Tokyo Century Corporation

1

TOKYO CENTURY CORPORATIONCONTENTSTokyo Century Corporation
Integrated Report 2021

1 Cover Story

2 Three Core Competences ofTokyo Century—Three Distinctive
Strengths ­Supporting Tokyo Century

1Management Philosophy

2

Tokyo Century’s Evolving Value Creation

4

Evolution of Tokyo Century’s Portfolio

6

Three Core Competences of Tokyo Century

7

Finance and Services

8

Partnerships

10 Highly Specialized Professionals
3 Special Feature
Seven Pillars of Business Strategies

14 Expansion of CSI Business Scope
16 Environment and Energy Businesses
18 Collaboration with Advantage Partners

4 Message from the President

20 Message from the President

5 Transition from Era of Ownership

26 Value Creation Modelto Era of Use—Sustainability
Management at the Tokyo Century
Group

Editorial Policy
Integrated Report 2021 was
prepared to better inform shareholders, investors, and otherstakeholders regarding Tokyo
Century's management direction
and business strategies andoperations, in addition toproviding financial informationand non-financial information,
including examples of environmental, social, and governance(ESG) initiatives, while incorporating the opinions, observations, and predictions of certainof the Company’s officers andother personnel.

28 Sustainability Management Targeting

Sustainable Improvements to Corporate ValueCORPORATE SLOGAN

Solutions toyour Pursuits.

30 Initiatives to Address Climate Change—

Endorsement of TCFD Recommendations

6 Strengthening of Response to Critical
Issues under New Fourth MediumTerm Management Plan

32 Positioning of New Fourth Medium-Term
Management Plan

34 Transformation of Businesses with Digital
Technologies

36 Strengthening of Human Resources to Support
Growth over the Next 10 Years

38 Diversity Discussion—Tokyo Century’s Initiatives
for Empowering Female Employees

42 Strengthening of Financial Base
7 Strategies by Operating Segment
and Progress

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

8 Corporate Governance

54 Evolution of Tokyo Century’s Corporate
Governance System

62 Message from an External Director
64 Risk Management and Compliance
70 Management Organization
Data Section

74 Performance Highlights
76 Financial Summary
78 Main Subsidiaries, Affiliates., and Other
Companies

80 Corporate and Stock Information

Reporting Period*
April 1, 2020–March 31, 2021 (fiscal 2020)* This report includes information on some
activities taking place after April 1, 2021.

Forward-Looking Statements
Statements in this integrated report withrespect to the Tokyo Century Group’s plans,
forecasts, strategies, presumptions, andother statements that are not historicalfact are forward-looking statements basedon management’s assumptions and beliefs
grounded on information that was available
when the report was written. Actual Group
performance may differ considerably fromthat discussed in the forward-looking
statements.

Guidance for Collaborative
Value Creation
This integrated report refers to “Guidance
for Collaborative Value Creation,” which is acommon guideline among investors. As acompany with financial capabilities, Tokyo
Century focuses on creating businesses
that are useful to society by cooperatingwith its partners. The Company aims tohelp stakeholders understand its efforts to“contribute to the creation of an environmentally sound, sustainable economy andsociety,” which is part Tokyo Century’sManagement Philosophy.

Management Philosophy

The Tokyo Century Group will work alongside customers in pursuit of their growth
as a highly specialized and unique financial services company and will contributeto the creation of an environmentallysound, sustainable economy and society.

21TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

3

Cover Story

Tokyo Century’s Evolving
Value Creation
Broadening Out from Conventional Leasing to Advance into New Fields Basedon the Concept of “Finance × Services × Business Expertise” Together with
Customers and Partners

2009–

Merger of Major Leasing Companies
Birth of Century Tokyo Leasing
Corporation
The 2008 revision of leasing accounting standards
created a pressing need for Century Leasing System,
Inc., and Tokyo Leasing Co., Ltd., to revise their business portfolios. This need prompted the decision toundertake a merger by their management, leading to
the birth of Century Tokyo Leasing Corporation in 2009.

Growth of Market Capitalization

2016–

Change of Name toTokyo Century Corporation
Evolution beyond a Leasing Company
The new Tokyo Century got its start in October 2016.
With a new name and a Management Philosophy ofcontributing to the creation of an environmentallysound, sustainable economy and society, it declaredits commitment to developing a wide range of businesses as a distinctive and highly specialized financial
services company.

2020 –

Capital and Business AllianceAgreement with NTT
Acceleration of Partnership Strategy
Tokyo Century unveiled its New Fourth MediumTerm Management Plan, which describes thecourse it will take over the next decade in working
to establish a stable global business platform andexpand co-creative business with partners suchas the NTT Group.

2030 –

Quest to Become a Trusted Service
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.

4TOKYO CENTURY CORPORATION

5INTEGRATED REPORT 2021

1 Cover Story

Evolution of Tokyo Century’s
Portfolio

Balance of segment assets

5,000¥4,800.5* 2

91.1

100

International Business

86.3

Tokyo Century has continued to expand its business domain focused on
its four operating segments in response to changes in the times and in
79.0

the needs of customers and partner companies.
Balance of segment assets(Billions of yen, left axis)
Equipment Leasing
Mobility & Fleet Management
Specialty Financing
International BusinessOrdinary income(Billions of yen, right axis)

4,000

Ordinary income

¥78.1

73.5

Note: The Fourth Medium-Term Management Plan a year after its fiscal 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 toeach segment.

80

2020
Concluded a capital and business allianceagreement with Nippon Telegraph andTelephone Corporation (NTT)68.0

Acquired 14.9% of outstanding ordinaryinterest in the shareholding company of
the Advantage Partners Group

60.7
3,000

55.2

Specialty Financing

2018

60

Acquired a 70% stake in Shinko Real Estate Co., Ltd.,a real estate subsidiary of Kobe Steel, Ltd., andconverted it into a consolidated subsidiary

44.2

46.3

2,000

46.3

2019
Converted Aviation Capital Group LLC (ACG), a major
U.S.-based commercial aircraft lessor, into a consolidated subsidiary40

2013
Converted Nippon Rent-A-Car Service, Inc.
(NRS), into a consolidated subsidiary

33.4

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

Mobility & Fleet Management

2016
Changed corporate name to Tokyo Century Corporation

22.3

Converted CSI Leasing, Inc. (CSI), a leading U.S.-based
independent leasing company, into a consolidated subsidiary

1,000

20

2012

2009
Century Tokyo Leasing Corporation establishedthrough a merger between Century Leasing System,
Inc., and Tokyo Leasing Co., Ltd.

0

2009/3*1

2010/3

2011/3

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

2012/3

2013/3

2014/3Equipment Leasing

2015/3

2016/32017/3

2018/3

2019/32020/32021/30

6

2

TOKYO CENTURY CORPORATION

7INTEGRATED REPORT 2021

Three Core Competencesof Tokyo Century

Three Distinctive Strengths Supporting Tokyo Century

C ORE C OMPE T E NC E

Finance and Services
Provision of Financial Services Focused on Asset Value

Four Operating Segments

Finance and Services

Equipment
Leasing

Mobility & Fleet
Management

Specialty
Financing

International
Business

Major Products

Major Products

Major Products

Major Products• IT solutions• Corporate auto leasing• Aviation• IT equipment leasing• Subscription services• Individual auto leasing• Ship• Auto business• Collaboration with• Car rental• Real estate• Joint crediting mechanism• Environment and energy(JCM) business

partners

Provision of financial services
focused on asset value
P.7

Partnerships
CORE CO MPE TENCES

Collaboration
with NTT

Global Strategy

Creation of new businessdomains with robust networkof business partners

Partnership Strategy
Environment andEnergyBusinesses

Global BusinessCentered on CSI

P.8–9

Auto BusinessCentered on NRS

Highly Specialized
Professionals
Expansion of base of
specialized professionals
P.10–13

Post-COVID-19
Strategy

Seven Pillars ofBusiness Strategies

Aviation BusinessCentered on ACG

Collaboration
with Advantage
Partners Group

Real EstateBusiness● All business strategies● Mobility & Fleet Management● Specialty Financing● International Business8

TOKYO CENTURY CORPORATION9INTEGRATED REPORT 2021

2 Three Core Competences of Tokyo Century
Three Distinctive Strengths Supporting Tokyo Century
C ORE COM P E T EN CE

Partnerships
Diverse Businesses Developed Together with Partners in a Free,
Unregulated Operating Environment
Conducting business operations together with its partners, Tokyo Century is developing a diverse range of businesses that exceed the boundaries of conventional leasing while advancing into new business domains with thepotential to become growth drivers. We are merging our aptitudes and specialties with those of our partners tocontribute to the creation of an environmentally sound, sustainable economy and society. Through thisapproach, we are pursuing improved medium- to long-term corporate value along with sustainable growth.

(MITSUBISHI ESTATE)

Promotion and Expansion of Joint
Businesses Centered on Urban
Redevelopment and Projects

TOKYO TORCH scheduled for completion in 2027

Through a partnership spanning more than a decade, Mitsubishi
Estate Co., Ltd., and Tokyo Century jointly acquired a hotel andevents hall to be built in TOKYO TORCH, a building under construction in the Tokiwabashi area in front of Tokyo Station. We have also
partnered with Mitsubishi Estate in the development of data centers in the United States as well as in other social infrastructure
projects.

Groupwide Expansion ofBusiness Collaboration ina Variety of Growth Fields
We engage in business collaboration with Nippon
Telegraph and Telephone Corporation (NTT) in a varietyof growth fields, including digital technology, mobility, andenvironment and energy. In addition, we are reinforcing
and expanding the leasing and finance businesses of joint

Challenges to Pursuing
New Business Domains
with Core Partners

Medium- to Long-Term
Growth in Environment and Energy
Businesses Centered on Solar Power

Jointly operated mega solar power plant in
Hagi City, Yamaguchi Prefecture

Together with Kyocera Corporation, we are promoting initiatives in theenvironment and energy field, such as those of joint venture Kyocera
TCL Solar LLC, with the aim of contributing to the realization of a carbonfree society.

venture company NTT TC Leasing Co., Ltd.

Jointly operated data centerwith the NTT Group in India

Resolution of Social Issues throughCollaboration in Digital Transformation
and Digital Technology Fields
With our unique subscription and other financial services, we areengaged in collaborative ventures with Fujitsu Limited, a company that boasts advanced digital platforms, to provide highly
competitive services that contribute to the popularization of local
5G networks and to the resolution of social issues.

Bolstering of Operating Foundations
by Merging Expertise Based on
NITTSU Lease & FinanceHaving commenced operations, NITTSU Lease & Finance Co., Ltd., a company
to which the leasing operations of Nittsu Shoji Co., Ltd., a subsidiary of Nippon
Express Co., Ltd., were spun off, will seek to improve its corporate value by
generating synergies between Nippon Express’ logistics and customer bases
and our automotive and real estate businesses.

10TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

11

2 Three Core Competences of Tokyo Century
Three Distinctive Strengths Supporting Tokyo Century
C ORE COM P E T EN CE

Highly Specialized
Professionals
INTERVIEW with the NTT Project TeamQ

Could you please explain the collaboration
with the NTT Group for the data center business,with a focus on Tokyo Century’s initiatives?

We are moving ahead with preparations for the joint development
and operation of data centers in Mumbai, India, a city where the paceof data center market growth is among the fastest in the world.

Q

What do you see as the role of Tokyo Century
in joint efforts with NTT?

This project is the first venture in the NTT Group’s data center
business in which external funding was utilized. Tokyo Century has
engaged in joint projects with various partners in the past. Basedon this experience, our role will be to go beyond simply providing
funding to offer a wide range of advice as a partner seeking to growand improve efficiency together with the NTT Group.

QWhat are the advantages of partnering with NTT?

In a society permeated by information and communications
technologies, the data centers that amass and store data are an
important piece of social infrastructure. We therefore predict thatdemand for data centers will continue to grow on a global scale.
With its global data center business foundations, the NTT Groupis an invaluable partner, and we firmly believe that the development of a joint business with the NTT Group has significant social
meaning.

Q

What skills and capacities are required in frontline operations?
Also, what capacities do you think you can take advantage ofin joint efforts based on your own experience?

Curiosity is incredibly important. We must first have an interest in
the NTT Group and its clients, asking about the businesses they
are developing and the services and issues they are focused on inorder to obtain a better understanding. Then, once we have thisunderstanding, it is important to think about what we and ourpartners can do to support the efforts of the NTT Group and its
clients and to talk about such matters with the NTT Group. Our
collaborative ventures with partners are built on this ongoingprocess of learning and this process is thus something we mustcome to enjoy.
How do you work to align the aims of NTT and Tokyo Century?
Also, in what fields do you hope to partner with
NTT in the future?

Takayuki Nishimura (left) Taisuke Kanezaki (right)
Americas and Europe Business DivisionTokyo Century cultivates and empowers employees with high-level expertise for the developmentof businesses with high barriers to entry through collaborative projects with our core partners.
In this section, we present interviews with the individuals responsible for the collaborative projects
we are advancing together with our core partners.

INTERVIEW with the Fujitsu Project TeamQ

NTT Project Team

Employees with High-Level Expertise

The NTT Group supplies more than just data center services; it isa world-leading, comprehensive ICT service provider that canoffer one-stop services for meeting the ICT needs of clients.
Meanwhile, the Tokyo Century Group offers financial services
based on a glocal—or a global plus local—perspective in morethan 30 countries and regions worldwide. We could combine
these services with the full-stack services the NTT Group provides
its clients to supply differentiated, high-value-added services.
Looking ahead, the Tokyo Century Group aims to offer effective
assistance and support to the NTT Group’s various efforts, suchas the acceleration of the B2B2X model* promoted by the NTT
Group, as a partner in the financial services field. We thereby hope
to contribute to the realization of a sustainable society.
* Business model based on advocating the provision of high-value-added services to
end users (X) through the efforts of the NTT Group (B) together with its business
partners (B)QCould you please explain the type of joint projects undertakenwith Fujitsu, with a focus on Tokyo Century’s recent initiatives?

Fujitsu Limited is one of our most important business partners,
with a business relationship that dates back to our founding. We
have long been working with Fujitsu on the marketing front, providing our financial expertise in relation to the products Fujitsu sells as
a manufacturer and partnering to address customer needs.

QWhat do you see as the role of Tokyo Century
in joint efforts with Fujitsu?

The focus of customers’ IT investments is shifting from ownership to use. Against this backdrop, we must go beyond simply
providing financial expertise to share certain risks with partners
based on consideration of their perspectives in order to develop
together with partners’ earnings models that are mutually
beneficial.

Q

Q

What specific initiatives do you hope to engage in with
Fujitsu in the future?

The types of digital transformation advocated by Fujitsu arehighly compatible with the subscription-style business models
promoted by Tokyo Century. Accordingly, we see the potential todevelop highly competitive business models by combining thebusiness aspirations of both companies. By leveraging the
Bplats® subscription platform we have been providing to Fujitsu
through an agreement with Bplats, Inc., since 2019, we aim to
help create new services that will contribute to the resolution ofsocial issues and the invigoration of regional economies in fields
such as local 5G networks and data utilization.

What are the advantages of partnering with Fujitsu?

Fujitsu is a top-class IT service provider in Japan and a prominent
player on the global stage; thus, it boasts superior system development capabilities and robust support systems as an industry
leader. These strengths have been fueling Fujitsu’s recent drive totransform into a digital transformation company in pursuit offurther growth. With its state-of-the-art artificial intelligence (AI)technologies and advanced digital platforms, Fujitsu is the ideal
co-creative partner for Tokyo Century in its efforts to develop new
IT services that are in line with contemporary trends.

QWhat skills and capacities are required in frontline operations?
Also, what capacities do you think you can take advantage ofin joint efforts based on your own experience?

There are three capacities that are required in marketing: a capacity for action, specifically collecting information; a capacity forcreation to propose solutions matched to customer needs; and acapacity for negotiation for securing an advantageous position in
proposals. By mustering these three capacities, we look to makeproposals to Fujitsu, our co-creative partner, and its customers
that are brimming with creativity based on an in-depth understanding of these parties.

Fujitsu Project TeamSho Aoto (left) Makoto Wada (right)
IT Equipment Business Division II

12TOKYO CENTURY CORPORATION

2 Three Core Competences of Tokyo Century

INTERVIEW with a Kyocera Project Team Member

Three Distinctive Strengths Supporting Tokyo Century

Q

INTERVIEW with the Nippon Express Project TeamQ

Could you please explain the process of establishing
NITTSU Lease & Finance as a spin-off of the leasingQ

operations of Nittsu Shoji (a wholly owned subsidiary of
Nippon Express) as well as the background for thisundertaking, with a focus on Tokyo Century’s initiatives?

Tokyo Century’s business relationship with the Nippon Express
Group dates back to 1964, and, in 1966, we offered our support toNittsu Shoji when it sought to establish a leasing business division. Later, in 1984 a business alliance agreement was concluded
between Nittsu Shoji and Tokyo Century with the aim of spurring
the growth of both companies. This favorable, cooperative relationship continues today, and we therefore recognize the Nippon
Express Group as one of our most important partners.
After hearing from Nippon Express that it was looking for apartner in a joint leasing business venture, Tokyo Century threw
its hat in the ring. In the end, we were chosen from among multiple candidates as Nippon Express judged that we would be theideal partner for strengthening and expanding its business.

QWhat do you see as the role of Tokyo Century in joint efforts
with Nippon Express?

LLC and recent joint projects with Kyocera Corporation as well as the backgrounds

Kyocera TCL Solar was established in 2012. It started its operations with the development of 2MW-class solar power plants and has since moved on to developing
30MW-class plants and installing ground- and roof-mounted solar panels and evenfloating solar panels. Today, Kyocera TCL Solar operates 88 solar power plants acrossJapan with a combined generation capacity of approximately 400 MW. Moreover, byleveraging the assets accumulated thus far, we examined the feasibility of commencing
an asset management business with Kyocera Communication Systems Co., Ltd., asubsidiary of Kyocera.

What skills and capacities are required in frontline operations?
Also, what capacities do you think you can take advantage ofin joint efforts based on your own experience?

Joint ventures require us to accurately understand the issues
faced by our joint venture partners so that we can contribute to
the resolution of these issues. For this reason, we must have botha capacity to assess current conditions based on analyses ofissues and a propensity to create new ideas for addressing theseissues that are not bound by preconceptions.

QCould you please explain the solar power generation business of Kyocera TCL Solarfor these efforts, with a focus on Tokyo Century’s recent initiatives?

QHow do you work to align the aims of Nippon Express andTokyo Century? Also, in what fields do you hope to partnerwith Nippon Express in the future?

We look to generate synergies through mutual utilization of thecustomer bases, business expertise, and base networks of the
Nippon Express Group and the Tokyo Century Group. Specifically,
we see the potential to advance business collaboration in the realestate, environment and energy, and automotive fields andthereby contribute to the resolution of social issues centered on
the logistics industry as well as to the creation of an environmentally sound, sustainable economy and society.

We look to inject our insight into NITTSU Lease & Finance Co., Ltd.,and to combine this insight with the customer base and humanresource capabilities of Nittsu Shoji’s leasing operations to augment the corporate value of NITTSU Lease & Finance. Specifically,
we will help the company heighten its evaluation and other risk
management functions while sharing our specialized and sophisticated functions in fields such as real estate and theenvironment.
NITTSU Lease & Finance will furnish the asset management
functions for the global operations of the Nippon Express Groupand will fully leverage its insight to grow into a company that
contributes to the resolution of social issues centered on thelogistics industry.

Q

13

INTEGRATED REPORT 2021

Kyocera Project Team Member

Yuichiro Aoki
Environment & Energy Business Division I

How do you work to align the aims of Kyocera and Tokyo Century?
Also, in what fields do you hope to partner with Kyocera in the future?

Until now, our joint efforts have been in the phase of expanding the use of renewableenergy by taking advantage of moves to cut carbon emissions and reduce dependency
on nuclear power as well as the associated feed-in tariff (FIT) schemes. Through these
efforts, we have played a role in helping meet the needs of society together with
Kyocera. As Japan works toward its lofty goal of achieving carbon neutrality by 2050,
it will be important for solar power to become an economically viable power source thatcan stand on its own without the support of government programs. We see overcoming
this challenge and addressing the related social needs as a new business opportunityand simultaneously a new phase for our joint efforts with Kyocera.

INTERVIEW with a Mitsubishi Estate Project Team Member

QCould you please explain the process of becoming involved in the Tokiwabashi area
development project in front of Tokyo Station as well as the background forthis undertaking, with a focus on Tokyo Century’s initiatives?

TOKYO TORCH, the Tokiwabashi area development project in front of Tokyo Station, is abusiness district office building project. We acquired the office building in the area jointlywith Mitsubishi Estate Co., Ltd., in 2009, which represented our first business collaboration.
In the years that followed, we continued to engage in this and other joint projects,
building a partnership that has lasted more than a decade.

QWhat are the advantages of partnering with
Nippon Express?

What do you see as the role of Tokyo Century in joint efforts with Mitsubishi Estate?

Our role is to help ensure the success of joint projects by combining the expertise andcapabilities of Mitsubishi Estate and Tokyo Century. Our operating environment is transforming, and therefore we need to provide value that goes beyond financial functions.
Based on this recognition, I hope to offer support in terms of business activities by capitalizing on Tokyo Century’s own development project track record and on the experience ofother members of the Mitsubishi Estate Project Team.

Nippon Express helps furnish an important part of the social
infrastructure with its operating foundations in the logistics­industry. By collaborating with Nippon Express, we can help
address social infrastructure issues through logistics.

Q
Nippon Express Project Team

Takafumi Kikuchi (left)

Ayumi Osawa (right)

Seconded to NITTSU
Lease & FinanceCorporate Business Division II

How do you work to align the aims of Mitsubishi Estate and Tokyo Century? Also, in what
fields do you hope to partner with Mitsubishi Estate in the future?

People from Mitsubishi Estate exude a sincere desire to enrich cities through their work.
We, meanwhile, are committed to the realization of a sustainable society. Therefore,
I hope to make further contributions to society through joint projects that, like TOKYOTORCH, have social contribution benefits.

