Consolidated Financial Results for theYear ended March 31, 2017 [Japanese GAAP]May 9, 2017
Company name:
Stock code:
Representative:
Contact:

TOKAI Holdings Corporation
Stock listing:Tokyo Stock Exchange
3167
URL:
http://tokaiholdings.co.jp
Katsukiho Tokita, President & CEO
Kuniyoshi Muramatsu, Managing Executive Officer, General Manager of Administrative Headquarters
Telephone: +81-54-275-0007
Scheduled date of General shareholders' meeting:June 28, 2017
Scheduled date to submit Securities Report:
June 28, 2017
Supplementary materials on financial results:
Yes
Quarterly financial results briefing:
Yes (Institutional Investors only)(Figures are rounded to the nearest million yen)

1. Consolidated Financial Results for the Year Ended March 31, 2017 (April 1, 2016 to March 31, 2017)(1) Consolidated Operating Results(% figures represent year-on-year changes)
Sales

Operating Profit

Net Income
Attributable to
Owners of the
ParentRecurring Profit

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Year ended March 31, 2017

178,631(1.3)

12,75054.6

12,775

56.4

7,337

112.1

Year ended March 31, 2016

180,940

(3.5)

8,245

(8.4)

8,150

(4.7)

3,458

(12.1)(Note) Comprehensive income: 8,683 million yen in the Year ended March 31, 2017 (523.3%)
1,389 million yen in the Year ended March 31, 2016 (-78.4%)
Net Income
per Share

Net Income per
Share (Diluted)

Return on
EquityRecurring Profit
to Total Assets

Operating Profit
Margin

Yen

Yen

%

%

%

Year ended March 31, 2017

64.46

56.31

15.2

7.9

7.1

Year ended March 31, 2016

30.01

26.89

8.3

5.0

4.6

(Reference) Equity in affiliates accounted for under the equity method: 28 million yen for the ended March 31, 2017
0 million yen for the ended March 31, 2016

(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Net Assets per Share

Millions of yen

Millions of yen%

Yen

Year ended March 31, 2017

161,11256,44634.5

439.04

Year ended March 31, 2016

160,303

41,97025.6

362.77

Cash and Cash
Equivalents at theEnd of the Year

(Reference) Equity: 55,654 million yen for the Year ended March 31, 2017
41,063 million yen for the year ended March 31, 2016

(3) Consolidated Cash Flows
Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Year ended March 31, 2017

26,692(10,985)(16,643)

3,111

Year ended March 31, 2016

21,395(11,015)(9,150)4,044

2. Dividends
Annual Dividend
End of End of
YearQ2
Q3
end

End of
Q1
Year ended March 31, 2016

Total

Total
Dividends

Payout Ratio(Consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%



6.00



8.00

14.00

1,601

46.7

Dividend on
Equity(Consolidated)
3.8

Year ending March 31, 2017


17.00
28.00
3,416
43.4
7.0
11.00
Year ending March 31, 2017
14.00

28.00


14.00
(Forecast)(Note) The breakdown of the 2017 year-end dividend is ordinary dividend of 11 yen and commemorative dividend of 6 yen.
(Note) Capital surplus is included in dividend resources for the fiscal year ending March 31, 2017. For details, please see "Breakdown of Dividends Paid Out of Capital Surplus" below.

3. Consolidated Earnings Forecasts for the Year Ending March 31, 2018 (April 1, 2017 to March 31, 2018)(% figures represent year-on-year changes)

Sales

Operating Profit

Recurring Profit

Millions of yen%

Millions of yen%

Six months ending
September 31, 2017

86,0004.6

2,710(38.5)

Year ending March
31, 2018

189,400

6.0

11,410(10.5)

Millions of yen

Net Income Attributable Net Income
to Owners of the Parent per Share

%Millions of yen

%

Yen

2,650

(40.2)

1,080(54.7)

8.52

11,360(11.1)

6,450(12.1)

50.88*Notes(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries affecting the scope of consolidation): No(2) Changes in accounting policies, estimates, and restatements
1) Changes in accounting policies accompanying revisions in accounting standards, etc.: Yes
2) Changes in accounting policies other than 1): No
3) Changes in accounting estimates: No4) Restatements: No(Note) For details, please see page 25 of the attached materials: “5. Consolidated Financial Statements, (5) Notes to the Consolidated Financial
Statements, (Changes in Accounting Policies).”(3) Number of shares issued (common stock)
1) Shares issued at the end of each period (including treasury stock):

Q3 FY3/2017

2) Number of shares of treasury stock at the end of each period:

Q3 FY3/2017

12,915,785 shares FY3/2016

26,488,216 shares

3) Average number of shares during the period (cumulative):

Q3 FY3/2017

113,828,834 shares Q3 FY3/2016

115,237,936 shares

139,679,977 shares FY3/2016

139,679,977 shares(Note) Board benefit trust shares(BBT) is included in the number of year-end treasury stock.(420,000 stocks at FY3/2017) And the company
shares held in ESOP trust accounts are included in the treasury stock, which is subtracted from calculations of the average number ofshares during the period (210,575 shares for the Year ended March 31, 2017; 120,833 shares for the Year ended March 31, 2016).

1

(Reference) Overview of Non-Consolidated Operating Performance
Operating Performance for the Year Ended March 31, 2017 (April 1, 2016 to March 31, 2017)(% figures represent year-on-year changes)(1) Non-Consolidated Operating Results
Sales

Operating Profit

Millions of yen

Net Income
Attributable to
Owners of the
ParentRecurring Profit%

Millions of yen%

Millions of yen%

Millions of yen

Year ended March 31, 2017

6,606

6.5

1,441

(20.9)

1,383(22.5)

1,410

2.4

Year ended March 31, 2016

6,204

1.4

8,821

(11.4)

1,785

0.6

1,377

10.1

Net Income per
Share

%

Net Income per
Share (Diluted)

Yen

Yen

Year ended March 31, 2017

12.39

10.83

Year ended March 31, 2016

11.62

10.44

(2) Non-Consolidated financial Position
Total Assets

Net Assets

Equity Ratio

Net Assets per Share

Millions of yen

Millions of yen%

Yen

Year ended March 31, 2017

92,934

31,98834.4

252.34

Year ended March 31, 2016

102,334

24,79424.0

217.21(Reference) Equity: 31,988 million yen for the Year ended March 31, 201724,586 million yen for the year ended March 31, 2016

*Information Regarding Execution of Quarterly Review ProceduresThis quarterly financial statement is not subject to the quarterly review procedures pursuant to the Financial Instruments and Exchange Act, and the review
procedures of quarterly financial statements pursuant to the Financial Instruments and Exchange Act have not been completed as of the release of thisdocument.

* Explanation regarding the Appropriate Uses of Earnings Forecasts and Other Notes
All earnings forecasts provided within this document are based on the most accurate information available at the time of the release of this document. Actual
results may differ from forecasts due to various factors going forward.

