January 31, 2017
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, 2017
Significantly Higher Profits Led to Record-High Profits
TOKAI Holdings Corporation (hereinafter, the “Company”) today announced its financial results
for the third quarter of the fiscal year ending March 31, 2017 (April 1, 2016 to December 31, 2016).
(Millions of yen)

Sales

Q3 FY03/17

Q3 FY03/16(April 1, 2016 to(April 1, 2015 toDecember 31, 2016)

December 31, 2015)

Year-on-year
ChangePercent Change

127,432

130,103-2,671-2.1%

Operating profit

8,193

4,006

+4,187+104.5%

Recurring profit

8,246

3,921+4,325+110.3%

Quarterly net

4,850

1,395+3,454+247.6%

42.71

12.05

+30.66+254.5%incomeEPS (Yen)

1. Significantly Higher Profits Led to Record-High Profits

Consolidated results for the third quarter of the fiscal year ending March 31, 2017 were sales of
127.4 billion yen, operating profit of 8.2 billion yen, recurring profit of 8.2 billion yen, andquarterly net income of 4.9 billion yen.
Operating profit doubled, growing by 4.2 billion yen (up 104.5%) compared to 4.0 billion yen
during Q3 FY03/16, and all profit indicators posted historic highs during the third quarter.
Active sales promotion activities conducted for Hikari Collaboration*—an area of focus during
FY03/17—during the previous fiscal year were successful, resulting in a 2.3 billion yen
improvement, and the Aqua (bottled water delivery) business also showed a 1.2 billion yen
improvement and achieved profitability for two consecutive periods after the interim period,owing to factors such as a shift in the sales strategy. For these reasons, operating profit increased
significantly, by 4.2 billion yen year-on-year.

2． Revenue/Expense Balance of Hikari Collaboration Steadily Improved, ARPU Increased, andHigh Profitability Realized
Amid a stagnant broadband market, Hikari Collaboration is a product that can be expected tosee improved ARPU and higher earnings. By promoting this service, the Company plans torealize high profitability in its Broadband business.
The number of Hikari Collaboration customers as of the end of the third quarter of the fiscalyear ending March 31, 2017 was up by 69 thousand compared to the beginning of the fiscal year,
to 288 thousand. Customers continued to shift to high unit price and high profitability services,leading to a 26% year-on-year improvement in ARPU in the Broadband business.
Hikari Collaboration sales for the third quarter were up 6.4 billion yen year-on-year while
operating loss contracted by 2.3 billion yen, demonstrating steady progress.
3． Revenue/Expense Balance of Aqua Business Steadily Improved Toward Achieving Full-YearProfitability
The number of customers in the Aqua business as of the end of the third quarter of the fiscalyear ending March 31, 2017 was up by 2 thousand compared to the beginning of the fiscal year, to135 thousand.
By transitioning to a sales structure emphasizing efficient customer acquisition to match
market conditions, the Company was successful in securing customer count growth on par withthe same period of the previous fiscal year while also restricting acquisition costs per customer to
69% of those seen during the same period of the previous fiscal year. Combined with other factors
such as reduced advertising costs, the operating loss/profit improved by 1.2 billion yen
year-on-year.
Steady progress was achieved in improving revenue/expense balance and the business wasprofitable during the interim period, with profits further expanding during the third quarter.
4．Consolidated Earnings and Dividend Forecasts for the Fiscal Year Ending March 31, 2017
As announced on October 31, 2016, earnings forecasts for the fiscal year ending March 31, 2017
were revised upward to operating profit of 12.8 billion yen, recurring profit of 12.4 billion yen, andnet income of 6.5 billion yen, with historic highs anticipated in all profit categories.
(Millions of yen)
FY03/17 Forecast

FY03/16 Results(April 1, 2016 to March 31, 2017)(April 1, 2015 to March 31, 2016)

Year-on-year
ChangePercent Change

Sales

179,700

180,940-1,240-0.7%

Operating profit

12,7508,245+4,505+54.7%

Recurring profit

12,3608,150+4,210+51.6%

Net income

6,500

3,458+3,042+88.0%EPS (Yen)

57.23

30.01

+27.22+90.7%As announced in the upward revision on October 31, 2016, the dividend forecast for the fiscal

year ending March 31, 2017 shall be 17 yen per share, including a commemorative dividend of 6
yen to mark the achievement of “Innovation Plan 2016 ‘Growing’” medium-term management
plan. Annual dividends will be 28 yen per share, a twofold increase from 14 yen for the fiscal year
ended March 31, 2016.
FY03/17 (Forecast)End of Q2

FY03/16

11.00
17.00
(Ordinary dividend: 11.00)(Commemorative dividend: 6.00)

6.00

Annual dividend total

28.00

14.00

Consolidated payout ratio

48.9%

46.7%

Year-end

8.00

For details, please see the attached materials, entitled “Financial Results for the Third Quarter ofthe Fiscal Year Ending March 31, 2017.”
Furthermore, for the Company’s third quarter earnings announcement for the year ending March
31, 2017 please see the following URL.
http://tokaiholdings.co.jp/english/ir/library/earnings.html* ISPs that provide self-branded optical broadband service via fiber optic lines provided by NTT.