Mitsubishi Estate Project Team Member

Soichiro Saeki
Real Estate Finance Division I14

3

TOKYO CENTURY CORPORATION

Special Feature

Examples Illustrating “Finance × Services × Business Expertise” Concept

Growth Strategies of CSI

Seven Pillars of Business Strategies

CSI: Breakdown of Ordinary Income

1 Expansion of CSI Business Scope

2 Environment and Energy Businesses

3 Collaboration with Advantage Partners

P.14–15

P.16–17

P.18–1975

Segment assets (Millions of U.S. dollars)
Ordinary income (Millions of U.S. dollars)

Asia

North
America

US$75.2
millionOUR MATERIALIT Y

CAGR

27%

65

3%

22%

Sustainable resource use

CSI: Global Transactions(FY2020)

EuropeExpansion of
CSI Business Scope15

INTEGRATED REPORT 2021

43%

Centraland South
America

Ordinary income
more than tripledfrom fiscal 2015

1,379
23

32%

Growth of Unique Life Cycle Management Services

1,515

49
1,939

39
1,601

1,958

1,707

26

2015

2016

Acquisition of
35% stake

Conversion towholly owned
subsidiary

2017

2018

2019

Reconstruction of sales systems
Reinforcement of ITAD business

2020

(FY)

Advancementof global
strategies

CSI Leasing, Inc. (CSI), is a major independent global leasing company based in the United States, with a network of morethan 70 bases around the world. Taking advantage of its freedom from ties to specific manufacturers, CSI boasts strengths

1.

in consulting services matched to the needs of its customers. The company provides comprehensive life cycle management services that combine offerings such as fair market value (FMV) leases*1 and data erasing. CSI’s services have built
up a strong reputation with customers developing global operations, to the extent that the company significantly outperforms its competitors.

EPC’s ITAD Services
Executive Personal Computers, Inc. (EPC), offers IT
asset disposition (ITAD) services, for example, data
erasing and disposal, for IT equipment that hasreached the end of its lease period. With 11 bases inNorth America, EPC continues to grow the quantities of equipment its ITAD services process, thereby
achieving steady profit increases.

Overview of UniqueComprehensive
Life Cycle
Management
Services

Unrivaled
GlobalNetwork

CSI has continued to achieve growth powered by the strong performance of
its FMV leasing of IT equipment, more than tripling its ordinary income since
Steve Hamilton
2015 as a result. The U.S. market, the current focus of CSI’s business, is masChairman andsive, and this market is expected to grow over the long term in conjunction
Chief Executive Officer
CSI Leasing, Inc.
with the advancement of 5G and Internet of Things (IoT) technologies. We
therefore see potential for CSI to grow through the utilization of M&A activities. At the same time, CSI is expanding its operations in the Asian market through coordination with Tokyo
Century’s network of bases in Asia. CSI also established its own bases in India in 2020 and in Japan in
2021, and it is examining the possibility of developing bases in Thailand, the Philippines, and Taiwan in the
future. CSI will pursue robust growth as a core company in the Tokyo Century Group by generating intraGroup synergies in Asia, a region that is expected to see rapid economic growth.

2.

FMV
Leases*1

Organic combinationof different services

MyCSI*2

Countries with EPC bases (17 bases in 7 countries: the United States,
Canada, Mexico, Costa Rica, Peru, the United Kingdom, and Slovakia)
Countries with certified partners or covered by EPC’s network (more than 30 countries)

Provision of high-quality
lease consulting services
for customers

ITAD
Services*3*1 A highly flexible form of leasing that offers customers options such as returning the asset, purchasing the asset, or extending the lease term at the end of the original lease period
based on fair market value (FMV) derived from the assessed residual value of the asset*2 A multi-region, multi-lingual online asset management system*3 Services for disposing of IT assets safely and appropriately

Outlook for Rapid Growth in the United States and Asia

Global Deployment of High-Quality ITAD Services

EPC is a subsidiary of CSI that provides IT equipment data erasing, disposal, and other ITAD services
through its network of 17 bases in seven countries. A major characteristic of EPC’s operations is that, inpartnership with CSI, the company is able to supply a range of services from leasing contracts through to
ITAD on a one-stop basis around the world. There has recently been a sharp rise in demand for ITAD services that dispose of IT equipment safely and appropriately, amid increased emphasis on information management and environmental protection. The popularization of remote working and the expansion in use of
IT devices stimulated by progress in 5G and IoT technologies will also benefit EPC. Going forward, EPC willseek to provide high-quality ITAD services in a wider range of regions by bolstering its network and building
upon its partnerships in the sector to meet the needs of multinational corporations seeking globally standardized services.

16

TOKYO CENTURY CORPORATION

17

INTEGRATED REPORT 2021

3 Special Feature
Seven Pillars of Business Strategies

Examples Illustrating “Finance × Services × Business Expertise” Concept

Environment andEnergy Businesses

OUR MATERIALIT Y

Contribution to
decarbonized society

Growing Environment andEnergy Businesses

1.

Creation of a Decarbonized Society
with Our Business Partners

Solar Power Plants Operational
across Japan (as of March 31, 2021)

The Tokyo Century Group is helping create a decarbonized society through its
renewable energy businesses, including solar and biomass power generation,
which are being developed in collaboration with the business partners that constitute one of our strengths. In fiscal 2020, we concluded a sustainability-linked
loan contract, based on which we are increasing our focus on environment and

129

energy businesses that help us achieve our goals of contributing to reductions
in CO2 emissions through solar power generation businesses.

Masayuki Miwa

Corporate PPA Business Strategy

General Manager, Specialty
Finance Business Unit I

Capitalizing on its knowledge of solar power generation businesses based on the
FIT scheme, Tokyo Century is expanding its corporate power purchase agreement (PPA) business throughwhich it supplies renewable energy directly to users. To this end, we are working together with consolidated
subsidiary Shinko Real Estate, Co., Ltd., to develop a corporate PPA business aimed at newly constructed
distribution warehouses. We are also examining the possibility of effectively utilizing surplus power fromcontracting facilities by distributing it to other locations. In addition, we believe that the feed-in premium(FIP) system to be launched in fiscal 2022 will present new earnings opportunities for the Company.
Accordingly, we are looking to expand the scope of our operations based on our broad customer base andrelationships with prime partners to accelerate the development of a FIP business.
Corporate PPA Business Scheme

Companies introduce renewable energy under direct contract with power generators

Major Joint Projects with Business Partners
Output of Mega Solar and Other Power
Generation Businesses

Mega Solar Projects
Kyocera TCL Solar LLC was established in 2012, the same year thatJapan launched its feed-in tariff (FIT) system. This company operates
solar power generation plants on one of the largest scales in Japan.

Binary Geothermal Power Generation

600

MW

1 Self-sufficient renewable

power generation

Notes:
1. Excludes solar panel leasing and financing
2. Output value proportionate to contribution rates(subsidiaries counted as 100%)

600

Tokyo Century is participating in binary geothermal power generation projects, which can achieve stable output with minimal impact
on the environment, in order to popularize this source of power.

Joint Operation of Solar Power Companies
In addition to maintaining stable operation of solar power plants,
Tokyo Century is involved in joint businesses focused on the utilization of power supplies, the creation of environmental value, and the22

deployment of related services.

2013

3 Provision of power stored

to the facilities of Shinko Real
Estate through gridin energy storage system
during the night

Expansion of business collaboration with Shinko Real Estate and prime partners

Total Generation Output
MW

2 Transmission of excess power

FY
2014
2015 2016 2017 2018 2019 2020

2.

Outlook for Environment and Energy Businesses

In addition to partnering with NTT Anode Energy Corporation and Kyocera Corporation, Tokyo Century isleveraging the strength of its robust portfolio of solar power plant assets to create new earnings opportunities. Our focus going forward will include managing the inconsistent output of solar power systems as wellas generating and supplying renewable energy. We have also begun initiatives for reusing and recycling solar
panels and other equipment as part of the development of businesses that contribute to the creation of anenvironmentally sound, sustainable economy and society. Tokyo Century has an important role to play in theenvironment and energy supply chain. In the short term, we will focus on expanding corporate PPA services.
In the medium to long term, we look to strengthen storage battery operations. Through this approach, Tokyo
Century will contribute to the realization of a carbon-free society through the promotion of the local production and consumption of power.

18

TOKYO CENTURY CORPORATION19

INTEGRATED REPORT 2021

3 Special Feature
Seven Pillars of Business Strategies

Examples Illustrating “Finance × Services × Business Expertise” Concept

Collaboration with
Advantage Partners

OUR MATERIALIT Y

Utilize diverse partnerships
to create new value

Future Outlook for
Collaboration with AP

1.

Acquisition of 14.9% stake in
Advantage Partners Group (September 2020)
Tokyo Century is building its investment portfolio by investing in the funds of Advantage Partners Group (AP), including as alimited partner, and through mezzanine financing. From a human resource perspective, the management of Tokyo Century
maintains close relationships with the management of AP, seconding personnel to the company and taking other steps todevelop a multilayered relationship.
As we seek to enter into new growth fields, we are strategically allying with AP, having built a relationship with the company through participation in its funds, with the aim of developing principal investment into a new pillar of our business.
AP is a leader in Japan’s private equity industry, boasting an industry-leading track record in private equity funds, both interms of the number of investments and investment amounts. By combining Tokyo Century’s robust customer base andfinancial services expertise with AP’s corporate-value-improving expertise, we aim to conduct joint investments with AP to
the tune of ¥30.0 billion to ¥40.0 billion going forward.

First Joint Investment ProjectLong-established company Q’sai CO., LTD., was acquired through a joint investment by Advantage Partners,
euglena Co., Ltd., and Tokyo Century. This company has since been positioned as a consolidated subsidiary of
euglena, and we plan to improve the company’s corporate value with our partners. Advantage Partners,
euglena, and Tokyo Century will work together to help Q’sai achieve its goal of evolving from a health food andcosmetic manufacturer focused on mail-order sales to a company supporting people in aging gracefully. In thisundertaking, we will capitalize on Advantage Partners’ strengths in the development of business structures,
euglena’s strengths related to environmental, social, and governance (ESG) factors and the United Nations
Sustainable Development Goals, and Tokyo Century’s wealth of experience in post-merger integration.
Ownership Structure of Q’sai after Consolidation by euglena
アドバンテッジパートナーズ ブランドロゴマーク

Well-aging support
company

Conversion into a
consolidated subsidiary○ロゴマークの比率変更及び色の変更を行ってはいけません。くれぐ
れも下記のプロポーション、色を保持して使用して下さい。
○ロゴマークは白地にポジ表示するのが理想ですが、やむを得ず色地に表示する場合は背景色によりネガ・ポジを使い分けてください。

ネガ
（白抜き）

○背景色が青（ブランドカラー）の場合のみ、右上の長方形を赤色で表示することが可能です。
○背景色が青（ブランドカラー）
以外の場合は、ロゴ全体を白抜きで表示してください。

49%

ブランドカラー背景タイプ
ポジカラータイプ

Major Investments by AP

Scheme for Collaboration between AP and Tokyo Century

Name

47.07%Net Protections Holdings, Inc.

Q-Partners(Special Purpose Company)

100%

ネガ
（白抜き）
汎用タイプ
ポジモノクロタイプ

アドバンテッジパートナーズ ブランドロゴマーク○ロゴマークの比率変更及び色の変更を行ってはいけません。くれぐ
れも下記のプロポーション、色を保持して使用して下さい。
○ロゴマークは白地にポジ表示するのが理想ですが、やむを得ず色地に表示する場合は背景色によりネガ・ポジを使い分けてください。

ネガ
（白抜き）

○背景色が青（ブランドカラー）の場合のみ、右上の長方形を赤色で表示することが可能です。
○背景色が青（ブランドカラー）
以外の場合は、ロゴ全体を白抜きで表示してください。

Background

Carve-out (reorganization byformer parent company)

Businessoverview

Deferred payment services
for e-commerce

ブランドカラー背景タイプ

3.93%** Initial holding of 19.94% stake acquired
through ¥4.7 billion investment

ポジカラータイプ

ネガ
（白抜き）
汎用タイプ
ポジモノクロタイプ

Focus when selecting joint investment candidates

Business
Carve-Outs
Selection andConcentrationof Businesses

Business
Succession
Small toMedium-Sized
Companies

Joint
Investment
Management
Strategies

Dissolutionof ParentSubsidiary
Listing
Governance
Enhancement

Focus on identification of needs of customers
and partner companies

Name

Yaruki Switch Group

Background

Business succession(succession from founder)

Businessoverview

One-to-one teaching facilities

2.

Pursuit of Further Growth through Collaboration

Establishment of Principal Investment Division in April 2021​
I ncrease in inquiries and pipeline after announcement of first investment deal (joint investment inQ’sai: approx. ¥4.7 billion investment by Tokyo Century)

Collaboration with Tokyo Century
Name

Fujitsu Interconnect
Technologies Limited

Background

Carve-out (businessreorganization by former
parent company Fujitsu Limited)Businessoverview

Development, manufacture, andsale of printed wiring boards

Hideo Nagatsuyu
Senior Partner
Advantage Partners Inc.

The acquisition of stock in Q’sai was a team effort between AP, Tokyo Century, andeuglena, with all members united by a shared set of values. Our ability to support thegrowth of Q’sai through this partnership is a powerful asset. Looking ahead, I see
potential for us to engage in future projects by supplying Tokyo Century’s customers
with the experience and consulting capabilities AP has accumulated through its
investment business activities thus far. For example, I think that we can help meet thebusiness carve-out and other needs of the manufacturers with which Tokyo Century
has strong business relationships, as well as the business succession needs of business owners. In seeking to help address these needs, AP will accelerate collaborative
efforts in close coordination with Tokyo Century going forward.

20

4

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

Message from the President
Over the next decade,Tokyo Century will focus efforts on its pillars ofbusiness strategies and on the cultivation of
ambitious and highly specialized personnel togrow into a financial services company thatmaintains the support of stakeholders.
Makoto Nogami
President & CEO, Representative Director

Information Disclosure Vision andMedium- to Long-Term Perspective
Cultivated amid the COVID-19 Pandemic
in My First Year as President

stance of arranging various opportunities to share ideas
with investors and practicing engagement throughconcise yet detailed explanations.
A major characteristic of Tokyo Century is the highlevel of specialized expertise it possesses in each of

I took up the mantle of president of Tokyo Century at theits businesses. Our aircraft leasing and car rental busi-

time of the launch of the New Fourth Medium-Termnesses were the most impacted by the COVID-19 pan-Management Plan in April 2020. More than a year has

demic. We thus received numerous questions frompassed since I assumed this position. I was appointed

investors as airlines suffered deteriorating operating

amid the rapid, nationwide spread of COVID-19, which

environments. The concerns expressed in these ques-

prompted the Japanese government to declare a statetions centered on factors such as the situation of leaseof emergency in Tokyo and six prefectures on April 7.

payment deferrals, the difficulty in finding subsequent

Amid this turmoil, many companies refrained fromlessees for returned end-of-lease aircraft, and the finan-disclosing performance forecasts at the beginning ofcial position of subsidiary Aviation Capital Group LLC, antheir fiscal years. Tokyo Century, however, chose toaircraft leasing company. We responded to these con-issue a performance forecast after carefully assessing

cerns by tracking and disclosing detailed information as

the impacts of the COVID-19 pandemic on each operat-

thoroughly as possible. As a result, I think we can pride

ing segment. For the businesses projected to suffer theourselves on the type of clear responses we offered togreatest impacts from the pandemic, we offered con-questions regarding such matters as the outlook for ourcise yet detailed explanations of the conditions to give

aircraft leasing business.

investors a better picture of the situation. This diligence

Moreover, we sought to put forth a clear narrative

won a positive response from the market, and this expe-

supported by plentiful non-financial information in ourrience informed what is now Tokyo Century’s basic

investor relations materials for quarterly financial

21

22

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

4 Message from the President

results announcements. Stakeholders had high praise

The most substantial of the seven pillars is our alli-

have been receiving offers to form business alliances

for these materials, stating that they were like “miniance with NTT. One year has passed since the conclu-

from a variety of companies, without placing weight on

integrated reports.” I look forward to further enhancing

sion of our capital and business alliance with NTT, andany specific corporate group. Furthermore, there has

our information disclosure activities going forward.

we have been generating success at a pace that sur-been a notable rise in the number of consultations

passes our initial expectations. NTT TC Leasing Co.,

regarding subscription services, digital transformation

Ltd, our joint venture with the NTT Group, boasts mas-

services, and other distinctive Tokyo Century financial

sive potential. In fact, I believe in the ability of this com-

services. This trend has made our presence as a finan-pany to double its ordinary income throughcial services company free from regulatory constraints

Business Strategy Outlook from a
Medium- to Long-Term Perspective

collaboration with Group companies. Other themes of

all the more apparent. I also must mention that it is ourI believe that, to effectively advance business strate-

our alliance with NTT include the real estate, environ-

human resources who support this strength. In fact, it

gies from a medium- to long-term perspective, it isment and energy, and data center businesses.

would be appropriate to say that our diverse and highly

prudent for us to divide businesses into two catego-

Undoubtedly, this alliance will be lauded as a major

specialized human resources are the greatest strengthries: businesses in which we will pursue organic

turning point in the growth of Tokyo Century when weof Tokyo Century.

growth to develop stable foundations for supporting

look back on our progress a decade from now. We will

management and businesses in which we will pursue

engage in a dedicated, concerted effort to advance thesubstantial growth over the next decade. To better

alliance with NTT going forward. At the same time,

illustrate to stakeholders this outlook for businesshowever, we will need to develop a balanced portfolio

strategies targeting future growth, we put forth six

that comprises businesses to be steadily grown today

pillars of business strategies in the presentation mate-and businesses from which we expect more significant

Tokyo Century is expanding its staff of highly special-

rial for our financial results for the six-month period

returns later down the line. Through this approach, I

ized human resources by cultivating new graduate

ended September 30, 2020, which were announced inhope to build this pillar into an even more substantial

hires and by recruiting mid-career hires. We do not

November 2020. After this announcement, carbon

aspect of our business strategies.

have the impressive facilities of a manufacturer, nor docommercializing those deemed to have potential. The

neutrality became a hot topic around the world. In light

we have the strong business domain and brand of aconsulting firm that helped us introduce this projectof this growing global movement, we introduced a

trading company. However, what we do have is highly

had high praise for the types of impressive ideas pro-

specialized human resources, who are a precious

posed by our employees. These proposals need toasset. Accordingly, the implementation of humanpass through several steps, such as document screen-

seventh pillar when announcing our full-year financial
results for fiscal 2020 in May 2021. This new pillar isStrengths of the Tokyo Century Groupfor Pursuing Future Growth

resource strategies is a top priority for ensuring sus-

ings and presentation reviews. In the first year of the

I would now like to talk about the strengths of thetainable growth. Steps to improve employee engage-

TC Biz Challenge Project, a total of 36 proposals wereTokyo Century Group that are the driving force behindment are thus also a top priority, and we are taking

received, of which three passed the final screening

our pursuit of medium- to long-term growth.

various initiatives for this purpose.

process before commercialization. Notably, several

environment and energy businesses, which previously
had been included in our NTT alliance pillar.
I would now like to explain a few of our seven pillars.
We need to revitalize the auto business centered on

Cultivation and Strengthening ofHighly Specialized Human Resources

car rental operations and resume growth in the aircraft

A primary driving force is our propensity for businessleasing business, as they were severely affected by theco-creation with business partners, a strength that our

Program. In the past, there was a tendency for talented

senting ideas at the final screening. By providing

COVID-19 pandemic. However, our focus is not merely

rivals cannot mimic. We have allied ourselves with a wide

individuals to stay too long within a given division,

opportunities to employees of all ages, we hope toon recovering these businesses; we look to achieve

range of business partners from various industries.

making it difficult to put their talents to use on aheighten employee engagement.

further growth by reforging these businesses to be

Therefore, we have developed a knack for finding ways toCompanywide basis. To address this issue, we launchedeven stronger after the damages dealt by the pan-lead joint businesses to success and working with part-the Career Challenge Program in 2020. This program

ality for contributing to society and achieving sustain-

demic. Meanwhile, our alliance with Advantage

ner companies to raise the value of these businesses. In

offers a system through which internal divisions seeking

able growth. Of these issues, we are dedicating thePartners, the real estate business, and the environment

our alliance with Mitsubishi Estate Co., Ltd., for example,

to recruit human resources disclose the requirements ofmost effort to “enhancement of the work environment,

and energy businesses represent new growth fields for

we are able to engage in discussions from a mutual

the relevant positions so that employees can apply forleading to strengthening of human resources.” As ITokyo Century and thus important pillars for the future.

perspective due to our significant real estate expertise.

these positions, and thereby shape their own career

mentioned, human resources are our greatest

Therefore, we will be pursuing significant growth inThis expertise was one of the reasons Mitsubishi Estatepaths. In its first year, the program was used by 14 indi-

strength, with the reason for that being we cannot run

businesses in these fields. Elsewhere, major U.S. IT

chose us as their joint business partner.

viduals to relocate to their desired divisions.

our business without them. Fortunately, we have been

One of these initiatives is the Career Challenge

relatively new employees were seen confidently pre-Tokyo Century has defined five key issues as materi-

In these partnerships, it is important for us to under-

Another initiative is the TC Biz Challenge Project,

Leasing, Inc., is central to the International Businessstand the businesses of both partners and customers

which is designed to provide employees who envision

including among new graduate hires. Several of thesesegment, and we look to indicate more clearly its driv-

and to create added value by heightening our expertisenew businesses the opportunity to chase their ambi-

individuals chose us even after considering positions

ing force behind our earnings growth and global

as a financial services company in order to foster

tions. Under the project, employees propose ideas forat megabanks and major trading companies. I am

strategies.

mutually beneficial win-win relationships. Recently, we

new businesses and Tokyo Century offers support for

overjoyed that Tokyo Century has become a company

equipment leasing consolidated subsidiary CSI

successful in securing talented human resources,

23

24

TOKYO CENTURY CORPORATION

25

INTEGRATED REPORT 2021

4 Message from the President

that is chosen in this manner. Moreover, I understandCentury. However, we must not be complacent in taking

We are also engaged in ventures for revitalizingthat it is my mission to carefully cultivate these indi-advantage of this trend. Rather, it will be important toregional communities. Together with map solutions

refine our partnership strategy to address social issues

viduals, always prioritizing our employees while devel-

actively think about how we can contribute to our cus-

provider ZENRIN CO., LTD., we conducted a verification

while steadily growing.

oping Tokyo Century into a company where people

tomers’ convenience if we hope to succeed in businesstest in Nagasaki Prefecture in which a smartphone app

want to continue to work.

while also contributing to society.

