Tokyo Century Corporation

1

INTEGRATED REPORT 2022

COVER S TORY

Contributing to
the creation of anenvironmentally sound,sustainable economy
and society

The Tokyo Century Group’s founding business of leasing is highly compatible
with its goal of contributing to the creation of an environmentally sound,sustainable economy and society. This pursuit continues to shape our actions
even after we expanded the scope of our business to include financial services.
The world is currently faced with a plethora of issues, including resource
depletion and climate change. At Tokyo Century, we are committed to preparing
an equally wide range of solutions to respond to these various social issues.
The Tokyo Century Group is amassing its collective strength in order to give its
utmost to preserve a bountiful environment for the future generations of people
who will shape the future.

MANAGEMENT PHILOSOPHYThe Tokyo Century Group will work
alongside customers in pursuit of
their growth as a highly specialized andunique financial services company andwill contribute to the creation ofan environmentally sound,sustainable economy and society.

2TOKYO CENTURY CORPORATION

COVER S TORY hy does Tokyo Century contribute to the creation of an environmentally sound,W
sustainable economy and society?

Corporate Culture
That Supports
Pursuits3

INTEGRATED REPORT 2022

Provision of Value to Stakeholders
Society

Supply of environmentfriendly services supporting
asset life cycles

Shareholders

Appropriate investment and portfolio management
through investment management framework

Generation of return on
equity surpassing cost ofshareholders’ equity andongoing earnings growth

Customers
andemployees

Solutions for businesses
and pursuits that help
resolve management issues

P.83

Diverse Approaches(Financial Services)

Why is a corporate culture that supports pursuits
imperative to the exercise of our Management Philosophy?

Contributing to the creation of an environmentally sound,sustainable economy and society requires the developmentof new businesses with diverse approaches.

New businesses are developed by merging the expertiseof different industries through our partnership strategy.

Pursuits ofPartner Companies
Human resources must be provided with suitable training
if they are to propose innovative ideas and support
the pursuits of partner companies.

Pursuits of
Employees

Corporate Slogan

Solutions to your Pursuits.
Commitments Encapsulated in Corporate Slogan

A corporate culture that supports pursuits must be
cultivated and entrenched to develop human resources
capable of proposing innovative ideas.

1. Tokyo Century works toward the pursuit of contributing to and assisting in the development of the businessesof customers and partners.
2. We support, encourage, and aid employees in their pursuits.
3. The Company thus achieves ongoing growth by providing solutions to the pursuits of partners and employees.

4TOKYO CENTURY CORPORATION

COVER S TORY

 ow does Tokyo Century contribute to the creation of an environmentally sound,H
sustainable economy and society?

Core Competences
To exercise its Management Philosophy, Tokyo Century must capitalize on its uniquefinancial services, its partnership strategy for generating synergies through the merging of specialties, and its highly specialized professionals who advance its distinctive

5

INTEGRATED REPORT 2022

2

Strategy capitalizing on vast customer basePartnership Strategy
Our partnership strategy, which capitalizes on our vast customer base, makes
it possible for us to adopt a diverse range of approaches.

​

See page 62 for details.

business models.
By taking advantage of these three core competences, we are developing businesses that contribute to the creation of an environmentally sound, sustainableeconomy and society.

1

Business model for providing financial functions
and unique value-adding services

Financial Services​
By applying the discerning eye we use to ascertain the use value of
assets fostered in our leasing business, we are able to broaden thescope of our business domain by supplying value-adding services
and advancing new businesses in which Tokyo Century is the main
business proponent.

Characteristics of Tokyo Century’s Financial Services
Tokyo Century goes beyond providing leases as a financial function to
supply value-adding services across asset life cycles based on a precise
understanding of customer needs.

Handling a diverse range of assets enables us to accumulate asset value
appraisal expertise, making us capable of appropriately taking the risks
needed to provide highly competitive operating leases to customers.

The advancement of a business model in which Tokyo Century is themain business proponent allows for the provision of a wide range of services
that extend beyond the boundaries of leasing.
See page 14 for details.

3

Proponents of distinctive and specialized business model

Highly Specialized
Professionals
Tokyo Century cultivates highly specialized professionals for advancing
its distinctive business model centered on its partnership strategy.
See page 58 for details.

​

6TOKYO CENTURY CORPORATIONCONTENTS

Cover Story

Tokyo Century Corporation Integrated Report 2022

1

Tokyo Century’s Management Philosophy

2

Corporate Culture That Supports Pursuits

4

Core Competences

Editorial Policy
Integrated Report 2022 was prepared to better inform shareholders, investors,
and other stakeholders regarding Tokyo Century's management direction andbusiness strategies and operations, in addition to providing financial information and non-financial information, including examples of environmental,social, and governance (ESG) initiatives, while incorporating the opinions,observations, and predictions of certain of the Company’s officers and otherpersonnel. We thereby sought to illustrate the Company’s potential for
ongoing growth over the long term.

CHAPTER 1 :CHAPTER 3 :CHAPTER 5:

Unique Medium- to Long-Term Strategies forContributing to the Creation of an Environmentally
Sound, Sustainable Economy and Society

Corporate Governance for Improving
Corporate Value

34

Tokyo Century’s Materiality for Practicing
Sustainability Management

36

Relationship between Materiality andMedium- to Long-Term Value Creation Strategies

Overview of Tokyo CenturyReporting Period*
April 1, 2021–March 31, 2022 (fiscal 2021)* This report includes information on some activities taking place after
April 1, 2022.
Forward-Looking Statements
Statements in this integrated report with respect to the Tokyo Century Group’splans, forecasts, strategies, presumptions, and other statements that are nothistorical fact are forward-looking statements based on management’s
assumptions and beliefs grounded on information that was available when
the report was written. Actual Group performance may differ considerablyfrom that discussed in the forward-looking statements.

10

Tokyo Century by the Numbers

12

At a Glance

14

Tokyo Century’s Two Value Creation Cycles

16

Value Creation Initiatives

18

Expansion of Management Capital Correlatedwith Materiality

20

Milestone—Tokyo Century’s History

CHAPTER 2 :Message from the President
24

Message from the President

ABOUT THIS REPORTTokyo Century’s management strategies that include factors such as materiality analyses incorporating market projections.

Disclosure Based on Integrated Reporting Principles
This integrated report contains information on business risks and opportunities and value creation activities based on
integrated reporting principles.

P. 44–55

P. 14–19

P. 34–37

Management Philosophy,
Corporate Culture, andCore Competences

Business Model

Tokyo Century’s Materiality
for Practicing
Sustainability Management

38

Materiality Initiatives

40

Climate Change Scenario Analyses

44

Medium- to Long-Term Financial Strategies

48

Strategies by Operating Segment and Progress

68

Evolution of Tokyo Century’s Corporate
Governance System

76

DIALOGUE—Discussion between External Directors

80

Risk Management and Compliance86

Management TeamCHAPTER 6 :Data Section
92

Performance Highlights

Mobility & Fleet Management

94

Financial Summary

52

Specialty Financing

96

Main Subsidiaries, Affiliates, and Other Companies

54

International Business98

Corporate and Stock Information48

Equipment Leasing

50

CHAPTER 4 :Reinforcement of Operating Foundations That
Support Strategies
58

Human Resource Strategy

62

Strengthening of Partnerships

Management Strategies

This integrated report conducts disclosure based on integrated reporting principles while also offering systematic explanations ofP. 1–5

7

INTEGRATED REPORT 2022

Medium- to Long-Term
Financial Strategies
Strategies by Operating
Segment and Progress

Information on management strategies can be found in the following sections.
P. 18

 xpansion of Management Capital CorrelatedEwith Materiality

P. 24

Message from the President

P. 34

 okyo Century’s Materiality for Practicing
T
Sustainability Management

P. 36

 elationship between Materiality andRMedium- to Long-Term Business Strategies

P. 40

Climate Change Scenario Analyses

P. 44

Medium- to Long-Term Financial Strategies

P. 48

Strategies by Operating Segment and Progress

P. 68

 volution of Tokyo Century’s Corporate
E
Governance System

P. 80

Risk Management and Compliance

Materiality (Key Issues)
Process of Identifying Materiality
P. 34

Materiality Identified to Support Sustainability Management

Relationship between Management Strategies and Materiality
P. 58–65
Reinforcement of
Operating Foundations That
Support Strategies

P. 36

Materiality Connected to Value Creation Strategies

Pursuit of Goals of Materiality Initiatives
P. 34–65

 nique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, SustainableU
Economy and Society / Reinforcement of Operating Foundations That Support Strategies

8TOKYO CENTURY CORPORATION9INTEGRATED REPORT 2022

OV ER V I EWCHAPTER

1

Overview ofTokyo Century

10Tokyo Century by the Numbers

12

At a Glance

14

Tokyo Century’s Two Value Creation Cycles

16

Value Creation Initiatives

18

Expansion of Management Capital Correlatedwith Materiality

20

Milestone―Tokyo Century’s History

10

TOKYO CENTURY CORPORATIONNet Income Attributable to Owners of Parent

90.5

¥

billion

50.3

692

MW

billion

ENVIRONMENTAL

Segment Assets¥

4,879.4

Credit Ratings*1

JCR:

R &I :C H AP T E R 1

Renewable Energy Generation
Capacity*3

Tokyo Century by the Numbers¥

Overview of Tokyo Century

IN NUMBERS
Ordinary Income11

INTEGRATED REPORT 2022

AA
+
A

–

Number of Employees(Consolidated)billion

7,634
Market Capitalization*2

¥

555.5

billion

SOCIAL

Shareholder Returns

12

consecutive years ofdividend increases** Since the merger of Century Leasing System, Inc., and Tokyo Leasing Co., Ltd.

Ratio of External Directors
on the Board of Directors*1

38%

Overseas Network

More than30*1 As of June 30, 2022
*2 As of March 31, 2022

countries and regions

GOVERNANCE*3 Excludes solar panel leasing and financing; output value proportionate to ownership ratio of under-operation projects (subsidiaries counted as 100%)

12TOKYO CENTURY CORPORATION

13INTEGRATED REPORT 2022

C H AP T E R 1

Overview of Tokyo Century

AT A GLANCE
Equipment
Leasing

Mobility & Fleet
Management

Specialty
Financing

International
Business

Financial services optimally matched to needs of capital
investments in information and communications equipment

Wide-ranging auto services provided using industry-leading fleet

Unique viable businesses built on specialized expertise indiverse product areas

Leasing and auto service businesses developed throughglobal network encompassing more than 30 countries andregions centered on North America and Asia

Major Offerings
Leasing, installment payment, and other financial services
for information and communications, manufacturing, andother equipment
IT solutions
Subscription services​
Collaboration with partners​

Major Offerings
Corporate auto leasing
Individual auto leasing
Car rental services

Major Offerings
Leasing, finance, and other businesses related to aviation,
shipping, environment and energy, and real estateBusiness investment
Structured finance, etc.

Major Offerings
IT equipment leasing
Auto business
Joint crediting mechanism (JCM) businessCharacteristics
Diverse leasing business solutions and services
Co-creative businesses advanced together withprime partners

Characteristics
Full lineup of auto leasing, car rental, and other comprehensive auto services
Next-generation mobility services accommodating mobility
as a service (MaaS), electric vehicles, etc.

Characteristics
Specialties fostered through diverse businesses pertaining
to major offerings
Highly competitive financial services offered throughcollaboration with industry-leading business partners

Characteristics
Diverse financial services offered through global network
Highly competitive fair market value (FMV) leases provided
by CSI Leasing, Inc.

Segment Assets

Ordinary Income / ROA

Segment Assets

Ordinary Income / ROA

Segment Assets

Segment Assets

Billions of yenBillions of yenBillions of yenBillions of yen

1,800

1,379.7

1,500
1,200

%

40

2.4% 2.5
33.9

750

32

2.0

600

20

24

1.5

450

15

16

1.0

300

10

%

25

611.8

19.2
3.1%

Ordinary Income / ROA

Billions of yen

5.0

2,500

4.0

Billions of yen

2,311.8%

Billions of yen

50

5.0

600

2,000

40

4.0

3.0

1,500

30

2.0

1,000

20

29.5

Ordinary Income / ROA
Billions of yen

557.1

%

25

5.0

480

20

19.0
3.7% 4.0

3.0

360

15

3.0

2.0

240

10

2.0

1.0

120

5

1.0

0

0

900
600

1.3%
8

300
0

20/3

21/3

22/3

0

20/3

21/3

Ordinary income

0.5

150

0

0

22/3

ROA

Reasons for Increased income stemming from equity in
Changesearnings of affiliates NTT TC Leasing Co., Ltd.,and NITTSU Lease & Finance Co., Ltd.

5

20/3

21/3

22/3

0

20/3

21/3

Ordinary income

22/3

ROA

Reasons for Profitability achieved due to increased
Changesrevenues from the corporate auto leasing

business and success in controlling costs ofthe car rental business

1.0

500

0

0

10

20/3

21/3

22/3

0

20/3

21/3

Ordinary income

22/3

ROA

Reasons for Decreased income, despite gains on sales
Changes
centered on real estate businesses, due toimpairment losses recorded in aircraft leasing
business stemming from reduced demand foraircraft amid COVID-19 pandemic

20/3

21/3

22/3

0

20/3

21/3

Ordinary income

22/3

ROA

Reasons for Increased income due to strong gains on
Changesre-leased asset sales amid growing demandfor IT equipment and valuation gains on
operational investment securities in Asia

Distribution of Segment Assets (Fiscal 2021)
Equipment Leasing 28%

Mobility & Fleet Management 13%

Specialty Financing 48%

International Business 11%0

14TOKYO CENTURY CORPORATION

15INTEGRATED REPORT 2022

C H AP T E R 1

Overview of Tokyo Century

BUSINESS MODELTokyo Century’s Two Value Creation Cycles

Tokyo Century’s core competences are its unique financial services, its partnership strategy, and its highly specialized
professionals. By merging these competences, we drive the improvement of corporate value through two value
creation cycles based on our business characteristics.

1

Identification of Partners’ Issues

	Identification of business opportunities for addressing
partners’ issues

2

Merging of Financial Services

Sources of CompetitivenessExpertise for jointly operating businesses
and generating earnings with partners

	Merging of financial functions, robust asset portfolio, asset
management expertise, relationships with wide-ranging
customers, and other value-adding functions

1

2

3

	Reduction of risks through joint business operations withpartners and growth through return-generating businesses
created using expertise of the Company and of partners

4

Value Creation Cycle
through Partnerships

Business Growth through Co-Creation

Joint
Investment
Partners

Financial functions
Asset management
Wide-ranging
customer baseMonitoring	Decisions regarding sales/withdrawal based on results ofoperating environment and monitoring analyses in accordance with the basic strategy of pursuing growth by maintaining holdings over the long term

Joint Venture

3

4

Diverse and Highly Specialized Professionals
Central to Business Model

Our team of diverse and highly specialized professionals make it possible for us to develop a wide
range of unique businesses with high barriers to entry by growing asset-based business models andteaming up with prime partners. Tokyo Century will continue to bolster its team of specialized professionals to develop even more creative businesses.

Diverse and highly specialized professionals
who maximize the value of assets and partners
and expand the scope of value creation
1

Identification of Customers’ Issues

	Provision of high-value-added services based on a concise
understanding of the issues of customers and their needs
for financial functions and other services

2

1

P. 58

2

Sources of CompetitivenessHighly Specialized Assets

Provision of Assets

	Reduction of customer lease payments through accurate
appraisals of asset value and differentiation of services byholding highly specialized assets

Value Creation Cycle
through Asset ValueBusinesses

43Provision of Value	Improvement of competitiveness through provision ofcomprehensive services including the leasing of assets
and provision of after-sales services

3

4

Enhancement of Value	Improvement of earnings power by effectively organizing
asset portfolio to reuse or sell assets while practicing asset
replacement

Value

16

TOKYO CENTURY CORPORATION

17

INTEGRATED REPORT 2022

Creation of Wide-Ranging Value
through Expansion of Asset-BasedBusiness Models

2Powerful Synergies for Growing
Earnings with the NTT Group

Value Creation Cycle
through Asset ValueBusinesses

4

3Tokyo Century offers comprehensive life cycle

ownership by Nippon Telegraph and Telephone Corporation (NTT), 10%

Strengths at Each Stage of Life Cycle Management
1 Proposal of ICT

equipment introduction

management services that combine leases of

2 Pre-lease
Swift and simple introduction
processes (kitting)Introduction proposals basedon equipment and use

information and communications technology

financing for domestic companies and through co-creative businesses withour business by capitalizing on our ability toprovide finely tuned responses to customers’¥10.2bn+¥6.8bnprocure funds at low costs, which allows it to make highly competitive
FY2020(Year of establishment*)

Continuous Relationship
Development
through Intensive
One-Stop Services

from customers. We will continue to develop¥17.0bn

Tokyo Century. It also capitalizes on the creditability of the NTT Group to

customer transactional dataservices. These services have won high praise

Ordinary Income of NTT TC Leasing

ownership by NTT Finance Corporation, and 50% ownership by Tokyo
Century. This company is growing its earnings by providing leasing and3

4

proposals.

preferences learned fromequipment and other assets with value-adding

2

Value Creation Cycle
through Partnerships

NTT TC Leasing
Equity-method affiliate NTT TC Leasing Co., Ltd., is a joint venture with 40%

Comprehensive Life Cycle Management Services

One-Stop Services Emphasizing
Asset Use Value and Service Value

1

Value Creation Initiatives

FY2021* Figure represents nine-month performance for period
from July 2020 to March 2021, as operations werecommenced in July 2020.

Nippon Car Solutions

needs.
 ease maturity
4 L
Data erasure, recycling, etc.

 ease period
3 L
Proposals of upgrades andcontract renewals

Nippon Car Solutions Co., Ltd. (NCS), is a joint venture in which NTT holds a
stake of approximately 40% while Tokyo Century has a roughly 60% stake.

Ordinary Income of NCS¥14.3bn

In addition to auto leases, NCS provides maintenance management services, safe driving instruction and other accident reduction services,telematics services developed jointly with the NTT Group, and other mobility

Aviation Business¥9.0bn+¥5.3bnservices for contributing to the safety and security of customers. Strengthsof this company include its ability to provide solutions-oriented services

Global Company Boasting Aircraft Comprehensive Leasing Platform

based on the use patterns of the wide-ranging customers of the NTT Group,

Consolidated subsidiary Aviation Capital Group LLC (ACG) is a major U.S. aircraft leasing company that leases aircraft to

the ITOCHU Group, and the Tokyo Century Group.

more than 90 companies in over 45 countries. Strengths of this company lie in its highly specialized platform comprising

Aircraftvalue

Joint Data Center Operation

1

Appraisal
value

Together with NTT Global Data Centers Corporation, Tokyo Century is jointly

1 Price negotiation capabilities made possible by purchasing aircraft

operating data centers in India. In conjunction with growing investment innecessary for securing lessees

42

Aircraftenginevalue

ACG’s Strengths
from The Boeing Company and Airbus SE and marketing capabilities

3

2 Technical team specializing in monitoring aircraft condition
5

3 Repossession and marketing capabilities allowing for swift collectionof aircraft to be leased to other airlines
4 Vast customer network

Operating lease
0

6

12

18

Years

The value of aircraft engines recovers after extensive maintenance conducted
once every six years. Long-term use of engines is thus possible through appropriate maintenance and management.

5 Insight for assessing future aircraft value

FY2021* NCS was merged with former Tokyo Century subsidiaryTokyo Auto Leasing Co., Ltd.

its global network and its marketing, technical, and asset management functions.
Appropriate Maintenance Management

FY2014(Year of merger*)data center businesses, we are working to expand our business with afocus on maximizing investment efficiency through collaboration.

C H AP T E R 1

1Value Creation Initiatives

Overview of Tokyo Century

BUSINESS MODEL

18

TOKYO CENTURY CORPORATION19

INTEGRATED REPORT 2022

C H AP T E R 1

Expansion of Management Capital Correlated with Materiality
See page 35 for more information on Tokyo Century’s materiality.

Input

Financial Capital
Stable fund procurement

Strategies for Expanding Management Capital

Creation of value through diverse partnerships

Interest-bearing debt: ¥4,247.4 billion; Shareholders’ equity: ¥673.0 billion
Ratings: AA– from Japan Credit Rating Agency, Ltd.;A+ from Rating and Investment Information, Inc.; iversification of fund procurement sourcesD(utilization of ESG financing, etc.)

BBB from S&P Global Ratings Japan, Inc.*1

Ongoing earnings growth

Funds procured through sustainability-linked loans (aggregate): ¥213.7 billion

Human Capital

Number of employees (consolidated): 7,634

Human resources who
sustain value creation

Ratio of female managers (consolidated): 9.7%

Ratio of female employees (consolidated): 30.7%

Improvement of capital efficiency

Appropriate investment and portfolio
management through investment
P.83
management framework

Training for junior employees by year of employment
Management training
Career design training

Value Creation Cycle
through Partnerships

Global human resource cultivation(overseas trainee dispatch, etc.)

Ordinary income:¥90.5 billion (up ¥12.4 billion year on year)
Net income attributable to owners of parent:¥50.3 billion (up ¥1.1 billion year on year)
Return on assets*: 1.9% (up 0.3 point year on year)
Return on equity: 8.1% (down 0.6 point year on year)* Rate of ordinary income generated from segment assets nhancement of work environment, leadingE
to strengthening of human resources
Promotionof diversity
KPIs: Ratio of female managers (fiscal 2022): at least 30%
Ratio of women among new-graduate hires (fiscal 2022):
at least 30%

Total annual training hours: 15,000

Outcomes

Improvement of employee engagement
Employee awareness surveys and career development support
based on findings

Difference in average number of years of service
between men and women*: 0.2 years(down 0.5 years year on year)* Men: 17.3 years; Women: 17.1 years

Employee turnover rate: 5.3%
(up 0.9 point year on year)
Employee engagement survey response rate: 96%

Workstylereforms
KPI: Ratio of annual paid leave acquisition (fiscal 2022):
at least 70%
Encouragement of teleworking, staggered working hours, andother flexible workstyles

Value Creation Cycle

Intellectual
CapitalHigh-value-added
service businesses

Creation of new businesses driven
by technical innovation

Unique financial service businesses
Expertise in handling highly specialized assets
Subscription platforms romotion of digital transformation (DX) strategies centered onPcross-organizational DX Strategy Division
Value Creation Cycle
through Asset ValueBusinesses

Manufactured
Capital
Source of profits

Segment assets: ¥4,879.4 billion
Equipment Leasing: ¥1,379.7 billion
Mobility & Fleet Management: ¥611.8 billion
Specialty Financing: ¥2,311.8 billion
International Business: ¥557.1 billion

Social and
Relationship Capital
Extensive overseas
network

Scope of global operations: more than 30 countries and regions
Number of consolidated subsidiaries and equity-method affiliates:

more than 50

Vast customer network
Annual number of activities for engagement with shareholders and investors:

more than 200

Natural Capital
Provision of renewableenergyPromotion of health and productivity management

Number of solar power plants under operation: 118
Number of projects adopted under joint crediting mechanism (JCM) projects (aggregate): 10
Promotion of corporate power purchase agreements to supply electricity generated fromrenewable sources through direct contracts with companies*1 As of June 30, 2022 *2 Ratio of assets represented by next-generation aircraft models with fuel efficiency significantly higher than prior models (including Aviation Capital Group LLC)
*3 Electric vehicles, fuel-cell electric vehicles, plug-in hybrid-electric vehicles, and hybrid-electric vehicles *4 Nippon Car Solutions Co., Ltd., Nippon Rent-A-Car Service, Inc., and Orico Auto
Leasing Co., Ltd. *5 As of June 30, 2022; includes part-time workers

 reation of relationships with promising start-up companies
Cthrough alliance with leading global accelerator platform Plugand Play Japan

Sustainable resource use
Joint business with partners targeting improved capital efficiency
Improved asset use value through asset management, etc.

Inclusion in the Digital Transformation Stock Selection
program—jointly organized by the Ministry of Economy,
Trade and Industry and the Tokyo Stock Exchange—for eight consecutive years

Nippon Rent-A-Car Service, Inc. (NRS), ranked No. 3 in
2022 rental car service customer satisfaction ranking(up from No. 5 in 2021) due to improved customer
convenience achieved through digitalization
Ratio of next-generation aircraft in aviation business*2:

45.7% (up 5.0 points year on year)

Ratio of electrified vehicles*3 in fleet*4:
19.3% (up 0.5 point year on year)

Replacement of existing assets with environment-friendly assets

Contribution to social infrastructuredevelopment
Strategy of alliances with prime partners in countries of operation
 xpansion of businesses that support infrastructure developmentEthrough urban redevelopment and local economic development

Contribution to decarbonized society
Expansion of use of renewable energy centered on solar power cceleration of decarbonization strategies based on recommenA
dations of TCFD

Growth of joint businesses with partners
Ordinary income of NTT TC Leasing (non-consolidated):¥17.0 billion (up ¥6.8 billion year on year)

Creation of local employment opportunities throughopening of Hotel Indigo Karuizawa (employment of
79 individuals*5)
Renewable energy generation capacity:
692 MW (up 92 MW year on year)
Reduction of greenhouse gas emissions through JCM
projects (aggregate): 35,000 t-CO2 (up 1,000 t-CO2
year on year)
Note: Data is as of March 31, 2022, unless otherwise noted.