Breakdown of Dividends Paid Out of Capital Surplus
The following provides a breakdown of the part of the dividends for the fiscal year ended March 2017that was paid out of the capital surplus.
(Record date)Fiscal year-end

AnnualDividend per share

Yen

Yen

0.79

0.79

Millions of yen

Millions of yen

100

100

Total dividend payments(Note) Proportional reduction in net assets: 0.3%

2[Attachment]

Contents
1. Operating Results and Financial Position······················································································· 2(1)Overview of Operating Results ···························································································· 2(2)Consolidated financial position····························································································· 4(3)Cash flows ····················································································································· 4(4)Basic Profit Distribution Policies and Dividends for the Current and Next Fiscal Years ······················· 5(5)Business and Other Risks ·································································································· 5

2. Status of the Corporate Group ··································································································· 10
3. Group Management Policy ······································································································· 12(1)

Basic Policy of Corporate Management ················································································ 12(2)Target Management Indices ······························································································· 12(3)Management Strategies and Items to Address over the Medium to Long Term································ 13

4. Basic Perspective on Selection of Accounting Standards ·································································· 15
5. Consolidated Financial Statements ····························································································· 16(1)Consolidated Balance Sheets ····························································································· 16(2)Consolidated Statements of Income andConsolidated Statements of Comprehensive Income ································································ 19(3)Statement of Changes in Consolidated Shareholders’ Equity ······················································ 21(4)Consolidated Statements of Cash Flows ··············································································· 25(5)Notes to the Consolidated Financial Statements ······································································ 27(Notes on Premise of Going Concern) ···················································································· 27(Significant Matters Forming the Basis of Preparing theConsolidated Financial Statements) ······················································································· 27(Changes in Accounting Policies) ·························································································· 30(Changes in Presentation Method) ························································································ 30(Additional Information) ······································································································ 30(Notes to the Consolidated Balance Sheets) ············································································ 32(Notes to the Consolidated Statements of Income) ···································································· 34(Note to the Consolidated Statements of Comprehensive Income)················································· 37(Notes to the Statement of Changes in Consolidated Shareholders’ Equity) ····································· 38(Notes to the Consolidated Statements of Cash Flows)······························································· 40(Segment Information) ······································································································· 40(Per-Share Information) ······································································································ 44(Important Subsequent Events) ···························································································· 44

6. Non-Consolidated Financial Statements ·························································································· 45(1)Balance Sheets ··············································································································· 45(2)Statements of Income ········································································································ 47(3)Statement of Changes in Shareholders’ Equity ········································································ 48

7. Other ································································································································· 50(1) Changes in Executive Positions····························································································· 50

11. Operating Results and Financial Position(1) Overview of Operating Results
Consolidated operating results for the fiscal year
In the fiscal year ended March 31, 2017, the Japanese economy was on a gradual recovery trend, with an upturn inpersonal consumption and some improvement in employment conditions, but the general economic outlook remains
clouded due to uncertainties in overseas economies, such as the risk of weaker-than-expected performance of emerging
economies in Asia led by China, and the policies of the new U.S. administration.
In fiscal 2014, the TOKAI Group launched “Innovation Plan 2016 ‘Growing,’” a three-year medium-term management
plan whose main goal was to strengthen the earnings capability of its businesses. The fiscal year ended March 31, 2017
was the final year of this three-year plan. The Group provides energy, information and communications, and other services
to a broad range of customers from individuals to corporations. Competition to attract customers has intensified in allservices due to deregulation and new companies moving into the market. In this context, the Group has actively focusedon providing services that fulfill customers’ needs by promoting and putting into action its TLC (Total Life Concierge)
concept, which targets cross-selling and building strong relationships with customers. To this end, in the fiscal year ended
March 31, 2017, we added electric power to our established gas, ISP, CATV, and Aqua services, and proactively worked
on offering various options such as selling single and packaged services (including discounts and loyalty points for usersof more than one service).
During the fiscal year ended March 31, 2017, the Group booked sales of 178,631 million yen (down 1.3% year on year),affected by such factors as a decrease in gas selling prices. However, we made steady progress on improving earnings inthe Hikari Collaboration and Aqua businesses—area of focus for the fiscal year ended March 31, 2017. As a result, theCompany recorded operating profit of 12,750 million yen (up 54.6%), recurring profit of 12,775 million yen (up 56.7%) andnet income attributable to owners of the parent of 7,337 million yen (up 112.1%), with all profit indicators posting historic
highs.
As of March 31, 2017, the number of continuing customers was 2,564 thousand (up six thousand), and members of the
TLC Membership Service numbered 586 thousand (up 94 thousand).
Performance by segment was as follows.

(Gas and Petroleum)
In the liquefied petroleum gas (LP gas) business, in the fiscal year ended March 31, 2017, the Group engaged in efforts
to attract new customers in Tokyo and 11 prefectures, including starting services in Gifu Prefecture. As a result, thenumber of customers rose by eight thousand from March 31, 2016, to 588 thousand. Sales volume of LP gas was flat year
on year. Sales were down year on year as selling prices were lowered during the previous fiscal year to reflect a drop in
procurement prices.
In the city gas business, the number of customers was 54 thousand, unchanged from the level as of March 31, 2016,
but sales fell year on year due to a decline in selling prices stemming from the raw material price adjustment system.
Due to these factors, segment sales came to 73,344 million yen (down 9.2% year on year), but operating profit was
6,942 million yen (down 0.4%), unchanged from the previous fiscal year’s level.

(Building and Real Estate)
In the Building and Real Estate business, housing sales and orders in the renovation business and other areas declined,leading to segment sales of 19,511 million yen (down 7.0% year on year). Earnings increased for building management
support services and in other areas, but operating profit still dropped to 461 million yen (down 31.7%).

(CATV)In the CATV business, we worked to acquire new customers through sales of set discount offerings for broadcasting
and communications, in addition to smartphone set discounts through alliances with major mobile phone carriers.
In addition, owing to efforts to improve customer satisfaction such as delivery of regional information via community2

channels and reinforcing customer support to prevent cancellations, subscribers to the broadcasting service increased by
9 thousand from March 31, 2016, to 508 thousand, and subscribers to telecommunications services increased by 15
thousand from March 31, 2016, to 225 thousand.
Due to an increase in subscribers, segment sales totaled 25,396 million yen (up 3.2% year on year), and operating
profit was 2,331 million yen (up 100.7%).

(Information and Communications Service)
In the broadband business, while acquiring new customers, we actively marketed to encourage existing customers toswitch to Hikari Collaboration services “@TCOM Hikari” and “TNC Hikari.” As a result, the number of Hikari Collaboration
customers increased by 79 thousand from March 31, 2016, to 299 thousand. Amid an increasingly competitiveenvironment due to many new entrants, including major mobile phone carriers, customers for overall FTTH were 720
thousand, and customers for overall broadband, which includes ADSL, fell by 39 thousand from March 31, 2016, to 794
thousand.
Segment sales were 49,508 million yen (up 11.9% year on year), primarily owing to increased customer numbers in
Hikari Collaboration, and operating profit surged to 3,065 million yen (up 269.5%).

