Our Business Top

Our Business Top

JP
INTEGRATED REPORT 2023
menu

INTEGRATED REPORT 2023

TOP
Download Entire ReportPDF:6,479KB
COVER STORY OPEN

  • Tokyo Century Transformation and Sustanable Growth

  • Management Philosophy

  • Tokyo Century’s History

  • Tokyo Century’s Target Portfolio

  • Growth Business Model Transformation and Evolution

  • Security Enhancement of Risk Management

  • PDF Download2,317KB

CHAPTER 1 Message from the President OPEN
CHAPTER 2 Sustainability Management at Tokyo Century OPEN
CHAPTER 3 Medium-Term Management Plan 2027 and Medium- to Long-Term Vision OPEN
CHAPTER 4 Stakeholder Engagement OPEN
CHAPTER 5 Business Model and Growth Strategies by Operating Segment OPEN
CHAPTER 6 Enhancement of Risk Management OPEN
CHAPTER 7 ESG Strategies OPEN
CHAPTER 8 Data Section OPEN
Download Entire ReportPDF:6,479KB

BACK NUMBERS

Integrated Report 2023

Transformation and Sustainable Growth

scroll

Message from the President

Chapter1

Message from the President

Evolution into Unique Financial Services Company through Tokyo Century Transformation (TCX)

By promoting four types of transformation, Tokyo Century will evolve its asset value innovation and integration capabilities as it seeks to improve corporate value through sustainable growth.

View

Chapter1

Message from the President

Evolution into Unique Financial Services Company through Tokyo Century Transformation (TCX)

By promoting four types of transformation, Tokyo Century will evolve its asset value innovation and integration capabilities as it seeks to improve corporate value through sustainable growth.

View

Message from the President

Chapter2

Sustainability Management at Tokyo Century

Sustainability management

Message from the President of the Corporate Planning Unit

By promoting sustainability management based on an integrated approach toward financial and non-financial strategies, I aspire to generate a virtuous cycle of ongoing growth.

View

The Tokyo Century Group seeks to heighten the value it provides to stakeholders over the long term through its value creation process.

Provision of Value to Stakeholders

The Tokyo Century Group seeks to heighten the value it provides to stakeholders over the long term through its value creation process.

Chapter3

Medium-Term Management Plan 2027 and Medium- to Long-Term Vision

Strategy

Directive for Long-Term Growth

Cultivation of sense of anticipation using highly profitable portfolio capable of consistent earnings growth

Tokyo Century seeks to achieve ongoing improvements in corporate value by heightening asset and capital efficiency, reducing the volatility and increasing the predictability of performance to lower cost of capital, and achieving stable and high earnings growth.

View

Chapter4

Stakeholder Engagement

ENGAGEMENT

  • Transformation Dialogue between an Institutional Investor and President

    Tokyo Century continuously engages with investors to guide efforts to improve corporate value.

    View

  • Stakeholder Engagement

    Improving Corporate Value through Dialogue and Co-Creation

    View

Chapter5

Business Model and Growth Strategies by Operating Segment

Strategies by operating segment

Business Model

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

Business Model

At a Glance

Portfolio Transformation and Business Overview

At a Glance

Chapter6

Enhancement of Risk Management

Risk management

  • Major Risks and Management Frameworks

    We have been promoting comprehensive risk management under our risk management policy with the aim of taking appropriate action, both qualitatively and quantitatively and as needed, by assessing the risks associated with the Company as a whole.

    View

  • Risk Management

    The main objective of risk management at the Tokyo Century Group is to support growth and value creation by allowing for bold risk taking, and we are therefore managing risks, including measuring risks on a consolidated basis while controlling the capital use rate.

    View

  • Response to Expansion of Business Domain

    We operate an investment management framework for the effective control of investment risk and optimization of the business portfolio while regularly monitoring the ROIC spread by the operating segment.

    View

Chapter7

ESG Strategies

ESG Strategy

Roundtable Discussion on Diversity

Evolution Driven by a Diverse and Flat Organizational Culture

Tokyo Century aspires to craft a diverse and flat organizational culture. We arranged a roundtable discussion on the subject of Tokyo Century’s evolution in which frank opinions were shared regarding the thoughts and careers of the participants, specifically two individuals who had previously taken childcare leave and the deputy general manager of the Diversity Promotion Office.

View

Evolution of Tokyo Century’s Corporate Governance System

Recognizing that effective corporate governance is a key for maximizing corporate value, Tokyo Century endeavors to create a sound and highly transparent management structure that swiftly responds to changes in the business environment and makes accurate decisions.

View

Chapter8

Data Section

Corporate data

MANAGEMENT PHILOSOPHY

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

Highly Specialized and Unique Financial Services

Not limiting itself to financial functions, Tokyo Century is committed to its ongoing quest to provide financial services that cater to customer needs, to create highvalue-added services tied to asset life cycles, and to develop businesses itself.

Highly Specialized and Unique Financial Services.

Partnerships with Customers Pursuing Business Growth

Tokyo Century employees continue their bold efforts to deliver solutions that surpass customer expectations and to thereby contribute to the creation of value and consequently to the development and growth of customers’ businesses. Our partnership strategy is founded on the strength of our trust-based relationships with customers, and we intend to preserve this tradition within the Company so that we can keep growing together with customers.

Partnerships with Customers Pursuing Business Growth.

Creation of an Environmentally Sound, Sustainable Economy and Society

As a company involved in a business related to various assets, recycling and decarbonization are incredibly important themes for Tokyo Century as it seeks to contribute to the creation of an environmentally sound, sustainable economy and society. We are united in our ongoing commitment to realizing such a society in order to preserve a pristine environment for future generations.