Overview of Tokyo Century

VALUE CREATION

20

TOKYO CENTURY CORPORATION21

INTEGRATED REPORT 2022

C H AP T E R 1

Overview of Tokyo Century

MILESTONE
Milestone—Tokyo Century’s History

Tokyo Century: Born of theStrengths of Its Predecessors

2009–

took up the new name Tokyo Century as it evolved from a leasing company to a financial services company. Looking

Merger of Major Leasing Companies

2020–

to the future, Tokyo Century will continue to evolve over the next decade as a company that drives change in its

Birth of Century Tokyo Leasing

Agreement with NTT

capacity as a trusted service and business partner to customers.

Corporation

Acceleration of Partnership Strategy

Faced with a pressing need to revise their business

By bolstering its co-creative businesses with theportfolios, the management of Century Leasing

NTT Group, Tokyo Century is accelerating col-System, Inc., and Tokyo Leasing Co., Ltd., werelaboration on the fronts of digital technology,

prompted to undertake a merger, leading to the birthmobility, real estate, energy and environment,of Century Tokyo Leasing Corporation in 2009.

and global businesses.

Born of the merger of two major leasing companies, the surviving company transformed its business portfolio andCentury Leasing
System, Inc.

1969

Strengths​• Access to vast customer network of the
ITOCHU Group

Capital and Business Alliance• Leasing services centered on informationand communications technology equipment

Established through joint investment by ITOCHU Corporation, Dai-Ichi Bank, Ltd.

2030–

(currently Mizuho Bank, Ltd.), Nippon Life Insurance Company, andAsahi Mutual Life Insurance Company

Quest to Become a Trusted Service

Merging of strengths
of both companies

and Business PartnerTokyo Century aims to grow into a global corporategroup with a diverse team of people in order to contribute to the resolution of social issues and achieve
stable, sustainable growth as a trusted service andbusiness partner.

Tokyo Leasing
Co., Ltd.

Strengths​• Access to vast customer network of former The
Dai-Ichi Kangyo Bank, Ltd.
• Predecessor of partnership strategy with prime
customers

2016–

Change of Name to Tokyo Century Corporation
Evolution beyond a Leasing Company

1964

Established through joint investment by Nihon Kangyo Bank, Ltd. (currently Mizuho Bank, Ltd.),

The new Tokyo Century got its start in October 2016. With a new

Kangin Tochi-Tatemono Co., Ltd. (currently Chuo-Nittochi Co., Ltd.), and Nanoh Co., Ltd.

name and a Management Philosophy of contributing to the(currently Chuo-Nittochi Co., Ltd.)

creation of an environmentally sound, sustainable economy andsociety, it declared its commitment to developing a wide rangeof businesses as a distinctive and highly specialized financial
services company.

22TOKYO CENTURY CORPORATION

23

INTEGRATED REPORT 2022

Expansion and Diversification of Portfolio
Centered on Four Operating Segments

4,879.4*2

International
Business

91.1

Tokyo Century has continued to expand its business domain, through organic growth and M&A activities,

Ordinary Income

90.5

86.3

focused on its four operating segments in response to changes in the times and in the needs of customers

100

and partner companies.

79.0

Transformation of Portfolio Strategy

80

4,000

Successes of First–Fourth Medium-Term Management Plans (Fiscal 2010–Fiscal 2019)
Establishment of four operating segments through smooth expansion in growth areas while maintaining strong balance ofsegment assets in Equipment Leasing segment

78.1

73.5

Specialty Financing

Directives under New Fourth Medium-Term Management Plan (Fiscal 2020–Fiscal 2022)
Development of quality and resilient business portfolio through relentless creation of new financial services in response tochanging environment

68.0

60.7
3,000

2016

55.2
Segment assets(Billions of yen, left axis)
Equipment Leasing
Mobility & Fleet Management
Specialty Financing
International Business
Ordinary income(Billions of yen, right axis)

44.2

46.3

2018

International BusinessConverted CSI Leasing, Inc., aleading U.S.-based independentleasing company, into a consolidated subsidiary46.3

Acquired a 70% stake in Shinko
Real Estate Co., Ltd. (currently
TC Kobelco Real Estate Co., Ltd.),a real estate subsidiary of Kobe
Steel, Ltd., and converted it into
a consolidated subsidiary

2019
2,000

2012

Specialty Financing

2013

2020

Specialty Financing

Acquired 14.9% of outstanding
ordinary interest in the shareholding company of the Advantage
Partners GroupSpecialty Financing

Converted Aviation Capital Group LLC,
a major U.S.-based commercial aircraft lessor,
into a consolidated subsidiary

Established solar power generation company
Kyocera TCL Solar LLC as a joint venture with
Kyocera Corporation

33.4

60

Specialty Financing

Mobility & Fleet
Management

Mobility & Fleet Management

Converted Nippon Rent-A-Car Service, Inc.,
into a consolidated subsidiary

22.3

Equipment Leasing

Converted Nippon Car Solutions Co., Ltd.,an auto-leasing company for corporate
customers, into a consolidated subsidiary

1,000

40

2020

20

Equipment Leasing

Established NTT TC Leasing Co., Ltd., by spinning
off a portion of NTT Finance Corporation’s leasing
and global operations

2020

All Businesses

Concluded a capital and business allianceagreement with Nippon Telegraph and Telephone
Corporation (NTT)0

2009/3*1

2010/3

2011/3

2012/3

2013/3

2014/3

Note: The Fourth Medium-Term Management Plan was completed a year after its April 2019 launch, and the New Fourth Medium-Term Management Plan was announced in February 2020.
*1 Data for fiscal 2008, the year immediately prior to the merger, is a simple aggregation of data for the former Century Leasing System, Inc., and the former Tokyo Leasing Co., Ltd.
*2 Segment assets consist of the total amount of operating assets, investment in equity-method affiliates, goodwill, etc., belonging to each segment.

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/30

C H AP T E R 1

Segment Assets
5,000

Overview of Tokyo Century

MILESTONE

24

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2022

25

CHAPTER

2
Koichi Baba
President & CEO, Representative Director

Commitment as the New President & CEO
Greetings, my name is Koichi Baba, and I assumed

we cannot simply respond to change as we havethe position of president & CEO of Tokyo Century

done thus far. Rather, we must turn an attentive

Corporation in April 2022.

eye to the changes we see to glean hints about the

I want Tokyo Century to deliver services andfuture so that we can take a preemptive approach.

value that exceed customers’ expectations in

I am committed to helping Tokyo Century evolve

order to make truly meaningful contributions to

into a company that brings about change and issociety. Moreover, the process of making theseable to act in this manner. I will thus be guiding

contributions should help our employees aroundmanagement based on a healthy recognition of

the world achieve self-actualization. I pledge tothe challenges we face.

fulfill my responsibility as the leader of theCompany in generating such a virtuous cycle.
Tokyo Century has declared its goal of evolving

At the same time, I always aspire to manage
with a constant awareness of the need for Tokyo
Century to grant happiness to all of its employees.

from a company that responds to change to

In order to build strong bonds of trust with employ-become a company that brings about change.

ees based on a relationship in which employees

I have extensive experience in formulating manage-and the Company are viewed as equals, I think it isment strategies as the president of the Corporate

important for the individual sense of purpose felt

Planning Unit. After the 2009 merger, we enjoyedby each of our employees to line up with Tokyo

a favorable environment for charting a course

Century’s Management Philosophy. Employees

toward growth thanks to the global trends of mon-must work to accomplish their own personal goals

etary easing and international cooperation. This,and to achieve growth through this process.

however, has changed in recent years. We are now

Meanwhile, the Company must offer its full sup-in an era of uncertainty when it is difficult to predict

port to employees as they chase their ambitions.

what will come next. The disruptions seen lately

Tokyo Century should strive to become an amal-

have included pandemics, countries prioritizing

gamation of the growth employees achieveisolation over international cooperation, rises inthrough such ambition. This will require us to findglobal energy prices, and hikes to policy interest

new employees who share our philosophy in order

rates in the United States and Europe to combat

to drive the ongoing growth of the corporate value

inflation. Faced with this uncertainty, it is clear thatof the Company.

We will overcome uncertainty
to become a company
that brings about change.

C H AP T E R 2

Message from the President

Message from the President

26TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2022

developing services focused on the value of intan-

I was involved in the process of redefining ourgible assets, such as digital technologies and data,

Management Philosophy in 2016. This process

going forward. By evolving our service lineup in

saw us scrutinizing and carefully deciding eachstep with the changes to be seen over the decades

and every word to find the expressions that mostto come, we will continue to build upon the scope

concisely described our desire for the ongoingof the Company’s financial services.

growth of the Group. We eventually arrived at ourAnother important part of our Management

current Management Philosophy: the Tokyo

Philosophy is “work alongside customers in pur-Century Group will work alongside customers insuit of their growth.” Our employees tackle new

pursuit of their growth as a highly specialized andchallenges to provide solutions that surpass cus-

unique financial services company and will con-tomers’ expectations in order to help them create

tribute to the creation of an environmentallythe value they seek. This ongoing process of ambi-

sound, sustainable economy and society.

tion in turn helps Tokyo Century achieve its own

By “a highly specialized and unique financial
services company,” we refer to the underlying
principle of Tokyo Century’s distinctive businessgoals. This portion of our philosophy expresses
our desire to generate this virtuous cycle.
The last element of our philosophy is “contrib-

model, through which we set ourselves apart fromute to the creation of an environmentally sound,

our peers by providing highly specialized andsustainable economy and society.” Our founding

unique financial services matched to customers’

business of leasing addresses demand for shiftingneeds pertaining to asset value. There are likely

from the ownership of assets to use. This pursuit

many who view our founding business of leasing

is highly compatible with the concept of an envi-

as one of providing financing options for purchas-ronmentally sound, sustainable economy anding assets. We, however, believe that the starting

society, and is also an underlying principle of ourpoint for this business is to supply the value ofmanagement as we seek to broaden our businessusing assets. The strengths of a leasing company

scope from financing to include services and busi-

lie in its expertise in determining the value ofness operations. At the same time, we recognize

assets. Such expertise can be equated to the ability

the social need to address environmental issues,

to look at, say, a computer that someone is using

particularly those whose resolution is related to

today and being able to guess who will be inter-the transition to a decarbonized society. This is why

ested in buying that computer and how much they

I am constantly broadcasting, to both internal andwill be willing to pay for it several years from now.

external stakeholders, my belief that the satisfac-

We also have to think from the customer’s per-tion of the planet is second only to the satisfaction

spective in making it easier to use these assets,of the customer. By entrenching and exercisingfor example, by erasing the data of secondhand

our Management Philosophy and the principles it

computers or performing other necessary pro-

encapsulates throughout the Group, we aim tocesses. By maintaining this perspective and sup-create businesses that contribute to the resolution

plying unique value, we are able to grow whileof social issues and to preserve a pristine environ-differentiating ourselves from other companies.

ment for the people of the future. This quest will

Tokyo Century handles and supplies a wide variety

no doubt allow Tokyo Century to continue to func-of assets, including aircraft, real estate, cars, andtion as an indispensable entity to society.

other tangible assets. We are also looking at

C H AP T E R 2

As president of the Corporate Planning Unit,

Message from the President

Tokyo Century’s Management Philosophy of Contributing toCustomers’ Pursuits and to the Creation of an Environmentally
Sound, Sustainable Economy and Society with Highly Specialized
and Unique Financial Services

27

Advancement of “Finance × Services × Business Expertise” Concept
through Expansion of Diverse Partnership Strategies and Corporate
Culture Founded on Innovation and Speed
The point of origin for Tokyo Century’s business

Our partnership and human resource strategies

model is the provision of asset use value throughwill be an indispensable building block for busi-

various schemes. Today, we are building upon thisness models based on this concept. Bringing

business model to pursue higher levels of corpo-

about change requires that we actively engage

rate value through our “Finance × Services ×with our customers to promote open innovation by

Business Expertise” concept, which entails using

combining our insight for generating diverse syn-assets to develop our own business operations.

ergies that would be impossible for Tokyo Century

Looking at solar power, for example, we do not

to do alone. For this reason, it is important that wehave to limit our involvement to leasing solar panels

maintain an accurate understanding of the issues

to customers; Tokyo Century can also become

faced by customers and the goals they aim to

involved in power generation by owning and oper-

accomplish. This understanding should be used toating its power plants. In this manner, we canprovide optimal services and value to customers

capitalize on our specialized expertise pertaining

so as to build relations that inspire customers toto the value of assets to develop businesses

recognize Tokyo Century as a partner in the co-ourselves, or, in other words, to branch out fromcreation of value. We have a robust track record offinancing to develop services and businesses ingenerating synergies through partnerships withorder to broaden the scope of the value we create.

customers, and this culture of partnerships is aThis approach is at the heart of our “Finance ×

major strength of the Company. This strength isServices × Business Expertise” concept.

supported by our human resources. As illuminated28

TOKYO CENTURY CORPORATION

29

INTEGRATED REPORT 2022

The pillar of collaboration with the Advantage

strategy.” By using this term, I hope to establish aees excel in terms of innovativeness and speed.

als with diverse backgrounds, both new-graduate

Partners Group is another area where we expect

clear divide between our prior Japan-based global

These qualities are a great source of confidence

and mid-career hires, from around the world are

to be able to broaden the scope of the financial

strategy and thereby promote the merging of thewhen it comes to making the proposals that cus-able to fully exercise their talents. Increasing theservices Tokyo Century provides. Tokyo Century

strengths of our global expansion efforts out of

tomers and partners need. I hope to preserve

number of individuals capable of inspiring theirhas dealings with a wide variety of prime customers.

Japan and out of the United States based on athese qualities as part of the enduring DNA ofcoworkers and of always being respectful and

By allying ourselves with the Advantage Partners

clear understanding of the differences in their

Tokyo Century. Our goal for the coming decade is

receptive toward others will directly heighten

Group, a leader in Japan’s private equity industry,

methodologies and policies. CSI has an extensive

to become a global corporate group with a diverse

our capacity for creating new value.

we have been able to participate in investments as

platform based in the United States. By deploying

an equity player. Going forward, we will endeavor

CSI’s fair market value leases* on a global scale,to supply solutions in response to the rising needs

we anticipate that this company will come to be

for business reorganization and selection andan even larger growth driver for the Tokyo Century

concentration in order to develop our operations

Group.

team of people. Accordingly, I think that Tokyo

Seven Pillars of Medium- to Long-Term Management Strategies

in this area into a new growth business.

* Leasing based on fair market value derived from the assessed
residual value of IT equipment

The last pillar is global business centered on
The pillar of the aviation business, specificallyresults for the six months ended September 30,

the aircraft leasing business, is facing a challeng-

2020, we also put forth seven pillars of businessing operating environment due to the impacts ofstrategies. An overarching theme for management

the COVID-19 pandemic and Russia’s invasion ofover the medium to long term will thus be advanc-Ukraine. Nevertheless, global air travel demand ising strategies based on these seven pillars. Of

on the rise. Accordingly, there is no change to ourthese pillars, I want to place particular emphasis

outlook that the market for this business has highon the collaboration with Nippon Telegraph andpotential for future growth, and we are sure that

Telephone Corporation (NTT), which is based on athe current adversity can be overcome.

where we can capitalize on the insight we havement in a renewable energy fund. Meanwhile,

accumulated with regard to solar power genera-

we will look to incorporate the NTT Group’s wide-tion businesses.

addition, we are involved in some major projects

beneficial growth over the medium to long term.

with prime partners. Over the medium to long

In auto businesses, like rental cars, anotherterm, we will be moving ahead with projects per-of the seven pillars, next-generation mobility,

taining to TOKYO TORCH, a building under con-centered on electric vehicles (EVs), will be an

struction in the Tokiwabashi area scheduled forimportant theme. With an eye to the future popu-

completion in fiscal 2027, and the Uchisaiwaicholarization of EVs, Tokyo Century commenced

1-chome area redevelopment project, one of theinvestment in MIRAI-LABO Co., Ltd., a company

largest projects in the Tokyo metropolitan area,that boasts EV battery evaluation and reuse tech-which is set to be completed in fiscal 2028. We

nologies, in fiscal 2021. We are currently in thealso expect to see the accumulation of high-qual-

process of preparing unique new services together

ity assets over the long term as a result of ourwith this company.

involvement in these projects.

Aviation
Business
Centered on ACG

19these measures, I think we can achieve highly

Auto BusinessCentered on NRS

D-

States, where we expect to see rapid growth. In

VI

into Tokyo Century’s business domain. ThroughCO

gradually ramping up our investment in the Unitedst-Concerning the real estate business, we areogy, mobility, real estate, and global businesses,

Collaboration
with Advantage
Partners Group

Po

ranging businesses, which include digital technol-

Seven Pillarsof Business
Strategies

trategynesses in areas including asset management,

businesses in India and conducting joint invest-

hip S

ture with NTT. We are also developing data centerers

intend to pursue steady growth in these busi-

Environment andEnergyBusinesses

Global BusinessCentered on CSI

r tn

high over the medium to long term. We therefore

growth at NTT TC Leasing Co., Ltd., our joint ven-

Collaboration
with NTTbapate that demand for renewable energy will remaingyPa

energy prices are currently soaring, and we antici-

has exceeded our initial expectations.

telS

As for environment and energy businesses,

2019. I believe that the potential of this alliance
Through this alliance, we anticipate organic

I refer to this pillar as our “U.S.-based global

Gl ocapital and business alliance formed in fiscal

CSI Leasing, Inc., our consolidated subsidiary.

tra

In November 2020, when announcing our financial

St

ra

te

Real EstateBusiness
All business strategies

gy

Mobility & Fleet Management
Specialty Financing
International BusinessC H AP T E R 2

Century needs to be a company at which individu-

Message from the President

by past employee awareness surveys, our employ-

30

TOKYO CENTURY CORPORATION

Exhaustive and Comprehensive Portfolio Management
Grounded on Financial Discipline
nesses based on asset value and on its “Finance ×

cial discipline, including such factors as the degree

Services × Business Expertise” concept. Weof resilience of equity to fluctuations in asset

thereby aim to develop a strong business portfolio

prices. As Tokyo Century seeks to expand its busi-

comprising high-quality, highly profitable assets.

ness domain going forward, it will be important to

However, updating our diverse business strategies

manage our portfolio with due consideration paid

to ensure ongoing growth requires exhaustive andto risk assets. At the same time, we must work tocomprehensive portfolio management. This pro-build a stronger reputation among our stakehold-cess will involve measuring the risks of all busi-

ers through means such as promoting coordina-nesses and monitoring cost of capital and returntion and synergies among our different businesses.

on invested capital spread. As a number of ourI feel that Russia’s invasion of Ukraine presentsbusinesses are dependent on asset value, we area need to revise our methods of assessing country

exposed to the risk of fluctuations in asset prices.

risk. Our previous method placed a lot of weight

For example, if an asset, let’s say an aircraft or car,on statistical analyses looking at factors including

is predicted to have a value of 100 three years

country credit ratings and current account bal-from now, but only ends up with a value of 80, thenances. In the future, however, I think it will be

we are at risk of suffering a loss of 20. We seek toimportant to make investment decisions that

combat such risks by performing assessments

accurately reflect geopolitical risks, as well asof our portfolio that quantitatively measure risk

factors like the dependence of certain countries

assets. The Risk Management Division is the cen-on resources and the state of supply chains.

tral proponent of these assessments. Based on

Paramount Importance of Sustainability Managementin Next-Generation Business Strategies

Company to take steps to provide a workplaceenhance our methods of measuring these emis-

environment that helps employees achieve self-

sions and to address to emissions based on theactualization. One of Tokyo Century’s five key

concept of Scope 3, which includes emissions

issues in terms of materiality is “enhancement offrom business partners. We also need to consider

work environment, leading to strengthening of

the fact that the trend toward decarbonized assets

human resources,” and the administration ofwill create demand for upgrading to EVs or toemployee awareness surveys has been defined

aircraft with greater fuel efficiency. This will

as an initiative for addressing this issue. In fiscal

expand the range of business opportunities

2021, we received a relatively high response rateavailable to Tokyo Century. I therefore intend toof 96% for employee awareness surveys. The input

emphasize both the risks and the opportunities

on employee engagement levels gained throughassociated with environmental issues in my man-these surveys is used to formulate new manage-

agement approach.

ment strategies and otherwise help advance a

Recently, we have been focusing on invest-

PDCA (plan–do–check–act) cycle for humanments in human resources in our practice of sus-

resource strategies. Input from employees is antainability management. As I mentioned earlier, it

invaluable asset to management and an importantis crucial for the relationship between employees

foundation for sustainability management.

and the Company to be one of equals and for the

Evolution into an Entity That Is Indispensable to Society
The current challenging operating environment

business growth for generating ongoing improve-

will persist in fiscal 2022. I therefore want to makements in corporate value. I look forward to thefiscal 2022 a year of a “Great Reset” to shape acontinued understanding and support ofTokyo Century for the next decade that is different

our investors and other stakeholders.

from the Company of the past decade. The yearof 2030 will be positioned as a milestone for thetransformation of the Company over the next
decade. The operating environment is now more

Along with business development and portfolio

businesses that contribute to the accomplishment

volatile than it has ever been. As the leader ofmanagement, Tokyo Century is focused on prac-of the SDGs and otherwise devoting corporate

Tokyo Century, I will need to look carefully at theticing sustainability management. Today, it isefforts to help build a better society is an effective

developments we see to predict future changes incommon for elementary school students to learn

way to practice sustainability management. “ESG,”

our never-ending quest to flexibly evolve our busi-

about the United Nations Sustainable

a component of sustainability management,

ness model and boldly advance into new business

Development Goals (SDGs), and it would not be an

stands for “environmental, social, and governance.”

fields. Moreover, I will take a two-pronged approachoverstatement to say that the way the current

However, an earnest attempt to promote manage-

toward management that includes building upongeneration perceives the environment and social

ment based on ESG issues will no doubt contrib-

existing businesses and developing growth busi-

issues is completely different from how my gen-ute to the ongoing growth of a company. As such,nesses in order to construct a resilient businesseration regarded these matters. When the children

I think that we can reframe this acronym as stand-portfolio. Everyone at Tokyo Century is committedof today grow up and it becomes time to choose

ing for “earnings, strength, and growth.”

to achieving our long-term vision of becoming a

the company they will work for, it is unlikely that

We also cannot ignore the fact that Tokyo

they will choose companies that continue to place

Century’s business contributes to environmental

people by acting as a service and business partner

economic gains as the top priority for their corpo-

issues. The production and use of the assets wethat is trusted by customers and other stakehold-rate activities and initiatives. I believe advancing

supply, like aircraft and cars, emit greenhouseers. This commitment will propel us toward rapid

global corporate group with a diverse team of

September 2022

C H AP T E R 2

these assessments, we place emphasis on finan-gases. For this reason, it is important for us to31

Message from the President

Tokyo Century is developing a breadth of busi-

INTEGRATED REPORT 2022

32

TOKYO CENTURY CORPORATION

33

INTEGRATED REPORT 2022

STRATEGY

CHAPTER

3

Unique Medium- to Long-Term
Strategies for Contributing to theCreation of an Environmentally Sound,
Sustainable Economy and Society

34

Tokyo Century’s Materiality for Practicing
Sustainability Management

36

Relationship between Materiality andMedium- to Long-Term Value Creation Strategies

38

Materiality Initiatives

40

Climate Change Scenario Analyses

44

Medium- to Long-Term Financial Strategies

48

Strategies by Operating Segment and Progress
48 Equipment Leasing
50 Mobility & Fleet Management
52 Specialty Financing
54 International Business34

TOKYO CENTURY CORPORATION

35

INTEGRATED REPORT 2022

Tokyo Century’s Materiality for Practicing
Sustainability Management

Tokyo Century’s Materiality (Key Issues)

Sustainability Management Based on Management Philosophy

Materiality

1 Contribution to

decarbonized society

Materiality Identified to Support Sustainability Management

Relevant
SDGs

Contribute to widespread use of clean energy through climatechange response and environmental efforts
Select KPIs

Contributions to reductions in CO2 emissions through solar power
generation businesses of three consolidated subsidiaries*1 (fiscal 2022)
Generation value: more than 478,900 MWh
Contributions to reductions in CO2 emissions: more than 191,321 t-CO2

Tokyo Century’s Materiality (Key Issues)Based on the United Nations Sustainable Development Goals (SDGs), Tokyo Century has created a materiality map that consid-

See page 39 for details

For Tokyo Century, sustainability management constitutes a management strategy for resolving social issues and achieving sustainable growth and improvements in corporate value by contributing to the creation of an environmentally sound, sustainableeconomy and society, as described in its Management Philosophy, through its business activities.

Priority Materiality Initiatives

ers the degree of priority for its stakeholders (indicated on the vertical axis) as well as the degree of priority for the Company
itself (indicated on the horizontal axis). Priority issues for the Company include the development of diverse businesses (such asaviation and solar power generation) that take advantage of its highly free operating environment and business characteristics
grounded in the value of its assets.

for the 17 SDGs. We then proceeded to identify the issues of importance for the Company by looking at the connection between

Select KPICertification under Digital Transformation Stock Selection
program*2 of the Ministry of Economy, Trade and Industry

the SDGs and our Management Philosophy and financial information. The important issues defined in these two categories
formed the axes used when preparing our materiality map, and this map was used to identify the five materiality items describedon the following page, based on discussions by the Sustainability Committee and the Board of Directors.
In addition, protocols have been introduced regarding materiality notifications in agendas for meetings of the Transaction
Evaluation Meeting, Management Meeting, and the Board of Directors. The Company has also created a sustainability contribution award program. These measures are meant to help improve awareness regarding materiality initiatives among employees.

