance with managerial environments. Promoting Technological Development and Enhancement of Technical Capability For promoting technological development and enhancing technical capability, at the Komaki Research Center and other facilities, we will focus on research and development of practical technologies regarding maintenance and reinforcement of civil engineering structures starting with the Shinkansen, transportation services and measures to counter natural disasters. In addition, we are promoting the deployment of high-speed railway and Superconducting Maglev in overseas projects by applying comprehensive high-speed railway technologies. We continue to engage in marketing activities to corridors that have been selected as viable targets. Yoshiomi Yamada President Affiliated Business In regard to non-railway businesses, we are proceeding with construction and tenant leasing of the Nagoya Station New Building toward its completion at the end of We are also striving to increase revenue with our commitment to revitalize commercial facilities of station buildings and merchandise businesses. Furthermore, we will engage in efforts to enhance the earning capability of JR Central group companies by further developing the agricultural business and leveraging our assets. Environmental Conservation Activities In regard to global environmental issues, we have actively worked to make the public aware of the superiority of railway as a transportation means friendly to the global environment, and we are continuing with efforts that contribute to conservation of the global environment such as the introduction of the Series N700A, which enables large reductions in energy consumption, and the replacement with energy-efficient rolling stock for conventional line. We will also be making effort in reducing resources/energy in our daily operation. Reduction of Long-term Debt and Payables We have reduced our long-term debt and payables, which had once totaled 5.5 trillion yen at its highest, by approximately 2.8 trillion yen, and we have steadily continued with efforts to strengthen our financial foundation. We will continue striving to reduce long-term debt and payables while steadily promoting key measures. Going forward, we will continue to strive to ensure safe and reliable transportation, improve customer service and pursue efficiency and cost reduction at all levels including equipment investment. At the same time, we shall surely and steadily promote efforts aimed at the enhancement of the managerial foundations of our businesses, starting with the Tokaido Shinkansen, and construction of the Chuo Shinkansen, while also striving to reduce long-term debt and payables and continue to offer stable dividends. Chairman Yoshiyuki Kasai President Yoshiomi Yamada 2 3

4 Capital Investment Capital Investment in FY2013 (Year ended March 31, 2014) Ensuring Safe and Reliable Transportation Capital Investment123 billion yen P6 Reference Strengthening Technological Capability, Pursuing Overseas Projects & Preserving the Global Environment Capital Investment1 billion yen P18 Reference We will give priority to ensuring safe and reliable transportation, which is the foundation of the railway business. Starting large-scale renovation to preserve and improve the soundness of civil engineering structures along the Tokaido Shinkansen Promoting measures to counter derailment and deviation of the Tokaido Shinkansen as well as reinforcing elevated track columns along conventional lines as further anti-earthquake measures Promoting rebuilding and seismic strengthening of buildings such as the Hamamatsu Workshop and Mishima station Promoting countermeasures for falling rocks and upgrade of level-crossing safety devices for the conventional lines Enhancing anti-tsunami measures based on the hazard maps to be published by each local government Enhancing employee training to focus on safety and hospitality in cooperation with group companies by utilizing the General Education Center Grout injection behind lining Injection into crack Reinforcement with rock bolts and steel plates (For where lining is thin) Large-Scale Renovation (tunnel; measures to inhibit age-related deterioration) We will continuously strive to enhance our technological capabilities, which are the foundation of railway management and development, as well as to pursue overseas projects using the high-speed railway and superconducting maglev systems, and to preserve the global environment. Promoting research and development for practical technologies such as those for maintenance and reinforcement of civil engineering structures, enhancement of transportation services, and countermeasures for natural disasters Engaging in marketing activities in regions and corridors that have been selected as viable targets for overseas projects using the high-speed railway or superconducting maglev systems by leveraging our comprehensive technological capabilities Promoting measures to contribute to conservation of the global environment such as replacing old rolling stock with energy-saving rolling stock Steel Truss Bridge (for tests) Enhancing Tokaido Shinkansen Transportation Services Capital Investment55 billion yen We will continue to enhance transportation services, including replacement of Series 700 with the N700A for the Tokaido and Sanyo Shinkansen. Introducing N700A, which employs the latest technological developments, as well as promoting modifications of Series N700 to incorporate technology adopted by the N700A Completing large-scale renovation of Shin-Osaka Station after a seven-year renovation project with renovation of the draw-out tracks Promoting installation of new movable