is used as a tourism-oriented MaaS platform. In thediverse range of businesses requires a rigorous risk

test, users sought to visit tourist attractions using themanagement system. It is especially important to pay

ment of next-generation technologies, such as CASE

app to find the most ideal route by combining train

attention to the operations at business investments(connected, autonomous, shared & service, and elec-

travel with car rental. In such ways, we are working toand operating companies. Post-investment progresstric) and MaaS (mobility as a service) is moving for-create new businesses that help invigorate regional

management is as important as pre-investment

ward. However, we must carefully consider whether

shopping districts and tourist attractions. The revital-

screening. Based on this recognition, we have set up

There is currently a growing push to reduce environ-these technologies will actually contribute to higher

ization of regional communities is an important form

the Investment Management Committee, a cross-mental impacts and waste. Meanwhile, we are witness-earnings and, more important, to increased customerof social contribution that furthers the achievement ofbusiness organization consists of people from corpo-

ing a transition from ownership to use in which greater

convenience. On this front, we have invested in the taxi

the SDGs. We look to develop operations in this area

rate planning, credit supervision, comprehensive riskemphasis is placed on the convenience and experiences

dispatch service company being developed by DeNAthrough steadfast efforts in order to capitalize on the

management, and so forth. This committee judges

to be gained by using articles as opposed to the articles

Co., Ltd., and Nihon Kotsu Co., Ltd. If ordering a taxi

potential profits going forward.

the appropriateness of investments in new investment

themselves. The popularization of subscription busi-

through one’s smartphone becomes commonplace inIn this manner, Tokyo Century aims to promote well-candidates based on their projected profitability andnesses is an example of this trend. The widespread

Japan, it will not only contribute to higher conveniencegrounded businesses in efforts to develop sustainablesocial contributions. For existing businesses, mean-

entrenchment of this focus on use over ownership isbut also help reduce environmental impacts by allow-

businesses with an earnest focus on generating earn-

while, the committee is ramping up monitoring andcreating a favorable operating environment for Tokyo

ing taxis to be allocated more efficiently.

ings while contributing to society.

performing checks from a fixed-point perspective to

In the automotive industry, for example, the develop-

Contributions to Society through theGroup’s Businesses

boasting significant expertise. Therefore, we look to

As for internal fortification, the development of adetermine whether businesses will be continued orInitiatives Pursuing Growthover the Next Decade

exited. Through these provisions, we have developed
a rigorous risk management system.
Lastly, I would like to mention a recent discussion
I had with officers about our vision for the future aI anticipate that the next decade will give rise to an

decade from now. This discussion revealed a feeling

operating environment in which our past experienceof nervousness among the officers with regard to thewill cease to be a reliable guide as we are expected tovolatile operating environment. However, this nervous-

evolve and act with incredible speed. This environment

ness was overshadowed by their sense of exaltation

is likely to be characterized by energy issues, such as

and excitement for Tokyo Century’s potential.

those related to the decarbonization trend, and sophis-

I am committed to developing Tokyo Century into

ticated communications brought about by 5G or eventhe type of company that achieves sustainable growth

6G networks. In such an environment, flexible manage-

and contributes to the happiness of all of its stakehold-ment systems capable of both proactive expansion

ers by constantly providing financial services thatand internal fortification will be of utmost importance.

benefit society. As we seek to make greater contribu-

Efforts for proactive expansion will include applying

tions to society, we will raise the presence of Tokyo

digital transformation methodologies to the basic

Century as a pioneer in new business models thatleasing business model to achieve further growth. At

expand beyond the boundaries of a leasing company

the same time, we will build upon our seven pillars of

to further improve corporate value. I look forward tobusiness strategies to strengthen these pillars andthe continued understanding and support of our inves-

reap greater rewards. Also, it is necessary to acquire

tors and other stakeholders.

highly specialized expertise and abundant knowledge
outside the leasing business in order to develop
sophisticated businesses that can win out against
global competition. Tokyo Century is at a great advantage in this regard as it has long been engaged in collaborative businesses with numerous partners

August 2021

26

Transition from Era of
Ownership to Era of UseTokyo Century has continued to flexibly evolve its businesses as a financial services company
that is able to adapt to change. Always responsive to the contemporary expectations of society,

Stable fund procurement

Consolidated net assets:¥688.4 billion
R&I: A

1

Understand issues faced bycustomers and partner companies

S&P: BBB

Human Capital

Human resources who sustain
value creationN umber of employees (consolidated):2

Consider collaborations, alliances,and joint ventures with partner companies

3

Provide financial services
focused on asset valueIntellectual Capital

High-value-added service businesses

Tokyo Century aspires to help resolve social issues, thereby contributing to its sustainable growth and improved value, through initiatives
based on the Company’s materiality, a set of issues linked to the SDGs.

Contribution to decarbonized society•R isks related to the introduction of carbon taxes, the institution of stricter regulations, and other factors pertaining to the transition to a decarbonized society•P hysical risks associated with increases in natural disasters and abnormal weather
events as a result of climate change• Expansion of renewable energy businesses in conjunction with changes to energy mixes•D iverse business opportunities arising as a result of trend toward electric vehicles• Increased leasing needs associated with social demand for energy conservationand decarbonization

Creation of new businesses driven
by technical innovation

7,438

Ratio of female employees (consolidated):
34%

MATERIALITY

Risks

Financial Capitalmanagement resources to achieve sustainable growth over the long term.

Opportunities

BUSINESS FLOW

we strive to create new businesses that contribute to society while utilizing our uniqueFinancial services focused on asset value

Risks

INPUT

JCR: AA–As a shift in values drives a transition from ownership to use among consumers,

Sustainability Management at the Tokyo Century GroupVALUE CREATION
MODEL• Obsolescence of existing business model due to delayed adaptation to technological progress•L oss of customers and diminished productivity resulting from inability to undertake
digital transformation•G rowth of subscription businesses in tandem with development of digital society•R ise in collaborative businesses with partners boasting high technological prowess•C reation of new businesses through digital transformation

Co-creation with partner companies

Manufactured Capital

Extensive overseas network

Scope of global operations:
More than 30 countries and regions
Alliances with prime partners
in countries of operation

Natural Capital

Provision of renewable energy
Solar power generation capacity:
600 MWA ctive solar power plants:

129* As of the end of March 2021

Team of Highly Specialized Professionals

Tokyo Century’s highly specialized professionals enable it to createbusinesses with a high barrier to entry through collaborative projects
with prime partners.

Risks

Tokyo Century contributes to the growth of its customers’ businesses by providing high-value-added services capitalizing on its
highly specialized and unique expertise while pursuing new possibilities through collabo­rations with customers and through the utilization of the collective strength of the Group. By generating synergies
in this manner, we will boldly explore new business fields in pursuitof ­sustainable growth.

Opportunities

Broad Array of Business Partners• Increased forward-looking investments in data centers and resilient real estate• Emergence of new mobility businesses related to advancements such as automotive
business driving data utilization and flying cars
• Development of hotel businesses that help revitalize appealing regional economies in Japan

Sustainable resource use
Risks

Social and
Relationship Capital•C ontraction of capital investments due to population aging and decline in Japan•D
 ecreased tourism demand due to impacts of prolonged COVID-19 pandemic• Increased disposal costs for end-of-lease assets due to stricter environmental regulations• Need to comply with regulations differing by country as a result of business globalization

Opportunities

Wide variety of assets such as automobile, aircraft, ship, and real estate

STRENGTHS• Expansion of circular economy and life cycle management businesses focused on asset value•G rowth of refurbishment businesses accommodating eco-friendly society•D ifferentiation of IT equipment leases through ITAD services and sophisticateddata-erasing technologies

Enhancement of work environment,
leading to strengthening of human resources
Risks

Segment assets: ¥4.8 trillion

Contribution to social infrastructure development• Inability to secure human resources due to unappealing work environment• Inability to innovate due to lack of workplace diversity• Failure to retain talented human resources due to perceived lack of opportunities for growth

Opportunities

Source of profits

27

INTEGRATED REPORT 2021

Opportunities

5

TOKYO CENTURY CORPORATION• Improved employee engagement through workstyle reforms• Acquisition of talented human resources by developing appealing work environment• Energization of staff through new business proposal projects and internal recruitment programs

OUTCOME
Contributions to the creationof an environmentally sound,sustainable economy andsociety as describedin the Tokyo Century Group’s
Management Philosophy

28TOKYO CENTURY CORPORATION

29

INTEGRATED REPORT 2021

5 Transition from Era of Ownership to Era of Use—Sustainability Management at the Tokyo Century Group

Sustainability Management
Targeting Sustainable Improvements
to Corporate Value

Promotion of Sustainability Management
Sustainability management strategies furnish a core framework for the New Fourth Medium-Term Management Plan.
Tokyo Century is advancing initiatives based on its materiality (key issues), which is itself based on the SDGs, for the purpose of promoting sustainability management to address social issues through its business activities. We thereby aim to
improve corporate value while ensuring sustainable growth for both the Tokyo Century Group and the greater society. The
progress of these initiatives is assessed through a PDCA (plan–do–check–act) cycle.

Our Approach to Sustainability

Process for Determining Materiality

Quest to Always be a Company with the Support of Society

the 17 SDGs and the related 169 targets to identify issues. These

Materiality

In determining our materiality, we performed materiality analyses ofissues were then incorporated into management strategies to bevalue along with customers as a financial services company, and it thereby contributes to the creation of an environmentallyused in mitigating risks and creating business opportunities based

sound, sustainable economy and society. In promoting sustainability management, we envision, with due consideration of

on social issues, in order to further Tokyo Century on its quest to

the Sustainable Development Goals (SDGs), a society 10 to 20 years into the future and then take a backcasting approachachieve sustainable growth as a company with the support of

toward creating financial services that will meet the needs of that time.

society. In addition, we have formulated a materiality road map that is

Resolution of Social Issues Together with Stakeholders

linked to the SDGs. This road map was used as the basis for interviews with numerous relevant internal divisions, discussions among

Contribution to
decarbonized society
Creation of new
businesses driven bytechnical innovation

Materiality for stakeholders

Tokyo Century’s commitment to sustainability is driven by its pursuit of further sustainable development and higher corporate

Sustainable
resource use
Contribution to social
infrastructure development

the Sustainability Committee, and efforts for clarifying the relationship between materiality issues and the New Fourth Medium-Term
Management Plan. After these steps, the selected issues were exam-

Identify Key Social Issues

AchievesustainablegrowthIncrease
corporate
value

Strengthen Engagement

Shared Platform
Utilize diverse partnerships
to create new value

Strengthen Internal Base

Maintain high degree ofexpertiseUtilize “Finance x Services x
Business Expertise” conceptD evelop global networkC ollaborate with prime partners
B uild solid customer baseContribution to
decarbonized society• Solar power generation
businesses• Biomass and biogas power
generation businesses• Joint crediting mechanism(JCM) projects

Materiality for Tokyo Century
Sources including main ESG evaluation indices: Dow Jones Sustainability
Index, FTSE4Good Index, MSCI Index, and SASB

to the final decision of five materiality issues and one shared platform

Exercise Strengths inFour Operating Segments
to Resolve Issues

Enhance disclosure of
non-financial information
Strengthen stakeholder engagement

Tokyo Century’s
Materiality

ined by the Management Meeting and the Board of Directors, leadingImprove systems for promoting
sustainability
Practice effective risk
managementD evelop human resource infrastructure (diversity, workstylereforms, etc.)Implement corporate governancesystems, etc.

Steadily address materiality(key issues) based on the SDGs
C
 ontinuously identify trends insociety from a medium- tolong-term perspective and takespecific initiatives to resolve
issuesEnhancement of work environment, leading to strengthening of
human resources

Creation of new businesses
driven by technicalinnovation• Provision of subscription
service platform in collaboration with Bplats, Inc.
• Fixed-price power conditioner
rental service jointly developed with the OMRON Groupfor supporting related initiatives.
Structure for Promoting Sustainability Management
Board of Directors
President
Management Meeting

Discusses and reports on the status ofsustainability initiatives

Sustainability Committee(Chairperson: President, Corporate
Planning Unit)• Plans, promotes, and coordinates all
Group companies’ sustainability efforts• Discusses matters related to materiality(key issues)Committees, etc.
Comprehensive Risk
Management Committee(Chairperson: President, Risk
Management Unit)
Other Committees, etc.

Coordination(Secretariat: Sustainability
Management Division)
Tokyo Century and Its Group companies

Contribution tosocial infrastructuredevelopment• Operation of Hotel Indigo
Karuizawa• Driving assistance service, anadvanced telematics Drive
Doctor, that uses driving datato contribute to road safety

Discusses and reports on the deliberations
at the Sustainability Committee and theManagement Meeting

Sustainable
resource use

Implement sustainability initiatives

Enhancement of work environment, leading to strengthening of human resources• IT equipment refurbishment
operations of CSI Leasing,Inc., and TRY Corporation• Introduction of Career Challenge
Program as internal recruitment
system• Aircraft life cycle management operations centered on
Aviation Capital Group LLC
and GA Telesis, LLC• Implementation of TC Biz Challenge
Project as new business proposal system• Administration of employee awarenesssurveys30TOKYO CENTURY CORPORATION

31

INTEGRATED REPORT 2021

5 Transition from Era of Ownership to Era of Use—Sustainability Management at the Tokyo Century Group

Initiatives to Address Climate Change
Endorsement of TCFD Recommendations

Scenario analyses were performed using two scenarios released by the International Energy Agency, one projecting global warming of 2 ºC
above preindustrial levels by the end of the century (2 ºC scenario) and another projecting global warming of 4 ºC above preindustrial levels(4 ºC scenario).

Tokyo Century announced its endorsement of the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD) in April 2021. In addition, based on a

3 Business Impact Assessment

risk materiality assessment related to climate change, we identified climate change risks
and opportunities under multiple scenarios and conducted qualitative and quantitative business impact assessments forour environment and energy businesses (solar power generation) in line with TCFD recommendations. We have also
defined the measures that will be used to address these risks and opportunities and disclosed information thereon.

Strategy—Scenario Analysis of Climate Change-Related Business Risks and Opportunities
1

2

Risk Severity
Assessment
Market andtechnology
changes

Reputation

Government
policy and Physical risks
laws

1

3

4

Scenario GroupDefinition

Business Impact
Assessment

Definition ofCountermeasures

Scenarios projecting global
warming of 2 ºC and 4 ºC
above preindustrial levels by
the end of the century

Business impacts• Input costs• Revenue• Supply chain• Business suspension• Timing

Countermeasures• Business model reform• Portfolio reform• Investments in capabilities and technologies

Risk Severity Assessment

Risks and Opportunities in Environment and Energy Businesses (Solar Power Generation)
Only items that were assessed as “Large” in regard to the potential business impact of the associated risks and opportunities are shown below.
Subcategory

Transitionalrisks

Physicalrisks

Business impact
Indicator

Risks

Opportunities

Carbon prices

Expenditures

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.

Recycling regulations

Revenue,
expenditures

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.

Subsidy policies including
renewable energy

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 emission reduction policy
may be adopted, and the feed-in tariff
program may provide opportunities forbusiness expansion over the long term.

Changes in energy mix(including energy demand)

Revenue

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

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

Spread of renewable energy Revenue,
assetsand energy-saving
technologies

Declining the value of equipment and power
generation costs of power generation facilities may intensify competition with othercompanies.

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

Intensification of abnormal
weather events

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 land and other assets.

The development of resilient equipment
through the accumulation of expertise
may lead to new opportunities via theexternal supply of this equipment.

Revenue,
expenditures

2 Scenario Group Definition

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. As a result, we arrived at the outlook that the cost of physical risks would amount to anincrease of approximately ¥400 million in non-life insurance costs under the 4 °C scenario and approximately ¥300 million under the 2 °C
scenario. Furthermore, we ascertained that Tokyo Century would be able to maintain business profitability under both scenarios even if thepurchase price for renewable energy drops to ¥7/kWh (Source: “Price Target”: Fundamental Review of FIT Program and Renewable Energy
Policy Reconstruction, Agency for Natural Resources and Energy, April 2019). The analysis results under the 2 °C scenario show a highexpectation for profit growth through the capture of opportunities due to projected increases in non-fossil value and opportunities in the
renewable energy businesses. The impact of both physical and transitional risks on the overall portfolio of the Group was limited in this
scenario analysis. Based on the results of these scenario analyses, however, we will continue to strive for sustainable growth by strengthening our resilience to climate change and taking advantage of business opportunities.

4 Definition of Countermeasures
As a result of the scenario analysis, the following countermeasures have been defined to mitigate risks and capture opportunities fromclimate change.
Risks

Targets of measures

Concrete measures

Environment and energy
businesses(Solar power generation)

Profitability
improvement

Increasing profitability by improving facility efficiency

Prevention of sales
decline after end of
FIT program

Expanding into non-FIT projects

Capturing of newopportunities

Examining renewable energy businesses other than solar power generation–Strengthening asset management
Maximizing power generation efficiency through accumulated asset management expertise–Developing new businesses in areas such as corporate power purchase agreements,
self-wheeling models, and virtual power plants (VPPs)–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 businessmodels–Discovering new needs through the use of secondhand solar panels, for example, by entering
the recycling 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 and for assessing thecost reduction benefits of these initiatives. This undertaking will take advantage ofthe energy infrastructure insight of Tokyo Gas Engineering Solutions Corporationand 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.

Mega solar power plant in Kurokawa District,
Miyagi Prefecture

Detailed Disclosure Based on TCFD Recommendations
Please refer to the following website for detailed disclosure based on TCFD recommendations related to topics such as governance, strategies, risk management, and metrics and targets.

https://www.tokyocentury.co.jp/en/csr/environment/tcfd.html

32

6

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

Strengthening of Response to
Critical Issues under New Fourth
Medium-Term Management Plan

Positioning of New Fourth
Medium-Term Management Plan

Seven Pillars of Business Strategies

Collaboration with NTT
GrowthStrategies
Progress

The New Fourth Medium-Term Management Plan has guided Tokyo Century in developing a solid, high-quality businessportfolio centered on the provision of financial services, which are the drivers of its growth. Examples of these services canbe seen in the seven pillars of our business strategies. At the same time, we have sought to bolster our management foundations with a focus on reinforcing consolidated management, fostering human resources with an emphasis on diversity,

Past

FY2009—FY2019

GrowthStrategies

First to Fourth Medium-Term
Management Plans
Build platform for growthFirst:

Progress

Present

FY2020—FY2022

New Fourth Medium-Term Management Plan
Basic Strategies

Review and Successes

Establish a global
platform for stable1business, including
viable businesses

Engaged in various co-creative businesses withNTT and other prime partners, strengthened data
center and other businesses expected to see
demand growth in the United States and India

Build a solid,
2 high-quality
business portfolio

Reinforced risk management system centered on
newly established Investment Management
Committee

Became a comprehensive financial services
company focusing on assets
Changed company name, pursued viable business initiatives

Build a managementbase supporting the3
improvement ofcorporate value

Fourth:KPIs

Third:

Raised asset efficiency and steadily worked
toward sustainable growth

Conducted growth investments focused on sevenpillars of business strategies, established DX
Strategy Division to guide creation of new businesses utilizing digital technologies

Targets for FY2022

Ordinary income		

Net income attributable to owners of parent

130.0 billion ¥ 80.0 billion¥

Shareholders’ equity ratio

12%			

12%

Human Resource
Strategies
P.36

Develop businesses contributing
to the SDGs and ESG issues

 ommencement of corporate PPA businesses and self-wheeling models together with consolidated
C
subsidiary Shinko Real Estate Co., Ltd.

 einforcement of initiatives for popularizing electric vehicles and otherwise promotingR
decarbonization
 romotion of digital transformation in car rental business and creation of new mobility services
P
together with partners

Progress onclusion of business alliance agreement eying mobility as a service (MaaS) business withC
ZENRIN CO., LTD.

Aviation Business Centered on ACG
GrowthStrategies
ProgressResumption of growth in preparation for recovery in domestic travel demand and airline funding needs
Integrated operation of aviation business with Aviation Capital Group LLC (ACG) and GA Telesis, LLC
 upport for growth of ACG utilizing growth investment facilities of Japan Bank for International
S
Cooperation and other institutions
Increase in number of deliveries of newly built fuel-efficient narrow-body aircraft

Real Estate Business
GrowthStrategies
Progress

Promotion of collaboration with partner companies in urban redevelopment and other projects
Expansion of investee channels in the United States and other overseas markets
Joint acquisition of the hotel and events hall to be built in TOKYO TORCH with Mitsubishi Estate Co., Ltd.
Entry into the data center development business with Mitsubishi Estate in the United States

Collaboration with Advantage Partners Group

ProgressPlan for joint investment of ¥30.0–¥40.0 billion with Advantage Partners GroupIdentification of diverse needs related to business succession, business carve-outs, and response toparent-subsidiary listingAcquisition of all shares of Q’sai Co., Ltd., together with Advantage Partners and euglena Co., Ltd.
Acquisition of energy storage device and system business from Showa Denko Materials Co., Ltd.

Global Business Centered on CSIManagement Philosophy

Risk Management
P.64

GrowthStrategies

ROE

Financial Strategies
P.42
Creation of a sustainableeconomy and society evelopment of corporate power purchase agreement (PPA) businesses and utilization of feed-inDpremium system with focus on solar power generation business expertise and coordination with realestate business

Auto Business Centered on Nippon Rent-A-Car Service

GrowthStrategies

Management Componentsof New Fourth
GovernanceMedium-Term
P.54
Management Plan

Participation in data center business in India together with the NTT GroupInvestment in major taxi dispatch app business operator Mobility Technologies Co., Ltd.

Second:Incorporation of projects for NTT Group companies through co-creation with NTT TC Leasing

Start of joint operation of solar power generation company with NTT Anode Energy Corporation

Shaping the Next Decade

Expanded business domain into promising
growth fields

Accumulation of assets at equity-method affiliate NTT TC Leasing Co., Ltd.

Environment and Energy Businesses

enhancing the risk management system, and strengthening corporate governance. Through this approach, we are building
frameworks for improving corporate value over the medium to long term.

 xpansion of collaborative businesses in growth fields such as digital technologies, mobility, andE
global businesses

Business Strategies
P.44

Digital Strategies
P.34

GrowthStrategies
Progress

Response to globally growing needs for IT asset disposition services
Expansion of share in high-latent-demand Asian market
 xpansion of regional scope of operations at CSI Leasing, Inc.’s (CSI), ITAD service subsidiaryE
Executive Personal Computers, Inc.
Establishment of a new base for CSI in Japan to expand Asian operating base network

33

34

TOKYO CENTURY CORPORATION

35

INTEGRATED REPORT 2021

6 Strengthening of Response to Critical Issues under New Fourth Medium-Term Management Plan

Transformation of Businesses
with Digital Technologies

VisionTokyo Century continues to build upon existing growth businesses while exploring new

Targetbusiness domains in its four operating segments for realizing profit-making businesses
under the next medium-term management plan.