(Aqua)In the Aqua business, the Company pushed forward with customer acquisition activities for the “The gift of delicious
water: Ulunom” brand, mainly targeting large-scale commercial facilities throughout the country, and succeeded inincreasing the number of Aqua customers to 135 thousand, up by 2 thousand from March 31, 2016.
As a result, sales in this segment came to 5,762 million yen (up 5.0% year on year), and by restricting customer
acquisition costs and advertising and promotion costs, we succeeded in moving into the black in this segment, with
operating profit amounting to 101 million yen (from an operating loss of 1,275 million yen in the preceding fiscal year).

(Others)
In the nursing care business, an increase in the number of users led to higher sales year on year.
In the ships business, sales were up, as the number of ships repaired increased.
In the bridal events business, the number of couples holding ceremonies and use for special events were flat year on
year, and sales were correspondingly flat compared with the preceding fiscal year.
As a result, segment sales came to 5,108 million yen (up 4.8% year on year), and the operating profit was 112 million
yen (compared with an operating loss of 197 million yen in the preceding fiscal year).

・Future Outlook
Regarding the future outlook, although gradual economic expansion is forecast for Japan, competition for customers is
intensifying beyond the boundaries of business sectors and formats as companies from other industries enter the market
and operators form alliances amid progress with deregulation.
The TOKAI Group’s main business is providing services to retail customers. The Group’s goal is to realize the TLC
concept as a Total Life Concierge providing a range of daily life-related infrastructure and strengthen and expand thescope of the earnings capability of our businesses.
Under these conditions, the TOKAI Group started its new medium-term management plan “Innovation Plan 2020
‘JUMP.’” The Group will do its utmost to achieve plan targets.
Consolidated operating result targets for the fiscal year ending March 31, 2018 (the first year of “Innovation Plan 2020
‘JUMP’”) are shown below. Targets factor in forward expenses for acquiring customers with the goal of achieving final-yearplan targets.

<Consolidated operating results forecast for fiscal year ending March 31, 2018>3

Net Sales

189,400 million yen(6.0% year-on-year increase)

Operating profit

11,410 million yen(10.5% year-on-year decrease)

Recurring profit

11,360 million yen(11.1% year-on-year decrease)

Net Income attributable to owners of the parent

6,450 million yen(12.1% year-on-year decrease)

These earnings forecasts are based on the most accurate information currently available. Actual results may differ fromforecasts due to a variety of factors going forward.

(2) Consolidated financial position
Total assets amounted to 161,112 million yen as of March 31, 2017, up 808 million yen from March 31, 2016. This ismainly because fixed assets decreased by 1,417 million yen due to depreciation and other factors, but investment
securities increased by 2,196 million yen because of a rise in market prices.
Total liabilities were 104,665 million yen, down 13,666 million yen from March 31, 2016. This is primarily due to a 17,273
million decrease in interest-bearing debt as a result of conversion of convertible bonds with stock acquisition rights andrepayment of loans.
As of March 31, 2017, net assets totaled 56,446 million yen, up 14,475 million yen from March 31, 2016. Although theGroup paid 2,159 million yen in dividends from surplus, it booked 7,337 million yen in net income attributable to owners of
the parent and a 7,200 million yen increase in asset from the conversion of convertible bonds with stock acquisition rights
and other factors.

(3) Cash flows
Cash and cash equivalents stood at 3,111 million yen as of March 31, 2017, down 933 million yen from March 31, 2016.
Cash flows from each activity during the fiscal year under review and the factors behind them are as follows.

(Cash flows from operating activities)
Net cash provided by operating activities was 26,692 million yen (up 5,296 million yen year on year). Funds increased
chiefly due to net income before income taxes and the effect of depreciation and amortization expenses (non-cash items).
Although net cash provided by operating activities was up significantly year on year, the rise was due mainly to anincrease in net income before income taxes.

(Cash flows from investing activities)
Net cash used in investing activities was 10,985 million yen (up 30 million yen year on year). Cash was used mainly forthe acquisition of tangible and intangible assets.

(Cash flows from financing activities)
Net cash used in financing activities was 16,643 million yen (down 7,492 million yen year on year). This was mainly due
to efforts to reduce interest-bearing debt.
Additionally, cash flows from financing activities decreased significantly year on year, but this was primarily due to theabsence of proceeds from issuance of convertible bonds with stock acquisition rights, and aggressive efforts to reduce
interest-bearing debt.
Below is a summary of major cash flow indicators.

Equity ratio (%)
Equity ratio on a marketvalue basis (%)

Year ended

Year ended

Year ended

Year ended

March 31, 2013

March 31, 2014

March 31, 2015

March 31, 2016

March 31, 2017

18.6

21.6

25.7

25.6

34.5

21.0

23.2

36.3

41.4

67.4

4

Year ended

Ratio of interest-bearing
debt to cash flow
Interest coverage ratio(Note)

3.6

3.7

2.7

3.3

2.0

17.4

19.1

28.0

29.3

48.9

Equity ratio:

Shareholders’ equity/Total assets

Equity ratio on a market-value basis:

Total value of shares at market price/Total assets

Ratio of interest-bearing debt to cash flow:

Interest-bearing debt/Cash flow from operating activities

Interest coverage ratio:

Cash flow from operating activities/Interest payments*All financial indicators are calculated on a consolidated basis.
*Market capitalization is based on the year-end share price multiplied by the number of shares issued and outstanding at yearend (after deducting treasury stock).
*Operating cash flow is based on cash flows from operating activities in the consolidated statements of cash flows. Interestbearing debt covers bonds payable and loans payable in the consolidated balance sheets. Interest payments are based on theinterest paid amounts shown in the consolidated statements of cash flows.

(4) Basic Profit Distribution Policies and Dividends for the Current and Next Fiscal Years
The Company’s basic policy on profit distribution is to maintain stable dividends that reflect consolidated earnings.
For the fiscal year ended March 31, 2017, we plan to award total dividends of 28 yen per share, comprising an interim
dividend of 11 yen and a year-end dividend of 17 yen.
For the fiscal year ending March 31, 2018, we plan to award total dividends of 28 yen per share, comprising interim andyear-end dividends of 14 yen each.
(5) Business and Other Risks
The Group recognizes the following risks as major factors that could affect its operating performance and financial
condition. Accordingly, we are endeavoring to prevent or minimize these risks.
Forward-looking statements below are based on the Group’s judgment as of March 31, 2017.
・Impact of Interest Rate Fluctuations
The Group strives to strengthen and enhance its management base in the Gas and Petroleum, Building and Real Estate,
CATV, Information and Communications, and Aqua segments. In addition, we are working to lower interest-bearing debt
and improve our equity ratio through cash flow management based on our medium-term management plan. However,
future interest rate fluctuations could affect the Group’s operating performance and financial condition.
・Business Alliances and M&A Activity
The Group has a policy of engaging proactively in business alliances and M&A activity when doing so can be expected
to deliver synergies with existing services or when launching new services could lead to future business development.
Nevertheless, business partners’ operations and acquired businesses may not develop according to plan, and if results fallshort of expectations, the Group’s operating performance and financial condition could be affected.
・Recoverability of Invested Assets
The Group engages in large-scale capital investment to expand business in its core segments: Gas and Petroleum,
CATV, and Information and Communications services. Furthermore, existing investment plans may require change orrevision due to the development and launch of new technologies and the resulting provision of new services, as well as toexpand operations. The Group takes proper steps to evaluate investment results and review investment plans, butinvestment performance may fall below initial expectations due to major changes in conditions, such as economic andmarket fluctuations. In such instances, the recoverability of invested assets may be delayed. Departments in charge ofinvestment project work consistently to stringently manage the recoverability of invested cash, such as assessing the statusof each individual investment and revising business plans where necessary. Even so, if it is unable to respond to changes in
the operating environment, such as sharp economic fluctuations and sudden drops in demand, the Group may be obliged5