3 Contribution to social

infrastructuredevelopment

Moreover, we have defined key performance indicators (KPIs) along with a PDCA (plan–do–check–act) cycle for materiality

Respond to advances in global mobility services and cooperate with local communities to contribute to social infrastructure development
Select KPIs

Number of vehicles equipped with telematics services*3
Number of safe driving lessons conducted*4
Ratio of rental cars equipped with safety devices (automatic brakes, etc.)*5

issues.
Identification of Materiality Using Materiality Map

Materiality

4 Sustainable

resource use

1

Contribute to development of a circular economy focused on
the value of assets
Select KPIs

Development of refurbishment businesses
Number of secondhand computers sold (fiscal 2022):
more than 250,000

2Importance for stakeholders

543

5 Enhancement of work

environment, leading tostrengthening of
human resources

Shared Platform

Shared platform

Promote human resource development, diversity, and workstyle reforms that improve job satisfaction and foster a senseof personal growth
Select KPIs

Ratio of women among new-graduate hires (fiscal 2022): at least 30%
Ratio of female managers (fiscal 2022): at least 30%
Rate of childcare leave acquisition by male employees (fiscal 2022): 100%

Utilize diverse partnerships to create new value

Importance for Tokyo Century
Major ESG standards referenced: Dow Jones Sustainability World Index, FTSE4Good Index Series, MSCI indexes, SASB Standards*1 Solar power generation company Kyocera TCL Solar LLC and two other subsidiaries *2 Program to certify business operators based on the revision to Act on Facilitation ofInformation Processing implemented on May 15, 2020; companies must apply for certification and the Ministry of Economy, Trade and Industry selects for certification those companies
implementing superior initiatives *3 Nippon Car Solutions Co., Ltd., Nippon Rent-A-Car Service, Inc., and Orico Auto Leasing Co., Ltd. *4 Nippon Car Solutions Co., Ltd. *5 Nippon
Rent-A-Car Service, Inc.

C H APT E R 3

mental, social, and governance (ESG) evaluation and non-financial information disclosure standards as well as the 169 targets

businesses driven
by technicalinnovation

Create new businesses by integrating new technologies into
financial services and contribute to the digital economy
Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

The process of creating this map involved first assessing the importance of issues for stakeholders based on major environ-2 Creation of new36

TOKYO CENTURY CORPORATION37

INTEGRATED REPORT 2022

Relationship between Materiality and Medium- to
Long-Term Value Creation Strategies
Materiality Connected to Value Creation Strategies
Materiality

Social Value

Major Initiatives of
New Fourth
Medium-Term
Management Plan

Create new businesses by integrating
new technologies into financial services
and contribute to the digital economy

Respond to advances in global
mobility services and cooperate withlocal communities to contribute tosocial infrastructure development

Sustainable
resource use

Contribute to development of acircular economy focused on thevalue of assets

 ising investment in data centersR
and resilient real estate in preparation for future trends

 xpansion of circular economy andElife cycle management businesses
focused on asset value evelopment of hotel businessesDcontributing to local economic
development

 rowth of refurbishment busiG
nesses compatible with an ecofriendly society

Promote human resource development, diversity, and workstyle reforms
that improve job satisfaction andfoster a sense of personal growth rowth of renewable energy businesses
G
that address climate change rowth of subscription service businesses inGtandem with development of digital societyIncreased opportunities for supplying
new auto services in light of trend toward
electric vehicles (EVs)Increase in opportunities for joint businesses
with companies possessing innovativetechnologies

 ising leasing needs in conjunction withRsocial demand for energy saving anddecarbonization

 reation of new businesses through digitalC
transformationIntroduction of carbon taxes, increased
regulation, and other risks associated withthe transition to a decarbonized society iminishment of competitiveness of existingDbusiness model due to failure to promptly
respond to new technologies

 bsolesce of social infrastructureO
due to population aging anddeclineIncreased waste treatment costs
for end-of-lease assets due tostricter environmental regulations

 ifficulty in securing humanD
resources due to lack of an appealing workplace environment hysical risks arising through increases inPnatural disasters and abnormal weather
events due to climate change oss of customers and reduced productivityL
due to impaired service provision capabilities
resulting from lack of effective digitaltransformation

 ecreased tourism demand as aD
result of prolongation of COVID-19
pandemic

 eed to respond to legal requireN
ments of countries around theworld following increased businessglobalizationInsufficient innovation due to lackof diversity

 xpansion of solar, biomass, binary geotherEmal, and other renewable energy businessesInvestment in world’s first large-scale cleanhydrogen infrastructure investment fund romotion of mobility-as-a-service (MaaS)P
tourism service verification test throughcoordination between ZENRIN CO., LTD.,
and Nippon Rent-A-Car Service, Inc.

 apital and business alliance withC
MIRAI-LABO Co., Ltd., which develops
used EV battery diagnosis and evaluation and reuse businesses romotion of full transition to EVs for theP
NTT Group’s fleet through Nippon Car
Solutions Co., Ltd.

 aunch of fixed-price power conditionerLrental service jointly developed with the
OMRON Group articipation in TOKYO TORCH projP
ect in Tokiwabashi area in front ofTokyo Station, Uchisaiwaicho
1-chome area development project,and other large-scale urban redevelopment projects

Introduction of Career Challenge
Program internal recruitment system,
resulting in an aggregate total of 27
individuals being assigned to their
desired position (as of April 30, 2022)

 tilization of joint crediting mechanism
U(JCM) to take part in an aggregate total of
10 projects for supporting decarbonization
strategies of Thailand, the Philippines,
Indonesia, and MyanmarInvestment in Volocopter GmbH, a company
developing flying cars, to start initiatives in
preparation for next-generation air mobility
services ifferentiation of IT equipment
Dleases through sophisticated data
erasure technologies and other IT
asset disposition services

 mergence of new mobility businesses likeEautomotive businesses using driving data andflying cars

 stablishment of IBeeT Corporation, a jointEventure with ITOCHU Corporation, to commence subscription services for household
electricity storage systems and peripheral
equipment oint operation of Hotel Indigo
J
Karuizawa with InterContinental
Hotels Group PLC

 aunch of Belong One secondhandLsmartphone and tablet rental service
for corporate users together with the
ITOCHU GroupInvestment in two joint data center
businesses in India together with NTT
Global Data Centers Corporation

Improvement of employee engagement through workstyle reforms
 cquisition of talented humanA
resources by developing an appealing workplace environment
 nergization of staff through new
Ebusiness proposal systems andinternal recruitment systems

 oss of talented human resourcesL
due to failure to provide opportunities for growth in the workplaceImplementation of TC Biz Challenge
Project new business proposal
system, with commencement ofcommercialization of one proposal
passing final judging among 36 proposals received in first iteration
 stablishment of Tokyo Century
E
Group Human Rights Policy stablishment of Basic Policy on
EHealth and Productivity ManagementIntroduction of teleworking system
as well as satellite office system for
improving operational efficiency

To view the Tokyo Century Group Human Rights Policy,
please refer to the following website.
https://www.tokyocentury.co.jp/en/csr/humanrights/policy.html

To view the Basic Policy on Health and Productivity Management,
please refer to the following website.
https://www.tokyocentury.co.jp/en/csr/health/policy.html

C H APT E R 3

Risks

Contribute to widespread use of clean
energy through climate change response
and environmental efforts

 reation of new businessesCdriven by technical innovation

 nhancement of workE
environment, leading
to strengthening of
human resources

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

Opportunities

Contribution to
decarbonized societyContribution tosocial infrastructuredevelopment

38

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2022

39

Materiality Initiatives
POINT

1

Promotion of Understanding among Employees

Sustainability GovernanceTokyo Century is promoting understanding of sustainability management through communication documents (sustainability
communication) and e-learning programs, as well as through training for new employees and ongoing annual training programs.

Sustainability Management Promotion System

In addition, a dedicated portal site has been established to distribute sustainability information and otherwise bolster in-house

Sustainability management strategies are an important framework of Tokyo Century’s medium-term management plan. Ourcommunication.

approach toward sustainability management entails contributing to the resolution of social issues through our business to achieve

Moreover, we have implemented protocols for including materiality notifications in agendas for meetings of the Transaction

sustainable growth for both society and the Company, along with improvements in corporate value. In practicing this type of

Evaluation Meeting, Management Meeting, and the Board of Directors, a sustainability contribution award program, and othersustainability management, we are advancing materiality initiatives that contribute to the accomplishment of the SDGs andframeworks for allowing a more tangible feeling of one’s contribution to sustainability management through their work. These are

implementing a PDCA cycle to confirm progress with this regard.

just some of our initiatives for improving awareness among employees.

Structure for Promoting Sustainability Management

Discusses and reports on the deliberations
Board of Directors

Committees, etc.
Comprehensive Risk
Management Committee(Chairperson: President, Risk
Management Unit)

Sustainability Committee
Coordination (Chairperson: Director and President,
Corporate Planning Unit)

Other Committees, etc.

Reinforcement of Climate Change Response Measuresof the Sustainability Committee and theContributions to a Decarbonized Society
Defined as Materiality

Management Meeting
Discusses and reports on the status ofsustainability initiatives

Climate change is a serious issue for the global environment that impacts the lives of• Plans, promotes, and coordinates alla decarbonized society through means such as rolling out green growth strategies,

everyone on the planet. To combat this issue, society is ramping up efforts to realize

Group companies’ sustainability efforts

an example of which would be the Japanese government’s declaration of its goal of• Discusses matters related to materiality

achieving carbon neutrality by 2050. Tokyo Century, with its dedication to sustainability(Secretariat: Sustainability
Management Division)

management, has defined “contribution to decarbonized society” among its materiality
key issues for helping accomplish the Sustainable Development Goals. We have alsoTokyo Century and Group companies

declared our endorsement of the recommendations of the Task Force on Climate-

Implement sustainability initiatives

related Financial Disclosures (TCFD) established by the Financial Stability Board. The
Company is thus disclosing information based on scenario analyses of how climate

Role of the Sustainability Committee
Established in April 2018, the Sustainability Committee is responsible for deliberations related to sustainability management at
Tokyo Century. This committee meets twice a year, in principle. Important matters deliberated on by the Sustainability Committee arereported to and discussed by the Management Meeting and the Board of Directors to allow for oversight by the Board of Directors.
The Sustainability Committee is chaired by the president of the Corporate Planning Unit, and this committee promotes initiatives
for addressing materiality items that position sustainability as an important management issue. The Sustainability Management
Division, which is responsible for planning, promoting, and overseeing Companywide sustainability initiatives, functions as thesecretariat for the Sustainability Committee.

Members and Meetings of the Sustainability Committee (Fiscal 2021)
Members
Chairperson

Members

Director and President of the Corporate Planning Unit
Operation Headquarters: Unit heads (IT Unit, Business Process Management Unit, Personnel Unit, General
Affairs Unit, Risk Management Unit), deputy president of the Corporate Planning
Unit, general manager of the Corporate Planning Division, and general manager of
the Sustainability Management Division
Business Headquarters: Four business unit general managers (Equipment Leasing, Mobility & Fleet
Management, Specialty Financing, and International Business) and observers(invited as necessary)

Auditors

Standing corporate auditors

Meetings
Meetings held

4

Major agenda items• Information disclosure based on recommendations of TCFD
• Business and human rights initiatives• Progress of medium- to long-term sustainability management initiatives (road map)
• Carbon-neutrality initiatives

Yuichi Okade
General Manager,
Sustainability Management Divisionchange could impact its business. We understand that climate change presents opportunities, in addition to risks. To capitalize on climate change-related opportunities, we aredeveloping solar power and other renewable energy businesses, utilizing joint crediting
mechanism (JCM) projects to work with developing countries to curb greenhouse gas
emissions and share the emissions reduction benefits between involved countries, andtaking part in other environmental business activities. These initiatives have been recognized by financial institutions as environmental projects that contribute to the mitigation of climate change. We were thus able to secure approximately ¥200.0 billion in
financing through sustainability-linked loans* in fiscal 2021. Moreover, Tokyo Century
utilizes environmental impact assessment worksheets to confirm and assess the environmental impacts of projects prior to their commencement to help us maintain a better
understanding of the climate change-related risks and opportunities we face. We arefirmly committed to helping develop a decarbonized society via business activities,
such as promoting the adoption of EVs through leasing.
* A form of sustainable financing for providing funding support for enhancing sustainability management with fluctuatinginterest rates based on the accomplishment of ambitious sustainability performance targets

Diversification of Fund Sources through Sustainable FinanceTokyo Century has received highly positive evaluations from financial institutions for its ambitious sustainability performance targets. Such targets include climate change-related targets,
contributions to reductions in greenhouse gas emissions through solar power generation
businesses and JCM projects, and workstyle reform and diversity targets like a 100% rate ofchildcare leave acquisition by male employees. These evaluations are being leveraged to bolster our contributions to the resolution of social issues via funding.

C H APT E R 3Management Meeting2

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

President

POINT

40

TOKYO CENTURY CORPORATION

41

INTEGRATED REPORT 2022

Climate Change Scenario Analyses
Environment and Energy Businesses (Solar Power Generation)

Scenario Group Definition

2

Aviation Business (Aircraft Leasing)Tokyo Century announced its endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD) in April 2021. In addition, based on a risk materiality assessment related to climate change, we disclosed the results of
scenario analyses conducted based on the TCFD recommendations targeting environment and energy businesses (solar power
generation, May 2021) and the aviation business (aircraft leasing, May 2022).

Scenario analyses were performed using two scenarios, one projecting global warming of less than 2˚C above preindustrial levelsby the end of the century (Well Below 2˚C or 1.5˚C Scenario) and another projecting global warming of 4˚C above preindustrial
levels (4˚C Scenario).

Business Impact Assessment

3

Tokyo Century projected various parameters by formulating estimates looking forward to 2030 along with estimates of the impact
in 2041, after the end of the feed-in tariff (FIT) program.

Scenario Analysis of Environment andEnergy Businesses (Solar Power Generation)

Risks

Subcategory

Carbon prices

Recycling
regulations

Transition risks

Subsidy policies
including renewable energy

Changes in energymix (including
energy demand)

Spread of renewable energy andenergy-saving
technologies

Physical risks

Intensification ofabnormal weather
eventsIt will be possible to maintain businessprofitability even if the purchase pricefor renewable energy drops to ¥7/kWh.*In addition to the outlook indicatedto the left, there is a high expectation for earnings growth throughthe capture of opportunities due toprojected increases in non-fossil
value and opportunities in the
renewable energy businesses.

* Source: Price target from Fundamental Review
of FIT Program and Renewable Energy Policy
Reconstruction, Agency for Natural Resources
and Energy, April 2019

The costs of physical risks are projected to amount to an increase of
approximately ¥400 million in non-life
insurance.

The costs of physical risks areprojected to amount to an increaseof approximately ¥300 million in
non-life insurance.

The impact of both transitionand physical risks on theoverall portfolio of the Groupwas limited. Based on the
results of these scenario
analyses, however, we willcontinue to strive for sustainable growth by strengthening
our resilience to climatechange and taking advantage
of business opportunities.

Business impact
Indicator

Risks

Opportunities

4

Definition of Countermeasures

Solar power generation businesses are notexpected to be impacted by risks related tocarbon pricing.

Our competitive advantage in terms ofrenewable energy prices may increase
following rises in costs of generatingenergy from fossil fuels.

Legal restrictions regarding the collection
and recycling of solar panels may have afinancial impact and may tarnish our
medium- to long-term reputation.

Panel recycling and hazardous material
recycling technologies and services may be
developed ahead of competitors and introduced to, and ultimately expand, the market.

Profitability improvement

Revenue

The profitability of a business operated
under the feed-in tariff program may deteriorate if grid parity is not achieved before
the program ends.

A stricter CO2 emissions reduction policy
may be adopted, and the feed-in tariff program may provide opportunities for business expansion over the long term.

Prevention of sales decline
after end of FIT program

Revenue

The number of renewable energy power
generation companies may increase,and the competitive environment may
become increasingly severe. Also, sales
prices may fall.

The portion of electricity sourced fromrenewable energy may expand as a resultof the Japanese government’s decarbonization targets.

Declines in the value of equipment andpower generation costs of power generation facilities may intensify competition
with other companies.

Business opportunities for solar and biomass power generation may expand as
the use of renewable energy increases.

Damage to employees and power plants
caused by natural disasters may result in
additional investments to restore facilities.
In addition, insurance premiums and othercosts may increase for power plants andother assets, which could have an impact
on performance.

The development of resilient equipment
through the accumulation of expertise maylead to new opportunities via the external
supply of this equipment.

Expenditures

Revenue,
expenditures

Revenue,assets

Revenue,
expenditures

Note: Only items that were assessed as “large” in regard to the potential business impact of the associated risks and opportunities are shown above.

As a result of the scenario analyses, the following countermeasures have been defined to mitigate risks and capture opportunities
from climate change.
Targets of measures

Concrete measures

Increasing profitability by improving facility efficiency
Strengthening asset management
Maximizing power generation efficiency through accumulated asset management expertisesee example initiative below

Expanding into non-FIT projects
	Developing new businesses in areas such as corporate power purchase agreements, self-wheelingmodels, and virtual power plants (VPPs)

Examining renewable energy businesses other than solar power generation

Capturing of
new opportunities

Example Initiative	Expanding business into renewable energy businesses other than solar power generation(e.g., hydropower, biomass power, and wind power)	Entering the VPP business, supply and demand adjustment market, capacity market, etc.,
using storage batteries	Growing business by investing in companies that provide new technologies and business models
	Exploring new needs through the use of secondhand solar panels, for example, by entering therecycling business

Verification Test for Enhancing Solar Power Generation Asset Management

Tokyo Century has launched a verification test for improving the generation capacity and cutting the operating costs of its solar
power plants, as well as for assessing the cost reduction benefits of these initiatives. This undertaking will take advantage of theenergy infrastructure insight of Tokyo Gas Engineering Solutions Corporation and the solar power generation expertise of Kyocera
Communication Systems Co., Ltd. By combining the specialties of Tokyo Century with those of these partners, we aim to contribute to the spread of renewable energy.

C H APT E R 3

Physicalrisks

Risk Severity Assessment

Well Below 2˚C or 1.5˚C Scenario

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

1

Transitionrisks

4˚C Scenario

42TOKYO CENTURY CORPORATION43

INTEGRATED REPORT 2022

Climate Change Scenario Analyses

4

Definition of Countermeasures
IssuesScenario Analysis of Aviation Business (Aircraft Leasing)Contraction ofdemandMajor ongoing initiatives

Countermeasures for future consideration

 apturing opportunities for expanding assets thatC
are in high demand through orders and purchasecommitments for newly build aircraft (orderbook
delivery slots available through 2028)Investing in new assets related to bio-jet fuel,hydrogen-powered aircraft, electric aircraft,
and other assets and participating in related
businesses

see example initiative below

Expanding part-out and conversion businesses

1

Risk Severity Assessment

Tokyo Century assessed the severity of risks in terms of time frame (medium term / long term) and industry (aviation / aircraft

Rise inimpairment rate

Time frame

Risks

Opportunities

Medium term
(2030)

It is possible that government or aviation industry
CO2 emissions regulations will lead to reduced
demand for older aircraft.
The popularization of next-generation aircraft*1 could
result in lower asset value for older aircraft.

 sufficient fleet of next-generation aircraft may leadA
to increased earnings opportunities.
Higher evaluations among investors may result inpreferential interest rates for next-generation aircraft
and new-generation aircraft.*2

Long term(2050)

 he popularization of new-generation aircraft couldTcause sharp decreases in the value of existing nextgeneration aircraft.
Declines in ESG ratings could impede fund procurement activities.

If new-generation aircraft represent a large portion of
the Company’s fleet, it may contribute to higher earnings and asset value.

Aviation Capital Group LLC (ACG), a major U.S. aircraft leasing company and consolidated subsidiary of Tokyo Century, is pursuing
reductions to CO2 emissions by introducing into its fleet next-generation aircraft with high levels of fuel efficiency. The A320neo,
a mainstay next-generation aircraft of Airbus SE, offers a 20% reduction in CO2 emissions compared with the previous generationand is gaining attention from the aircraft market as an eco-friendly aircraft. All outstanding orders for aircraft by ACG are for*1 Low-carbon aircraft with improved fuel efficiency, lighter body, and other features*2 Blended wing body (passenger aircraft, alternative fuel aircraft, electric aircraft, hydrogen-powered aircraft, etc.)2

Introduction of Highly Fuel-Efficient, Next-Generation Aircraft

Example Initiative

next-generation aircraft. By transitioning its fleet toward eco-friendly aircraft, ACG aims to help reduce CO2 emissions from theaviation industry.

Scenario Group Definition

Ratio of Next-Generation Aircraft Among ACG’s Fleet*1

Delivery Schedule for Ordered Aircraft*2(As of March 31, 2022)

Scenario analyses were performed using two scenarios, one projecting global warming of less than 2˚C above preindustrial%

Aircraftlevels by the end of the century (Well Below 2˚C or 1.5˚C Scenario) and another projecting global warming of 4˚C above

60

20

50

preindustrial levels (4˚C Scenario).

3

43

Business Impact Assessment

4˚C Scenario

Well Below 2˚C or
1.5˚C Scenario

2023

16

2024

2025

17
15

15

2027

2028 (Fiscal year)

10

22
20

Business impact assessment

Despite the expectation of strict energy regulations, aircraft
passenger transport volumes are anticipated to grow by anannual rate of 2.8% (2019–2050). Meanwhile, leasing revenues are forecast to decrease and impairment rates areprojected to increase due to the introduction of carbon taxes
and the tightening of CO2 emissions regulations. Accordingly,
aircraft leasing business earnings (ordinary income) are
expected to decrease following the projected developments,
while suitable profit margins will be maintained due to theincrease in aircraft passenger transport volumes.

2022

16

35

40

eration paid to GDP growth rates and other factors in accordance with its current business plan.
Forecast rises in aircraft demand are projected to have asignificant benefit in bolstering leasing revenues, and impairment losses resulting from deterioration in the credit conditions of certain airlines are expected to be minor. Accordingly,
aircraft leasing business earnings (ordinary income) are
expected to grow following the projected developments.

15

15

Based on the aforementioned scenarios, Tokyo Century assessed the potential impact on its business in 2050 with considScenario

15

5

The results of the scenario analyses
suggest that the impact of climatechange on the aircraft leasing business will be limited. Based on the
results of these scenario analyses,
however, we will continue to strive for

2
0

2017

2018

*1 As of December 31 of each year

2019

2020

2021 (Fiscal year)

0

2026

*2 All ordered aircraft are next-generation aircraft models offered by The Boeing
Company and Airbus SE.

To view the environmental, social & governance report of Aviation Capital Group, please refer to the following website.
https://www.aviationcapitalgroup.com/wp-content/uploads/2022/08/ACG-ESG-report-2021-20220819.pdf

sustainable growth by strengthening
our resilience to climate change andtaking advantage of business
opportunities.

Response to Climate Change and TCFD Endorsement	For more information on governance, strategies, risk management, and metrics and targets pertaining
to disclosure based on TCFD recommendations, please refer to the following website.
https://www.tokyocentury.co.jp/en/csr/environment/tcfd.html

C H APT E R 3

leasing). The risks and opportunities deemed to have a large impact on the Company’s business area are as follows.

 educing portfolio risk by diversifying andR
expanding lessee base and shifting toward
next-generation aircraftEnhancing asset turnover business to realize
the swift sale of owned aircraft and improve
profitability
Expanding asset management services for
managing aircraft after sale to third parties

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society estructuring portfolio by addressing asset riskR(focusing on narrow-body aircraft with low average
age and high liquidity, diversifying maturity dates,
and implementing other measures)
Periodically monitoring asset value volatility throughvalue at risk model on a consolidated basis
Setting ratio of next-generation aircraft (fuel-efficient
aircraft) in the portfolio as a key performanceindicator

44

TOKYO CENTURY CORPORATION45

INTEGRATED REPORT 2022

Medium- to Long-Term Financial Strategies

Fiscal 2022 Earnings Target Based on
Operating Environment Outlook

Tokyo Century targets ROA of

Ongoing Policy of Stable,
Long-Term Returns to Shareholders
As I mentioned, net income attributable to owners of

substantial growth 10 years

amassing consolidated earnings, despite the impacts ofparent is expected to decline substantially in fiscal 2022.

the COVID-19 pandemic on aircraft leasing and car rental

However, this decline will not change our basic financial

operations. As for fiscal 2022, the final year of the New

and capital policies. This is because the impairment

Fourth Medium-Term Management Plan announced inlosses associated with Russia’s invasion of Ukraine are a

February 2020, the impacts of the pandemic will be felt

one-time event and because we are seeing steady growth

together with the effects of Russia’s invasion of Ukraine.

in ordinary income as car rental operations recover amid

Given this outlook, we are projecting ordinary income ofthe diminishing impacts of the COVID-19 pandemic. Based¥100.0 billion, net income attributable to owners of parent

on these reasons, we plan to issue an annual dividend of

Tatsuya Hirasakiof ¥20.0 billion, and ROE of 3% in fiscal 2022. All of these¥143 per share in fiscal 2022, the same as in fiscal 2021.

Director and Managing Executive Officer
President, Corporate Planning Unit
President, Accounting Unit

figures are lower than the financial targets set in the

In this manner, we will continue to adhere to our basic

medium-term management plan, meaning that the only

policy of providing stable, long-term returns to sharehold-one of said targets we are on course to accomplish is thaters during the period of the current medium-term manage-

for the shareholders’ equity ratio, for which the plan puts

ment plan. In addition, we put into practice management

forth the target of 12%. Moreover, the newly projected

guidelines for capital use rates (risk exposure associatedfigures for net income attributable to owners of parent

with economic capital) from the perspective of financial

and ROE represent the lowest levels since the merger.

soundness. Accordingly, it was judged that Tokyo Century

down the line.