platform fences at Tokyo Station and Nagoya Station Promoting installation of smoking rooms at all Shinkansen stations P10 Reference Developing Affiliated Businesses Capital Investment : 34 billion yen *Including 23 billion yen to be invested by consolidated subsidiaries We will steadily move ahead with the Nagoya Station New Building Project as we strive to increase competitiveness and revenue of our existing business. Promoting construction of the Nagoya Station New Building, scheduled to be completed at the end of 2015, as well as actively promoting tenant leases Increasing revenue by invigorating commercial facilities in the station building and stimulating merchandise businesses Making continuous efforts to develop our agriculture business to provide safer and more reliable food products P20 P12 Reference Enhancing Conventional Line Transportation Services Capital Investment4 billion yen We will actively address various measures such as electrification of the Taketoyo Line. Steadily promoting electrification of the Taketoyo Line to start operation in the spring of 2015 Proceeding designs for replacing old diesel cars with new ones Continuously promoting installation of barrier-free facilities at stations, including elevators, multifunction toilets, and braille blocks that have lines indicating the platform edge side P12 P13 Reference N700A Capital Investment (Non-Consolidated) Illustration of Nagoya Station New Building (tentative name) Capital Investment FY2013 (planned) Non-consolidated271.0 billion yen * / Consolidated294.0 billion yen *including billion yen for safety-related investments Promoting the Chuo Shinkansen Project Employing Superconducting Maglev System Capital Investment37 billion yen *Consists of only capital investment related to extension and facility upgrade of Yamanashi Test Line We will promote measures to realize the Chuo Shinkansen employing the Superconducting Maglev System. Steadily proceeding with preparations to begin construction, such as assessing the environmental impact between Tokyo and the Nagoya City including publication of Draft Environmental Impact Statement Completing the construction to extend the Yamanashi Maglev Test Line to 42.8 km and upgrade its facilities, and restarting running tests using the new rolling stock Series L0 Making efforts to improve Superconducting Maglev technology and reduce costs for construction, operation and maintenance Enhancing Marketing Initiatives Capital Investment11 billion yen We will proactively develop marketing initiatives to increase revenue. Making efforts to expand use of and increase the number of Express Reservation service members and PLUS EX service members Proactively developing various marketing campaigns utilizing tourism resources such as the Grand Shrine of Ise, where a special ceremony is held, as well as Kyoto, Nara and other destinations, as well as developing travel products for inbound tourists Making efforts to penetrate a new service, nation-wide mutual use of TOICA with IC cards of other transport operators, and to promote TOICA usage for railways and electric money Increasing passenger volume through local cooperation, such as the Sawayaka Walking event P14 Reference P16 Reference Taketoyo Line under construction for electrification New vehicle, Series L0 PLUS EX Card (billions of yen) Capital Investment Safety-related Investment Note: The figures planned for FY are as of the publishment of the financial report for the year ended March 31,

5 Safety and Reliability Initiatives for Securing and Enhancing Safe and Reliable Transportation JR Central believes that ensuring safe and reliable transportation is the fundamental principle of the railway business, and has worked since its inception to improve its systems and introduce the latest technologies for its rolling stock and equipment. Accordingly, we are continually implementing education and training for staff in charge of train operations and facility maintenance, and also improving our crisis management to respond quickly to all situations including emergencies through the implementation of practical training based on various types of simulated accidents or disasters. Safety-Related Investments (Non-consolidated) (billions of yen) Locations of Seismometers and Detection Points Shin- Osaka Capital Investments Safety-Related Investments Tokyo Seismometers alongside railway lines (50) Detection points (21) Derailment Prevention Guards preventing a derailment by the derailment prevention guards Example) The effect of derailment prevention guards on a rocking derailment, which is one type of derailment caused by earthquakes. When the tracks move laterally during an earthquake, the wheels on one side collide with the rails while the wheels on the other side bounce up from the shock. The train derails when the tracks then move in the opposite direction at this instant. (Rocking derailment) Since the wheels opposite from the wheels that have bounced up are still riding on the rail, the derailment prevention guards prevent a derailment by stopping these wheels from moving any further in the lateral direction. Measures for Ensuring and Enhancing Safety JR Central has implemented a wide range of safety-related capital investments in a well-planned manner including the upgrading of ATC (Automatic Train Control), CTC (Centralized Traffic Control) for the Tokaido Shinkansen and ATS (Automatic Train Stop) for conventional lines, the introduction of CTC on conventional lines, the strengthening of elevated track columns, embankments, and bridges as an earthquake countermeasure, the replacement of rolling stock and the upgrading of safety devices on grade crossings. In