Press Release Material- On the management integration of TOKAI and VIC TOKAI November 18, 2010

Purpose of Business Integration

1Necessity of Holding Company

2

Aim of the Holding Company

Overview of Holding Company

3

Outline of Holding Company

4Integration Scheme

5

Basic Role of Holding Company

6

Retail Business Portfolio

7

Synergy Through Integration

8

SchedulePage11 Necessity of Holding Company
History of the TOKAI GroupTOKAI Co. Ltd. and VIC TOKAI Co. Ltd. had expand their scale with stable energy business andgrowth information business. Especially in the information business's development had beenremarkable, and we have expanded our customer base rapidly through this business.

E s t a b l i s h Tw o P i l l a r s o f G r o u p R e v e n u e
Net sales: ¥160B, Ordinary Income: ¥10.8B, Net Income: ¥3.1B, Number of Customers: 2.26M

Construction of a new management system for sustainable growth of the group
In order to provide comprehensive products and services that meet the needs of all living using
the group's total strength, by shifting to a holding company structure that can flexibly andresponsiveness organization.
And resolve many issues that the group is holding, such as publicly listed parent/subsidiary pairs,
and achieve sustanable growth.
① Restructuring and optimal allocation of management resources (“Selection andConcentration")② Eliminate duplication of business and assets③ Rationalization across the group④ Reduction of interest-bearing debt / Improvement of capital ratio⑤ Training group human resorces
Page 22

Aim of the Holding Company① Restructuring and optimal allocation ofmanagement resources○Primary restructuring
・Establish a holding company, make VIC TOKAI awholly owned subsidiary○Secondary restructuring (Mutual utilization ofcustomer base, selection and concentration)
・ Growth based on the Group's strengths in the retail field・ Integration of retail business and customer informationsuch as energy, information communication(broadband · CATV · mobile), Aqua, insurance etc.
・ Restructuring Bridal, Banquet business, housing, realestate, and ship repair business.
②Eliminate duplication of business and assets○Assets: Optical Fiber Trunk Network between Tokyo,
Nagoya and Osaka.
○Organization: Inter-company communication and salesorganization of broadband ISP③Rationalization across the group・Improve distribution efficiency④Reduction of interest-bearing debt / Improvement ofcapital ratio○Policy
・ Centralize financing functions at holding company
・ Enhancement of investment in management plan andthorough implementation of cash flow management○Current interest-bearing debt
・ ¥127B at end of FY2009 (¥120B at Sep. 30, 2010)○Current capital ratio
・7.2% at end of FY2009(Net Assets ¥13.9B / Total Assets ¥191B)○ Compared to other companies (At end of FY2009)
・SINANEN 59.1%, MITSUUROKO 55.8%, KAMEI
29.1%, Iwatani 16.6%, NIPPON GAS 18.8%⑤Training group human resorces・ Fostering next generation leaders with abundant
knowledge and experience across the group・ Training personnel capable of providing smart
products/services according to customer's needs

・Standardization and streamlining of operations byrestructuring core systems
・Reduction of indirect operation cost by setting up ashared service companyPage3

Outline of Holding Company

3

Overview of Holding CompanyCompany nameTOKAI Holdings Corporation

Share transfer ratio

TOKAI ： VIC TOKAI = 1 : 2.3

Aoi-ku, Shizuoka City,
Shizuoka PrefectureLocation
CEOKatsuhiko Tokita

Listed exchangeTokyo Stock ExchangeFirst SectionApril 1, 2011

Accounting period

March 31

Capital¥14 billion

VIC TOKAI (wholly owned subsidiary) Outlineof consolidation

TOKAI (wholly owned subsidiary) Outline ofconsolidation
Gas, Information communication,Others

Business

Established

CATV, Information
communication, Others

BusinessSales

159 billion Yen

Sales

42.8 billion Yen

Operating
Income10 billion Yen

Operating
Income5.5 billion Yen

Employees

4,029

Employees

1,590

Accounting
periodMarch 31

Accounting
periodMarch 31
Page

* Numbers are the fiscal year ended March 201044

Integration Scheme

Integration Scheme: Joint Shares TransferShares transfer（ From April 1, 2011 ）Current status

