NEC Capital Solutions Limited
https://www.necap.co.jp/english/■ Editorial Policy and Scope
Editorial Policy

Since 2014, the Company has been issuing an “Integrated Report” (“thispublication”). This publication is aimed to focus on the main points related toour management issues and medium- to long-term goals. To enhancecomprehension of the Company, we invite the reader to visit our website.

NEC Capital Solutions Limited

INTEGRATEDREPORT
2023

Scope

Organization: NEC Capital Solutions Limited and its consolidated subsidiaries
and equity-method affiliates

Period:Lively Motion（CMYK）

Data represent results from April 1, 2022 to March 31, 2023
(including most recent activities)

Media concept● Booklet

The booklet contains a report that is
focused on crucial information, mainly
information on our material issues.

● Website

The website presents PDF files containing
the booklet, as well as more detailed
information (Japanese Only).

Activities of great
importance tostakeholders

BookletWebsiteActivities of great
importance to theCompany

Cover Artwork: SKYLINE by CHABI● Publication

December 2023 (Published annually)● Contact IR & PR Department for inquiries

about the report

We sponsor Paralym Art, an initiative supporting artists with disabilities to enable their dreams tocome true through art.
We chose four candidate pieces of artwork reminiscent of the four rings of the circular economy(page 1) taken from what we consider to be a “Next-generation circular economy” as outlined in ourGroup Vision 2030, “Be a solution company leading the next-generation circular economy.” Employees
of our group companies in Japan then voted to select the piece above.
This artwork, which evokes the beautiful circulation of nature, represents the Group’s intent tocreate a next-generation circular economy.

Paralym Art Office, SHOUGAISHAJIRITSU SUISHIN KIKOU ASSOCIATIONOur purpose/Contents

C o r po rate P h il os op h y

Helping Societies Advance through“Capital Solutions”*Capital Solutions: The Company’s own term referring to the provision of solutions (“Solutions”) for a wide range of issues related to customers’
managerial resources (“Capital”).

Be a solution company leading
the next-generation circular economy*Solution Company: Implementation of “Capital Solutions” that is included in both our corporate philosophy (reason for existing) and company name.
“Company” means a business organization and a group of colleagues (partners) that shares the same values.

The next-generation circular economy that we envision for 2030 and beyond, not only reduces adverse
environmental impact through enhanced resource efficiency, but also utilizes resources in a continuous
circular process, and is a circular economy that continues to generate newly added value. The Group aims
to create various and “circular economy-oriented” services through the innovation of capital solutions.

Local
revitalization

Co-creation of
corporate value

Energy/smart
citiesShareholders

Vendorpartners

Employees
Services

Products(Virtuous circle
for local
economies)

The Group

Biodiversity(Virtuous circle
for naturalenvironment)

Our purpose/Contents ..............................................1

Process towards value creation ................................3

Use

Recycling ofresources[SDGs the Group can contribute to in particular](Cyclical use)

Foundation for Value Creation
Sustainability Message............................................19
Continuing to be a company
that values the obvious

Masamitsu Kisaki,

Representative Director andSenior Executive Vice President

Material issues(III) Creation of new services andbusinesses to resolve social issues ...26

Financial/Corporate Data

Financial Report ......................................................39
Review of BusinessResults for Fiscal Year
Ended March 31, 2023 andOutlook for Fiscal YearEnding March 31, 2024

Noboru Watanabe,
Executive Officer1

Our history .................................................................7

9

Takashi Nawa (Professor of Hitotsubashi University Business School,

and ICT infrastructure ....................25

Turning products
into services

At a glance .................................................................5

Medium-term Plan 2025..........................................13

Developing CSV management for a next-generation
circular economy.

Material issues(II) Promotion of establishment of social

Sharing

1

Special Dialogue......................................................15

and circular economy ....................22

Customers

Financial/Corporate Data

Message from the President .....................................9

Sustainability...........................................................21

Services

Recycling

Introduction

Material issues(I) Promotion of decarbonized society

Products

Foundation for Value Creation

Contents
Strategies for Value Creation

Group Vision 2030

(Virtuous circle
for growth)

Strategies for Value Creation

Introduction

The role we must play in realizing a “next-generation
circular economy”

outside director of the Company)

19

Material issues(IV)

Investment in human capital .......27

Message from an executive officer incharge of human resources

Taking on corporate culture
transformation

Koji Shibata,

Executive Officer

Material issues(V) Pursuit of corporate governance that

supports improved corporate value ...32

WEB Sustainability

https://www.necap.co.jp/csv/report/
index.html(available in Japanese only)

39

Financial data and non-financial highlights(for 11 years) ............................................................43

Segment information ..............................................45
Corporate data/Share information.........................46

WEB Financial Information and Business Results

https://www.necap.co.jp/english/ir/
financial/index.html

NEC Capital Solutions Limited Integrated Report 2023

2

Process towards value creation

Introduction

To realize the Group Vision, we will implement
Group vision

Be a solution company leading the

The society we envisionin 2030(Next-generation circular economy)
Progress with efforts to achieve
the SDGs▶P.6

Financial capital[Operating asset balance]

966.1 billion yen[Net assets]

128.8 billion yen[Equity ratio]

A super-smart society brought bySociety 5.0*2

10.4%

Our business

CapitalSolution

R&I AJCR A● Our vendor finance

Increased demand forenvironmental considerations

function honed overmany years● A wide range of financial
services

Social relations
capital● Cooperation with NEC

Cyclical use of resources,a circular economy

Group● Customer base of thenational and local
governments● Strong relations withlocal financial institutions

Financial products● Wealth of ICT knowledge

ICT/professional services

Intellectual capital

Vendor finance

866

Financial/Corporate Data

CSV*1 management and resolve issues for society▶P.21

Material
issues(important issues)
Promotion of
decarbonizedsociety and circular
economyPromotion of
establishment ofsocial and ICT
infrastructure

Human capital

New value creation through DX andbusiness model reforms

Foundation for Value Creation

next-generation circular economy[External credit ratings][Number of employees
on a consolidated basis]

Strategies for Value Creation

Creation of newservices andbusinesses toresolve social issues

Investment in
human capital

Pursuit of corporate
governance that
supports
improved corporate
value

▶P.13

Practice
CSV
management
Medium-term
Plan 2025

Aim to create
services unique tothe Company
to achieve a nextgeneration
circular economy

Three types of circular
economy-oriented
services

Services thatlead to cyclicaluse of products

Services thatlead to virtuous
circle for local
economies andsocieties
Services thatlead to virtuous
circle forcorporate
growth▶P.14

OUTCOME
Economic Value
Improved stock price, brandrecognition, and brand power
Improved profitability

Mediumterm Plan
2025
Targets

FY2026/3：10.0 billion yen

Profit attributableto owners of parent

ROA：0.9%
ROE：8%

Social Value
Realization of next-generation
circular economy

・Value creation, business model reforms
・Response to climate change andbiodiversity

Contribute to the achievementof SDGs*1 CSV stands for Creating Shared Value. It is a business strategy framework that was advocated by Michael Porter, an American business scholar, in 2006. Itmeans achieving a balance between activities to earn economic profit and the creation of social value (= solving social issues).

3*2 Society 5.0: A human-centered society that balances economic development with the resolution of social problems by a system that highly integrates
cyberspace and physical space. This refers to a new society following the hunting society (Society 1.0), agricultural society (Society 2.0), industrial society(Society 3.0), and information society (Society 4.0). The Cabinet Office advocates Society 5.0 as a future society that Japan should aspire to.

NEC Capital Solutions Limited Integrated Report 2023

4

At a glance

We provide four types of business leveraging
the strengths we have nurtured over the years
Leasing Business

OperatingincomeMain operations

6,368

million yen

the expiration or premature cancellation of lease contracts,
maintenance services for leased items and others

47%

OperatingincomeMain operations

4,412

million yen● Investments in business ventures aimed at earning gains

on the sale of securities● Asset, real estate and advisory services businesses

operated by RISA Partners, Inc.

Operating income

Financial capital

Kept the highest-ever level as we did in the previous fiscal year.

866(Fiscal year ended March 31, 2023)

33%

Finance Business

OperatingincomeMain operations

2,154● Money loans, factoring and securities investments aimed

at generating dividend revenue and others

4%

Other Business

OperatingincomeMain operations

493

million yen● New business in the areas of energy, tourism, agriculture andhealthcare, private finance initiative (PFI) and public private
partnership (PPP)* projects and various other services*PPP: Public Private Partnership. A partnership between public
offices and private companies for the purpose of carrying out
a project. PFI is one of the various PPP approaches.

5

50%

40%

and Approx.

Percentage of mid-career employees
and female employees (non-consolidated)

Wealth of knowledge on ICT
equipment

Our vendor finance function honed
over many years

Intellectual capital

80%

60%

Approx.

Ratio of ICT equipment handled

million yen

Corporate culture based on extensive
diversity

Number of employees (consolidated)(component ratio of contracts executed by model inthe Leasing Business)

Approx.

Average for the past 3 years

Ratio of NEC sales channels(component ratio of contracts executed by purchaser
in the Leasing Business)

Social relations capital

Stable customer base

1,800

Approx.

16%

Equity ratio

Approx.

Average for the past 3 years

million yen

10.4%

966.1 billion yen

A distance that enables employees
to recognize each other● Sales of goods related to leasing, sales of properties after

Financial/Corporate Data

(As of the end of March 2023)

Human capitalcommunication equipment, office equipment and various
other types of facilities and equipment

Investment Business

Foundation for Value Creation

Operating asset balance● Leasing, rental and installment sales of information and

11,715Strategies for Value Creation

Introduction

Strong relations with local financial
institutions

180

Approx.

Number of the national and local
government customers

Network of RISA Partners, Inc.

Partnership with NEC

Many years of promoting
environmental management

37.7%

Ratio of shares owned by NEC
Corporation

More than

20 years

Years since obtainment of ISO 14001
certification(Environmental management systems)
NEC Capital Solutions Limited Integrated Report 2023

6

Our history

Introduction

Lively Motion（CMYK）

In response to the changing times, we are
expanding our solution services● Trends in operating asset

balance and ordinary income(after listing on the Tokyo Stock
Exchange in 2005)

Operating asset balance (left axis)■Leasing Business (formerly, Leasing
and Installment Sales Business)■Finance Business (formerly, Loan
Business)■Investment Business (formerly, RISA
Business)■Other Business

Strategies for Value Creation

2008

2005

Company name changed to
NEC Capital Solutions Limited

Listed on the Tokyo
Stock Exchange

Financial/Corporate Data

2020

Entered the United States
2018

40th anniversary of
the founding

2013

Group Vision formulated

2010

RISA Partners, Inc.
converted to a subsidiary

Foundation for Value Creation

2012

Advanced overseas
for the first time

(billion yen)(billion yen)

��

���

Ordinary income (right axis)* In connection with the revision ofreportable segments, the data
presented was retrospectively
modified for the segments after therevision for the period from the fiscal
year ended March 31, 2017 to the fiscal
year ended March 31, 2021.

Lease accounting
standards changed
Global financial
crisis

FY����/�

Nov. 1978
Establishing a presence in theleasing sector

FY����/�

FY����/�

FY����/�

Great East Japan
Earthquake

FY����/�

FY����/�

FY����/�

FY����/�

FY����/�

FY����/�COVID-19
pandemic

FY����/�

FY����/�

FY����/�

Business topics
Sustainability topics

Circa 2003–
Expanding business areas into
ICT services

Apr. 2008–
Expanding business areas into
financial services

Established in 1978 as acompany that takes on a sales
finance function for NEC
products. Steadily growing ourtransaction volume centeredon the leasing of NEC
products, we settled into arole as a manufacturer
affiliated leasing company.

Pursued our growth potential anddistinctive character on the occasionof listing on the Tokyo Stock
Exchange. Accumulated our ICT
expertise by advancing our uniqueefforts, such as the diversification of
products we handled and the life
cycle management service of ICT
equipment.

Expanded our efforts for financial
services with the aim of shifting tohigher value-added business, andchanged the company name to NEC
Capital Solutions. Enhanced solutions toa broad range of sophisticated financeby promoting multifaceted businessactivities, including the conversion of
RISA Partners, Inc. into a subsidiary.

Developed a Group Vision in 2013 that expresses
what we aspire to be in 10 years. We have been
aiming to achieve CSV management that solves
societal issues through our business by providing
services that combine the strengths of the Group.

1999 Acquiring ISO 14001
environmental
management systems(EMS) certification

2004 Receiving prize for excellence inenvironmental management, the “2ndJapanese Environmental Management
Grand Prize” of Mie Prefecture2010 Election of independent
director

2013 Top prize awarded for both “the 15th
Green Purchasing Grand Award”
competition and “the Minister ofEnvironment Prize” competition

2006 Acquiring ISO/IEC 27001
certification, aninternational standard for
information security
management system (ISMS)JQA-IM0333

2007 Launch of Waku-waku (exciting) Children’s Pond Project, a biotope construction,social action program

▶P.24

7

FY����/�Quantitative andqualitative
monetary easing
policy introduced by
the Bank of Japan

2011 Business Continuity Plan
(BCP) formulation2012 Launch of environmental/
restoration support
syndicated loans(terminated in 2018)

Oct. 2013–
Aiming to realize CSV management

Relocation of HQ and major groupcompanies

2018 Quality Management System (QMS)
ISO 9001 certification obtained
Government, Public and Social
System Sales Division

FY����/�

FY����/�

FY����/�

FY����/�

FY����/�

Apr. 2023–
Promoting CSV management inaccordance with our new Group Vision
Since formulating the Group Vision 2030 in April 2023,
we have been practicing CSV management with theaim of realizing a next-generation circular economy.

2020 Acquiring PrivacyMark

2022 Issuing sustainability bonds
Acquiring certification as aDX-certified operator

Announcing support for the
Task Force on Climate-Related
Financial Disclosures (TCFD)

2023 Recognized as a Health &Productivity Management
Outstanding Organization

NEC Capital Solutions Limited Integrated Report 2023

8

Mess age f ro m t h e P re s i d e nt

Developing CSV management
for a next-generation circular economy

The NEC Capital Solutions Group will further deepen the CSV management it has been promoting for the past 10 years

and develop it towards a new era. Here, I would like to explain our efforts to take on the challenge of creating new value

based on the keyword “next-generation circular economy,” as well as our efforts to create future capital solutions.

President

Masaaki Suganuma

9

Introduction

Strategies for Value Creation

Foundation for Value Creation

Financial/Corporate Data

Please explain the next-generation circular
economy set forth in “Group Vision 2030.”

What strengths are you going to leverage inyour efforts to realize the Group Vision?

We envision contributing to an advanced
society that adapts to change, and haveadopted the keyword“next-generation circular economy.”

Our strengths include expertise in ICT
equipment, business relationships with
the national and local governments, andthe sales capabilities of RISA Partners.