addition, we started implementing countermeasures to derailment / deviation on the Tokaido Shinkansen in 2009 as a new earthquake countermeasure. Further, while we appropriately implement various inspections of tunnels, bridges and other such structures as well as rolling stock, facilities, electrical and other equipment, we are also developing more efficient and effective inspection methods and have continually introduced various inspection equipment and systems. Furthermore, in February 2012, the replacement work, which began in 2006, was completed for introduction of ATS-PT, a new automatic train stop system, on all the conventional lines. As described above, we have worked actively since our inception to promote passenger safety and have spent a total of approximately 2.7 trillion yen (approximately 55% of total capital investment (non-consolidated)) over the 26 years up until the end of FY Furthermore, we started to conduct the large-scale renovation of Tokaido Shinkansen infrastructure from Preparing for Natural Disasters (1) Earthquake Countermeasures Reinforcement of Structures In regard to Shinkansen earthquake countermeasures, we have already completed anti-quake reinforcement of elevated track columns, except on parts related to development projects, which were deemed to require reinforcement as a result of an anti-quake diagnosis performed on all Tokaido Shinkansen track after the Hanshin-Awaji Earthquake. Also we have reinforced elevated track columns between Mishima and Toyohashi, which require reinforcement since the expected wave patterns for a future Tokai Earthquake published by the Japanese government in 2003 suggest ground motion in this area could be particularly strong. In conjunction to further strengthen structures along the same section, we have proceeded to implement earthquake-resistant reinforcement of bridges and embankments as well since 2008 and have completed reinforcement of embankments by the end of FY2012 except for some parts related with consultative cases. Furthermore, we are engaging in works to strengthen facilities on conventional lines, such as the construction preventing bridges from falling down and the anti-quake reinforcement of elevated track columns. Improvement of Earthquake Disaster Prevention System In 1992 JR Central became the first company to introduce an Earthquake Rapid Alarm System, which was introduced on the Tokaido Shinkansen, and we have made efforts to introduce a Conventional-Lines Earthquake Information Communications System. The Tokaido Shinkansen Earthquake Rapid Alarm System (TERRA-S), developed by modifying the previous earthquake-alarm system and introduced in 2005, has improved speed and accuracy of the system. Furthermore, by July 2013, we will increase responsiveness to vertical earthquakes and interlocking-type earthquakes, as well as provide for better backup systems in an effort to further improve the reliability of systems and safety against earthquakes. Countermeasures to Prevent Derailment / Deviation In light of the derailment accident on the Joetsu Shinkansen caused by the Niigata Chuetsu Earthquake that occurred in October 2004 and certain characteristics of the Tokaido Shinkansen, we started implementing derailment and deviation prevention measures in 2009 and are committed to the greatest extent possible to further strengthen seismic resistance. Firstly, by March 2013, in order to prevent as much as possible a derailment during an earthquake, Derailment Prevention Guards has been installed parallel to and on the inside of rails in sections that are expected to experience strong earthquake motion during a Tokai Earthquake, and on sections right before points that trains pass over at high speeds due to the fear of more damage in the event of a derailment. Furthermore, by March 2020, we will install additional Derailment Prevention Guards in all other sections that are expected to experience strong earthquake motion during a Tokai Earthquake, and on sections right before tunnels where trains pass at high speeds. In conjunction with this, in addition to current earthquake countermeasures for conventional civil engineering structures, countermeasures to suppress the spilling of ballast, the sinking of embankments and the displacement of elevated track columns are implemented to ensure that derailment prevention guards function effectively. Also, in order to prevent as much as possible large rolling stock deviations from track in case of a derailment, Deviation Prevention Stoppers had been installed at the bottom of all Shinkansen rolling stock bogies of our company by FY2012. (2) Tsunami Countermeasures In addition to stipulating in our corporate regulations the operating rules and procedures for verifying safety prior to recommencing train operation to guard against a tsunami, we have installed Tsunami Warning Signs which show evacuation direction along railways in the areas which are supposed to be attacked by tsunami. Also, we have taken into account the events of the Great East Japan Earthquake which struck in March 2011, and strengthened our capability to guide an evacuation along conventional lines by revising the standards by which crews direct evacuations on their own judgment and improving tsunami evacuation maps noting evacuation routes and shelters. We have also conducted tsunami evacuation training based on these revisions and will keep it. (3) Countermeasures against Other Natural Disasters We also strive to minimize the impact of other natural disasters on our railway operations. For example, we are conducting training in rapidly communicating information in accordance with a prescribed communication network so as to restore