Interim report
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- 1 - Consolidated Financial Results (Kessan Tanshin) for the First Three Months of Fiscal Year Ending March 31, 2027 [Japan GAAP] August 3, 2026 Name of Listed Company: Tokyo Century Corporation Stock Exchange Listing: Tokyo Securities Code: 8439 (URL: https://www.tokyocentury.co.jp/en/) Representative: Koji Fujiwara, President & CEO, Representative Director Contact: Tatsuya Hirasaki, Director and Senior Managing Executive Officer, Chief Financial Officer Phone: +81-3-5209-6710 Scheduled Payment Date of Dividends: – Preparation of Supplementary Reference Documents: Yes Holding of Earnings Call: Yes (for institutional investors and analysts) (Amounts less than one million yen are omitted.) 1. Consolidated Performance Three Months Ended June 30, 2025 Three Months Ended June 30, 2026 YoY (Millions of yen) (Percentage change) (1) Consolidated business results: Revenues 347,586 388,407 11.7% Operating income 35,312 46,303 31.1% Ordinary income 37,282 51,057 36.9% Net income attributable to owners of parent 22,082 35,129 59.1% Basic earnings per share (Yen) 45.25 71.85 Diluted earnings per share (Yen) 45.06 71.66 Notes: Total comprehensive income For the three months ended June 30, 2026: ¥63,971 million –% For the three months ended June 30, 2025: ¥(29,245) million –% As of March 31, 2026 As of June 30, 2026 (Millions of yen) (2) Consolidated financial condition: Total assets 7,214,810 7,437,496 Net assets 1,252,593 1,291,832 Shareholders’ equity ratio 15.5% 15.6% Reference: Shareholders’ equity As of June 30, 2026: ¥1,159,114 million As of March 31, 2026: ¥1,120,503 million These consolidated financial results are an English translation of excerpts from the Japanese “Kessan Tanshin” including attachments filed with the Tokyo Stock Exchange, solely for the convenience of readers outside Japan. This report has been prepared in accordance with accounting principles and practices generally accepted in Japan. Amounts less than ¥1 million have been omitted unless otherwise stated.
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- 2 - 2. Dividends Dividends per Share (Yen) First Quarter Second Quarter Third Quarter Year-End Total Fiscal 2025 – 36.00 – 44.00 80.00 Fiscal 2026 – Fiscal 2026 (Forecast) 45.00 – 45.00 90.00 Note: Revisions to the most recently announced forecast of dividends: None 3. Consolidated Results Forecast for the Fiscal Year Ending March 31, 2027 (As of August 3, 2026) Full Year YoY (Millions of yen) (Percentage change) Net income attributable to owners of parent 123,000 10.5% Basic earnings per share (Yen) 251.66 Note: Revisions to the most recently announced forecast of consolidated results: None Notes (1) Significant changes in the scope of consolidation during the period under review: None (2) Adoption of special accounting treatments for quarterly consolidated financial statements: Yes (3) Changes in accounting policies, changes in accounting estimates, and retrospective restatements 1) Changes in accounting policies due to reforms of accounting standards: None 2) Changes in accounting policies other than item 1) above: None 3) Changes in accounting estimates: None 4) Retrospective restatements: None (4) Number of shares of common stock issued 1) Number of shares issued at the end of the period (including treasury stock) As of March 31, 2026: 492,113,280 shares As of June 30, 2026: 492,113,280 shares 2) Number of shares of treasury stock at the end of the period As of March 31, 2026: 3,351,414 shares As of June 30, 2026: 3,181,814 shares 3) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year) Three months ended June 30, 2025: 488,045,605 shares Three months ended June 30, 2026: 488,913,247 shares Note: The Company introduced the BBT-RS (Board Benefit Trust-Restricted Stock). The number of shares of treasury stock at the end of the period includes the Company shares held by the trust for the BBT-RS plan (1,690,526 shares as of June 30, 2026 and March 31, 2026). In addition, the number of shares of treasury stock deducted in the calculation of the average number of shares outstanding during the period includes the Company shares held by the trust for the BBT-RS plan (1,690,526 shares as of June 30, 2026 and 1,850,700 shares as of June 30, 2025).
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- 3 - Review of the Japanese-language originals of the attached quarterly consolidated financial statements by certified public accountants or an audit firm: Yes (voluntary) Explanation related to forward-looking statements and other items warranting special mention (Regarding forward-looking statements) The statements concerning future performance presented in this document are prepared based on currently available information and certain preconditions that Tokyo Century Corporation and its Group companies believe to be reasonable at the publication of this document. These statements do not purport that the Company pledges to realize such statements. Actual results may be substantially different from any projections presented herein due to various factors. (Methods for obtaining supplementary reference documents for financial statements) The supplementary reference documents were disclosed on the TDnet on the same date as this document (Japanese only) and were also posted on the Company’s website. The Company plans to hold an earnings call on Monday, August 10, 2026.