To date, we have advocated for “CSV management,” inwhich we resolve social issues through our business andcontribute to society, which leads to profit. This approachand value are the basis of our business activities, andthey will remain unchanged in our new Group Vision.
However, in recent years, the world has been affectedby unprecedented changes such as worsening climatechange, pandemics of infectious diseases, risinggeopolitical risks, and the spread of financial instability,
making the future uncertain. In addition, major changes
in the industry and social life are expected, including
the development of cutting-edge technologies such as
digital technology (IoT*1, AI*2, robots), new value creation

One of our strengths is that we have specialized knowledge
regarding the handling of ICT equipment and can provide
financial solutions that utilize this knowledge. Up until
now, we have mainly handled hardware leasing basedon close relationships with vendors and developed abusiness with additional services. As many ICT equipment
has begun transitioning to provision via subscription
or SaaS*3 in recent years, vendors that make upfront
investments in pay-as-you-go mechanisms and systembuilding are required to manage their businesses withgreater awareness of ROIC and cash conversion cycles, andsupporting these financial aspects has become a new role
for the Company. Within the NEC Group, we are involved
in intellectual property and ownership issues faced byoperating companies and we are involved in the resolutionof these issues as well. We also receive inquiries regarding
the transition to subscription models from other ICT
vendors.
Another one of our strengths is that we do a lot ofbusiness with the national and local governments. Throughcustomer sharing with the NEC Group, we have received
business from over 1,800 national and local governments
in Japan, and this has become a strong foundation for oursales activities. Thanks to our extensive track record, we
can accurately handle bidding and contract proceduresthat differ by the national and local government. We arealso able to quickly move forward with major projects,
such as the simultaneous switching of installed equipment
and the mass delivery of devices used in the GIGA School
Program.*4 Based on these strengths, we are also focusing

through DX, and business model reforms. Under suchcircumstances, how should we go about developing
our business, and what should we aim for in order tocontribute to society? We need to respond to changes
autonomously while deepening our thinking.
By its nature, the leasing business is a business that
contributes to the reduction of environmental burden
through the reuse of resources and improved efficiency,
therefore it can be said that it directly contributes to thecreation of a recycling-based society. Looking ahead, we
recognize that we will need to implement initiatives thatcreate new value while further developing “circulation,”with an eye towards the post-2030 society aimed for by
the SDGs. Based on this idea, we set the goals of our Group
Vision for 2030, the same year as the SDGs. Moreover, we
envision contributing to an advanced society that adapts
to the changing times, and have adopted the keyword“next-generation circular economy.”
We create services that lead to the cyclical use of
products, a virtuous circle for local economies andsocieties, and a virtuous circle for corporate growth.
Through the provision of these services, we will lead thenext-generation circular economy.
Another keyword in our new Group Vision is “Solution
Company.” To resolve our customers’ management issues,
we will innovate solutions for vendor finance, ICT services,and financial products in order to expand our businessdomains and create “circular economy-oriented” services.
We use the word “Company” to mean partners and agroup of colleagues who work together to achieve theirgoals, aim in the same direction amid social change, andmove forward together.

on the PFI business. For example, we have been involvedin over 20 projects in the school meal center development
business.
Our other strength is the network of approximately
180 regional financial institutions nationwide held by
our subsidiary, RISA Partners that conducts Investment
Business, as well as their knowledge in the real estate field.
We provide financial solutions in collaboration with RISA
Partners, where we implement initiatives by leveraging
these strengths and the company’s quick decision-making
capabilities.
We aim to develop businesses that leverage thestrengths listed above and advance the innovation ofcapital solutions in order to realize a next-generation
circular economy.

NEC Capital Solutions Limited Integrated Report 2023 10

Message from the President

Introduction

Please tell us what you are aiming for with the
newly formulated “Medium-term Plan 2025.”

The recently concluded “Mid-Term Plan 2020” (planperiod: FY2021/3-FY2023/3) had “expand core areas” and“harvest new businesses” as the pillars of its businessstrategy, and by promoting it alongside our strategy tostrengthen the management foundation that supports thisstrategy, we concluded a decade of initiatives to realize
CSV management.
As a result, the consolidated business results for
FY2023/3 achieved both the planned targets for operating
income of 11.0 billion yen and ordinary income of 12.0
billion yen, and profit attributable to owners of parent
exceeded the three-year cumulative target. I believe thatthe efforts we have made over the past few years to create
new solutions are bearing fruit, and that our profitability
has steadily increased. However, our profitability is still
low compared to industry standards, and we will strive forfurther improvement in this remaining issue.
Regarding new businesses, we focused on the fourdomains of healthcare, energy, tourism, and agriculture.
In addition to aiming to generate revenue from financial
and peripheral services, we also aimed to provide services
unique to us that lead to local revitalization. In thehealthcare domain, initiatives combined with real estate
finance yielded results, while in the energy domain, we
increased assets with the expansion of renewable energy
such as solar power generation. As a result, both areas
generated revenue. On the other hand, the tourism domain
was negatively impacted significantly by the pandemic,
and the agriculture domain was also unable to generate
revenue.
Going forward, we will develop initiatives over the next
three years by identifying areas in which we can further● Road map to realizing our Group Vision 2030

Create services unique tothe Company

11

Financial/Corporate Datamaking use of what we have learned.

I believe that the new solutions wesowed have borne fruit and that our
profitability has steadily increased.

Medium-term Plan 2025

Foundation for Value Creation

advance as a business as well as areas to focus on while

Looking back on the completed previous
Medium-term Plan, can you tell us about
your achievements and challenges?

FY2024/3-FY2026/3

Strategies for Value Creation

We have set financial and non-financial
indicators. We have clarified our attitude
toward resolving environmental andsocial issues through our business.
As a first step towards realizing our new group vision for2030, we have formulated and launched the “Medium-term
Plan 2025” (plan period: FY2024/3-FY2026/3). This plan
promotes the business strategies of “expand service
business and create new cyclical services,” “accelerate
growth through strategic investment in core businesses,”and “strengthen vendor finance and expand customer
base,” creating pillars for revenue to realize a nextgeneration circular economy.
In creating cyclical services, we are considering adding
new things to existing initiatives, such as increasing thevalue of real estate and accelerating the response to aging
infrastructure through PFI and PPP businesses, in order tosignificantly increase “circulation.” In our core businesses
such as ICT-related services, we are expecting further
improvements in revenue, and to that end, we intend to
take proactive steps to accelerate future growth, such as
considering the expansion of HR and strategic investments
in M&A, etc. on merit.
In terms of the planned indicators, financial indicators
are set along with non-financial indicators, and we haveset forth to resolve environmental and social issues
through business activities and promote the enhancementof human capital. Our financial indicators aim to achieve“profit attributable to owners of parent of 10.0 billion
yen,” “ROA of 0.9%,” and “ROE of 8%” in the consolidated
business results for FY2026/3, the third year of the plan.
Our non-financial indicators include five items related
to environmental and social issues including “a 20%

FY2027/3-FY2031/3

Next Medium-term Plan

Develop services unique tothe Company

Establish revenue fromservices unique to theCompany

reduction in CO2 emissions (Scope 1 + 2) compared to

FY2023/3 ” and “a renewable energy power generation
capacity of 100MW.” They also include two items related tohuman capital: “employee engagement score of 34%” anda “ratio of female managers of 10%.”
The financial indicators are a huge challenge for theCompany, which is in the process of strengthening its
profitability, but we hope to achieve them with thestrength of the entire Group, and use the strength we havedeveloped to take our next leap forward.
Over the next three years, the trend toward
decarbonization and response to SDGs is expected toaccelerate, and the funds needed by the national and local
governments to address aging infrastructure are expected
to increase. As I mentioned earlier, we aim to achieve ourgoals by creating services that add new things to existing
initiatives and taking hold of the above opportunities.

Please tell us your message to stakeholders.

We will grasp the needs of society in atimely manner and promote management
worthy of a company listed on the Prime
Market of the Tokyo Stock Exchange.
In 2015, we identified material issues concerning ourbusiness activities and management foundation, and now,in line with the formulation of our Group Vision 2030,
we have re-identified them and reworded them todemonstrate their direct link to contributing to theenvironment and society. Of the five material issues,“investment in human capital” is an issue that I personallyplace particular emphasis on, as one of my missions
is to “create a company in which employees can takepride.” The source of value creation in CSV management
is nothing other than HR. We will work to improve

employee engagement, ensure diversity, and realize healthmanagement, while actively investing in human capital for
HR development and workstyle reforms, including the useof DX.
Next, I would like to share my thoughts on profit
distribution. Regarding the three areas of investment in
human capital, investment in growth strategies, and returnof profits to shareholders and investors, we will always
be conscious of and implement the optimal balanceaccording to the situation.
In terms of return of profits, we set the annual dividendfor FY2023/3 at 110 yen per share (interim: 37 yen, yearend: 73 yen, dividend payout ratio: 36.9%), an increaseof 36 yen year on year. As we expect to achieve growth inboth revenue and income in our consolidated businessresults in FY2024/3, we plan to further increase the annual
dividend to 130 yen (interim: 65 yen, year-end: 65 yen,
dividend payout ratio: 37.3%).
As a company listed on the Prime Market, we aim toachieve a PBR of 1x or above by incorporating humancapital investment and business investment into our
growth strategies in the long term, and we plan to expand
the return of profits as a commitment to improving
business results in the short term.
Through communication with our stakeholders, wewill gain an understanding of the changing times, social
demands, and what society needs in a timely manner, andby using the above knowledge in our management, we willcontribute to “Helping Societies Advance,” as stated inour corporate philosophy. We appreciate your continued
support of the NEC Capital Solutions Group over the longterm.
*1 IoT: Internet of Things, meaning that all things have communication
functions and are connected to a network.

*2 AI: Artificial Intelligence. In general, it refers to technology that allows
computers to perform intelligent actions such as understanding
and recognizing human language and making inferences.

*3 SaaS: Software as a Service, a form of using software via the Internet.

*4 GIGA School Program: A program to equip elementary and juniorhigh schools with ICT devices promoted by the
Ministry of Education, Culture, Sports, Scienceand Technology.

NEC Capital Solutions Limited Integrated Report 2023 12

Medium-term Plan 2025

Introduction

Medium-term Plan 2025

Our new Group Vision, “ Be a solution company leading the next-generation circular economy,” was established witha goal of 2030 that is in sync with the SDGs. Under the Medium-term Plan 2025, we will carry out CSV management,

which we had been implementing during the 10 years under our previous Group Vision, and take up the challenge ofreforms to realize a next-generation circular economy.

Review of Medium-term Plan 2020
Strategy(I)Expand core areas:

Strategy(III)Management objectives

Improve profitability and accelerate pursuit of sustainability management through realizing a next-generation circular economy● Profit targets(billion yen)

Profit attributable to owners of parent

Plan

FY2021/3 FY2022/3 FY2023/3 Cumulative
total

Results

4.0
4.1

5.5
6.9

7.5
6.4

17.0
17.4

Though improving profitability remains an issue, net income reached three-year target● We attracted higher demand during the pandemic, primarily in the Leasing business, and achieved profit targets.

● An increase in assets with higher profitability and investment business initiatives contributed to revenue and profit.
● External credit ratings improved due to higher profitability and other factors. Our R&I rating was improved from

“BBB+” to “A -” and our JCR rating was improved from “A -” to “A.”● Further improvements to revenue and profit are an issue, such as expanding the customer base and pursuing

initiatives with high added value.

Progress made in generating revenue from new businesses differed in each area

● The energy area saw an expansion in the scope of the business, and the healthcare area succeeded in steadily

securing assets for the warehousing business, resulting in revenue and profit in these two areas.

● In the tourism area, we made progress with investments and loans utilizing tourism resources as well as operationand fund businesses, but this area has yet to generate substantial amounts of revenue and profit.

● In the agriculture area, we struggled to stabilize revenue and generate revenue by pursuing the sixth

industrialization (encouraging workers in agriculture, forestry and fishery sector to produce, process and sell theirproducts) and optimizing the value chain.

● Although PFI was affected by the pandemic and high prices, progress was made in generating revenue fromprojects that we took part in as the representative company, among others.

Launch of new services is a work in progress● Through the acquisition of NEC Financial Services, LLC, we entered the North American market where “as aservice” type offerings are promoted.

● Efforts were made to launch a new service model with vendors and create new services, but this is still a work inprogress.

● Reinforcement, including of the organization, is necessary to create and establish new services unique to theProfitattributableto owners ofparentROA*
ROE

Results in FY2024/3 FY2026/3
FY2023/3
Plan
Plan

6.4

7.5

10.0

0.7%

0.7%

0.9%

6%

● Accelerated activities aimed at improving work motivation and reinforce improvements to employee engagement.
● Revamped workstyles, such as establishing a remote work environment and reworking the operation process.

● Recognized as a Health & Productivity Management Outstanding Organization 2023 (large enterprise category).

Reinforcement of sustainability initiatives● Issuance of Company’s first sustainability bond.

● Sustainability Committee was established and PDCA aligned with the TCFD (Task Force on Climate-related

Financial Disclosures) was begun.

● Became a supporter of TCFD recommendations.

13

7%* Consolidated net income/average balance forconsolidated operating assets

8%● Non-financial indicators (excerpts)
Objective

Description

CO2 reductions to achievecarbon neutrality

Scope1+2
Ratio of decline compared to FY2023/3
Cumulative contracts over threeEstablishment of social
year period for the national and local
infrastructure
governments
Promotion of cyclical use
Total number of disposals of products
following expansion of ICT
whose lease has ended over three-yearbusiness
periodPromotion of response to
Renewable energy power generation
climate change
capacity (power generators owned)
Promotion of activities
School biotope education: Total
contributing to society
increase in number of schools overwith natural capital in mind
three-year period
Improve employee engagement Employee engagement score
Promotion of diversity
Ratio of female managers

TargetFY2026/3
20%
reduction
400.0
billionyen
700,000
units
100MW

10
schools
34%
10%

Expand service business and create new cyclical services

Business Strategy(I)Expand services in renewable energy power generation, warehousing, IT asset management, PFI,
tourism, and other businesses
Create new services for a circular economy

・Create services leading to cyclical use of products
・Create services leading to virtuous circle for local economies and societies
・Create services leading to virtuous circle for corporate growthBusiness Strategy(II)Accelerate growth through strategic investment in core businesses

Expand scale of business through high added value for ICT-related services

・Enhancement of services related to PC-LCM*1 through system tie-ups with customers and vendors andstrengthening of planning functions, expansion of rental services, BPO*2 and consulting services

Expand and refine fields for financial products in Japan and overseas

・Expand financial product and investment targets, with a focus on investments/loans and advisory services, andincrease revenue and profit

Business Strategy(III)Strengthen vendor finance and expand customer base

Provide capital solutions aligned with vendors and customers

Improve profitability and create revenue opportunities by strengthening relationships with vendors
Cultivate transactions by developing and offering solutions for customers’ issues
Strategy to strengthen management foundationcompany.

Reinforcement of initiatives to improve employee engagement(billion yen)

Human

Strengthen management foundation supporting businessstrategies

The first three years, during which we will take on challenges to transform ourselves in order to realize the nextgeneration circular economy set forth in the Group Vision
Aim to create new cyclical services unique to the Company to practice CSV management and achieve a next-generation
circular economy● Financial indicators

Harvest new businesses:

Generate revenue from new businesses that capitalize on ourstrengths, including in non-financial sectors

Financial/Corporate Data

Set non-financial indicators such as measures to realize carbon neutrality

Advance services unique to us that demonstrates its strengths

Strategy(II)Foundation for Value Creation

Positioning of Medium-term Plan 2025

Environmental and social issues capital● Strategies

Strategies for Value Creation

Strengthenfoundation for sales
operations basedon digitalization ofoperating process
and use of digital
information

Launch core system
as DX foundation
andpromote DX
activities

Create organization, andintroduce HR
management systemaligned withmanagement strategies,
and create corporate
culture conducive toongoing challenges andinnovation

Improveeffectiveness ofcorporate
governance

Implement
measures to achievecarbon neutrality(bring Scope 1 + 2 ona consolidated basis
effectively to zero by
FY2041/3)*1: PC-LCM: A one-stop IT equipment provision service from procurement through to operation and management.
*2 BPO (Business Process Outsourcing): A management strategy that aims to improve operational efficiency and reduce costs by partiallyoutsourcing a company’s business processes.