Realization of profitmaking businesses under
the next medium-term
management plan(fiscal 2023 and beyond)

Basic Policies
Tokyo Century has defined business transformation with digital technology as one of the key themes and policies forstrengthening its management foundations under the New Fourth Medium-Term Management Plan. Accordingly, we arepromoting digital transformation (DX) for harnessing digital technology to enhance corporate value and bolster competitive-Transformation of existing businesses
Creation of new businesses

Establishment of DX Strategy Divisionness and to drastically revise existing systems to accelerate digital innovation.

Creation of New, Competitive Business Domains

1

2

3

4

Innovate corporate
culture, organization,and processes

Improve productivity
through innovation

Transform existing
businesses

Create new
businesses

Construction of platforms from long-term perspective
to achieve earnings contributions during the period of
the next medium-term management plan

Collaborative Project with Shimizu Corporation

Collaborative Smart Building Project Utilizing Shimizu’s
DX-Core Building Operating System and the Company’s
TCplats Comprehensive Subscription Service Platform

Digital Transformation Promotion System
Tokyo Century has maintained a consistent focus on the utilization of digital technologies, which
has been reflected in its initiatives. As a result, we have been selected for inclusion in the Digital
Transformation Stock Selection (DX Stocks) program—jointly organized by the Ministry of
Economy, Trade and Industry (METI) and the Tokyo Stock Exchange—for seven consecutive
years since the establishment of the program (including its previous incarnation as the Competitive IT Strategy Company Stock Selection). In December 2020, the DX Strategy Division wasestablished for the purpose of further systematizing these digital transformation initiatives andfor developing a digital transformation promotion system that conforms to the Digital Governance Code formulated by METI.
Promotion of DX with partner companies that represent our strength

Acquisition of certification as
DX-certified operator advancing superior initiatives under
METI’s DX Certification system

Continued external solicitationof proactive DX initiatives

Partnership
Strategy

tor platform Plug and Play Japan tocreate innovation with partners andstart-up companies

Conversion of unrivaled domestic

Utilization of
DX Certification
Systemsubscription service platform
provider Bplats into equity-method
affiliateOngoing research and development

Planning and Developmentof New Business Models
with Bplatsof business platforms in collaboration with Bplats as initiative supporting future business strategies

Joint planning of new businessmodels that flexibly respond tocurrent business environment

Overview of DX-Core

nology for achieving sophisticated building operations. This is accom-

Cloud-based
building OS

plished by linking various types of building equipment, including
air-conditioning equipment, lighting, cameras, access management systems, elevators, automatic doors, robots, and digital signage, as well as

Signageservice applications regardless of their developer. DX-Core provides the

Smartphones

hub function that links these various types of building equipment andapplications. We are working with Shimizu to promote the digital transformation of building operations by utilizing the TCplats platform for pay-

CamerasAccessmanagement
systems

RobotsAutomateddistribution

Air-conditioning
equipment
Lighting

ment, billing, and transaction management that we are developing jointly

Virtual reality

with Bplats, Inc. Specific methods of linking these systems and concrete

Safety monitoring

Automatic
doors

Building OS

Elevators

initiatives are currently being discussed between the two parties.

ロゴパターンとカラー表示色

Alliance with leading global accelera-Evaluation for certification

looking at Tokyo Century’svarious successes in improving operational efficiency

Shimizu Corporation’s DX-Core building operating system is a core tech-

DX-Core

01

基本形
・ 単体用

基本的に単体で使う場合はこちらを使用する。

・ サービス名・ルビ併記用

Collaborative Project with the Omron Group

WEBなどで記載する場合はこちらを使用する。

パワーコンディショナ定額貸出サービス

グラデーション0°

Launch of POWER CONTINUE Joint Fixed-Price Solar Power
Conditioner Rental Service

パワーコンティニュー

グラデーション0°

Together with OMRON Social Solutions Co., Ltd. (OSS), Tokyo Century provides the POWER CONTINUE fixed-price
その他の表示色・ ネガティブ表示・グレースケール表示
power conditioner rental service. This service was designedof operators of low-voltage
open-air・ ポジティブ表示to address the needs

solar power plants seeking to limit the expenses and generation losses that could result from sudden system issues.
With this service, power generation business operators can increase generation output with no initial costs while freeing
themselves from the costs of repairing or replacing power conditioners. OSS is responsible for the equipment exchange
and maintenance procedures associated with the service while the Company provides financial services related to the
ロゴマークカラー

ロゴタイプカラー

equipment as well as its TCplats comprehensive subscription service platform.
C：100% M：80% Y：30% K：0%

C：70% M：20% Y：30% K：0%

C：60% M：0% Y：100% K：0%

C：50% M：0% Y：100% K：0%

C：0% M：0% Y：0% K：100%

R：0% G：67% B：124%

R：68% G：160% B：174%

R：111% G：186% B：44%

R：143% G：195% B：31%

R：37% G：30% B：28%

DIC：254

DIC：418

DIC：2549

DIC : 2545

DIC：582

36

TOKYO CENTURY CORPORATION37

INTEGRATED REPORT 2021

6 Strengthening of Response to Critical Issues under New Fourth Medium-Term Management Plan
Bolstering of Management Foundations

Strengthening of Human Resources to
Support Growth over the Next 10 Years

Targets of New Fourth Medium-Term Management Plan
Major Measures under New Fourth Medium-Term Management Plan
Measures

Progress

Recruitment ofdiverse human resourcesTokyo Century continues to position the recruitment and cultivation of talented human resources capable of helping enact
its Management Philosophy as a central component of human resource strategies while advancing them in an integrated
manner with management strategies. Specifically, we are recruiting and cultivating human resources with the specialties

Development of
global human resources

necessary for engaging in collaborative ventures with partner companies. At the same time, we have been expanding ourhuman resource systems to improve employee motivation and to facilitate diverse workstyles. In order for the Company tocontinue to grow while adapting to changes in the operating environment over the next 10 years, it will be necessary tofoster human resources who can boldly tackle new challenges without fear of failure. Moreover, we will need to develop a
corporate culture that empowers such human resources to proactively contribute in order to heighten employee engagement.

1

Development programs forheightening expertise and businessexecution capabilities

2

Human resource systems that
support autonomous skills development
Accommodation of diverse workstyles andenhancement of work–life balance support
systemsDiverse training programs based on resultsof individual characteristic analyses

Introduction of internal recruitment systems to
support self-driven career development (Career
Challenge Program)Training and career consultation forsupporting career plansE nhancement of programs for cultivating
global human resourcesImprovement of treatment of junior employees
and expedition of promotion to management
positionsDevelopment of management position
candidates and promotion of diverse
human resources roactive recruitment of new graduate and mid-career hires
PRevision of practices for positioning new graduate hires
Introduction of referral hiring system
Online training on the SDGs held with participation by 16 employees fromJapan and total of five employees from Singapore, Indonesia, and Malaysia inorder to build upon cross-border, cross-business human resource exchanges

Revision of human resource
systems to accommodate
workstyle reforms

Introduction of Career Challenge Program

Improvement of
employee engagement

 ormulation of measures based on employee awareness survey results
F
Ongoing use of 360-degree evaluations

Improvement of Employee Engagement

Career Challenge Program

Measures Based on
Employee Awareness
Survey Results

The Career Challenge Program is an internal recruitment initiative inwhich divisions and branch offices seeking to recruit human resources
disclose the requirements of the relevant positions, so that the positions can be filled from among internal applicants (14 employees havebeen relocated through this program as of April 1, 2021).

In Tokyo Century’s fiscal 2019 employee aware-

Message from Career Challenge Program User

ness survey, a large number of comments werereceived requesting the cultivation of an environment for supporting cross-business andHuman Resource
Strategies

cross-functional personnel relocations and theinvigoration of planning activities. This feedback
prompted us to introduce two initiatives—the
Career Challenge Program and the TC Biz
Challenge Project. Through these initiatives, we
aim to provide employees with opportunities tobe placed in positions where they can fully
utilize the skills that they have acquired throughself-driven development schemes, thereby

3

Cultivation of workplace environment that empowers all officers
and employees
Initiatives for ensuring peace of mind
for employees and their families

4

Human resource recruitmentemphasizing diversity
Initial positioning respecting desiresof new graduate hiresC ultivation of workplace environmentthat supports tangible feelings of growthP romotion of diversity by empowering
female employees, hiring non-Japaneseemployees, etc.

Entrenchment of atmosphere conducive
to free and open voicing of opinionsR ecruitment of highly specialized
professionals

fostering a corporate culture in which the autonomous decisions of individual employees arerespected.

Akiko Matsumoto
Sustainability
Management Division

Before using the Career Challenge Program, I
was positioned in the Company’s Ship Finance
Division. One day, a partner explained to me
the Poseidon Principles, a financial institution
initiative for combating climate change risks inthe maritime industry. This experience mademe realize the importance of guiding ourbusiness activities based on an understandingof trends pertaining to the SDGs and to ESG
factors, prompting my decision to apply to the
Sustainability Management Division. The
Career Challenge Program is truly an appealing
initiative as it gives us the opportunity to think
about our own careers, tackle new challenges,
and pursue growth all while remaining in thesame company. This is not Tokyo Century’s
only effort to empower employees in thismanner: it has also implemented a number ofother initiatives for this purpose over the past
couple of years, and employee satisfaction
seems to be on the rise as a result.

TC Biz Challenge Project
The TC Biz Challenge Project is a new business proposal initiative
supporting employees’ efforts to tackle new challenges without fear of
failure (a total of 36 proposals have been submitted to date, three of
which have reached the final stage of judging).

38

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

39

6 Strengthening of Response to Critical Issues under the New Fourth Medium-Term Management Plan

Diversity
Discussion

Tokyo Century’s Initiatives for Empowering Female Employees

The Tokyo Century Group promotes
diversity and inclusion for the purposeof fostering a workplace environment
conducive to the contributions of employeeswith diverse backgrounds, thereby
developing an organization that capitalizes
on the diversity of every employee.

Development of a Corporate Culture
That Gives Everyone the Confidence to
Chase Their Ambitions

one will often find that the experience they have accu-

Communication of Importance of Diversity
and Inclusion by Management

mulated thus far will guide their bat to a hit.
Kashiura : There is a tendency for women to feel as

Kashiura : Promoting diversity and inclusion (D&I)

though the hurdle for promotion to a management

throughout the organization will require the Company

position is too high. In fact, it is still quite common forto recruit and develop diverse human resources as partme to reach out to female employees and suggest thatof its growth process. This is a fact that management

they put their talents to work in a management position,needs to continue to communicate.

to step up to the plate, but once there with bat in hand,

only to have them shy away from the opportunity.

Tokyo Century appointed its first female director in

I too have felt this way in the past. However, thisfiscal 2021. This is a positive development and one I

changed when you, Ms. Hara, were a speaker at a semi-

believe has served to spread awareness regarding D&I.

nar arranged by Nikkei, Inc. At this seminar, you statedGoing forward, it would be ideal for the Company tothat nothing will change if you do not step up to thefoster a corporate culture in which members of theplate. Repeating these words in my head helped allevi-

lesbian, gay, bisexual, transgender, and queer/question-

Hara : Fostering awareness regarding the contributions

ate my anxieties and convince me to take up a positioning (LGBTQ+) community, for example, are viewed asof female employees requires the development of aas general manager. You might feel hesitant to be

workplace environment in which everyone, regardlesscalled a role model, but I cannot deny that you and thecompletely normal by everyone.
Hara : Promoting D&I requires ongoing attention toof gender, recognizes the existence of unconscious

respect I have for you were important sources of moti-

matters such as amplifying the voices of women,biases and works to eliminate these biases. There arevation for me. Seeing you speak to people from over-younger employees, and non-Japanese employees.

unfortunately still some men who hold biases against

seas on an equal footing was an inspiration, and part ofAppropriate delegation of authority is imperative to thiswomen, such as that they should not be worked too

the reason I have come this far is because I have beenprocess. When it comes to brainstorming and businesshard or that all-women teams have trouble getting
along. Similarly, there are still cases in which womenfollowing in your footsteps.
Hara : I appreciate your kind words. It is also true to say

feel unconfident when provided with an opportunity due

there are many who feel that assuming a management

to factors including having convinced themselves that

position means increased responsibility with few ben-they lack leadership skills.

efits. However, if one actually steps up to management,

Such sentiments must be addressed at the Companywide

they will find themselves privy to a much greaterlevel. At the same time, it is important to ensure thatvolume of information, making it easier to get a full viewfemale employees have a strong desire to take advan-of their company. Moreover, the ability to take part intage of the opportunities afforded to them. I believe

formulating strategies will also make one’s work morethat you, Ms. Kashiura, are a good example with thisenjoyable and stimulating. I want more people to recog-

regard. It is only natural to feel uneasy when first asked

nize these benefits of joining management.

Mahoko Hara

Atsuko Kashiura

Senior Managing Executive Officer
Executive Chairperson, Aviation Capital Group LLC

General Manager, Structured Finance Division

Mahoko Hara joined The Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho
Bank, Ltd.), in 1987. She then moved on to join Citibank, N.A., in 2000,
where she engaged in structured finance and asset finance. Thereafter,
she took part in structured credit product development at Shinsei
Securities Co., Ltd., before joining Tokyo Century in 2011. She became amanaging executive officer at Tokyo Century in 2016 and assumed theconcurrent position of executive chairperson of U.S. aircraft leasing
subsidiary Aviation Capital Group LLC in 2019. Ms. Hara now resides in
Newport Beach in the United States. She received her current title in2020. A focus of her work has been empowering and elevating theposition of women inside and outside of Tokyo Century.

Atsuko Kashiura joined the former Tokyo Leasing in 1996, where she
was assigned to the corporate marketing division of head office (equivalent to the large enterprise arm of a corporate business division in the
Equipment Leasing segment under the current organizational structure). In 1999, she transferred to Tokyo Leasing’s international businessdivision and began working on the development of lease programs for
global vendors. She later entered the Structured Finance Division in
2003, assuming a position in debt transactions and securitization,
guarantees, and other trade finance services. In 2014, Ms. Kashiura
became a member of the Investor Relations Division, where she worked
on public relations activities such as advertisements and press
releases, eventually rising to the position of deputy general manager,
overseeing investor relations and all other aspects of the division’s
activities. It was in 2021 when she assumed her current position as
general manager of the Structured Finance Division.

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TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

41

6 Strengthening of Response to Critical Issues under New Fourth Medium-Term Management Plan

Diversity Discussion—Tokyo Century’s Initiatives for Empowering Female Employees
I believe that management’s mission
directives, I feel that it is important to develop frame-

opportunities to build their skills while they are still newworks in which senior management does not decideso that they can gain a wide range of experience andeverything, but rather in which employees of different

heighten their capabilities.

ages and backgrounds are given a chance to join the

New employees often need to focus on more method-

discussion. Steadfast efforts with this regard are also

ical work. At the same time, however, it is important toimperative to helping management understand the true

share as much information as possible within the orga-reason why D&I is so important.

nization so that employees can understand the reason-should be to communicate to stakeholders
its vision of a corporate culture that is
accepting of diversity.
Mahoko Haraing behind management decisions. I refer to this as

Creation of New Businesses
by Amassing the Individual Strengthsof Fostered Professionals

having a “flat organization,” and I look to help develop
such an organization by fostering an environment inwhich everyone recognizes the meaningfulness of their

Hara : Tokyo Century’s business is growing increasingly

work within the Company’s overarching vision.
Kashiura : I am the general manager of the Structured

sophisticated, and is thus coming to require greater

Finance Division. The greatest mission of my division islevels of creativity. It is therefore now more importantto create new businesses. One venue for these efforts

than ever to foster professionals who can fully exercise

was the TC Biz Challenge Project* established in fiscal

their individual strengths. For this reason, I think that

2020. Many members of the Structured Finance

the Company should provide employees with various

Division submitted proposals through this initiative, andeach of these proposals was mindful of the need tocontribute to the realization of an environmentallysound, sustainable economy and society and of the
SDGs. This fact highlights how Tokyo Century’sManagement Philosophy has become entrenchedthroughout the Company.

in a lot of opinions being offered largely from newer
employees. Thus, I feel that such an environment
enables employees to exercise their individual
strengths. I aim to inspire every employee to have theirown opinion, hone their thinking skills, and use theseskills to contribute and then drive the creation of new
businesses by amassing the resulting individual
strengths. This is the approach I will take toward contributing to the growth of Tokyo Century.
* A new business proposal initiative supporting employees’ efforts to tackle newchallenges without fear of failureManagement’s Mission of Fosteringa Corporate Culture That Is Open to
Diverse Opinions

We have also begun examining peripheral projects

Even if a company promotes diversity and assembles

arising from said project, and a project team compris-

Hara : The operating environment is changing at ana team of diverse human resources to promote diversity,

ing members of differing ages and ranks has been

increasingly rapid pace. Responding to this change

it will only bleed talent if strong interpersonal relation-assembled for this purpose. I believe that fostering an

requires organizational mobility and flexibility. It is thus

ships cannot be forged within the organization. Thus,

environment in which it is easy to voice opinions results

crucial to develop an organization that is open to

more important than anything is the cultivation of adiverse opinions and in which everyone can act as aculture of mutual acceptance. Fortunately, Tokyo

professional and enjoy their work. It is also importantCentury has a staff of relatively well-mannered individu-

for a company to put forth a clear vision and to shareals, meaning that the groundwork for achieving real

the overarching frameworks of this vision with all

inclusion is already in place. I am convinced that a

I aim to develop an environment in which

employees. This requires members of senior manage-

better Tokyo Century can be achieved if management

everyone can fully exercise their strengths

ment like us to play a consistent role in communicating

continues to communicate the importance of inclusion

information.
Kashiura : Recently, management has been consistently

while everyone works to foster an atmosphere ofso that these individual strengths can beamassed to create new businesses.
Atsuko Kashiuracommunicating the importance of contributing to themutual acceptance.
Hara : I think you are spot on. A corporate culture that isaccomplishment of the SDGs. This communication

open to diverse opinions will give rise to lively debates

takes the form of an ongoing relay of information fromand subsequently innovation. Moreover, if employees

management to division and branch office heads, andfeel that working at Tokyo Century lets them participate

then from division and branch office heads to the teamin the process of creating new and exciting businessmembers below them. The concept of “leave no one

opportunities, they will feel pride in their organization.

behind” is an important underlying principle for the

For this reason, I believe that management’s mission

SDGs, and I fully believe this principle coincides with theshould be to communicate to stakeholders its vision of aconcept of inclusion.

corporate culture that is accepting of diversity.

42

TOKYO CENTURY CORPORATION43

INTEGRATED REPORT 2021

6 Strengthening of Response to Critical Issues under New Fourth Medium-Term Management Plan

Strengthening of Financial Base

Shareholder Returns

and liquidity were continued in fiscal 2020. These mea-

In fiscal 2022, the final year of the New Fourth Medium-Termsures included shifting from short-term procurement meth-Management Plan, we target a shareholders’ equity ratio ofods, such as commercial paper, to long-term procurement

12% coupled with ROE of also 12%. The bolstering of capital

measures and expanding commitment lines. Long-term
fund procurement was centered on corporate bonds, andROE and Cost of Shareholders’ Equity

equity based on factors such as the expected rate of return

will be imperative to accomplishing these goals; therefore,

Tokyo Century has achieved industry-leading levels ofof stock markets. We have maintained a cost of sharehold-we feel that our target payout ratio of 30% for the final year

the Company floated a ¥130.0 billion issue of hybrid bonds

return on assets (ROA) and return on equity (ROE) throughers’ equity of around 9%, indicating that ROE has remainedof the plan represents a realistic level of shareholder returns.

(unsecured subordinated bonds) and a ¥60.0 billion issue

the expansion of its business domain via co-creation withabove cost of shareholders’ equity.

business partners and through M&A activities. In fiscal

As for fiscal 2021, we plan to pay an annual dividend ofof unsecured straight bonds. In addition, U.S.-based aircraft¥143 per share, an increase of ¥5 per share compared withleasing subsidiary Aviation Capital Group LLC issued senior

the previous fiscal year. This amount was calculated based

unsecured notes totaling US$1.0 billion, further increasing

on the Company’s forecast for net income attributable to

the Group’s presence in the direct financing market. As asharp year-on-year drop in earnings centered on the car

Improvement of Corporate Valueand Balance Sheet Management

owners of parent of ¥60.0 billion and its target of approach-result of these efforts, the long-term funding ratio increased

rental and aviation businesses that was attributable to the

The price-to-book ratio has remained constantly above 1.0

ing a payout ratio of 30%. In addition, we aim to maintain a

10.7 percentage points year on year, to 78.3%.

COVID-19 pandemic. We anticipate a certain degree oftimes. The Company’s relatively high level of ROE isstrong trend of annual dividend increases in fiscal 2022,

In principle, subsidiaries procure their own funds based

recovery in these businesses in fiscal 2021, and we arethought to be a significant factor behind this trend. Going

based on our target payout ratio of 30% and prefaced onon the characteristics of their respective businesses andthus projecting that ROE will once again climb above 10%

forward, we will work to improve corporate value by pursu-

the accomplishment of our target for net income attribut-

markets, although we also provide parent-to-subsidiary

based on our forecast for net income attributable toing higher levels of ROA through appropriate risk-taking

able to owners of parent of ¥80.0 billion for fiscal 2022.

loans as necessary.

owners of parent of ¥60.0 billion, which will represent an

and investments in growth businesses, increasing earnings

Going forward, Tokyo Century will continue to be guided

The status of fund procurement across the Tokyo

per share, and consistently generating ROE that exceeds

by its basic policy of providing stable, long-term returns toCentury Group is reported to management via the Assetcost of shareholders’ equity.

shareholders as it seeks to ensure a balance between

Liability Management Committee, which deliberates anddecides on policies for funding and hedging market risks,

2020, ROE fell below 10% for the first time since the 2009
merger, settling at 8.7%. This outcome was the result of aincrease of 22.1% year on year.
As for fiscal 2022, the final year of the New Fourth
Medium-Term Management Plan, we will target ROE ofGiven the recent increase in co-creative ventures with

undertaking investments in promising businesses and

12%, which we expect to achieve as the operating environ-business partners and large-scale M&A activities, there isreinforcing its financial base in a consistent effort toincluding interest rate and foreign exchange risks. We arement takes an upswing due to factors such as the accel-

also a need to strengthen the Company’s financial base.

steadily improve the payout ratio.

exercising extra care in managing liquidity risk in view of

eration of COVID-19 vaccination rollouts and as we expand

Accordingly, Tokyo Century will seek to strike a balance

the growing ratio of foreign currency-denominated fundour co-creative initiatives with business partners.

between investments in growth businesses, the strength-

procurement accompanying our business expansion andening of its financial base, and the rebuilding of its equity

Status of Fund Procurement

minus weighted average cost of capital) is monitored regu-

during the period of the New Fourth Medium-Term

The Tokyo Century Group’s funding balance (interest-bear-

Furthermore, the Company is strengthening its fundlarly for all four of Tokyo Century’s business areas, and cost

Management Plan while also practicing balance sheet

ing debt) stands at approximately ¥4.3 trillion as of Marchprocurement base by actively incorporating SDGs financing.

management based on an optimal capital structure.