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- 4 - 1. Overview of Business Results * In this section, “1. Overview of Business Results,” the amounts expressed in units of millions have been rounded off to the nearest hundred million. (1) Overview of Business Results for the Period under Review During the three months ended June 30, 2026, revenues increased ¥40,800 million, or 11.7%, to ¥388,400 million, and gross profit increased ¥15,100 million, or 19.5%, to ¥92,300 million, respectively, from the same period of the previous fiscal year. The latter was mainly due to an increase in income in the Global Business segment and the Transport segment. Selling, general and administrative expenses increased ¥4,100 million, or 9.8%, to ¥46,000 million from the same period of the previous fiscal year, mainly due to increases in personnel and non-personnel expenses in the Global Business segment. Non-operating income minus non-operating expenses amounted to a net income of ¥4,800 million, up ¥2,800 million, or 141.4%, from the same period of the previous fiscal year. This was mainly caused by an increase in equity in earnings of affiliates. Due to the factors mentioned above, ordinary income increased ¥13,800 million, or 36.9%, to ¥51,100 million from the same period of the previous fiscal year. Extraordinary income minus extraordinary losses amounted to a net income of ¥1,500 million, mainly due to the recording of litigation settlement proceeds and other items. Income taxes increased ¥2,100 million, or 18.9%, to ¥13,400 million from the same period of the previous fiscal year. Net income attributable to non-controlling interests increased ¥300 million, or 6.7%, to ¥4,100 million from the same period of the previous fiscal year. As a result, net income attributable to owners of parent increased ¥13,000 million, or 59.1%, to ¥35,100 million from the same period of the previous fiscal year. Average exchange rate during the period for the preparation of consolidated financial statements for the major overseas subsidiaries and affiliates closing accounts in December is ¥156.96/US$ for the first three months of the fiscal year ending December 31, 2026 (January to March 2026) and ¥152.56/US$ for the first three months of the fiscal year ended December 31, 2025 (January to March 2025). (Overview of Business Results by Segment) In connection with its organizational and structural transformation effective April 1, 2026, the Group has changed its reportable segments to foster collaboration between its customer-facing business units (Domestic Business and Global Business), which drive customer-centric business initiatives, and its product development units (Social Infrastructure, Transport, Mobility, and Corporate Investment), which provide sophisticated solutions. This change is intended to create synergies across businesses and enhance the Group’s ability to deliver value to customers and society. As a result of this change, effective from the first quarter of the fiscal year ending March 31, 2027, the Company has changed its reportable segments from the previous five segments, “Equipment Leasing,” “Automobility,” “Specialty Financing,” “International Business,” and “Environmental Infrastructure,” to the following six segments: “Domestic Business,” “Global Business,” “Social Infrastructure,” “Transport,” “Mobility,” and “Corporate Investment.” Business results by segment were as follows. Revenues for each segment represent “revenues from customers,” and segment income represents the amount for the “reportable segment.” In addition, the year-on-year comparisons below are based on figures for the previous fiscal year that have been reclassified to reflect the new segment classification. [Domestic Business] Revenues increased ¥10,200 million, or 8.7%, to ¥127,600 million, and segment income increased ¥1,200 million, or 17.2%, to ¥8,100 million, respectively, from the same period of the previous fiscal year. The increase in segment income was mainly due to an increase in profit recognized from NTT TC Leasing Co., Ltd., a joint venture company with a partner. The balance of segment assets decreased ¥17,100 million, or 1.3%, to ¥1,290,600 million from the end of the previous fiscal year.