the schedule to normal as early as possible. To protect railway lines from rain and wind, we are improving facilities including embankments and cutting slopes. Additionally, in extreme situations when wind speeds or rainfall exceeds certain levels, we guarantee safe and reliable transportation by taking measures including restricting operations. Train Control System in the Case of Earthquakes Tokai General Control Center Train Radio Detector Transmit train to stop Conventional-Lines Earthquake Information Communications System Japan Meteorological Agency (Japan Meteorological Business Support Center) Tokaido Shinkansen Earthquake Rapid Alarm System (TERRA-S) Splicing equipment for earthquake early warning Relay Station Detector Shinkansen General Control Center Substation Stop Electricity Seismometer Seismic wave Epicenter Large-Scale Renovation For the civil engineering structures of Tokaido Shinkansen, which has passed 48 years from the opening of operation, it will be necessary to replace facilities in the future due to age-related deterioration, and in order to carry out large-scale renovation starting from FY2018, we had accumulated allowance reserves since 2002 upon approval by the Minister of Land, Infrastructure, Transport and Tourism on the allowance reserve plan for the large-scale renovation of Shinkansen infrastructure (the Allowance Reserve Plan ) under the Nationwide Shinkansen Railway Development Act. In addition to the allowance reserve, we have been continuously working on research and development mainly at our research facility, which was established in Komaki, Aichi, in 2002, and have succeeded in developing a new method that makes it possible to substantially reduce interference to train operations at the time of construction and also to decrease construction costs drastically. Therefore, we determined that an earlier start of the large-scale renovation using the new method would be appropriate and decided to conduct such renovation five years ahead of schedule, starting from We applied to the Minister of Land, Infrastructure, Transport and Tourism for an amendment to the Allowance Reserve Plan in January The new plan was approved in February 2013, by the Minister and we will conduct the renovation for ten years. Tsunami Warning Sign indicats the evacuation root Example of the Large-scale renovation (Concrete bridge) 6 7

6 Safety and Reliability Mechanism of ATC Speed of own train Comparison between speed and ATC signal. Position information of own train Ground Receive equipments (for position adjustment) General Training Session Simulating Actual Accidents General Training Center General Training Simulator (Shinkansen) The Shinkansen General Control Center From the position information of both trains, ATC signal (speed check pattern) is calculated. When the speed exceeds ATC signal, a brake system will work. Position information of the preceeding train Preceeding train Education and Training To ensure safe and reliable transportation, we implement safety education and training for the employees engaging in train operations and facility maintenance. In particular, we regularly confirm the knowledge and skills of staff in charge of train operation in order to be thoroughly prepared to maintain safety, and utilize Simulators for Drivers and Simulators for Conductors that are almost identical to actual cars to cultivate and train drivers and conductors. We also work to improve our ability to respond to accidents quickly and restoration technique by holding regular training sessions that simulate actual accidents, such as the simulated repair of derailed rolling stock, as well as damage repair trainings that include the restoration of track, power cable and signal communication facilities. In addition, as the company experiences a swift generational change we are making sure that skills and knowledge are passed down mainly through OJT at work sites, group training to improve expert knowledge and skill in accordance with position and rank, and self-betterment, such as JR s unique internal online training. In the established General Training Center which opened September 2011, we are implementing more practical and effective training using a full array of training equipment including the General Training Simulator which allows crews and other personnel to engage in complex training. Through these efforts we shall strive to further develop employee training that focuses on safety and service as a group. Tokaido Shinkansen (1) Shinkansen Operation System The safe and punctual operation of the Tokaido Shinkansen is supported by the complete safety control through utilizing various systems, with the Shinkansen operation system (COMTRAC*) as the core, which accurately controls vast volumes of data such as the operational status of trains and the utilization of facilities. At the Shinkansen General Control Center in Tokyo, various directives, such as transportation, cars and crew management, facility, electrical power, and signal, utilize these systems and work in close cooperation to support the safe and reliable transportation. Also, the Shinkansen 2nd General Control Center that has the same functions has been established in Osaka with the cooperation of JR West to be used in the event that the Shinkansen General Control Center becomes inoperable, thereby strengthening our crisis management ability. *COMTRAC (COMputer-aided TRAffic Control) COMTRAC is the system that controls train routes, train operations, and the allocation of staff (drivers and conductors) and rolling stock. Based on input data prescribing the operational conditions for each train (such as station departure and arrival