31, 2021. This figure is relatively unchanged from a year

For example, we executed a sustainability-linked loan withbasis. The Company calculates cost of shareholders’earlier, although measures for improving funding stability

sustainability performance targets in March 2021.

Price-to-Book Ratio Source: Bloomberg

Long-Term Funding Ratio

Interest-Bearing Debt

%Billions of yenThe return on invested capital (ROIC) spread (ROICof shareholders’ equity is calculated on a consolidated

Times%


2.0

20

80

5,000

67.6

78.3

60

1.5

10

51.5

8.7%

1.27

51.7

3,000

40

times*

1.0

2,810.7
1,178.7

3,041.2

1,799.9

1,713.9

2,478.3

2,567.0

2020/32021/3

1,250.4

2,000

2009/3

2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3* Closing price on June 30, 2021

04,280.9

020

0.5

4,278.2
4,000

11.5%

Tokyo Century
Average for major leasing companies
ROE

M&A projects in recent years.

0

2018/3

2019/32020/32021/31,000

1,632.0

1,790.80

2018/3

2019/3

Indirect fund procurement

Direct fund procurement

447TOKYO CENTURY CORPORATION45

INTEGRATED REPORT 2021

Strategies by Operating
Segment and Progress

Equipment
Leasing

Mobility & Fleet
Management

Specialty
Financing

International
Business

Financial services optimally matched to needs

Auto leasing for both corporate customers

Aviation, shipping, environment and energy,

Leasing and auto service businesses developed throughof capital investments in information andand individuals, car rental services, and otherreal estate, principal investment, structured

global network encompassing more than 30 countries

communications equipment

auto services

finance, and other businesses

and regions centered on North America and Asia

Social Contributions through Business Activities

Social Contributions through Business Activities

Social Contributions through Business Activities

Social Contributions through Business Activities

Contributions to development of ICT-powered education
environments through support for introduction of education-use tablets at schools by the Tokyo Century Group

Targeting of creation of new auto services through collaborative projects with new partner ZENRIN CO., LTD., in addition to existing partnerships

Development of Hotel Indigo Karuizawa, scheduled to openin spring 2022, together with InterContinental Hotels Group
PLC

Truck-related financial services offered by U.S. subsidiarythat support e-commerce market

Characteristics

Characteristics

Characteristics

Characteristics• Diverse leasing business solutions and services• Full lineup of auto leasing, car rental, and other comprehensive auto services• Highly competitive financial services offered throughcollaboration with industry-leading business partners• Diverse financial services offered through global network• Co-creative businesses advanced together with prime
partners

Balance of Segment Assets

Ordinary Income / ROA

Billions of yenBillions of yen

%

1,800

35

2.5

750

2.0

21

1,500

Balance of Segment Assets

Ordinary Income / ROABalance of Segment Assets

Ordinary Income / ROA

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

%

25

5.0

2,500

50

5.0

600

600

20

4.0

2,000

40

4.0

480

12

1.5

450

15

3.0

1,500

30

3.0

360

9

1.5

14

1.0

300

10

2.0

1,000

20

2.0

240

6

1.0

7

0.5

150

5

1.0

500

10

1.0

120

3

0.5

0

0

0

0

0

0

30.4
2.1

1,489.1
28

1,200

629.5

11.5

900
600
300
0

2019/3 2020/3 2021/3• Highly competitive fair market value (FMV) leases provided
by CSI Leasing, Inc.

• Next-generation mobility services accommodating
mobility as a service (MaaS), electric vehicles, etc.

0

2019/3 2020/3 2021/3

Ordinary income

ROA

2019/3 2020/3 2021/3

0

1.8

2019/3 2020/3 2021/3

Ordinary income

ROA

2,184.7

2019/3 2020/3 2021/3

0

38.3

1.8

2019/3 2020/3 2021/3

Ordinary income

ROA

Balance of Segment Assets

Ordinary Income / ROA

Billions of yenBillions of yen

%

15

2.5

483.1

2019/3 2020/3 2021/3

0

2.1
10.7

2019/3 2020/3 2021/3

Ordinary income

ROA

Distribution of Segment Assets (Fiscal 2020)
Equipment Leasing 31%

Mobility & Fleet Management 13%

Specialty Financing 46%

International Business 10%

2.0

0

46

TOKYO CENTURY CORPORATION47

INTEGRATED REPORT 2021

7 Strategies by Operating Segment and Progress

Equipment
Leasing

Growth Strategies

Strengths

Broadcustomer baseWe will contribute to the creation of asustainable economy and society by

Evolution of “Finance×Services×
Business Expertise”
concept

Culture of constantly
tacking challenges
in new businessareas

“Finance × Services × Business Expertise” approach forresponding to diversifying and changing customer needs

accelerating efforts to increase value inCo-creative businesses with NTT Group, Fujitsu Limited,

the leasing business and expand partner-

Nippon Express Co., Ltd., and other prime partners

Opportunities

ships utilizing digital transformation.

Expansion of businesses in new fields by enhancing relationships
with prime partners
Rising demand for environmental value driving growth in decarbonization-related businesses
Growth of subscription services and other next-generation financial services that merge digital transformation with leasing andfinance businesses

Risks

Business risks associated with expansion into new businessfields extending beyond boundaries of finance

Koichiro SatoManaging Executive Officer
President, Equipment Leasing Business Development Unit

Governance risks arising in conjunction with growth of Group
companies
Rising concern for credit risks in conjunction with prolongation of
COVID-19 pandemic

businesses, we aim to create new services and businesses founded on models such as subscription services.

In our core leasing business, we aim to expand the func-

Our growth strategies will be advanced through a con-tionality and boost the value of our solutions and services

certed effort by all employees to help realize a carbon-freeso that we can continue responding to the diversifying

society, accomplish the goals of the SDGs, and otherwiseneeds of customers. We are also ramping up efforts tocontribute to the resolution of social issues while also

take part in renewable energy projects and to refurbish

achieving sustainable growth in the Equipment Leasing

end-of-lease properties in order to contribute to the cre-segment over the long term.

ation of an environmentally sound, sustainable economy
and society.
Another focus is co-creative businesses advanced

Business Value Maximization Initiatives

together with our prime partners to boldly expand into new
business fields and thereby achieve robust yet sustainable

New business areas
entered throughpartnerships

growth. For example, we launched new co-creative businesses with the NTT Group and Nippon Express Co., Ltd.,in fiscal 2020. Furthermore, we will enhance consolidated
management of the Tokyo Century Group, including existing affiliates, to maximize the earnings of the Equipment
Leasing segment.

Organic businessvalue growth

Leasing andinstallment

At the same time, digital transformation is being accelerated to maximize the value of related businesses. By
merging digital technologies with leasing and financesales

Promotion of digital transformation
Expansion of customer base and channel network

Quest to Create an Environmentally Sound,
Sustainable Economy and Society

Overview of New Fourth Medium-Term Management Plan

Boost value of leasing business and adapt to digital transformation
Boost value of leasing business and accelerate business co-creationC reate new business domains in response to digital transformation
Optimize organization and improve operational efficiency to suit changes in business style
Successes of New Fourth Medium-Term Management Plan
Boosting of leasing­business value

 orporate power purchase agreements: Installed solar panels on roof of Seishin
C
Works of Kawasaki Heavy Industries, Ltd., and concluded industrial in-house generation system support service contract through collaboration with Kyocera
Communication Systems Co., Ltd.

Tokyo Century is expanding collaboration with prime partners in
the environment and energy field. Going forward, we will work to

OUR MATERIALITY

Contribution to decarbonized society

contribute to the creation of a sustainable society through efforts
to resolve environmental and social issues.
New Joint Businesses

Corporate power purchase agreements

 ubsidies: Took advantage of COVID-19 supply chain subsidies ahead of leasingS
industry peers; achieved industry-leading number of acceptances
 ubscription services: Commenced collaborative project utilizing DX-Core building operating system develS
oped by Shimizu Corporation and Tokyo Century’s TCplats comprehensive subscription service platform

Co-creative
businesses stablished NTT TC Leasing Co., Ltd. (50% ownership by Tokyo Century), as jointEventure with NTT Group through business carve-out of leasing and global operationsof NTT Finance Corporation
 stablished NITTSU Lease & Finance Co., Ltd. (49% ownership by Tokyo Century),Ethrough business carve-out of leasing operations of Nittsu Shoji Co., Ltd.

Operational
optimization


Installed
teleworking systems in response to COVID-19 pandemic; promoted shift to paperless operations bylaying groundwork for electronic contracts and utilizing lease expiration system

Solar power generation business of
Fifth Japan Solar Power Company LLC

Digestion gas (biogas)
power generation business of
TC Tsukishima Energy Solution LLC

48

TOKYO CENTURY CORPORATION49

INTEGRATED REPORT 2021

7 Strategies by Operating Segment and Progress

Mobility & Fleet
Management

Strengths

Robust productlineup

We are providing new mobility services,
including those that further the popular-

Connected,
business process
outsourcing andother high-quality
services

Collaboration
with diverse
business partners

Complete, industry-leading lineup of mobility services­(individual and corporate auto leasing, car rental, and otherization of electric vehicles (EVs), throughservices)

unrivaled service quality and collaboration

Collaboration with NTT Group, ITOCHU Group, and other diverse

with diverse business partners.

business partners

Growth Strategies

services that respond to the evolution of automotive tech-

The operating environment for the Mobility & Fleet

cars, and to diversifying mobility demand. Furthermore,Management segment is undergoing a once-in-a-century

efforts are being accelerated to create new mobility ser-transformation driven by advances in automotive tech-vices and improve operational efficiency by harnessing

nologies and the diversification of methods of automobile

digital technologies. Through these initiatives, we seek touse. On the service front, meanwhile, entries from othercreate new earnings opportunities while leveraging ourindustries are making it a common occurrence to see therelationships with prime partners. Such partners include

creation of businesses that deliver value differing fromprior partners like the NTT Group and the ITOCHU Group

industry conventions or based on new ideas. In this envi-

as well as new partners such as major taxi dispatch appronment, we are operating our business based on a policy

business operator Mobility Technologies and major mapof weathering this time of great change by continuing tosolutions provider ZENRIN.

nologies, such as those related to EVs and connecteddevelop high-quality services while simultaneously creat-

Risks

Opportunities

ing high-value-added businesses based on new ideas.

Masato Osugi

Popularization of EVs and other decarbonization initiatives
Utilization of digital transformation to improve customer convenience and operational efficiency
New automotive businesses that leverage automotive data
Intensifying, cross-industry competition due to increasing entry
into mobility fieldRapid depression of fleet value and fluctuations in prices of used
vehicles due to spread of EVs and other next-generation vehicles
Reduced travel demand due to COVID-19 pandemic

Expansion of Auto Service Businesses through Partnerships

Launched in fiscal 2020, the New Fourth Medium-Term

CASE/MaaSManagement Plan puts forth the key words of digital,

Eco-friendly

mobility, and EV. We are engaged in a variety of initiatives

Next-generation mobility

based on these key words. For example, we are ramping
up efforts to contribute to a carbon-free society by targeting reduced fuel consumption of vehicles through efforts

Smart distribution

Prime Partners

Smart cities

to promote the spread of EVs and other electrified vehicles
with high environmental performance and to provide edu-

Digital Technologies

cation on safe driving techniques. We are also deploying

Mobility

EVs

Managing Executive Officer
President, Mobility Business Development Unit

Overview of New Fourth Medium-Term Management Plan

Grasp changing times as opportunity to pursue mobility services that go one step further
Enhance customer value and brand power with unrivaled service quality
Take innovative initiatives for new era
Pursue channel and segment strategies aimed at expanding business base
Strengthen Group management systems to support business expansion
Successes of New Fourth Medium-Term Management Plan
Co-creative
businesses oncluded capital and business alliance agreement with Mobility Technologies Co., Ltd.,
C
which operates a taxi dispatch app business, and developed new mobility services in
preparation for spread of mobility as a service (MaaS), automated driving, and smart cities
 oncluded business alliance agreement with map solutions provider ZENRIN CO.,C
LTD., and advanced co-creation of new solution services in MaaS, smart city, anddigital transformation fields to contribute to regional invigorationEVs romoted introduction of EVs at NTT Group, which has joined EV100* initiative, andPcommenced trial of support program for companies considering EV introduction
together with Tokyo Gas Co., Ltd., at Nippon Car Solutions Co., Ltd.

Quest to Create an Environmentally Sound,
Sustainable Economy and Society
The Mobility & Fleet Management segment strives to contribute to a
decarbonized society. To this end, we are working to help vehicles

OUR MATERIALITY

Contribution to decarbonized society

utilize fuel and electricity more efficiently by promoting EVs and otherelectrified vehicles with high environmental performance, providing education on safe driving techniques, and encouraging
the introduction of telematics systems and drive recorders. In addition, we are expanding use of car rental services, a typeof car-sharing service, to facilitate more efficient vehicle use. Efforts for promoting electrified vehicles are being advanced
alongside the Tokyo Century Group’s initiatives to promote the spread of renewable energy. Education on safe driving techniques and efforts to encourage the introduction of telematics systems and drive recorders will serve as a conduit for
helping reduce traffic accidents and thus will contribute to the development of social infrastructure. At the same time, welook to contribute to the sustainable, cyclical use of resources by growing use of car rental services.
Popularization of EVs andother electrified vehicles
Transformation of vehicles(Massive reductions in CO2 emissions)

Promotion ofsafe driving lessons

Promotion of telematics
services and drive recorders

Transformation of driving methods(Fuel-and electricity-efficient driving)* A global initiative by The Climate Group bringing together companies committed to accelerate the shift toelectric transport

Digitaltransformation

 eleased smartphone app with car rental reservation and other functions for increased customer
R
convenience, redesigned online car rental reservation website to cut back on associated administrative work, and implemented operating and workstyle reforms to improve efficiency based on data
analysis at Nippon Rent-A-Car Service, Inc.

Contribution to a decarbonized society

Promotion of renewable energy (Groupwide initiatives)

Expansion of car rental
service users
Transformation of vehicle use(Vehicle sharing)50

TOKYO CENTURY CORPORATION51

INTEGRATED REPORT 2021

7 Strategies by Operating Segment and ProgressSpecialty
Financing

Growth Strategies

Strengths

Collaboration
with prime partners

Leading renewableenergy businesses
in Japan

Personnel withexpertise andinnovative spirit

We are leaping beyond
expectations and pursuing

Highly competitive financial services provided together with
Mitsubishi Estate Co., Ltd., Kyocera Corporation, Advantage

professionalism to further

Partners Inc., and other prime partners

refine our business.

Specialized global staff supporting sophisticated business in all

Risks

Opportunities

asset classes

Keiichiro Ogushi
Deputy President, Director and Executive Officer
President, Specialty Finance Business Development Unit

Rising demand for carbon neutrality in renewable energy
businessesIncreased demand for data centers and distribution facilities inreal estate businesses igher business succession and carve-out demand in principalH
investment businesses

Fluctuations in energy output caused by major natural disasters

Overview of New Fourth Medium-Term Management Plan

Further refine businesses with expertise and creativity
Maximize value chain in collaboration with partners
B uild organizational platform and infrastructure in accordance with global standards
Develop new businesses in response to changes in operating environment
Ensure post-merger integration and governance of acquired companies
Successes of New Fourth Medium-Term Management Plan
Aviation and shipping

Renewable energy

Real estate

Principal investment

 inanced SOx scrubbers (exhaust gas desulfurization units) to help
F
protect marine environments
Supported liquidity of Aviation Capital Group LLC through use of growthinvestment facility from Japan Bank for International Cooperation andother institutions
 ncouraged real estate-holding customers to install solar panels
ECommenced corporate power purchase agreements and self-consignment leveraging synergies between
real estate and solar power generation businesses together with Shinko Real Estate Co., Ltd.
 ook part in TOKYO TORCH (Tokiwabashi area development project inTfront of Tokyo Station) and U.S. data center business together with
Mitsubishi EstateParticipated in Uchisaiwaicho 1-chome area development projectin Tokyo cquired all shares of Q’sai Co., Ltd., together with Advantage Partners and euglena Co., Ltd., for purpose ofA
increasing Q’sai’s corporate value as first joint investment with Advantage Partners

NTT Group in all divisions of Specialty Financing

In fiscal 2021, the focuses of the Specialty Financing seg-

segment

ment will include pursuing new growth by responding toAdvancement of real estate business initiatives

changes in the operating environment in the post-

together with partner companies; exploration of new

COVID-19 world. Another focus will be deepening ties withbusiness models through the provision of one-stop

partners and aggressively advancing wide-ranging initia-

service for real estate together with Shinko Real Estate

tives in environment and energy and new businesses withand close domestic and overseas partners

strong connections to ESG factors and to the SDGs. TheseImprovement of generator performance and expansion

initiatives will be part of our efforts to prepare for the final

outside the Company through enhanced asset manage-

year of the New Fourth Medium-Term Management Plan.
Specifically, we will revise our business road map

ment at solar power plants
Continuation of integrated operation of Aviation Capital

toward a carbon-neutral state and refine business portfo-

Group and GA Telesis, LLC, with both companies boast-lios and strategies in all product lines to grow the Specialty

ing sophisticated aviation business operation expertise;

Financing segment.

efforts to return to a growth track while monitoringEstablishment of a dedicated principal investment divi-

trends in the aircraft market in light of the significant

sion; commencement of full-fledged business invest-

impacts of the COVID-19 pandemic

ment initiatives with Advantage Partners

Development of business structures for efficient asset
management given new workstyles and optimal work
environments as a result of the COVID-19 pandemicLong-term stagnancy in aviation business growth due to COVID19 pandemic
 nexpected changes in aviation, shipping, and real estateUmarkets

Expansion and reinforcement of coordination with theQuest to Create an Environmentally Sound,
Sustainable Economy and Society
Joint Solar Power Generation Business withNTT Anode Energy, Future Coordination, and Outlook

OUR MATERIALITY

Contribution to decarbonized society

In accordance with the basic agreement concluded in March 2020,
Tokyo Century transferred a portion of the equity of EnergyGate, Co., Ltd., to NTT Anode Energy Corporation and commenced a joint business with this company.
With strong support from NTT Anode Energy, weare bolstering the earnings of this business by
expanding our renewable energy asset portfolio, sharing expertise, and increasing generation efficiency. We
are also taking part in new businesses, such as storage battery systems and biomass power generation,
while pursuing synergies between NTT Anode Energy
and Tokyo Century through concerted efforts involving
other products in Specialty Financing and other operating segments.
The Company has engaged in environment andenergy businesses with numerous partner companies.
We will continue our efforts to resolve environmental
and other social issues and thereby contribute to thecreation of a sustainable society.

52

TOKYO CENTURY CORPORATION53

INTEGRATED REPORT 2021

7 Strategies by Operating Segment and Progress

International
Business

Growth Strategies

Strengths

Unrivaled
global network

We are developinga circular economy

Alliances withprime Japanese
partners and­promising local
companies overseas

High-quality
leasing services
provided by CSI
Leasing, Inc. (CSI)

Specialized, high-value-added services and alliances with prime
Japanese companies, promising local companies in overseas

by utilizing our unrivaled

markets, and financial institutions

global network.

Expansion of fair market value (FMV) leasing, IT asset disposition (ITAD) services, and other high-quality consulting services

Toshio Kitamura

Risks

Opportunities

provided by CSIManaging Executive Officer

Expansion of 5G, Internet of Things (IoT), and other digital technology markets
Needs for remote working environments and other peripheralservicesIncreasing information security needs
Global economic stagnancy due to prolongation of COVID-19
pandemic
Country, credit, and interest rate increase risks
Fluctuations in global power balance

President, International Business Development Unit

IT asset managed services, FMV leasing, and ITAD services that capitalize on its strengths.