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- 5 - [Global Business] Revenues increased ¥17,000 million, or 35.9%, to ¥64,300 million, and segment income increased ¥1,400 million, or 37.4%, to ¥5,000 million, respectively, from the same period of the previous fiscal year. The increase in segment income was mainly because of the receipt of large-scale IT asset disposal (ITAD) orders at CSI Leasing, Inc., a consolidated subsidiary, as well as profit growth in North America, driven by steady leasing transactions. The balance of segment assets increased ¥29,400 million, or 3.2%, to ¥955,400 million from the end of the previous fiscal year. [Social Infrastructure] Revenues decreased ¥1,000 million, or 2.5%, to ¥40,700 million, and segment income increased ¥900 million, or 37.8%, to ¥3,300 million, respectively, from the same period of the previous fiscal year. The increase in segment income was mainly because of an increase in gain on sale in the real estate business, as well as increased income mainly driven by the overseas renewable energy business, etc., in the environmental infrastructure business. The balance of segment assets increased ¥21,700 million, or 2.0%, to ¥1,105,600 million from the end of the previous fiscal year. [Transport] Revenues increased ¥10,500 million, or 20.5%, to ¥61,500 million, and segment income increased ¥8,700 million, or 245.4%, to ¥12,200 million, respectively, from the same period of the previous fiscal year. The increase in segment income was mainly because of an increase in gain on sale of aircraft in the aviation business and an increase in income from the sale of vessels in the shipping business. The balance of segment assets increased ¥100,000 million, or 4.4%, to ¥2,348,700 million from the end of the previous fiscal year. [Mobility] Revenues increased ¥5,400 million, or 6.3%, to ¥90,700 million, and segment income increased ¥900 million, or 13.7%, to ¥7,400 million, respectively, from the same period of the previous fiscal year. The increase in segment income was mainly due to higher gain on sale of vehicles, reflecting increases in used vehicle prices and other factors, as well as higher revenues from car rental services for inbound tourism. The balance of segment assets increased ¥22,800 million, or 4.2%, to ¥571,200 million from the end of the previous fiscal year. [Corporate Investment] Revenues decreased ¥100 million, or 3.3%, to ¥2,700 million, and segment income decreased ¥200 million, or 12.5%, to ¥1,400 million, respectively, from the same period of the previous fiscal year. The decrease in segment income was mainly due to lower capital gains than in the same period of the previous fiscal year. The balance of segment assets decreased ¥100 million, or 0.1%, to ¥91,900 million from the end of the previous fiscal year. Segment Income (Billions of yen) Classification Three months ended June 30, 2025 Three months ended June 30, 2026 Change Amount % Reportable Segment Domestic Business 6.9 8.1 1.2 17.2 Global Business 3.6 5.0 1.4 37.4 Social Infrastructure 2.4 3.3 0.9 37.8 Transport 3.5 12.2 8.7 245.4 Mobility 6.5 7.4 0.9 13.7 Corporate Investment 1.6 1.4 (0.2) (12.5) Other, Adjustment (2.4) (2.2) 0.2 – Amount Recorded in Quarterly Consolidated Statements of Income 22.1 35.1 13.0 59.1
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- 6 - Balance of Segment Assets (Billions of yen) Classification As of March 31, 2026 As of June 30, 2026 Change Amount % Reportable Segment Domestic Business 1,307.7 1,290.6 (17.1) (1.3) Global Business 926.1 955.4 29.4 3.2 Social Infrastructure 1,083.9 1,105.6 21.7 2.0 Transport 2,248.7 2,348.7 100.0 4.4 Mobility 548.4 571.2 22.8 4.2 Corporate Investment 92.0 91.9 (0.1) (0.1) Other 104.0 92.5 (11.5) (11.0) Total of Segment Assets 6,310.7 6,455.9 145.2 2.3 (2) Overview of Financial Conditions for the Period under Review Total assets at the end of the first quarter of the fiscal year ending March 31, 2027 increased ¥222,700 million, or 3.1%, to ¥7,437,500 million, and segment assets increased ¥145,200 million, or 2.3%, to ¥6,455,900 million, respectively, from the end of the previous fiscal year. Total liabilities increased ¥183,400 million, or 3.1%, to ¥6,145,700 million, and interest-bearing debts increased ¥228,400 million, or 4.4%, to ¥5,370,900 million, respectively, from the end of the previous fiscal year. Total net assets increased ¥39,200 million, or 3.1%, to ¥1,291,800 million from the end of the previous fiscal year. This was mainly due to a ¥13,500 million increase in retained earnings and a ¥22,100 million increase in translation adjustments. As a result, the shareholders’ equity ratio increased by 0.1 percentage points compared with the end of the previous fiscal year to 15.6%. Exchange rate at the end of the period for the preparation of consolidated financial statements for the major overseas subsidiaries and affiliates closing accounts in December is ¥159.93/US$ at the end of the first quarter of the fiscal year ending December 31, 2026 (March 31, 2026) and ¥156.54/US$ at the end of the previous fiscal year (December 31, 2025). (3) Explanation of Future Forecast Information such as Consolidated Results Forecast We have made no revision to the consolidated results forecast which was announced on May 11, 2026.
