February 5, 2018

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

Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2018
Close to Attaining Target Customer Count of 2.88 Million Announced in May by Spending Upfront toAcquire Customers

TOKAI Holdings Corporation (hereinafter, the “Company”) today announced its financial
results for the third quarter of the fiscal year ending March 31, 2018 (April 1, 2017 to December 31,2017).
1. Customer Numbers Up Sharply by 270 Thousand; Close to Full-Year Target of 2.88 Million
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 to
making progress with existing priorities such as increasing the number of continuing customers,
securing multiple contracts based on the “Total Life Concierge” (TLC) concept, and expanding
service areas. The plan targets roughly double the number of customers, sales, and operating profit
in the fiscal year ending March 31, 2021 versus the fiscal year ended March 31, 2017.
In the third quarter of the fiscal year ending March 31, 2018, the Company spent upfront costs
to implement an aggressive sales program to increase the number of customers, which forms its
earnings base, with a view to attaining medium-term management plan targets. As a result, thecustomer count reached 2,839 thousand as of December 31, 2017, increasing by 275 thousand(+10.7%) from March 31, 2017, and expanding the Company’s earnings base.
The net increase in customer count at existing businesses (not including the newly acquired
Tokyo Bay Network Co., Ltd.) progressed at four times the pace of net increase during the fiscal
year ended March 2017.
The net increase in customer count broken down by main services is as follows: Gas (LP and citygas) 11,447 (versus a net increase of 1,499 in the first nine months of the previous fiscal year);
CATV 268,187 (versus a net increase of 18,080), due in part to the effect of acquiring Tokyo Bay
Network; and Aqua 8,320 (versus a net increase of 1,936). The net decrease in customers of theInformation and Communications business was limited to approximately 50% year-on-year owing
to the contribution of new customers of the LIBMO MVNO service launched in February 2017.

2. Upfront Spending to Expand Earnings Base by Aggressive Sales Program
In the third quarter of the fiscal year ending March 31, 2018, sales were up by 5.9 billion yen(+4.6%) year-on-year to 133.3 billion yen due to an increase in customer numbers and Tokyo Bay
Network M&A effect, although operating profit was down by 1.6 billion yen (-19.7%) to 6.6 billion
yen due to the expected increase in costs to acquire new customers and prevent service
cancellations.
(Millions of yen)

Sales

Q3 FY03/18

Q3 FY03/17(April 1, 2017 to(April 1, 2016 to

December 31, 2017)

December 31, 2016)

YoY
ChangePercent Change

133,336

127,432+5,903+4.6%

Operating profit

6,579

8,193

-1,614-19.7%

Recurring profit
Quarterly net income

6,662

8,246

-1,584-19.2%

3,435

4,850

-1,415-29.2%EPS (Yen)

26.66

42.71

-16.05-37.6%

3. Ongoing Progress with Improvement of Financial Position
The Company improved its equity ratio by 0.5 percentage point from 34.5% at the end of theprevious fiscal year to 35.0% as a result of booking quarterly net income and progress with theconversion of convertible bonds with stock acquisition rights.
Free cash flow was down year-on-year, because of upfront spending to aggressively build up thecustomer base, but the balance of interest-bearing debt has only increased marginally since thestart of the fiscal year ending March 31, 2018 owing to the conversion of convertible bonds withstock acquisition rights. The Company has maintained an interest-bearing debt/EBITDA ratio at
around 2.1x, the same level as the previous fiscal year.
4. 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 11.4 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 expansion, 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 six 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

189,400

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%

FY03/18 (Forecast)End of Q2 (Yen)

ChangeFY03/18
14.00

Percent Change

FY03/17
11.00

Year-end (Yen)

14.00

17.00

Annual dividend total (Yen)

28.00

28.00

Consolidated payout ratio

55.0%

43.4%

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 Third Quarterof the Fiscal Year Ending March 31, 2018.”
Furthermore, for the Company’s third quarter earnings announcement for the year ending
March 31, 2018, please see the following URL.
http://tokaiholdings.co.jp/english/ir/library/earnings.html
Contact: Yoshihiro Taniguchi
Public Relations and Investor Relations Office
TEL: +81-(0)3-5404-2891
Email: overseas_IR@tokaigroup.co.jp