A major factor behind this unfavorable performance is

has sufficient resilience to risks when taking into accountSince it was born of the merger of Century Leasing

based on an optimal capital structure. In fiscal 2020 andprojected to be an extraordinary loss of U.S.$380 million

System, Inc., and Tokyo Leasing Co., Ltd., in 2009, Tokyo

fiscal 2021, however, ROE dropped to around 8%. This(approx. ¥44.4 billion; translated at a rate of ¥116 perCentury has continued to take an ambitious stance towardoutcome was a result of the sluggish performance of the

U.S.$1), incurred based on the decision to record impair-co-creation with partners and the expansion of its busi-

aircraft leasing and car rental businesses amid the COVID-

ment losses for the entire value of eight aircraft previously

ness domain through M&A activities and other means.

19 pandemic. A priority for the Company going forward

leased to Russian airlines by aircraft leasing subsidiary

We have thereby managed to maintain an industry-leading

will thus be to recover ROE to the doubt-digit level. To

Aviation Capital Group LLC (ACG). In terms of macroeco-

level of return on equity (ROE) of 10% or more. As we growmaintain a double-digit ROE over the medium to long term,

nomic conditions, we also expect to be impacted by theour business, we have also been working to reinforce our

we must increase earnings via higher return on assets

rapid policy interest rate hikes in the United States and thefinancial base. In this manner, Tokyo Century has struck a(ROA).* Approaches toward achieving this objective willrising volatility in stock markets. These risk factors haveSince the merger, Tokyo Century has continued to expand

balance between investments in growth businesses, theinclude reforming existing business models and creating

shaped the aforementioned performance forecasts forbeyond financial services to place greater emphasis on

strengthening of its financial base, and shareholder

new, highly profitable businesses.

fiscal 2022.

services and business operations in its business model.

returns while also practicing balance sheet management* Ratio of ordinary income to total assets

and Downward Revisions to Forecasts

Times

%


2.0

20

8.1% 10
0.81
times*

1.5

1.0

0

0.5
09/3

10/3

11/3

12/3

13/3

14/3

15/3

16/3

17/3

18/3

19/3

20/3

21/3

22/3

Tokyo Century’s price book-value ratio (left axis)
Average price book-value ratio for major leasing companies (left axis)
0Tokyo Century’s ROE (right axis)* Based on closing price on June 30, 2022

Measures for Recovering ROE

Earnings GrowthInvestment in highly profitablebusinesses for improving ROAAdvancementof measures basedon seven pillars of businessstrategies
Introduction of next-generation
aircraft and other highly profitableassets at ACG

Pursuit of Higher ROA by Building upon
Existing Businesses for Growth over Next
Five Years and Exploring New Business Models
and Fields for Growth over Next Decade

Accordingly, the scale of its balance sheet has continued
New Fourth Medium-Term Management Plan Targets

Price Book-value Ratio and ROE Source: Bloomberg

future earnings power.

Ordinary
incometo grow while its business portfolio transforms. This development has exposed the Company to a more diverse
range of risks, making it necessary for Tokyo Century to

New Fourth MediumTerm Management
Plan Targets(Fiscal 2022)

Post-Revision
Forecasts(Fiscal 2022)¥130.0 billion¥100.0 billion

stockpile the capital needed for addressing such risks.
While we therefore look to maintain double-digit ROE,
we recognize that this will require us to reallocate thecapital we have amassed to highly profitable growthareas in order to heighten earnings while boosting ROA.
Tokyo Century has four operating segments, each with

Net income
attributableto ownersof parent¥80.0 billion

Shareholders’equity ratio

12%

12%

ROE

12%

3%

¥20.0 billion

differing characteristics. Nevertheless, we expect growthin all of these segments and will therefore be pursuingincreased earnings while heightening ROA. Of particularimportance to the future will be the Specialty Financing
segment. This segment has been a major growth driver
since the merger and it is expected to continue to function
so going forward. Due to the types of assets held in the

C H APT E R 3

In fiscal 2021, Tokyo Century succeeded in steadily

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

3% with the goal of achieving

46

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2022

47

Medium- to Long-Term Financial Strategies

Specialty Financing segment, it accounts for a large por-

Over the medium term, or the next five years, Tokyo

functions, to develop new business models that involve

Tokyo Century will therefore need to create the frame-tion of our risk exposure. As a result, this segment is also

Century expects to be able to generate sufficient earnings

supplying value via new functions to expand earnings

works necessary for this undertaking during the period of

expected to generate higher ROA than other segments ingrowth by further building upon existing businesses.

opportunities and thereby increase profitability. The cur-the next medium-term management plan. From the per-terms of risk-adjusted return. Realizing these returns,

Approaches to this end will include the recovery of therent uncertain era is characterized by ever-shorter productspective of human resource strategies, for example, thehowever, will require that we recover the performance ofperformance of ACG as well as the advancement of mea-

life cycles, which in turn necessitates the exploration oftypes of employees and skills we require are changing

ACG, a constituent of the segment that continues to suffersures based on our seven pillars of business strategies

new business fields. Meanwhile, we recognize that resolv-

together with our business strategies. It is thus importantfrom the impacts of the COVID-19 pandemic and Russia’s

through means such as collaborative and joint businesses

ing social issues, among which environmental issues arethat we recognize the gap between the staffing require-invasion of Ukraine. I think we managed, to a certain

with NTT and other prime partners. A number of the initia-

particularly prominent, through business activities is bothments of our business strategies and our current

extent, downside risks stemming from the massive impair-tives for laying the groundwork for future growth under the

an obligation and an opportunity for all companies, includ-

employee base, in order to reform our human resource

ment losses recorded in the aviation leasing business as acurrent medium-term management plan are anticipated toing Tokyo Century.

portfolio to bolster the diversity and expertise of ourresult of the extraordinary circumstances created by the

begin contributing to earnings in the future and will thus

abovementioned developments. However, lease rates andbe components behind earnings growth over the medium

ment plan will thus be our ability to develop new businessother market conditions have not returned to the pre-term. Examples of these initiatives include collaboration

models and explore new business fields with an eye to the

COVID-19 level of 2019. Accordingly, more time willwith the Advantage Partners Group and joint businesses

next decade.

be needed before ACG’s performance can recover to thewith the NTT Group. At the same time, the advancementlevels anticipated when it was consolidated in 2019.

of our business strategies is anticipated to lead to

Aviation market forecasts disclosed by the International

increases in assets. The scale of our asset portfolio cur-

Air Transport Association project that it will not be until

rently exceeds ¥5 trillion. As such, the ongoing implemen-2024 before global air passenger traffic recovers to thetation of strategies entailing growth in assets will naturally

level seen prior to the COVID-19 pandemic. We therefore

give rise to issues related to capital efficiency. If we are to

anticipate that the recovery of ACG’s performance to theovercome these issues, it will be important to develop adegree initially forecast will not occur until after the market

business model involving asset turnover while working

has recovered.

toward increases in ROA.

need to be conducted toward this end.
Meanwhile, I think the promotion of environmental,social, and governance (ESG) initiatives will be incredibly

As we tackle these tasks, we will seek to achieve ROA of

important as the Company seeks to boost its earnings

3%, an increase from the figure of 1.6% posted in fiscal 2021.

power under the next medium-term management plan.
The underlying belief behind this statement is that a virtuous cycle of increases in earnings power and ESG initia-

Ongoing Creation of Frameworks forDeveloping New Business Models andExploring New Business Fields

tives will lend itself to the practice of effective sustainability
management. Moreover, ESG initiatives will help lower
cost of shareholders’ equity while also producing futurefinancial value. I therefore look to advance initiatives thatTokyo Century will continue to develop new businesstarget higher corporate value in an integrated manner thatmodels and explore new business fields in pursuit ofcombines financial value and non-financial value.

Century’s business strategies from a long-term perspec-

half of the next decade, will be the evolution of thehigher ROE and ROA over the next decade. Our strong,

We are currently in the process of establishing the next

tive looking 10 years ahead and based on the Fifth

Company’s “Finance × Services × Business Expertise”

trust-based relationships with our various business part-

medium-term management plan, and I have no doubt that

Medium-Term Management Plan, scheduled to start inapproach. This will require us to move beyond our existingners will be a powerful asset in this undertaking. These

our human resources will continue to be a source of com-

fiscal 2023.

business models, which are centered on financing

relationships constitute a strength in comparison with ourpetitiveness under the new plan. Management proactively

rivals and are also why we have garnered praise from

communicates to employees their importance for foster-

capital markets.

ing a desire among them to not only participate in ourIf we are to fully capitalize on this major strength, it isMedium- to Long-Term Growth of Assets

Transformation ofbusiness model and domain

Portfolio emphasizing
asset efficiency
Growth through existing
business strategies
Utilization of external capital throughjoint businesses with partners

Development of new, highly profitablebusiness models
Exploration of new business fields

not enough for us to simply continue to support theinitiatives relate to them. We thereby aim to encourage

growth of our customers and business partners withautonomous action by employees to ensure that the next

financing functions; we must also seek to create newplan can be as effective as possible.

value for them by transforming ourselves, in response to

As president of the Corporate Planning Unit, I hope tothe uncertain operating environment, into a conglomerate

formulate a vision and strategies that can unite the Tokyo

that creates new businesses. Fortunately, Tokyo Century is

Century Group in the advancement of the next medium-

able to utilize a wide variety of assets through its businessterm management plan. Other initiatives going forward will

operations, including both tangible assets and intangible

include proactive disclosure to guarantee that all members

assets, such as partner companies and human resources.

of capital markets are provided with sufficient information

I am also keenly aware of the fact that, if we cannot organ-

while practicing ongoing engagement. In this manner, I aim

ically combine these assets to create new businesses andto drive improvements in corporate value and spur ourbusiness models, we will be unable to achieve ongoingtransformation into a new Tokyo Century Group. I would

growth. Over the years, Tokyo Century has continued tolike to ask our stakeholders for their ongoing support inexpand its business domain by creating diverse services

the months and years to come.

matched to the times in a free, unregulated operating
environment. We will continue this trend under the next
medium-term management plan by laying the groundwork
Five years from now

10 years from now

initiatives but also make them understand how these

for the development of new businesses.

C H APT E R 3

Meanwhile, a focus over the long term, or the latter

employees. Investments in human resources will also

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

I would now like to talk about the directives for Tokyo

An important theme of the next medium-term manage-

48

TOKYO CENTURY CORPORATION49

INTEGRATED REPORT 2022

Strategies by Operating Segment and Progress

Growth Strategies

Strengths
Broad customer baseWe will contribute to the creation of asustainable economy and society by

Culture of constantly tackling challenges in new business areas

ing up efforts to take part in renewable energy projects and to“ Finance × Services × Business Expertise” approach for responding to diversifying and changing customer needs

creation of an environmentally sound, sustainable economy

ing to the diversifying needs of customers. We are also rampBusiness Value Maximization Initiatives

refurbish end-of-lease properties in order to contribute to theand society.
Another focus is coordination with our prime partners toBusiness expansion
into growth areas
Carbon neutrality
Circular economies

boldly expand into new business fields and thereby achieve

Digital transformation

Opportunities
Risks

 usiness risks associated with expansion into new businessBfields extending beyond boundaries of financeGovernance risks arising in conjunction with growth of Group
companiesGeopolitical risks and other operating environment changes

Boosting of the Value of the Leasing Business and Adaptation to Digital Transformation
Successes of New Fourth Medium-Term Management Plan
Boosting of Value of Leasing Business

Co-Creative Businesses

Renewable Energy onverted FFG Lease Co., Ltd., a subsidiary ofCFukuoka Financial Group, Inc., into an equitymethod affiliate

Corporate Power Purchase Agreements
Installed solar panels at Hino factory of DAIHATSU METAL Co., Ltd., andstarted providing industrial in-house generation system support service
through collaboration with Kyocera Communication Systems Co., Ltd.

Human resource development, organizational capability improvement

a new co-creative lease business with Fukuoka Financial
Group. Furthermore, we will enhance consolidated management of the Tokyo Century Group, including at existing affili-

Digital transformation,
operational efficiency
improvement

ates, to maximize the asset efficiency and earnings of theEquipment Leasing segment.
The growth of our business is driven by the contributions

Enhancement of customer
channel networksof our diverse and highly ambitious and motivated humanTime

Quest to Create an Environmentally Sound, Sustainable Economy and Society

Overview of New Fourth Medium-Term Management Plan

Launched POWER CONTINUE fixed-price power conditioner rental
service for low-voltage open-air solar power plants together withOMRON Social Solutions Co., Ltd.

ITOCHU Corporation and the JFE Group, while also launching eveloped new co-creative framework for growingDdigital technology businesses together with the
Fujitsu GroupOperational Optimization
 tilized digital contract technologies to improveU
operational efficiency and realize paperless procedures with regard to contracting with customers chieved paperless and higher-efficiency processesA
regarding management of contracts and assets
and conclusions of leases using LINCS, a contract
information supply service

Launch of Secondhand Smartphone and Tablet
Rental Service for Corporate Users with ITOCHUOUR MATERIALITY

Sustainable resource use

Together with wholly owned ITOCHU subsidiary Belong Inc., Tokyo Century has launched the Belong One secondhand
smartphone and tablet rental service for corporate users.
Belong One is a rental service that provides high-quality secondhand smartphones and tablets, equipped with information security functions and with initial configuration completed, to accommodate the recent rise in demand forbusiness-use smartphones and tablets.
This service facilitates increased reuse of smartphones and tablets by performing maintenance on devices after
the end of rental services so that they can be reused, thereby contributing to the realization of circular economies.

C H APT E R 3

 xpansion of businesses in new fields by enhancing relationEships with prime partners
Rising demand for environmental value driving growth indecarbonization-related businesses
Growth of next-generation financial services that merge
subscription and other digital transformation services withleasing and finance businesses

Other growth areas

advanced environment and energy businesses together with
Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

Koichiro SatoManaging Executive Officer
President,
Equipment Leasing Business
Development Unit

technologies to improve operational efficiency.

robust yet sustainable growth. For example, in fiscal 2021 wein the leasing business and expand
partnerships utilizing digital transformation.

work engagement. We are also proactive in our use of digitalformation and expand the functionality and boost the value of
our solutions and services so that we can continue respond-

accelerating efforts to increase value

motivating and open workplace environment and improving

In our core leasing business, we aim to promote digital trans-

Evolution of “Finance × Services × Business Expertise” concept o-creative businesses with the NTT Group, Fujitsu Limited,C
Nippon Express Co., Ltd., and other prime partners

resources. For this reason, we are committed to building a

Business Value

Equipment
Leasing50

TOKYO CENTURY CORPORATION51

INTEGRATED REPORT 2022

Strategies by Operating Segment and Progress

Mobility & Fleet
Management

Strengths
Robust product lineup
Connected, business process outsourcing, and otherhigh-quality services
Collaboration with diverse business partners
Complete, industry-leading lineup of mobility services (individualand corporate auto leasing, car rental, and other services)

We are providing next-generation mobility
services, including those related to electric ollaboration with the NTT Group, the ITOCHU Group, and otherC
diverse business partners

vehicles (EVs), and creating new businesses
while expanding our growth foundations

Masato Osugi

Risks

Managing Executive Officer
President,
Mobility Business
Development Unit

Intensifying, cross-industry competition due to increasing entry
into mobility field by competitors
Delays in deliveries of new automobiles as a result of shortagesof semiconductors and other parts
Reduced mobility demand amid pandemics
Increases in resource and material prices in conjunction withrising geopolitical risks

ness process reengineering to achieve further improvements inManagement segment is currently experiencing substantial

operational efficiency using IT.

volatility as the trend toward electrified vehicles is propelled byGoing forward, we will take advantage of our fleet of sometechnological innovation and decarbonization efforts, as busi-

700,000 vehicles to strengthen our relationships with the NTT

nesses based on new ideas arise from market entry by players

Group, the Mizuho Group, the ITOCHU Group, and other prime

from other industries and as mobility demand fluctuates amid

partners. At the same time, we will aggressively propose thethe COVID-19 pandemic.

introduction of EVs, important building blocks of a decarbonized society, with the goal of quickly amassing an EV fleet of

In this environment, we are advancing growth strategies foraround 100,000 vehicles.

expanding our businesses and strengthening our operating

We will also shift from a product-oriented perspective to afoundation based on the key words of “digital technologies,”“mobility,” and “EVs.” Strategies to expand our businesses

market oriented-perspective in order to create new services

include the acceleration and enhancement of organic growth inbased on an accurate understanding of customer needs.

existing businesses via differentiation through the proposal of

Expansion of Auto Service Businesses through Partnerships

high-value-added products and via customer retention efforts
founded on the use of digital transformation and AI technolo-

Prime Partners

gies to uncover customer needs. We are also advancing
projects for achieving non-organic growth with the goal of
supplementing previously lacking functions and expanding ourbusiness scope. Other business expansion efforts include

CASE/MaaS

redoubling our approach toward new technologies and decar-

Decarbonization

Nextgeneration
mobility

Smart
distribution

Smart cities

bonization by means of creating EV value chains and enhancing marketing approaches through data analysis and utilization.

Digital Technologies

MobilityEVs

As for strategies to strengthen our operation foundation, we will

Quest to Create an Environmentally Sound, Sustainable Economy and Society

Overview of New Fourth Medium-Term Management Plan

Generation of Synergies through Alliance with MIRAI-LABO

Framing of the Changing Times as an Opportunity to Pursue Mobility Services That Go One Step Further

capital and business alliance with MIRAI-LABO, which possesses EV battery diagnosis and evaluation and reuse tech-

Co-Creative Businesses

EVs

Digital Transformation

 oncluded capital and business allianceCagreement with Mobility Technologies
Co., Ltd., which operates a taxi dispatch
app business, and developed new mobility
services in preparation for the spread of
MaaS, automated driving, and smart cities

 romoted introduction of EVs with a focus onP
the NTT Group at Nippon Car Solutions Co., Ltd.

 eleased new smartphoneR
app and redesigned online
car rental reservation website to improve customer
convenience and cut backon associated administrative
work at Nippon Rent-A-Car
Service, Inc.; launched service that allows rental cars
to be rented and returned ina non-face-to-face manner
via a smartphone oncluded business alliance agreement
Cwith map solutions provider ZENRIN CO.,LTD., and commenced verification test of
MaaS tourism service for contributing to
the revitalization of the local economy in
Nagasaki City aunched initiatives with Kyushu Electric PowerL
Company, Incorporated, for supplying EVs as
business-use vehicles on weekdays and rental
cars on weekends

Contribution to
decarbonized society

As part of its quest to create an environmentally sound, sustainable economy and society, Tokyo Century concluded a

Successes of New Fourth Medium-Term Management Plan ommenced capital and business alliance withC
MIRAI-LABO Co., Ltd., which develops battery
diagnosis and evaluation and reuse businesses

OUR MATERIALITY

nologies. Through this alliance, we aim to develop a model for effective use of batteries based on battery analyses.
The development of such a model has been identified as a challenge needing to be overcome in order to promote thespread of EVs. We anticipate that this model will help improve the competitiveness of Tokyo Century’s EV leases.
In addition, we will work with MIRAI-LABO’s partners to bolster and supply environment-friendly mobility services related
to the reuse and recycling of EV batteries.

Environmental platform holder providing conventionexceeding technologies for a MaaS society withan intense focus on the environment

Popularization of EVs throughreinforcement of value chain

Provision of environment-friendly mobility services including extracting battery packs fromused EVs to be reused in solar-powered street lights and stationary storage batteries

Assessment/ ReuseDisassembly

Used EV

Battery packSolar-powered
street light

Stationary storage
batteryC H APT E R 3

collaboration with diverse business partners.

educate and train human resources while accelerating busi-

The operating environment surrounding the Mobility & Fleet

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

Opportunities

through unrivaled service quality and rowth in businesses related to electrified vehicles due toGpursuit of carbon neutrality
Utilization of digital transformation to improve customer
convenience
Creation of new businesses utilizing CASE (connected, autonomous, shared & service, and electric), mobility as a service(MaaS), digital transformation, and other automobile data-related
technologies
Shift from ownership to use of automobiles

Growth Strategies

52TOKYO CENTURY CORPORATION53

INTEGRATED REPORT 2022

Growth StrategiesT he specialized expertise pertaining to our product lines will

In fiscal 2022, the final year of the New Fourth Medium-Termbe leveraged alongside the comprehensive strength of theManagement Plan, the Specialty Financing segment will focus

Group to accelerate collaborative business ventures with

Leading renewable energy businesses in Japanon tasks including accomplishing the Company’s fiscal 2022

partners and thereby enhance and diversify our operations.

targets. At the same time, we will cement our earnings foun-W e will seek out environmental business opportunities with

Organization and personnel with expertise and innovative spirit

dation in preparation for the upcoming Fifth Medium-Termregard to our full array of assets for helping realize carbon

Management Plan with the goal of developing frameworks forneutrality.

 rovision of highly competitive financial services based on theP
Tokyo Century Group’s comprehensive strength and throughcollaboration with Nippon Telegraph and Telephone Corporation(NTT), Mitsubishi Estate Co., Ltd., Kyocera Corporation, Advantage
Partners Inc. (AP), and other prime partners
Specialized global staff supporting sophisticated businesses inall asset classes

ongoing growth.

Steps will be taken to develop organizations and infrastruc-

Opportunities

Specialty
Financing eed to reform all product lines to achieve carbon
Nneutrality by 2050
Transition to new businesses in response to volatility inenergy and financial markets

Risks

Strategies by Operating Segment and Progress perating environment changes arising from Russia–
O
Ukraine conflictDelays in recovery of demand and economic conditions
due to COVID-19 pandemic

Strengths
Collaboration with partners to develop diverse and viablebusinesses

We are leaping beyond
expectations and pursuing
professionalism to further
refine our business.

Aviation

 volution of integrated operations with ACG and GA Telesis, LLC, and readjustment of growth track of aviationEbusiness

Shipping

Creation of business opportunities through optimal portfolio management and collaboration with partners

Environment
and EnergyImprovement of value through sophisticated management of solar power assets
Diversification of renewable energy portfolio and expansion of regional scope of investments
Promotion of energy management businesses (storage batteries, electric vehicles, etc.)

Real Estate xploration of earnings opportunities through joint real estate initiatives and business reform together with partners
ERegional diversification of domestic and overseas investments and focus on projects with medium- to long-term
growth potential in order to secure stable core earnings
Pursuit of carbon neutrality in real estate businesses through coordination with environment and energy businesses

Principal
Investments

 romotion of joint investments with AP and enhancement of business investment modelPImprovement of corporate value of investees and generation of synergies by calling upon Tokyo Century’s
customer base

Overview of New Fourth Medium-Term Management Plan

Further Refinement of Businesses with Expertise and Creativity
Quest to Create an Environmentally Sound, Sustainable Economy and Society

Successes of New Fourth Medium-Term Management Plan
Aviation and Shipping

Environment and Energy ormed business alliance regardingFleasing of electric vertical take-off andlanding aircraft between Volocopter
GmbH and Aviation Capital Group LLC(ACG)

 ointly established fund for investing in renewableJ
energy businesses together with NTT Anode Energy
Corporation and Sumitomo Mitsui Trust Bank, Limited

Second Joint Investment with AP—Transference of Energy
Storage Devices and Systems Business from Showa Denko
Materials, Future Collaboration, and Outlook

OUR MATERIALITY

Contribution to
decarbonized society articipated in U.K. power grid electricity storageP
project with Nippon Koei Co., Ltd., and three othercompanies

Together with AP, Tokyo Century acquired the energy storage devices and systems business of Showa Denko Materials

 inanced exhaust gas desulfurization scrubbers for protecting
Fmarine environments

 rew solar power generation businesses (mega solar,G
corporate power purchase agreements, floating solar
power, agricultural solar sharing, etc.)

siders it a vehicle for synergies with existing businesses. Storage battery technologies and products are imperative to a

Real Estate

Principal Investments

 ook part in TOKYO TORCH redevelopment
Tproject and U.S. data center business
together with Mitsubishi Estate ompleted business carve-out of energy storageC
devices and systems business from Showa Denko
Materials Co., Ltd., as second joint investment with AP

ment as an opportunity to pened Hotel Indigo Karuizawa as secondOphase of collaboration with InterContinental Hotels Group PLC

 articipated in initial public offering for renewableP
energy special-purpose acquisition company operated
by AP

the creation of an environmen-

 rdered 60 Airbus aircraft and promoted next-generation aircraftOwith higher fuel efficiency through ACG

 articipated in Tokyo Cross Park Vision project in the UchisaiwaichoP
1-chome district of Tokyo

via a business transference. This business was inherited by the newly established Energywith Co., Ltd., in December 2021.
Tokyo Century regards this project as a joint investment conducted as part of its strategic alliance with AP and connumber of Tokyo Century’s businesses, including its auto, renewable energy, and data center businesses. Accordingly,
this joint investment will enable us to provide high-value-added financial services related to electricity storage going
forward. We therefore aim tocapitalize on this joint investcontribute to the developmentof social infrastructure and totally sound, sustainable economy and society.

C H APT E R 3Managing Executive Officer
President,
Specialty Finance Business
Development Unit

and to promote highly productive organizational operations.