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- 7 - 2. Quarterly Consolidated Financial Statements and Primary Notes (1) Quarterly Consolidated Balance Sheets (Millions of yen) As of March 31, 2026 As of June 30, 2026 Assets Current assets Cash on hand and in banks 221,478 278,591 Accounts receivable - installment sales 197,021 202,781 Lease receivables and investment assets 1,588,984 1,594,043 Loans 361,709 364,893 Operational investment securities 427,988 426,561 Accounts receivable - leases 72,322 71,724 Short-term investment securities 100 100 Inventories 41,670 33,416 Other current assets 315,287 306,517 Allowance for doubtful accounts (8,609) (8,601) Total current assets 3,217,955 3,270,028 Non-current assets Property and equipment Leased assets 2,837,562 2,950,005 Advances for purchases of property for lease 135,150 164,889 Other operating assets 128,768 127,241 Construction in progress 10,218 12,742 Own assets in use 31,926 32,937 Total property and equipment 3,143,626 3,287,816 Intangible assets Computer programs leased to customers 2,705 2,732 Goodwill 56,245 66,118 Other intangible assets 34,028 33,363 Total intangible assets 92,979 102,213 Investments and other assets Investments in securities 615,698 633,009 Claims provable in bankruptcy or rehabilitation 3,152 3,130 Deferred tax assets 43,689 42,853 Retirement benefit asset 4 4 Other investments 99,480 100,313 Allowance for doubtful accounts (3,095) (3,047) Total investments and other assets 758,930 776,264 Total non-current assets 3,995,536 4,166,295 Deferred assets 1,319 1,173 Total assets 7,214,810 7,437,496
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- 8 - (Millions of yen) As of March 31, 2026 As of June 30, 2026 Liabilities Current liabilities Notes and accounts payable - trade 223,956 166,804 Short-term borrowings 404,965 428,968 Current portion of bonds 156,108 168,486 Current portion of long-term debt 1,041,539 1,124,472 Commercial papers 318,787 323,195 Payables under fluidity lease receivables 12,500 14,500 Current portion of long-term payables under fluidity lease receivables 5,070 4,677 Accrued income taxes 23,080 18,661 Deferred profit on installment sales 22,072 23,155 Provision for bonuses 5,452 3,630 Provision for bonuses for directors (and other officers) 438 128 Provision for share awards for directors (and other officers) 199 266 Other provisions 437 607 Other current liabilities 178,505 179,833 Total current liabilities 2,393,114 2,457,387 Long-term liabilities Bonds payable 982,155 1,125,561 Long-term debt 2,214,978 2,175,671 Long-term payables under fluidity lease receivables 6,380 5,394 Deferred tax liabilities 100,241 104,578 Provision for retirement benefits for directors (and other officers) 243 252 Provision for share awards for directors (and other officers) 177 208 Provision for automobile inspection costs 733 758 Other provisions 841 1,174 Net defined benefit liability 9,625 9,842 Other long-term liabilities 253,726 264,835 Total long-term liabilities 3,569,103 3,688,276 Total liabilities 5,962,217 6,145,664 Net assets Shareholders’ equity Common stock without par value 81,129 81,129 Capital surplus 56,547 56,648 Retained earnings 665,085 678,635 Treasury stock (3,893) (3,782) Total shareholders’ equity 798,869 812,630 Accumulated other comprehensive income Net unrealized holding gains on securities 47,707 47,362 Deferred gains or losses on hedges 6,950 10,058 Translation adjustments 264,812 286,926 Remeasurements of defined benefit plans 2,162 2,136 Total accumulated other comprehensive income 321,634 346,483 Share subscription rights 1,775 1,563 Non-controlling interests 130,314 131,153 Total net assets 1,252,593 1,291,832 Total liabilities and net assets 7,214,810 7,437,496
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- 9 - (2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income Quarterly Consolidated Statements of Income (For the three months ended June 30, 2025 and 2026) (Millions of yen) Three months ended June 30, 2025 (Apr. 1 to Jun. 30, 2025) Three months ended June 30, 2026 (Apr. 1 to Jun. 30, 2026) Revenues 347,586 388,407 Costs 270,404 296,151 Gross profit 77,182 92,255 Selling, general and administrative expenses 41,869 45,952 Operating income 35,312 46,303 Non-operating income Interest income 423 757 Dividend income 805 808 Equity in earnings of affiliates 3,892 8,043 Other 227 298 Total non-operating income 5,348 9,907 Non-operating expenses Interest expense 2,717 3,586 Foreign exchange losses 525 960 Other 136 606 Total non-operating expenses 3,379 5,154 Ordinary income 37,282 51,057 Extraordinary income Settlement income – 1,284 Gain on sale of investment securities 160 346 Other 40 57 Total extraordinary income 201 1,688 Extraordinary losses Loss on valuation of investment securities 274 81 Other 52 80 Total extraordinary losses 327 162 Income before income taxes 37,155 52,582 Income taxes 11,273 13,398 Net income 25,882 39,184 Net income attributable to non-controlling interests 3,800 4,054 Net income attributable to owners of parent 22,082 35,129