The spread of 5G, IoT, and other digital technologies is

Other efforts include ongoing acceleration of joint credit-

moving forward at an accelerated pace. Such advances

ing mechanism (JCM) projects that are highly compatible

have led to a rise in demand for IT equipment stimulatedwith the aspirations of the SDGs, the expansion of transac-

by the popularization of teleworking amid the COVID-19

tions with Japanese companies through internal andpandemic and e-commerce market growth. In this environ-external collaboration leveraging our unrivaled global net-

ment, it is important to furnish swift responses to thework, and extensive coordination among overseas

needs arising from such market trends coupled withsubsidiaries.
The source of our competitiveness in these undertak-efforts to increase business continuity.
The 3Rs (reduce, reuse, and recycle) are central to theings is employee motivation and engagement. To heighten

leasing business; thus, this business is thought to be aemployee motivation and engagement, the Company hassustainable and cyclical business. A major theme for the

introduced performance-linked compensation systems at

International Business segment in 2021 will be the expan-

overseas subsidiaries while also recruiting CEOs for thesesion of the business of CSI, a company that boasts

companies locally and taking other steps to cultivate andstrengths in comprehensive life cycle management ser-promote diverse human resources.

vices. The network of this company was augmented with

Global Base Network

the establishment of an Indian base in November 2020,

City with CSI base
City with Tokyo Century base
City with both CSI and Tokyo Century bases

and we will continue to expand its Asian network andoperations. We will also work with existing overseas subsidiaries to accelerate the generation of synergies within
the Tokyo Century Group and thereby reinforce earnings
foundations.
In addition, Tokyo Century began investing in the data
center business, which serves a rapidly growing market,
through a joint project with the NTT Group. We are also
developing a diverse range of other businesses, including

Overview of New Fourth Medium-Term Management Plan

Respond to expansion of digital economy and mobility revolution
Collaborate with excellent companies through strategic alliancesP ursue broader and deeper businesses related to FinTech and automobiles

Quest to Create an Environmentally Sound,
Sustainable Economy and Society

Successes of New Fourth Medium-Term Management Plan
United StatesAsia chieved record-breaking ordinary income of US$75 million at CSI, more than tripleA
fiscal 2015 level, making for strong compound annual growth rate of 27% sinceinitial investment in fiscal 2015
More than doubled ordinary income at AP Equipment Financing, Inc., with a figureof US$7 million, by capitalizing on sharp growth in U.S. truck financing demand
seen in response to e-commerce market growth
Acquired Work Truck Direct, Inc., a truck and arbor equipment dealer serving threewestern U.S. states; began pursuing synergies between dealership and finance
operations

Start of the JCM Eco Lease Scheme

OUR MATERIALITY

The JCM Eco Lease Scheme was launched in 2020 for the purpose ofContribution to decarbonized society eveloped joint data center business with NTT Group in India
DExpanded CSI’s Asian operations and established CSI bases in India and Japan
Converted BPI Century Tokyo Lease & Finance Corporation (joint venture leasing
company with major Philippine bank, Bank of the Philippine Islands) and moved
ahead with business restructuring
Engaged in Philippine renewable energy supply project as representative participantthat became Tokyo Century’s first project in JCM Eco Lease Scheme

able energy to a shopping mall in the Philippines. The

encouraging the use of the Financing Program for Joint Crediting
Mechanism (JCM) Model Projects. This scheme subsidizes lease payments, as opposed to investment costs, to allow
users to receive leases with better terms and conditions. Moreover, the related procedures have been simplified with theaim of more efficiently promoting the popularization anddeployment of carbon-free technologies. The first project
selected for this scheme was a project for supplying renew-

Overview of JCM Eco Lease Scheme
Local power
generation company

Company is the representative participant in this project,which will be advanced together with our branch in thePhilippines. Going forward, we will continue to proactively
take part in and expand joint JCM projects through partnerships with Japanese and overseas partners.

Power
supplyLease contract(JCM Eco Lease)

Leasingcompany54

8

TOKYO CENTURY CORPORATION

Corporate Governance
2. Management Structure

Evolution of Tokyo Century’s Corporate Governance System
Recognizing that effective corporate governance is a key management concern for maximizing corporate value, Tokyo Century
endeavors to create a sound and highly transparent management structure that facilitates accurate decisions and swift responses tochanges in the operating environment.

Tokyo Century’s management structure centers on the Board of Directors and the Board of Corporate Auditors. Its executive
officer system accelerates management strategy decisions and continuously strengthens supervision and operational execution. The Company has one female officer among its 30 executive officers.
Chairperson

Number ofMembers

Meetings Heldin Fiscal 2020

Board ofDirectors

Makoto Nogami

13

12

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 by prevailing laws and regulations, the Articles of Incorporation, and rules governing theBoard. It also supervises the execution of operations bydirectors and executive officers.

Board ofCorporate
Auditors

Futoshi Okada

48

The Board of Corporate Auditors meets regularly and executes independent and fair audits of the compliance andappropriateness of corporate activities, including the performance of duties by directors and executive officers.

Management
Meeting

Makoto Nogami

11

Once a week,
in principle

The Management Meeting deliberates on particularly important matters concerning the execution of operations andmakes decisions for the entire Group.

Transaction
Evaluation
Meeting

Ko Nakagawa

10

Once a week,
in principle

The Transaction Evaluation Meeting discusses and makes
decisions about major business transactions being considered by Tokyo Century and Group companies as well astransactions that warrant complex risk analysis.

President & CEO,
Representative Director

Overview

1. History of Strengthening Our Corporate Governance System
Over the past decade, Tokyo Century has implemented various measures to separate the executive function from the oversight function and otherwise strengthen its corporate governance system.
Details• Appointment of an external director
2015 • 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
2017 • Number of external directors increased (from two to three)2018 • Number of external directors increased (from three to four)
eparation of the Nomination and Compensation Committee into two entities: the Nomination Committee and the• SCompensation
Committee
2011• Number of external directors increased (from four to five, external directors represent at least one-third of all directors)
2019 • System reforms implemented, including the appointment of external directors as chairpersons of the Nomination Committee
and the Compensation Committee

2019

2021

55

INTEGRATED REPORT 2021

Standing Corporate Auditor(External Corporate Auditor)

President & CEO,
Representative Director
Managing Executive Officer

Internal Control and the Corporate Governance System (as of July 1, 2021)
Shareholders’ Meeting• Number of internal directors reduced (from 15 to 13) • Shift to system incorporating diversity

Composition of the Board of Directors (as of July 1, 2021)

Coordination

Initiatives for better exercising the functions of
the Board of Directors and for promoting diversity

Measures for achieving these objectives were
examined, leading the Company to reduce thenumber of internal directors by two while continuing to have external directors represent at least
one-third of all directors. In addition, a female
external director was appointed for the first timein line with efforts supporting greater diversity in
our corporate governance system. We will continue working to improve the functionality of theBoard of Directors.

External
Directors

38%(5)

Composition of theBoard of Directors(Total of 13 directors)

Internal
Directors

62%(8)

Appointment /Dismissal

Audit

Board of Directors

Company Counsel

ReportNomination Committee
and Compensation
Committee

Coordination

Appointment /Dismissal / Supervision

Audit

Risk Management Division

Coordination

Independent Auditor

to Japan’s Corporate Governance Code.

Auditors(Board of Corporate
Auditors)
Coordination

were included among the important themes put
forth for fiscal 2020, a step ahead of the revision

Appointment /Dismissal

Appointment /Dismissal

Appointment

Audit Unit
Audit

President & CEO

ReportDirection /SupervisionInternal Audit
Evaluation ofInternal Control
Audit

Chief Compliance Officer

Management Meeting
Transaction Evaluation Meeting

Executive Officers

Appointment /Dismissal / Supervision

Operation Headquarters / Business Headquarters
Group Companies

ReportCommittees• ALM Committee• Internal Control Committee• Comprehensive Risk Management
Committeeetc.

56TOKYO CENTURY CORPORATION57

INTEGRATED REPORT 2021

8 Corporate Governance
Evolution of Tokyo Century’s Corporate Governance System

4. Diversity of Directors

3. Committees
Meetings Heldin Fiscal 2020

Name

PurposeNomination
Committee

Primarily consists of independent directors, advises the Board of Directors, deliberates on the nomination of candidates for director and corporate auditor positions, and reports to the Board of Directors

8Compensation
Committee

Primarily consists of independent directors, advises the Board of Directors, discusses matters such as
directors’ compensation systems and policies, and reports to the Board of Directors

4

Asset Liability
Management (ALM)
Committee

Discusses matters relevant to managing market, liquidity, and other risks in order to identify andminimize the exposure of assets and liabilities to risks, including fluctuations in interest and foreign
currency exchange rates, and reports to the Management Meeting

4Internal Control
Committee

Discusses general internal control matters, including evaluation of the effectiveness of the financial
reporting system, and scope of evaluation to ensure the internal control system functions effectively
and reports to the Management Meeting

3

Comprehensive
Risk Management
Committee

Discusses matters such as construction of the risk management system and approaches to measuring risk and also periodically assesses the Company’s risk exposure and reports to the Management
Meeting

4

Credit Risk Management
Committee

Discusses matters including the Group’s credit portfolio as a whole and credit risk management andreports to the Management Meeting2

IT and Administration
Strategy Management
Committee

Discusses matters including IT strategy, IT investment plans, and administrative system plans ofTokyo Century and Group companies and reports to the Management Meeting3

Sustainability
Committee

Reports important matters related to the Group’s sustainability activities to the Board of Directors;
plans, promotes, and oversees the Group’s sustainability activities; discusses important issues related
to sustainability; and reports to the Management Meeting

2

Composition of Committees (Directors) (as of July 1, 2021)
Position

Name

Chairperson,
Representative Director

Shunichi
Asada

President & CEO,
Representative Director

MakotoNogamiDeputy President,
Representative Directorand Executive Officer

Masataka
YukiyaExternal Director

Masao
YoshidaNomination
Committee

Compensation
Committee

Chairperson
ALM
Committee

Comprehensive
Credit Risk
Internal Control Risk
Management
Committee
Management
Committee*
Committee*

IT andAdministration
StrategyManagement
Committee

YukitoHigaki
Akio
Nakamura
ToshioAsano
Miho
TanakaDeputy President, Directorand Executive Officer

Akihiko
Okada
Keiichiro
Ogushi

Director and Senior
Managing Executive Officer

KoichiBaba

Director and Managing
Executive Officer

TatsuyaHirasakiDirector

Toshihito
Tamba* Managing Executive Officer Ko Nakagawa serves as the chairperson of the Comprehensive Risk Management Committee and the Credit Risk Management Committee.

Tokyo Century aims to appoint a diverse team of directors in order to strengthen the frameworks for ensuring effective
oversight and advisory functions for the Board of Directors. To facilitate this effort, a skills matrix detailing the skills of internal and external directors has been prepared and approved by the Board of Directors.

Director Skills Matrix (as of July 1, 2021)
Specialization
Position

Name

Age

Chairperson,
Representative
Director

Shunichi
Asada

72

President & CEO,
Representative
Director

MakotoNogami67

Deputy President,
Representative
Director andExecutive Officer

Masataka
Yukiya65

Masao
Yoshida72

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

YukitoHigaki

58

President of Imabari
Shipbuilding Co., Ltd.

Akio
Nakamura

65

Former director-generalof the Financial Bureau,
Ministry of FinanceToshioAsano

68

Former president andrepresentative director of
Asahi Kasei Corporation

Miho
Tanaka46

Partner of Shiba & Tanaka
Law Offices

AkihikoOkada

61

Keiichiro
Ogushi60

Director and Senior
Managing Executive
Officer

KoichiBaba

60

Director andManaging Executive
Officer

TatsuyaHirasaki53

Director

Toshihito
Tamba

71

MemberSustainability
Committee

External Director

Deputy President,
Director andExecutive Officer

Background

Corporate
Management

GlobalOperations

Legal Affairs /Finance
Risk Management

Accounting /Taxation

58

TOKYO CENTURY CORPORATION59

INTEGRATED REPORT 2021

8 Corporate Governance
Evolution of Tokyo Century’s Corporate Governance System

5. Director Appointment Policies
Policies for the Nomination of Director Candidates
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 andto the improvement of medium- to long-term corporate value based on expertise, extensive knowledge, or abundant experi-

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

Important Themes for Fiscal 2020

ence 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

Reinforcement of control and oversightfunctions for subsidiaries and affiliates

2

Deepen discussion on Board’s oversight functions and continue to explore
Composition of Board of Directors, including
ideal ratio of internal and external directors and gender and global aspects ofgiving consideration to issue of diversity
diversity

Nomination Committee is chaired by an independent external director and the majority of its members are independent
external directors.

Reasons for the Appointment of New Directors

Bolster monitoring of investee companies in view of growing business risks
associated with large-scale M&A activities and investments implemented infiscal 20191

On July 1, 2021, the Company appointed two new directors: Miho Tanaka and Tatsuya Hirasaki.
Ms. Tanaka has abundant experience and extensive knowledge as an attorney-at-law, particularly in regard to corporate
legal affairs and M&A activities. Ms. Tanaka was appointed as an external director as it is expected that she will be able tocontribute to effective oversight of operational execution from an independent perspective based on her deep insight androbust experience.
Mr. Hirasaki has abundant experience and extensive knowledge gained in operational execution in fields including
accounting and corporate planning at Tokyo Century. Mr. Hirasaki was appointed as a director as it is expected 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.

6. Major Items Raised at Meetings of the Board of Directors in Fiscal 2020

Category

Generalmanagement

Officers

StocksESG

OthersItemtarget formulation and progress management• EMarnings
anagementfrom major subsidiaries• Discussions ofreports
stockacquisitions
sales and investments exceeding predefined amounts• Establishment of fund investment andlimits•of representative directors and directors with titles• ACppointment
ompensation
bonuses for directors• Appointment ofand
executive
officers•
ividend policies for consolidated subsidiaries• DInterim
dividends•of TCFD recommendations• ENndorsement
on-financial
key
performance indicators related to materiality• Report on Companywide
initiatives for improving employee engagement• Evaluation of Board of Directors'
effectiveness and report on evaluation• Details of Meetings of the Nomination
Committee and the Compensation Committee• Cross-shareholdings•of business plans, financial statements, etc.
• ANpprovalomination of director and corporate auditor candidates• Complianceinitiative plans and progress reports• Audit plans andreports• Establishment ofimplementation
DX
Strategy
Division•

Results of the Fiscal 2020 Effectiveness Evaluation
In fiscal 2020, the Board of Directors was deemed to be adequately and appropriately fulfilling its roles and duties, which are(1) providing overall direction by setting corporate strategies; (2) creating an environment conducive to appropriate risk-taking
by senior management; and (3) exercising highly effective oversight of senior management and directors from an independentand objective standpoint. Looking ahead, the Board of Directors will continue to discuss medium- to long-term management
strategies with appropriate consideration paid to the operating environment and circumstances related to the Company.
Highly Evaluated Areas

Major Issues for Fiscal 2021

1. Acceleration of initiatives for enhancing investment risk
management by clarifying investment continuation andwithdrawal standards and developing investee monitoringprocesses through establishment of investment management framework

1. Invigoration of discussions at meetings of theBoard of Directors
2. Discussions emphasizing cost of capital
3. Reinforcement of information-sharing systemsof Group companies
4. Promotion of diversity management

2. Improvement of diversity and balance of knowledge,
experience, and skills among members of the Board of
Directors by appointing female external director andreducing the number of internal directors to revise Board
scale based on discussions centered on Nomination
Committee regarding ideal structure and composition ofoversight functions

Measures for Addressing Major Issues for Fiscal 2021
Invigoration of discussions
at meetings of the Board of
Directors

Utilization of capacity for examining measures to continue invigorating discussions, including
revising proposal standards and meeting proceedings, and engaging in open discussions

Discussions emphasizing
cost of capitalContinuation of current practice of reporting policies for cost of capital and returns to the Boardof Directors as appropriate

Reinforcement of
Arrangement of opportunities for discussions between officers and employees of Group compa­information-sharing systems nies and external directors and further reinforcement of management frameworksof Group companies
Promotion of diversity
management

Acceleration of measures for promoting diversity, such as increasing the ratio of female managers

60TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

61

8 Corporate Governance
Evolution of Tokyo Century’s Corporate Governance System

8. Officer Compensation

9. 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

Point

by the Board of Directors after consulting with the Compensation Committee, which primarily comprises independent

The Audit Unit has been established as an independent organization under the direct control of the president and isexternal directors, and receiving advice from external experts.
Systems for director compensation are designed to raise director awareness regarding the enhancement of shareholder
value by aligning the interests of directors with those of shareholders through healthy incentives to contribute to the ongoing growth of the Company 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 the Company’s corporate value.
Compensation policies, systems, and levels are decided by the Board of Directors based on consultations with andreports from the Compensation Committee.
Compensation systems comprise basic compensation, bonuses, and stock options provided as non-monetary, stockbased compensation. Basic compensation, which is fixed compensation, is determined through a comprehensive consider-

Objective and Independent Audit Systemtasked with performing internal audits of Tokyo Century and Group companies. Internal audits are aimed at confirming the appropriateness of the Company’s systems, organizations, and rules; whether all business activities comply
with relevant laws and regulations and internal rules; and whether operating processes and the risk management
system work appropriately and rationally. Based on these audits, improvements are proposed and advice is provided
as necessary. As the Group expands its operations, risk profiles are becoming more sophisticated and complex.
Accordingly, Tokyo Century aims to conduct internal audits that are effective from a risk-based approach. Throughsuch 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.

ation 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 atapproximately 1.0:1.0–2.5 and is determined within this range by comprehensively taking into account achievements andperformance based on each director’s expected duties.
The Compensation Committee discusses matters regarding the compensation of individual directors, including whether
this compensation adheres to the defined policies. The president & CEO then decides individual compensation amounts
based on and in consideration of reports from the

1.0:

1.0–2.5

decided based on the defined policies.

Basic Compensation

Bonuses

The compensation of external directors and corporate

have in place independent audit units that perform audits at their respective companies. Audit plans and results arereported to the Audit Unit of the Company, which provides instruction and support as necessary.
The Audit Unit directly audits subsidiaries that do not have their own auditing functions.
Corporate Governance System for Major Subsidiaries

Compensation Committee. The Board of Directors therefore judges that compensation amounts have been

Audit System for Major Subsidiaries
Major domestic subsidiaries as well as major overseas subsidiaries Aviation Capital Group LLC and CSI Leasing, Inc.,

Stock Options as
Stock-Based
Compensation

Major Subsidiaries (Nippon Car Solutions Co., Ltd., Nippon Rent-A-Car Service,
Inc., Aviation Capital Group LLC, CSI Leasing, Inc., etc.)
Internal Control / Audits

auditors, who are in positions independent of operational

Audit Unit of Tokyo Century

execution, consists entirely of basic compensation based

Fixed Compensationon their roles. In addition, the compensation of corporate

Performance-Based

Coordination / Reports

Compensation
Determined based on comprehensive
consideration of duties, roles,
Distributed according toand responsibilities
achievements and performance

auditors is decided through deliberations among the corporate auditors within the defined limits.

Board of Directors and Management Meeting of Tokyo Century

Compensation and Eligible Officers
Total Compensation(Millions of Yen)

Directors(excluding external directors)

Officer Category

Total Compensation by Type (Millions of Yen)

Number of Eligible
Officers

Fixed Compensation

Performance-Based
Compensation

Non-Monetary
Compensation

699

320

194

184

11

Corporate auditors (excluding
external corporate auditors)

45

45

—

—

2

External officers

133

133

—

—

7

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, 2021, were 15 and 4, respectively, the above compensation amounts also include
payments to one director who retired on June 22, 2020.

Basic Audit Policy
Tokyo Century shall promote forward-looking audits that contribute to more sophisticated risk control and improved corporate value.
1. Audit quality shall be enhanced and audit personnel shall be cultivated to improve capacity for audits to assessorganizational and business risks.
2. Internal audits and information sharing shall be performed to prevent misconduct and scandals and to facilitate theimplementation of internal controls.
3. Instruction and support shall be provided to help growing domestic and overseas Group companies implement audit
systems, and coordination shall be practiced for this purpose.

62TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2021

63

8 Corporate Governance

Message from an External Director
I will lend my support toevolving corporate governanceat Tokyo Century to ensure that
the Company continues
to enjoy sustainable growthover the long term.
Masao Yoshida
External Director
Chairperson of the Compensation Committee

I voice suggestions at meetings of the Board of Directors from two perspectives: that based on my experience as acorporate manager and that based on my viewpoint as an outsider. Through this approach, I aim to help Tokyo Century
contribute to the realization of an environmentally sound, sustainable economy and society and achieve sustainablegrowth over the long term through its focus on the concept of “Finance × Services × Business Expertise.”Tokyo Century provides financial functions as well as various
businesses and services. I have experience as a manager of acompany also engaged in multiple businesses. Based on thisexperience, I try to pose questions to management from abusiness perspective. For example, Tokyo Century aspires
to contribute to the creation of an environmentally sound,sustainable economy and society and to achieve sustainablegrowth, and it is advancing initiatives to help accomplish the
Sustainable Development Goals (SDGs) in order to achieve
its objectives. Given that resources are finite, the efficient useof resources will be crucial to this undertaking. This need for
efficiency could be seen as an underlying principle for all­business activities. I remain always mindful of this fact whenvoicing opinions at Board meetings with the aim of confirming

whether or not the Company’s business plans are sufficiently
cognizant of this need. In the solar power generation business,for instance, this need manifests in whether the option of reuseis selected when it is time to dispose of end-of-life solar panels
and whether frameworks for minimizing disposal costs havebeen envisioned. These factors are incredibly important, and I
am rigorous in ensuring that they have been properly
considered.
Homogeneity is not necessarily beneficial to a company’s
management. For this reason, I look to also offer the viewpointof an outsider, alongside my business perspective, in mycapacity as an external director. A constant focus of mine isthus to inquire into the validity and rationality of proposals at
Board meetings from an objective standpoint.

The Company’s drive toward realizing sustainable growth over the long term will be supported by identifying materiality
as a set of key issues linked to the creation of an environmentally sound, sustainable economy and society and to theaccomplishment of the SDGs and by incorporating these issues into concrete plans.
I think it is important for companies to broaden their efforts
beyond simply maximizing profits to simultaneously find ways
to contribute to society through their business. A company
cannot remain sustainable over the long term if it does not do
this. Consideration for environmental, social, and governance(ESG) factors will be absolutely essential for this purpose.
Tokyo Century has identified its materiality as a set of key
issues that correlate with the SDGs selected based on theirdegree of impact on its management and on its quest to
create an environmentally sound, sustainable economy andsociety, and these issues have been incorporated into its
medium- to long-term plans. It is important that considerationof ESG factors and the SDGs does not stop with abstract
discussions; these factors and goals must be incorporated
into concrete plans coupled with key performance indicatorsand then matched with actions to accomplish the goals ofthese plans. I have great confidence that the scope and effectiveness of the Company’s plans will lead to long-term growth,and I aim to support the implementation of these plans to
my fullest.

Corporate governance at Tokyo Century is evolving steadily. The next step
will be to reinforce the governance systems of consolidated subsidiaries
and to strengthen systems for implementing management strategies.
I have been an external director at the Company
since 2017. Compared with when I first joined, theNomination Committee and the Compensation
Committee have evolved significantly in terms ofeffectiveness. Moreover, I have recently seen discussions at Board meetings lead to the development ofinvestment decision and withdrawal standards fromthe perspective of risk management. In this manner,
the Company’s corporate governance system isfunctioning effectively with regard to the implementation of management strategies.
Measures to continue evolving corporate governance will bevital to ensuring that Tokyo Century can continue to growsustainably over the long term. The influence of consolidated
subsidiaries’ performances on the Company’s earnings has
been rising as of late, meaning that reinforcing the governancesystems of consolidated subsidiaries is a significant matter.
Companies are run by people, and it is of utmost importancefor the management teams of consolidated subsidiaries topractice sound management as well. External directors are
currently limited in the extent to which they are able to visit
consolidated subsidiaries as a result of the COVID-19 pandemic.
I therefore look forward to visiting consolidated subsidiaries
both in Japan and overseas after the pandemic subsides toshare information on the issues faced by these subsidiaries.