Creation of an Environmentally Sound, Sustainable Economy and Society.

Tokyo Century’s Target Portfolio

Portfolio in Fiscal 2022：Distribution of Segment Assets by Segment as of March 31, 2023 consisted of 46% in the Specialty Financing (Real Estate 10%, Aviation 32%, Shipping 2%), 24% in the Equipment Leasing, 11% in the Automobility, 12% in the International Business and 5% in the Environmental Infrastructure. The Environmental Infrastructure established in fiscal 2023.
  • *1Established in fiscal 2023

Ordinary Income (Loss) / ROA

In the Equipment Leasing segment, ordinary income was 31.7 billion yen and ROA was 2.4% for the year ended March 2023.
In the Automobility segment, ordinary income was 28 billion yen and ROA was 4.6% for the year ended March 2023.
In the Specialty Financing segment, ordinary income was 57.4 billion yen and ROA was 2.3% for the year ended March 2023.
  • *2Includes figures for energy and environment businesses that are currently part of the Environmental Infrastructure segment
In the International Business segment, ordinary income was -9 billion yen.
  • *3 Includes valuation losses on operational investment securities (¥18.7 billion)

Growth Business Model Transformation and Evolution

  • Growth

Business Model Transformation and Evolution

Tokyo Century will transform and evolve its two value creation cycles with the goal of developing new, highly profitable businesses.

Key Points of Transformation and Evolution of Value Creation Cycles

Value Creation Cycle through Asset Value Businesses

Enhancement of services that address digital technology- and decarbonization-related needs

  • Provision of financial services incorporating AI, IoT, mobile, cloud, blockchain, and other digital technologies
  • Creation of financial services that contribute to the realization of a society centered on clean energy use

Value Creation Cycle through Partnerships

Augmentation of lineup of services that foster understanding with regard to visions of partners and help resolve their issues

  • Strengthening of relationships with existing partners and expansion of business scope through collaboration with new partners
  • Creation of high-value-added services that help resolve the issues faced by partners through business proposals from Tokyo Century

Shared Issues

Cultivation of Organizational Culture and Development of Human Resources That Bring About Change

  • Cultivation of organizational culture of boldly exploring new business fields and creating new businesses
  • Recruitment and development of highly specialized human resources

Acceleration of Coordination among Operating Segments

  • Development of frameworks enabling the five operating segments to share and utilize expertise and knowledge centered on newly established GX Task Force and DX Task Force
  • Creation of new business opportunities by generating synergies through merging of specialties of various operating segments
Tokyo Century will transform and evolve its two value creation cycles with the goal of developing new, highly profitable businesses.

Security Enhancement of Risk Management

  • Security

Enhancement of Risk Management

Issues and Directive Informed by Previous Medium-Term Management Plan (Fiscal 2020–Fiscal 2022)

Issue1

Response to sudden macroeconomic changes

The COVID-19 pandemic and Russia’s invasion of Ukraine resulted in massive losses centered on the aviation business of the Specialty Finance segment. In addition, valuation losses were recorded on certain investments in the International Business segment due to sudden fluctuations in the stock market.

Major impairments, doubtful accounts, and unrealized losses on operating investment securities incurred over 3 years totaled approximately 158.8 billion yen. The total was 22.5 billion yen (Specialty Financing 20.3 billion yen, International Business 2.2 billion yen) in fiscal 2020, 34.6 billion yen (Specialty Financing 32.5 billion yen, International Business 2.1 billion yen) in fiscal 2021, and 101.6 billion yen (Specialty Financing 82.7 billion yen (of which, extraordinary losses on aircraft associated with Russian airlines of ¥74.8 billion), International Business 18.9 billion yen) in fiscal 2022.
Issue2

Rising cost of capital due to decreased predictability of performance

There is a tendency for our performance to become less reliable and predictable as the portion of our portfolio accounted for by relatively high-risk businesses increases. Accordingly, there is a need for exhaustive portfolio management with consideration for the balance of risks and returns.

Directive

Transformation of business model to ensure high profitability

By allocating management resources to services and businesses with high expected ROA, Tokyo Century will transform its portfolio to maintain stable growth by increasing overall asset efficiency.

Medium- to Long-Term Measures Based on Issues and Directive

Tokyo Century aims to build resilient organizations and portfolios by heightening its responsiveness to unforeseen events.

1. Reinforcement of investment screening and monitoring functions

Entrenchment and enhancement of investment management framework

Steps are being taken to reinforce investment screening and monitoring functions to appropriately assess investments and determine the necessity of withdrawals.

Enhancement of responsiveness toward country and global risks

Geopolitical risks and limit ratings of overseas businesses are being reassessed as part of efforts to enhance risk management in preparation for the occurrence of extreme circumstances.

2. Development of risk control framework

Strengthening of risk controls and diversification of portfolio

The effective management of risk exposure associated with economic capital (capital use rates) is practiced, and risk limits will be introduced for categories that account for a large portion of our risk profile in order to strengthen risk controls and diversify our portfolio.

Management emphasizing cost of capital

The methods of managing return on invested capital spread by operating segment are being revised so that this spread can be used to guide revisions to portfolio allocations as part of efforts to facilitate management emphasizing the balance of risks and returns.
Within the Portfolio Targeted over Medium to Long Term, Finance consists of Equipment leasing, Auto financing, and Structured finance, with the expected ROA of 3%. The expected ROA for Services is 4% or more. The Businesses consists of Auto services, Aviation, shipping, and real estate, Principal investments, Data centers, Renewable energy generation and Asset Management, with the expected ROA is 4% or more.
BACK NUMBERS OPEN

Investor Relations

ページトップへ戻る