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- 10 - Quarterly Consolidated Statements of Comprehensive Income (For the three months ended June 30, 2025 and 2026) (Millions of yen) Three months ended June 30, 2025 (Apr. 1 to Jun. 30, 2025) Three months ended June 30, 2026 (Apr. 1 to Jun. 30, 2026) Net income 25,882 39,184 Other comprehensive income Net unrealized holding gains on securities 3,198 (447) Deferred gains or losses on hedges (3,771) 2,696 Translation adjustments (52,093) 20,895 Remeasurements of defined benefit plans (12) (18) Share of other comprehensive income of affiliates accounted for using equity method (2,448) 1,660 Total other comprehensive income (55,127) 24,787 Comprehensive income (29,245) 63,971 Comprehensive income attributable to: Owners of parent (32,000) 59,979 Non-controlling interests 2,754 3,992
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- 11 - (3) Notes to the Quarterly Consolidated Financial Statements Adoption of Special Accounting Treatments for Quarterly Consolidated Financial Statements (Calculation of Tax Expenses) We reasonably estimate an effective tax rate after applying tax effect accounting to income before income taxes for the fiscal year ending March 31, 2027, and adopt a method to calculate tax expenses by multiplying income before income taxes by the estimated effective tax rate. However, where the amount of tax expenses calculated using the estimated effective tax rate is obviously unreasonable, tax expenses are calculated by multiplying income before income taxes by the effective tax rate designated by law after adjusting for significant differences that are not temporary differences. Notes on Segment Information (Matters Concerning Changes in Reportable Segments, etc.) In connection with its organizational and structural transformation effective April 1, 2026, the Group has changed its reportable segments to foster collaboration between its customer-facing business units (Domestic Business and Global Business), which drive customer-centric business initiatives, and its product development units (Social Infrastructure, Transport, Mobility, and Corporate Investment), which provide sophisticated solutions. This change is intended to create synergies across businesses and enhance the Group’s ability to deliver value to customers and society. As a result of this change, effective from the first quarter of the fiscal year ending March 31, 2027, the Company has changed its reportable segments from the previous five segments, “Equipment Leasing,” “Automobility,” “Specialty Financing,” “International Business,” and “Environmental Infrastructure,” to the following six segments: “Domestic Business,” “Global Business,” “Social Infrastructure,” “Transport,” “Mobility,” and “Corporate Investment.” The details of the reportable segments after the change are as follows: (a) Domestic Business Leasing and related services for information and communications equipment, office equipment, and other assets in Japan, as well as circular businesses involving reuse and recycling. (b) Global Business Lifecycle services covering the entire lifecycle of diverse assets, including information and communications equipment, provided overseas, primarily consisting of FMV leasing, financing, and IT equipment disposal services. (c) Social Infrastructure Business operations, leasing and financing, and asset management for real estate (office buildings, data centers, hotels, etc.) and renewable energy assets in Japan and overseas. (d) Transport Leasing and financing, and asset management for aircraft, vessels, and other such equipment in Japan and overseas. (e) Mobility Corporate and individual auto leasing and car rental services, vehicle maintenance and related services, and other businesses covering the entire mobility lifecycle in Japan and overseas. (f) Corporate Investment Corporate investments, including equity and mezzanine financing, value enhancement support for portfolio companies, and fund formation and management services in Japan and overseas. Segment information for the three months ended June 30, 2025 is presented in accordance with the new segment classification.