NEC Capital Solutions Limited Integrated Report 2023 14

Special Dialogue

Introduction

Strategies for Value Creation

Foundation for Value Creation

Financial/Corporate Data

The role we must play inrealizing a “next-generation
circular economy”
With the Group Vision 2030 finally underway, we invited Mr. Takashi Nawa (outside director of

the Company), a Professor at Hitotsubashi University Business School, School of International

Corporate Strategy and the author of Creating Shared Value for Management Innovation andProfessor at Hitotsubashi University Business
School, School of International Corporate Strategy

NEC Capital Solutions Limited

Outside Director

Takashi Nawa

NEC Capital Solutions Limited

President

Masaaki Suganuma

Review of the previous Group Vision“I highly commend the advanced andconcrete efforts that have been madetoward CSV.” (Mr. Nawa)

Under the previous Group Vision, whichbegan in FY2014/3, we accelerated our transformationfrom a leasing company to a company that provides capitalsolutions, and promoted the realization of CSV managementwith an eye toward resolving social issues. Throughout
this period, we were able to firmly cultivate understanding
and empathy for CSV management among our employees,
and were able to embark on new initiatives in fields suchas renewable energy and healthcare, paving the way to thegeneration of revenue. I believe that this past decade has
been a time in which we have been able to create a greaterawareness of CSV management while connecting ourcapital solutions to various other social issues.
Suganuma

KisakiWe started CSV management 10 years ago
when it was not as common as it is now, and over the past
decade, we have been able to develop a system to put CSV
management into practice, which now gives us a majoradvantage over other companies in the industry. We havealso achieved a certain degree of results in expanding ourbusiness domain to improve social value, including vendor
finance, ICT-related services, and financial products. In
terms of numbers, we were able to steadily accumulate
operating assets, achieve our three-year profit plan, andmeet our targets of over 100.0 billion yen in shareholders’equity and an equity ratio of over 10%. Compared to 10

15“Purposism” beyond Capitalism , to discuss the purpose of our Company aiming to create a nextNEC Capital Solutions Limited

Representative Director andSenior Executive Vice President

Masamitsu Kisaki

years ago, when we formulated our previous Group Vision,
our revenue level has increased significantly, and I would
summarize the past decade as a time in which we wereable to build the foundation for our next leap forward.
Nawa
I was involved as part of the team in theformulation of the previous Group Vision. Thanks to this, I
have been able to serve as an outside director to this day.
The Company has been emphasizing CSV as its purpose
from an early stage even from the global perspective—
before the adoption of the SDGs—and it can be said that therest of the industry is now catching up. I highly commend theCompany’s innovative spirit, and the fact that we actually
put it into practice with concrete businesses in terms ofenvironmental and social aspects, rather than simply talking
about it with fancy words. On the other hand, an importantquestion to ask ourselves is whether all employees,
including those in the back office, were able to make theirown purpose while rearranging the Company’s purpose tosuit each organization, and whether this was possible not
only in new businesses, but also in conventional businesses.
I would like to raise these points as issues that will affect thesuccess or failure of realizing our new vision.
Group Vision 2030

“Group Vision 2030 incorporates two
major beliefs and commitments”(President Suganuma)

We have recently announced our Group Vision
2030, “Be a solution company leading the next-generation
Suganuma

generation circular economy, and the future direction of our CSV management, alongside President
Suganuma and Vice President Kisaki.					circular economy,” which describes what we aim to be ineight years’ time, and this vision incorporates two majorbeliefs and commitments.
The first is our belief in and commitment to becoming
a company that aims to create a next-generation circular
economy. Leasing, which is the origin of the Company’s
founding, is a truly “circular economy-oriented”
business that can undertake proper 3R* processing ofreturned equipment. The Company has been supporting
environmentally friendly 3R processing since theearly 2000s, and I believe that the knowledge we haveaccumulated regarding “circular economy-oriented”
services through leasing is one of our major strengths.
Going forward, it is predicted that we will enter a world
where we must continue to recycle resources to maintainthe global environment, such as by achieving the SDGs
and preserving biodiversity. We have decided to call thisa “next-generation circular economy,” and based on theabove prediction, we aim to demonstrate our value andcontribute to resolving social issues based on our original
strengths, while using “circulation” as a keyword.
The second is our belief in and commitment to becoming
a “Solution Company.” In addition to the meaning ofa company that provides solutions to resolve futuresocial issues, we also use the word “company” to meana group of colleagues who share the same values. Basedon this idea, I would like to work to improve employee* 3R means Reduce waste emissions and Reuse and Recycle waste.
It refers to a mechanism for reducing the environmental burden bymaking effective use of resources and cutting waste emissions.

(Date of dialogue: June 2023)

engagement toward resolving issues for the creation of anext-generation circular economy.
I am sometimes asked about the specific form of a nextgeneration circular economy, but at this stage, I have
purposely kept it to expressions focused on keywords. Just
as the Company has autonomously sensed changes in
the world and expanded additional domains centered on
financial solutions, I would like for our front-line members
to be able to autonomously grasp market changes andcreate solutions that respond to them. I would like to addthat I purposely use abstract expressions to convey thissense of expectation.
Kisaki
The Group Vision 2030 is the resultof identifying and deriving our strengths from two
perspectives: our reason for existing and long-term trends
in the world.
The first topic of discussion during formulation was
future megatrends. From this perspective, focusing on thehigh affinity between the SDGs, which are common goals
for the entire world to be reached in 2030, and our own
CSV management, we have decided to set the goals for thisGroup Vision as 2030, in line with the SDGs. The Company
has predicted that society in 2030 will be a CPS (CyberPhysical System) society in which physical space andcyberspace are highly integrated. We have been working
on the specifics of our Group Vision, taking advantage ofthe fact that our Company is the closest to a CPS society inthe industry.
In addition, one of the key points of the Group Vision
2030 in this context was the incorporation of the ideaof “Company = colleagues with shared values,” asNEC Capital Solutions Limited Integrated Report 2023 16

Special Dialogue

Introduction

discussed by Suganuma. We, the management team, have

the Company as very reliable, as we temporarily hold onto

on our strong desire to align the vision of the Company

evolution. In other words, the Leasing Business,

incorporated anthropomorphic expressions like this basedwith the vision of each and every employee. This sharingof values can be said to be the key to achieving our Group
Vision, and we hope to link this sharing and dissemination
to improving employee engagement and strengthening
human capital.

Nawa
The term “circular economy” is being used
recently, and I believe that it represents both an old andnew concept. I am very impressed by the fact that the
new Group Vision reflects management’s strong will todevelop the Vision into a next-generation model, as wellas to further develop the Company itself while leading
the next-generation circular economy. Using my own
interpretation and words, I would say that the Company
has upgraded to CSV management 2.0. In addition, as I
mentioned at the beginning, I hope that the Company
will strive to comprehensively strengthen human capitalso that all employees can move forward with confidence
toward the Group Vision 2030 and traditional businesses
do not get left behind.

Roadmap towards 2030

“I would like to develop resilient
strategies based on a new management
approach” (Vice President Kisaki)

Suganuma This is just my personal image at this point,
but I hope that by the time we reach 2030 after a series of
future initiatives, we will have become a company witha unique edge that people feel tempted to contact when
faced with issues, for example, in the healthcare or solar
power fields.
Also, we have very large assets in the national and local
governments. Based on these strengths, I would like toexpand our non-core services to include more by 2030,
such as the operation of computer equipment. Moreover,
we will provide multifaceted services related to the
management of the national and local governments, suchas by proactively making proposals to local governmentsthat consider PFI and PPP due to aging infrastructure, andstrive to create an environment where we can develop
meaningful relationships. I believe that such developments
will, in a sense, contribute to society and support thecirculation of public infrastructure.

The current Medium-term Plan for FY2024/32026/3 has just started, and the next Medium-term Plan for
FY2027/3-2031/3 is still in the rough stages of design, but
the current Medium-term Plan includes several points thatwill lead to the next Medium-term Plan.
Of these, the point I place the most emphasis on is theintroduction of a business matrix strategy. To put it simply,
this is a new combination of the four business segments ofKisaki17

Strategies for Value Creation

Leasing Business, Finance Business, Investment Business,
and Other Business (service business), and theCompany’s four capital solutions of vendor finance,
ICT/professional services, customer sales and financial
products. This allows each organization, each person in
charge, and each individual to check their current positionand progress toward the objectives of the Medium-term
Plan at a detailed level, as necessary. At the same time,it also becomes possible to resiliently plan and executestrategies to achieve the goals. Over the next three years,
we will use this new management approach to consistently
and minutely monitor PDCA and aim to achieve ourmanagement targets for FY2026/3. Then, based on the
progress and final results of the current Medium-term Plan,
we will build a resilient plan for the next Medium-term
Plan.
[Business Matrix Strategy]

Leasing
Business

ICT/
VendorCustomer Financial
professional
financesales
products
services● Each organization, each person in

FinanceBusiness

Investment
Business
Other
Business

Capital solutions axis

charge, and each individual checks
their current position and progress
toward the objectives of the Mediumterm Plan at a detailed level, as
necessary.

● Resiliently plan and executestrategies to achieve the objectives.

Business segment axis
Nawa
Currently, many private companies are
struggling with the paradox that holding on to assetsthat originally generate corporate value is hindering PBR.
As a company that understands the concerns of privatecompanies and supports asset transformation (AX) fromtangible to intangible assets, I see the current position ofFoundation for Value Creation

Kisaki

Financial/Corporate Data

Earlier, Professor Nawa raised the issue of

assets and accompany the companies on their paths of

the importance of instilling purpose among employees.

which is our bread-and-butter business, is a “circular
economy-oriented” business that is highly suited toof our corporate philosophy, which can be describedas our purpose, our vision, and our principles. Someparts of our Group Vision 2030 refer to a world that issomewhat far ahead, but by having people grasp thevision in terms of these three layers, I hope the vision
will seem more relatable to employees. We are keenly
aware of the fact that the management goals we have set
in order to implement this new, highly ambitious vision
are by no means easy. On the other hand, I believe thatby accomplishing these objectives, we will dramaticallyincrease our presence within the industry. We are striving
to steadily implement all kinds of measures, including the
Medium-term Plan 2025, so that we can enjoy a virtuous
cycle in which we take the lead in creating new social value
and linking it to our next leap forward.

asset reorganization, and we look forward to playing aneven greater role in the future. Furthermore, for local
governments, I believe that initiatives for PPP and PFI,
which combine the power of the public and private sectors,
will become our key in the future. In the tourism businessand other businesses that we began working on under theprevious Group Vision, we not only made investments,
but also worked from the perspectives of both tourism
and regional revitalization. Based on these strengths, I
hope that we will become a co-creative organization that
undertakes all consultations about local concerns anddiscusses what the Company can do and incorporate.

In establishing this new vision, we formulated the trinity

Suganuma What I want to create the most through our
Medium-term Plan and vision is culture. The principles
mentioned by Kisaki are also included in this. As I
mentioned earlier, in order for us to become a company
that can autonomously respond to changes, it is essential

Towards sustainable growth in the future

Nawa
As we approach the end of this discussion,
I would like to express my personal opinion on our
relationship with NEC. To put it bluntly, I believe thatwithout our relationship with NEC, we would be in thesame position as many other general leasing companies.
NEC is a global company that is rated No. 1 in the worldin the security market, and I would like for the Company
to make effective use of the NEC brand to widely promote
our ability to provide safety and security even in theincreasingly advanced information society of the future.
Moreover, regarding the CPS-related topic that Vice
President Kisaki mentioned earlier, I hope that, while using
financial solutions, we will proceed in such a way that one
day we may be the ones guiding NEC while building a good
and trustworthy relationship.

to have a culture that is appropriate for this. Going forward,
I would like to continue to build this culture over the longterm. In addition, through this process, we would liketo become a company that works to communicate with
employees and foster job satisfaction, which is the mostimportant management theme.
Earlier, Professor Nawa mentioned CSV management
2.0. The Company has in fact entered a new management
stage towards its vision for 2030. As Kisaki mentioned,
the newly established vision is highly ambitious, but
by holding dialogue sessions and other events for all
employees, we are working to share how our objectives
are possible based on our past performance. Please lookforward to our future development, evolution, and growth.

NEC Capital Solutions Limited Integrated Report 2023 18

Su stainab i l i t y M e s s a ge
Foundation for Value Creation

Continuing to be acompany that values
the obvious
Representative Director
Senior Executive Vice President

Masamitsu Kisaki
Each and every employee is a key player
in our Group Vision 2030

It took approximately one year to formulate the Group
Vision 2030, which was announced in April 2023. We held
various discussions with a healthy sense of both danger
and positivity, asking questions such as what are ourstrengths, what is our culture, where do we stand in theindustry, and what do we want to be in the future? The
biggest issue we discussed was whether the Company was
generating revenues appropriate for a company listed on
the Prime Market of the Tokyo Stock Exchange. In order toface and overcome these issues, we determined that our
new Group Vision requires “innovation and challenges.”
Each and every employee is a key player in our Group
Vision. The word “company” in the phrase “Be a solution
company leading the next-generation circular economy”
includes, in addition to the meaning of a corporation, themeaning of colleagues who share values. In other words,

Corporate
Philosophy(reason for existing)Vision(our purpose)

Material issues

Principles(action guidelines)

19

it expresses how each and every employee contributes
to society through the company. There are a numberof actions a company should take to ensure that its key
players can take on innovation and challenges, andfulfill their roles to the fullest. The theme here deals with
understanding the Group Vision, empathizing with it,
sharing its common values, and finally, putting it into
action.
Because the Group Vision expresses what we want tobecome in a written form, it can seem abstract and difficult
to visualize in a familiar way. Therefore, by formulating“Principles (action guidelines)” that clarify the actions
that will lead to the realization of the Group Vision, we
have enabled our employees to take on “innovation andchallenges” in their daily work. These are actions that
we want each individual employee to undertake, and wehave summarized them in a short and easy-to-remember
phrase, the Four Shinka (advance, deepen, update, true
value).

● Four Shinka

Advance(Co-creation withcustomers)

Deepen(Deepen relationships
with customers)

UpdateTake up the challenge of strengthening
and developing services and creating new
businesses, while continuing to resolve issues
for customers and society.
Improve the quality of operations through IT
utilization and digitalization, and build solid
relationships of trust with customers.

(Corporate culture)

Each individual employee embraces diversity
and makes the most of their own potential.

(Corporate value)

Aim to improve corporate value continuously
by creating social value and economic value.

True value

Introduction

Strategies for Value Creation

Material issues that connect the vision
and Principles

In addition, in formulating the Group Vision 2030, we reidentified material issues. As the previous Group Vision
aimed to realize CSV management that creates both
economic and social value, it had a strong focus on
business strategies as important issues for the realizationof CSV management. A decade has passed, and we have
now entered a phase of evolving CSV management.
Accordingly, we have re-identified social issues, such asa decarbonized society and human capital, as material
issues from the perspective of sustainability. Material
issues play an important role in connecting the Group
Vision and Principles, and we incorporate the issues
identified in material issues into the measures of our
Medium-term Plan. Management indicators and KPIs (Key
Performance Indicators) based on these material issues
are linked to the performance goals of each and every
employee, including directors.

Dialogue sessions for all employees

Up to this point, I have explained the underlying beliefof the Group Vision, but the new Group Vision will truly
begin only when all employees have understood it. To
foster understanding within the Company, four directors
worked to hold dialogue sessions at all our offices from
May to early July 2023. These dialogue sessions allowed
us to not only foster understanding of the Group Vision but
also to share our values. We took time to have in-depth
discussions with 20 to 30 staff from each office, and for
offices located outside the headquarters area, where thefour directors do not visit very often, we combined theevent with a social gathering. I hope that by spending time
together in this way, our ways of thinking and decisionmaking criteria were shared with employees, and thatwhen faced with issues going forward, they will ask
themselves, “How would Mr. Kisaki approach this?” Thesharing of values cannot be achieved overnight, but wewill continue working toward it, such as by monitoring theresults of engagement surveys conducted once a quarter.

Foundation for Value Creation

Financial/Corporate Data

We would like to share with our employees the simple

value of being a “company that values the obvious.” Thegoals for our Group Vision are set for 2030, which is thesame year as the SDGs goals, and one could say that the
SGDs goals and targets are all “obvious.” I want to be acompany that values such “obvious” things.

Dialogue session

Carbon neutrality commitment for a nextgeneration circular economy

As of the current Medium-term Plan, we have included
non-financial indicators in the plan to integrate oursustainability initiatives with our business strategies. In
addition, we have declared our intention to become carbon
neutral by the fiscal year ending March 31, 2041. Enhancing
our sustainability initiatives is in line with the goals of
our Group Vision 2030. In our Medium-term Plan, we
have set a goal to further improve profitability, but rather
than pursuing immediate profits, our aim is to improve
profitability that can be sustained over the medium- tolong-term. I believe that each of these things leads to therise of values that place emphasis on the “obvious.”
We are ready to take on innovation and challenges
toward the creation of the next-generation circular
economy for 2030. If we can highlight the Company’s
uniqueness and solidify our position within the industry,
we will be able to lead the next-generation circular
economy. Going forward, it is likely that movements
related to natural capital, such as biodiversity, will
accelerate as global issues. We would like to respond tothese movements by providing our own unique “circular
economy-oriented” services.

Previous material issues

New material issues

・Strengthen the partnership with NEC・Reinforce our base for funding
Expanding the revenue
・Expand our customer basebase・Expand our global business・Create new businesses

Promotion of decarbonized society and circular economy

Business activity

Management foundation
Corporate culture
transformation

・Improve employee satisfaction

Strengthening
・Improve operational quality
management foundation・Ensure complianceBusiness activity

Promotion of establishment of social and ICT infrastructure
Creation of new services and businesses to resolve social
issuesManagement foundation

Investment in human capital

Pursuit of corporate governance that supports improved
corporate value

NEC Capital Solutions Limited Integrated Report 2023 20

Sustainability/Promotion of Decarbonized Society and Circular Economy

Introduction

Sustainability

We are working to practice CSV management in which our management strategy is directly linked to the Company’ssustainability. Establishing our Group vision with a goal of 2030, we aim to contribute to the achievement of the SDGs bymaking efforts to enhance social value through our business.
We have identified the material issues to achieve theGroup vision. In establishing the new Group vision, we reidentified these material issues. We also set non-financial
indicators in the Medium-term Plan 2025 to clarify the link
between material issues and our business strategy.

