August u, 2017

TOKAI Holdings Corporation
Katsuhiko Tokita, President & CEO(Code No. 3167 Tokyo Stock Edchange First Section)
To whom it may concern

Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018
Lower Profits on Upfront Costs to Acquire Customers, but Steady Progress withEarnings Base Edpansion

TOKAI Holdings Corporation (hereinafter, the “Company”) today announced its financial
results for the first quarter of the fiscal year ending March 31, 2018 (April 1, 2017 to June 30, 2017).
(Millions of yen)
Year-on-year

Q1 FY03/18

Q1 FY03/17(April 1, 2017 to June 30, 2017)(April 1, 2016 to June 30, 2016)

Sales

u2,531

u1,618

+912

+2.2%

Operating profit

2,152

2,870-717-25.0%

Recurring profit

2,20u

2,900-696-2u.0%

Quarterly net

1,182

1,766

-58u

-33.1%

9.33

15.60

-6.28

-u0.2%

ChangePercent Change

incomeEPS (Yen)

1. Upfront Spending to Edpand Earnings Base and Implemented Aggressive Sales Program
In May 2017, the Company announced its third medium-term management plan Innovation
Plan 2020 “JUMP” and growth strategies to attain plan targets. This entails investing a total of 100
billion yen over four years in M&A and pursuing an aggressive alliance strategy in addition tomaking progress with edisting priorities such as increasing the number of continuing customers
and multiple contracts based on the “Total Life Concierge” (TLC) concept and edpanding service
areas. The plan targets roughly double the number of customers, sales, and operating profit in thefiscal year ending March 31, 2021 versus the fiscal year ended March 31, 2017.
In this first quarter, sales rose by 900 million yen year-on-year (up 2.2%) to u2.5 billion yen due
mainly to an increased customer count, although operating profit fell by 700 million yen (down 25%)
year-on-year because of additional costs to acquire new customers and prevent contract
cancellations. These costs were edpected, because the Company invested in aggressive sales
strategies to edpand the customer count, which forms its earnings base, to attain plan targets.

Earnings results edceeded initial forecasts because progress in the increase of fee-paying
accounts and indirect cost savings was greater than edpected. The first quarter operating profit was79% of the Company’s first half forecast of 2.7 billion yen, surpassing the 65% progress rate in thefirst quarter of the previous fiscal year.
2. Net Increase in Customer Count in First Quarter Same as Annual Net Increase in Fiscal Year
Ended March 31, 2017
As a result of pursuing the aggressive sales strategy outlined above, the number of continuing
customers at the end of the first quarter was 2,570 thousand, increasing by sid thousand from theend of March 2017 and edpanding the Company’s earnings base. The increase equates to the annual
net increase in customers recorded in the fiscal year ended March 31, 2017.
The net increase in customer count broken down by main services is as follows: Gas (LP and citygas) 2,879 versus 131 in the first quarter of the previous fiscal year; CATV u,930 (5,92u); and Aqua
2,732 (9u7). The net decrease in customers of the Information and Communications business waslimited to approdimately u0% year-on-year thanks to the contribution of new customers of theLIBMO MVNO service launched in February 2017.
3. Progress of 81% toward Customer Count Target of 2.88 Million at End of Fiscal Year Ending
March 31, 2018 in First Quarter
As the first step of the aggressive M&A strategy described above, on July 20, 2017, theCompany acquired additional shares in Tokyo Bay Network Co., Ltd., an equity method affiliate ofthe Company, and made it a consolidated subsidiary as disclosed on the same day. Tokyo Bay
Network operates a CATV business in Tokyo with 250 thousand customers. Making it aconsolidated subsidiary has increased the number of the Company’s continuing customers to 2.82
million*. The substantial addition to the customer base is a big step forward in strengthening theCompany’s earnings base. As a result, progress toward the target of 2.88 million customers at theend of the fiscal year ending March 31, 2018 reached 81%.
u. Consolidated Earnings and Dividend Forecasts for the Fiscal Year Ending March 31, 2018
As announced on May 9, 2017, forecasts for the fiscal year ending March 31, 2018 anticipate
operating profit of 11.u billion yen (down 1.3 billion yen year-on-year) on investment to increase theearnings base for future growth, such as LP gas service area edpansion, promotion of new services
in the Information and Communications business, and measures to prevent retail customer
cancellations. The Company has made no changes to the consolidated earnings and dividend
forecasts for the fiscal year ending March 31, 2018.
The Company plans to maintain an annual dividend total of 28 yen per share (the annual
dividend total in the fiscal year ended March 31, 2017 was 28 yen per share, including acommemorative dividend of sid yen per share).
(Millions of yen)
YoY

FY03/18 Forecast

FY03/17 Results(April 1, 2017 to March 31, 2018)(April 1, 2016 to March 31, 2017)

Sales

189,u00

178,631+10,769+6.0%

Operating profit

11,u1012,750-1,3u0-10.5%

Recurring profit

11,36012,775-1,u15-11.1%

ChangePercent Change

Net income

6,u50

7,337-887-12.1%EPS (Yen)

50.88

6u.u6

-13.58-21.1%

FY03/18 (Forecast)

FY03/17

End of Q2

1u.00

11.00

Year-end

1u.00

17.00

Annual dividend total

28.00

28.00

Consolidated payout ratio

55.0%

u3.u%

Note: The year-end dividend for FY03/17 was an ordinary dividend of 11.00 yen plus a commemorative dividend of 6.00 yen.

