Applying Financial Expertise to Design the Future

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Applying Financial Expertise to Design the Future Applying Financial Expertise to Design the Future Annual Report & CSR Report 2010 Profile (As of March 31, 2010) Established: October 1, 2008 (The Japan Development Bank (1951) and the Hokkaido-Tohoku Development Finance Public Corporation (1956) were merged to form the Development Bank of Japan in 1999) Legal basis: The Development Bank of Japan Inc. Law (Law No. 85 of 2007) Law for Partial Amendment of the Development Bank of Japan Inc. Law (Law No. 67 of 2009) President: Minoru Murofushi Number of employees: 1,079 Capital: ¥1,181,194 million (100% owned by the Japanese government) Address: 9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan URL: http://www.dbj.jp/en Number of offi ces: Branch offi ces, 10; representative offi ces, 8; overseas representative offi ce, 1; and overseas subsidiaries, 2 Subsidiaries and affi liated companies: Consolidated subsidiaries, 13; non-consolidated subsidiaries, 14; and affi liated companies, 14 Main business: The provision of long-term funding (investment and loans) Purpose: To conduct business activities utilizing the methods of combining investments and fi nancing and other sophisticated fi nancial methodologies, thereby contributing to the smooth supply of funds to those who need long-term business funds, as well as to the sophistication of fi nancial functions. Q Scope of business operations: As well as such basic businesses as investment, lending and guarantee of obligations, DBJ carries out businesses in which it develops new fi nancial techniques. Q DBJ raises funds in a stable manner by borrowing from the government’s Fiscal Investment and Loan Program (FILP) and by issuing government-guaranteed bonds, as well as corporate bonds (without government guarantees), and by taking out long-term loans from the private sector. Total assets: ¥15,567.2 billion Loans: ¥13,538.0 billion Capital adequacy ratio: 18.79% Issuer ratings: Aa2 (Moody’s Investors Service, Inc.), AA– (Standard & Poor’s Corp.), AA (Rating and Investment Information, Inc.), AAA (Japan Credit Rating Agency, Ltd.) Note: Total assets, loans and the capital adequacy ratio are calculated on a non-consolidated basis. Forward-Looking Statements This Annual Report & CSR Report contains statements concerning management policies and future operating results. Such statements are not guarantees. Please be aware that future performance is subject to various changes in conditions in the operating environment. Contents Message from the President . 2 Financial Services to Contribute to the Future Prosperity of Japan . 4 Corporate Philosophy . 18 Logo and Corporate Color . 18 DBJ’s Target Business Model . 20 Businesses . 20 Overview of DBJ’s First Medium-Term Management Plan . 21 History of DBJ . 22 Privatizing DBJ . 24 Overview of Operations in the Year Ended March 31, 2010 . 26 Operating Conditions . 26 Overview of Consolidated Operating Performance . 28 Overseas Business . 30 Group Companies . 31 Topics . 32 DBJ’s Businesses . 33 Integrated Investment and Loan Services . 34 Loans . 36 Investment . 41 Consulting/Advisory Services . 43 Crisis Response Operations . 45 Providing a Safety Net . 47 Making Use of Information Functions . 48 CSR Report . 53 Implementing CSR Management . 55 CSR through Investment, Loan and Other Businesses . 60 Environmental Management . 86 Fostering Human Resources and Creating a Comfortable Work Environment . 90 Intellectual Asset Report . 93 Intellectual Asset Management . 94 Financial Platform That Enables DBJ to Meet the Needs of the Times . 98 Management Structure . 99 Corporate Governance . 100 Compliance . 105 Risk Management . 106 Client Protection Management System/Declaration on Personal Information Protection/Policy for Managing Conflicts of Interest . 110 Note: Figures contained herein are rounded . Disclosure 112 down. Accordingly, the total of each column of figures may not equal the Corporate Data . 113 total of the individual figures. In this report, a “0“ indicates figures of less than the indicated unit. Financial Condition . 125 A “—“ indicates the absence of an amount. Annual Report & CSR Report 2010 1 Message from the President To enhance clients’ corporate value, the Development Bank of Japan Inc. (DBJ) endeavors to provide integrated investment and loan services that strike a balance between profitability and public welfare. 