to record impairment losses on property, plant and equipment if investment results fall short of expectations. This situation
could affect the Group’s operating performance and financial condition.
・Credit Management
The Group formulates credit management regulations and other internal rules, and enacts and strives to enhance its
systems for managing business partner credit and receivables. Nevertheless, the Group’s operating performance andfinancial condition could be affected if a business partner’s management conditions were to worsen, the Group were toexperience delays in accounts and loans receivable, or if debts were to become irrecoverable.
・Management of Personal Information
As an entity handling personal information, the Group has formulated a Personal Information Protection Policy, which isdisclosed on its website. The Group takes the utmost care to handle customer information in accordance with the Act on theProtection of Personal Information and other legislation, as well as its internal regulations. If a large-scale leak of customer
information were to occur despite these efforts, rumors could lead to a loss of social credibility, and the Group could be
obliged to pay compensation for damages. Such a situation could affect the Group’s operating performance and financial
condition.
・Information System Failure
Particularly in the Information and Communications segment, the Group provides services via its own information
processing systems, data centers, and communication lines. We work meticulously to prevent system failure, but
information systems could fail or malfunction nevertheless as a result of equipment malfunction, human error, large-scale
natural disasters, or other factors. Such an accident could render the Group’s continued service provision problematic,rumors could lead to a loss of social credibility, and the Group could be obliged to pay compensation for damages. Such asituation could affect the Group’s operating performance and financial condition.
・Legal Restrictions
Across its multifaceted businesses, the Group is subject to the Law Concerning the Securing of Safety and the
Optimization of Transaction of Liquefied Petroleum Gas, the Gas Business Act, the Building Lots and Buildings Transaction
Business Act, the Construction Business Act, the Broadcast Act, the Telecommunications Business Act, and the Act on
Establishment of Enhanced Environment for Youth’s Safe and Secure Internet Use, as well as related legislation andregulation by competent authorities. The Group’s door-to-door sales businesses is subject to the Act on Specified
Commercial Transactions, and businesses involving the use of subcontractors are subject to the Act against Delay inPayment of Subcontract Proceeds, Etc. to Subcontractors. Also, many of the Group’s businesses involve direct interaction
with general consumers, and current legislation is trending toward greater levels of consumer protection and heightened
administrative guidance in the way legislation is applied. Furthermore, the future enactment of legal restrictions that wecannot currently anticipate and an inability to respond appropriately to such legislation could subject the Group to guidanceand censure by the administrative authorities. Rumors could lead to a loss of social credibility, and the Group could be
obliged to pay compensation for damages. Such a situation could affect the Group’s operating performance and financial
condition.
・Lawsuits
Through its business activities, the Group interacts with companies and individuals, and trouble and complaints could
lead to lawsuits. To prevent transaction-related trouble, the Group’s specialized legal department checks agreements inadvance, runs credit checks on the counterparties to agreements, and takes part in other legal activities. A management
system is also in place through which the department reports to the Board of Directors and Board of Corporate Auditors asnecessary. However, if a lawsuit were to arise nevertheless, rumors could lead to a loss of social credibility, and the Group
could be obliged to pay compensation for damages. Such a situation could affect the Group’s operating performance andfinancial condition.

6

・Large-Scale Disasters
Shizuoka Prefecture and the Kanto region account for a large proportion of the Group’s operating area. These regions
are potential sites of large-scale earthquakes: Shizuoka Prefecture may be affected by earthquakes in the Tokai region and
the Nankai Trough, and the Kanto region may be affected by an earthquake directly below the Tokyo metropolitan area. An
earthquake or other large-scale disasters could not only cause major damage to the Group’s personnel and facilities, butalso render the provision of power, which is essential for business continuation, result in extended communication circuit
outages, or cause lengthy disruptions to roadways and other transport infrastructure. These situations could hinder ongoingand sustained business operations, which could affect the Group’s operating performance and financial condition.
・Country Risk
The Group’s Gas and Petroleum segment, Aqua segment, and system innovation service division are involved inoverseas business development and engage in transactions with overseas companies. The Group’s business development
and transactions could therefore be affected significantly by local business customs or legal and regulatory restrictions,increases in personnel costs, exchange rate fluctuations, and acts of terrorism or other forms of social unrest. As a result,the Group’s operating performance and financial condition could be affected.
・Competition with Other Companies
In the Gas and Petroleum segment and the Information and Communications segment, the Group faces numerous
competitors equipped with more financial strength and technological and selling capabilities. Furthermore, the number ofcompetitors has grown in recent years, making the competitive landscape increasingly difficult.
In addition, growing competition among LP gas, city gas, electricity, and other forms of energy may result in difficulties inpassing on higher LP gas procurement prices to customers through increased selling prices.
In the CATV business, competition is growing more intense in areas outside conventional business spheres, such as the
major telecommunication companies’ provision of IP broadcasts.
If this sort of competition from entities within or outside the industries in which the Group operates intensify beyond
expectations, the Group’s operating performance and financial condition could be affected.
・Fluctuations in Gas Procurement Prices and Exchange Rates
The Group depends on imports from the Middle East for the majority of its LP gas, the principal product in the Gas andPetroleum segment, and procurement prices are therefore susceptible to fluctuations in market prices and exchange rates
stemming from geopolitical factors and the balance between supply and demand. The Group engages in hedging
transactions to lock in prices to some degree, thereby minimizing its exposure to market price and exchange rate volatility.
These transactions have the effect of limiting the impact on selling prices of sharp rises in resource costs, but conversely
limit the Group’s ability to benefit from greater-than-expected declines in commodity prices at the point of purchase. Losses
resulting from this fixing of prices could affect the Group’s operating performance and financial condition.
・Risk of Worsening Real Estate Market Prices
The Group is involved in the real estate business, so a plunge in real estate market prices could reduce the valuation ofreal estate held for sale, requiring the recording of impairment losses on real estate holdings and affecting the Group’s
operating performance and financial condition.
・Effects of Climate Change
The Group’s Gas and Petroleum segment and Aqua segment are significantly affected by the weather, particularly by air
and water temperatures. Abnormal weather, such as excessively hot summers and bitterly cold winters, could affect theGroup’s operating performance and financial condition.
・Technological Obsolescence in the CATV segment and Information and Communications Segment