A consensus regarding the importance of such face-to-faceinteractions has been seen at recent meetings of the Board of
Directors.
Next, I would like to talk about the effective use of employee
satisfaction and awareness surveys. One cannot deny that, if acompany hopes to achieve sustainable growth over the longterm, it must encourage its employees to feel an attachment totheir company. Tokyo Century has become more proactive inadministering employee satisfaction and awareness surveys
over the past couple of years as well as in implementing measures for improving employee awareness based on the resultsof these surveys. I feel that it would be incredibly effective if
the Company were to issue follow-ups to these surveys a few
years from now.

I will continue to offer input in my capacity as an external director to support Tokyo Century
in achieving sustainable growth over the long term.
There are two key concepts that I think will be important for
the Company to focus on in its pursuit of long-term sustainable growth. The first of these concepts is the combination ofdiversity. Tokyo Century got its start as a financial services
company, and it saw an increase in mid-career hiring of officers and employees in conjunction with the expansion of its
business scope thereafter. It is now home to a large number of
specialists from a diverse assortment of backgrounds, ranging
from real estate companies to shipping companies and airlines. In the future, efforts aimed at combining and merging
these diverse human resources and their diverse skills will be
crucial to the success of the Company. I am confident that the
combination of such diversity will give rise to unique businesses that create new value.
The second key concept is the reinforcement of global systems. Today, it is possible to receive information from anywhere in the world instantaneously, and global standards are
rapidly being developed against this backdrop. Meanwhile,
people live their everyday lives within their local communities.
Such a setting means that it is important to become increasingly mindful of both global and local circumstances. For thisreason, the Company needs to introduce non-Japanese people

into its management team and Board of Directors in order tocreate an environment that is conducive to the cultivation ofhuman resources who can excel on the global stage. The
development of plans for fostering future management candidates on a global scale will, at the same time, help create thegovernance systems required by globalization. These efforts
will be necessary if Tokyo Century looks to grow out of theshrinking Japanese market to become a player in the growing
global market.

To begin this process, Tokyo Century should assemble ateam of people, from both inside and outside the Company,
who resonate with its management vision and Management
Philosophy. It should then go on to seek out global management personnel who can contribute to its sustainable growthover the long term. Such an undertaking will not be easy, but
it is a challenge that I hope the Company will rise to.
With a focus on progress toward embracing these two concepts, I will continue to offer input in my capacity as an external director in order to help Tokyo Century move forward withefforts in this regard and to support the Company in achieving
sustainable growth over the long term.

64TOKYO CENTURY CORPORATION

65

INTEGRATED REPORT 2021

8 Corporate GovernanceRisk Management and ComplianceTokyo Century is reframing its approach toward

Risk Management

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
Ko Nakagawa
Managing Executive Officer
President, Credit Supervision Unitlosses to those oriented toward supporting the
maximization of corporate value.

Chief Compliance Officer (CCO)
President, Risk Management Unit
President, Legal Unit

Comprehensive Risk Management
Supporting Improvements in Corporate Value
Tokyo Century has been expanding its business domain
and providing solutions to social issues by creating uniquefinancial services that go beyond conventional leasing in abusiness environment free of regulatory constraints. Our
corporate culture drives us to take on the challenge ofdeveloping unprecedented businesses to create value in
new risk areas. The global COVID-19 pandemic createdrisks of so-called unexpected losses with regard to certain
elements of our business portfolio. Fortunately, Tokyo
Century’s effective approach toward comprehensive risk
management enabled us to take advantage of our multifaceted business portfolio to mutually compensate for any
shortfalls in given businesses, and we were thereby able toachieve a sufficient level of growth. This resilience has
been positively evaluated, leading to upward revisions to
the ratings outlooks for both Tokyo Century and Aviation
Capital Group LLC (ACG), our largest subsidiary, fromseveral external ratings firms, despite the current chal­lenging environment.
Our risk management approach continues to be focusedon strengthening visual risk management and enhancing
consolidated Group governance in Japan and overseas
through the use of consolidated enterprise risk management (ERM) and management information system (MIS)
measures.
The development of a sophisticated risk management
system is one of the key tasks in the New Fourth MediumTerm Management Plan. Efforts to address this key task

culminated in a new investment management framework
implemented in April 2020 to address the expansion of our
viable businesses. At the same time, we are constantly
bolstering our systems for managing non-financial risks inorder to meet various social expectations for environmental management, information security, crisis management,
and quality control.

Sound Operations Founded on Stringent
Risk Management and Strong Compliance
Imperative to an Innovative andCreative Company
To create new value and achieve sustainable growth as anentity that has an impact on society, a company must be
both durable and flexible. In other words, it must demonstrate resilience under both normal and unexpected conditions. Moreover, sound operations founded on stringent
risk management and strong compliance are imperative toan innovative and creative company like Tokyo Century.
Risk management requires considering Companywide
profits together with the rationality of the risks to be taken.
To ensure such management, Tokyo Century will effectively utilize its risk management framework while reviewing the status of its business activities as necessary andtaking on new challenges.
* The quality of being able to respond to changes in the operating environment byusing these changes to generate innovation from new solutions

Comprehensive Enterprise Risk Management
The Tokyo Century Group will continue to practice comprehensive
enterprise risk management (ERM) following its management
guidelines for capital use rates based on quantitative risk control
on a consolidated basis. The capital use rate is used to assess
risk resilience, which is an important criterion for rating financial
institutions. We have therefore sought to keep the risk amountwithin a certain level of capital buffers by adhering to the aforementioned management guidelines. As our business domain
continues to expand, the relationship between the amount of
capital and level of risk receives greater attention from investors
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 takepart in M&A activities, is also an important factor considered
under the risk management framework. Rather than adopting apassive approach to the soundness of corporate management,
we pay due consideration to the magnitude of increase in theamount of risk over a medium-term period of about three years,
the projection for organic increases in the shareholders’ equity
ratio from profit growth, and the level of tolerance of our capital
policy. In addition, the return on invested capital (ROIC) spread(ROIC less weighted average cost of capital) is regularly monitored as a cost-of-capital-based indicator of the risk and reward
balance of specific business areas.
Even amid the COVID-19 pandemic, we will continue to maintain the capital use rate at the appropriate guideline level while
securing sufficient growth potential.

 isual Risk Information Tracking at the Management
V
Level (MIS)
In addition to quantifying risks on a consolidated basis and controlling the capital use rate, we implement a visual MIS. Under the

Capital Use Rate Guidelines

A
Consolidated
economic capital

B
Total risk amountsystem, the Credit Risk Management Committee and theComprehensive Risk Management Committee take the lead in
regularly monitoring risk information on multiple criteria andreport the results to the Management Meeting and the Board of
Directors. One particular subject for regular reporting to the Boardof Directors is the key risk indicators (KRIs) established for nonfinancial risks (including those related to human resources, information security, accidents, compliance, and climate change) inlight of the increased importance of non-financial operationalrisks resulting from the expansion of our business scope.
In our global operations, we pay particular attention to ACG and
CSI Leasing, Inc. (CSI), our U.S.-based subsidiaries that specialize
in leasing and for which the scale of investment and assets isquite large. ACG has achieved success as a textbook example ofa resilient company made so through a unique risk management
approach that includes introducing a risk appetite framework toclarify the risks to be accepted, such as aircraft asset risks, andthe risks to be avoided (mitigated or transferred), such as interest,
liquidity, and foreign exchange rates. However, it is also importantto 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 ofTokyo Century. ACG and CSI were both large acquisitions, and wefeel that these companies are prime examples of effective postmerger integration.
The Company continues to appoint three members to theboard of directors of ACG, in which we have made our largest
investment to date, and to practice a business management
approach focused both on outward expansion and the reinforcement of internal frameworks. As a second line of defense, a risk
management framework has been established in coordination
with the Credit Supervision Unit and the Risk Management Unit ofhead office. To serve as a third line of defense, an independentinternal control framework has also been set up in coordination
with the Audit Unit. Physically visiting operating sites is not currently feasible due to the COVID-19 pandemic, but we maintainclose contact with local third-party audit firms and conduct consistent monitoring and sharing of certain risk information to
enable management members and directors to track the risks
inherent in the Group’s business portfolio in a time-sequential
manner.

Maintain guideline target while ensuring growth potential
through appropriate asset management and capital policy
100(%)

Guideline target(%)

VaR amounts(consolidated)for credit risk,
asset risk,
investment risk,
market risk,
operational risk, etc.

B/A

2018

2019

2020

2021

(FY)

66

TOKYO CENTURY CORPORATION67

INTEGRATED REPORT 2021

8 Corporate GovernanceRisk Management and Compliance

Major Risks and Management Approaches
Risk Category

Definition

Management Approach

Credit risk

Risk of losses from deterioration in the credit standing ofborrowers, includes project finance and country risk

Credit Risk Management Committee (credit risk measurement,
analysis), Transaction Evaluation Meeting (review of large projects
and new scheme projects, etc.), introduction of internal rating
system, country exposure management, etc.

Market risk

Interest
rate risk

Risk of losses from interest rate
fluctuations

Foreignexchange risk

Risk of losses from foreign currencydenominated assets and liabilities owing
to fluctuations in foreign exchange rates

ALM Committee (market risks such as fluctuations in interest rates
and foreign exchange rates, liquidity risk related to fund procurement); introduction of risk management tools such as hedge ratio,
maturity ladder, gap analysis, GPS (Grid Point Sensitivity), VaR, etc.

Liquidity risk

Risk of losses from difficulty in procuring funds or increasein funding costs owing to Company-specific factors; systemic risk of losses resulting from difficulty in procuring
financing owing to overall uncertainty in capital markets

Investment risk

EquityRisk of losses from factors such as
investment risk decline in prices or poor performance oflisted/unlisted equities, funds, venture
investments, REIT investments, etc.

Management Meeting and Board of Directors (policy and status ofinvestment in equities, etc.)
Comprehensive Risk Management Committee (investment risk
measurement)

Business
Risk of losses from investment activities
investment risk in specific businesses

Asset risk

Risk of losses from fluctuations in the value of real estate,aircraft, ships, automobiles, and other products as well as
losses resulting from operating businesses related to theseassets, includes risk of holding and investing in nonrecourse loans, equity investments, investment assets, etc.

Operational risk

Following 10 categories as non-financial risks identified formonitoringAdministration risk
Fraud risk
System risk
Information security risk
Legal risk
Employment management risk
Disaster risk
Regulatory and system change risk
Added in FY2020
Climate change risk
Reputational risk

Investment Management Committee

Established in FY2021(Investment screening, progress management, continuation/
withdrawal decision-making)Comprehensive Risk Management Committee (risk measurement,
monitoring status)

Administration risk and system risk: IT and Administration
Strategy Management Committee (preparation and operation of
IT strategy, IT investment, 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
Large-scale natural disasters and other crises:
Establishment of Crisis Management Rules, Business Continuity
Plan Rules, etc.; preparation and operation of BCP manual, safety
confirmation system, etc.
Other operational risks:Comprehensive Risk Management Committee (analysis and risk
measurement, countermeasure planning, non-financial KRI monitoring, etc.)

With respect to Group risk management, we mainly manage the following risks based on the characteristics of our business
operations.
Relationship between Major Group Companies and Main Risk Categories
Risk Category

Tokyo Century

Nippon Car
Solutions

Fujitsu
Leasing

NipponRent-A-Car
ServiceOrico Auto
LeasingHigh-weight risk category
Shinko Real Orico Business
EstateLeasing

Aviation
CapitalGroup

CSI
Leasing

TC
Skyward
Aviation

Credit risk

Investment Management Framework

Environmental Management

As the scope of Tokyo Century’s business expands, the number ofinvestment projects undertaken by the Company is growing and theassociated risks are becoming more complex. For the purpose ofeffectively controlling the diversifying investment risks and optimizing our business portfolio, we instituted a new investment management framework in April 2021. Primary focuses of this framework
include clarifying investment screening, continuation, and withdrawal
standards and developing standardized monitoring processes.
Under this framework, meetings of investment advisory committees will be held prior to discussions by the Management
Meeting as part of the process for screening investments of apredetermined scale, in order to confirm the anticipated level ofprofitability 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 withregard 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 thescenarios formulated at the time of their selection will be confirmed regularly. Should it become apparent that a project will not
be able to achieve its initial targets, discussions will be arranged
on whether investment will be continued.
This new investment management framework will be implemented going forward to facilitate the standardized managementof processes spanning from investment screening to monitoringand decisions of continuation or withdrawal. Through thisapproach, the Company will endeavor to enhance investment risk
management while accelerating the optimization of its businessportfolio.

Tokyo Century recognizes that helping address environmental
issues is part of its responsibility toward society. Based on thisrecognition, we have developed an environmental management
system, for which we have received certification based on ISO
14001, the international standard for such systems. This environmental management system facilitates ongoing improvements
through planning, implementation, and operation and confirmation of environmental initiatives based on a PDCA (plan–do–
check–act) cycle and regular management reviews of these
initiatives.
The Company’s Management Philosophy and Basic
Environmental Policy state that it will contribute to the creation ofan environmentally sound, sustainable economy and society.
Contributing to the environment through our business activities isimperative to accomplishing this goal. Accordingly, we have begun
conducing environmental impact assessments based on environmental impact assessment worksheets in order to confirm andtrack the impact of new projects in Japan on the environment.
Moreover, in fiscal 2020 climate change risk was introduced
as a new risk under the non-financial operational risk category
in reflection of the fact that climate change has the potential
to seriously impact management. The Comprehensive Risk
Management Committee reports to the Board of Directors on the
results of monitoring of related non-financial KRIs twice a year.

Overview of Investment Management Framework
Investment Screening
Quantitative standards
Qualitative standards
Withdrawal standards

Monitoring
Single-fiscal-year intervals, in principleConfirmation of conformity with quantitative and qualitative standards and applicability of withdrawal standards

Investment Standards

Progress Management

Market risk
Interest rate risk
Foreign exchange risk
Liquidity risk
Investment risk

Continuation

Equity investment risk
Business investment risk
Asset risk

Automobile

GeneralAutomobile
residual value

Automobile

Real estate

Aircraft

Generalresidual value

AircraftOperational 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.

Non-conformity with standards or applicability ofwithdrawal standards

Continuation/Withdrawal
Decision

Withdrawal

68TOKYO CENTURY CORPORATION69

INTEGRATED REPORT 2021

8 Corporate GovernanceRisk Management and Compliance

Information Security
Information Security Measures
Tokyo Century views information security as a crucial issue
affecting corporate management, rather than just being a task for
the IT Unit. Implementing necessary information security measures is essential for protecting the Company and its customers’
information assets from incidents of cyberterrorism such as
targeted attack emails, ransomware, and business email fraud.
The Company has obtained certification under ISO 27001, theinternational standard for information security management
systems. Under the leadership of the Information Security
Committee, we regularly revise regulations and rules regarding
information management, conduct regular risk assessments toaddress information security risks, and carry out surveys to evaluate effectiveness.
We also recognize the importance of all officers and employees
having a deep understanding of IT risks and taking necessary
measures in their daily activities in addition to building a strong
information security system encompassing both tangible andintangible elements. Accordingly, information security training anddrills for handling targeted attack emails are regularly conducted
to improve the information security awareness of all officers andemployees.

Cybersecurity Measures
The TC-CSIRT (computer security incident response team)has been set up within the IT Unit as a dedicated cybersecurity
organization. In the event of a cybersecurity incident, this teamacts to minimize the damage. Under normal circumstances, theTC-CSIRT will take steps to prevent the recurrence of past incidents and the occurrence of new incidents by monitoring security
systems, preparing security manuals, and educating officers andemployees. As cyberattacks grow more sophisticated and complex, we endeavor to refine our cybersecurity measures by periodically having these measures assessed by third-party institutions
and actively exchanging knowledge with external partners throughmembership in the Nippon CSIRT Association. In addition, wehold regular drills that simulate cyberattacks to strengthen ourcapabilities for responding to cybersecurity incidents. Throughsuch drills, we strive to both verify our cybersecurity incident
response capabilities and enhance our response framework bycontinuously identifying areas of improvement and examining
new measures.

Information Security Issues at Group Companies
Certain Group companies are involved in consumer businesses,
which raises the need to further reinforce our personal information management efforts. Meanwhile, the global development ofour business has resulted in Group companies being locatedaround the world. We are thus aware of the need to strengthen
information security measures in accordance with diverse cultures and regulatory systems. In fiscal 2020, incidents at Group
companies in Japan included malware infections andunauthorized access to corporate websites through cyberattacks.
Meanwhile, incidents at overseas Group companies that occurred
involved the receipt of emails purporting to be from our business
partners or executives of Tokyo Century. We encourage closer
collaboration with Group companies by establishing security
guidelines for said companies, strengthening management ofoutside subcontractors, providing information on information
security, and holding regular liaison meetings. We also strive toprevent security incidents by bolstering the security systems ofGroup companies through increased involvement by the IT Unit intheir operations.
In addition to these efforts, we conduct regular drills for officers
and employees that simulate a suspicious email attack without
prior notice. Such email drills were conducted targeting theCompany and its domestic and overseas Group companies withemails in Japanese, English, and Chinese several times during
fiscal 2020. These drills have proved to be an effective training
method for improving the information security awareness ofofficers and employees.

Compliance Structure for the Tokyo Century Group
Board of Directors
Chief compliance executive of the Group
President & CEO
Appointment

Management Meeting

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

Internal reporting system(Consultation/Whistleblowing System)

Compliance-related report, etc.

Internal route: Compliance OfficeExternal route: Corporate lawyer(law firm)Compliance representatives
Presidents of Group companies

Internal route: Standing corporate
auditors
Independent of management

Reports/consultations on compliance issues
Standard reporting line

Reports oncompliance violations

Employees of Group companies

Compliance ompliance Structure Composed ofC
Compliance Officers
At the Tokyo Century Group, the Compliance Office promotes
Groupwide compliance measures under the supervision of thechief compliance officer (CCO) appointed by the president & CEO,
who is also the chief compliance executive. The heads of eachbusiness division and branch office, along with the presidents ofeach Group company, act as compliance officers (COs) with the
responsibility of guaranteeing compliance with all relevant laws
and regulations and ensuring that business activities are kept inline with social norms. In addition, the CCO, who is concurrently
president of the Risk Management Unit, also serves on ACG’sboard of directors and directly engages in compliancecommunication.

 igorous Compliance at Consolidated GroupR
Companies
The Risk Management Liaison Committee for Group com­panies
meets regularly each year to work on strengthening consolidated
business management. This committee, attended by compliance
representatives from domestic Group companies, has alreadymet 15 times since its establishment and proved to be a valuable
forum for internal communication and sharing important compliance issues.
A major task faced amid rapid global expansion in our businessdomain is to integrate into the Group’s compliance structure
practices pertaining to compliance that are matched to the specific circumstances of the operations of individual Group companies. For example, CSI has established a compliance portal
system with a multiple-language interface that is available on a

global basis. ACG, meanwhile, is revising its compliance rules tobring them in line with Tokyo Century’s compliance standards,
while also strengthening its frameworks through means such as
using online systems for compliance reporting.
For overseas Group companies, relevant head office divisions
utilize remote meetings, e-learning programs, and other tools to
overcome the recent difficulties in engaging in face-to-face communication associated with the COVID-19 pandemic. Said divisions also provide Group companies with training, monitor the
status of compliance with local laws and regulations, confirm theeffectiveness of business continuity plans, and raise awarenessto facilitate use of the internal reporting system.

Anti-Corruption Measures
The Tokyo Century Group seeks to ensure that its business activities are fair, impartial, and transparent. Accordingly, we prohibit
bribery, comply with fair trade laws, practice a strict policy of
non-association with antisocial forces, and implement measures
to prevent money laundering, funding of terrorist activities, andother acts of corruption. To prevent money laundering and funding of terrorist activities, we have established rules for developing
databases for confirmation of customers, placing limits on theacceptable counterparties before commencing transactions,asking for proof of identity when concluding contracts, and monitoring contracts that are in effect. These rules are rigorously
enforced to prevent the occurrence of problematic transactions.

Internal Reporting System
The Company has established an internal reporting system.
Reports from our domestic and overseas Group companies havecome to represent a not insignificant portion of the reports
received through this system. We believe this is due to our consistent efforts to raise awareness of the internal reporting systemamong employees, including locally hired staff at overseas Group
companies, which have led to increased awareness and, subsequently, system use. At the same time, stringent whistleblower
protection measures at both the associated external law firm
(corporate lawyer) and the Compliance Office, located in head
office, have helped increase confidence in the system, encourage
more use thereof, and contribute to the effective functioning of
the system.

Number of Reports Received via the Group Internal
Reporting System


20

17
15

10

5

0

2016

2017

2018

2019

2020

(FY)

70

TOKYO CENTURY CORPORATION71

INTEGRATED REPORT 2021

8 Corporate GovernanceManagement
Organization

Masao Yoshida*1 *2
External Director
Masao Yoshida has served in positions
including president and representative
director of Furukawa Electric Co., Ltd. He
was appointed as an external director ofTokyo Century in June 2017 and then to theposition of chairperson of theCompensation Committee in September
2019, both positions he currently holds.
Mr. Yoshida possesses experience andextensive knowledge based on long-term
involvement in corporate management at
Furukawa Electric Co., Ltd., and offers
management advice and provides proper
oversight of operational execution towardsustainably enhancing the corporate valueof Tokyo Century.

Management Team(As of July 1, 2021)

Shunichi Asada
Chairman, Representative Director
Shunichi Asada was appointed president &CEO, representative director of Tokyo
Leasing Co., Ltd., in April 2008 and served
as president & CEO, representative directorof Tokyo Century for 11 years following themerger in April 2009, after which he wasappointed to his current position as chairman, representative director in April 2020.
Mr. Asada aggressively promoted new
business models by taking advantage of abusiness environment free of regulatory
constraints and established the four operating segments. Moreover, he possesses
abundant experience and a successful trackrecord as the manager with the most credit
for leading Tokyo Century’s development as
a top-tier financial services company in theindustry.