Financial Results for the Third Quarter of the
Fiscal Year Ending March 31, 2018
TOKAI Holdings Corporation(Code: 3167)
February 5, 2018

Customer count up sharply; earnings base expands◎ Customer count up 275 thousand (net), mainly in CATV business, due in part to M&A
of Tokyo Bay Network◎ Net increase of customer count in existing businesses (excluding M&A) progressing
at 4.0x the pace of previous fiscal year, up 25 thousand in cumulative Q3 versus
6 thousand in FY03/17(Thousands of customers)

2,519
2,415

2,537

2,839

Net increase of
275 thousand(+10.7%)Gas+11 thousand
CATV +268 thousand
Aqua+8 thousand(and others)

2,558

275

2,564

2,445
250
4.0x netincrease

72
FY03/1230
FY03/1373
FY03/14

Net increase (existing businesses)

19

20

6

25

FY03/15

FY03/16

FY03/17Q3 FY03/18

Net increase (M&A)

Customer count at the end of term

1

Upfront spending on aggressive sales policy◎ Policy for FY03/18 is upfront spending for future growth, such as expanding service
areas, launching new communications services, preventing service cancellations andaggressive sales program to grow customer base
◎ Operating profit down due to 3.0 billion yen in upfront spending to acquire newcustomers and launch new services(Millions of yen)YoY

Q3 FY03/18 Results Q3 FY03/17 Results(April 1, 2017 to
December 31, 2017)(April 1, 2016 to
December 31, 2016)

133,336

127,432+5,903+4.6%

Operating profit

6,579

8,193

-1,614-19.7%

Recurring profit

6,662

8,246

-1,584-19.2%Net income

3,435

4,850

-1,415-29.2%EPS (Yen)

26.66

42.71

-16.05-37.6%

Sales

PercentchangeChange2

Taking advantage of strengthened equity capital to invest for growth◎ Equity ratio up on progress with conversion of convertible bonds and sustained
quarterly net profit growth◎ Cash flow down on 3.0 billion yen upfront spending to acquire new customers andlaunch new services, and aggressive investment in business expansion such as 1.2
billion on Tokyo Bay Network M&A. Maintained interest-bearing debt/EBITDA ratio
close to FY03/17 level

Equity ratio

34.5

%

As of March 31, 2017

Balance of interestbearing debt
Operating cash flow

54.1

billionyen

As of March 31, 201717.1

billionyen

Q3 FY03/17

Investment cash flow

-6.9

billionyen

Q3 FY03/17

Free cash flow

10.2

billionyen

Q3 FY03/17

Interest-bearing
debt/EBITDA ratio

2.0 X
FY03/17* EBITDA target for full-year FY03/18 was applied to calculate interest-bearing debt/EBITDA ratio for Q3 FY03/18.

➡
➡

35.0

As of December 31, 2017

57.5

➡
➡

-9.7

➡

billionyen

As of December 31, 2017

12.3

➡

%

billionyen

Q3 FY03/18
billionyen

Q3 FY03/18

2.6

billionyen

Q3 FY03/18

2.1 X
Q3 FY03/18

3

Full-year forecast◎ Forecasts 1.3 billion yen year-on-year operating profit decline in FY03/18 due toupfront spending on expanding service areas, sales promotion of new information
services, and preventing service cancellations by retail customers with a view toexpanding earnings base for future growth◎ No change to full-year consolidated earnings forecast announced on May 9, 2017
(Millions of yen)

YoY

FY03/18 Forecast FY03/17 Results(April 1, 2017 toMarch 31, 2018)(April 1, 2016 to
March 31, 2017)

189,400

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％

Sales

Percent
ChangeChange4

Dividend forecast◎ Interim dividend is 14 yen per share, up 3 yen from 11 yen per share in previous fiscal
year◎ Year-end dividend unchanged from initial forecast of 14 yen per share to maintainprevious fiscal year’s annual dividend of 28 yen per share (previous fiscal year’s yearend dividend of 17 yen per share was ordinary dividend of 11 yen per share +commemorative dividend of 6 yen per share)30