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Society

Shintaro Yamazaki

ture frameworks that match the pace of business growth

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TOKYO CENTURY CORPORATION55

INTEGRATED REPORT 2022

Strategies by Operating Segment and Progress

International
BusinessStrengths
Unrivaled global network
Alliances with prime Japanese partners, such as the NTT Group,and promising local companies overseas
High-quality leasing services provided by CSI Leasing, Inc. (CSI)
 pecialized, high-value-added services and alliances with prime
S
Japanese companies, promising local companies in overseas
markets, and financial institutions
Expansion of fair market value (FMV) leasing,*1 IT asset disposition (ITAD) services,*2 and other high-quality consulting services
provided by CSI

We will build a thoroughly
differentiated business by teaming up
with alliance partners and leveraging
our unrivaled global network.

*1 Leasing based on FMV derived from the assessed residual value of IT equipment*2 Services for disposing of IT assets safely and appropriately

Growth Strategies

Tokyo Century excels in areas such as JCM projects and

The International Business segment is leveraging its strengths

ITAD operations, which significantly contribute to the accom-in the IT, mobility, and environmental fields as well as its alli-plishment of the United Nations Sustainable Development

ances in order to differentiate its business and achieve ongo-

Goals. The advancement and expansion of such activities is

ing growth with a focus on growth businesses and niche fields.

thus expected to help resolve social issues and keep our busi-

CSI, one constituent of this segment, has been expanding

ness on a growth track.

its global network by establishing a Japanese base in May

The source of our competitiveness in these undertakings is

2021 and then acquiring stakes in Norwegian companies inour employees. To reflect the importance of its employees and

September. Moreover, CSI plans to extend its operations intoheighten their motivation and engagement, the Company has

Taiwan, Thailand, Indonesia, Sweden, Finland, and Denmark

introduced performance-linked compensation systems at

in fiscal 2022. This network expansion will allow CSI to better

overseas subsidiaries while also appointing locally hired per-address the needs of multinational companies while alsosonnel and women to manage bases and taking other steps

enabling it to solidify its earnings foundation by accelerating

to cultivate and promote diverse human resources.

synergies through intra-Group coordination with existing over-Opportunities
Risks

Director and Senior Managing
Executive Officer
President,International Business
Development Unit

 xpansion of 5G, Internet of Things (IoT), and other digitalE
technology markets
Need for remote working environments and other peripheralservicesIncreasing information security needs
 ngoing risk of stagnancy in production and supply chainsOGeopolitical risks
Interest rate increase risks

ownership and development projects with the NTT Group in
India, which are seeing massive increases in data traffic. The

Global Base Network (expansion of network centered on Asia): City with CSI base
: City with Tokyo Century base
: City with both CSI and Tokyo Century bases

segment is also advancing a diverse range of other businesses
through the provision of managed services for IT assets, FMV
leases, and ITAD services that capitalize on Tokyo Century’s
strengths.
In addition, we are developing strong alliances withJapanese partners and prime local companies in markets
around the world. The strengths of these various partners

Overview of New Fourth Medium-Term Management Plan

Response to Expansion of Digital Economy and Mobility Revolution

will be combined in the pursuit of new business value going
forward.

Successes of New Fourth Medium-Term Management Plan
Quest to Create an Environmentally Sound, Sustainable Economy and Society

United States chieved record-breaking ordinary income at CSI and established bases in India,
A
Japan, and Northern Europe to further expand global network
Posted record-breaking earnings at all four auto business subsidiaries
Improved customer convenience primarily through launch of new services
Acquired Work Truck Direct, Inc., and Fiber Marketing International, Inc., dealers oftrucks, arbor equipment, and small construction equipment, enabling the provision ofcomprehensive services linked to financing services of AP Equipment Financing Inc.

Expansion of Global-Standard ITAD Services

OUR MATERIALITY

Sustainable resource use

CSI subsidiary Executive Personal Computers, Inc. (EPC), offers such ITAD services as data erasing and disposal for IT
equipment. With a network of 18 service bases in seven countries, EPC is able to provide high-quality, global-standard
services in more than 30 countries. In recent years, greater importance is being placed on the environment and on
information with regard to the disposal of IT equipment. At the same time, the popularization of remote working and the
propagation of 5G and IoT technologies are driving a rise in theAsia

number of IT devices. This trend is anticipated to spur rapid growth in ommenced joint data center business with the NTT Group in India
CCompleted business restructuring of consolidated subsidiary BPI Century Tokyo Lease & FinanceCorporation (joint venture leasing company with major Philippine bank, Bank of the Philippine
Islands), resulting in a sharp upturn in performanceReceived approval for four projects in which Tokyo Century functions as representative under
Financing Program for Joint Crediting Mechanism (JCM) Model Projects (including one project
recognized under new JCM Eco Lease Scheme; total of 10 projects approved to date)demand for ITAD services, which can be used to ensure the safe andappropriate disposal of these IT assets. EPC seeks to cater to theneeds of multinational companies with global-standard ITAD services
while also properly reusing and recycling IT equipment around theworld. For this reason, the company is bolstering its network, expanding alliances with partners, and providing high-quality ITAD services inan ever broader range of regions.

C H APT E R 3

Toshio Kitamura

Meanwhile, we are moving ahead with joint data center

Unique Medium- to Long-Term Strategies for Contributing to the Creation of an Environmentally Sound, Sustainable Economy and Societyseas subsidiaries.

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TOKYO CENTURY CORPORATION57

INTEGRATED REPORT 2022

FOUNDATIONCHAPTER

4

Reinforcement of
Operating Foundations That
Support Strategies

58

Human Resource Strategy

62

Strengthening of Partnerships

58TOKYO CENTURY CORPORATION59

INTEGRATED REPORT 2022

Human Resource Strategy
Tokyo Century is bolstering its staff of specialized human resources based on the two themes of humanresource strategies and measures and the cultivation of management personnel, in order to foster people
capable of developing co-creative businesses together with partner companies.

Human Resource Strategies and Measures

Theme 1

(Medium-Term Management Plan)

Specific Human Resource Initiatives

Management Philosophy
The Tokyo Century Group will work alongside customers in pursuit of their growth as a highly specialized andunique financial services company and will contribute to the creation of an environmentally sound, sustainable

Focus

Initiatives

Enhancement ofspecialized skills

economy and society.

New business workshops for supporting business incubation
 raining on subscription services, IT, digital transformation, and other skills necessary for developingT
co-creative businesses
 nowledge Lab program for sharing knowledge related to financial service planning and otherK
initiatives
Practical training sessions led by external specialists for improving accounting, taxation, and legal skills

Recruitment ofdiverse humanresources

Fostering of people capable ofdeveloping co-creative businesses
together with partner companies

Recruitment and­development of global
human resources

Dispatch of human resources to overseas subsidiaries

Revision of humanresource systems
to accommodate
workstyle reforms

Establishment of Basic Policy on Health and Productivity Management (in March 2022)

Initiatives of
Employees

 lobal training of groups including both domestic employees and employees of overseas subsidiaries
G
designed to foster a global mindset nhancement of work-life balance support systems (proactive support for employees giving birth,Eraising children, or providing care to family members)
Establishment of targets*• Annual paid leave acquisition rate: at least 70%• Rate of childcare leave acquisition by male employees: 100%
* Targets of Action Plan for the Promotion of Women’s Active Participation in the Workplace

Improvement of Employee Engagement
Based on the results of its first employee awareness survey, Tokyo Century has introduced the Career Challenge Program*1
and the TC Biz Challenge Project*2 to further improve employee engagement. The results of the second employee aware-

Theme 1

Theme 2

Human Resource Strategies and Measures(Medium-Term Management Plan)

Cultivation of Management PersonnelTraining of managers and executive officers in preparation for future promotions to management positions

Page 59

Page 60

1First employee awareness survey (fiscal 2019)
Analysis of results to examine and introduce response systems

First Cycle

Enhancement of specialized skills
Recruitment of diverse human resources
Recruitment and development of global humanresources
Revision of human resource systems to accommodate workstyle reforms

ness survey will also be analyzed to facilitate effective measures going forward.

2

1

2

Measures based on employee awareness survey
Introduction of Career Challenge Program and TC Biz Challenge Project
Implementation of measures

3

Status of measure implementation

3

Career Challenge Program: Use of system by 27 individuals over two iterations since launch
TC Biz Challenge Project: Verification tests underway for proposals passing final-stage judging
Refinement of systems

A global corporate group with a diverse team of people

SecondCycle

Vision1

Second employee awareness survey (fiscal 2021)*1 Career Challenge Program: Internal recruitment initiative in which divisions and branch offices seeking to recruit human resources disclose therequirements of the relevant available positions so that they can be filled from among internal applicants*2 TC Biz Challenge Project: New business proposal initiative supporting employees’ efforts to tackle new challenges without fear of failure

C H A PT E R 4

Solutions to your Pursuits.

Establishment of targets*• Ratio of women among new-graduate hires: at least 30%• Ratio of female managers: at least 30%

Reinforcement of Operating Foundations That Support Strategies

Initiatives ofPartners

Recruitment of mid-career individuals and introduction of referral hiring system

60TOKYO CENTURY CORPORATION61

INTEGRATED REPORT 2022

Human Resource Strategy

Theme 2

Cultivation of Management Personnel
Entrenchment of Corporate Culture
for Supporting Ambitions

Tokyo Century aspires to fill its ranks with people capable of creating highly
specialized and unique financial services that customers choose while also
predicting and adapting to operating environment changes. Moreover, we arecultivating future managers through a process including selecting potential
candidates for management positions from among employees with specialized

Number of individuals dispatched
to business schools

We used the TC Biz Challenge Project to support our ambi-

8tion of commercializing aquaponics ventures that couple(Aggregate total for fiscal 2020–fiscal 2021)

hydroponics for cultivating vegetables in water with aqua-skills and helping them gain a variety of experience through dispatch to affiliate

culture for raising fish on land.

companies and other development opportunities.

Major Initiatives
As our focus is the cultivation of future management personnel, we help candidates
gain experience in performing management tasks through dispatch to businessschools and secondment to overseas subsidiaries. Moreover, a new program was

We are currently moving forward with verification tests,

Number of individuals participatingin management training program

and we eventually hope to go on to develop a businessApprox.

with marketing activities.

(Fiscal 2021)

model involving the cultivation of vegetables and fish along

250

Should Tokyo Century approve our plans for commercializing this model, it would allow us to produce, sell, andlaunched in fiscal 2021 to help managers, approximately 250 individuals, learn

popularize vegetables and fish raised through aquaponics.

about management strategies and other necessary management theories.

We thereby hope to make aquaponics a commonplace
option for sustainable food production.
Tokyo Century has an entrenched corporate culture forsupporting employees’ ambitions and letting them tackle

joint venture with Hitachi Construction Machinery Co., Ltd. This company is thus a joint venture between a financial services provider and amanufacturer, meaning its approach toward customers differs greatly
from that of Tokyo Century. I think it is a very interesting distinction.
Being involved in the management of a local subsidiary cansometimes lead to mistakes or trouble, but I think a manager needs
a positive attitude that frames such setbacks as opportunities toimprove how things are done.
I go about my current duties by capitalizing on my experience informulating strategies for the International Business segment andmanaging the operations of overseas associates as well as on theconnections I formed through coordination with various divisions.
I will continue to utilize the skills built over my career with the goal

Rie Furuya
Managing Director
HTC Leasing Co., Ltd.

of making HTC Leasing an organization with high levels of engagement in which all employees can genuinely and tangibly grow.
I also want to help develop an organization grounded on diversity
and inclusion, at which a female manager is not something out of
the ordinary. I will continue to gain and share my experience toward
this end.

business domain. We are incredibly grateful to have been
provided with this opportunity, and we will give our all toensure the successful commercialization of this venture.

Cultivation of Global Human Resources
After joining Tokyo Century, I worked for some time in the domestic leasing business before spending nine years at a Chinese subsidiary. I waslater transferred to Tokyo Century’s head office. In fiscal 2022, I was
dispatched to AP Equipment Financing Inc., a U.S. subsidiary. Whentaking part in overseas businesses, it is difficult to align everyone, including those at the head office and in the country in question, along thesame vector and reach a shared understanding. Nevertheless, I feel that
I am always growing as I seek to take charge of projects, making any
necessary adjustments based on an overarching view of the negotiations.
My experience in overseas markets has made it clear how incredibly
important it is to share Tokyo Century’s corporate culture with theemployees of local subsidiaries. The Company’s global training programs are designed to promote exchanges between domestic andoverseas employees. I believe these programs are imperative to improving the engagement of overseas employees. My own personal goal is tobecome someone with the skills needed to contribute to our overseas
strategies, regardless of the country or field.

Hiroto Inoue
Corporate Planning Officer
AP Equipment Financing Inc.

C H A PT E R 4

I have experience as a managing director at HTC Leasing Co., Ltd., achallenges in areas outside of the Company’s current

Reinforcement of Operating Foundations That Support Strategies

Experience as Managing Director ofa Thai Subsidiary

Hiroki Tanimoto (Left) Yuma Imairi (Right)
Corporate Planning Division and Structured Finance Division

62TOKYO CENTURY CORPORATION63

INTEGRATED REPORT 2022

Strengthening of Partnerships
Tokyo Century’s partnership strategy is an important element supporting its management foundations. Accordingly, we have continued to engage in proactive partnerships since our inception.

コーポレートシンボル

Aタイプ（英語版）

データは、アイソレーションの枠（透明）を設定しています。

Initiatives Advanced under Partnership Strategy

In these relationships, Tokyo Century acts as a partner in value creation by supplying financial
services while promoting open innovation that merges our aptitudes and specialties with those of
our partners. We thereby aim to improve medium- to long-term corporate value while maximizing

Fulfillment of Role as Asset Holder

カラー

the value we provide to stakeholders.

モノクロ

Together with NTT TC Leasing Co., Ltd., we are providing
building leases for new market facilities as part of a projectfor reorganizing publicly certified wholesale markets being
advanced by Toyama City, Toyama Prefecture.

Tokyo Century

Benefit of Partnership
Utilization of scheme for diversifying risk
areas based on specialties of both partners

Vision Shared with Partner

Joint Business Ventures esponse to demand for rebuilding aged public facilities
R
across Japan xpansion of businesses for invigorating local economies throughEcontributions to infrastructure development, etc.

Co-Creation of Value throughOpen Innovation

Vision Shared with Partner
Elevation of renewable energy to a primary power source

Aptitudes

Financial Services

Specialties

Specialized Assets

Expertise

Broad Customer Base

ITOCHUTokyo Century

50%
ownership

50%
ownership

Joint Venture

Improvement of resilience to natural disasters
 xpansion of household and medium- and large-scale industrial
Eelectricity storage systems

Development of efficient decentralized power
supply platform for using AI to achieve mutual
supply of surplus power

Personnel Exchanges
2019	Identification of promising start-ups

Aid for Efforts of Partners
Together with JFE Engineering Corporation, Tokyo Century
established SecondSight Inc. as a joint venture operatingcompany for providing ­diagnosis solutions combining thetechnologies of start-up companies.
Outputs

Vision Shared with Partner

Expansion of Existing Businesses evelopment of platform for supplying advanced technologies ofDstart-up companies to customers and society

Entry into New Business Fields

 ontribution to the growth of industry in Japan by catalyzing growthC
opportunities for start-up companies

J&TC Frontier
Establishment of joint investment
vehicle and investment of approximately ¥3.0 billion in 21 companies
in digital transformation, aerospace,
health tech, and other fields

2022	
Introduction of promising
start-ups to customers

Provision of solutions using cuttingedge diagnosis technologies in start-up
commercialization phase

C H A PT E R 4

IBeeT Corporation, a joint venture with ITOCHU Corporation,
was established to launch subscription services forelectricity storage systems in response to growing demand.

Building leases for new market­facilities as part of Toyama City’s
project for reorganizing publicly
certified ­wholesale markets

Reinforcement of Operating Foundations That Support Strategies

PartnerCompanies

NTT TC Leasing

64

TOKYO CENTURY CORPORATION

65

INTEGRATED REPORT 2022

Strengthening of Partnerships

Messages from Internal and External
Individuals Responsible forStrengthening of Partnerships

Partnership Strategy with the ITOCHU Group
Since being seconded to Tokyo Century in fiscal 2019, I have been involvedin various joint initiatives between this company and the ITOCHU Group.
Such initiatives have included investment in solar, biomass, and other renewable energy businesses and the establishment of IBeeT Corporation, a joint
venture handling electricity storage system leases. One initiative that

Partnership Strategy with the NTT Groupparticularly impressed me was the launch of the Belong One secondhand
smartphone and tablet rental service for corporate users. This service com-

Since the formation of our capital and business alliance with the NTT Groupbines the strengths of the ITOCHU Group, which is able to secure a reliable

in 2020, the Corporate Planning Division has been fully cooperating with this

supply of secondhand tablets through its global network, and Tokyo Century,

partner, and we have made steady progress in our joint undertakings. NTT

which builds ongoing relationships with its customers through leasing and

TC Leasing, a joint venture between NTT and Tokyo Century, has continued

rental services that do not end with sales. We were thereby able to create ato increase its number of joint projects with the Company, leading to ongo-

service that matches demand, making for a joint business that grows while

ing growth in performance. We are also working with the NTT Group incontributing to the accomplishment of the Sustainable Development Goals

global-scale ventures. For example, we are engaged in joint forays in the(SDGs). We are currently procuring terminals for rental from external sources,

energy and environment field as well as in the data center business in India.

but we look to generate further synergies in the future by using end-of-lease

Tokyo Century’s role in this partnership is to supply its functions to vari-devices belonging to Tokyo Century as another source of terminals.

ous NTT Group companies and to propose various new businesses that help

My secondment allowed me to learn about the financial side of Tokyo

address the NTT Group’s management issues. Moreover, our partnership

Century’s leasing operations while also opening my eyes to the fact thatallows us to engage in businesses with high barriers to entry that Tokyo

lease items. I hope that I can be a part of co-creating businesses that con-thereby helps expand our business domain. It is our goal going forward to

Taro Nakajima
Corporate Planning DivisionPartnership Strategy with JFE Engineeringpany. We hope that these exchanges will help NTT TC Leasing’s employees
build upon their skills by gaining a more diverse range of business experi-

JFE Engineering Corporation has been a long-time partner of Tokyo Century,

ence and that these enhanced skills will drive improvements in NTT TC

and we have teamed up in a wide variety of business domains. Personally,

Leasing’s corporate value.

I have been involved in solar power projects, a binary geothermal project inHokkaido Prefecture, a biomass project in Aichi Prefecture, and various other

The NTT Group’s View of Its Partnership with Tokyo Century

projects in my position of overseeing joint businesses with JFE Engineering.
The role of Tokyo Century in its partnership with JFE Engineering is to pro-

NTT TC Leasing, our joint venture with Tokyo Century, is steadily growing its leasing

vide the leasing, loan, investment, and other financial functions that may bebusiness by combining Tokyo Century’s financial services with the NTT Group’s brandneeded as well as to exercise asset management functions including man-power and broad-ranging business domain. In addition, Nippon Car Solutions Co., Ltd.,

aging the operations of special-purpose companies. JFE Engineering boasts

which was created through the merger of the auto leasing businesses of Tokyo Century

a breadth of business operation insight in diverse fields such as renewable

and the NTT Group, has grown into an auto service company that leads the industry

energy and recycling along with a track record in the production, mainte-

in terms of both quality and quantity. As these joint ventures illustrate, Tokyo Century

nance, and operation of equipment and facilities. Tokyo Century, meanwhile,is an important partner to the NTT Group.

has expertise in handling financial services and assets. These strengths are

I see Tokyo Century as a team of finance experts who have been highly helpful

Yoshitake Ban
Director
Corporate Strategy
Corporate Strategy Planning
Department
Nippon Telegraph and Telephone
Corporation

being combined in our joint business efforts.

in supporting the NTT Group in resolving its management issues. I look forward to

Going forward, I hope to contribute to the realization of a decarbonizedadvancing new joint ventures with the support of Tokyo Century’s financial functions
and asset appraisal capabilities. We are collaborating around the world, and I see
particular potential for expanding upon our partnership on the global stage.
I hope that Tokyo Century will continue to help resolve the NTT Group’s management issues through proposals that capitalize on its strengths.

Takuya Matsunaga
Corporate Business Division IV

society and circular economies by expanding our involvement in wind, hydro,
and other renewable energy businesses and creating new services in areas
including on-site energy supply services, storage batteries, and recycling.

C H A PT E R 4

ees to NTT TC Leasing and receive employees dispatched from this com-businesses that utilize end-of-lease items.

Reinforcement of Operating Foundations That Support Strategies

tribute to the accomplishment of the SDGs, like circular economy

help contribute to the improvement of the NTT Group’s corporate value as
We are also taking part in personnel exchanges as we dispatch employ-

Corporate Business Division III(Seconded from ITOCHU Corporation)

there are veritable mountains of assets waiting to be utilized among end-of-

Century could not surmount alone, such as the data center business, andan indispensable business partner.

Taro Kitahara

66TOKYO CENTURY CORPORATION67

INTEGRATED REPORT 2022

GOVERNANCE
CHAPTER

5

Corporate Governance for
Improving Corporate Value

68

Evolution of Tokyo Century’s Corporate Governance System

76

DIALOGUE—Discussion between External Directors

80

Risk Management and Compliance86

Management Team68

TOKYO CENTURY CORPORATION69

INTEGRATED REPORT 2022

Evolution of Tokyo Century’s
Corporate Governance System
Effectively functioning corporate governance is a crucial aspect to improving corporate value. Accordingly, Tokyo Century
endeavors to create a sound and highly transparent management structure that facilitates accurate decision-making and

2. Diversity of Directors

swift responses to the rapidly changing operating environment.
Tokyo Century aims to appoint a diverse team of directors in order to strengthen the frameworks for ensuring effective management oversight and advisory functions for the Board of Directors.

1. Tokyo Century’s History of Strengthening Its Corporate Governance System
to Improve Corporate Value

Director Skills Matrix (as of July 1, 2022)
Areas of expertise and expected contributions

Tokyo Century has proceeded to implement various diversity-minded measures to separate the executive function from the oversightfunction and otherwise strengthen its corporate governance system.
Details

2011

Compliance with Japan’s Corporate Governance Code
Number of external directors increased (from one to two)2016

Board Effectiveness Review Council meeting held
Establishment of the Nomination and Compensation Committee

Chairman & co-CEO,representative director

Masataka
Yukiya66

President & CEO,representative director

Koichi
Baba

61

Masao
Yoshida73

Former president andrepresentative director of
Furukawa Electric Co., Ltd.

Akio
Nakamura

66

Former director-generalof the Financial Bureau,
Ministry of FinanceToshioAsano

69

Former president andrepresentative director of
Asahi Kasei Corporation

2017

Number of external directors increased (from two to three)

Miho
Tanaka47

Partner of Shiba & Tanaka
Law Offices

2018

Number of external directors increased (from three to four)Separation of the Nomination and Compensation Committee into two entities: the Nomination Committee and theCompensation Committee

TsuyoshiNumagami

62

Professor of Graduate Schoolof Business Administration,
Hitotsubashi University

AkihikoOkada

62

HiroshiSato62

ToshioKitamura

59

MahokoHara

57

Director and managing
executive officer

TatsuyaHirasaki54

Director

Shunichi
Asada

73

External director

2019Number of external directors increased (from four to five; external directors represent at least one-third of all directors)

2019 ystem reforms implemented, including the appointment of external directors as chairpersons of the Nomination
S
Committee and the Compensation Committee

2021

Number of internal directors reduced (from 15 to 13)
One female external director appointed

2022

A second female director appointed
Increase in the ratio of external directors on the Nomination Committee and the Compensation Committee (63%

Director andsenior managing
executive officer

71%)

Composition of the Board of Directors (as of July 1, 2022)
Internal Directors

8External Directors

5

Men

Woman

Ratio of External Directors

38% (5)
Woman

Ratio of Female Directors

15% (2)

Deputy president,
director andexecutive officer

Background

Corporate
Management

GlobalOperations

Finance / Risk
Management

Legal Affairs /Accounting /Taxation

Sustainability

IT / Digital
Transformation

Addition of Director Skills Matrix Items
 okyo Century revised its director skills matrix based on its management strategies and plans, prompting it to add the new items ofT“Sustainability” and “IT / Digital Transformation” among the areas of expertise of and expected contributions from directors.
“Sustainability” was selected due to its importance to contributing to the creation of the environmentally sound, sustainable economy
and society described in Tokyo Century’s Management Philosophy, to addressing the material issues described in the Company’s
medium- to long-term strategies, and to promoting diversity management.
“IT / Digital Transformation” was included as it was judged to be an important skill for developing new businesses that combine Tokyo
Century’s financial services with digital technologies and for formulating and implementing medium- to long-term digital transformation
strategies.

C HA PT ER 5

Age

Corporate Governance for Improving Corporate Value

Name

Appointment of an external director

2015

Men

Position

70

TOKYO CENTURY CORPORATION71

INTEGRATED REPORT 2022

Evolution of Tokyo Century’s Corporate Governance System
Meetings Held in Fiscal 2021

Nomination Committee

3. Management Structure Comprising Ideal Committees

Board of Directors

Shareholders’13

The Board of Directors deliberates on and makes decisions about the policies, strategies, business plans,
and other key management issues of the Company
and Group companies as well as matters specified byprevailing laws and regulations, the Articles ofIncorporation, and rules governing the Board. It alsosupervises the execution of operations by directors andexecutive officers.

Chairperson:
Koichi Baba
President & CEO, representative director

Appointment / Dismissal

Appointment / Dismissal

Coordination

Coordination

The Board of Corporate Auditors meets regularly andexecutes independent and fair audits of the complianceand appropriateness of corporate activities, including theperformance of duties by directors and executive
officers.