Promotion of decarbonized society
and circular economy▶P.22

Creation of new services andbusinesses to resolve social issues▶P.26

Promotion of establishment of socialand ICT infrastructure

Investment in human capitalManagementfoundation Pursuit of corporate governance that
supports improved corporate value

Sustainability implementation system

PDCA management

The Company monitors and reviews business activities
under the PDCA cycle, from the management level tothe employee level. The PDCA Committee continues
monitoring important matters related to the management
objectives, material issues and sustainability on a monthly
basis. This ensures decision-makings are communicatedto the employee level to make prompt actions . We havethe PDCA cycle run surely at the employee level and a

Board of Directors

Election/
Dismissal/
Supervision

President

and non-financial indicators)● Sustainability● Environmental targets● Other important issues

Management Conference

Sustainability Committee

AN

PL

O

D
PDCA
Committee

TI

ON

E
CH

CK

AC

Importantmanagement
issues● Risk control

Risk Management
Committee
ALM Committee● Sustainability

Executive Officers

variety of committees as well, thus ensuring the importantmanagement indicators and issues to be reported andshared in a timely and appropriate manner.
We also work on non-financial indicators continuously
in a PDCA-based cycle by reflecting them in annual
business plans and reviewing important issues and theimplementation status at regular meetings. These matters
are also reported to and discussed by the Sustainability
Committee.
Staff
department

Instruction/Action

MeetingbodiesImportantthemesSustainability Committee
Reporting/Sharing

21

Report anddiscussion

Sales and staff departments
Group companies● ComplianceInternal Control Committee▶P.32

Report andresolution● Management objectives (financial indicators● Material issues▶P.27● Business quality
improvement Committee for
Improving Business Quality

Committee for Strengtheningof Management Foundation
Committee for Promoting
Service Models
Committee for Considering
Scheme Risks
Investment and Loan
Committee

Improvement
activities

Staff
department
Managing
department
targets

Sales
department
Managing
department
targets

Promotion of decarbonizedsociety and circular economy▶Response to climate change▶Reinforcement and creation of services

for a circular economy

Basic policy

In 1999, we were certified under the ISO 14001
international environmental management standard, aheadof other companies in the leasing industry in Japan, andhave since been promoting environmental management.
Our business activities have a smaller environmental
burden than manufacturing or other types of business. We
thus place emphasis on increasing environmental benefits(values) for customers and society. Based on the conceptsof “Realizing a low-carbon society through Eco-Leasing/
Eco-Financing” and “Recycling resources through leasing,”
we have been actively developing business that helps solve
environmental issues to positively impact all of society.
We announced our support for the Task Force on
Climate-related Financial Disclosures (TCFD) in September
2022, and have since been disclosing information inaccordance with the TCFD recommendations.
Based on our new Group vision, which aims to realizea next-generation circular economy, we are working on
highly effective actions to promote a decarbonized society
and circular economy by building a system in which ourbusiness activities themselves are linked to activities toaddress climate change issues.
We responded to the Carbon Disclosure Project (CDP)
Climate Change 2022 Questionnaire, and scored a B,
indicating the Company is showing evidence of managing
our environmental impact.
● Conceptual diagram of environmental

benefit and environmental burden
Reducing
environmental burden

Plus

Admirable activities

Zero
Minus
▼

We established the Sustainability Committee, chaired by
the president, an organization to discuss sustainability
within the Group. In principle, the Sustainability Committee
holds two meetings per year. It discusses the developmentof policies and plans relating to sustainability as wellas the state of the implementation of the PDCA cycle.
Results of the discussions are reported to the Management
Conference and Board of Directors, and important matters
are subject to resolutions of the Board of Directors.

▶P.25

Financial/Corporate Data

Our initiatives▲

See Medium-term Plan 2025 on▶P.14 for non-financial indicators

Our material issues

Business
activities

Foundation for Value Creation

Material issues (I)Basic policy

Material issues and non-financial indicators

Strategies for Value Creation[CS, CSR (social contribution)]▶

Increasing
environmental benefit

Activity time

Good faith activities

Efficient management
to reduce theenvironmental loadfrom customers
and society

Reduce office paper,garbage and industrial
waste and conserve
energy[Eliminate theenvironmental burden
imposed by the Company]

For more information, please visit:https://www.necap.co.jp/csv/environment/index.html(available in Japanese only)

Environmental Policy

We have established our Environmental Policy as an action guideline for environmental management. With an eye torealizing the Group vision 2030, we have reviewed the Policy.
Environmental Policy●●●●

In order to contribute to the creation of a carbon-neutral, next-generation circular economy, we will engage in business thatsolves social issues and create economic value together with the value chain.
We will work to improve our operational quality that contributes to sustainable business activities, as well as improve theefficiency of these operations.

We will actively promote the creation of a society and environment that can recycle resources to enable our co-existence with nature.
We will comply with environmental laws and regulations and other requirements to which we agree.

● Non-financial indicators in the Medium-term Plan 2025

Objective

CO2 reductions to achieve carbon neutrality

Description

Scope 1+2: Reduction rate compared to FY2023/3

Promotion of cyclical use following expansion Total number of disposals of products whoseof ICT businesslease has ended over three year period

Promotion of response to climate change

Carbon Neutrality Commitment

Renewable energy power generation capacity(power generators owned)

FY2023/3

FY2026/3 (Target)

200,000
units

700,000
units

157t-CO243MW

20% reduction
100MW

See Non-financial (non-consolidated) on ▶P.43-44 for our CO2 emission figures

Aim for a carbon neutrality by the fiscal year ending March 31, 2041 (bring Scope 1 + 2 on a consolidated basis
effectively to zero)

We have set the goal of reducing the CO2 emissions (Scope 1 + 2, the Company and RISA Partners) generated from ourbusiness activities by 20% in the fiscal year ending March 31, 2026 compared to the fiscal year ended March 31, 2023.
We aim to achieve net zero CO2 emissions (Scope 1 + 2) on a consolidated basis including our overseas subsidiaries by thefiscal year ending March 31, 2041.

NEC Capital Solutions Limited Integrated Report 2023 22

Promotion of decarbonized society and circular economy

Introduction

Response to climate change (information disclosure based on the TCFD recommendations)

Governanceimpact the Group’s business. They are subject to control
by each management meeting body and the Management
Conference.

We established the Sustainability Committee, chaired by
the president, to be an organization discussing climatechange and other sustainability issues.

See Risk Management on▶P.38 for information on company-wide risk management

See Sustainability on▶P.21 for sustainability implementation system

Strategy

We conducted a scenario analysis to consider the impact
of climate change on our business, in order to formulate
and examine strategies for the Group. In this scenario
analysis, we examined risks and opportunities from both
qualitative and quantitative perspectives, referring to the“4°C scenario,” which assumes no further action against
climate change is taken, causing the intensity of extreme
weather events to increase, and the “1.5°C scenario,” whichassumes more ambitious measures to tackle climate change
are taken in a bid to achieve decarbonization. A detailed
analysis of risks and opportunities is posted on our website.
The scenario analysis found that, although a certain
level of risk is expected in either scenario, the impact on
our business is limited. In fact, we concluded that climatechange is likely to increase our business opportunities, suchas increased demand for Information and Communication
Technology and leasing, new services and the expansion of
new investment opportunities.
In response to the ever-changing global situation, we will
review risks and opportunities as needed while consultingwith the relevant internal divisions and management teams,
and revise them to develop more effective countermeasures.

Risk management

We classify risks that may adversely impact our businessactivities into two types: ERM risks*1 and other risks.

ERM risks are subject to control by the Risk Management
Committee. Other risks are risks that may significantly

We believe climate-related risks are key management
risks that fall into both categories. From the perspectiveof overall risk management, the Sustainability Committee
chaired by the president manages these risks in an
integrated manner.
When it is expected that climate-related risks will
significantly impact*2 the Group, we will swiftly discussa response policy. The situation will be assessed by
the Management Conference and a resolution will be
submitted to the Board of Directors. Decisions will beincorporated into business plans as appropriate.

*1 ERM risks comprise (1) credit risks, (2) market risks and (3) operationalrisks (such as administrative risks and system risks) in enterprise risk
management (ERM).
*2 Significant impact refers to an impact that reaches the level of thetimely disclosure standards of the Tokyo Stock Exchange (estimatedamount of impact on profit, etc.)

Metrics and Targets

In April 2023, we announced the Medium-term Plan 2025
and set new medium- to long-term environmental targets,
aiming to reduce the CO2 emissions (Scope1 + 2) generated

from our business activities as below.
FY2023/3

CO2
emissions(t-CO2)157

FY2026/3(Target)

FY2041/3(Target)Achieve net zero
Down 20%
on a consolidated
comparedbasis including ourwith FY2023/3
overseas subsidiaries

For more information, please visit:https://www.necap.co.jp/csv/environment/climatechange.html(available in Japanese only)

Climate change risks associated with credit costs

Based on the TCFD scenario analysis for the banking
sector released by the Ministry of the Environmentof Japan, we created a scenario in which borrowers’
ability to repay their loans deteriorated due to theoccurrence of physical and transition risks. Then,
taking into account the Company’s characteristics, we
calculated the increase in credit costs based on credit
balance for the fiscal year ended March 31, 2023.
The impact on gain and losses from a rise in credit
costs due to physical risk for the periods being
analyzed was negligible.
We did not observe any additional credit costs as aresult of transition risk.

23● Overview of our analysis scenarios (millions of Yen)
Physical risk

Transition risk
Policy changes, changes in the
Risk incident
Floodssupply-demand balance◆4°C scenario
IEA Stated Policies Scenario/RCP8.5
Applied◆1.5°C scenario
scenarios
IEA Net Zero Emissions by 2050/RCP2.6
Sustainable Development Scenario
Energy, electric vehicles,
Analysis
Corporations
steel sectors (excluding
scope
renewable energy)
RegionGlobalAnalysis period
2050
Scenario
1.5℃
4℃
Scenario
1.5℃
4℃
Increase inSingle fiscal year
Single fiscal year
37
51
ー
ー
credit costs
Total through 2050 1,011 1,379 Total through 2050
ーー

Strategies for Value Creation

Foundation for Value Creation

Financial/Corporate Data

Our efforts towards reinforcement and creation of services for a circular economy■ “PIT Managed Services”

ICT equipment is one of the most important infrastructuresin a company. At the same time, we need to provide
support tailored to the life cycle, such as procurement andintroduction support, security management, contract andasset management, and operation management. With our
track record of handling a large number of ICT equipment,
we have been providing such services from an early stage,
including the operation of ICT equipment. We analyze thecurrent situation to define the ideal state, and provide
services that enable outsourcing from the introduction of
ICT equipment to operation management after installation.
This allows us to provide powerful support for clientcompanies’ IT system divisions. In the Medium-term Plan
2025, one of our business strategies is to expand scale ofbusiness through high added value for ICT related services,
based on lease and rental services.

ColumnOperation
management

Procurement
and introduction
supportSecurity
management

Contract and asset
management“Waku-waku” (exciting) Children’s Pond Project

Since 2007, we have been working in cooperation
with the Asaza Fund, a nonprofit organization, on the“Waku-waku” (exciting) Children’s Pond Project, asocial contribution activity that provides environmental
education programs through biotope construction. As ofthe end of March 2023, a total of 50 elementary schools
have participated in this project.
Based on the recognition that leasing, our mainstay
business, is an industry conducive to recycling thatcan make effective use of resources, we started thisproject with the goal of providing children with a place
to learn about the importance of nature’s cycles. The
basic program consists of five sessions. Not only do
we construct biotopes, but we also place value on theprocesses before and after construction. The curriculum
consists of learning about living creatures’ homes andlifestyles, observing the surroundings of the school,
designing and constructing biotopes, and observing
them afterwards. We hope this series of experiences
helps children to learn about the mechanisms forprotecting biodiversity and gain a higher awareness ofco-existing with nature. During the COVID-19 pandemic,
we enhanced our activities further by introducing online
classes using Zoom.
The natural environment has been gaining attention
in recent years as natural capital, an important capitalthat supports the lives of citizens and the managementfoundations of companies. Against this backdrop, we
have included the number of activities of the “Wakuwaku” (exciting) Children’s Pond Project into thenon-financial indicators of our Medium-term Plan 2025.
By continuing to promote these activities, we will
strive to provide better environmental education to
the children who will lead the next generation, thereby
contributing to the creation of a sustainable society.

(Top) Killifish being released into thecompleted biotope(Right) Setting up a bird house to
attract birds to the constructedbiotope● Non-financial indicators in the Medium-

term Plan 2025

Objective

Description

Promotion
School biotopeof activities
education: The
contributing tototal number ofsociety with natural schools in thecapital in mind
three-year period

FY2023/3

FY2026/3(Target)3

10

For more information, please visit:https://www.necap.co.jp/company/biotop/index.html(available in Japanese only)

NEC Capital Solutions Limited Integrated Report 2023 24

Promotion of establishment of social and ICT infrastructure/
Creation of new services and businesses to resolve social issues

Material issues (II)Introduction

Our initiatives

Promotion of establishment ofsocial and ICT infrastructure▶Establishment of social and ICT

infrastructure

Basic policy

Since being established to take on a sales finance functions
for NEC products, we have grown larger while closelycooperating with NEC.
NEC offers solutions integrating ICT and a wide rangeof technology to the national and local governments,
contributing to the enhancement of operational efficiency
and quality of public services. Backed by NEC’s customer
base, we have business relationships with the national
and local governments all over Japan, with 30 sites aroundthe country and registrations with 1,800 municipalities
nationwide as designated applicants. Contracts withpublic offices and municipalities account for over half ofcontracts executed in our leasing business. Our businesssupports social infrastructure itself, ranging from systems
for central government offices, police departments and fire
departments, to systems for local governments, such as
basic resident registers and infrastructure for educational
institutions.
In the spread of COVID-19, there was an urgent need to
improve the ICT environment at schools. The government

thus stepped up its efforts to realize the GIGA School
program ahead of schedule, with the goal of enabling all
schools to provide a computer to each student. Amid themany issues and questions that arose due to the new,large-scale initiative, we supported the early realization of
the GIGA School program on the financial side by utilizing
our strengths, such as undertaking lifecycle managementfrom the selection and introduction of highly reliable ICT
equipment through to disposal.
In recent years, we have also been utilizing our businessexperience with the national and local governments tocarry out the private finance initiative (PFI) business. In
this business, we assist the outsourcing of public sector
projects, from facility construction through to operation, tothe private sector.

● Non-financial indicators in the Medium-term Plan 2025

Objective

Establishment of social
infrastructure

Description

National andlocal governments

Average for the
past 3 years

Cumulative contracts over three year period
for the national and local governments

FY2023/3

FY2026/3 (Target)

127.8 billion yen 400.0 billion yen

Our initiatives■ Conclusion of a business contract related to the PFI project, the “Project forConstructing the Kasai Rinkai Aquarium (tentative name)”
On the basis of our track record of conducting businesswith the national and local governments, in 2011 westarted PFI and PPP business promoting public-private
partnerships for public facilities. We have built up a trackrecord, mainly in projects related to local culture andschool education, such as cities’ cultural complexes,
school meal centers, and other facilities. We are utilizing
this experience to improve social infrastructure. We
concluded a business contract for the Project forConstructing the Kasai Rinkai Aquarium (tentative name)in 2022, which is the second project for which we serve as
representative. A special purpose company (SPC), whose
tradename is Tokyo Seatelier Co., Ltd., was establishedthrough a consortium comprising the Company and10 other companies, and will handle all aspects of the
project, from design and construction to maintenance and25

management of the facility. In addition to serving as therepresentative company of this project, we will also invest
in and manage the SPC, among others. The aquarium isscheduled to open in 2028.

Foundation for Value Creation

Material issues (III)Creation of new services andbusinesses to resolve social issues

Financial/Corporate Data

Our initiatives▶Revitalization of local communities

and economies▶Response to aging society

Basic policy

We aim to solve issues of both customers and society andrealize a virtuous circle for the environment and growth byintroducing innovations to capital solutions and creating
new services and business. We provide services that leadto cyclical use of products; services that lead to a virtuous
circle for local economies and societies; and services● Overview of ourservice businesses

Corporateadvisory

PFI and PPP● Contracts executedby customer in the Private ﬁrms
Leasing Business

Strategies for Value Creation

ITAM*2*1 PPA: Power Purchase Agreement*2 ITAM: IT Asset Management

Power
generation
business
PPA*1

Servicebusinessthat lead to a virtuous circle for corporate growth byestablishing and strengthening the three solution areasof vendor financing, ICT and professional services, andfinancial products, thus aiming to realize a next-generation
circular economy.