2 Annual Report & CSR Report 2010 Enhancing Clients’ Corporate Value Fundamental Stance on CSR On October 1, 2008, DBJ opened the door to a whole We believe that the realization of our corporate new era of its history by becoming a joint-stock philosophy through the implementation of our financial company. Based on a corporate philosophy of “applying services—including financial crisis response operations— financial expertise to design the future,” DBJ strives to is key to fulfilling our corporate social responsibility provide mutually beneficial integrated investment and (CSR). loan services that enhance clients’ corporate value and As all of our corporate activities directly influence help them achieve their objectives. society, the environment and the economy, we are Operating according to a corporate governance devoted to conducting all our activities appropriately, scheme that befits a joint-stock company, we conduct thereby contributing to the corporate value of our clients our operations in a manner unique among financial and DBJ. By acting as a responsible member of society, institutions, striking a balance between profitability and we are determined to make every effort to contribute to public welfare. the realization of a sustainable society. We are proud to have delivered our first dividend as a consequence of such efforts in our second year of Our Future Role operations and our first full year as a joint stock com- The Japanese economy faces a number of complex pany. We thank all our stakeholders sincerely for their structural problems, including a declining population, a understanding and support. falling birthrate, a graying population, low growth and public finance difficulties. Responding to the Financial Crisis By providing the funds to enable stable growth and In response to the financial crisis that commenced in the developing according to a business model that provides autumn of 2008, we initiated financial crisis response integrated investment and loan services, we will maintain operations in December in our capacity as a designated strong partnerships with other financial institutions as financial institution. As of March 31, 2010, cumulative we create platforms to support social and economic financing provided in this manner amounted to ¥3.1 activities. At the same time, we will leverage our client trillion. base, expertise and networks as we endeavor to contrib- In the future, we will retain our characteristic spirit ute to the success of a new Japanese growth strategy. of public-mindedness and neutrality. While maintaining I ask for your ongoing support of our endeavors. alliances with other financial institutions, we will respond promptly to clients’ needs. July 2010 To facilitate the smooth implementation of financial crisis response operations, the Law for Partial Amendment of the Development Bank of Japan Inc. Law Minoru Murofushi was passed in the Japanese government’s 2009 regular President & CEO Diet plenary session. The law enabled the government to Development Bank of Japan Inc. utilize its financing to strengthen DBJ’s financial sound- ness, and the law resolved to have further discussions on the government’s future share ownership in DBJ, as well as its organizational structure. Annual Report & CSR Report 2010 3 Financial Services to Contribute to the Future Prosperity of Japan Financial support for new growth areas Manufacturing Industry and Technology Initiatives Since the era of reconstruction following World War economy has been driven by the manufacturing these clients’ businesses over the medium to long Unizone Co., Ltd. See pages 83–84 4 Annual Report & CSR Report 2010 II, the development of the Japanese industry. We support the expansion of term through investment and loans. ¥3.2 trillion Manufacturing industry loan balance (As of March 31, 2010) We meet the continued demand for capital from the driving force behind Japan’s economic devel- opment, the manufacturing industry, supporting new and additional plant and equipment and the expansion of R&D facilities. Through investment and loans, DBJ helps Japan’s manufacturing industry to meet the needs of the times, enabling manufacturers to grow their businesses and expand their operational bases. As of March 31, 2010, DBJ’s loan balance stood at ¥3,265.3 billion, with the manufacturing industry accounting for 24.1%. Annual Report & CSR Report 2010 5 Financial Services to Contribute to the Future Prosperity of Japan Rebuilding the social platform Social Infrastructure Initiatives For the development and further sophistication and improvements to quality of life, DBJ applies support the efforts of its clients to maintain and ¥3.6 trillion Transportation infrastructure loan balance (As of March 31, 2010) DBJ provides extensive initiatives to support the maintenance and improvement of social infrastruc- ture, such as transport infrastructure (e.g., airports, airlines, railways, buses and roads) from a long- term perspective and a position of neutrality. From this perspective, beginning with initial project formulation, we provide coordinated support for multiple firms across a project. As of March 31, 2010, DBJ’s balance of loans for transport infrastructure (transportation
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