For details, please see the attached materials, entitled “Financial Results for the First Quarterof the Fiscal Year Ending March 31, 2018.”
Furthermore, for the Company’s first quarter earnings announcement for the year ending
March 31, 2018 please see the following URL.
http://tokaiholdings.co.jp/english/ir/library/earnings.html* Simple total of customers at the end of the first quarter of 2,570 thousand and Tokyo Bay

Network’s customer count of 250 thousand.
Contact: Yoshihiro Taniguchi
Public Relations and Investor Relations Office
TEL: +81-(0)5u-273-u878
Email: overseas_IR@tokaigroup.co.jp

Financial Results for the First Quarter of theFiscal Year Ending March 31, 2018
TOKAI Holdings Corporation(Code: 3167)
August 4, 2017

Aggressive sales program with upfront spending◎ In anticipation of future growth, in this term we plan to make upfront spending to
expand the customer base by such as expand the sales area and introducing newcommunication service and prevent contract cancellations.
◎ Although an increase of 300 million yen as a result of an increase in the number ofcustomers, due to the addition of upfront spending of 1 billion yen, the operating profit
decrease of 0.7 billion yen year-on-year.
(Millions of yen)

Q1 FY03/18 Q1 FY03/17(April 1, 2017 toJune 30, 2017)(April 1, 2016 toJune 30, 2016)

YoY
Amount ofChange

Percent
Change42,531

41,618+912+2.2%

Operating profit

2,152

2,870-717-25.0%

Recurring profit

2,204

2,900-696-24.0%Net income

1,182

1,766-584-33.1%

EPS (Yen)

9.33

15.60

-6.28

-40.2%Sales

1

Performance result in outpace internal expectations◎ The increase in the number of billing and the reduction of indirect costs
progressed more than the internal expectation at the beginning of the year.
◎ The progress rate for the (cumulative) operating profit forecast of 2.7 billion
yen in the 2nd quarter was 79%, progressing at a pace exceeding the same
period of the previous year.
12.8
Reforming profit trend
Operating profit(Billions of yen)from second half
11.4
The progress rate of the 1Q operating
profit of 2.2 billion yen against the 2Q(cumulative) forecast of 2.7 billion yen
was 79%.

4.4

Progress rate 65%

2.9

2.2

8.3

2.7
1.5

1Q

2Q
FY 2016 results

2Q cumulative

2nd half

Full year

FY 2017 forcast

FY 2017 1Q resluts

2Achieve net increase of last year in 3 months of 1Q◎ The number of customers at the end of 1Q was 2.57 million, an increase of 6,000
from the previous term, and the earnings base expanded.
◎ Steady progress toward the achievement of the target of 2.88 million at the endof FY 2017, including M & A of Tokyo Bay Network Co., Ltd. with 250,000
customers conducted in July.
Number of customer(Thousand)

2,558
73

72

2,564

2,570

2,537
Realized the same netincrease in this firstquarter with the FY2016.

2,51930
2,415
FY2011192,445
FY2012FY2013

Net increase

FY2014

20FY2015

66FY2016

FY2017_1Q

Number of customers at the end of term

Expansion to2.88 million at theend of FY 2017

Increased by250 thousand*to 2.82 million
due to M&A.
Progress of
81% of the2.88 million at
the end of theterm.
*Simple sum of 2.57 million
customers at the end of 1Q and 250
thousand Tokyo Bay Network
customers

3

Full-year forecast◎ The earnings forecast for the fiscal year ending March 31, 2018 included the advance
expenses such as expanding the area, promoting information new services,preventing cancellation of retail customers, etc., in order to expand the earnings basefor future growth, so anticipate a 1.3 billion yen decline from the previous year.
◎ There is no change to the full-year consolidated performance forecast (announced onMay 9, 2017) at this time.
(Millions of yen)

Q1 FY03/18

FY03/17(April 1, 2017 toMarch 31, 2018)(April 1, 2016 to
March 31, 2017)

YoY
Amount ofChange

Percent
Change189,400

178,631+10,769+6.0％

Operating profit

11,41012,750-1,340-10.5％

Recurring profit

11,36012,775-1,415-11.1％

Net income

6,450

7,337-887-12.1％EPS (Yen)

50.88

64.46

-13.58-21.1％

Sales4

Dividend forecast◎ There is no change to the dividend forecast (announced on May 9, 2017).
◎ The annual dividend per share plans to maintain 28 yen in the previous term (FY 2016
includes a commemorative dividend of 6 yen).
(Yen)