Regional
revitalization(tourism)Fee businesses andnon-financial
businessThree types of circular economyoriented services

Warehousing

New businesscreated by theentireFee businesses(handling shift company
towardservices)

Services that lead tocyclical use of products

Services that lead tovirtuous circle for local
economies and societies
Services that lead to a
virtuous circle forcorporate growth

Our initiatives■ Asset renovation fund to revitalize local communities and economies

Asset renovation fund is a fund formed in collaboration
with the Organization for Promoting Urban Development,
regional financial institutions and other parties. The
fund is based on the community development fundsupport project of the Ministry of Land, Infrastructure,
Transport and Tourism. It will invest in private-sector
urban development projects that contribute to therealization of flexible workstyles and comfortable lifestyles
that bring workplaces and residences closer together or
integrate them using buildings that are 20 years old andolder. The fund is managed by OHANAPANA, a wholly-

owned subsidiary of the Company. The Company has also
invested in the fund. Since the establishment of the fund in
2022, we have invested in four projects.
(As of the end of July 2023)

Healthcare REITs are real estate investment trusts (REITs)
that specialize in investing in healthcare facilities. In
order to help build infrastructure in the healthcare field,
which is indispensable for an aging society, we support
the growth of REIT by temporarily holding (warehousing)healthcare facilities before they are incorporated into
this REIT. This initiative, which began in 2015, has beensteadily securing assets by strengthening partnerships
with financial institutions, developers, and operators. Witha view to realizing a decarbonized society, in recent years
we have been promoting the acquisition of environmental
certifications such as BELS (Building-Housing EnergyEfficiency Labeling System).

[Projects invested in]●●●●

Tsukuba Machinaka Design (Tsukuba City, Ibaraki Prefecture)

Gose Machizukuri Co., Ltd. (Nara City, Nara Prefecture)

Setouchi Ryokan (Onomichi City, Hiroshima Prefecture)
NOTE Iga Ueno Co., Ltd. (Iga City, Mie Prefecture)■ Responding to aging population through our warehousing business for a healthcare REIT

Architectural rendering of the Kasai Rinkai Aquarium (tentativename) (By DAIKEN SEKKEI)NEC Capital Solutions Limited Integrated Report 2023 26

Investment in human capital

Introduction

Material issues (IV)

▶Ensuring diversity of HR▶Realizing health management▶HR and organization development toachieve sustainable growth▶Workstyle reforms utilizing technology

Taking on corporate
culture transformation
Koji Shibata

The major themes of our Group Vision 2030 announcedin April, “Be a solution company leading the nextgeneration circular economy,” are “improving profitability
by providing added value to resolve social issues” and“creating a company that employees who share the samevalue can take pride in (improvements to engagement).”
I recognize that this Group Vision cannot be achieved
simply through the continuation of conventional
initiatives, but that it requires major challenges andinnovation at both the organizational and individual levels.
Moreover, it is essential for all employees to innovate
their ways of thinking, their awareness, and their actions.
Up until now, we had formulated “Human Resources
Medium-term Plans” based on management strategies,
but this time, we have formulated a “Human Resources &Corporate Culture Transformation Medium-term Plan” thatincorporates corporate culture transformation with the aimof transforming corporate culture into the one conducive
to ongoing challenges and innovation. Last year, we
introduced 360-degree feedback to general managers forthe first time, and “challenges and innovation” was listed
as one of the actions that needed improvement. Moreover,in the engagement survey conducted last year, scores for a“culture of openness and mutual respect” were lower

27

Financial/Corporate Data

▶Improvements to engagement

Message from an executive officer in charge of human resources

The background of the formulation of a
Medium-term Plan for the human resources
department

Foundation for Value Creation

Our initiatives

Investment in
human capital

Executive Officer

Strategies for Value Creation

than other companies. Accordingly, we have incorporated
various measures into our Human Resources & Corporate
Culture Transformation Medium-term Plan in order to bringabout a “culture that is open and free, values challenges,
and allows people to participate in their own unique way,”a “culture that understands and respects the diversity ofhuman resources and ways of thinking, and thus leads tothe improvement of corporate value,” as well as a “safework environment for both the mind and body, including
psychological safety” during the period of our Mediumterm Plan.
The source of our value as a company that operates
financial services lies in the staff who work for us.
Therefore, the key to realizing the Group Vision 2030 lies intransforming our corporate culture and helping each andevery employee maximize their potential.

What are the challenges to improving profitability?
As part of our management strategy, we are promoting
the “introduction of innovations to capital solutions” toimprove profitability. Specifically, we are expanding not
only conventional business segments but also peripheral
domains, and venturing to create new businesses and“circular economy-oriented” services. When creating
new businesses and services, it is essential to have aculture that allows diverse human resources with varying

experience, expertise, and values to openly exchange
opinions. In addition, from the perspective of challenges,
we need to encourage each and every employee to take onchallenges, and change our organizations and systems topromote and encourage the taking on of challenges.

Toward corporate culture transformation

As a first step, we have established five standards of
behavior that should be incorporated into employees’

daily actions based on the Principles (Action Guidelines):
Four Shinka (advance, deepen, update, true value)(please see page19 for details), which were formulated
together with our Group Vision 2030. As of FY2024/3,
we have incorporated these standards into our humanresources evaluation system. The five standards of
behavior are customer-oriented, self-development, taking
on challenges, speed, and open communication, andthey serve as a system to promote desirable actions. For
example, if a subordinate tries taking on a new initiativethat is different from past practices and it does not lead tosuccess, but they still receive a positive response from theirsuperiors and colleagues, said subordinate is more likely to
try taking on other challenges again in the future. In termsof open communication, we are encouraging innovationin communication, such as by promoting training to makemanagement more aware of psychological safety andunconscious bias. I believe that raising each individual’sawareness of the standards of behavior and having
them change their behavior accordingly will lead to atransformation in corporate culture.

What constitutes a company that employees
can take pride in?

If a person works at a company where they can empathizewith the Group Vision, contribute to resolving social
issues through their daily work, and experience personal
growth, then surely they will be proud to tell their family

and friends about the company they work for. To realize
this, we aim to be a company where all employees arerecognized as important individuals and where the daily
work, while demanding, is truly enjoyable. In other words,
I would like for us to aim to be a company with high levelsof engagement.
Improving engagement is not something that can beachieved in a single step. In addition to the engagement
survey conducted once a year, we plan to measure
the effectiveness of our measures and change them asnecessary by conducting mini-surveys three times a year.
Although we still have a lot of work to do in the future,
we value our excellent culture of keeping promises tocustomers and seeing things through to the end, as wellas trusting the colleagues who work alongside us. At thesame time, we would like to work on corporate culture
transformation so that all employees can play even greaterroles going forward.

● Behavioral evaluation items

The actions that employees should take (Dos) areevaluated as either “Excellent” or “More” for eachbehavioral indicator
Indicator

Dos

Self-development

Always look toward the future

Customer-oriented
Taking on challenges
Speed

Open communication

Take anticipatory action

Take on challenges by asking
how to make things work
Take action first, and makechanges as you go
Openly exchange opinions

Efforts toward open communication (President’s luncheon put inplace based on suggestions from employees)

NEC Capital Solutions Limited Integrated Report 2023 28

Investment in human capital

Introduction

Basic policy (human resources strategy)

Investment in human capital is one of the material issues we need to address to achieve the Group vision 2030. We arecarrying out initiatives in five areas: improvements to engagement; ensuring diversity of HR; realizing health management;
HR and organization development to achieve sustainable growth; and workstyle reforms utilizing technology.

Basic policy for HR development

Human resources are the greatest asset in the Group’sbusiness. By maximizing the value of our personnel, we
aim to enhance our corporate value over medium- to longterm. To this end, we will develop HR, organization, andcorporate culture transformation strategies that are linked
to our business strategies. Based on these strategies, wewill strive to be a company in which diverse personnel can
maximize their potential, feel satisfied in, and can takepride in.
Based on our Group vision, the Group will take on thechallenge of expanding not only our existing business, butalso business in peripheral fields, as well as creating new
business and “circular economy-oriented” services. To
achieve these, as well as our Group vision, we aim to be acompany that is chosen by diverse personnel by improving
the well-being of employees that continue to take onchallenges and grow.

Workplace environment improvement policy

Based on our basic policy for HR development, we willdevelop an in-house environment in which diverse
personnel can maximize their potential and play anactive role. We have set our eyes on achieving thefollowing: a system that enables employees with various
circumstances, such as needing childcare and nursing care,
to exercise their potential regardless of time and placeconstraints; a compensation system based on employees’roles (work) regardless of their years of experience orage, and their contributions to company performance;and being a company that employees can take pride in,such as by creating an organizational culture that values
unrestricted, vigorous action and encourages them toplay an active role in their own way (a company andorganization filled with highly engaged employees). To thisend, we plan to implement a variety of measures, including
the provision of IT environments and office space.

Improvements to engagement

The Company regularly conducts employee engagement
surveys to monitor our reforms to be a company where
employees feel satisfied in and can take pride in, as
outlined in our basic policy for HR development, andmake improvements under the PDCA cycle. We sharethe company-wide engagement score and key points for
improving the engagement score among all directors. We
also share the results of each division among the officers
and general managers in charge to improve these scores.

In the final year of the Medium-term Plan 2025 (thefiscal year ending March 31, 2026), we will accelerate
improvements in order to reach the top 25% of thecompanies participating in the survey (see table below).
The Company will also introduce a system that links
employee engagement scores to the performance

evaluations used to determine the director compensation,and our management team are also committed to
improve these scores.

● Non-financial indicators in the Medium-term Plan 2025

Objective

Description

Improve employee engagement Employee engagement score

FY2019/3

18%

FY2023/3

21％

FY2026/3 (Target)

34%*Based on a survey by Kincentric, a global HR consulting firm. The score of 34% represents the score level for the top 25th percentile of theJapanese company participants.

Ensuring diversity of HR (diversity, equity and inclusion)

We have acquired talent with expertise and experience in different
areas in line with the expansion of our business into new domains.
This has enabled us to create a richly diverse organization, where
47% of our employees are mid-career recruits and 37% are women(right table). From the perspective of diversity and equity andinclusion, going forward we will further promote the creation of anenvironment in which diverse personnel can truly play an activerole, such as by utilizing female and senior personnel and promoting
the employment of people with disabilities. We will promote these
initiatives from both aspects of systems and corporate culture.

29● Status of employee diversity(non-consolidated)

Ratio of mid-career
recruits

Ratio of female
employees

Ratio of female
managers

Ratio of employeeswith disabilities

End of
2021/3End of
2022/3End of
2023/3

37%

38%

37%

48%

4.4%

1.52%

47%

5.0%

2.28%

47%

5.5%

2.38%

Strategies for Value Creation

Initiative to promote women’s active engagement
To date, we have implemented various HR development
measures. These include promoting the conversion ofgeneral clerical personnel into career-track positions,dispatching employees to external educational institutions,
supporting the acquisition of specialized knowledge, andholding workshops aimed at exploring individuality andcareer ambitions. We have also taken steps to encourage
women to take active roles, such as the enhancementof our support system for balancing childcare and work
beyond the legal requirements, and the introduction ofa mechanism that enables flexible work styles throughrevisions to our remote work and flextime systems.
In the fiscal year ended March 31, 2023, we held our
first workshop for management, including directors, on
identifying and controlling unconscious bias. Throughthese measures aimed at managers, we will strive to create
an environment in which women can play an even more
active role.
However, while the ratio of female managers in the
Company has improved, diversity in decision-making
remains an issue. We consider this as one of our top
priority management issues, and we will work to improve
both the recruitment and systematic development of
human resources, aiming to achieve a 10% ratio of female
managers as of the end of March 2026 (5.5% as of the endof March 2023).

Foundation for Value Creation

Financial/Corporate Data

Efforts to employ people with disabilities

In July 2021, we began operating a farm for two purposes:
providing an environment where workers with disabilities
can work for a long time with peace of mind and serving
the local community by creating jobs for people withdisabilities. This accelerates the employment of people
with disabilities. In the fiscal year ended March 31, 2023,
2.38% of employees were people with disabilities (on anon-consolidated basis).
In the fiscal year ended March 31, 2023, the second year
since the opening of the farm, we held an event to plantseeds and harvest crops with the interested employees
from the head office site. We also carried out initiatives
to enable employees at the head office to feel closer tothe people with disabilities that work on the farm, suchas distributing the fresh vegetables harvested there to
employees at the head office, and introducing farm
activities on the Company intranet.

● Non-financial indicators in the Medium-

term Plan 2025

Objective

Promotion of diversity

Description

Ratio of female managers

FY2026/3(Target)10%

Employees from the head office site sowing seeds

Realizing health management

As our energetic employees are the source of our businessactivities, we believe that the mental and physical healthand safety of all our employees is of utmost importance.
In promoting health management, we will make efforts
to collaborate with industrial physicians, healthcare staff
and health insurance associations, and work together
to maintain and improve the health of our employees
and their families, and the president will be in charge ofpromoting these efforts.

In September 2022, we announced our Commitment
to Health Management both internally and externally.
In March 2023, we were recognized as a Health &Productivity Management
Outstanding Organization 2023
(large enterprise category) by
the Ministry of Economy, Tradeand Industry and the Nippon
Kenko Kaigi.

HR and organization development to achieve sustainable growth

Development of next-generation
leader candidates

We have been working on the systematic developmentof next-generation leadership candidates, ranging fromsenior management candidates to young talent withhigh potential. This has involved carrying out strategic

personnel rotations, including dispatching them toexternal companies and overseas subsidiaries, as well
as selecting employees to be dispatched to external
educational institutions. In the fiscal year ended March
31, 2023, we once again ramped up these initiatives andstarted the full-scale development of succession planning.

NEC Capital Solutions Limited Integrated Report 2023 30

Investment in human capital/Pursuit of corporate governance that supports improved corporate value

Expanding HR development systems that promote career autonomy
To promote career autonomy, in addition to the currently

implemented human resources development andplacement in accordance with employees’ wishes basedon the self-reporting system, we introduced an HR open
recruitment system in the fiscal year ended March 31, 2023.
We will continue to expand this system going forward.
Moreover, in order to support the autonomous learningand career development of individual employees in linewith their diverse work and roles, we collaborate withexternal educational institutions to provide training
courses that meet a wide range of needs, including
training to enhance expertise, and aim to develop
qualified individuals in the financial area systematically.

Transforming corporate culture and strengthening management

To realize our Group Vision 2030 and Medium-term Plan
2025, we established standards of behavior that we expectfrom our employees and introduced a new behavioral
evaluation system based on these standards in April 2023.
The standards of behavior for realizing our vision are
divided into five categories: “customer-oriented,” “selfdevelopment,” “taking on challenges,” “speed,” and “opencommunication.” By giving examples of expected behavior
in each category, we will change the speech and conduct of

our employees, which will in turn transform the corporate
culture.
In order to effectively implement an corporate cultureof taking on challenges and innovation in the workplace,management skills as well as an open and psychologicallysafe workplace culture are essential. For this reason, we havebeen implementing measures to strengthen management
skills and enhance psychological safety, and we will continue
to strengthen and implement these initiatives.

To help every employee independently choose theirown workstyle and place to work, we have provided
them with notebook computers and smartphones andhave established an IT environment that allows them towork flexibly at home, in a satellite office, or elsewhere.
Moreover, from the perspectives of improving productivity,
BCP, and environmental considerations, we have reduced
or eliminated the use of paper. We have also beenpromoting the electronic workflow of approval processes
so that work can be carried out digitally.
Going forward, we will continue to promote companywide DX activities centered around the Information
Systems Department, such as by launching a core system
as DX foundation, utilizing Robotic Process Automation(RPA), and utilizing AI. Through this, we aim to achieve
high productivity. In addition, we will enhance IT and DX
education to develop and secure HR.

Message from outside director

organization and the introduction of an HR management
system aligned with management strategies, and thecreation of a corporate culture conducive to ongoingchallenges and innovation, have been widely expanded
upon since last year.
To promote the dissemination of top management’s
commitment and values, the Company has continued
to implement activities to deepen communication, suchas holding dialogue sessions between employees andthe president as well as other executives, and creating
opportunities for regular exchanges of opinions between
the president, executive officers, and other executives
expected to play leadership roles in promoting innovation.
I would like to see the management team and executives
work together to continue deepening communication
with employees, until the results of their activities havespread throughout the entire organization, and all
employees are able to talk about cultural transformation
initiatives as their own issues. I hope that the Company willdevelop into an organization that listens sincerely to theopinions of each and every employee, and where honest
communication is possible regardless of position.