Chairperson:
Futoshi Okada
Standing corporate auditor(External corporate auditor)

Independent Auditor

9

Audit Unit

Nomination Committee

ReportingCompensation Committee

ReportingInternal Audit
Evaluation ofInternal Control

Coordination

Risk Management Division

Appointment /Dismissal /Supervision

Direction /Supervision

Auditing

Board ofDirectors

Company Counsel

Auditing

Coordination

Number of Members:
13 (5 of whom are external directors)

Board of Corporate Auditors

Meeting
Appointment / Dismissal

Auditing

Auditors(Board of Corporate Auditors)

Auditing

Appointment

President & CEO
ReportingManagement
Meeting

Internal Control Committee

Transaction
Evaluation Meeting

Executive Officers

Business Headquarters /Operation Headquarters
Group Companies

Chief Compliance Officer

Comprehensive Risk Management Committee
Credit Risk Management Committee
Appointment /Dismissal /Supervision

Asset Liability Management Committee
IT and Administration Strategy
Management Committee

2

Internal Control Committee

4

The Internal Control Committee discusses generalinternal control matters, including the evaluation of
the effectiveness of the financial reporting system andthe scope of evaluation, in order to ensure the internal
control system functions effectively, and reports to
the Management Meeting.

 omprehensive Risk Management
C
4
Committee

The Comprehensive Risk Management Committee
discusses matters such as the construction of the risk
management system and approaches to measuringrisk while periodically assessing the Company’s risk
exposure and reporting to the Management Meeting.

Investment Management Committee

Credit Risk Management Committee
2

Once a week, in principle

Management Meeting   Once a week, in principle

The Management Meeting deliberates on particularly important matters concerning the execution of operations andmakes decisions for the Tokyo Century Group.

Chairperson:
Koichi Baba
President & CEO, representative director
Number of Members:
8

9
The Investment Management Committee facilitates
appropriate investment management by deliberating on
matters related to the development and implementationof investment management structures and the assessment of large-scale investment projects and reports to
the Management Meeting.

Sustainability Committee

4

The Sustainability Committee reports important mattersrelated to the Tokyo Century Group’s sustainability activities to the Board of Directors; plans, promotes, andoversees said sustainability activities; discusses important issues related to sustainability; and reports to theManagement Meeting.

Asset Liability Management Committee
4

The Asset Liability Management Committee discusses matters relevant to managing market, liquidity,
and other risks—in order to identify and minimize theexposure of assets and liabilities to risks, including
fluctuations in interest and foreign currency exchange
rates—and reports to the Management Meeting.

IT and Administration Strategy
2Management Committee

The IT and Administration Strategy Management
Committee discusses matters including the IT strategies, IT investment plans, and administrative system
plans of Tokyo Century and Group companies andreports to the Management Meeting.

C HA PT ER 5

Investment Management Committee

Corporate Governance for Improving Corporate Value

The Credit Risk Management Committee discusses
matters including the Tokyo Century Group’s credit
portfolio as a whole and credit risk management andreports to the Management Meeting.

Transaction Evaluation Meeting

Number of Members:
8Compensation Committee

As an advisory body to the Board of Directors primarily
consisting of external directors, the Compensation
Committee discusses matters such as director compensation systems and policies and reports to theBoard of Directors.

Sustainability Committee

Number of Members:
4 (2 of whom are external corporate auditors)

The Transaction Evaluation Meeting discusses and makes
decisions about major business transactions being considered by Tokyo Century and Group companies as wellas transactions that warrant complex risk analysis.

Chairperson:
Ko Nakagawa
Managing executive officer

8

As an advisory body to the Board of Directors primarily consisting of external directors, the Nomination
Committee deliberates on the nomination of candidates for director and corporate auditor positions
and reports to the Board of Directors.

72

TOKYO CENTURY CORPORATION73

INTEGRATED REPORT 2022

Evolution of Tokyo Century’s Corporate Governance System

4. Director Appointment Policies

6. Evaluation of the Effectiveness of the Board of Directors and Issues

Policies for the Nomination of Director Candidates

The Company hires a third-party assessment institution to objectively evaluate the effectiveness of the Board of Directors and uses its
evaluation reports during meetings of the Board Effectiveness Review Council.

Regarding the nomination and appointment of director candidates, taking into consideration its fiduciary responsibility to stakeholders,Tokyo Century nominates individuals who are qualified to contribute to the Company’s sustainable growth and to the improvement of
medium- to long-term corporate value based on expertise, extensive knowledge, or abundant experience gained in corporate management
and operational execution. Decisions concerning the nomination and appointment of director candidates are undertaken by the Board of
Directors with reference to opinions of the Nomination Committee. The Nomination Committee is chaired by an external director designated as an independent director and the majority of its members are external directors designated as independent directors.

Reasons for the Appointment of New Directors
On June 27, 2022, the Company appointed four new directors: Tsuyoshi Numagami, Hiroshi Sato, Toshio Kitamura, and Mahoko Hara.
Tsuyoshi Numagami has exceptional academic knowledge as a corporate management researcher, particularly in corporate strategy
and organization, and is well versed in a variety of industrial fields. Mr. Numagami was appointed as a director as it is expected that he will
be able to use his exceptional insight and abundant experience in the Company’s management and to provide oversight of operational
execution from an independent perspective.
Hiroshi Sato has abundant experience and wide-ranging insight gained from his involvement in corporate management and the execution of overseas and sales operations at a general trading company. Mr. Sato was appointed as a director as it is expected that he will beable to use his experience and knowledge to contribute to the Company’s sustainable growth and to the improvement of corporate value.
Toshio Kitamura has abundant experience and wide-ranging insight from his involvement in overseas and sales operations at financial
institutions and in the execution of sales, overseas, and other operations at the Company. Mr. Kitamura was appointed as a director as it isexpected that he will be able to use his experience and knowledge to contribute to the Company’s sustainable growth and to the improvement of medium- to long-term corporate value.
Mahoko Hara has abundant experience and wide-ranging insight in planning and product development at financial institutions as wellas in the execution of overseas and sales operations at the Company. Ms. Hara was appointed as a director as it is expected that she will
be able to use her experience and knowledge to contribute to the Company’s sustainable growth and to the improvement of medium- tolong-term corporate value.

5. Major Items Raised at Meetings of the Board of Directors in Fiscal 2021

1

2

Reinforcement of control andoversight functions for
subsidiaries and affiliates
Bolstering of monitoring of investee companies inview of growing business risks associated withlarge-scale M&A activities and investments
implemented

Composition of Board of Directors,
including giving consideration toissue of diversity
Deepen discussion on Board of Directors’ oversightfunctions and continue to explore ideal ratio ofinternal and external directors and gender andglobal aspects of diversity

Evaluation in Fiscal 2021
Subject

Progress

Details

Steps were taken to facilitate more constructive discussions through reductions to thesize of the Board of Directors and the appointment of external directors from outside
Invigoration of discussionsof the financial industry. However, the amount of time devoted to free discussions on
Unsatisfactoryon medium- to long-term
medium- to long-term management strategies was insufficient due to the restrictions
management strategies
imposed by the COVID-19 pandemic. Accordingly, there is a need to reform meeting
proceedings to allow for more invigorated discussions.
The investment management framework began functioning, improving the transparency of investments and allowing for even more energized debates with an emphasison cost of capital.

Discussions emphasizing
cost of capitalVerysatisfactory

Reinforcement of
information-sharing
systems of Group
companies

Although risk management frameworks are in place at Group companies, there are notenough on-site inspections of overseas Group companies due to the COVID-19 pandemic.
Unsatisfactory Management of Group companies will continue to be a critical priority given that theimportance of such management is growing as the Company’s business becomes
more global.

Promotion of sustainability
management

Satisfactory

ESG

Understanding regarding the importance of sustainability management is shared, contributing to the progress of various initiatives, including pursuing carbon neutrality andestablishing basic policies on human rights and health and productivity management.

Management reports from major subsidiaries

Evaluation of Board of Directors’ effectivenessand report on evaluation

Discussions on stock acquisitions and sales and investments
exceeding predefined amounts

Details of meetings of the Nomination Committee
and the Compensation Committee

Establishment of fund investment limits

Cross-shareholdings

Management Issues to Be Discussed at Board of Directors’ Meetings in Fiscal 2022

Reports on results of investment management framework monitoring

Establishment of Tokyo Century Group Human Rights Policy

Investor relations activity reports

Establishment of Basic Policy on Health andProductivity Management

1 Medium- to Long-Term Discussion Looking toward 10 to 15 Years in the FutureThere is a need for expanded discussion on management visions, business models, long-term targets, risk control, and other topics
based on the rapidly changing operating environment.

Officers
Appointment of representative directors and directors with titles
Compensation and bonuses for directors
Appointment of executive officers

StocksSustainability management reports
Carbon-neutrality initiatives

Other Matters
Approval of business plans, financial statements, etc.
Nomination of director and corporate auditor candidates

Dividend policies for consolidated subsidiaries

Compliance initiative plans and progress reports

Interim dividends

Audit plans and implementation reports
Selection of new Tokyo Stock Exchange segment

2 Group GovernanceGroup governance systems must be enhanced to allow for greater coordination of information-sharing and risk management frameworks amid growing overseas operations and joint initiatives with partner companies.

C HA PT ER 5

Earnings target formulation and progress management

Important Theme for Fiscal 2021

Corporate Governance for Improving Corporate Value

General Management

Important Theme for Fiscal 2021

74

TOKYO CENTURY CORPORATION75

INTEGRATED REPORT 2022

Evolution of Tokyo Century’s Corporate Governance System

7. Officer Compensation

8. Audit System

Policies and Method for Determining Officer Compensation
Policies for determining the amounts of compensation to be paid to individual directors are decided through deliberations by the Board of
Directors after consulting with the Compensation Committee, which primarily comprises external directors designated as independent
directors, and receiving advice from external experts.
Systems for director compensation are designed to raise directors’ awareness regarding the enhancement of shareholder valueby aligning the interests of directors with those of shareholders through healthy incentives to contribute to the ongoing growth of theCompany and frameworks for linking compensation to the medium- to long-term development of its businesses. In addition, director compensation systems aim to attract outstanding talent in order to recruit and cultivate individuals who can drive the improvement of theCompany’s corporate value.
Compensation policies, systems, and levels are decided by the Board of Directors based on consultations with and reports from theCompensation Committee.
Compensation systems comprise basic compensation, bonuses, and stock options provided as non-monetary, stock-based compensation. Basic compensation, which is fixed compensation, is determined through comprehensive consideration of such factors as the duties,
roles, and responsibilities of the recipient. The compensation of directors responsible for operational execution comprises basic compensation as well as performance-based bonuses and stock options provided as stock-based compensation. The payment ratio of basic compensation and performance-based compensation is set at approximately 1.0:1.0–2.5 and is determined within this range by comprehensively
taking into account achievements and performance based on each director’s expected duties.
The Compensation Committee discusses matters regarding the compensation of individual directors, including
1.0:
1.0—2.5
whether said compensation adheres to the defined policies.
The president & CEO then decides individual compensation
Stock Options asamounts based on and in consideration of reports from the
Basic Compensation
Bonuses
Stock-Based
Compensation Committee. The Board of Directors therefore
Compensation
judges that compensation amounts have been decided basedon the defined policies.
The compensation of external directors and corporate
Performance-Based
Fixed Compensation
auditors, who are in positions independent of operational
Compensation
Determined based on comprehenexecution, consists entirely of basic compensation based on
sive consideration of duties, roles,
Distributed according totheir roles. In addition, the compensation of corporate audiand responsibilities
achievements and performance
tors is decided through deliberations among the corporate
auditors within the defined limits.

with performing internal audits of Tokyo Century and Group companies. Internal audits are aimed at assuring the appropriateness of the Company’s systems, organizations, and rules; whether all business activities comply with relevant laws andregulations and internal rules; and whether operating processes and the risk management system work appropriately andrationally. Based on these audits, improvements are proposed and advice is provided as necessary. As the Group expands its
business area, risk profiles are becoming more diversified and complex. Accordingly, Tokyo Century aims to conduct internal
audits that are effective from a risk-based approach. Timely and appropriate audits are also conducted of companies newly
consolidated through investment or acquisition, namely, Aviation Capital Group LLC (ACG). Through such auditing activities,
we strive to improve the corporate value of the Company and Group companies.
Annual internal audit plans are reported to the Board of Directors after approval by the president (Management Meeting),
and the results of the audits are reported to the president (Management Meeting) and to the Board of Directors.

Audit System for Major Group Companies
Major domestic Group companies as well as major overseas

The Tokyo Century Group’s Audit System

Group companies ACG and CSI Leasing, Inc., have in place
independent audit units that perform audits at their respec-

Tokyo Century (Board of Directors, Management Meeting)Consultation / Reporttive companies. Audit plans and results are reported to the
Audit Unit of the Company, which provides instruction andsupport as necessary.
The Audit Unit directly audits subsidiaries that do not havetheir own auditing functions.

Instruction / Advice

Audit Unit of Tokyo Century
Report of
Audit
Results

Instruction /AdviceCompanies with Audit Units(ACG, etc.)

Auditing
Improvement
Proposals /AdviceReport /Consultation

Companies without Audit Units(Domestic and Overseas
Group Companies)

Basic Audit Policy
growth and evolution of the Company.

Total Compensation by Type (Millions of Yen)

Number of Eligible
Officers

Fixed Compensation

Performance-Based
Compensation

Non-Monetary
Compensation

626

301

194

131

11

Corporate auditors(excluding external corporate auditors)

45

45

—

—

2

External directors andcorporate auditors

132

132

—

—

8

Notes: 1. Stock options provided as stock-based compensation are accounted for under “Non-monetary compensation,” although they constitute performance-based compensation.
Accordingly, amounts of stock options provided as stock-based compensation are not included under “Performance-based compensation.”			 2. Although the total number of directors and the total number of corporate auditors as of March 31, 2022, were 13 and 4, respectively, the above compensation amounts also
include payments to four directors who retired on June 28, 2021.

Higher levels of audit quality will be pursued, and improvement proposals and advice shall be provided to facilitate improvements to operations and aid in the prevention of accidents and misconduct.
Risk identification and verification capabilities will be enhanced from a forward-looking perspective.
Support for and coordination among Group companies will be ramped up to strengthen the Groupwide audit system.

Message from the President of the Audit Unit
Tokyo Century is boldly pursuing growth even in the midst of a challenging operating environment characterized by the prolonged COVID-19 pandemic and the economic and businessrepercussions of rising geopolitical risks. I view the Audit Unit as our third line of defense, thelast bulwark for governance and risk management. The unit thus has a cornerstone role insupporting the ambitions of the Company. I am therefore committed to offering constructive
and accurate improvement proposals and advice to ensure effective risk management.

Akihiko Okada
Deputy President, Director and Executive Officer
President, Audit Unit

C HA PT ER 5

Directors(excluding external directors)

The Audit Unit has been established as an independent organization under the direct control of the president and is tasked

Corporate Governance for Improving Corporate Value

Total Compensation(Millions of Yen)

Objective and Independent Audit System

Tokyo Century will conduct audits to contribute to the improvement of corporate value as the third line of defense supporting theCompensation and Eligible Officers in Fiscal 2021
Officer Category

Point

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TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2022

DIALOGUE

efficiency. Digital transformation is also a tool for creating
new services for sharing information among employees.

—Discussion between External Directors

For me, this type of digital transformation will be vital torealizing substantial future growth.

Path to Future Growth for
the Tokyo Century Group
Miho Tanaka

Toshio Asano

External Director

External Director

77

What types of factors will need to beconsidered with regard to risk management
amid the expansion and diversification ofbusiness strategies?
Asano: Geopolitical risks will be a significant area of con-cern for the foreseeable future. When I was a manager of a

We will support the development of

manufacturing company, I remember having to be incredibly
careful when deciding what countries to build factories in.

a business portfolio that accounts forThis was because, should a factory be seized, it would

all possible risks and the creation of

result in a loss of business insight. This experience gave

financial services suited to the next era.

political risks can have on corporate management.

me a keen awareness of the devastating impacts that geoAs Tokyo Century also develops a global business, it is
crucial for the Company to diversify its business portfolio
out of consideration for geopolitical risks. At the same time,

What are your opinions regarding the
New Fourth Medium-Term Management
Plan and the issues it needs to address?

however, we cannot forget that taking risks is necessary toachieving significant returns. It is thus important for a company to decide the amount of risks it will take based on
analyses of the potential risks it may face.

Asano: I have a great deal of praise for the New Fourth

Tanaka: Although it is easy to think about the types of geo-short-term risks. Rather, we must more deeply analyze thepolitical risks that may be faced, it is much more difficult toincredibly well. I also hold in high regard the initiatives beingsocial issues that Tokyo Century can greatly help resolve

predict the likelihood of their manifestation in the future.

while also guiding Tokyo Century to expand its income

implemented through the investment management frame-

and which have the potential to generate earnings. From aThis is one of the reasons it is important to develop a rela-sources beyond its conventional leasing operations into

work introduced in fiscal 2021 in terms of risk management.

medium- to long-term perspective, I believe it is crucial for thetively balanced business portfolio. Another viable approachfinancial services and viable businesses. Conversely, there

The main issue I see with the New Fourth Medium-Term

Company to continue to be guided by its “Finance × Services

is to decide ahead of time the standards based on which

are numerous issues that still need to be addressed if TokyoManagement Plan is the increases in segment assets. That

× Business Expertise” concept, working diligently toward thisdecisions to withdraw from businesses will be made, andCentury is to truly embody its “Finance × Services × Businessbeing said, I suspect that there is potential to further boost

aspiration, if it hopes to achieve substantial growth.

to make such decisions through detailed analyses of theExpertise” concept. Nevertheless, I am convinced that the

the Company’s profitability by utilizing assets more effi-

Tanaka: As Tokyo Century seeks to advance its “Finance ×

potential impacts when an unpredicted event occurs.

Company is poised to grow rapidly in the years to come.

ciently from the perspective of return on assets.

Services × Business Expertise” concept and expand theMoreover, a company must have extensive frameworks inrange of areas in which it creates value, the reinforcement

place to facilitate constant monitoring of risks, maintain anof the Company’s financial base will be imperative. In par-up-to-date understanding with this regard, and minimize

ticular, the amount of assets in the Specialty Financing

losses through prompt business withdrawals when thosesegment continues to grow. I think that this issue will needstandards are applicable.

Tanaka: Looking back at the period of the medium-term

management plan, we cannot deny that the COVID-19
pandemic created a challenging operating environment forthe car rental and aircraft leasing businesses. Regardless,Tokyo Century’s car rental business was able to rapidly

What issues do you think will need to beaddressed when preparing the upcoming
Fifth Medium-Term Management Plan?

recover from the impacts of the pandemic. This businessto be addressed to strengthen the Company’s financial

It is impossible to completely eliminate risks. Accordingly,

base. Possible measures to this end will include further

it is imperative to respond appropriately before and after risks

has massively improved its earnings structure through the

Asano: The Fifth Medium-Term Management Plan will, of

subdividing product categories in order to increase the levelmaterialize. Steps to be taken prior to the materialization ofadvancement of a digital transformation strategy including

course, be influenced by the current trends in the operatingof specialty therein.

risks include developing an understanding of the risk pat-the development of new applications and other measures.

environment, specifically climate change, the resumed

As for the aircraft leasing business, the Russia–Ukraine

increase in COVID-19 cases, and geopolitical risks. At thegrowth in the future. An area where the scope for innova-

to determine how to respond based on these risk patterns.

conflict has prompted the Company to post impairment

same time, however, we must remember that, when taking

tion is broad is digital transformation, which is now a promi-

Post-materialization, the initial response is critical. Therefore,

losses on lease aircraft. However, this measure was aa long-term perspective looking 20 or 30 years down the line,

nent trend in society. In my opinion, it is important not tothere is a need to decide, in advance, to whom responsibili-

response to an unpredictable occurrence, and I believe that

it is important not to become overly preoccupied withlimit digital transformation initiatives to improving workties are delegated immediately after a risk materializes.

Moreover, innovation will be essential to achieving rapid

terns that may impact any company and running simulations

C HA PT ER 5

Aviation Capital Group LLC is navigating this situation

how it is generating clear increases in business performance

Corporate Governance for Improving Corporate Value

Medium-Term Management Plan, particularly with regard to78

TOKYO CENTURY CORPORATION79

INTEGRATED REPORT 2022

DIALOGUE—Discussion between External Directors

What risks are faced in terms of Group
governance for the Tokyo Century Group?

principles, and the level of governance measures can varyby company to company. For any company, the first step
to installing effective group governance systems is thus to

Asano: As a company becomes a global entity, and its

develop and reinforce shared, groupwide internal control

number of subsidiaries increases as a result, it becomesframeworks. Another effective approach toward groupmore difficult to maintain an understanding of everything

governance is to develop frameworks for promoting com-going on within the organization. Of course, companies

munication between employees engaged in similar tasksneed to endeavor to increase the transparency of gover-at different companies in order to align the entire organi-nance of subsidiaries and improve communication inzation toward a single goal. When working with compa-

order to facilitate information sharing among subsidiaries.

nies outside of Japan, particularly those in Asian

However, there is a limit to what can be accomplishedemerging countries, it is important to gather information

through such efforts. For this reason, it is important forand insight on a given country’s legal and taxation sys-

companies to pursue more effective group governancetems from local staff for making decisions that appropri-

while remaining cognizant of this limit.

ately reflect the circumstances of the respective areas.

From a medium- to long-term
perspective, I will support
Tokyo Century’s managementin pursuing substantial growth
based on its “Finance × Services
× Business Expertise” concept.
Toshio Asano

Instilling both a propelling force and a uniting force into
an organization is key to effective group governance.
Tokyo Century is currently trying to grow its business asa global company. I therefore believe that it is at a stage

Through which lens do you hope toobserve the Board of Directors?

in which it needs to exercise a propelling force. By this,I mean that it has to ensure thorough compliance with

Asano: I have years of experience in transforming busi-

the core rules of its Group governance while delegating aness portfolios. In fact, Asahi Kasei Corporation, wherecertain degree of authority to subsidiaries for matters that

I used to be president, has massively transformed its

go beyond the scope of those rules in order to build thebusiness portfolio on multiple occasions over its 100-year

foundations for promoting growth. Moreover, the mea-

history. I have long said that, just because a business is

spectrum of business vitality. Tokyo Century’s business issures for responding to unpredicted events should beturning a profit today, does not guarantee that it will con-currently highly profitable. However, we must also antici-

clearly defined with the aim of facilitating global expan-

tinue to post profits tomorrow, and I have seen the fullpate that this profitability may diminish in the future. It is

What are your future hopes for
the Tokyo Century Group?

sion based on a sense of conviction.

thus vital to always consider potential changes or revisions

Asano: We are in the midst of a transition from savings to

Tanaka: Effective group governance is difficult even for

to business structure. I hope to contribute to the growthinvestments along with trends toward globalization, digi-

M&A activities within Japan, let alone for those conductedof Tokyo Century by voicing opinions based on this per-talization, and manufacturers branching out to provide

on a global scale. Each company has its own governancespective at meetings of the Board of Directors. I also

services. Tokyo Century has the necessary foundations

recognize that, in pursuing medium- to long-term growth,

to create value in response to all of these trends.

term losses. I therefore want to support the Company’s

only some 10 years having passed since its birth out ofmanagement in making such difficult decisions.

the merger. I think it is a point that is worth emphasizing.

Tanaka: Tokyo Century’s internal directors are diligent andTokyo Century is still young, and it has planted the seeds

incredibly talented while its external directors all havefor growing creative businesses that are truly matched toimpressive track records. Personally, I believe my role is to

the times. I therefore want Tokyo Century to become aprovide various unique perspectives. For example, I have acompany that provides all employees with opportunities

long career as an attorney, and I have been able to witness

to excel in these businesses.

the internal workings of numerous companies as a spe-

Tanaka: Tokyo Century’s corporate slogan is “Solutions tocialist in corporate law. This experience has given me ayour Pursuits.” This slogan exemplifies how this is not aunique perspective to learn the fundamental principles

company that lets aspirations end as mere pipe dreams; itbehind the long-term approaches and internal control

has the passion needed to chase its aspirations and makesystems of such companies. In terms of diversity, I have a

dreams a reality. I want to see Tokyo Century boldly tackle

unique perspective as a woman, while my age group also

new challenges in order to develop creative services forgives me a distinctive viewpoint. I therefore hope to use

future eras.

these various unique perspectives to contribute to thegrowth of Tokyo Century.

C HA PT ER 5

Miho Tanaka

Tokyo Century is still a rather young company, with

Corporate Governance for Improving Corporate Value

I hope to use my various unique­perspectives, as a corporate
law specialist, as a woman, andas a representative of my age group,
to contribute to the growth ofTokyo Century.

it is sometime necessary to take risks or to endure short-80TOKYO CENTURY CORPORATION81

INTEGRATED REPORT 2022

Risk Management and ComplianceTokyo Century has been expanding its business domain and providing solutions to social issues by creating unique financial
services that go beyond conventional leasing in a business environment free of regulatory constraints.
Going forward, Tokyo Century will reframe its approach toward risk management in order to better live up to the expectations of its various stakeholders and of society and to grow into a more resilient company that can continue to create
new value. Specifically, we look to evolve our risk management functions from those aimed at limiting business losses tothose supporting the maximization of corporate value.
Our risk management approach is focused on strengthening visual risk management and controlling non-financial risks
through the use of consolidated enterprise risk management (ERM) and management information system (MIS) measures.