7

The Group is involved in the CATV segment and Information and Communications segment, where technologicalinnovation occurs at dizzying speeds. If the Group’s products or services become obsolete or the Group loses its market
due to technological innovation, if the Group becomes unable to respond to technological innovation, or if it is unable toinvest sufficient capital to provide new services, it may result in a loss of competitiveness. As a result, the Group’s operating
performance and financial condition could be affected.
・Relations with Suppliers, Outsourcing Partners, and Subcontractors
The Group procures products for numerous segments, including the Gas and Petroleum, Building and Real Estate,
CATV, Information and Communications, and Aqua segments. In addition, we outsource or subcontract certain operations
to other companies. If trouble were to arise with these suppliers, outsourcing partners, or subcontractors, the Group’s ability
to provide customers with a stable supply of products and services could suffer, affecting the Group’s operating
performance and financial condition.
・Dependence on Specific Entities for Business and Orders
In its software development business, the Group is relatively highly reliant on specific system integrators. We have built
robust relationships with entities that have proven able to precisely respond to sophisticated requirements and havecultivated expertise in system configuration and operational knowhow. However, changes in management conditions orbusiness strategies at these system integrators could affect the Group’s operating performance and financial condition.
In broadband services, the Group forms alliances with telecommunications carriers, selling services to individuals via
consumer electronics retailers under sales agency agreements, and wholesaling though alliances with internet service
providers (ISPs). Changes in business strategies on the part of these telecommunications carriers, consumer electronics
retailers, and ISPs could affect the Group’s operating performance and financial condition.
In the mobile phone business, the Group offers a low-cost SIM service using networks leased from NTT DoCoMo, Inc.,and acts as a distributor for SoftBank Corp. Major changes in business strategies, sales agency policies, and wholesale
network leasing fees of these telecommunication carriers could affect the Group’s operating performance and financial
condition.
・Unprofitable Transactions in Contracting Operations
In the Building and Real Estate Segment, the Group accepts orders and subcontracting requests from major
manufacturers and general contractors. Profitability could be affected if trouble should arise in these operations, delivery aredelayed, or work fails to satisfy conditions of acceptance. As a result, the Group’s operating performance and financial
condition could be affected.
In the software development business and other businesses, the Group endeavors to manage projects thoroughly at theinquiry, estimate, and acceptance phases with the aim of efficient system configuration and development. Nevertheless, if
defects arise post-delivery, customers change their requested development formats, or additional specifications are called
for, it would require an increase in work hours and cause profitability to worsen due to unforeseen development-related
incidents. Such factors could affect the Group’s operating performance and financial condition.
・Sanitation and Quality Management in the Provision of Food Products
In the Aqua business, the Group engages in the production and sale of bottled water for delivery, and as part of theweddings business we provide food and beverages. If any problems were to arise with respect to the quality or hygiene
management of such food and beverages, rumors could lead to a loss of social credibility, and the Group could be obliged
to pay compensation for damages. As a result, the Group’s operating performance and financial condition could be affected.
・Impact of Liberalization
Reforms are being steadily enacted to the electricity and city gas systems under the liberalization of the household
electricity retail markets. In the telecommunications sector, the wholesaling of fiber-optic lines by NTT East Japan and NTT
West Japan is prompting market entry from businesses other industries, and large-scale players are expected to increase8their service areas. If selling competition and price competition become more severe than the Group expects, its operating
performance and financial condition could be affected.

92. Status of the Corporate GroupThe TOKAI Group comprises the Company, 22 subsidiaries, and five affiliates. The Group’s operations are diverse,
spanning energy, housing construction and real estate sales, CATV, information and communications services, Aqua, andbridal events, and comprises six business segments. The principal businesses of each of these segments, as well as theirpositioning within the departments of the Company and its affiliates, are outlined below.
(1) Gas and Petroleum Segment
One of the Group’s core business segments, the Gas and Petroleum segment comprises the following four businesses.
(LP gas and petroleum business)
This business primarily involves the sale of LP gas, liquefied natural gas, petroleum products, and related construction.
TOKAI CORPORATION, TOKAI Gas Corporation, and Osuga Gas Service, Ltd. handle sales, and purchasing is conducted
mainly by TOKAI CORPORATION.
Tokaizosen-unyu Corporation is involved in overland transportation; TOKAI CORPORATION, TOKAI Home Gas
Corporation, and TOKAI Gas Corporation take part in customer management and new customer cultivation; and Energy
Line Corporation handles filling and distribution.
TOKAI CORPORATION also handles the retesting and painting of various high-pressure gas containers, and JOYNET
Co., Ltd. produces LP gas.
Overseas, TOKAI Myanmar Co., Ltd., located in Yangon, the Republic of the Union of Myanmar, handles equipment
construction related to LP gas.
(City gas business)
TOKAI Gas Corporation provides city gas (natural gas) in Shizuoka Prefecture, such as the cities of Yaizu and Fuji.
(High-pressure gas business)
TOKAI CORPORATION sells oxygen, nitrogen, and other high-pressure gases, as well as related equipment. Affiliatedcompany SHIZUOKA OXYGEN CORPORATION produces high-pressure gases.
(Security business)
TOKAI CORPORATION provides automated security services.
(2) Building and Real Estate Segment
TOKAI CORPORATION builds and designs homes and shops, sells related equipment, and develops, buys and sells,
leases, and brokers real estate.
TOKAI CORPORATION and TOKAI Gas Corporation perform renovations.
(3) CATV Segment
The CATV business is handled by TOKAI Cable Network Corporation, ICHIHARA COMMUNITY NETWORKTELEVISION CORPORATION, ATSUGI ISEHARA CABLE NETWORK CORPORATION, EAST Communications Co., ltd.,
LCV CORPORATION, KURASHIKI CABLE TELEVISION Inc., Toco Channel Shizuoka Corporation, and affiliated company
Tokyo Bay Network Co., Ltd.; Net Technology Shizuoka Corporation handles related businesses.
Note: Tokyo Bay Network Co., Ltd. became an equity-method affiliate following the acquisition of shares on March 15,2017.
(4) Information and Communications Segment
The Information and Communications segment comprises the following four businesses.
(System innovation service business)
TOKAI Communications Corporation develops software, provides information processing services, and sells related
equipment.
Affiliated company CloudMaster Co., Ltd., located in Taipei, Taiwan, develops software, provides information processing
services, and sells related equipment.
(Corporate telecommunications business)
TOKAI Communications Corporation provides fiber-optic leasing and data transmission services.
(ADSL and FTTH business)
TOKAI Communications Corporation sells TOKAI Network Club (TNC) and Web Shizuoka services within Shizuoka
Prefecture, and sells directly under the @TCOM brand nationwide outside Shizuoka Prefecture. The company also
wholesales ADSL lines in Shizuoka Prefecture and the Kanto region.