55.0

52.9
44.2

46.7
40.2
35.1

43.4
28.0

6.0
22.0

12.0

12.0

12.0

12.0

FY2011FY2012FY2013

FY2014

Annual dividend per share

14.0

FY2015

Commemorative dividend

FY2016FY2017(forcast)

Dividend payout ratio(%)

5

Appendix(1) Consolidated results(2) Sales by segment(3) Operating profit by segment(4) Consolidated financial indicators(5) Consolidated cash flows(6) Group customer count(1) Consolidated results(Millions of yen)

Q1 FY2012
Results

Q1 FY2013
Results

Q1 FY2014
Results

Q1 FY2015
Results

Q1 FY2016
Results

Q1 FY2017
Results

43,33943,03844,302

42,672

41,61842,531

Operating profit

1,718

648

1,657

1,708

2,870

2,152

Recurring profit

1,494549

1,547

1,649

2,900

2,204

Quarterly netincome

549

149

713714

1,766

1,182

EPS (Yen)

5.50

1.31

6.21

6.18

15.60

9.33

Sales

7

(2) Sales by segment(Millions of yen)

Q1 FY2012
Results

Q1 FY2013
Results

Q1 FY2014
Results

Q1 FY2015
Results

Q1 FY2016
Results

Q1 FY2017
Results

23,36521,94022,513

20,28817,47917,392

Information andCommunications

9,167

9,414

9,659

9,826

11,78012,447

CATV

5,888

5,970

6,070

6,074

6,241

6,406

Building and Real
Estate

2,806

3,419

3,728

4,012

3,414

3,617

Aqua

891

942

1,123

1,320

1,424

1,456Others

1,220

1,350

1,207

1,149

1,277

1,211

43,33943,03844,302

42,672

41,61842,531

Gas andPetroleum

Total

8(3) Operating profit by segment(Millions of yen)

Q1 FY2012
Results

Q1 FY2013
Results

Q1 FY2014
Results

Q1 FY2015
Results

Q1 FY2016
Results

Q1 FY2017
Results

Gas andPetroleum

1,345

1,049

1,494

1,865

2,197

1,324

Information andCommunications

1,371

826

1,333

691

913

774

421

377

503

498

717

875

-7

135

31

63

81

90-212-523-511

-227

1956

Others,adjustments-1,201-1,216-1,193-1,182-1,060-969

Total

1,718

648

1,657

1,708

2,870

2,152

CATV
Building and Real
EstateAqua*Prior to elimination of indirect expenses

9(4) Consolidated financial indicators(Millions of yen)

Q1 FY2012
Results

Q1 FY2013
Results

Q1 FY2014
Results

Q1 FY2015
Results

Q1 FY2016
Results

Q1 FY2017
Results

Total assets

176,864

171,202167,262

164,163

155,595

157,848

Total liabilities

149,684

137,619

128,734

120,110113,074

102,337

Total net assets

27,18033,582

38,52844,05342,521

55,511

Balance ofinterest-bearing
debt

103,21890,176

81,16873,461

67,061

54,966

EBITDA

6,082

5,040

6,030

5,898

6,760

5,948

Equity ratio

14.9 %

19.1 %

22.5 %

26.3 %

26.8 %

34.6 %
10(5) Consolidated cash flows(Millions of yen)

Q1 FY2012
Results

Q1 FY2013
Results

Q1 FY2014
Results

Q1 FY2015
Results

Q1 FY2016
Results

Q1 FY2017
Results

Operating cash
flow

6,703

7,725

8,080

4,285

8,242

4,851

Investment cashflow

-2,237-3,407-1,844-3,162-2,454-2,870

Free cash flow

4,466

4,318

6,235

1,123

5,787

1,981

Financing cashflow

-3,925-5,368-6,449-1,261-6,216-2,262

11

(6) Group customer count(Thousands of customers)(Thousands of customers)

Q1 FY2012
Results

Q1 FY2013
Results

Q1 FY2014
Results

Q1 FY2015
Results

Q1 FY2016
Results

Q1 FY2017
Results

642

629

627

625

634

645

Previous ISP
model, etc.

775

833

857

800

593

507

HikariCollaboration

－－－

58251

310

MVNO－

12

2

2

8

Mobile

198

217

229

235

235

232

972

1,049

1,087

1,095

1,081

1,057

CATV

682

693

692

692

716

738

Aqua

99

105

126

130

134138Security

20191818

17

17

2,392

2,471

2,526

2,537

2,557

2,570

Gas (LP and city gas)

情報通信SubtotalTotal*The number of customers under a thousand are rounded to the nearest thousand. Information and Communications andCATV both offer communications services, and so their numbers are excluded from total figures.

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

Please contact us with any questions regarding these materials.
Public Relations and Investor Relations Office
TOKAI Holdings Corporation
2-6-8, Tokiwa-cho, Aoi-ku, Shizuoka 420-0034, Japan
Phone: +81- (0)54-669-7676
Fax: +81- (0)54-275-1110
http://tokaiholdings.co.jp/english/
e-mail： overseas_IR@tokaigroup.co.jp

12