Relationship between Major Group Companies and Main Risk Categories
Tokyo
Century

Risk Category

Nippon Car
Solutions

FLCS

NipponRent-A-Car
Service

Automobile

Generalresidual value

Automobile

Orico Auto
Leasing

TC Kobelco
Real Estate

Automobile

Real estate

High-weight risk category
Orico BusinessLeasing

IHI FinanceSupportAviation
CapitalGroup

Generalresidual value

Aircraft

CSI
Leasing

Tokyo
Century(USA)

TC
Skyward
Aviation

Credit risk
Market risk
Interest rate risk
Foreign exchange risk
Liquidity risk
Investment risk
Equity investment risk
Business investment risk
Asset risk

Note: The scope of management extends to all consolidated subsidiaries. The table above only lists Tokyo Century’s significant subsidiaries subject to internal control under Japan’s
Financial Instruments and Exchange Act.

Investment Management Committee
Established in fiscal 2021

Comprehensive Risk Management Committee
Measurement and management of risks

AircraftOperational risk

1. Major Risks and Management Frameworks
Management Meeting and Board of Directors
Management of policy and status ofinvestments in equities, etc.

GeneralGeneralresidual value residual valueInvestment screening, progress management,
and continuation/withdrawal decision-making

Credit Risk Management Committee
Credit risk measurement and analysis
Transaction Evaluation Meeting
Review of large projects and newscheme projects, etc.

2. Risk Management

Internal Rating System
Country Exposure Management

Comprehensive Enterprise Risk Management
The Tokyo Century Group will continue to practice comprehensive enterprise risk management (ERM) in accordance with its man-Investment risk

Following 11 non-financial risk categories identified
for monitoring
Administration risk
Fraud risk
System risk
Information security risk
Legal risk
Personnel and labor risk

Credit risk

Revised in fiscal 2022

Asset risk

Liquidity risk

tors and other interested parties. For this reason, the capital use rate has become a key indicator for objectively determining prospects for our sustainable growth and investment capacity.
We refer to the targeted level of the capital use rate only as a guideline, since the regulations regarding capital use levels forfinancial institutions are not applied to us. In operating a business, seizing business opportunities, such as the opportunity to take

Revised in fiscal 2022

part in M&A activities, is also an important factor considered under the risk management framework. Rather than adopting a pas-

Disaster risk
Regulatory and system change risk
Climate change risk
Reputational risk
IT and Administration Strategy Management Committee
Preparation and implementation of IT strategies,
IT investment policies, administrative system, etc.
Information Security Risk
Information Security Committee
Operation based on ISO 27001
Establishment and Operation of CSIRT Office in the
IT Promotion Division

Asset Liability Management Committee
Management of market risks, such as fluctuations in interest
rates and foreign exchange rates, liquidity risk
Introduction of risk management tools such as hedge ratio,
maturity ladder, gap analysis, GPS (grid point sensitivity),
VaR (value at risk), etc.

domain continues to expand, the relationship between the amount of capital and level of risk receives greater attention from inves-

Human rights and workplace environment risk

Administration Risk and System Risk

Market risk

amount within a certain level of capital buffers by adhering to the aforementioned management guidelines. As our business

Disaster Risk (Large-Scale Natural Disasters andOther Crises)
Establishment of Crisis Management Rules, BusinessContinuity Plan (BCP) Rules, etc.
Preparation and Implementation of BCP Manual,
Safety Confirmation System, etc.
Other Operational Risks
Comprehensive Risk Management Committee
Analysis and measurement of risks and countermeasureplanning
Non-financial key risk indicator monitoring, etc.

sive approach to the soundness of corporate management, we pay due consideration to the magnitude of increase in the amountof risk over a medium-term period of about three years, the projection for organic increases in the shareholders’ equity ratio from
earnings growth, and the level of tolerance of our capital policy.
Even amid the COVID-19 pandemic and the changes to the geopolitical landscape, we will continue to maintain the capital use rate at
the appropriate guideline level while securing sufficient growth potential. At the same time, we will constantly improve on the level of ourrisk management frameworks in conjunction with the expansion of our business domain and changes in the operating environment.
Capital Use Rate Guidelines

A
Consolidated
economic capital

B

100

Total risk amount
VaR amounts(consolidated) for
credit risk, asset risk,
investment risk,
market risk,
operational risk, etc.

Maintain financial discipline while carefully assessing
business environment to take necessary risks(%)

Guideline target
(%)

B/A

2018

2019

2020

2021

2022

(Forecast)(FY)

C HA PT ER 5

Operationalrisk

to assess risk resilience, which is an important criterion for rating financial institutions. We have therefore sought to keep the risk

Corporate Governance for Improving Corporate Value

Six Risk
Categories

agement guidelines for capital use rates based on quantitative risk control on a consolidated basis. The capital use rate is used

82

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2022

83

Risk Management and Compliance

Visual Risk Information Tracking at the Management Level
In addition to measuring risks on a consolidated basis and controlling the capital use rate, we implement a visual management
information system (MIS). Under the system, the Credit Risk Management Committee and the Comprehensive Risk Management

3. Response to Expansion of Business Domain

Committee take the lead in regularly monitoring risk information on multiple criteria and report the results to the Management
Meeting and the Board of Directors.*
In our global operations, we pay particular attention to Aviation Capital Group LLC (ACG) and CSI Leasing, Inc. (CSI), our U.S.based subsidiaries that specialize in leasing and for which the scale of investments and assets is quite large. ACG has achieved
success as a textbook example of a resilient company made so through a unique risk management approach that includes introducing a risk appetite framework to clarify the risks to be accepted, such as aircraft asset risks, and the risks to be avoided(mitigated or transferred), such as interest, liquidity, and foreign exchange rates. However, it is also important to establish unified
governance in line with the Company’s corporate standards from the standpoint of consolidated management control. Accordingly,
the management standards of ACG and CSI are being integrated into the global management policies of Tokyo Century. ACG and
CSI were both large acquisitions, and we feel that these companies are prime examples of effective post-merger integration.
* For information on the monitoring activities by the Company’s committees, please refer to “1. Major Risks and Management Frameworks.”

High

Risks to be
accepted

Risk Category

Risk Management Method

Positive

Asset acquisition risk 1•F ocus on investments in widely applicable assets thatpromise reliable leasing rates and residual value

Residual value risk 2
Jurisdictional risk
Aviation market risk•P ortfolio management based on defined risk management
indicators to address potential impacts from difficult-tocontrol operating environment factors (limits on level ofgeographic region exposure concentration, control of
average age of fleets, etc.)

Low

MediumNeutralRisks to be
avoidedPositive

Credit risk
Remarketing risk 3
Model risk 4
Operational risk•P ortfolio management based on defined risk management
indicators (diversification of lease maturities, new aircraft
delivery timings, and lessees)

Positive

Capital management risk
Interest rate risk
Liquidity risk
Currency risk
Reputational risk•H edging within a predefined range based on stringent risk
management indicators (interest rate duration mismatch,debt-to-equity ratio limitation, etc.)•R egular stress tests in preparation for potential operating
environment changes

Under this framework, meetings of investment advisory committees are held prior to discussions by the Management Meetingas part of the process for screening investments of a predetermined scale, in order to confirm the anticipated level of profitability
after considering capital costs based on the inherent risks (quantitative standards) and the compatibility with Tokyo Century’s
strategies (qualitative standards). In addition, multifaceted evaluations will be conducted by business divisions with regard to business plans, investment structures, and projected quantities of risk and environmental impacts. After investment, projects will continue to be monitored through standardized processes, and the status of projects and their conformity to the scenarios formulated isk that appropriate portfolio management cannot be practiced in relation to aircraft acquisition methods,
R
selected models, etc.
Risk that aircraft cannot be sold or disposed of at the residual value anticipated at the time of leasing
Risk that lessees cannot be found for new or re-lease aircraft due to declines in aircraft demand, etc.
Risk that sufficient returns cannot be generated by projects due to inability to appropriately reflect interest
rate or aircraft value trends into lease rates in pricing models

Overview of Investment Management Framework,

Investment
Screening

Verification of Investment Risks and Profitability

Investment
Standards

Confirmation of Conformity to Investment Standards

Progress
Management

Monitoring

Continuation /Withdrawal Decision• Confirmation of conformity to investment management framework standards• Assessment of profitability versus risks• Determination of compatibility with management policies, strategies, etc.,
of Tokyo Century• Definition of triggers for withdrawal decisions• Confirmation of conformity to quantitative (cost of capital, etc.) and qualitative
standards• Verification of business plan progress

Investment Continuation Judgment• Confirmation of changes in strategic importance, market growth potential, etc.
• Assessment of withdrawal impacts

Continuation

Withdrawal

Non-Financial (Non-Quantitative) Risks
As our business domain grows and we branch out from the financial sector to provide business services, it is becoming increasingly important to account for non-financial operational risks that cannot be measured quantitatively. Based on this recognition,
Tokyo Century has established key risk indicators (KRIs) for non-financial risks. Regular monitoring of these KRIs is performed, andthe results are reported to the Board of Directors and other relevant bodies. KRIs have been set pertaining to human resources,
information security, accidents, compliance, climate change, legal affairs, and corruption. We are also expanding our range ofenvironmental KRIs in relation to renewable energy, CO2 emissions, and the portion of our portfolio accounted for by fuel-efficient
aircraft amid the rising importance of tracking and managing climate change risks. Nevertheless, stakeholder concern for nonfinancial risks is constantly rising. From the perspective of sustainability, Tokyo Century will continue to bolster its range of effective indicators related to climate change risks as well as to other environmental, social, and governance (ESG) factors and to theUnited Nations Sustainable Development Goals (SDGs).

ROIC Monitoring in Four Operating Segments
Tokyo Century regularly monitors the return on invested capital (ROIC) spread (ROIC less weighted average cost of capital) as a
cost-of-capital-based indicator of the risk and reward balance of specific business areas. Business and risk characteristics areaccounted for in this monitoring. Moreover, this timing-based monitoring approach is used to promote management that emphasizes
cost of capital along with sound financial discipline. Factors examined through this monitoring include whether an appropriatebalance is being maintained between risks and returns in our four operating segments and whether the necessary risks are being
taken to generate value and stimulate growth.

C HA PT ER 5

2. Residual value risk:
3. Remarketing risk:
4. Model risk:

continuation, and withdrawal standards and developing standardized monitoring processes.

Corporate Governance for Improving Corporate Value* Proactive and autonomous management made possible by ACG’s high level of expertise

1. Asset acquisition risk:

instituted an investment management framework. Primary focuses of this framework include clarifying investment screening,

initial targets, discussions will be arranged on whether investment will be continued.

Ability to
Influence*

Risks to be
mitigated ortransferred

For the purposes of effectively controlling diversifying investment risks and optimizing its business portfolio, Tokyo Century has

at the time of their selection will be confirmed regularly. Should it become apparent that a project will not be able to achieve its

ACG’s Risk Appetite Framework
Risk Tolerance

Investment Management Framework

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TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2022

85

Risk Management and Compliance4. Compliance

5. Information Security

Compliance Structure

Tokyo Century views information security as a crucial issue affecting corporate management. The Company has accordingly

At the Tokyo Century Group, the Compliance Office promotes compliance measures under the supervision of the chief complianceobtained certification under ISO 27001, the international standard for information security management systems. Under the leader-

officer (CCO) appointed by the president & CEO, who is also the chief compliance executive.

ship of the Information Security Committee, we periodically revise regulations and rules regarding information management, conduct

The heads of each business division and branch office of the Company, along with the presidents of Group companies, act asregular risk assessments to address information security risks, and carry out security training for employees and officers.
The TC-CSIRT (computer security incident response team) has been set up within the IT Unit as a dedicated cybersecurity orga-

compliance officers (COs) with the responsibility of coordinating with the Compliance Office to guarantee compliance with all rel-nization. Under normal circumstances, the TC-CSIRT will take steps to prevent the recurrence of past incidents and the occurrence

evant laws and regulations and ensure that business activities are kept in line with social norms.

of new incidents by monitoring security systems, assessing the security of cloud services, and educating officers and employees.
As cyberattacks grow more sophisticated and complex, we endeavor to enhance our response capabilities by periodically having

Compliance Activities
Compliance activity plans are formulated through discussions by the Management Meeting at the beginning of each fiscal year,
and these plans are reported to the Board of Directors. The adequacy of the progress of these plans is reviewed every six months
by the Management Meeting and the Board of Directors.
Specific compliance activities include e-learning programs, face-to-face and online training sessions, distribution of compliancerelated information, and compliance awareness surveys. We also arrange Groupwide forums for sharing compliance information.

our cybersecurity measures assessed by third-party institutions, sharing information with external partners through membership in
the Nippon CSIRT Association, and participating in drills for exercising the knowledge acquired in this manner.
Developing a global business means that actions must be taken to protect personal information and strengthen information
security measures with respect for various cultures and regulatory environments. Based on this recognition, we encourage closer
collaboration with Group companies by establishing security guidelines for said companies, strengthening management of outside
subcontractors, providing information on information security, and holding regular liaison meetings.
In addition to these efforts, we conduct email drills targeting the Company and its domestic and overseas Group companies

Internal Reporting System
In response to the revision of Japan’s law regarding the protection of whistleblowers that went into effect in June 2022, we havetaken steps to reinforce and clarify the already stringent whistleblower protection measures of our internal reporting system. We
will continue to adhere to the highest standards in operating our internal reporting system based on the belief that it is an important
tool for exercising compliance management.
In addition, we are working to expand use of our internal reporting system by broadening the scope of compliance-related con-with emails in Japanese, English, and Chinese several times a year. These drills have proved to be an effective training method for
improving the information security awareness of officers and employees.
For more information on the following topics, please refer to the Company’s corporate website.
• ISO 27001 Certification• Basic Information Security Policy

https://www.tokyocentury.co.jp/en/csr/governance/security.html

sultations that can be processed through all internal and external consultation venues. The ratios of reports from domestic andoverseas Group companies indicate that this system is well entrenched and functioning appropriately.
Compliance Structure for the Tokyo Century Group

6. Business Continuity Plans

Board of Directors

Tokyo Century has established business continuity plans for major natural disasters and infectious diseases, with a complementary

Appointment

Chief compliance officer (CCO)
President, Risk Management Unit
(Secretariat: Compliance Office)Compliance-related
promotion, instruction, etc.

Compliance officers (COs)
Heads of Tokyo Century businessdivisions and branch offices
Strict compliance observanceCompliance education

Tokyo Century employees

Compliance-related reports, etc.

Compliance representatives
Presidents of Group companies
Reports / consultations on compliance issues
Standard reporting line

Employees of Group companies

plan for novel coronaviruses. A basic principle shared among all of these plans is their placing the protection of lives as the top priority.
Internal reporting system(Consultation / Whistleblowing System)
Compliance OfficeCorporate lawyer / law firmStanding corporate auditors
Independent of management

In order to prepare for typhoons, heavy rains, earthquakes, and other natural disasters, which are growing in frequency eachyear, we analyze the results of annual Group safety confirmation drills and the outcomes in actual events that have required theconfirmation of employee safety, and steps are taken to address any issues revealed through this process. We have also established guidelines for coming to and leaving work, earning Tokyo Century recognition as a model company in Tokyo for limiting
instances of all employees leaving work at the same time during a natural disaster.
Meanwhile, we took steps to combat the COVID-19 pandemic through both measures to curb the actual transmission of thevirus as well as measures to install teleworking infrastructure. The latter entailed distributing thin client terminals and smartphones
to all officers and employees and introducing electronic application and online meeting systems. In this manner, we are instituting

Reports on complianceviolations

Internal route
External routeeffective business continuity measures while simultaneously implementing systems prefaced on workstyle reforms, including
teleworking and staggered working hours. These measures also make it possible to shift to a remote workstyle should the head
office be impacted by some disaster. Moreover, business continuity measures and policies for domestic and overseas Group companies include developing frameworks for information sharing and coordination, reinforcing crisis management systems in new

For more information on the following topics, please refer to the Company’s corporate website.
• Compliance Structure of the Tokyo Century Group • Internal Reporting System• Compliance Handbooks • Compliance Education • Initiatives for Preventing Corruption

https://www.tokyocentury.co.jp/en/csr/governance/compliance.html

businesses, and conducting drills on crisis management-related, public relations activities.

C HA PT ER 5

Appointment

Management Meeting

Corporate Governance for Improving Corporate Value

Chief compliance executive of the Group
President & CEO

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TOKYO CENTURY CORPORATION87

INTEGRATED REPORT 2022

External Directors*1 *2
Management Team(As of July 1, 2022)

Representative Directors

President & CEO, Representative Director

N C ALM IT

N C ALM IT

Masataka Yukiya served as executive officer, chief
operating officer of the Financial and Insurance Divisionin the Finance, Realty, Insurance & Logistics Services
Company of ITOCHU Corporation. He became a director and managing executive officer of Tokyo Century inJune 2011 and was appointed to his current positionof chairman & co-CEO, representative director in June
2022. Mr. Yukiya possesses abundant experience andextensive knowledge based on his involvement incorporate management at a general trading company
and his achievements as president of the Equipment
Leasing Business Unit of Tokyo Century.

Koichi Baba has served in positions including executive
officer and general manager of the Taipei Branch ofMizuho Bank, Ltd. He was appointed as an executive
officer of Tokyo Century in June 2014 and assigned tohis current position of president & CEO, representative
director in April 2022. Also, in April 2022, he assumed
the position of chairperson of the Asset Liability
Management Committee and of the IT and Administration Strategy Management Committee. Mr. Baba
possesses abundant experience and extensive knowledge based on his involvement in the domestic andoverseas sales operations at a financial institution andhas experience in executing operations as president of
the Corporate Planning Unit of Tokyo Century.

Committee Membership Legend
N : Nomination Committee

C : Compensation Committee

IC : Internal Control Committee

CRM : Credit Risk Management Committee
S : Sustainability Committee

ALM : Asset Liability Management Committee

CR : Comprehensive Risk Management Committee
IT : IT and Administration Strategy Management Committee

IM : Investment Management Committee: Chairperson

Toshio Asano

External Director

External Director

N C

N C

N C

Masao Yoshida has served in positions includingpresident and representative director of Furukawa
Electric Co., Ltd. He was appointed as an external
director of Tokyo Century in June 2017 and then to
the position of chairperson of the Compensation
Committee in September 2019, both positions hecurrently holds. Mr. Yoshida possesses experienceand extensive knowledge based on long-term involvement in corporate management at Furukawa ElectricCo., Ltd., and offers management advice and provides
proper oversight of operational execution for sustainably
enhancing the corporate value of Tokyo Century.

Akio Nakamura has served in positions including
director-general of the Osaka Regional Taxation
Bureau, National Tax Agency, and director-general of
the Financial Bureau, Ministry of Finance. After heserved for two years as an external director of Tokyo
Century from June 2015, he was reappointed as anexternal director in June 2018. He was appointed as
director, representative executive officer, president
and CEO of Japan Securities Depository Center,
Incorporated, in June 2019, a position he currently
holds. Mr. Nakamura possesses extensive knowledge
in areas such as financial policy and tax affairs andhas experience and a track record in corporate
management while offering management advice andproviding proper oversight of operational execution
for sustainably enhancing the corporate value ofTokyo Century.

Toshio Asano has served in positions includingpresident and representative director of Asahi Kasei
Corporation. He was appointed as an external
director of Tokyo Century in June 2019, a position hestill holds while also fulfilling the role of chairpersonof the Nomination Committee, which he assumed inJune 2021. Mr. Asano possesses abundant experience and extensive knowledge based on his longterm involvement as the most senior manager ofAsahi Kasei Corporation and offers management
advice and provides proper oversight of operational
execution for sustainably enhancing the corporate
value of Tokyo Century.

Miho Tanaka

Tsuyoshi Numagami

External Director

External Director

N C

N C

Miho Tanaka has served in positions at Asahi Koma
Law Offices (currently Nishimura & Asahi) and TMI
Associates before taking up her current position as apartner at Shiba Management Legal Office (currently
Shiba & Tanaka Law Offices). She became an external
director at Tokyo Century in June 2021. Ms.Tanaka
has abundant experience and extensive knowledge
as an attorney-at-law, particularly in corporate legal
affairs and M&A activities, and she applies her deep
insight to monitor operational execution from an
independent perspective.

Tsuyoshi Numagami served as the dean of the
Graduate School of Commerce and Managementat Hitotsubashi University before becoming director
and vice president thereof and later taking up his
current position as a professor of the university’s
Graduate School of Business Administration. He
became an external director at Tokyo Century in June
2022. As a researcher of corporate management, Mr.
Numagami has exceptional academic insight regarding corporate strategies and organizations and is wellversed in various industries, and he applies his deep
insight to monitor operational execution from an
independent perspective.

C HA PT ER 5

Koichi Baba

Chairman & Co-CEO, Representative Director

Akio Nakamura

External Director

Corporate Governance for Improving Corporate Value

Masataka Yukiya

Masao Yoshida*1 External directors as stipulated by Article 2-15 of theCompanies Act of Japan*2 Designated independent directors as stipulated by
the Tokyo Stock Exchange

88TOKYO CENTURY CORPORATION89

INTEGRATED REPORT 2022

Management TeamInternal Directors

Corporate Auditors

Futoshi Okada

Katsuya Amamoto

Yoshio Nomura

Masao Fujieda

Standing Corporate Auditor

Standing Corporate Auditor

Standing Corporate Auditor

Corporate Auditor

External Corporate Auditor

Akihiko Okada

Hiroshi Sato

Toshio Kitamura

Deputy President, Director and Executive Officer
President, Audit Unit

Deputy President, Director and Executive Officer
Responsible for Equipment Leasing and
Deputy President, Specialty Finance Business Unit I
ALM

Director and Senior Managing Executive Officer
President, International Business Development Unit
President, International Business Unit
Director and Vice Chairman of CSI Leasing, Inc.

Hiroshi Sato has served as managing executive
officer and general manager of the Plant Project,
Marine & Aerospace Division as well as the chief
executive for European Operation at ITOCHU
Corporation. He became the senior managing
executive officer and executive advisory officer for theEquipment Leasing Business Development Unit andSpecialty Finance Business Unit I at Tokyo Century
in June 2021, before assuming his current positionof deputy president, director and executive officer
and responsible for Equipment Leasing and deputy
president of the Specialty Finance Business Unit I in
June 2022. Mr. Sato possesses abundant experienceand extensive knowledge gained through his involvement in corporate management, overseas operations,and sales at a general trading company.

After holding the position of general manager ofEurope Corporate Banking Division No.1 at Mizuho
Corporate Bank, Ltd., Toshio Kitamura became
general manager of the East Asia & ASEAN Business
Department of Tokyo Century in May 2013. He thenbecame an executive officer of the Company in April
2016 and director and vice chairman of CSI Leasing,Inc., a position he still holds, in May 2018 before
assuming his current position of director and senior
managing executive officer and president of both theInternational Business Development Unit and theInternational Business Unit in June 2022. Mr. Kitamura
possesses abundant experience and extensive
knowledge gained through his involvement in operational execution of a financial institution and theCompany.

President and Representative Director,
TC Business Experts Corporation

Before becoming a standing corporate
auditor (external corporate auditor) at
Tokyo Century in June 2012, Futoshi
Okada served as managing executive
officer and vice chairman of the AsianCommittee in charge of investment bankgroup sales at Mizuho Securities Co., Ltd.
Mr. Okada possesses abundant experience and extensive knowledge gained
through his involvement in corporate
management, overseas operational
execution and sales at a financial
institution, which he uses to fulfill his
function of providing effective management oversight of the legality andappropriateness of Tokyo Century’s
corporate activities.

External Corporate Auditor
Katsuya Amamoto has filled the positions of general manager of the Kobe
Branch, Business Division VII, and of
Credit Supervision Division I of Tokyo
Century prior to his assuming his current
position of standing corporate auditor in
June 2019. Mr. Amamoto possesses
abundant experience and extensive
knowledge gained through his involvement in screening, sales, and planning at
the Company, which he uses to fulfill his
function of providing effective management oversight of the legality andappropriateness of Tokyo Century’s
corporate activities.

ALM IC CR

Masao Fujieda was a partner at Showa
Ota Ernst & Young (currently EY Japan)
before taking up his current positions at
Fujieda Masao Tax Accounting Office in
October 2011 and as an external corporate auditor of Tokyo Century in June
2018. Mr. Fujieda possesses abundant
experience and extensive knowledge
regarding taxation and accounting
gained as a tax accountant, which heuses to fulfill his function of providing
effective management oversight of thelegality and appropriateness of Tokyo
Century’s corporate activities from an
impartial and objective standpoint.

Executive Structure and Unit Presidents
Akihiko Okada

Deputy President, Director andExecutive Officer

Tatsuya Hirasaki

Director and Managing Executive Officer

Takashi Yonetsu

Managing Executive Officer

Junji TsutsuiManaging Executive Officer

Toshiyuki Otobe

Executive Officer

Ko Nakagawa

Managing Executive Officer

Equipment Leasing Business Development Unit

Koichiro SatoManaging Executive Officer

Corporate Business Unit I

Katsusuke Hirako

Executive Officer

Toshihiko Tamura

Executive Officer

Audit Unit
Corporate Planning Unit
Accounting Unit

Operation Headquarters

Akihiko Okada has served in positions including
managing executive officer and chief operating officerof the Steel, Non-Ferrous & Solar Division of ITOCHU
Corporation. He was appointed to the position of
deputy president, director and executive officer ofTokyo Century in June 2019 and then to the positionof chairperson of the Internal Control Committee in
April 2021, a position he still holds. He assumed his
current position of deputy president, director andexecutive officer and president of the Audit Unit in
April 2022. Mr. Okada possesses abundant experience and extensive knowledge in diverse areas
including corporate management and global
business based on his extensive overseas experienceat a general trading company.