10

(Mobile phone business)
TOKAI Communications Corporation acts as a distributor for SoftBank Corp., handling shop operations and customer
agency services. The Group also markets LIBMO, a low-cost SIM service using networks leased from NTT DoCoMo, Inc.
(5) Aqua Segment
TOKAI CORPORATION uses natural water to produce and sell drinking water, and Tokaizosen-unyu Corporation
handles overland transport and home delivery.
TOKAI (Shanghai) Trade & Commerce Co., Ltd., sells drinking water in and around Shanghai, China.
(6) Others Segment
The Others segment is made up of three businesses.
(Weddings and hotel business)
Bouquet Tokai Mishima Corporation operates a comprehensive wedding hall and reception facilities in the city ofMishima, Shizuoka Prefecture. TOKAI City Service Corporation operates Grandair Bouquet Tokai, a wedding hall in Aoi
Tower, in the city of Shizuoka.
Affiliated company Waei Co., Ltd. operates a hotel business.
Note: Wedding hall and reception facility Vrai Cloche Bouquet Tokai Mishima run by Bouquet Tokai Mishima Corporation
has closed as of March 31, 2017.
(Ship repair business)
Tokaizosen-unyu Corporation handles ship repairs, mainly on deep-sea and coastal fishing vessels.
(Other services)
TOKAI CORPORATION engages in the insurance agency business, and TOKAI Life Plus Corporation handles thenursing care business.
Affiliated company TOKAI Human Resources Evol Corporation is involved in the human resource dispatch business.

11

3. Group Management Policy(1) Basic Policy of Corporate Management
In April 2011, the TOKAI Group formulated its Group philosophy, the TOKAI-WAY, comprising four layers—a corporate
philosophy, mission, vision, and values—which are shared throughout the Group, leading to a fresh start.
Amid rapid changes in the social environment and customers’ needs, we aim to achieve sustainable group-wide growth byoperating as a unified group and taking full advantage of the strength of our 2.56-million-strong customer base,comprehensive services, and agility.

1)

Corporate Philosophy (Beliefs of the TOKAI Group)“To improve the lives of our customers, we will continue to grow and develop together with local communities and theearth.”As a corporation providing comprehensive support for daily life and driven by the capabilities and the potential wehave nurtured since our establishment, we will continue to contribute to the happiness of our customers while deepening
our links with local communities and the earth.

2)

Mission (The mission the TOKAI Group must complete to benefit society, our customers, and our shareholders)“Transform, challenge, and implement.”
Based on our strong determination to serve our customers, we constantly challenge ourselves to self-transform tosucceed in anticipating the needs of daily life, and providing people with security and safety, convenience and comfort,
and joyful and meaningful lives.

3)

Vision (Long-term business goals the TOKAI Group must aim for)“Through continued expansion throughout Japan and the world, we will strive to be a TLC (Total Life Concierge) as a
one-stop provider of products and services requested by customers.”
Our aim is to strengthen the comprehensive capabilities of the Group in today’s globalizing society and bring a
succession of diverse services closely linked to daily life and to local communities, and in this way, to become a leading
Total Life Concierge representing Japan in the twenty-first century.

4)

Values (Common values which must play an important role in guiding the actions of employees of the TOKAI Group)“Always sharing our joy and excitement with you.”・Communication that links us all.
As partner constantly by your side, we value communication. Drawing on the strengths of our team, we bring you
fresh excitement.
・Giving you security, safety, and fulfillment.
With security and safety being our first priority, we constantly express our grateful spirit by providing you with thefinest possible services.
・Always remembering the enthusiasm and pride of professionalism..
To remain the professionals chosen by customers, we will strive to improve every day as we joyfully perform ourwork, driven by the freedom to create new ideas.
・Growing toward the future together with the communities we serve.
We are helping revitalize communities, creating a natural environment, and local community life, so everyone fromchildren to the elderly can live free from anxiety.

(2) Target Management Indices“Innovation Plan 2016 ‘Growing,’” our medium-term management plan for the fiscal year ended March 31, 2015 to thefiscal year ended March 31, 2017, called for ongoing improvements in our financial position and set major targets forrecovering profitability. Operating profit in the fiscal year ended March 31, 2017 was a record 12,750 million yen, mainly due

12TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

to a steady rise in the number of Hikari Collaboration customers and the Aqua business turning profitable. We aim to further
enhance profitability going forward.

(3) Management Strategies and Items to Address over the Medium to Long Term
The Group transitioned to a holding company structure in April 2011. Since that time, we have prioritized management
initiatives to improve our financial position. The fiscal year ended March 31, 2017 was the final year of our “Innovation Plan
2016 ‘Growing’” medium-term business plan. During the plan period, the Group focused on improving earnings capability
while continuing with efforts to improve its financial position. As a result, in terms of balance sheet improvement, interestbearing debt was reduced from 124 billion yen before management integration to 54.1 billion yen, and our equity ratio
improved from 7.7% to 34.5% over the same period by accumulating profits and disposal of treasury stock. In terms ofearnings, operating profit in the fiscal year ended March 31, 2017 was a record 12,750 million yen, mainly due to a steadyrise in the number of Hikari Collaboration customers and the Aqua business turning profitable. However, the number ofcustomers that form the Group’s earnings base increased only marginally to 256 million as of March 31, 2017, amid intensecompetition in all business areas. The Group intends to strengthen its competitiveness further, and maintain and expand its
customer base in all retail businesses.
In the energy sector, competition with energy-related companies and other new market players looks set to intensify inthe electric power and city gas businesses in the wake of retail liberalization. The Group added electric power to its portfolioof services in an alliance with Tokyo Electric Power Company (now TEPCO Energy Partner, Inc.) in April 2016. The Groupplans to differentiate itself from competitors by offering a portfolio of daily life infrastructure-related services from LP gas andcity gas to information and communications, CATV, Aqua, and electric power to attract new customers and prevent service
cancellation by existing customers.
Based on the Group’s TLC (Total Life Concierge) concept, the Group will aim to respond flexibly to changes in thebusiness environment, generate new businesses and services, as well as reinforce points of contact with customers, andprovide comprehensive offerings combining a host of lifestyle services.
The environment surrounding the Group’s gas business is characterized by a declining population, changing consumer
lifestyles, competition between energy providers, and fluctuating crude oil prices. Given these factors, we expect sales andprice competition to grow increasingly fierce.
In the LP gas business, recognition of the social importance of LP gas is growing, as consumers see how LP gas
supports lifestyles in local communities and serves as a source of energy that can be distributed in times of emergency. The
Group will promote better efficiency in its customer operations, such as delivery and meter inspection, aiming to heighten
price competitiveness through increased efficiency and cost reductions. At the same time, we will endeavor to maintain andgrow our customer base, attracting new customers by expanding our service area and through M&A activity.
In the city gas business, numerous new participants are expected to enter the market in step with the full-scale retailliberalization of city gas came into effect in April 2017. As a city gas provider with close community ties, the Group will
respond to this challenge by further augmenting its security systems, providing additional services and products with firmly
rooted community and customer ties, thereby establishing our business foundation and achieving sustainable growth.
In the CATV business, market conditions are difficult as major telecommunication companies continue to compete on
the broadcasting, communications, and telephone services. We will respond by promoting the acquisition of corebroadcasting service customers and offering set products combining communications services. Meanwhile, our
independent community channel service broadcasts programs featuring people from the community, allowing us to promote
closer local ties and distribute information through live broadcasts of local events and sports tournaments. We will leverage
this content in our sales activities. By developing and expanding services with close community ties, we will endeavor to
pursue CATV value while maintaining and expanding revenues.
Competition in the information and communications business is intense, as technological innovation proceeds at a rapid
pace, while companies are being called on to respond swiftly to customer needs. In the area of information andcommunication systems, in tandem with progress in cloud computing, we are developing solution services that provide atrinity of offerings: the Group’s fiber-optic networks, data centers, and systems development. In this manner, we are striving
to grow further by expanding our recurring revenue business model, as well as creating and offering services and solutions