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- 12 - I. Three months ended June 30, 2025 (from April 1, 2025 to June 30, 2025) 1. Information concerning the amount of revenues and income by reportable segment (Millions of yen) Reportable Segment Other (Note 1) Total Adjustment (Note 2) Amount shown on the Quarterly Consolidated Statements of Income (Note 3) Domestic Business Global Business Social Infrastructure Transport Mobility Corporate Investment Revenues Revenues from customers 117,442 47,322 41,706 51,006 85,327 2,802 1,979 347,586 – 347,586 Intersegment revenues/transfers 126 48 0 26 196 – 140 539 (539) – Total 117,569 47,370 41,706 51,033 85,523 2,802 2,120 348,126 (539) 347,586 Segment income 6,920 3,611 2,381 3,541 6,506 1,563 387 24,914 (2,831) 22,082 Notes: 1. “Other” represents corporate revenues and expenses related to businesses that are not included in any reportable segment. 2. Adjustment to segment income mainly consists of general and administrative expenses, which are not attributed to reportable segments. 3. Segment income is adjusted with net income attributable to owners of parent shown on the quarterly consolidated statements of income. 2. Information concerning impairment loss on non-current assets, goodwill, etc., by reportable segment The information is omitted due to immateriality. II. Three months ended June 30, 2026 (from April 1, 2026 to June 30, 2026) 1. Information concerning the amount of revenues and income by reportable segment (Millions of yen) Reportable Segment Other (Note 1) Total Adjustment (Note 2) Amount shown on the Quarterly Consolidated Statements of Income (Note 3) Domestic Business Global Business Social Infrastructure Transport Mobility Corporate Investment Revenues Revenues from customers 127,615 64,290 40,665 61,467 90,687 2,708 972 388,407 – 388,407 Intersegment revenues/transfers 161 50 0 24 138 – 177 553 (553) – Total 127,777 64,340 40,665 61,492 90,826 2,708 1,150 388,961 (553) 388,407 Segment income 8,111 4,963 3,282 12,233 7,395 1,368 376 37,731 (2,601) 35,129 Notes: 1. “Other” represents corporate revenues and expenses related to businesses that are not included in any reportable segment. 2. Adjustment to segment income mainly consists of general and administrative expenses, which are not attributed to reportable segments. 3. Segment income is adjusted with net income attributable to owners of parent shown on the quarterly consolidated statements of income. 2. Information concerning impairment loss on non-current assets, goodwill, etc., by reportable segment The information is omitted due to immateriality.
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- 13 - Notes in the Case of Material Changes in Shareholders’ Equity Not applicable Notes on Going Concern Assumption Not applicable Notes to Quarterly Consolidated Statements of Cash Flows The quarterly consolidated statements of cash flows for the three months ended June 30, 2026 have not been prepared. Depreciation (including amortization of intangible assets excluding goodwill) and amortization of goodwill for the three months ended June 30, 2025 and 2026 are as shown below. (Millions of yen) Three months ended June 30, 2025 (Apr. 1 to Jun. 30, 2025) Three months ended June 30, 2026 (Apr. 1 to Jun. 30, 2026) Depreciation 67,368 71,912 Amortization of goodwill 1,229 1,097
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- 14 - Significant Subsequent Events (Transfer of Shares in a Subsidiary) At its Board of Directors meeting held on August 3, 2026, the Company resolved to execute a Memorandum of Understanding with ITOCHU Corporation regarding the transfer of 50.0% of the shares of TC Skyward Aviation U.S., Inc. ("SKY-U"), a consolidated subsidiary of the Company, to ITOCHU Corporation (the "Share Transfer"). Upon execution of the Share Transfer, SKY-U and its wholly owned subsidiary, Aviation Capital Group LLC ("ACG"), will be excluded from the Company's consolidated subsidiaries and become equity- method affiliates of the Company. 1. Reason for the Share Transfer The aircraft leasing market is a promising growth sector in which medium- to long-term growth in passenger demand is expected. At the same time, industry consolidation has accelerated, and further expansion of business scale has become essential for ACG, a consolidated subsidiary of the Company, to maintain and strengthen its competitive advantage. On the other hand, from the perspectives of risk tolerance and capital efficiency, there were certain constraints on expanding ACG's asset scale by the Company alone, which had become a key issue. In light of these circumstances, the Company determined that transferring a portion of its shares in ACG to ITOCHU Corporation, which has a strong financial base and is expected to generate medium- to long-term business synergies in this business, and making ACG a jointly operated business with ITOCHU Corporation, would contribute to maximizing ACG's corporate value and enhancing the capital efficiency of the Company Group. Overview of the Share Transfer Item Details Counterparty to transfer ITOCHU Corporation Scheduled timing