Workstyle reforms utilizing technology (utilization of IT, promotion of DX)

Representative Director of
DDD Corporation

Takako Hagiwara

Under the new management structure, “Group Vision2030” and “Medium-term Plan 2025” have begun to move
forward. The goals of the “Medium-term Plan 2025” areto “implement CSV management and resolve issues forcustomers and society through business,” and “create
services unique to the Company to achieve a nextgeneration circular economy,” and now is the time to takea step toward a new stage.
Under this management policy, the major management
themes are “cultural employee engagement,” which makes
next-generation business development possible, and“improve employee engagement,” which supports this.
It is encouraging to see that, in order to achieve these,
initiatives related to human capital, such as the creation of

31

Introduction

Strategies for Value Creation

Foundation for Value Creation

Material issues (V)Pursuit of corporate governance that
supports improved corporate value

Financial/Corporate Data

Our initiatives▶Improved effectiveness of corporate

governance▶Respect for human rights▶Thorough compliance▶Enhancement of risk management

Improved effectiveness of corporate governance

To practice CSV management, we have engaged in numerous dialogues from the perspectives of our stakeholders, including
shareholders, members of the local community, customers and employees. At the same time, we have been monitoring andsupervising management from a medium- to long-term perspective in an effort to reform the management structure.

Corporate governance system

In addition to general shareholder meetings, we haveinstituted a Board of Directors, a Board of Corporate
Auditors and an Accounting Auditor under the Companies
Act. We have also introduced an executive officer system toaccelerate decision-making, and the Board of Directors
supervises and monitors them.
History of corporate governance improvements
Jun. 2004 Implemented executive officer system
Mar. 2010 Elected one independent director

Jul. 2011 Added one independent director for a total of two
Apr. 2012 Established voluntary Compensation Committee
Nov. 2018

Established voluntary Election andCompensation Committee

Jun. 2021 Added one independent director for a total of three

Board of Directors

Five out of NEC Capital Solutions’ nine directors areoutside directors. Meetings of the Board of Directors are
regularly held once a month, with extraordinary meetings
held when necessary. In addition to making decisions onimportant matters concerning issues prescribed by laws
and regulations, the Articles of Incorporation, and otherrules, the Board of Directors monitors the state of businessexecution by directors by receiving various reports, suchas the amount of risk faced by the Group and the results ofinternal audits. In the fiscal year ended March 31, 2023, theBoard of Directors held 14 meetings to discuss and passresolutions to determine the issues, including the policyof investment and loan projects considered importantto our business strategies, establish the Human Rights
Policy, and set a new Group vision and Medium-term Plan.
Furthermore, three of the outside directors are independent
with no interests in the Group or major shareholders, andno risk of conflicts of interest with general shareholders.
Their names are submitted as independent directors inaccordance with the Tokyo Stock Exchange’s stipulations.
We expect our outside directors to play roles of providing
advice concerning all aspects of corporate management
based on their deep insights and extensive experienceand of being involved in decision-making at the Board of
Directors to ensure its appropriateness and fairness.

Corporate auditing system

Four Corporate Auditors (three of which are outside
Corporate Auditors) hold regular meetings of the Board of
Corporate Auditors to discuss auditing activities based on
the auditing plan and management information.
Along with attending important internal meetings
that include meetings of the Board of Directors andManagement Conference, Corporate Auditors holdconferences once a month with the President of NEC
Capital Solutions to discuss important auditing issues,
problems the Company needs to address, and progress
made in developing an environment for auditing, inaddition to gathering direct feedback from directors andemployees regarding the execution of business.
The Auditing Department provides specific advice andrecommendations regarding the improvement of business
operations through internal audits, offers guidance on thedevelopment and operation of the internal control system,and evaluates its operation.

Assessment of the effectiveness of the Boardof Directors

Analysis and assessment of the effectiveness of the Board of
Directors are conducted once a year at the Board of Directors
meeting to improve its function. NEC Capital Solutions
conducted a survey through an outside agency for all
directors and Corporate Auditors in January 2023. According
to the survey findings, the Board of Directors’ Office
separately conducted interviews with independent outside
directors to obtain their opinions. Opinions were gathered
at a Management Roundtable comprising all directors andCorporate Auditors in light of the findings mentioned above
and from the perspectives specified below, and analyses,
discussion, and assessment were conducted.
1

Supervision of the management by the Board of Directors

3

Strategic orientation of the management by the Board of
Directors

2

4

Appropriate Board composition

Ensured discussion opportunities for the Board of
Directors

NEC Capital Solutions Limited Integrated Report 2023 32

Pursuit of corporate governance that supports improved corporate value

We assessed that the Board of Directors was sufficiently

boosting corporate value and shareholder value.

of Directors” and “2. Appropriate Board composition” theBoard of Directors assessed that it consists of a diverse
range of officers with the necessary skill sets, sharesnecessary information in an appropriate manner, andfunctionally supervise the management. As for “3. Strategicorientation of the management by the Board of Directors”
and “4. Ensured discussion opportunities for the Board of
Directors” the Company held a Management Roundtable
to freely exchange opinions on important management
issues, and enhanced the advance briefings on proposals
given to outside directors. In addition, the Board of
Directors set agendas with an eye on strategies of the newGroup vision and the Medium-term Plan, thereby ensuring
discussions for strategic orientation of the management.
Going forward, the Company will continue to work to
improve the effectiveness of the Board of Directors andincrease its corporate value over the medium- to long-termby steadily following up on the Medium-term Plan with theaim of realizing our Group vision, which is to “Be a solution
company leading the next-generation circular economy.”of business execution comprises the supervisorycompensation for their supervisory function and theexecutive compensation for their executive function,and the executive compensation consists of the basecompensation, the performance compensation (bonus)
and the share compensation. The ratio between the fixedcompensation and the performance-linked compensationin the case of standard performance is roughly set at 60:40.
The performance-linked compensation was determinedaccording to the consolidated profit and the level ofachievement against the personal key performanceindicator (KPI) targets for resolving medium- and longterm issues in their areas of charge. This was meant tospur directors to commit to our short-, medium-, andlong-term management objectives. Starting from thefiscal year ending March 31, 2024, ROA and ESG-related
indicators have been newly added to evaluation factors,
such as responses to environmental and social issues
including initiatives for carbon neutrality and employee
engagement scores. Performance-linked compensation
will also be based on the extent to which these targets
have been achieved. The compensation for outside
directors and Corporate Auditors is composed solelyof fixed compensation, and is not linked to company
performance in consideration of their roles. The amountof compensation for Corporate Auditors is determinedthrough deliberations among the Corporate Auditors.

Director compensation

At the Company, the Election and Compensation
Committee, a majority of which comprises independent
outside directors, discusses a policy on the determinationof details about compensation for individual directors andrefers it to the Board of Directors for a decision.
We design a system for directors’ compensation to suit theobjectives of securing and retaining competent personnel
who practice our corporate philosophy and of motivating

The compensation for any director playing a role

Directors

Election/
Dismissal/
Supervision＝Outside directors

General Shareholders’ Meeting

Election/Dismissal

Board of Directors Outside directors
5＝Internal directors

9

Audit

Corporate Board ofAuditors Corporate
Auditors

Election and Compensation Committee

Executive Officers

Sales and staff departments

3

4

Cooperation

President

Management Conference

Outsidedirectors

Auditing Department
Internal audit

Foundation for Value Creation

Financial/Corporate Data

Directors● Directors (as of the end of June 2023)

Masaaki Suganuma

Masamitsu Kisaki

Representative Director

Director

Director

Director

Director

Representative Director and President

Takashi Nawa*
OutsideIndependent

Professor of Hitotsubashi University
Business School, School ofInternational Corporate Strategy

Takako Hagiwara*
OutsideIndependent

Representative Director of DDD
Corporation

For more information, please visit:https://www.necap.co.jp/csv/governance/index.html(available in Japanese only)● Corporate governance system schematic diagram(as of the end of June 2023)
Election/Dismissal

Strategies for Value Creation

directors to play the roles expected of them in continuously

effective during the fiscal year ended March 31, 2023.

As for “1. Supervision of the management by the Board

33

Introduction

Director

Satoshi Okubo
OutsideManager of Group Business
Management and Transformation
Department, Strategy Division, NEC
Corporation

Director

Shigeki Fujita
OutsideTakashi Arai

Director

Yuichi Tsukada

Asako Yamagami*
OutsideIndependent

Partner, ITN Partners Attorney at
law admitted in JapanFor their biography, please visit:
Notice of the Convocation of the 53rd Ordinary General
Meeting of Shareholders (Japanese only)
https://www.necap.co.jp/ir/shareinfo/pdf/20230530e.pdf

General Manager of Public
Solutions Planning Department,
NEC Corporation*Mr. Takashi Nawa, Ms. Takako Hagiwara, and Ms. Asako Yamagami
are independent directors in accordance with the Tokyo Stock
Exchange’s stipulations.

Corporate Auditor (Full-time)

Corporate Auditor● Corporate Auditors (as of the end of June 2023)

Cooperation
Accounting
Audit

Election/
Dismissal

Accounting Auditor

Cooperation

Corporate Auditor (Full-time)

Yoshiyuki Koizumi

Hiroshi Komazaki
OutsideTatsuya Oyama
OutsideGeneral Manager, Head of Corporate
Accounting & Global Finance, Corporate
Accounting & Global Finance Department,
Finance Division, NEC Corporation

Corporate Auditor

Shigetoshi Yokomizo
OutsideSenior Manager, IT Service Solution
FP and A Group, IT Services FP and A
Department, Finance Division, NEC
Corporation

NEC Capital Solutions Limited Integrated Report 2023 34

Pursuit of corporate governance that supports improved corporate value

Introduction

Skills matrix

Name

Masaaki Suganuma

Corporate
Legal affairs Human
Finance,Financialmanage- CSV, ESG
and risk
resources
accounting
industry
Gender ment
management strategy

GlobalMale○○

Masamitsu Kisaki

Male

○

○

○

Takashi Arai

Male

○

○

Yuichi Tsukada

Male

○

○

Takashi Nawa

Male

○

○

○

○

Takako Hagiwara

Female○○○○Asako Yamagami

FemaleSatoshi Okubo

Male

○

○

Shigeki Fujita

Male

○

○

= Outside= Independent director○

Message from outside director

Partner, ITN Partners Attorney at law
admitted in Japan

Asako Yamagami

Looking back on the past year from the perspective ofcorporate governance, the highlight was the formulation of
the Group Vision 2030 and Medium-term Plan 2025. Basedon the fact that CSV management, which the Company
established ahead of the rest of the industry in theprevious Group Vision formulated in 2013, has taken holdover the past decade, the Board of Directors repeatedly
deliberated on the form of approaching “next-generation
circular economy” and the strategic direction that should
be taken to provide unique solutions that will lead to a
virtuous circle for the environment and growth.
The Medium-term Plan 2025, which represents the firststep toward realizing this, aims to improve profitability
and accelerate the pursuit of sustainability management
through the realization of a next-generation circular

35

ICT

○

○
○

○
○

○

○

Financial/Corporate Data

Under our corporate philosophy of “Helping Societies Advance through ‘Capital Solutions,’” the NEC Capital Solutions
Group recognizes that respect for human rights is an important issue for management. We will therefore fulfill oursocial responsibility by implementing initiatives to respect human rights throughout the Group.

Businessdevelopment

○

○

○

○

○

○

Foundation for Value Creation

Respect for human rights

We identify skills that the Board of Directors should have in light of our management philosophy and ensure that thecomposition of directors is well-balanced as a whole in terms of knowledge, experience and skills.
Knowledge, experience and skills

Strategies for Value Creation○○○

economy. The Company has also set non-financial
indicators, such as the promotion of DE&I and measuresto achieve carbon neutrality. At the same time, regarding
the policy for determining compensation for directors,
the Company has clarified the standards for calculating
performance compensation and added progress made on
environmental and social issues as well as engagementscores to the calculation standards, thereby increasing thetransparency of the process for determining compensationand making it possible to objectively evaluate the statusof progress on sustainability goals. Moreover, the risk
management system has been refined, and progress has
been made toward the creation of an environment that
supports appropriate risk-taking by the management
team. With the progress in the effectiveness of the Board of
Directors and timely reports by the Board of Corporate
Auditors being made on the status of initiatives and issues
related to the Medium-term Plan, I am committed toengage in discussions that incorporate theperspectives of a wide range of stakeholders in order toappropriately monitor the process of realization of theGroup Vision.

Human Rights Policy

In December 2022, we established the NEC Capital
Solutions Group’s Human Rights Policy through approvalof the Board of Directors. This policy is based on the United
Nations’ “Guiding Principles on Business and Human
Rights*.”This policy applies to all directors and employees of the
NEC Capital Solutions Group. We will also work with ourcustomers, business partners, and suppliers to ensure theirunderstanding of this policy and to encourage their efforts
to respect human rights. We will also continuously review
this policy and our measures to respect human rights
based on this policy, and update and revise it as necessary.
* Guiding Principles on Business and Human Rights: A global standard
approved by the UN Human Rights Council in 2011. A set of principles
that embody the UN framework on business and human rights.

Human rights education

In order to ensure that all directors and employees of
the Group understand the necessity and importance ofrespect for human rights and execute operations properly
according to the provisions of the NEC Capital Solutions
Human Rights Policy, we perform human rights education
and all directors and employees, including temporary
workers, of the Group receive the education.

Hotline to consult and report on human rights(complaint mechanism)

The Company has put a complaint mechanism in place toaddress and remedy any adverse impact on human rights.
We have established and operate a whistle-blowing system(hotline) for all Group employees.
For more information, please visit:https://www.necap.co.jp/csv/humanrights.html(available in Japanese only)

Thorough compliance

The Company strives to ensure thorough compliance as a business operator engaged in the money lending businessand type II financial instruments business. In addition to establishing a Code of Conduct, we have also prepared thenecessary training and frameworks/systems as part of efforts to constantly improve the awareness of business ethics
and compliance among officers and employees in our Group.

Code of Conduct

The Group established the NEC Capital Solutions Group
Code of Conduct which stipulates that all directors andemployees are required to comply with relevant laws andregulations in their daily business activities and to takeaction consistent with social ethics. The Code of Conduct● Basic Position

1
2

consists of seven chapters: General Provisions; Respectfor Human Rights; Our Relationship with Society; Our
Relationship with Customers and Business Partners;
Our Relationship with Shareholders and Investors;
Management of Company Assets and Information; andOperating Systems.

WE will comply with all applicable laws, rules, regulations, and in-house regulations, etc., including this Code, in every
aspect of our corporate activities at all times. WE will strive to ensure that all corporate activities are in compliance withnormal business practices and social ethics.
WE will maintain impartial, fair, and open relationships with all the stakeholders of our company and will conductbusiness in a fair manner with them.

3

WE will not take any action pursuing our personal or a third party’s interests against our company’s legitimate interests.

5

WE will establish an effective internal control system and implement it.

46
7

WE will not carry out any actions whatsoever that may damage the NEC Capital Solutions Group’s social trust or honor.
WE will accurately and fairly maintain all accounting and other records in accordance with applicable laws, rules,
regulations, and in-house regulations, and properly execute our duties. WE will not carry out any unlawful accounting
transactions or actions that may cause losses to the NEC Capital Solutions Group.

With an awareness of our position as a member of society, WE will always act in accordance with a good social consciencebased on high moral and ethical standards.

NEC Capital Solutions Limited Integrated Report 2023 36

Pursuit of corporate governance that supports improved corporate value

Compliance promotion system

At the quarterly Internal Control Committee, the initiativesof each group company are controlled in a cross-sectionalmanner.
Our regular compliance auditing consists of internal
audits by the Auditing Department on the status of theCompany’s compliance to laws and regulations, theArticles of Incorporation and various rules.

Compliance education

In order to ensure that all directors and employees of
the Group understand the necessity and importance ofcompliance as the basis of all our business activities andexecute operations properly according to the provisions of
the NEC Capital Solutions Code of Conduct, we conduct
compliance training annually, and all directors andemployees, including temporary workers, of the Group
receive the training.
See ▶P.43-44 for change in the compliance training
participation rate

Whistle-blowing system

The Company has an external whistle-blowing hotline
where any employee having discovered improper activities
can report anonymously. Measures are in place to ensurethat whistle blowers are not treated disadvantageously.
The whistle-blowing system may be used by all directors
and employees of the Group, including those of overseas
group companies.