13

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

in the fast-growing big data and IoT businesses.
In broadband services, the Group began the Hikari Collaboration service (a one-stop FTTH ISP service using fiber-optic
services provided by NTT) in February 2015 amid expectations of slowing growth of FTTH in the domestic broadband
market. We have concentrated our efforts on raising ARPU by acquiring new customers and attracting customers switchingfrom other ISPs. As a result, the Group’s Hikari Collaboration customers totaled 299,000 in the fiscal year ended March 31,
2017, serving as a major earnings growth driver. However, competition between ISPs has intensified in the Hikari
Collaboration business, The Group intends to strengthen its business base by continuing efforts to acquire new customers
and attract customers switching from other ISPs.
In the mobile phone business, the Group launched our low-cost SIM service LIBMO in February 2017. To expand
earnings, we intend to offer a unique service with competitive pricing in the low-cost SIM service market, which is expected
to continue growing. We are also combining it in a package with fixed-line services such as Hikari Collaboration to expand
sales of both services and prevent service cancellations.
In the Aqua business, since the Great East Japan Earthquake, consumer demand for delicious water that is safe andsecure has grown sharply; taking advantage of this demand as the market matures has been a matter of some urgency. In
Shizuoka Prefecture, the Group has developed the “Oishii Mizu no Takuhaibin” (“Tasty Water Delivered to your Door”) brand,
providing mineral-rich natural water from the base of Mt. Fuji in returnable bottles. Nationwide, we are developing the“Ulunom” brand, using disposable bottles.
Meanwhile, we are enhancing quality by refurbishing production facilities and enhancing management systems at ourplants such as the Aqua Fujisan Plant, to continue providing high-quality drinking water that is safe and secure. TOKAI(Shanghai) Trade & Commerce Co., Ltd., is developing a bottled water delivery service in Shanghai, China, under the
Fujishigen (“water resource from Fuji”) brand. The Group is maximizing the value of the World Heritage Site Mount Fuji
brand and combining it with our stylish in-house produced water servers that enhance room interiors and a regular
maintenance service to convey the message of water that is safe and secure in marketing face-to-face at department storesas well as via our website and SNS.
In our nursing care business, we commenced facility operations in April 2011. This business has progressed steadily. As
Japanese society continues to age, the Group’s business development will need to respond to the changing social
environment. We intend to continue expanding our operations in fee-based elderly homes with nursing care, centered on
day services. By also leveraging the information and communications technologies the Group has cultivated, we will work todevelop services that connect nursing care patients with their families, to provide services that consider the convenience fornursing care users.
As a provider of various lifestyle infrastructure services, maintaining ongoing customer transactions and promoting
multiple transactions is key to expanding the Group’s overall transactions.
In December 2012, we launched the TLC Membership Service, a membership service spanning the Group. Under thissystem, members can earn proprietary “TLC points” based on the number of times they use our services and the amountspent. Customers who use many of our services, etc., can enjoy greater benefits.
The number of members is growing steadily, and surpassed 586 thousand members as of March 31, 2017. The system
is being established to increase the level of return to customers and create customer contact points across the Group. We
plan to expand and enhance the reward points menu, offer events and services for members, and promote other benefits to
help attract new customers, curtail cancellations, and strengthen our earnings base in each business.
Meanwhile, to make better comprehensive use of the Group’s contact points with customers, in addition to initiatives at
each of our businesses and services, we are working to strengthen various channels throughout the Group, including faceto-face, call center, and web-based communication. By analyzing the customer information we amass on a daily basis, wewill build a system to propose and provide services optimized to customer needs and lifestyles.
Through the above-mentioned initiatives under the holding company structure, we aim to offer our myriad of products
and services to the Group’s important base of 2.56 million customers, as well as continuing to provide new products andservices. In this manner, we strive to realize the TLC (total life concierge) concept.

14

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

4. Basic Perspective on Selection of Accounting Standards
As the Group conducts its operations primarily in Japan, with little overseas activity, we intend to comply with Japanese
accounting standards for the foreseeable future. However, we will consider the adoption of international accounting
standards, taking into account various situations in Japan and overseas.

15

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

5. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of yen)

As of March 31, 2016

As of March 31, 2017

AssetsCurrent assets
Cash and deposits

4,077

3,239

Notes and accounts receivable–trade

21,30522,838Merchandise and finished goods

4,307

3,676

Work in process

610

645

Raw materials and supplies

694

737

Deferred tax assets

886

743

*3 6,626*3 7,045

(391)

(332)

38,11738,594

Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

104,921

107,539

Accumulated depreciation(69,743)(73,821)

Buildings and structures, net

35,17833,718

Buildings and structures

89,23691,396

Accumulated depreciation(67,162)(69,547)

Buildings and structures, net*1 22,074*1 21,848

Land

21,825

22,634

Leased assets

23,29423,502(12,315)(12,633)

10,97910,869868

189

13,54014,330

Accumulated depreciation(9,401)(9,944)

Other, net

4,138

4,386

*5 95,064*5 93,647

6,589

5,861

675

568

Other

3,674

4,559

Total intangible assets

10,94010,988*2 7,236*2 9,433

105

87

Deferred tax assets

1,790

1,350

Net defined benefit asset

2,360

2,397

Other

5,255

5,024

Allowance for doubtful accounts

(599)

(432)

Total investments and other assets

16,14917,860122,153

122,496

Machinery, equipment and vehicles

Accumulated depreciation
Leased assets, net
Construction in progress
Other, net

Total property, plant and equipment
Intangible assets
Goodwill
Leased assets

Investments and other assets
Investment securities
Long-term loans receivable

Total non-current assets

16

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

Deferred assets
Total assets

17

31

21

160,303

161,112

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Millions of yen)
As of March 31, 2016

As of March 31, 2017

Liabilities
Current liabilities

13,511

14,779

Short-term loans payable*5, *7 27,828*5, *7 22,912

Current portion of bonds

758

578

lease obligations

3,815

3,398

Income taxes payable

1,954

3,484

Provision for bonuses

1,247

1,260

212

434

Other

13,63014,455

Total current liabilities

62,95861,304984

406

10,0002,800*5, *7 31,839*5, *7 27,440

8,923

8,950

Other accruals

68

101

Net defined benefit liability

308

364

Other

3,249

3,299

Total non-current liabilities

55,37343,361

118,332

104,665

Capital stock

14,00014,000Capital surplus

19,25824,286

Retained earnings

Notes and accounts payable–trade

Other accruals

Non-current liabilities
Bonds payable
Convertible bonds with stock acquisition rights
Long-term loans payable
Lease obligations