Contact: Yoshihiro Taniguchi
Public Relations and Investor Relations Office
TEL: +81-(0)54-669-7676
Email: overseas_IR@tokaigroup.co.jp

Financial Results for the Third Quarter of theFiscal Year Ending March 31, 2017
TOKAI Holdings Corporation(Code: 3167)
January 31, 2017

Significantly higher profits led to record-high profits◎ Profitability improved steadily in Hikari Collaboration and Aqua, areas of focus for the current
fiscal year (the two businesses combined, improvement of 3.5 billion yen), contributing toearnings. Aqua achieved profitability for two consecutive periods following the interim period◎ Effect on sales of price revisions resulting from lower prices of raw materials for gas was minus
6.2 billion yen year-on-year(Millions of yen)

Q3 FY03/17

Q3 FY03/16(April 1, 2016 toDecember 31, 2016)(April 1, 2015 toDecember 31, 2015)

YoY
Amount ofChange

Percent
Change127,432

130,103-2,671-2.1%

Operating profit

8,193

4,006+4,187+104.5%

Of which, HikariCollaboration-125-2,418+2,292－

Of which, Aqua

299-933+1,233－

Recurring profit

8,246

3,921+4,325+110.3%

Net income

4,850

1,395+3,454+247.6%

EPS (Yen)

42.71

12.05+30.66+254.5%
1Sales*Operating profit for Hikari Collaboration and Aqua are before elimination of indirect expenses

Progress in shift to Hikari Collaboration◎ In line with the NTT’s shift in fiber optic line sales from direct sales to wholesaling, the Company
entered the Hikari Collaboration market (self-branded optical broadband services via fiber optic lines)
in March 2015
◎ Progress is ahead of the national average and the shift to high ARPU services continues to advance◎ Contributions to higher profits are expected to continue into the next management plan period byaiming for a higher ratio of Hikari Collaboration customers combined with new customer acquisition

Hikari Collaboration Progress(Ratio of Hikari Collaboration customers)

49.0%

52.7%

Effect of Shift to Hikari Collaboration

56.8%

Broadband business ARPU

38.6%

3,037

Q3 FY03/17

Up26%

yen/contract

35.1%
24.4%

yen/contract

0.8%

Broadband business operating profit

1.4%
03/15

03/16

2,411

Q3 FY03/16

FY03/16
09/16

TOKAI

12/16

03/17

FY03/17 Forecast

1.1billion yen 3.1billion yen

National2*Operating profit is calculated prior to elimination of indirect expenses

Hikari Collaboration ratio =Water delivery business also contributing to profit
increase through an efficient model◎ As market growth was in the single digits in FY2014 and flat in FY2015, the Company shifted to efficientcustomer acquisition (emphasizing cost efficiency) from FY03/17, and achieved profitability during theinterim period◎ While maintaining contract figures on par with Q3 FY03/16, acquisition cost was reduced by 31% andfull-year targets are projected to be achieved◎ Continuous contributions to profits are expected from moderate growth, achieved by focusing on
efficient markets
Market Customer Growth in Single Digits since FY2014

Shift of Emphasis to Sales Efficiency
Q3 FY03/16(Thousands of customers)(Rate of growth)

160

50.0%

122

40.0%

130

133

140120102

Newcontracts

Q3 FY03/17

20,721
1,058

Acquisition
costs

million yen

18,722726
million yen

100

30.0%

80

20.0%

5731%

60

reduction

10.0%

400.0%

Aqua business operating profit

20

FY03/16

FY03/17 Forecast

0-10.0%FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

TOKAI Customers

TOKAI Growth*Source: Japan Delivery Water & Server Association

National Growth*-1.1billion yen

0.3billion yen*Operating profit is calculated prior to elimination of indirect expenses

3Full-year forecast◎ No change from revised full-year forecast (upward revision announced on
October 31, 2016)◎ Forecast calls for historic highs in profits, with operating profit of 12.8 billion
yen and net income of 6.5 billion yen(Millions of yen)
FY03/17
Forecasts