time, platform, and order) the system can monitor the status of all trains in operation. (2) ATC (Automatic Train Control) The ATC system continually displays a signal to the driver showing the train s maximum permitted speed which varies according to the distance from the train in front of it and track conditions. If the train exceeds the permitted speed, the ATC automatically applies the brake to bring the train s speed back within the permitted range. We introduced a new ATC system that uses the various cutting-edge technologies to enhance reliability with the renewal of Tokaido Shinkansen ATC ground equipment in March Unlike the existing multi-step brake control system, the new system is one-step brake control system that ensures smoother braking from full speed to a complete stop. By digitalizing the signal used to send and receive data with this new ATC system we are now able to send and receive more data when compared with the previous ATC system resulting in improving system reliability as well as improving passenger comfort and flexibility of timetable scheduling. (3) Doctor Yellow We run a multiple inspection train, known as Doctor Yellow, to test the Shinkansen facilities such as electrical facilities and track. This train, which is based on the Series 700, is equipped with the latest devices to efficiently conduct high-precision inspections and measurements at speeds of 270 km/h, and it therefore plays an important role in supporting the safety and reliability of the Tokaido Shinkansen. (4) Renovation of the Hamamatsu Workshop In July 2010 we started renovations of the Hamamatsu Workshop which is the only workshop that performs overhauls of the Tokaido Shinkansen. Through these renovations we aim to replace and strengthen existing structures to improve anti-quake resistance, work efficiency through the introduction of line improvements and the latest equipment, and the overall work environment. Renovations are expected to be completed at the end of FY2018. Conventional Line (1) Conventional Line Operation System JR Central s 12 conventional lines are controlled from two control centers; the Tokai General Control Center and Shizuoka General Control Center. Each of the centers monitors the operational status of trains and the utilization of facilities 24 hours a day. (2) Centralized Traffic Control (CTC) The CTC system efficiently controls train operations through the centralized remote control of station signals. The system is also equipped with functions for real-time monitoring of the operational status of trains. The CTC enables us to manage train and station information at its control centers. Such centralization allows orders and directives to be issued more rapidly even in emergency situations. We have implemented the CTC system on almost all of our lines, thus ensuring reliable train management. (3) ATS: Automatic Train Stop ATS is a system for automatically applying emergency brakes in situations where the train risks overrunning. We introduced ATS-ST systems on all lines, which have functions such as an immediate application of the emergency brake if the train passes over an ATS ground coil located short of signals which control departures and arrivals of trains in a station when such signal indicates that the train should stop. This has greatly led to the prevention of serious accidents. In upgrading the ATS-ST systems, we have been replacing systems on all conventional lines with the ATS-PT system, which has the capability to check the speed continuously according to the distance from the train to the signal, and, since FY2006, we have moved forward with preparations and commenced its use gradually. In February 2012, we completed the introduction on all conventional lines, which has dramatically enhanced safety. (4) Doctor Tokai As for the maintenance of railway tracks and electrical facilities, the use of the multiple inspection train, known as Doctor Tokai, introduced in 1997, has enabled the efficient and early monitoring of facility conditions. Following on from Doctor Tokai s long track record of steady and reliable inspections for approximately ten years, we introduced an additional track inspection train, known as Doctor, in April The new train is equipped with the latest technologies, and allows us to further improve our ability to carry out a frequent high-precision track testing. (5) Countermeasures against Snow Slides and Falling Rocks We have developed equipment to protect against falling rocks and snow slides on sections where such a risk is present. Moreover, the installation of equipment to detect falling rocks has prevented accidents before they happen by restricting train operation if falling rocks or snow slides are detected. ATS-PT Renovation of the Hamamatsu Workshop (completion image) CTC System Area Inotani Shiojiri Takayama Line Tatsuno Mino-Akasaka Chuo Line Mino-Ota Ogaki Gifu Kofu Taita Line Iida Line Tokyo Maibara Tajimi Minobu Line Kyoto Kansai Line Nagoya Gotemba Line Kameyama Obu Fuji Shin-Osaka Taketoyo Line Kozu Taketoyo Numazu Atami Meisho Line Tokaido Line Shizuoka Matsusaka Toyohashi Ise-Okitsu Taki Sangu Line Tokaido Shinkansen Kisei Line Toba Shingu Speed Braking Pattern Ground coil (Pattern generation) CTC system area Speed is continuously checked. At any given speed, if the speed exceeds the pattern, the emergency brake activates. Signal train s running curve ATS-PT Overview Based upon information from the ground, a braking pattern is generated in a train in accordance with the distance to the signal ahead. When the train speed exceeds this pattern, emergency brakes are automatically engaged bringing the train to a stop before the signal. ATS-PT provides continuous control through braking patterns. Retaining Walls and Alarm System for falling rocks 8 9