Shareholder of TOKAI Holdings
Shareholder
of TOKAI

Previous
Shareholder ofTOKAI

Shareholder
of VIC TOKAI

Previous
Shareholder of
VIC TOKAITOKAI Holdings

TOKAI
32.1%
100%
54.6%
（60.6%）

VIC TOKAI

100%

TOKAI

VIC TOKAI

Ratio of share transfer
TOKAI

：

VIC TOKAI

1：

2.3

Describe the holding ratio of outstanding shares
The figures in parentheses are group consolidated holding ratio

Page5

5

Basic Role of Holding Company
Basic Role of Holding Company

Separate “group management” and “individual management” (business execution)○The Holding company do① Optimal allocation of management resources (human, objects, money, information) for
operating companies to achieve goals② Supporting business promotion of each operating company (planning, survey etc.)

Holding company（TOKAI Holdings）

Operating Company（VIC TOKAI）

Operating Company（TOKAI GAS）

・Optimal allocation of management
resources
・Support for business promotion

Individual management(Business execution)

Operating Company（TOKAI）

GroupmanagementPage

6

Retail Business Portfolio

Attractiveness of market※26※1【Telecommunication【情報通信】 】・Accelerating ICT conversion of society, medium- to・社会のIT化の加速により、中長期的な成長期待あり
long-term growth expectation⇒ toICTの革新を背景にした、新たなthe→Aimbuild
a new business model against
backgroundof ICT innovation
ビジネスモデルの構築を目指す【Aqua】
・Market growth is expected as a
product that matches the times
such as convenience andenvironmental friendliness→Increase customers and beearly mainstay commercialization

Aqua

【Gas】
・Rise of alternative energy, progress inenergy conservation, decrease in the numberof households, etc. lead to maturity→Improve profitability by improving
efficiency and streamlining0≈

Complement each other withsynergy of other business or
new business※ Size of the circle indicates the latest sales

Profitability※3≈※1 Maximization of the sum total of expected earnings of individual projects and a method of consideration for steadily earning revenue while avoiding risks.
※2 Total sum of scores of each trend assessment of the external environment (economy, society, laws and regulations, technology), evaluation of market growthpotential and evaluation of competitive environment※3 Calculate the difference between the latest operating profit margin for each business and the average operating profit margin of the industry to which each businessbelongs (listed company: FY 2009). Projects with a larger positive difference are scored as assuming high profitability.
Page7

7 Synergy Through Integration
Mutual utilization of retail customer base
①Centralized customer base utilizing VIC TOKAI information technology②Actively promote sales utilizing TOKAI sales structure⇒ Increase ARPU（Average Revenue Per User）【TOKAI Holdings】

2.26million【VIC】
Customer：1.10M【TOKAI】
Customer：1.16M
LPG・LNG
AquaBroadband
SecurityMobile

CATVBroadband（September 30, 2010）Page

87 Synergy Through Integration
Aiming business area (TLC)
Solar power

Geothermal

Telecommunication

MobileInsurance

Handyman ServiceGas

Housing / Facilities

EnergyGridHome security

TOKAI“Total Life Concierge”

HEMS
BEMS/FEMS

Facility
Grid

Gas and energy
dispersed power
management

ICT
Grid

comprehensive service of living
Mobility
Grid

Hospitality
Grid

EV Vehicle
Management

Bicycle / motorcycle / car sharing

Charging
stationFunerary
funeralSecurity
Grid
Aqua

Healthcare
Grid

AgribusinessLong-term
Medical
Nursing carecollaboration
Various procedures

Settlement service
BridalTOKAI Communication Platform(Communication / Authentication / Billing)
Produce peace of mind, convenience and comfort for customers by connecting a variety ofcommunity-based grids※Grid：In the meaning of the lattice, each field covers the entire area like a mesh, and even if each one is small, it intends to produce huge power if gathered※HEMS（ Home Energy Management System）：A system that connects energy consuming equipments and power generation equipment in a household network byutilizing ICT technology, controls the operation of each appliance to an optimum state, and achieves total energy conservation※BEMS（ Building and Energy Management System）： A system that grasps the energy used and the indoor environment of the building and uses it for energy conservation※FEMS（Factory Energy Management System）：A system to grasp the state of energy use at factories, to rationalize and optimize energy usePage97 Synergy Through Integration