After serving as head of the Minamisenba
Branch of Mizuho Bank, Ltd., Yoshio Nomura
became an executive officer and generalmanager of Personnel Division II of Tokyo
Century in April 2010 and then managing
executive officer and president of the
Personnel Unit and General Affairs Unit in
April 2016. In June 2021, he took up the
position of corporate auditor of consolidated
subsidiary Nippon Car Solutions Co., Ltd.,
paving the way to his current position as astanding corporate auditor of the Company,
which he assumed in June 2022. Mr. Nomura
possesses abundant experience andextensive knowledge gained through his
involvement in sales and human resourcerelated processes at financial institutions
and human resource-related processes andgeneral affairs at the Company, which heuses to fulfill his function of providing
effective management oversight of thelegality and appropriateness of Tokyo
Century’s corporate activities.

Treasury Unit
IT UnitBusiness Process Management Unit
Personnel Unit
General Affairs Unit
Credit Supervision Unit
Risk Management Unit

Tatsuya Hirasaki

Shunichi Asada

Director and Senior Managing Executive Officer

Director and Managing Executive Officer

Director

Executive Advisory Officer for Specialty FinanceBusiness Development Unit

President, Corporate Planning Unit

Corporate Business Unit II

President, Accounting Unit

Corporate Business Unit III

Takao Kamata

Executive Officer

Mobility Business Development Unit

Masato Osugi

Managing Executive Officer

Specialty Finance Business Development Unit

Shintaro Yamazaki

Managing Executive Officer

Yoichiro Nakai

Deputy President, Executive Officer

Yoshito Kitagawa

General Manager

Toshio Kitamura

Director and Senior Managing
Executive Officer

Director and Executive Chairperson of Aviation
Capital Group LLC
Mahoko Hara has served as general manager of the
Product Solutions Division of Shinsei Bank, Limited.
She became senior manager of the Finance Business
Unit of Tokyo Century in March 2011 and was later
appointed to the position of executive officer andgeneral manager of the Finance Business Development Office in April 2013. She assumed the positionof executive chairperson of consolidated subsidiary
Aviation Capital Group LLC in January 2020, a
position she holds concurrently with the position of
director, senior managing executive officer andexecutive advisory officer for the Specialty FinanceBusiness Development Unit, in addition to the position of deputy president of the Specialty FinanceBusiness Unit I she took up at the Company in June
2022. Ms. Hara possesses abundant experience andextensive knowledge gained through her involvementin planning and product development at a financial
institution as well as overseas operational execution
and sales at the Company.

ALM IC CR CRM IT S IM

Tatsuya Hirasaki was appointed to the positions ofgeneral manager of the Accounting Division of Tokyo
Century in October 2013 and executive officer in April
2017 before assuming his current position of director
and managing executive officer, president of the
Corporate Planning Unit, and president of the
Accounting Unit in April 2022. It was at this time that
he became chairperson of the Sustainability Committee, a position he still holds. He also currently serves
as the chairperson of the Japan Leasing Association’s Accounting and Taxation Committee and as amember of the Accounting Standards Board ofJapan’s Technical Committee: Lease Accounting. Mr.
Hirasaki possesses abundant experience andextensive knowledge based on his involvement in
operational execution pertaining to accounting,corporate planning, and other activities.

Shunichi Asada was appointed as president & CEO,representative director of Tokyo Leasing Co., Ltd., in
April 2008 and served as president & CEO, representative director of Tokyo Century for 11 years following
the merger in April 2009, after which he was appointed
to his current position as a director in June 2022.
Mr. Asada aggressively promoted new businessmodels by taking advantage of a business environment free of regulatory constraints and establishedthe four operating segments. Moreover, he possesses
abundant experience and a successful track record as
the manager with the most credit for leading Tokyo
Century’s development as a top-tier financial services
company in the industry.

Business Headquarters

Deputy President, Specialty Finance Business Unit I

Equipment
LeasingSpecialty Finance Business Unit I
Specialty Finance Business Unit II
Business Development Unit

International Business Development Unit
International Business Unit

Mobility &FleetManagement

Specialty
Financing

International
Business

C HA PT ER 5

Mahoko Hara

Corporate Governance for Improving Corporate Value

Legal Unit

90

TOKYO CENTURY CORPORATION91

INTEGRATED REPORT 2022

CORPOLATEDATACHAPTER

6

Data Section

92

Performance Highlights

94

Financial Summary

96

Main Subsidiaries, Affiliates, and Other Companies

98

Corporate and Stock Information

92

TOKYO CENTURY CORPORATION93

INTEGRATED REPORT 2022

Performance Highlights
Financial Information

Non-Financial Information

Ordinary Income

Net Income Attributable to Owners of Parent+¥12.4 billion
YoY

Billions of yen

100

86.3

79.0

90.5

91.1

60

78.1

80

+¥1.1 billion

Billions of yen

YoY

51.3

52.3

56.3

50.3

49.1

50

20
18/3

0

Reasons for
Changes

19/3

20/3

21/3

9.7

9.1
7.9

7.2

6.7

45

42
36

34

32

30

+3

YoY

5,608.6

5,000

8

18/3

19/3

20/3

21/3

22/3

0

18/3

19/3

20/3

21/3

0

22/3

Male
Female

+5

YoY

40

22

30

19

25

19

20

6

2

* Ratio of ordinary income to total assets

5,602.9%5,663.8

2.5

2.2+0.2 point

2.2

+3

20

YoY
13

9

10
0

18/3

9

19/3

9

6

20/3

21/3

YoY

Ratio of Eligible Employees Who Have Taken
Paid Annual Leave

Pre-Owned Personal Computers Sold%

Units

80

74.7

1.9

2.0

1.6

1.4

1.5

77.3

76.3

75.6

72.7

+2.9 points

60

YoY

22/3

1.0

2,000

18/3

19/3

20/3

21/3

0

22/3

459,341

500,000

479,625
405,055–157,599 units
YoY

400,000
291,003

247,456

200,000
20

0.5

1,000

600,000

300,000

40

18/3

19/3

20/3

21/3

22/3

100,000

0

18/3

19/3

20/3

21/3

0

22/3

18/3

19/3

20/3

21/3

22/3

Total assets on March 31, 2022, were up ¥60.9 billion from March 31, 2021, due to increases in assets in the Specialty
Financing segment and the International Business segment stemming from yen depreciation. Return on assets was
up 0.2 percentage point, regardless of the rise in total assets, due to the increase in ordinary income.

Net Income per Share /ROEInterest-Bearing Debt

CO2 Emissions from Electricity Consumption*2

Reduction of CO2 Emissions*3 by Solar+59,535 MWh
Power Generation of Kyocera TCL Solar LLC
YoY–¥33.5 billion
Yen+¥8.99600
486.0913.7

494.93
12.7

400

YoY

524.9611.5

402.578.7

411.56

%

18
15
12
9

200

–0.6 point

6

YoY

100
19/3

20/3

21/3

22/3

3
0

5,000

4,278.2

4,280.9

4,247.4

1,200

MWh

2,810.7

3,041.2–48 t-CO2

1,075

1,000

4,000
3,000

t-CO2

YoY

825

818

800

770

722

500,000

 lectricity generated annuallyEthrough solar power generation
CO2 emissions reduction

400,000
287,888

300,000

1,000
0

200,000

400

100,000

200
18/3

19/3

20/3

21/3

22/3

Return on equity was down 0.6 percentage point year on year due to an increase in retained earnings and translation
adjustments resulting from yen depreciation. Interest-bearing debt on March 31, 2022, was down ¥33.5 billion fromMarch 31, 2021.

0

18/3

19/3

20/3

21/3

22/3

0

447,619
388,084

153,491

149,681

178,824

162,025

Reduction of
16,799 t-CO2

90,541

YoY

47,075
18/3

250,000
200,000

340,712

600
2,000

t-CO2

150,000
100,000
50,000

19/3

20/3

21/3

22/3

0

*1 Ratio of eligible employees who have taken childcare leave (non-consolidated): 100%
*2 Emission factors for electricity consumption use the alternative values for emission coefficients by electricity utility used for GHG Accounting, Reporting and Publication System under
Law Concerning the Promotion of the Measures to Cope with Global Warming.
*3 Emission factors for CO2 reduction amounts use the standard values defined in the display guidelines by Japan Photovoltaic Energy Association.

C HA P TE R 6

8.1

YoY

Billions of yen

Data Section

300

Reasons for
Changes

10

10

ROA*

4,086.5

3,755.1

18/3

50

10

3,000

0

12

4

0

+¥60.9 billion

6,000

500

Persons

20

22/3

Billions of yenReasons for
Changes

%

20

YoY

0

YoY

Eligible Employees Who Have Taken Childcare Leave(Non-Consolidated)*1

 espite decreased earnings in the Specialty Financing segment due to the recording of impairment losses on aircraft,D
ordinary income was up ¥12.4 billion year on year and net income attributable to owners of parent rose ¥1.1 billion
following growth in the International Business, Mobility & Fleet Management, and Equipment Leasing segments.

Total Assets

4,000+0.6 point

60

40

30
40

Ratio of Female Managers

Persons

50

40

60

Number of Female Managers /(Non-Consolidated)

94TOKYO CENTURY CORPORATION95

INTEGRATED REPORT 2022

Financial Summary
Operating Results*1(Billions of yen)

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/3

Revenues

691.1

828.6

883.0

940.5

976.1

1,012.2

1,067.6

1,166.6

1,200.2

1,278.0

Costs

620.2

731.2

759.3

803.6

823.3

849.0

885.9

958.7

999.2

1,070.9

Gross profit

70.9

97.3

123.7

136.8

152.8

163.2

181.7

207.9

201.0

207.1

80.7

106.5

134.1

150.2

170.3

184.8

208.0

239.0

244.8

255.0

Selling, general and administrative expenses

28.9

45.9

65.2

70.9

80.8

89.5

104.0

119.6

123.8

124.4

Personnel and non-personnel expenses

29.8

46.0

66.3

69.7

79.6

89.8

103.8

115.5

114.4

116.9

Credit costs

(0.9)

(0.1)

(1.1)

1.2

1.2

(0.3)

0.3

4.1

9.5

7.5

Operating income

42.0

51.4

58.4

65.9

72.0

73.7

77.7

88.3

77.2

82.7

Ordinary income

46.3

55.2

60.7

68.0

73.5

79.0

86.3

91.1

78.1

90.5

Extraordinary income (losses)

(0.1)

(0.1)

(1.0)

0.5

0.2

0.4

0.1

3.8

1.7

(1.1)

Net income attributable to owners of parent

28.9

33.1

34.1

40.0

43.7

51.3

52.3

56.3

49.2

50.3

Total assets

2,465.8

2,884.8

3,151.9

3,317.9

3,579.9

3,755.1

4,086.5

5,608.6

5,602.9

5,663.8

Segment assets*2

2,253.3

2,605.0

2,895.6

3,000.2

3,243.8

3,338.7

3,630.9

4,773.04,800.5

4,879.4

1,496.3

1,532.9

1,535.4

1,465.1

1,425.3

1,369.8

1,372.8

1,471.1

1,489.1

1,379.7

Mobility & Fleet Management

130.5

358.1

380.5

414.1

462.3

521.4

592.7

631.2

629.5

611.8

Specialty Financing

491.8

542.1

711.9

846.4

897.6

978.9

1,142.4

2,147.9

2,184.7

2,311.8

International Business

134.6

172.0

267.9

272.4

457.4

462.6

512.9

510.6

483.1

557.1

1,939.2

2,211.7

2,419.9

2,551.5

2,733.0

2,810.7

3,041.2

4,278.2

4,280.9

4,247.4

Net assets

233.7

285.5

336.5

374.9

404.8

456.0

524.4

660.1

688.4

795.6

Cash flows from operating activities(89.7)(28.3)(171.0)(136.6)

(0.7)

26.4

(59.2)(50.7)

51.3

227.4

Cash flows from investing activities

(5.6)

10.0

(18.7)(3.1)(30.1)(107.9)(123.9)(315.2)(97.4)(16.1)Cash flows from financing activities

135.9

54.5

156.9

155.8

27.5

81.6

189.0

523.1

19.0

(201.4)

Cash and cash equivalents at end of year

83.1

115.8

71.9

91.8

85.7

86.4

89.7

250.1

216.9

240.0

Net income

272.32311.64322.84379.34413.51486.09494.93524.96402.57411.56

Net assets

2,092.46

2,386.02

2,776.37

3,033.61

3,360.27

3,750.35

4,039.68

4,543.43

4,670.45

5,507.50

Dividends

48.00

52.00

65.00

80.00

100.00114.00124.00136.00138.00143.00Return on equity (ROE)*3

14.0

13.9

12.5

13.1

12.9

13.7

12.7

11.5

8.7

8.1

4

Return on assets (ROA)*

2.0

2.1

2.0

2.1

2.1

2.2

2.2

1.9

1.4

1.6

Shareholders’ equity ratio

9.0

8.8

9.3

9.6

9.9

10.5

10.4

9.9

10.2

11.9

Overhead ratio (OHR)*5

42.1

47.2

53.6

50.9

52.1

55.0

57.1

55.5

56.9

56.5

Employees (Consolidated)

1,676

3,309

4,113

4,124

5,430

6,035

7,016

7,365

7,438

7,634

Sales revenues(gross profit before deducting funding costs)

Financial Condition*1(Billions of yen)Equipment Leasing

Interest-bearing debt

Cash Flows*1(Billions of yen)

Per-Share Data (Yen)

Significant Indicators (%)

Other Data (Persons)*1 Data is rounded to the nearest unit.
*2 Segment assets include the investment in equity-method affiliates, goodwill, etc., belonging to each segment.
*3 ROE = Net income attributable to owners of parent / Equity (simple average of beginning and end-of-term balance sheet figures) × 100*4 ROA = Ordinary income / Total assets (simple average of beginning and end-of-term balance sheet figures) × 100*5 OHR = (Personnel expenses + Non-personnel expenses) / Gross profit × 100

C HA P TE R 6

2014/3

Data Section

2013/3

96

TOKYO CENTURY CORPORATION97

INTEGRATED REPORT 2022

Main Subsidiaries, Affiliates, and Other Companies
Japan

Asia
Location

Main Business

VotingRights*VotingRights*Nippon Car Solutions Co., Ltd.

Japan

Auto leasing

60%

Tokyo Century Leasing China Corporation

China

General leasing

80%

Nippon Rent-A-Car Service, Inc.

Japan

Car rental

89%

Tokyo Century Factoring China Corporation

China

Factoring services

100%

Orico Auto Leasing Co., Ltd.

Japan

Auto leasing for individuals

50%Tokyo Leasing (Hong Kong) Ltd.

Hong Kong

General leasing

100%

FLCS Co., Ltd.

Japan

IT equipment leasing

80%

Tokyo Century Leasing (Singapore) Pte. Ltd.

Singapore

General leasing

100%

IHI Finance Support Corporation

Japan

General leasing and finance

67%

Tokyo Century Asia Pte. Ltd.

Singapore

Investment and shareholding services andancillary business100%

Orico Business Leasing Co., Ltd.

Japan

General leasing

50%

Tokyo Century Capital (Malaysia) Sdn. Bhd.

Malaysia

General leasing

100%

ITEC Leasing Co., Ltd.

Japan

General leasing

85%

TISCO Tokyo Leasing Co., Ltd.

Thailand

General leasing

49%

S.D.L. Co., Ltd.

Japan

General leasing

100%

HTC Leasing Co., Ltd.

ThailandConstruction machinery finance70%

TRY Corporation

Japan

Refurbishment of IT equipment80%

TC Advanced Solutions Co., Ltd.

Thailand

Reverse factoring and other services

59%

TC Tsukishima Energy Solution LLC

Japan

Sale of electricity generated using biogas

90%

TC Car Solutions (Thailand) Co., Ltd.

Thailand

Auto financing and services

99%

Amada Lease Co., Ltd.

Japan

General leasing

60%

PT. Century Tokyo Leasing Indonesia

Indonesia

General leasing

85%

TC Kobelco Real Estate Co., Ltd.

Japan

Real estate business70%

TC Property Solutions Corporation

Japan

Property management

100%

BPI Century Tokyo Lease & Finance Corporation

The
Philippines

General leasing

51%

TC Hotels & Resorts Karuizawa Co., Ltd.

Japan

Hotel business

100%

Dalian Bingshan Group Hua Hui Da Financial Leasing Co., Ltd.

China

General leasing and finance

40%

Kyocera TCL Solar LLC

Japan

Sale of electricity generated using solar power

81%

Suzhou New District Furui Leasing Co., Ltd.

China

General leasing and finance

16%

TCLA Godo Kaisha

Japan

General leasing and installment sales

100%

President Tokyo Corporation

TaiwanAutomobile leasing and general leasing

49%

Shunan Power Corporation

Japan

Sale of electricity

60%

NTT Global Data Centers NAV2 Private Limited

India

IT services and equipment leasing

50%

TC Agency Corporation

Japan

Casualty insurance

100%

NTT Global Data Centers Holding Asia BOM8 Pte. Ltd.

Singapore

IT services and equipment leasing

75%

TC Business Service Corporation

Japan

Business processing services

100%

PT. Hexa Finance Indonesia

Indonesia

Construction machinery finance

20%

TC Business Experts Corporation

Japan

Business inspection services

100%

Yoma Fleet Ltd.

MyanmarAuto leasing and car sharing

20%

NTT TC Leasing Co., Ltd.

Japan

General leasing and finance

50%

NITTSU Lease & Finance Co., Ltd.

Japan

General leasing and finance

49%

U.S.A.

ITOCHU TC Construction Machinery Co., Ltd.

Japan

Sale of and rental services for construction
and other equipment

50%

Company

Bplats, Inc.

Japan

Subscription-based business

32%

FFG Lease Co., Ltd.

Japan

General leasing

25%

Nanatsujima Biomass Power LLC

Japan

Sale of electricity generated using
biomass power

25%

IBeeT Corporation

Japan

Subscription services for decentralized
power supplies and related equipment

50%

Chuo-Nittochi Asset Management Co., Ltd.

Japan

Management and formation of real estate
investment funds

30%

EuropeLocation

Main Business

VotingRights*TC Skyward Aviation Ireland Ltd.

Ireland

Aviation leasing and finance100%

TC Aviation Capital Ireland Ltd.

Ireland

Aviation leasing and finance

100%

Tokyo Leasing (UK) Plc

U.K.

General leasing

100%

Company

Location

Main Business

VotingRights*TC Skyward Aviation U.S., Inc.

U.S.A.

Aviation leasing and finance

100%

TC Realty Investments Inc.

U.S.A.

Real estate investment

100%

CSI Leasing, Inc.

U.S.A.

IT equipment leasing

100%

Tokyo Century (USA) Inc.

U.S.A.

General leasing

100%

Aviation Capital Group LLC

U.S.A.

Aviation leasing and finance100%

AP Equipment Financing Inc.

U.S.A.

General leasing and finance

100%

Fiber Marketing International, Inc.

U.S.A.

Sale of small construction equipment, etc.

100%

GA Telesis, LLC

U.S.A.

Provision of products, services, and solutions
to the commercial aerospace industry

49%

Gateway Engine Leasing, LLC

U.S.A.

Aircraft engine leasing

20%

Consolidated subsidiaries
Equity-method affiliates* Voting right percentages are rounded to the nearest whole number.

C HA P TE R 6Main BusinessCompany

Data Section

Location

Company

98TOKYO CENTURY CORPORATION99

INTEGRATED REPORT 2022

Corporate and Stock Information
Corporate Information (as of July 1, 2022)

Stock Information (as of March 31, 2022)

Company NameTokyo Century Corporation

Transfer Agent

Mizuho Trust & Banking Co., Ltd.

Head Office

FUJISOFT Bldg., 3 Kanda-neribeicho, Chiyoda-ku,
Tokyo 101-0022, Japan

Number of Shares of
400,000,000 shares
Common Stock Authorized

Stock Listing

Tokyo Stock Exchange,
Prime Market (as of April 4, 2022)

Number of Shares ofCommon Stock Issued

123,028,320 shares

Securities Code

8439

Number of Shareholders

17,026

Trading Lot Size

100 shares

FoundedJuly 1, 1969

Paid-in Capital¥81,129 million

Company
Representatives

Chairman & Co-CEO: Masataka Yukiya
President & CEO: Koichi Baba

Number of Employees 7,634 (919 on a non-consolidated basis) (as of March 31, 2022)

Major Shareholders

Closing of Accounts

March 31

Main Banks

Mizuho Bank, Ltd.; MUFG Bank, Ltd.; Sumitomo Mitsui Banking Corporation; The Norinchukin Bank;
Sumitomo Mitsui Trust Bank, Limited; and Japan Bank for International Cooperation (as of March 31, 2022)

Independent Auditor

Deloitte Touche Tohmatsu LLC

Networks

Domestic: Head office, Sapporo, Sendai, Saitama, Yokohama, Shizuoka, Nagoya, Kanazawa, Kyoto, Osaka, Kobe,
Okayama, Hiroshima, and Fukuoka
Overseas: Tokyo Century operates in more than 30 countries and regions in Asia, North America, Central andSouth America, Europe, and elsewhere.

Management Personnel (as of July 1, 2022)
Board of Directors
Chairman & Co-CEO,Representative
Director

Masataka Yukiya

President & CEO,
Representative
Director

Koichi Baba

Director (External
Director)*1 *3

Masao Yoshida
Akio Nakamura
Toshio Asano
Miho Tanaka
Tsuyoshi Numagami

Corporate Auditors

Executive Officers

Standing Corporate
Auditor (External
Corporate Auditor)*2

Deputy President,
Executive Officer

Yoichiro Nakai

Managing Executive
Officer

Seiichi Mizuno
Koichiro Sato
Takashi Yonetsu
Masato Osugi
Ko Nakagawa
Junji Tsutsui
Yoshihiro Ueda
Minoru Kuwahara
Shintaro YamazakiStanding Corporate
AuditorDeputy President,
Director andExecutive Officer

Akihiko Okada
Hiroshi Sato

Director and Senior
Managing Executive
Officer

Toshio Kitamura
Mahoko Hara

Director

Shunichi Asada*1 External director as stipulated by Article 2-15 of the Companies Act of Japan*2 External corporate auditor as stipulated by Article 2-16 of the Companies Act of Japan*3 Designated independent officer as stipulated by the Tokyo Stock Exchange

Masao Fujieda

Executive Officer

Toshihiko Tamura
Toshiyuki Otobe
Yukihiro Tanaka
Makoto Honda
Takao Kamata
Takeshi Fujimoto
Katsusuke Hirako
Masatoshi Hiraga
Tatsuo Hayama
Hideharu Suekane
Masaaki Teragami

Shareholding
Ratio* (%)

ITOCHU Corporation

36,71430.04

Chuo-Nittochi Co., Ltd.

17,160

14.04

Nippon Telegraph and Telephone Corporation

12,302

10.07

KSO Co., Ltd.

10,306

8.43

The Master Trust Bank of Japan, Ltd. (Trust Accounts)

5,856

4.79

Mizuho Bank, Ltd.

4,688

3.84

Seiwa Building Co., Ltd.

4,002

3.28

Custody Bank of Japan, Ltd. (Trust Accounts)

3,870

3.17

Financial institutions

17.7%

Securities companies

0.6%

Treasury stock

0.7%

Nippon Life Insurance Company

2,117

1.73

Mizuho Trust & Banking Co., Ltd. (Retirement Allowance
Trust, Orient Corporation Account Trust & Custody Services
Bank, Ltd. re-entrusted)

1,900

1.55

Other domestic institutions 67.3%* The shareholding ratio is calculated by excluding treasury stock (826,799 shares).

Bond Ratings (as of July 1, 2022)
Credit Rating
AgencyLongterm

Shortterm

Individuals and others

4.3%

Foreign investors

9.4%

Issuer: Tokyo Century Corporation (Securities Code: 8439)
Japan Credit Rating Agency, Ltd.
(JCR)

Rating and Investment
Information, Inc. (R&I)

S&P Global Ratings
Japan, Inc. (S&P)

Rating:

AA–

A+

BBB

Outlook:Positive

Positive

StablePreliminary
Rating for
Bonds
Registered for
Issuance*

Rating:AA–

A+

Expected Issue
Amount:¥400 billion¥400 billion

Issue Period:

Two years beginning
February 25, 2022

Two years beginning
February 25, 2022

Euro MediumTerm Note
ProgramRating:AA–

A+

Maximum
Outstanding
Amount:Equivalent of U.S.$2 billion

Equivalent of U.S.$2 billion

Commercial
Paper

Rating:J-1+

a-1

Maximum
Outstanding
Amount:¥800 billion¥800 billion

Issuer Rating* Each bond will be rated by each rating agency upon issuance.
(Reference) https://www.tokyocentury.co.jp/en/ir/br.html

C HA P TE R 6

Tatsuya Hirasaki

Katsuya Amamoto
Yoshio Nomura

Shareholders

Data Section

Director andManaging Executive
Officer

Corporate Auditor(External Corporate
Auditor)*2 *3

Futoshi Okada

Breakdown of Shareholders
Number of
Shares Held(Thousands)

INTEGRATED REPORT 2022
Tokyo Century Corporation

Tokyo Century Corporation
FUJISOFT Bldg., 3 Kanda-neribeicho, Chiyoda-ku,
Tokyo 101-0022, Japan
https://www.tokyocentury.co.jp/en/

Printed in Japan