7 Transportation Service Providing Services Customers will Choose We are working to improve our transportation services by, for example, establishing easy-to-use timetables, improving facilities, and introducing new rolling stock to increase speed and passengers comfort in order to fulfill our long-term mission of maintaining and developing, in an integrated fashion, both the Tokaido Shinkansen, which serves as Japan s main transportation artery, and the conventional line network in the Tokai (such as Nagoya or Shizuoka) region as well as to be a transportation mode that customers will choose. Japan s GDP and Tokaido Shinkansen Passenger-kilometers (100 million passenger -kilometers) Tokaido Shinkansen Data (FY2013.3) daily number of trains 336 *1 Average daily passenger ridership 409 thousand Yearly passenger ridership 149 million Maximum operating speed 270km/h Average delay from schedule per train 0.5 minutes *2 *1.Including extra services *2.Including delays due to uncontrollable causes, such as natural disasters Tokaido Shinkansen Service (Nozomi, Hikari, Kodama) Nozomi Hikari Kodama GDP TokyoShin-Osaka, time required 2 hr 25 min *1 Approx. 3 hr Approx. 4 hr Passenger-kilometers (JR Central) Sources: GDP: Annual Report on National Accounts (Cabinet office, Government of Japan) TokyoShin-Osaka, fare/surcharge*2 14,050 13,750 13,750 GDP ( trillion) Number of non-reserved seat cars Note:Each Tokaido Shinkansen train has 16 cars *1.Based on the fastest Nozomi service *2.For a reserved seat of regular cars (normal season) Non-reserved seats are all 13,240 *3.May vary by train Stops Nozomi:Shinagawa, Shin-Yokohama, Nagoya and Kyoto Hikari:Same as Nozomi, plus a few additional stations Kodama:Every station *3 Tokaido Shinkansen Since its inauguration in 1964, approximately 5.4 billion people have used the Tokaido Shinkansen, the transportation artery linking Japan s three largest metropolitan areas, Tokyo, Nagoya, and Osaka, which has supported Japan s economic growth. Characteristics of the Tokaido Shinkansen Safety Punctuality Comfort High Speeds High Frequency and High Capacity No accidents resulting in fatalities or injuries of passengers onboard since operations commenced Highly-skilled personnel with safety awareness through comprehensive training Train control system with the most sophisticated electronic technologies, continuous safety-related investments including countermeasures for derailment and deviation as further anti-earthquake measures in addition to reinforcement of structures Annual average delay is 0.5 minutes per operational train (FY2013.3, including delays due to uncontrollable causes such as natural disasters) Rolling stock with enhanced riding comfort and noise suppression Comfortable interior space that meets various needs of passengers such as a wireless LAN Internet connection service in the Series N700N700 available between Tokyo and Shin-Osaka Constant renovation of stations and installation of new facilities such as elevators, escalators, smoking rooms. Maximum speed of 270km/h (300km/h in the Sanyo Shinkansen section) The fastest Nozomi connects Tokyo and Shin-Osaka by 2 hours and 25 minutes, which is virtually the same time that this route takes by air if one includes the time necessary to travel between airports and city centers as well as check-in, etc 336 daily departures (FY2013.3, including extra services), 1,323 seats per train A maximum of ten Nozomi services per hour. Daily passenger capacity of the Shinkansen between Tokyo and Osaka is approximately 320 thousand, which exceeds that of airlines with approximately 29 thousand (FY2013.3) The Express Reservation service allows passengers to change their reservations for free via mobile phones, PCs or smart phones as many times as they like prior to departure and receipt of tickets. With the ticketless EX-IC Service utilizing an IC card, it is no longer necessary to pick up a paper ticket prior to boarding, a benefit which shortens total travel time and enables passengers to take maximum advantage of the overwhelmingly frequent Tokaido Shinkansen services. Drastic timetable revision and opening of the Shinkansen Shinagawa Station in October 2003 With the inauguration of the Tokaido Shinkansen in 1964, the time required to travel between Tokyo and Osaka was shortened to three hours and 10 minutes (the trip took four hours initially) from six hours and 30 minutes. Then with the introduction of the Nozomi in 1992 that time was shortened further to two hours and 30 minutes and we strove to improve convenience even further by steadily increasing the number of Nozomi services thereafter. In October 2003, the investment in rolling stock and ground facilities that we had continuously engaged in over approximately 15 years culminated with the upgrading of the maximum speed of all trains to 270km/h and a drastic timetable revision that resulted in a maximum of seven Nozomi services operated each hour. In conjunction with this we also dramatically improved convenience of the Tokaido Shinkansen by creating non-reserved seats on Nozomi services in addition to lowering reserved seat charges and offering travel products that allowed passengers to utilize the new timetable. Then, we opened the Shinkansen Shinagawa Station simultaneously with the drastic timetable revision, thereby shortening the total travel time of passengers traveling from or to southwest Tokyo by 20 to 30 minutes. Additionally, having all train services including Nozomi services stop at Shinagawa and Shin-Yokohama stations with the timetable revision of March 2008 