Yukito Higaki*1 *2
External Director

Akio Nakamura*1 *2
External Director

Makoto Nogami
President & CEO, Representative Director

Masataka Yukiya
Deputy President, Representative Directorand Executive Officer
Responsible for Equipment Leasing
Masataka Yukiya served as executive officer,
chief operating officer of the Financial andInsurance Division in the Finance, Realty,
Insurance & Logistics Services Company of
ITOCHU Corporation. He became a director
and managing executive officer of Tokyo
Century in June 2011 and was appointed tohis current position as deputy president,
representative director and executive officer
responsible for Equipment Leasing in April
2020. Mr. Yukiya possesses abundant experience and extensive knowledge based on his
involvement in corporate management at
ITOCHU Corporation and his achievements
as president of the Equipment Leasing
Business Unit of Tokyo Century.

Makoto Nogami was appointed to the position of director of Tokyo Century in April
2009 before becoming president & CEO,representative director of corporate auto
leasing subsidiary Nippon Car Solutions Co.,
Ltd., in April 2015 and concurrently served as
deputy president, director and executive
officer of Tokyo Century. In April 2020, heassumed his current position of president &CEO, representative director. Mr. Nogami
possesses broad experience and a trackrecord as a leader credited with achieving
business growth for Nippon Car Solutions
Co., Ltd., and Nippon Rent-A-Car Service, Inc.,and as president of the Equipment Leasing
Business Development Unit and the Mobility
Business Development Unit of Tokyo
Century.

Akio Nakamura served in positions including
director-general of the Osaka Regional
Taxation Bureau, National Tax Agency, anddirector-general of the Financial Bureau,
Ministry of Finance. After he served for two
years as an external director of Tokyo
Century from June 2015, he was reappointed as an external director in June
2018. He was appointed as president andCEO of Japan Securities Depository Center,
Incorporated, in April 2019, a position hecurrently holds.
Mr. Nakamura possesses extensive knowledge in areas such as financial policy and tax
affairs and has experience and a track recordin corporate management while offering
management advice and providing proper
oversight of operational execution towardsustainably enhancing the corporate value ofTokyo Century.

Yukito Higaki is currently the president of
Imabari Shipbuilding Co., Ltd. He became an
external director of Tokyo Century in June2017 and continues to hold this position.
Mr. Higaki possesses abundant experienceand extensive knowledge as the most senior
manager of Imabari Shipbuilding Co., Ltd.,and offers management advice and provides
proper oversight of operational execution
toward sustainably enhancing the corporate
value of Tokyo Century.

*1 External director as stipulated by Article 2-15 of theCompanies Act of Japan*2 Designated independent officer as stipulated by the
Tokyo Stock Exchange

72TOKYO CENTURY CORPORATION73

INTEGRATED REPORT 2021

8 Corporate GovernanceManagement Team (as of July 1, 2021)

Toshio Asano*1 *2
External Director

Koichi Baba

Toshio Asano has served in positions
including president and representative
director of Asahi Kasei Corporation. He
was appointed as an external director ofTokyo Century in June 2019, a position hestill holds while also fulfilling the role ofchairperson of the Nomination
Committee, which he assumed in June
2021. Mr. Asano possesses abundant
experience and extensive knowledge
based on his long-term involvement as themost senior manager of Asahi Kasei
Corporation and offers management
advice and provides proper oversight ofoperational execution toward sustainably
enhancing the corporate value of Tokyo
Century.

Director and Senior Managing
Executive Officer
President, Corporate Planning Unit
Koichi Baba has served in positions including
executive officer and general manager of theTaipei Branch of Mizuho Bank, Ltd. He wasappointed as an executive officer of Tokyo
Century in June 2014 and assigned to hiscurrent position of director and senior managing executive officer and president of the
Corporate Planning Unit in April 2020.
Mr. Baba spearheads Tokyo Century’s sustainable management initiatives as thechairperson of the Sustainability Committee.
Moreover, he possesses abundant experience and extensive knowledge based on his
involvement in the domestic and overseas
sales operations at Mizuho Financial Group,
Inc., and has experience in executing operations as president of the Corporate Planning
Unit of Tokyo Century.

Miho Tanaka*1 *2
External Director
Miho Tanaka has served in positions at Asahi
Koma Law Offices (currently Nishimura &Asahi) and TMI Associates before taking up
her current position as a partner 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 andextensive 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 froman independent perspective.

Keiichiro Ogushi
Akihiko Okada
Deputy President, Director andExecutive Officer Responsible for Audit Unit
Akihiko Okada has served in positions including managing executive officer and chief
operating officer of 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 took up his
current position as deputy president, director
and executive officer responsible for the
Audit Unit in April 2021. Mr. Okada possesses abundant experience and extensive
knowledge in diverse areas including corporate management and global business basedon his extensive overseas experience at
ITOCHU Corporation.

Deputy President, Director andExecutive Officer
President, Specialty Finance Business
Development Unit and President, Specialty
Finance Business Unit I
Keiichiro Ogushi has served in positions
including senior managing executive officer
and head of the Research & Consulting Unitof Mizuho Financial Group, Inc., and representative director and president of Japan Hades
Co., Ltd. He was appointed deputy president,
director and executive officer of Tokyo
Century in July 2020 and assumed his current
position of deputy president, director andexecutive officer, president of the Specialty
Finance Business Development Unit, andpresident of Specialty Finance Business Unit I
in April 2021. Mr. Ogushi possesses abundant
experience and extensive knowledge basedon his involvement in corporate management
and in execution of sales, market, and otheroperations at Mizuho Financial Group, Inc.

Tatsuya Hirasaki

Toshihito Tamba
Director
Toshihito Tamba served in positions including representative director and executive vicepresident, chief operating officer of Overseas
Operations of ITOCHU Corporation. He wasappointed chairman & co-CEO, representative director of Tokyo Century in June 2011
before assuming his current position as
director in April 2020. In addition, he became
an outside director at Fuji Electric Co., Ltd., in
June 2016, a position he continues to hold.
Mr. Tamba possesses abundant experienceand extensive knowledge based on his
involvement in corporate management andexecution of overseas and other operations
at ITOCHU Corporation and from leading
Tokyo Century for nine years as chairman,
representative director.

Director and Managing Executive Officer
President, Accounting Unit
Deputy President, Corporate Planning Unit
and General Manager, Corporate Planning
Division
Tatsuya Hirasaki was appointed to thepositions of general 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 Accounting Unit, deputy
president of the Corporate Planning Unit, andgeneral manager of the Corporate Planning
Division in June 2021. He also currently
serves as the chairperson of the Japan
Leasing Association’s Accounting andTaxation Committee and a member of the
Accounting Standards Board of Japan’sTechnical Committee: Lease Accounting.
Mr. Hirasaki possesses abundant experienceand extensive knowledge based on his
involvement in operational execution pertaining to accounting, corporate planning, andother activities.

*1	External director as stipulated by Article 2-15 of theCompanies Act of Japan*2	Designated independent officer as stipulated by the
Tokyo Stock Exchange

74TOKYO CENTURY CORPORATION75

INTEGRATED REPORT 2021

Data Section

Performance Highlights
Financial Information

Non-Financial Information

Ordinary Income

Net Income Attributable to Owners of Parent–¥13.0 billion

Billions of yen

100
86.3
80

60

YoY

91.1

73.5

56.3
51.3

78.1

79.0

–¥7.2 billion

Billions of yen

50

52.3

YoY

Number of Female Managers / Ratio of Female Managers(Non-Consolidated)

Eligible Employees Who Have Taken Childcare Leave(Non-Consolidated)*2

Persons%+1.2 points

60

YoY

12

Persons

50
27

49.2

9.1

50

43.7

7.9
40

40

30

30

20

20

36

34

32

5.5

42

7.2

6.7

60

10

+6
YoY

27

40

+1

22

8
30

YoY

19

19

20

6

40

20

18

4

–3

13
20

0

10

2017/3

2018/3

2019/32020/302021/310

2017/3

2018/3

2019/32020/32

02021/32017/3

2018/3

2019/32020/32021/3

Number of female managers
Ratio of female managers (non-consolidated)

Total Assets–¥5.7 billion
YoY

Billions of yen

6,000

5,608.6

5,602.9

3,755.1

2017/3

Male

Female2018/3

2019/3%Units

2.2

2.2

1.9

–0.5 point

73.6

74.7

77.3

72.7

76.3

YoY

–3.6 points

60

4,086.5

2021/3*2 Ratio of eligible employees who have taken childcare leave (non-consolidated): 100%

%

80

6

2020/3Pre-Owned Personal Computers Sold

2.0
3,579.9

0

Ratio of Eligible Employees Who Have Taken
Paid Annual Leave

2.1

4,000

9

9

ROA*1

2.5

5,000

0

10

YoY

YoY

1.4

600,000–74,570 units

500,000

459,341

YoY

479,625

405,055
400,000

1.5
40

3,000

272,925300,000

291,0031.0
200,000

2,000
0.5

1,000

0

20

2017/3

2018/3

2019/32020/302021/3100,000

2017/3

2018/3

2019/32020/32021/30

2017/3

2018/3

2019/32020/32021/30

2017/3

2018/3

2019/32020/32021/3*1 Ratio of ordinary income to total assets

Net Income per Share / ROEInterest-Bearing Debt

Yen%Billions of yen

600

500

400

486.0913.7

12.9

494.93524.96

12.7

413.51

11.5–¥122.39
YoY

18

200

4,278.2
15

402.578.7–2.8 points

6

2017/3

2018/3ROE

2019/32020/32021/3t-CO2

MWht-CO2

1,200

1,096

–48 t-CO2

1,075

2,733.0

2,810.7

3,041.2

818

800

770

0

287,888

300,000

200,000

162,025
150,000

47,075100,000

1,000

2020/32021/3050,00035,063200

2019/3100,000

90,541

111,487400

2018/3

153,491+8,534 t-CO2

149,6812017/3200,000

YoY
600

0

YoY

340,712

YoY

1,000

+47,372 MWh

388,084

400,000

2,000

3

Net income per share

Reduction of CO2 Emissions*4 by Solar
Power Generation of Kyocera TCL Solar LLC

825

9

YoY

4,280.9

4,000

12

100

0

YoY

5,000

3,000
300

+¥2.7 billion

CO2 Emissions from Electricity Consumption*3

2017/3

2018/3

2019/32020/32021/3*3 As for the emission factors for electricity consumption, adopted the alternativevalues of an emission coefficient by electricity utility used for GHG Accounting,
Reporting and Publication System under Law Concerning the Promotion of the
Measures to Cope with Global Warming0

2017/3

2018/3

2019/32020/32021/3

Electricity generated annually through solar power generation
CO2 emissions reduction*4 As for the emission factors for CO2 reduction amount, adopted the standard values
defined in the display guidelines by Japan Photovoltaic Energy Association0

76TOKYO CENTURY CORPORATION77

INTEGRATED REPORT 2021

Data Section

Financial Summary
2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3

Revenues

716.3

691.1

828.6

883.0

940.5

976.1

1,012.2

1,067.6

1,166.6

1,200.2

Costs

643.7

620.2

731.2

759.3

803.6

823.3

849.0

885.9

958.7

999.2

Gross profit

72.7

70.9

97.3

123.7

136.8

152.8

163.2

181.7

207.9

201.0

84.2

80.7

106.5

134.1

150.2

170.3

184.8

208.0

239.0

244.8

30.8

28.9

45.9

65.2

70.9

80.8

89.5

104.0

119.6

123.8

30.8

29.8

46.0

66.3

69.7

79.6

89.8

103.8

115.5

114.4

0

(0.9)

(0.1)

(1.1)

1.2

1.2

(0.3)

0.3

4.1

9.5

Operating income

41.9

42.0

51.4

58.4

65.9

72.0

73.7

77.7

88.3

77.2

Ordinary income

46.3

46.3

55.2

60.7

68.0

73.5

79.0

86.3

91.1

78.1

Extraordinary income and losses

(2.2)

(0.1)

(0.1)

(1.0)

0.5

0.2

0.4

0.1

3.8

1.7

Net income attributable to owners of parent

26.2

28.9

33.1

34.1

40.0

43.7

51.3

52.3

56.3

49.2

Total assets

2,260.4

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

Segment assets*2

2,110.9

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

1,492.2

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

Mobility & Fleet Management

115.5

130.5

358.1

380.5

414.1

462.3

521.4

592.7

631.2

629.5

Specialty Financing

397.7

491.8

542.1

711.9

846.4

897.6

978.9

1,142.4

2,147.9

2,184.7

International Business

105.5

134.6

172.0

267.9

272.4

457.4

462.6

512.9

510.6

483.1

1,783.2

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

Net assets

201.3

233.7

285.5

336.5

374.9

404.8

456.0

524.4

660.1

688.4

Cash Flows*1

Cash flows from operating activities(26.4)(89.7)(28.3)(171.0)(136.6)

(0.7)

26.4

(59.2)(50.7)

51.3(Billions of yen)

Cash flows from investing activities

(0.5)

(5.6)

10.0

(18.7)(3.1)(30.1)(107.9)(123.9)(315.2)(97.4)Cash flows from financing activities

38.3

135.9

54.5

156.9

155.8

27.5

81.6

189.0

523.1

19.0

Cash and cash equivalents at end of year

44.5

83.1

115.8

71.9

91.8

85.7

86.4

89.7

250.1

216.9

Net income

245.82272.32311.64322.84379.34413.51486.09494.93524.96402.57

Net assets

1,796.62

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

Dividends

44.00

48.00

52.00

65.00

80.00

100.00114.00124.00136.00138.00Return on equity (ROE)*3

14.5

14.0

13.9

12.5

13.1

12.9

13.7

12.7

11.5

8.7

Return on assets (ROA)*4

2.1

2.0

2.1

2.0

2.1

2.1

2.2

2.2

1.9

1.4

Shareholders’ equity ratio

8.4

9.0

8.8

9.3

9.6

9.9

10.5

10.4

9.9

10.2

Overhead ratio (OHR)*5

42.3

42.1

47.2

53.6

50.9

52.1

55.0

57.1

55.5

56.9

Employees (Consolidated)

1,722

1,676

3,309

4,113

4,124

5,430

6,035

7,016

7,365

7,438

Operating Results*

1(Billions of yen)

Sales revenues(gross profit before deducting funding cost)
SG&A expenses
Personnel and non-personnel expenses
Credit costs

Financial Condition*1(Billions of yen)Equipment Leasing

Interest-bearing debt

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

78

TOKYO CENTURY CORPORATION79

INTEGRATED REPORT 2021

Data Section

Main Subsidiaries, Affiliates, and Other Companies
Japan

Asia
Location

Main Business

VotingRights*Location

Main Business

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%

Fujitsu Leasing 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/shareholding and ancillary 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%

Shinko Real Estate Co., Ltd.

Japan

Real estate business70%

BPI Century Tokyo Lease & Finance Corporation

The Philippines

General leasing

51%

TC Property Solutions Corporation

Japan

Property management

100%

NTT Global Data Centers NAV2 Private Limited

India

IT services and equipment leasing

100%

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

20%

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%

PT. Hexa Finance Indonesia

Indonesia

Construction machinery finance20%

TC Agency Corporation

Japan

Casualty insurance100%

Yoma Fleet Ltd.

MyanmarAuto leasing and car sharing

20%

TC Business Service Corporation

Japan

Business processing services

100%

TATA Capital Financial Services Limited

India

General leasing and finance—TC Business Experts Corporation

Japan

Business inspection services

100%

NTT TC Leasing Co., Ltd.

Japan

General leasing and finance50%

ITOCHU TC Construction Machinery Co., Ltd.

Japan

Sale of and rental services for construction
and other equipment

50%

NITTSU Lease & Finance CO., LTD.

Japan

General leasing and finance49%

Location

Main Business

VotingRights*Bplats, Inc.

Japan

Subscription-based business32%

TC Skyward Aviation U.S., Inc.

U.S.A.

Aviation leasing and finance

100%

Nanatsujima Biomass Power LLC

Japan

Sale of electricity generated using biomass power

25%

TC Realty Investments Inc.

U.S.A.

Real estate investment

100%

Chuo-Nittochi Asset Management Co., Ltd.

Japan

Management and formation of real estate investment funds

30%

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%

Company

EuropeCompany

U.S.A.
Company

Location

Main Business

VotingRights*Work Truck Direct, Inc.

U.S.A.

Sale of small and medium-sized trucks

100%

TC Skyward Aviation Ireland Ltd.

Ireland

Aviation leasing and finance100%

GA Telesis, LLC

U.S.A.

Provision of products, services, and solutions to thecommercial aerospace industry

49%

TC Aviation Capital Ireland Ltd.

Ireland

Aviation leasing and finance

100%

Gateway Engine Leasing, LLC

U.S.A.

Aircraft engine leasing

20%

Tokyo Leasing (UK) Plc

U.K.

General leasing

100%

Company

Consolidated subsidiaries

Equity-method affiliates

Other companies* Voting right percentages are rounded to the nearest whole number.

80

TOKYO CENTURY CORPORATION81

INTEGRATED REPORT 2021

Data Section

Corporate and Stock Information
Corporate Information (as of July 1, 2021)

Stock Information (as of March 31, 2021)

Company NameTokyo Century Corporation

Transfer Agent

Mizuho Trust & Banking Co., Ltd.

Number of Shares of Common Stock Authorized 400,000,000 shares

Head Office

FUJISOFT Bldg., 3 Kanda-neribeicho, Chiyoda-ku, Tokyo
101-0022, Japan

Stock Listing

Tokyo Stock Exchange, First Section

Number of Shares of Common Stock Issued

123,028,320 shares

Securities Code

8439

Number of Shareholders

11,043

FoundedJuly 1, 1969

Trading Lot Size

100 shares

Paid-in Capital¥81,129 million

Company
Representatives

Shunichi Asada
ChairmanPresident & CEO Makoto Nogami
Deputy President Masataka Yukiya

Major Shareholders

Breakdown of Shareholders

Number of Employees 7,438 (917 on a non-consolidated basis) (as of March 31, 2021)
March 31

Main Banks

Mizuho Bank, Ltd.; MUFG Bank, Ltd.; The Norinchukin Bank; Sumitomo Mitsui Trust Bank, Limited;
Sumitomo Mitsui Banking Corporation; and Japan Bank for International Cooperation

Independent Auditor

Deloitte Touche Tohmatsu LLC

Network

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 and South America,
Europe, and elsewhere.

Management Personnel (as of July 1, 2021)
Corporate Auditors

Chairman,
Representative Director

Shunichi Asada

President & CEO,
Representative Director

Futoshi Okada

Makoto Nogami

Deputy President,
Representative Directorand Executive Officer

Masataka Yukiya

Standing Corporate
AuditorYuichiro Ikeda
Katsuya Amamoto
Masao Fujieda

Director(External Director) *1 *3

Masao Yoshida
Yukito Higaki
Akio Nakamura
Toshio Asano
Miho Tanaka

Corporate Auditor(External Corporate
Auditor) *2 *3

Akihiko Okada
Keiichiro Ogushi

Director and Senior
Managing Executive
Officer

Koichi Baba

Director and Managing
Executive Officer

Tatsuya Hirasaki

Director

ITOCHU Corporation

36,714

30.07

Nippon Tochi-Tatemono Co., Ltd.*2

15,712

12.87

Nippon Telegraph and Telephone Corporation

12,302

10.08

KSO Co., Ltd.

10,306

8.44

Mizuho Bank, Ltd.

4,688

3.84

Custody Bank of Japan, Ltd. (Trust accounts)

4,118

3.37

Seiwa Sogo Tatemono Co., Ltd.

4,002

3.28

The Master Trust Bank of Japan, Ltd. (Trust accounts)

3,109

2.55

Nippon Life Insurance Company

2,228

1.83

1,900

1.56

Toshihito Tamba*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

Financial institutions
19%
Securities companies 
1%Treasury stock 
1%Other domestic institutions 67%
Individuals and other
4%
Foreign investors
8%

Deputy President,
Executive Officer

Yoichiro Nakai

Mizuho Trust & Banking Co., Ltd. (Retirement Allowance
Trust, Orient Corporation Account Trust &Custody Services Bank, Ltd. re-entrusted)

Senior Managing
Executive Officer

Yasushi Yoshino
Mahoko Hara
Hiroshi Sato

*1 The shareholding ratio is calculated by excluding treasury stock (947,379 shares).
*2 Nippon Tochi-Tatemono Co., Ltd., merged with Chuo Real Estate Co., Ltd., effective April 1, 2021, and changed its nameto Chuo-Nittochi Co., Ltd.

Managing Executive
Officer

Seiichi Mizuno
Toshio Kitamura
Koichiro Sato
Takashi Yonetsu
Masato Osugi
Ko Nakagawa
Junji Tsutsui

Executive Officers

Standing Corporate
Auditor (External
Corporate Auditor) *2

Deputy President,
Director and Executive
Officer

Shareholding
Ratio*1(%)

Shareholders

Closing of Accounts

Board of Directors

Number of
Shares Held(Thousands)

Executive Officer

Hiroaki Ogino
Kimio Kozuka
Yoshihiro Ueda
Toshihiko Tamura
Minoru Kuwahara
Masahiro Ohata
Toshiyuki Otobe
Shintaro Yamazaki
Yoichi Matsumoto
Yukihiro Tanaka
Makoto Honda
Takao Kamata
Takeshi Fujimoto
Katsusuke Hirako

Bond Ratings (as of July 1, 2021)
Credit Rating Agency

Longterm

Issuer Rating

Preliminary
Rating for
Bonds
Registered for
Issuance*
Euro MediumTerm Note
Program

Short- Commercial
term
Paper

Issuer: Tokyo Century Corporation (Securities Code: 8439)
Japan Credit Rating Agency, Ltd.
(JCR)

Rating and Investment Information, Inc. S&P Global Ratings Japan, Inc.
(R&I)
(S&P)

A

BBB
StableRating:AA–

Outlook:

StablePositive

Rating:AA–

A¥400 billion¥400 billion

Two years beginning
February 25, 2020

Two years beginning
February 25, 2020

AA–

A

Equivalent of US$2 billion

Equivalent of US$2 billion

J-1+

a-1

¥800 billion¥800 billion

Expected Issue
Amount:Issue Period:
Rating:Maximum
Outstanding
Amount:Rating:Maximum
Outstanding
Amount:* Each bond will be rated by each rating agency upon issuance.
(Reference) https://www.tokyocentury.co.jp/en/ir/br.html

Tokyo Century Corporation
FUJISOFT Bldg., 3 Kanda-neribeicho, Chiyoda-ku,
Tokyo 101-0022, Japan
https://www.tokyocentury.co.jp/en/

Printed in Japan