Tokyo Century : Financial Results for FY2023 with Script

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First, please let me go over the key points I will explain today.

The first point is about net income and dividends. Net income increased ¥67.4 billion from the

previous fiscal year to ¥72.1 billion, the first record high profit in four years since fiscal 2019,

partly due to the dissipation of ¥58.0 billion in Russia-related losses. We plan to pay a dividend of ¥52, up ¥2 from the initial plan.

Second is a breakdown of the record high, in which all operating segments recorded increases in income, making for a good start to the first year of the Medium-Term Management Plan 2027.

The third point is strengthened partner strategies.

In collaborative projects with our major partner, the NTT Group, Nippon Car Solutions Co., Ltd.

(NCS) and NTT TC Leasing Co., Ltd. (NTL) have achieved record high profits. We have made

progress in cooperation with the NTT Group in each of operating segments, including participation in the data center business in the United States, which is expected to expand its market utilizing AI.

The fourth point is awareness of issues.

Although we have achieved record high profits, asset efficiency and capital efficiency are still not high enough to meet our goals of ROA of 1.4% and ROE of 10% in the medium-term management plan.

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P/B ratio. Prior to 2019, P/B ratio, which is the market valuation, remained above 1.0 due to the

earnings growth associated with aggressive growth investments. From fiscal 2020 to 2022, losses were recorded due to the COVID-19 pandemic, the Russian invasion of Ukraine, and other factors, causing the cost of shareholders' equity to increase due to the volatility of the Company's business results. To date, our P/B ratio has remained below 1.0.

We have achieved a V-shaped recovery in the fiscal 2023 results, but it is crucial to continue efforts to ensure that our stakeholders fully achieve stable expansion of net income, which reflects the value we create, and sustained growth, leading to a lower cost of capital. To this end,

in each operating segment, we will further strengthen our growth investments, looking ahead to

the medium-term management plan and beyond, in order to put our business performance back

on a growth trajectory.

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Ordinary income increased ¥11.1 billion from the previous fiscal year to ¥117.3 billion, a record high along with net income.

ROE was 8.8%, and the shareholders' equity ratio was 13.5% due to an increase in translation adjustments resulting from the weaker yen.

For fiscal 2024, we target the achievement of ordinary income of ¥125.0 billion (up ¥7.7 billion; 6.6%), net income of ¥80.0 billion (up ¥7.9 billion; 10.9%), and dividends per share of ¥58.

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Compared to the previous fiscal year, the Specialty Financing and International Business segments, which recovered from losses posted in the previous fiscal year, recorded a substantial increase in income.

All other operating segments posted increases in income, with Automobility also showing an increase attributed to the growth of NIPPON Rent-A-Car, Inc.

(NRS).

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We expect to hit a record high income ever in fiscal 2024 as well, with increased income in all operating segments. We expect a solid increase in income in the Automobility and Specialty Financing segments.

In Automobility, we expect a decrease in gain on sale of used cars, but we will endeavor to offset the decline with profit growth of NRS.

In Specialty Financing, despite a decrease in gain on sale of vessels in the shipping

business, we expect a significant increase in income of ¥4.0 billion, mainly due to ACG's profit growth being driven by a strong aircraft market.

In International Business, although there will be an impact due to upfront costs related to the U.S. data center projects, we expect CSI Leasing, Inc. (CSI) to drive profit growth. Also, we allow for some one-time gains.

On the other hand, Equipment Leasing and Environmental Infrastructure are the two

segments where we see the need to accumulate income to achieve the target.

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In Equipment Leasing, we intend to improve core earnings by amassing quality assets through expansion of collaborative business with partners and other measures. We will closely monitor the interest rate trends, as domestic interest rates are on the rise and costs may increase in the short term.

In Environmental Infrastructure, we are in a phase of aggressive overseas investment to

achieve mid- to long-term growth, and we expect to be impacted by the upfront cost

burden for several years. However, we intend to accumulate stable earnings by steadily

executing pipelines of financing projects and other measures.

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In fiscal 2023, portfolio transformation-one of the main TCX measures in the medium- term management plan-has become widespread in the Company, and progress is being made with relevant initiatives.

Specific examples include a review of the equity stake in the business companies involved in the Equipment Leasing and Automobility segments and had been jointly doing business with our business partner Orient Corporation, as well as strengthening asset turnover in

the real estate and aircraft businesses.

This table shows how we will achieve the ¥27.9 billion required to attain the net income target of ¥100.0 billion in fiscal 2027, the final year of the medium-term management plan from fiscal 2023 results, by operating segment.

In the Equipment Leasing segment, although NTL is the growth driver, we will strengthen TC's standalone earnings power in addition to accumulating profits from affiliates.

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