FY03/16
Results(April 1, 2016 to
March 31, 2017)(April 1, 2015 toMarch 31, 2016)

YoY
Amount ofChange

Percent
ChangeOperating profit

179,700
12,750180,940
8,245-1,240+4,505-0.7%+54.7%Of which, Hikari
Collaboration-442-3,007+2,566－Of which, Aqua

301
12,3606,500
57.23-1,119
8,150
3,458
30.01

+1,420+4,210+3,042+27.22－+51.6%+88.0%+90.7%

Sales

Recurring profit
Net incomeEPS (Yen)4*Operating profit for Hikari Collaboration and Aqua are before elimination of indirect expenses

Dividend forecast◎ No change from revised dividend forecast (upward revision announced on October 31, 2016)◎ Year-end dividends are planned to increase to 17 yen per share, including the originally planned
dividend of 11 yen per share combined with an IP16 achievement commemorative dividend of 6yen◎ Two consecutive fiscal years of dividend increase and an annual dividend of 28 yen (14 yen pershare during FY03/16), a twofold increase
3030252520

20

28 yen per share
614 yen+

14 yen per share
1510Annual
dividend15

12 yen per share 12 yen per share 12 yen per share 12 yen per share

666+5 yen

6666

6

FY03/12

FY03/13

FY03/14

FY03/1500

Interimdividend

118

1065

5

17

Year-end
dividend

11Interim
dividend

FY03/16
Commemorative
dividend

FY03/17Est.

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 FY03/12
Results

Sales

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

129,122 130,879 132,959 135,981 130,103 127,432

Operating profit

5,684

5,690

3,196

4,866

4,006

8,193

Recurring profit

4,917

4,948

2,959

4,517

3,921

8,246

Quarterly net
income1,178

1,7679201,819

1,395

4,850

EPS (Yen)

11.80

17.68

8.03

15.81

12.05

42.71
7

(2) Sales by segment(Millions of yen)

Q3 FY03/12
Results

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Gas andPetroleum

66,146

67,174

66,964

67,10658,34851,291

Information andCommunications

28,15528,37528,62830,02031,98836,212

CATV

18,097

17,80018,093

18,207

18,345

18,901

Building and Real
Estate10,148

10,846

12,37913,311

13,783

12,926

Aqua

2,679

2,883

3,271

3,707

4,130

4,391

Others

3,895

3,798

3,621

3,626

3,507

3,708

129,122

130,879

132,959

135,981130,103

127,432Total

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

Q3 FY03/12
Results

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Gas andPetroleum

3,816

4,493

3,297

4,376

5,232

5,550

Information andCommunications

4,170

3,785

3,227

3,716

1,472

2,993

CATV

1,669

1,205

1,398

1,309

1,453

2,125

Building and Real
Estate

341

247

591

349523619

Aqua-660-616-1,695-1,166-933

299

Others,adjustments-3,653-3,423-3,623-3,718-3,741-3,396

Total

5,684

5,690

3,196

4,866

4,006

8,193

*Prior to elimination of indirect expenses

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

Q3 FY03/12
Results

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Total assets

186,035

176,147

172,863

168,034

164,500

157,735

Total liabilities

160,908

144,838

138,724

128,808

122,228111,007

Total net assets

25,12731,30834,13939,22542,272

46,728

Balance ofinterest-bearing
debt

114,480

98,44791,03282,74379,53965,678

EBITDA

19,052

18,771

16,333

17,817

16,56519,922Equity ratio

13.0 %

17.3 %

19.2 %

22.8 %

25.1 %

29.1 %
10(5) Consolidated cash flows(Millions of yen)

Q3 FY03/12
Results

Q3 FY03/13
Results

Q3 FY03/14
Results

Q3 FY03/15
Results

Q3 FY03/16
Results

Q3 FY03/17
Results

Operating cashflow

17,756

17,521

14,535

15,111

8,505

17,082

Investment cash
flow-7,590-7,554-7,672-6,909-8,750-6,929

Free cash flow

10,166

9,967

6,863

8,202-244

10,152Financing cashflow-14,201-8,628-7,635-7,983-47-11,26111

(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
ResultsGas (LP and city gas)

656

631

629

624

629

635

Previous ISP
model, etc.

752

803

848

866

686

538

HikariCollaboration

－－－－

173

288

186
939
726

207
1,010
688

2251,073
694

234
1,099
689

235
1,094
704

234
1,060
728

97
20
2,414

103
20
2,427

121
19
2,510

133
18
2,540

134
18
2,553

135
172,551

Information andCommunications

Q3 FY03/12ResultsMobile
Subtotal

CATV
Aqua
Security
Total*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 arebased 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 results
may 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

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