resulted in further improving accessibility to the Tokaido Shinkansen in the Tokyo metropolitan areas. Further improvements to the Tokaido Shinkansen (1) Increasing capacity and the number of Nozomi services with direct service between the Tokaido and Sanyo sections. We have continued to improve the convenience of the Shinkansen through a series of timetable revisions since October We further boosted transportation capacity by allowing up to eight Nozomi services per hour in March 2005, and a maximum of nine services in March 2009, and continue to flexibly adjust train services such as a new time table, in which ten Nozomi services are offered per hour during the busy time of the day, in March Also, in March 2006 we aimed to further improve convenience to the Sanyo section by increasing the number of Nozomi services with direct service between the Tokaido and Sanyo Shinkansen sections and operating two Nozomi services between Tokyo and Hakata per hour. Since then as well, we have further strived to improve service by augmenting Sanyo direct service Nozomi. (2) Concentrated introduction of the Series N700 Characteristics of the Series N700 JR Central and JR West jointly developed the Series N700. The Series N700 increased the speed on curves by adopting a body inclining system for the first time in Japan s Shinkansen history and improved acceleration performance thereby enabling a shortening of travel time. In addition, we have improved ride quality including comfort and quietness, and achieved significant energy savings to decrease the amount of energy consumed by 25% compared to the Series 300 and by 19% against the Series 700. Concentrated introduction and increase in the number of Nozomi operated by the Series N700 Starting with the introduction of the Series N700 rolling stock for Nozomi direct service between Tokaido and Sanyo Shinkansen sections in FY2007, we have sequentially expanded operation of Series N700 Nozomi with the concentrated introduction of 80 trainsets over the five years ending FY2011. Since the timetable revision in March 2012, there was a total of 96 trainsets, including the 16 trainsets introduced by JR West, and all regular Nozomi service have operated with the Series N700. (3) Introduction of N700A(N700 Advanced) and Remodel of Series N700 Subsequent to the intensive introduction of the Series N700, we have introduced the N700A, which employs the results of technological developments achieved since the birth of the Series N700, including the High Performance Wheel Mounted Brake Disk, Bogie Vibration Detective System Fixed Speed Running Device, in an effort to even further improve safety, reliability and energy efficiency, to replace the Series 700 rolling stock. We introduced six trainsets of the N700A in FY2012 and we shall introduce seven trainsets in FY2013 and six trainsets per year from FY2014 to FY2016. Also, from FY2013 to FY2015, we will remodel existing eighty N700 trainsets to improve further safety and reliability by equipping High Performance Wheel Mounted Brake Disk and Fixed Speed Running Device. This means that approximately 80% of the Shinkansen rolling stock owned by JR Central will be of the Series N700A type by the end of FY2016. Tokaido Shinkansen Daily Departures (Trains / day) Nozomi Hikari Kodama Note1: Departures shown are as of the beginning of each fiscal year (excluding extra services) Note2: JR Central commenced operations in Apr. 1987, Nozomi began commercial operation in Mar. 1992, a drastic timetable revision was implemented in Oct. 2003(maximum seven Nozomi hourly departures) [Cars] Series 300 Introduction of rolling stocks (Tokaido Shinkansen) Series 700 Series N700 Note: The figures are as of the end of each fiscal year (excluding retrained trains and.etc) N700A 10 11

8 Transportation Service Advanced semi-active suspension system Higher vibration-control performance by semi-active suspension system Outlet for Mobile Devices and Seatback table (The Series N700) Construction of an additional platform at Shin-Osaka Station New movable platform fence (Platform #27 of Shin-Osaka Station) Smoking Room on the platform of Tokaido Shinkansen Characteristics of the Series N700 and N700A 1. Latest equipment to further improve safety and ensure reliable transportation Further improving safety (adopting High Performance Wheel Mounted Brake Disk and Earthquake Blake ) Quick recovery from timetable disruption (adopting Fixed Speed Running Device ) Detecting a malfunction of bogie in advance (adopting Bogie Vibration Detective System ) (Only N700A) 2. Offering a relaxing, comfortable and high-quality cabin environment Enhanced riding comfort and quietness Installing an advanced semi-active suspension system Installing cover-all hood Installing Body Inclining System (N700A uses the system in wider areas than N700) Installing New vibration-damping panel (Green cars of N700A) Installing New acoustic floor structure (Green cars of N700 and all cars of N700A) Completely separated smoking and nonsmoking sections by making all seats non-smoking and installing smoking rooms Improvement of First class Green car quality Adopting Synchronized Comfort Seats 3. Offering the ultimate internal environment for businessperson Increasing the number of outlets for mobile devices All seats in Green Cars, window seats and seats at the front and back in regular cars) Individual high luminance LED reading light, leg warmers (Green cars) Making seatback tables large enough for laptop computers Improving quietness in vestibules, and realizing an ultimate conversing environment for mobile telephone users Aiming to perfect a stable Internet connection environment even during high-speed