16/09/13 13:13 16/09/13 13:13 2016 Annual Report & CSR Report to Design the Future Applying Financial Expertise (2,1) -1- e_DBJ_Cover_2016_160907.indd 16/09/13 13:13 (2,1) -1- e_DBJ_Cover_2016_160907.indd 16/09/13 13:13 Annual Report & CSR Report 2016 Development Bank of Japan Inc. e_DBJ_Cover_2016_160907.indd 1 (1,1) -2- e_DBJ_Cover_2016_160907.indd 16/09/13 13:13 Profile (As of July 1, 2016) 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. Act (Act No. 85 of 2007) President: Masanori Yanagi Number of employees: 1,187 (As of March 31, 2016) Capital: ¥1,000,424 million (100% owned by the Japanese government) Address: South Tower, Otemachi Financial City, 9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, 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, 3 Subsidiaries and affi liated companies: Consolidated subsidiaries, 25; non-consolidated subsidiaries, 33; and affi liated companies, 25 (As of March 31, 2016) Main business: The provision of long-term funding (investment and loans) Purpose: To conduct business activities utilizing the methods of integrated investment and loan services 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. 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. 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: ¥15,808.9 billion (As of March 31, 2016) Loans: ¥13,119.3 billion (As of March 31, 2016) Capital adequacy ratio: 16.85% (Basel 3, BIS standard) (As of March 31, 2016) Issuer ratings: A1 (Moody’s Investors Service, Inc.), A (Standard & Poor’s Corp.), AA (Rating and Investment Information, Inc.), AAA (Japan Credit Rating Agency, Ltd.) Note: Information above is 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. e_DBJ_Cover_2016_160907.indd 2 16/09/13 13:13 Contents Message from the President and CEO . 2 Toward the Future Prosperity of Japan . 4 Corporate Philosophy . 16 Logo and Corporate Color . 17 DBJ’s Target Business Model . 17 Overview of DBJ’s Third Medium-term Management Plan . 18 DBJ's History . 20 Background for Revisions to the DBJ Act . 22 Overview of Operations in Fiscal 2015 . 24 Operating Results . 24 Overview of Consolidated Operating Performance . 26 Overseas Business . 28 Group Companies . 29 Topics . 30 DBJ’s Businesses . 31 Integrated Investment and Loan Services . 32 Investments and Loans . 34 Consulting/Advisory Services . 46 Special Investment Operations . 50 Crisis Response Operations . 52 Initiatives Related to the Great East Japan Earthquake . 55 Regional Revitalization Initiatives . 58 Making Use of Information Functions . 60 CSR Report . 65 Implementing CSR Management . 67 CSR through Investment, Loan and Other Businesses . 72 Environmental Management . 92 Business Continuity Plan (BCP) . 96 Fostering Human Resources and Creating a Comfortable Work Environment . 98 Intellectual Asset Report . .101 Intellectual Asset Management . 102 Financial Platform That Enables DBJ to Meet the Needs of the Times . .106 Management Structure . .107 Corporate Governance . .108 Compliance . 113 Responding to Japan’s Stewardship Code . .113 Risk Management . 114 Note: Client Protection Management Basic Policy/Declaration on Personal Information Figures contained herein are rounded Protection/Policy for Managing Conflicts of Interest . .118 down. Accordingly, the total of each Disclosure . 120 column of figures may not equal the total of the individual figures. In this report, a “0” indicates figures Corporate Data . .121 of less than the indicated unit. A “—” indicates the absence of an Financial Condition . 147 amount. Annual Report & CSR Report 2016 1 Message from the President and CEO 2 Annual Report & CSR Report 2016 Issues Japan Faces and DBJ’s Role in that provides risk capital to fuel reconstruction and growth Resolving Them in the region affected by the Great East Japan Earthquake The Japanese economy continued to benefit from a tone of and its associated disasters. In addition, in the wake of the gradual recovery in business conditions, as higher corporate Kumamoto earthquakes in April 2016, we responded with earnings in fiscal 2015 offset signs that the purchasing mood all our effort, quickly setting up the Kumamoto Recovery of consumers had stalled. However, a number of challenges Office inside the Kyushu Branch and also working with remain. The country continues to face increasingly intense local financial institutions, establishing a restoration and global competition and must deal with issues related to reconstruction fund and pursuing other avenues of support the renewal of aging domestic public infrastructure and to stimulate restoration and reconstruction in areas that to energy, regional revitalization, a shortage of risk capital sustained damage. and fund management opportunities, and other concerns. The Third Medium-term Management Plan also lays out Against this backdrop, the Act for Partial Amendment of three functions—risk-sharing with banks and other organiza- the Development Bank of Japan Inc. Act came into force last tions, the provision of opportunities for fund management by year. We maintained our direction toward full-scale privatiza- investors, and extension of knowledge beyond the financial tion under the amended act, while firmly cementing Crisis sphere—that DBJ must demonstrate through initiatives in the Response Operations to deal with any large-scale disaster four operation-oriented primary areas of the plan. or economic crisis that occurs and directing efforts toward In risk-sharing with banks and other organizations, we new Special Investment Operations, which provide intensive seek to execute suitable distribution of risk among ourselves growth capital designed to revitalize regional economies and and other financial institutions, businesses and investors and increase corporate competitiveness. respond both to the diverse capital needs of enterprises and Accordingly, while our three-year Third Medium-term to other market demands through access to equity, mez- Management Plan—which moves into its final year in fiscal zanine and long-term loans and other high-risk capital. In the 2016—is fundamental to the role we must fulfill, we will provision of opportunities for fund management by investors, consistently engage with diverse financial players to create we are keen to contribute to a more robust financial market a smoothly functioning market as a provider of both risk environment by providing regional financial institutions, capital anchored in the real economy (capital funding such pension funds and other investors with quality fund manage- as mezzanine financing and investment, long-term funding ment opportunities, such as co-investment in syndicated for infrastructure and other projects, and the stable provision loans and overseas private equity funds. In extension of of funds that will drive the growth of Japanese enterprises) knowledge beyond the financial sphere, we draw on a non- and original knowledge (knowledge services that leverage aligned network and industry survey capabilities to provide experiential knowledge), and strive to resolve the issues reports on specific regions, industry sectors and business facing Japan from a long-term perspective, in line with the circles, and other subjects as well as quality knowledge from intent of the act and other requirements. a long-term perspective, including advice, to support clients in their efforts to pinpoint and resolve pressing issues. Specific DBJ Initiatives In our Third Medium-term Management Plan, we identified Meeting Our Corporate Social Responsibilities four primary areas requiring particular attention: growth sup- We will embark on our Fourth Medium-term Management port, infrastructure and energy, regional revitalization tailored Plan next fiscal year. Under the new plan, we will naturally to regional needs, and strengthening the safety net. work to reinforce the initiatives pursued during the Third To start, in the area of growth support, we are offering Medium-term Management Plan and build on the coopera- even greater assistance to promote initiatives that help tive relationships we have with private financial institutions companies hone a sharper competitive edge by providing and other organizations. At the same time, we will strive to risk capital through Special Investment Operations, for which further develop human resources with an enhanced ability we made investment and loans decisions valued at approxi- to provide sophisticated financial services and, as a cohesive mately ¥100