Basic policy on exclusion of antisocial forces

We believe that excluding antisocial forces that threaten
the order and security of civil society is an important
issue for society overall. As a corporate group with social
responsibilities, we established a basic policy on antisocial
forces, and set up a system to realize this policy.
For more information, please visit:https://www.necap.co.jp/csv/governance/compliance.html(available in Japanese only)

Information security

We provide the appropriate security countermeasuresfor our information systems, for information we obtained
individually, and for information provided to us by ourcustomers and clients. We thereby aim to maintain soundcorporate activities and organizational management to betrusted by our customers and clients.

Fundamental Information Security Policy

Strategies for Value Creationof various points of operations.

3. Our group shall continue to provide education necessary
to ensure information security.

Approach to risk management

2. Our group shall establish and implement internal rules
for information security.

4. Our group makes every effort to take appropriate human,organizational, and technical measures to ensure that
there will be no illegal intrusions, information leaks,
falsification, loss, robbery, destruction, and interference ofuse, etc. in information systems and information assets.

5. In the event of an information security problem, ourgroup makes every effort to immediately investigate
the causes of the problem, minimize the damage andprevent the recurrence of such an incident.

6. Our group shall comply with laws and other social norms
relating to information security.
7. Our group stipulates the following as basic policy forcontrolling information assets.

(I) We only obtain and retain the information necessary
for our business operation.
(II) Information is disclosed only to those who need it.
(III) Authorization of access to information is limited tothe minimum need for our business operation.

8. Our group makes every effort to continuously review andimprove the above-mentioned items.

Initiatives for improving information security

In 2006, we acquired ISO/IEC 27001 certification and we
strive to maintain and improve the level of information
security accordingly. The Company offers information
security education to all officers andemployees, including temporary
workers, of our Group each year. For
mid-career recruits and temporary
workers, we offer information security
education as soon as they join us toraise their awareness.
JQA-IM0333
See ▶P.43-44 for change in the information security
training participation rate

Efforts to protect personal information

To appropriately protect the personal information ofcustomers, we established the “Personal Information
Protection Policy” and handle information in accordancewith this policy. In 2020, we acquired the PrivacyMarkby establishing a personal information protection
management system, conforming with JISQ 15001:
Personal information protection management systems requirements.

Foundation for Value Creation

Financial/Corporate Data

Enhancement of risk management

1. Our group makes every effort to establish an information
security system and control information assets
appropriately.

For more information, please visit:https://www.necap.co.jp/csv/governance/security.html(available in Japanese only)

37

Introduction

We appropriately manage the diverse risks involved in business development by identifying the risks and opportunities

The objective of risk management, as we define it, is toensure the Company’s survival and improve corporate
value for stakeholders.
Taking on some degree of risk is necessary in ourbusiness, but the materialization of the risks could resultin losses on our financial statements and could requirecompensation and reparations. It invites a loss of publictrust in the Company, which could have a major impact
on our survival. We practice risk management by clarifying
and controlling our risk tolerance, thus enhancing our
relationship of trust with stakeholders.

Risk management system

We make every effort to recognize the risks that emerge
in the course of business execution, assessing themaccording to uniform criteria. We then carry out integrativerisk management and operation while maintaining
management stability and striving to maximize
shareholder value.
We strive to prevent and avoid risks that may
significantly impact our business activities through various
meeting bodies. We also have a system in place to reportsuch risks to the Board of Directors or the Management
Conference based on the degree of importance. We haveestablished a governance system that, in the event thatrisks are expected to arise, enables prompt consultation
with the Management Conference or Board of Directors on
the policies set by the respective meeting body, enabling
an immediate response. The main meeting bodies fordeliberating risk management are as follows.
Main meeting bodies
for deliberating risk
management

Risks to manage

Risk Management
Committee

Risks related to credit, and ERM(credit, market, and operation)

Internal Control
Committee

Risks related to internal control
and compliance

ALM Committee

Risks related to interest
rates, funding, income andexpenditure management,
foreign currency, and liquidity

Business Continuity Plan (BCP)The Company has formulated BCP as one of its mostimportant management issues and has reinforced systems
for operating and improving BCP.
Our BCP Action guidelines are as follows.
BCP Action guidelines(I) Surely protecting the lives and safety of
employees and visitors(II) Fulfilling social responsibilities as afinancial company(III) Minimizing management damage

Systems for operation and improvement● Formulation of the “Disaster Control and BusinessContinuity Concept”▶Clarified guidelines to enable employees to act
according to their own judgement in the event of adisaster, set specific actions to be handled by the
emergency headquarters and the business continuity
headquarters, etc.

● Training to foster awarenessThe emergency headquarters, established in February2020 as part of efforts to tackle the COVID-19 pandemic,has ended its activities as COVID-19 was reclassified as aClass 5 infectious disease in May 2023.
In the event of a major earthquake or a similar disaster,
the above mentioned Action guidelines are followed inoperations for the fast restoration of operations and thecontinuity of the business.
For more information, please visit:https://www.necap.co.jp/csv/governance/riskmanagement.html(available in Japanese only)

Sustainability Committee Climate-related risks

NEC Capital Solutions Limited Integrated Report 2023 38

F i n anc ial Rep o r t

Review of BusinessResults for Fiscal Year
Ended March 31, 2023 andOutlook for Fiscal YearEnding March 31, 2024

Noboru Watanabe, Executive Officer

Introduction

Strategies for Value Creation● Overview of consolidated business results(billions of yen)

Revenues

FY2023/3

YoY change

10.4

11.7

+12.1%

6.4

-7.5%

249.9

Operating income
Ordinary income

FY2022/3

258.1

11.4

12.4

Net income per share 322.37 yen

298.14 yen

Profit attributable toowners of parent

6.9

ordinary income (billions of yen)

FY����/��.�

Valuation of foreign exchange, etc.

�

GP in the Other Business

Amid increasingly uncertain businesscircumstances, Japan’s leasing industry
experienced an increase in transactions on a
year-on-year basis

During the fiscal year ended March 31, 2023, the Japanese
economy saw a year of progress in resuming economic
activities as society moved toward a post-COVID-19 world,
despite the lingering effects of COVID-19. On the other hand,
the Russian invasion of Ukraine that began in February 2022
has become prolonged, triggering soaring prices of crudeoil, grains, and other commodities. In response, central
banks around the world began tightening their monetary
policies to combat inflation. These situations aggravatedthe uncertainty. In December, there were movements inJapan suggesting revisions to monetary easing, such as
the Bank of Japan expanding the permitted fluctuation
range for long-term interest rates to 0.5% under its yield
curve control. Considering these changes in the domestic
and international environment, we will need to pay closer
attention to the outlook for future economic activities.
In this environment, leasing transactions in the Japaneseleasing industry for the fiscal year ended March 31,
2023 expanded 2.2% year on year, to 4,310.6 billion yen,according to the Japan Leasing Association’s Lease
Statistics published on May 29, 2023.
Business results

Revenues increased, but net profit fell below
the previous fiscal year’s record highRegarding the Group’s business results in the fiscal year
ended March 31, 2023, revenues were mostly flat in the
Leasing Business, where sales of large-scale leased assets

39－

Non-controlling interests *�

Personnel costs and other SGA *were posted in the previous fiscal year. On the other hand,
growth was seen in the Finance Business, Investment
Business, and Other Business, and revenues increased year
on year. Moreover, operating income and ordinary income
surpassed those of the previous fiscal year due mainly to
improvements in credit costs. Profit attributable to ownersof parent dropped compared to the previous fiscal year
due to an increase in profit attributable to non-controllinginterests.
Regarding factors that caused changes in ordinary
income, while there were fluctuations by business, grossprofit increased by 0.2 billion yen year on year. Selling,
general, and administrative expenses also improved by 1.1
billion yen year on year due to a significant improvementin credit costs, despite an increase in personnel expenses
caused by a rise in performance-based bonuses. Regarding
credit costs, there was a significant improvement year
on year due to the posting of large-scale credit costs inthe fourth quarter of the previous fiscal year, but theposting of an unexpected amount in the current year’s
fourth quarter became a factor in the downward revisionof the forecast for the period. In terms of non-operating
income and expenses, valuation of foreign exchange saw
a decrease in earnings of 0.8 billion yen year on year, while
gain on investment in partnerships increased by 0.5 billion
yen. All of these results are mainly due to the effects of
the initiatives of RISA Partners, Inc. Gain on investment
in partnerships is posted in non-operating income andexpenses for accounting purposes, and is not includedin the gross profit of the Investment Business. Foreignexchange was a factor that decreased earnings year on
year, because while we posted a gain on valuation offoreign exchange in the previous fiscal year, we posted aloss on valuation of foreign exchange in the current fiscal
year.

+8.9%

● Main reasons for changes in consolidated

GP*� in the Investment Business

Trends in the business environment and leasing industry+3.3%

Gain on investment in partnerships

-�.�

+�.�

+�.�

+�.�

Financial/Corporate Data

Operating asset balance reached a new highDespite large asset sales in the Leasing Business in thesecond quarter, the balance of operating assets was kept
at a high level even in the absence of special demand, suchas Windows 10 updates and GIGA school projects, thanks
to steady sales activities. In the Finance Business, thebalance of operating assets increased year on year due toan increase in factoring and assets such as corporate loans.
In the Investment Business, the balance of operating assets
rose year on year due to the acquisition of investment
projects, despite the sale of large-scale real estate forsale in the first quarter. In Other Business, we steadily
accumulated assets in new businesses such as healthcare
and solar power. As a result of the above, operating asset
balance reached a new high.
● Consolidate revenue by business (billions of yen)-�.�Credit costs

�.�

��.�

-�.�

GP in the Finance Business

FY����/�

�.�

Foundation for Value Creation+�.�

�.� ��.�

Non-controlling interests*1 Non-controlling interests: profit attributable to non-controllinginterests in fund revenue, etc.
*2 GP: Gross profit*3 SGA: Selling, general, and administrative expenses

Business results by business

Operating income in the Leasing Businessand the Investment Business, which bothgrew in the previous fiscal year, decreased
year on year

In the mainstay Leasing Business, revenues were down year
on year until the third quarter due to the effects of large
asset sales in the previous fiscal year, but for the full year,
revenues and gross profit remained at the same level as theprevious year. Meanwhile, operating income decreased year
on year due to an increase in credit costs and an increase
in selling, general and administrative expenses, including
personnel expenses. In the Finance Business, revenues roseyear on year due mainly to an increase in interest revenues.
Moreover, operating income improved significantly year
on year due to the posting of large-scale credit costs in theprevious fiscal year. In the Investment Business, revenuesrose significantly year on year due to the sale of large scale
real estate for sale in the first quarter. In contrast, profits
decreased year on year due to multiple exits of venture
funds in the previous fiscal year, as well as the posting ofcredit costs in the fourth quarter. In the Other Business,
which mainly includes new businesses, revenues andincome rose due to the considerable advances made inefforts for healthcare, solar power, PFI, etc.

Leasing
Business

Revenues

FinanceBusiness

Revenues

FY2022/3 FY2023/3 YoY change

Gross profit

Operating income
Gross profit

Operating income

224.2

224.3

7.1

6.4

16.6

+0.0%

16.6

5.2

+0.2%

-10.6%

6.6

4.1+25.9%

4.8-0.7+16.6%

2.2-

Investment Revenues
Business
Gross profit

16.4

22.8

+39.4%

Other
Business

5.4
4.2

4.4

-18.2%

1.7+15.6%
+3.3%

Total

Operating income
Revenues

Gross profit

Operating income

9.6

8.8
4.5

1.5
0.3

+6.8%

0.5

Revenues

249.9

258.1

Operating income

10.4

11.7

Gross profit

-7.7%

31.7

+79.3%

31.9

+0.7%

+12.1%* Figures exclude adjustments from segment summary information.

● Consolidated operating asset balance (billions of yen)

■Leasing Business ■Finance Business■Investment Business ■Other Business

�,���

���.�
���

���

�

��.�

���.�

��.�

���.�
��.�

���.�

��.�

���.�

��.�

���.�

��.�

���.�

���.�

���.�

End of Mar. ����*End of Mar. ����End of Mar. ����* In connection with the revision of reportable segments, the data
presented was retrospectively modified for the segments after therevision.

NEC Capital Solutions Limited Integrated Report 2023 40

Financial Report

Introduction

Fund procurement

Interest-bearing debt increased year on year,
and the impact of the rise in funding cost
ratio on business was limited

Cost of Yen funding remained stable at a low level dueto the Bank of Japan’s continuation of unprecedented
monetary easing. However, it was decided at the Bank ofJapan’s Monetary Policy Meeting held in December 2022
that the permissible fluctuation range for the yield curve
control would be expanded. In addition, we recognize
the necessity to keep a close eye on the fund-raising
environment, such as the financial instability that occurredin the United States and Switzerland in March 2023.
Under these circumstances, the Group’s interest-bearing
debt for the fiscal year ended March 31, 2023 increased
year on year, mainly centered on commercial paper. The
funding cost ratio was up year on year given the increase
in interest rates for foreign currency-denominated funding.
However, the interest rate change has a minor impact on
our financial results, given that a majority of our foreign
currency-denominated assets are under floating interest
rate contracts. There are no issues on capital resources andthe fund liquidity, and cash flows are normal.
● Consolidated interest-bearing debt

composition (left axis) and funding cost ratio(right axis)

Funding cost ratio (%) =Funding costs ÷ Average balance of interest-bearing debt

■Payables under securitized lease receivable ■Bonds ■Commercial paper■Long-term debt ■Short-term borrowings (left axis)
ー Funding cost ratio (right axis)（%）�.�

���（%）

�.�

��

�.��

��

�.��

�� FY����/��.��

FY����/�

�.�
Directfunding
ratio
40.4%

��
�

�.�

FY����/�End of Mar. ���� End of Mar. ���� End of Mar. �����.��

Forecast for the fiscal year ending March 31, 2024

Aiming to secure a new record highFor the fiscal year ending March 31, 2024, on a consolidated
basis, we forecast revenues at 260.0 billion yen, operating
income at 12.0 billion yen, ordinary income at 12.5 billion

41

yen and profit attributable to owners of parent at 7.5

billion yen. In addition to sustainable growth in the Leasing

Business and Finance Business, we are also striving toincrease revenue in the Investment Business, aiming for
a new record high. Moreover, we are working to increase
revenue over the medium to long term.
As mentioned at the beginning, we are aware that thebusiness environment will remain uncertain going forward
due to factors such as the prolonged Russian invasion of
Ukraine and changes in the policies of central banks aroundthe world. Although there are concerns about increases
in credit costs, increases in prices of leased assets, andincreases in fund procurement costs, transactions withsmall and medium-sized businesses, which are at anincreased risk of bankruptcy due to the end of COVID-19
emergency loans, account for a low proportion of theGroup’s overall business. Moreover, we believe that the
impact of these concerns on our business will be limited,as the situation is such that customers are aware of therise in prices and interest rates, and can easily gain anunderstanding of the shift of the costs on to lease rent, etc.

The annual dividend for the fiscal year ending
March 31, 2024 is planned to be 130 yen, an
increase of 20 yen from the previous fiscal year
For the fiscal year ended March 31, 2023, we increased theyear-end dividend by 36 yen from the initially planned levelof 74 yen. The annual dividend thus stood at 110 yen per
share.
For the fiscal year ending March 31, 2024, we plan to
pay an annual dividend of 130 yen per share (including aninterim dividend of 65 yen), which represents an increaseof 20 yen. While upholding our basic policy of maintaining
a stable dividend, we have taken into account that thedividend payout ratios of other companies in the same
industry have been continuously increasing and that theGroup’s equity ratio has been maintained at 10%, and, inthe formulation of our Medium-term Plan, decided on a
profit return plan after consideration of the future outlook.
● Business results for the fiscal year underreview and forecasts for the next fiscal year

(billions of yen)

Revenues

Operating income
Ordinary income

Profit attributable toowners of parent

Net income per share

Annual dividends per share

FY2023/3
Results

FY2024/3
Forecast

11.7

12.0

258.1

260.0

12.4

12.5

298.14 yen

348.37 yen

6.4

110.00 yen

7.5

130.00 yen* Forecast is as of April 28, 2023.