operation by utilizing Wireless LAN (between Tokyo and Shin-Osaka) 4. Perfecting train services so that passengers can feel more comfortable Enlarging information displays for onboard electronic news caption Enlarging multifunction wash room space and establishing facilities for ostomates for the first time on a Shinkansen train Installing toilet seats with a warm-water washing function (scheduled as standard equipment for N700A to be introduced in FY2014) Establishing security cameras on vestibules in order to improve train security (4) Further Enhancement of Transportation Service Large-scale renovation at Shin-Osaka Station At the Tokaido Shinkansen Shin-Osaka Station we added a new track and a new platform and will increase the number of draw-out tracks from two to four. We started using the track and platform from the end of FY2012 and will finish constructing other facilities including draw-out tracks during FY2013. The renovation will largely improve the flexibility of transport and enhance our ability to handle disasters, as well as increase the chance for us to operate 10 Nozomi services per hour. Additionally, in August 2012, the Shin-Osaka Hankyu Building was opened and the passageway through which people can move to the north side of the station was constructed. The improvement work of the station concourse, which was conducted along with the railway track construction, was also completed at the end of FY2012. Investment in Stations for Further Convenience and Comfort In order to offer further convenience and comfort at stations, we have changed station layouts to make ticket offices more accessible, upgraded waiting rooms for passengers and conducted renovation of retail tenants on station premises. At Shin-Osaka Station, where work commenced in 2007, improvements work on station facilities, such as layout changes of ticket windows and ticket gates, was successfully conducted and completed in March Moreover, to further enhance safety on platforms, we have introduced new movable platform fences that can utilize existing fences and cut costs, on platform #14 at Tokyo Station and on platform #27 at Shin-Osaka station from March We are steadily continuing to make improvements of passenger-related facilities including installation of new-model moving platform fences and installation of smoking rooms in all stations of Tokaido Shinkansen in the future. Conventional Line We operate a network of 12 conventional lines, which form an integrated network with the Tokaido Shinkansen. These lines have contributed to the development of communities and the regional economy around Nagoya and Shizuoka areas. Improvement of Service on Conventional Lines In regards to conventional lines, we are surely and steadily improving services such as speeding up, introducing new rolling stock, and increasing the frequency of trains. With regard to the express trains, we introduced Wide View new rolling stock and have synchronized the timetables of both the Tokaido Shinkansen and express trains to create an integrated network of the Tokaido Shinkansen and Wide View trains. Local trains have benefited from the increased frequency and cars of train services during peak-demand morning and evening periods and from the introduction of expanded rapid train services that reduce travel times. Moreover, train departures are being adjusted to provide service at regular intervals in order to provide timetables that better serve passenger needs. We also try to meet demands of tourists by operating special trains and increasing frequency and cars for local events such as Shikinen Sengu Ceremony at Ise Jingu (Shrine). Electrification of the Taketoyo Line We have decided to electrify the Taketoyo Line (between Obu and Taketoyo), which transports commuters in the Nagoya metropolitan region, in the spring of By abolishing diesel cars and using the same type of trains that are presently in operation in the Nagoya metropolitan area, we aim to improve transportation service by creating flexible timetables for the entire Nagoya metropolitan region and flexibly adding cars. Also, we will improve the ability to respond to delays as well as create a system that reduces the burden on the environment through electrification. Furthermore, since some diesel cars will need to be replaced soon, by switching from diesel cars to electric cars we will be able to reduce new rolling stock production costs and running costs. New Manufacturing for Conventional Line Rolling Stock In regard to conventional line rolling stock, in consideration of energy efficiency, barrier-free and comfort, we newly produced and introduced 204 Series 313 rolling stocks in As a continuation of this, from FY2010 to FY2012, we aimed to further improve safety and transportation service by newly producing 120 Series 313 rolling stocks as well as 10 Series Ki-Ha 25 rolling stocks and using them to replace aging rolling stocks. Upon such replacements, in March 2013, all rapid-service and local trains operating on the Tokaido Line became new rolling stocks made after the foundation of JR. We also plan to introduce 28 Series 313 rolling stocks after spring 2015 on the Taketoyo Line. Also, we will gradually introduce 52 Series Ki-Ha 25 (Secondary edition) rolling stocks to the Takayama Line, Taita Line, Kisei Line and Sangu Line from FY2014 to FY2015. By those replacements, in March 2016, all diesel trains will be new rolling stocks made after the foundation of JR. Conventional Lines Ridership (million passengers) Commuter Passes Ordinary Tickets Express Shinano (Wide-View type) Rapid-service train Mie Running Image of an event train, Mt. Fuji Train 371 Ki-Ha 25 (type of rolling stock) 12 13