Cost reduction through integration
Synergy through integration of
information and communications businessGroup-wide cost reduction

Aggregation of assets

Efficiency and streamline operations

Aggregation of fiber optic trunk
networks through Tokyo-NagoyaOsaka owned by each TOKAI andVIC TOKAI(Reduction of operation andmanagement cost, uniformity andimprovement of quality)· Promotion of shared services(Rationalization of indirect business)· Group-wide business processes· Efficient operation by system

Improve sales functions

Rationalization of logistics functions· Aggregation of sales organization ofbroadband ISP and salesorganization of intercompany
communication service· Rationalization of logistics with LPG
business and Aqua business

Page

10

7 Synergy Through Integration
Aggregation of assets - Aggregation of fiber optic trunk networks
FY2000～Mar 2010 CompletionTrunk 1,943 km
Brach※CATV optical trunk
Total distance laid by the end of March 2010

567 km2,446 kmCentral route
200 cores

4,956 km

Ashikaga
Gyota(Reference) Plan to launch after the fiscal year
ended March 2011

Relay station

19

6SouwaTsuchiura

Omiya

Kashiwa

Iruma

20
Kofu

Kiso

Setagaya
Uenohara

Soka 16

Nakatsugawa
Atsugi

Ogaki

Relay station (candidate site)

Gotenba 246

Toki
Kyoto

Fuji

Minakuchi

23

Nagoya-1
1
Toyokawa

25

Hiratsuka

ＮＴＴ Data
OtemachiInformation box sectional view
Used by Ministry of Land,
Infrastructure and TransportYaizu

Kakegawa

Hamamatsu

200 cores

Yokohama
1Odawara
NumazuShizuoka

Nagoya-2

Yokkaichi

1Osaka417Suwa

Rent from another company※ branch line, CATV optical trunk line, do not use
information box.
※ The position indication is also omitted.

Iwase

50

ＴＯＫＡＩ /VIC
TOKAITokyo-Nagoya R1-R246 Route300 cores

200to 300 cores

11・ TOKAI holds 1/2 of Kanto area and Meihan and central route.
・· VIC TOKAI holds 1/2 between Tomei and Meihan.
Page

11

7 Synergy Through Integration
Improve sales functions
VIC TOKAITOKAICEOCEOCOOCOOTokyo H.Q.
Administration Head Office

CS Head Office

CATV Head Office

SIS Head Office

General Affairs Division

Management Head OfficeInformation and communication
Head Officce

LPG Head Office

Industrial Head Office

Residence Head Office

LPG Head Office

Duplication of broadband
ISP sales organization

ISPBB Divisionintercompany communication service

Career Service Division

BB Mobile Division

Communications DivisionDuplication of sales organization ofPage

812Schedule
Schedule

Contents

November 18, 2010

Resolution of the Board of Directors (Conclusion of Share TransferPlan) · External release

November 19, 2010

TOKAI · VIC TOKAI Joint Briefing Session

January 21, 2011

Extraordinary shareholders meeting
Formulation of Business vision / Medium-term
management plan
Study of rationalization plan, shared service concept

April 1, 2011

Establish Holding company (TOKAI Holdings)

May, 2011

Presentation of new medium-term management plan

Realized the "final form of organization to aim"in the two years up to the fiscal year ending March 2013
Page13

The performance forecasts and forward-looking statements in these materials are based on
information currently available to the company, and include potential risks and uncertainties.
Please be aware that due to changes in a variety of factors, actual results may differ materiallyfrom the projections and other forward-looking statements in these materials.

Please contact us with any questions regarding these materials.
TOKAI Corporation, Group Integrated General Promotion Office
2-6-8, Tokiwa-cho, Aoi-ku, Shizuoka 420-0034, Japan
Phone：+81-(0)54-254-8181
FAX：+81-(0)54-273-4821
e-mail： tk-kikakuc@tokaigroup.co.jp

http://tokai.jp