of transfer November 2026 (scheduled) Name of subsidiary and business TC Skyward Aviation U.S., Inc. / Aircraft leasing business Number of shares to be transferred 3,281 shares Transfer price USD 1,946 million (scheduled) Impact on income Approximately ¥30.0 billion (expected) Ownership ratio after transfer 50.0% (Issuance of Bond-Type Class Shares via Third-Party Allotment and Reduction of Capital Stock and Capital Reserve) At its Board of Directors meeting held on August 3, 2026, the Company resolved to issue the 1st Series Bond- Type Class Shares, 2nd Series Bond-Type Class Shares and 3rd Series Bond-Type Class Shares (collectively, the "Bond-Type Class Shares") to ITOCHU Corporation and The Norinchukin Bank (collectively, the "Planned Allottees") via third-party allotment (the "Third-Party Allotment"), and entered into share subscription agreements with the Planned Allottees on the same date. In connection with the issuance of the Bond-Type Class Shares, the Company also resolved to reduce, as of the payment date for the Bond-Type Class Shares, the full amounts of capital stock and capital reserve increased upon the issuance of the Bond-Type Class Shares, and to transfer such amounts to other capital surplus (the "Reduction in the Amounts of Capital Stock, etc."). 1. Issuance of the Bond-Type Class Shares via Third-Party Allotment Overview of the Third-Party Allotment Item 1st Series Bond-Type Class Shares 2nd Series Bond-Type Class Shares 3rd Series Bond-Type Class Shares Payment date September 18, 2026 (scheduled) September 18, 2026 (scheduled) September 18, 2026 (scheduled) Number of new shares issued 8,000,000 shares 20,000,000 shares 20,000,000 shares Issue price ¥250 per share ¥250 per share ¥250 per share Amount to be incorporated into capital stock per share ¥125 per share (capital reserve: ¥125) ¥125 per share (capital reserve: ¥125) ¥125 per share (capital reserve: ¥125)
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- 15 - Total issue amount (total amount to be incorporated into capital stock) ¥2,000,000,000 (¥1,000,000,000) ¥5,000,000,000 (¥2,500,000,000) ¥5,000,000,000 (¥2,500,000,000) Planned allottee The Norinchukin Bank ITOCHU Corporation ITOCHU Corporation Cash call option exercise period On or after five years from the payment date (on or after September 18, 2031) On or after five years and three months from the payment date (on or after December 18, 2031) On or after five years and six months from the payment date (on or after March 18, 2032) Annual dividend rate 3.8% if the record date falls in any fiscal year ending on or before March 31, 2032; 1-Year JGB Interest Rate + 1.8% if the record date falls in any fiscal year ending on or after April 1, 2032 (capped at 10%) Same as left Same as left Use of proceeds Investment capital for grid- scale storage battery facilities, etc. Same as left Same as left Other No voting rights; no put option or call option in exchange for common shares Same as left Same as left 2. Reduction of Capital Stock and Capital Reserve In order to record distributable amounts in preparation for future flexible capital policies, subject to the completion of payment for the Bond-Type Class Shares under the Third-Party Allotment, the Company will reduce the full amounts of capital stock and capital reserve increased upon incorporation of the paid-in amount for the Bond-Type Class Shares into capital stock and capital reserve, and transfer such amounts to other capital surplus, effective as of the payment date for the Bond-Type Class Shares. Summary of the Reduction in the Amounts of Capital Stock, etc. Item Details Amount of capital stock to be reduced ¥6.0 billion. Since capital stock will increase by ¥6.0 billion due to the issuance of the Bond-Type Class Shares, the amount of capital stock after the effective date will not fall below the amount before the effective date. Amount of capital reserve to be reduced ¥6.0 billion. Since capital reserve will increase by ¥6.0 billion due to the issuance of the Bond-Type Class Shares, the amount of capital reserve after the effective date will not fall below the amount before the effective date. Method of reduction Pursuant to Article 447, Paragraphs 1 and 3, and Article 448, Paragraphs 1 and 3 of the Companies Act, the Company will implement the reduction as described above and transfer the entire amount of each reduction to other capital surplus. Schedule for the Reduction in the Amounts of Capital Stock, etc. Date Event August 3, 2026 Board of Directors' resolution regarding the Reduction in the Amounts of Capital Stock, etc. August 13, 2026 Public notice to creditors regarding objections (scheduled) September 14, 2026 Final deadline for creditors to state objections (scheduled) September 18, 2026 Payment date for the Bond-Type Class Shares (scheduled); effective date of the Reduction in the Amounts of Capital Stock, etc. (scheduled) 3. Future Outlook The impact of the issuance of the Bond-Type Class Shares via the Third-Party Allotment and the Reduction in the Amounts of Capital Stock, etc. on the Group's financial results is expected to be immaterial.