28 yen28 yenper shareper share

6

25

15

10

+3
yen

20

12 yen12 yen12 yen12 yenper shareper shareper shareper share

6

6

6

6

14 yenper share

11

8

6

6

6

6

6

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

Year-end dividend

+3
11

5

14

yen

14

Interim dividend0Interim dividend

Year-end dividend

FY03/17

Commemorative dividend

FY03/18(Forecast)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)

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Q3 FY03/18
Results

130,879

132,959

135,981130,103

127,432

133,336

Operating profit

5,690

3,196

4,866

4,006

8,193

6,579

Recurring profit

4,948

2,959

4,517

3,921

8,246

6,662

Net income

1,767

920

1,819

1,395

4,850

3,435

EPS (Yen)

17.68

8.03

15.81

12.05

42.71

26.66

Sales

1

(2) Sales by segment(Millions of yen)

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Q3 FY03/18
Results

Gas andPetroleum

67,174

66,964

67,10658,34851,29153,145

Information andCommunications

28,37528,62830,02031,98836,212

37,760CATV

17,80018,093

18,207

18,345

18,901

20,871

Building and Real
Estate10,846

12,37913,311

13,783

12,926

13,491

Aqua

2,883

3,271

3,707

4,130

4,391

4,652

Others

3,798

3,621

3,626

3,507

3,708

3,415

130,879

132,959

135,981130,103

127,432

133,336

Total

2(3) Operating profit by segment(Millions of yen)

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Q3 FY03/18
Results

Gas andPetroleum

4,493

3,297

4,376

5,232

5,550

3,857

Information andCommunications

3,785

3,227

3,716

1,472

2,993

2,410

CATV

1,205

1,398

1,309

1,453

2,125

2,758

Building and Real
Estate

247

591

349

523

619

681

Aqua

-616

-1,695-1,166

-933

299

221

Others,adjustments-3,423-3,623-3,718-3,741-3,396-3,350

Total

5,690

3,196

4,866

4,006

8,193

6,579

*Prior to elimination of indirect expenses3(4) Consolidated financial indicators(Millions of yen)

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Q3 FY03/18
Results

Total assets

176,147

172,863

168,034

164,500

157,735

165,897

Total liabilities

144,838

138,724

128,808

122,228

111,007

106,672

Total net assets

31,30834,13939,22542,272

46,72859,224

Balance ofinterest-bearing
debt

98,44791,03282,74379,53965,67857,511

EBITDA

18,771

16,333

17,817

16,56519,992

18,052Equity ratio

17.3 %

19.2 %

22.8 %

25.1 %

29.1 %

35.0 %
4(5) Consolidated cash flows(Millions of yen)

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Q3 FY03/18
Results

Operating cashflow

17,521

14,535

15,111

8,505

17,082

12,295Investment
cash flow-7,554-7,672-6,909-8,750-6,929-9,655

Free cash flow

9,967

6,863

8,202

-244

10,152

2,640

Financing cash
flow

-8,628-7,625-7,983-47-11,261-2,081

5

(6) Group customer count(Thousands of customers)

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Q3 FY03/18
Results

631

629

624

629

635

653

803

848

866

686

538

499

-

-

-

173

288

319

207

225

234

235

234

229

1,010

1,073

1,099

1,094

1,060

1,047

CATV

688

694

689

704

728

1,002

Aqua

103

121

133

134

135

143

Security

20

19

18

18

17

17

2,427

2,510

2,540

2,553

2,551

2,839

Information andCommunications

Gas (LP and city gas)
Previous ISP
model, etc.
Hikari Collaboration

MobileSubtotal

Total*The number of customers under a thousand are rounded to the nearest thousand. Information and Communications and
CATV 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 and uncertainties.
Please be aware that due to changes in a variety of factors, actual results may differ
materially from the projections and other forward-looking statements in these materials.

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)54 275-0007
Fax: +81-(0)54-275-1110
http://tokaiholdings.co.jp/english/
e-mail： overseas_IR@tokaigroup.co.jp

6