Strategies for Value Creation

Foundation for Value Creation

Financial/Corporate Data

Measures to realize management with an awareness of the cost of capital and stock prices

Aiming to achieve sustainable improvement in
profitability and enhance PBR
To achieve sustainable growth and improve corporate
value over the medium- to long-term, the Group placesemphasis on management with an awareness of returnon capital, which involves formulating and implementing
revenue plans and capital policies based on an accurate
understanding of the company’s cost of capital. To achievethis, we appropriately consider the review of our businessportfolio and the allocation of management resources,
including investments in human capital and systems, inconjunction with the formulation of our Medium-term Plan
and annual budget, and reflect them in our business plan.
In FY2023/3, the Group reached the final year of its
previous Group Vision and Mid-Term Plan 2020. Accordingly,
we formulated our new Group Vision, “Be a solution
company leading the next-generation circular economy,”with FY2024/3 as the first year, and we also formulated andannounced our “Medium-term Plan 2025.”
When formulating the Medium-Term Plan 2025, we
deemed it essential to secure a level of revenue that would
sustainably exceed the cost of capital to improve market
valuation, including PBR and PER. We also determinedthat sustainably increasing profitability would lead tofurther improvement in corporate value. In formulating a
concrete profit plan, in addition to increasing the absoluteamount of profits, we held repeated discussions on the
profitability that the Company should aim for, with a focus
on sustainably increasing profitability. As a result, we set
an ROE target of 8% for FY2026/3, the final year of our
Medium-term Plan 2025, and a target of 10.0 billion yen
for profit attributable to owners of parent. In addition to
improving profitability (improve ROE), we will carry out
return measures in line with our profit level while drawing
up growth strategies unique to the Group, such as grasping

revenue opportunities through our strengths in ICT andsound risk-taking capabilities. In doing so, we hope tocapture growth expectations from the market (improve
PER) and improve PBR, which is calculated using theformula ROE x PER.
Moreover, the Group has formulated and announced
non-financial indicators that go alongside the financial
indicators in the Medium-term Plan 2025. In addition toinitiatives related to environmental and social issues,
we will work to improve employee engagement bystrengthening investments and initiatives related to humancapital. This will lead to an improvement in profitability
through the accumulation of non-financial capital.
While weighted average cost of capital (WACC) andcost of shareholders’ equity represent typical indicators
used in the analysis of cost of capital, the Group uses costof shareholders’ equity from the perspective of placing
importance on investors’ expected returns, and undertakes
analysis by comparing it with ROE.
[Related information]

Group Vision 2030 and Medium-term Plan 2025
(FY2024/3-2026/3)
Published on April 28, 2023
P.14

3. Aim in Medium-term Plan 2025

P.16

5. Medium-term Plan 2025
(Business Strategy 1/2)

P.15

P.17

4. Management objectives (financial andnon-financial)
5. Medium-term Plan 2025
(Business Strategy 2/2)

IR-related information

Please see our website for detailed financial information.

▶︎ Investor Relations

https://www.necap.co.jp/english/ir/index.html▶︎ IR Library (Financial Results, Presentation Materials *on a quarterly basis)

https://www.necap.co.jp/english/ir/library/index.html▶︎ Annual securities report for the 53rd fiscal year (April 1, 2022 to March 2023)

https://pdf.irpocket.com/C8793/KSWQ/QTGY/a0wi.pdf (in Japanese)

NEC Capital Solutions Limited Integrated Report 2023 42

Financial data and non-financial highlights (for 11 years)

Consolidated financial data
For the year:
At year-end:

Revenues

2013/3¥229,205

Profi t before income taxes

Profi t attributable to owners of parent

9,315

4,302

Introduction

2014/3¥228,263
16,4785,009

2015/3¥213,854
4,425

2,817

2016/3¥202,637
6,032

3,334

2018/3¥215,719

2019/3¥231,432

6,608¥204,131

13,4563,517

2020/3¥220,717

8,986

6,006

9,093

6,391

5,118

Foundation for Value Creation

2021/3(millions of yen)2022/3¥221,256¥249,908

6,089

11,423

4,119

Financial/Corporate Data

6,940

(thousands of U.S. dollars)

2023/3¥258,107
12,444
6,419$1,932,809
93,18448,065

Total assets¥733,500¥703,093¥808,732¥828,943¥860,483¥906,495¥895,683¥997,511¥1,057,654¥1,030,617¥1,055,876$7,906,811

Per share data: Net assets¥3,139.91¥3,322.57¥3,453.70¥3,529.64¥3,675.84¥3,927.22¥4,131.64¥4,306.21¥4,438.33¥4,794.13¥5,085.69$38.08

44.00

44.00

44.00

44.00

44.00

50.00

55.00

60.00

60.00

74.00

110.00

0.82

10.4

-

Total net assets

79,569Basic net income

199.77

Cash dividends

Key indicators: Dividend payout ratio (%)

22.0

Equity ratio (%)

9.2

Price earnings ratio (Times)

Return on equity (%)

Number of employees

78,497232.6318.9

10.2

105,927130.81

101,027
154.85

33.6

28.4

9.2

9.2

For the year:

CO2 emissions (t-CO2)*1 Total(Scope1,2)
Scope1

Scope2

Ratio of female managers（%）

Compliance training participation rate (%)*1

Information security training participation rate (%)*1

�,����,���
�,����,���

23.0

9.0

10.0

0.6

0.7

0.8

1.5

1.0

1.0

0.6

1.1

1.2

7.2

3.9

4.4

4.5

7.3

7.4

5.6

4.4

7.0

625

666

686

725

755

767

784

811

812

866

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/3

-

-

-

-

-

94*

908

-

421
3

1.6

718

561

-

-

324

269

3

5

1.6

2.0

389

379*2

-

2

285*2

167

163

7

4

2.8

1.4

371*2
83*

2

287*2

158

371*2
83*

2

288*2

157

349*2
56*

13
（28）

95.5

94.0

2.4

3.2

4.4

100.0

100.0

-

55.9

58.1

61.1

63.9

64.7

66.6

68.7

61.2

100

100

5.5

ー Cash dividends (right axis)

7.0

4.5

4.5

21.1

5.3

170

11
（26）

100.0

5.3

22.1

4.1

5.0

22.9
（22.5）

22.0

66.5（66.8）

3.9

4.1

5.5

23.0
（22.9）

70.9（70.9）
5.2

-

100.0

87.5

80.0

100.0

100.0

93.3

93.8

100.0

78.6

100

100

100

100

100

100

100

100

100

100

100

100

100

*4 Excluding retired worker(Yen) (Yen)��� ���

100

100

100

*5 Retention rate of 3 year after joining new graduate

100

100

100

�

�

■Scope1■Scope2

Scope1

Direct emissions of greenhousegases by operators themselves(e.g. gasoline for cars ownedby the Company and gas for air
conditioning)��� ���
��

��

��

��
��

�,����,������,����,���
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/�
FY����/���

Down 87%��

comparedwith FY2011/3

��
��
��

100

● CO2 emissions��� ���
��

-

50

10
（27）

100.0

-

-

107

7
（22）

100.0

22.9

160

-

157

5
（19）

100.0

25.5

280*2

161

100.0

27.0

2

294*2

100.0

30.5

51*

2

100.0

34.8

331*2

-

6.0

629

1,253

2.23

36.9

2.3

�,����,���

�

31.4

1.2

�,����,���

�

9.3

8.47

● Profit attributable to owners of parent/Cash dividends
�,����,���

25.2

6.44

*1 Consolidated results. *2 Verified by a third party. *3 Figures in parentheses are the results on a consolidated basis.

(millions(millionsof yen)of yen)■Profit attributable to owners of parent (left axis)
�,����,���

9.9

964,619298.143

10.59

100.0

Stability of new graduates hired（%）※518.5

322.37

7.74

6.3

Turnover rate（%）※4

9.3

191.29128,815

5.73-

Paid leave acquisition rate (%)*3

17.9

9.2

237.66

121,740

7.35

1.1

Average monthly overtime (h)*3

26.9

296.81

113,885

10.46

2

Rate of return from childcare leave (%)

278.93

105,249

10.22

597

Number of female managers*3

163.35

105,999

14.59-

Energy use volume (crude oil conversion kL)*1 *2

110,990

9.25

The U.S. dollar amounts represent translation of Japanese yen, for convenience only, at the rate of ¥133.54 = U.S.$1.00 in effect on March 31, 2023.

Non-financial(non-consolidated)

108,822

11.77
6.5

Return on assets (%)

43

2017/3Strategies for Value Creation

��

FY2041/3(target)0

FY����/�
FY����/�(Base(Baseyear) year)

FY����/�
FY����/�FY����/�
FY����/�FY����/�
FY����/�FY����/�
FY����/�FY����/�
FY����/�

FY����/�
FY����/�
(target)(target)Scope2

Indirect emissions arising fromconsumption of electricity,heat and steam supplied fromoutsiders (e.g. electric power
consumed in offices and coolwater for air conditioning)

NEC Capital Solutions Limited Integrated Report 2023 44

Segment information/Corporate data/Share information

���
���
���

���.�

���.�

���.�

���.�

�.�
�.�
Segment
information
�.�
��
�

FY����/�

Main
operations

Leasing Business
FY����/�

FY����/�

FY����/�

�.�
�.�

�.�

�.�

���

��.�

���.�

�.�
�.�
�

FY����/�

● Leasing, rental and installment sales of informationand communication equipment, office equipment
and various other types of facilities and equipment● Sales of goods related to leasing, sales of properties

after the expiration or premature cancellation oflease contracts, maintenance services for leased
items and others

Revenue and operating income
���
���
���

■ Revenue (left axis) ー Operating income (right axis)

���.�

���

�.�

��
�

���.�

���.�

FY����/�

FY����/�

Operating asset balance
���
���
���

���.�

���.�

���.�

��

�.�
�.�

�.�

�.�
�.�

FY����/����.�

�

FY����/�

(billions of yen)
���.�

���
��
���

��.�

���.�

�.�

�.�

�.�
FY����/����.�

(billions of yen)

End of ����/� End ��.�of ����/� End of ����/� End ��.�of ����/� End of ����/���.�

FY����/�

FY����/�

���
���

���.�

● Investments in business ventures aimed at earning

gains on the sale of securities
���.�
���.�

���.�

● Asset,���.�
real estate and advisory services businesses

operated by RISA Partners, Inc.

Revenue and operating income
���
��
���
��
��

■ Revenue (left axis) ー Operating income (right axis)

��.�

�.�
FY����/��.�

FY����/�

�.�

���
��

��.�

��.�

��.�

�.�
�.�

�.�

FY����/�

FY����/�

FY����/�

��.�

��.�

��.�

Operating asset balance
��

��.�

End of ����/� End ��.�of ����/� End of ����/� End ��.�of ����/� End of ����/���(billions of yen)
�.�
�.�
�.�
�.�

(billions of yen)

End of ����/� End of ����/� End of ����/� End of ����/� End of ����/�

Business Overview Although revenue rose year on year due
to the sale of large-scale real estate for sale, operating income
fell year on year due mainly to the posting of credit costs.

45

�.�

�.�
�.�

Finance Business
FY����/�
FY����/�

FY����/�

�.�
�.�

-�.�

�.�

�.� �.�
�

FY����/�

● Money loans, factoring and securities investments

aimed at generating dividend revenue and others

�.�

■ Revenue (left axis) ー Operating income (right axis)

�.�

�.�

�.�
�

�.�

�.�

�.�

�.�

FY����/�

FY����/�

���.�

���.�

�.�

Operating asset balance
���

�.�

Corporate data (as of March 31, 2023)
Company nameHead office

NEC Capital Solutions Limited

Shinagawa Intercity C building, 15-3
Konan 2-chome, Minato-ku, Tokyo,108-6219, Japan
Tel. +81 (0)3 6720 8400

FY����/����.�

FY����/�

���.�

���

�.��

(billions of yen)
�.�

�.�

�.� �.�
�

FY����/�

(billions of yen)���.�FY����/��.�
�.�

Other Business

FY����/�

● New business in the areas of energy, tourism,Main���
operations
���.� and healthcare, private finance initiative���.� agriculture���.�(PFI) and public���.�
private partnership(PPP)
projects���.�
and other services

���

Revenue and operating income
���

�.�

�.��
�.�
�.�
�.�
�

■ Revenue (left axis) ー Operating income (right axis)

�.�

�.�

FY����/�

�.�

�.�
-�.�

FY����/��.�

�.�

FY����/�

��
��

��.�

��.�

��.�

�.�
�.�

�.� �.�

�.�

-�.�

FY����/�

Operating asset balance�(billions of yen)

End of ����/� End of ����/� End of ����/� End of ����/� End of ����/��.�

Paid-in capital

3,776.88 million yen

Stock listing
Closing ofaccounts

Number of
employees

�.�
Revenue,�.�gross profit, and operating �.�
�.�
income �.�
all increased
year on year due mainly toanincrease
in
�.�
�.�
�.�
-�.�
interest revenue in addition to lower
credit costs.
�.�
-�.�
�
�
�.�
Business Overview

FY����/�

Financial/Corporate Data

Leasing (Leasing for Information andCommunication Equipment, Office
Equipment, Industrial Equipment andothers), Installment Sales, Business
Loans, Factoring Services
Other (Business Outsourcing andSales of Used Equipment, etc.)
Tokyo Stock Exchange, Prime Market
Stock code: 8793
March 31703 (consolidated 866)

Main banks Sumitomo Mitsui Banking Corporation

Major
affiliatedcompanies

Domestic
network

EnterpriseratingSumitomo Mitsui Trust Bank, Limited
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Development Bank of Japan Inc.

RISA Partners, Inc.
Reboot Technology Services and Capitech
LimitedInnovative Venture Investment Limited
Partnership
NEC Financial Services, LLC
NEC Capital Solutions Singapore Pte. Limited
NEC Capital Solutions Malaysia Sdn. Bhd.
AIRA Leasing Public Company Limited, etc.
30 offices

・Rating and Investment Information, Inc. (R&I)
Long term AShort term a-1
・Japan Credit Rating Agency, Ltd. (JCR)Long term A
Short term J-1

�.�

End of ����/� End of ����/� End of ����/� End of ����/� End of ����/�

FY����/�

Masaaki Suganuma, President

Main business

�.�

�.�

�.�

FY����/�

Representative

�.�

-�.�

Foundation for Value Creation

�.�

�.�

Revenue and operating income

��

��
�

�

�.�

Strategies for Value Creation

Start of operation November 30, 1978

�.�FY����/�

FY����/�

Main
operations

�.�

Investment Business

Main
���
operations

�

�.�

�.�

�.�

�.�

�.�

�.�

�.�

��.�

�.�
While revenue and gross�.�
profit remained
�.�
�.�year, operating income
at the same level as the previous
�.�
��.� on year due to an increase in credit costs.
decreased year
�.�
�.�
�
�

��Business Overview

FY����/�

�.�

���

��.�

FY����/��.�

Introduction

�.�

FY����/��(billions of yen)
��.�

�.�

End of ����/� End of ����/� End of ����/� End of ����/� End of ����/�

Business Overview Revenue, gross profit, and operating
income rose year on year due to as the considerable advances
made in efforts for healthcare, solar power, PFI, etc.

* In connection with the revision to reportable segments, data involving retrospective modification are presented for the period from the fiscal year
ended March 31, 2019 to the fiscal year ended March 31, 2021.

Share information (as of March 31, 2023)● Basic information

Number of shares authorized

86,000,000 shares

Number of shares in one unit

100 shares

Number of shares issued
Number of shareholders● Principal shareholders

Shareholders

NEC Corporation

Number of Voting
shares rights(%)
8,110,000

37.66

24.95

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

897,200

4.16

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)
DFA INTL SMALL CAP VALUE PORTFOLIO

255,950

SUMITOMO LIFE INSURANCECOMPANY

225,0981.18

200,000

0.92

193,300

0.89

JPMorgan Securities Japan Co., Ltd.

SMBC Nikko Securities Inc.

Number of units
owned
215,235 units

27,4855,373,000

Mitsui Sumitomo Insurance Company,
Limited(excluding those with less than 1 unit)

21,533,400 shares

Sumitomo Mitsui Finance & Leasing
Company, Ltd.

Custody Bank of Japan, Ltd.

● Classification of shareholders

1.04

112,000

0.52

110,786

0.51

93,1000.43■Other corporations
135,742 units（63.1%）■Individuals/private and other investors 50,887 units（23.6%）■Financial institutions
14,174 units （6.6%）■Non-resident investors
11,312 units （5.3%）■Financial services providers
3,120 units （1.4%）

Disclaimer

The statements in this publication with respect to theCompany’s current plans, strategies and decisions areforward-looking statements, unless they are historicalfacts. Such forward-looking statements are based on
management’s assumptions and decisions in light of
the information currently available and involve risks anduncertainties. Because these forward-looking statements
could materially differ from actual results due to various
factors, readers are advised not to place undue relianceon them.

NEC Capital Solutions Limited Integrated Report 2023 46