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- 16 - Independent Auditor’s Report on Interim Review of Quarterly Consolidated Financial Statements To the Board of Directors of Tokyo Century Corporation: Auditor’s Conclusion We have reviewed the accompanying quarterly consolidated financial statements of Tokyo Century Corporation (the “Company”) and its consolidated subsidiaries (collectively, the “Group”), which comprise the quarterly consolidated balance sheets as of June 30, 2026 (from April 1, 2026 to June 30, 2026) and the quarterly consolidated statements of income and the quarterly consolidated statements of comprehensive income for the three months ended June 30, 2026 (from April 1, 2026 to June 30, 2026), and the related notes. Based on our interim review, nothing has come to our attention that causes us to believe that the accompanying quarterly consolidated financial statements are not prepared, in all material respects, in accordance with Article 4, Paragraph 1 of Standards for Preparation of Quarterly Financial Statements of Tokyo Stock Exchange, Inc. (the “Standards”) (applying the omissions prescribed in Article 4, Paragraph 2 of the Standards) and principles of corporate accounting for interim consolidated financial statements generally accepted in Japan. Basis for Auditor’s Conclusion We conducted our interim review in accordance with interim review standards generally accepted in Japan. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Interim Review of the Quarterly Consolidated Financial Statements” section of our report. We are independent of the Group in accordance with the regulations regarding professional ethics required in Japan, including the ethical requirements that are relevant to audits of the financial statements of public interest entities, and we have fulfilled our other ethical responsibilities as auditor. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Responsibilities of Management, Corporate Auditors and the Board of Corporate Auditors for the Quarterly Consolidated Financial Statements Management is responsible for the preparation and presentation of the quarterly consolidated financial statements in accordance with Article 4, Paragraph 1 of the Standards (applying the omissions prescribed in Article 4, Paragraph 2 of the Standards) and principles of corporate accounting for interim consolidated financial statements generally accepted in Japan, and for designing and operating such internal control as management determines is necessary to enable the preparation of the quarterly consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the quarterly consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, and disclosing, as applicable, matters related to going concern in accordance with Article 4, Paragraph 1 of the Standards (applying the omissions prescribed in Article 4, Paragraph 2 of the Standards) and principles of corporate accounting for interim consolidated financial statements generally accepted in Japan. Corporate Auditors and the Board of Corporate Auditors are responsible for monitoring the Directors’ execution of duties relating to the design and operation of the Group’s financial reporting process. Auditor’s Responsibilities for the Interim Review of the Quarterly Consolidated Financial Statements Our responsibility is to express a conclusion on these quarterly consolidated financial statements from an independent standpoint based on our interim review in our report on the interim review of quarterly consolidated financial statements. As part of our interim review in accordance with interim review standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the review. We also: Make inquiries, primarily of management and persons responsible for financial and accounting matters, and apply analytical and other review procedures. An interim review is substantially less in scope than an audit for the fiscal year conducted in accordance with auditing standards generally accepted in Japan. Conclude, based on the evidence obtained, whether nothing has come to our attention that causes us to believe that the quarterly consolidated financial statements are not prepared in accordance with Article 4, Paragraph 1 of the Standards (applying the omissions prescribed in Article 4, Paragraph 2 of the Standards) and principles of corporate accounting for interim consolidated financial statements generally accepted in Japan, if a material uncertainty relating to events or conditions comes to our attention that may cast significant doubt on the Group’s
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- 17 - ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report on the interim review of quarterly consolidated financial statements to the related notes in the quarterly consolidated financial statements or, if such notes are inadequate, to express a qualified conclusion or an adverse conclusion. Our conclusions are based on the evidence obtained up to the date of our report on the interim review of quarterly consolidated financial statements; however, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate whether nothing has come to our attention that causes us to believe that the presentation and notes in the quarterly consolidated financial statements are not prepared in accordance with Article 4, Paragraph 1 of the Standards (applying the omissions prescribed in Article 4, Paragraph 2 of the Standards) and principles of corporate accounting for interim consolidated financial statements generally accepted in Japan. Obtain sufficient evidence regarding the financial information of the entities or business activities within the Group as a basis for forming an opinion on the quarterly consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for the interim review of the quarterly consolidated financial statements. We remain solely responsible for our review conclusion. We communicate with Corporate Auditors and the Board of Corporate Auditors regarding the planned scope and timing of the interim review, and significant review findings that we identify during our review. We also provide Corporate Auditors and the Board of Corporate Auditors with a statement that we have complied with relevant ethical requirements regarding independence in Japan, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied to reduce threats to the acceptable levels. Interest Our firm and its engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan. Note to the Reader of Independent Auditor’s Report on Review The Independent Auditor’s Report herein is an English translation of the Japanese Independent Auditor’s Report on Review for the convenience of the reader. Notes: 1. The original of the above report on review is stored separately by the Company disclosing the Quarterly Consolidated Financial Results (Kessan Tanshin). 2. XBRL data and HTML data are not subject to the review. Motohiro Shimizu Designated Limited Liability Partner Engagement Partner Certified Public Accountant Makoto Fujimura Designated Limited Liability Partner Engagement Partner Certified Public Accountant Yoshihiro Fujii Designated Limited Liability Partner Engagement Partner Certified Public Accountant Deloitte Touche Tohmatsu LLC Tokyo Office, Japan August 3, 2026