Total liabilities
Net assets
Shareholders’ equity

9,870

15,048Treasury stock(6,409)(3,285)

Total shareholders’ equity

36,71950,048

1,153

2,126

230

720

1

(9)

Remeasurements of defined benefit plans

2,958

2,768

Total accumulated other comprehensive income

4,343

5,605

Stock acquisition rights

208－

Non-controlling interests

699

791

41,97056,446160,303

161,112

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment

Total net assets
Total liabilities and net assets

18

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Millions of yen)
Fiscal year ended

Fiscal year ended

March 31, 2016

March 31, 2016

180,940

178,631*1 111,127*1 105,590

69,812

73,040*2 61,566*2 60,290

8,245

12,750Interest income

1411

Dividend income

159

176

Commission fee

81

80

Other

516

450

Total non-operating profit

772

719

Interest expenses

710

531

Other

157

161

Total non-operating expenses

868

693

8,150

12,775Gain on sales of non-current assets

*3 7

*3 8

Transmission line facility subsidies

68

63

Subsidy income

1382

Gain on sales of investment securities

00Gain on reversal of subscription rights to shares

-

98

215

172

*4 0

*4 8

*5 1,002*5 831

Impairment loss

*6 693-

Bad debts expenses*7 234-

Total extraordinary losses

1,929

840

Net income before income taxes

6,436

12,108

Income taxes (current)

2,900

4,487

Income taxes (deferred)

23

197

Total income taxes

2,924

4,685

Net income

3,511

7,422

52

85

3,458

7,337

Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit

Non-operating expenses

Recurring profit
Extraordinary income

Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets

Net income attributable to non-controlling interests
Net income attributable to owners of the parent

19

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Consolidated Statements of Comprehensive Income)(Millions of yen)
Fiscal year ended

Fiscal year ended

March 31, 2016

March 31, 2016

3,511

7,422

(1,227)

973

Deferred gains (losses) on hedges

324

490

Foreign currency translation adjustment

(37)

(12)

(1,172)

(189)

(5)

(0)

*1 (2,118)*1 1,260

1,393

8,683

1,343

8,597

50

86

Net income
Other comprehensive income
Valuation difference on available-for-sale securities

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using
the equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

20

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017(3) Statement of Changes in Consolidated Shareholders’ Equity
Year ended March 31, 2016 (April 1, 2015–March 31, 2016)(Millions of yen)
Shareholders’ equity
Capital stock

Balance at beginning of period

14,000Capital surplus

22,315Retainedearnings

Treasury stock

7,803

Total shareholders’equity(8,033)36,085

Change during the year
Cash dividends from retained earnings(1,391)(1,391)

Net income attributable to owners of the parent

3,458

3,458

Conversion of convertible bonds with stock－acquisition rights
Acquisition of treasury shares(1,801)(1,801)

Disposition of treasury shares

149

211

360

Cancellation of treasury shares(3,198)

3,198

－

(7)

15

7

Increase by share exchanges
Equity gain from sale of consolidated subsidiary－

equityNet change in items other than shareholders’ equity
Total change during the year
Balance at end of period－(3,057)

2,066

1,624

634

14,00019,2589,870(6,409)36,719

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Deferred gains
or losses onhedgesForeigncurrencytranslation
adjustment

Remeasurements

Total accumulatedof defined benefit other comprehensive
plans

Subscription

Non-

Total

rights tocontrollingnetsharesinterests assets

incomeBalance at beginning of
2,378

(94)

44

4,130

6,458

260

662 43,467

periodChange during the year
Cash dividends from
(1,391)
retained earnings
Net income attributable
3,458
to owners of the parent
Conversion of
convertible bonds with－stock acquisitionrightsAcquisition of treasury(1,801)shares
Disposition of treasury360
sharesCancellation of treasury－

sharesIncrease by share7
exchanges

21

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

Equity gain from sale of－consolidated subsidiary
equityNet change in items
other than shareholders’(1,224)324(42)(1,172)(2,115)(52)

37 (2,131)(1,224)324(42)(1,172)(2,115)(52)

37 (1,496)

1,153

230

1

2,958

4,343

208

699 41,970

equityTotal change during theyear
Balance at end of period

22

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

Year ended March 31, 2017 (April 1, 2016–March 31, 2017)(Millions of yen)
Shareholders’ equity
Capital stock

Capital stock

14,00019,258

Balance at beginning of period

Capital stock

Capital stock

9,870

Capital stock

36,719(6,409)Change during the year
Cash dividends from retained earnings(2,159)(2,159)Net income attributable to owners of the parent

7,337

7,337

Conversion of convertible bonds with stock
4,221

2,978

7,200

(262)

(262)

407

1,213

acquisition rights
Acquisition of treasury shares
Disposition of treasury shares

806

Cancellation of treasury shares－

Increase by share exchanges－

Equity gain from sale of consolidated subsidiary
(0)

(0)

equityNet change in items other than shareholders’ equity
Total change during the year
Balance at end of period

－

5,027

5,177

3,123

13,32814,00024,286

15,048(3,285)50,048

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Deferred gains
or losses onhedgesForeigncurrencytranslation
adjustment

Remeasurements

Total accumulatedof defined benefit other comprehensive
plans

Subscription

Non-

Total

rights tocontrollingnetsharesinterests assets

incomeBalance at beginning of
1,153

230

1

2,958

4,343

208

699 41,970

periodChange during the year
Cash dividends from
(2,159)retained earnings
Net income attributable
7,337
to owners of the parent
Conversion of
convertible bonds with

7,200

stock acquisition rights
Acquisition of treasury(262)
shares
Disposition of treasury
1,213
sharesCancellation of treasury－

sharesIncrease by share－exchanges
Equity gain from sale ofconsolidated subsidiary(0)equity23

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

Net change in items
other than shareholders’

973

490

(11)

(189)

1,262

(208)

92

1,146

973

490

(11)

(189)

1,262

(208)

92 14,475

2,126

720

(9)

2,768

5,605

－

791 56,446

equityTotal change during theyear
Balance at end of period

24

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017(4) Consolidated Statements of Cash Flows(Millions of yen)
Fiscal year ended

Fiscal year ended

March 31, 2016

March 31, 2017

Cash flows from operating activities
Net income before income taxes and minority interests

6,436

12,108Depreciation

14,701

14,441

Amortization of goodwill

2,033

1,200

Impairment loss

693－

Increase in net defined benefit asset and liability

63

(251)

(174)

(188)

(Gain) loss on sale of investment securities

(0)

(0)

Interest expenses

710

531

(Gain) loss on sales of non-current assets(7)0Interest and dividend income

1,002

831

(1,140)(1,959)

1,083

553

351

1,458

1,378

29

(1,170)(94)

Increase (decrease) in deposits received

(878)

655

Other

(371)

635

Subtotal

24,711

29,952

Income taxes paid

(3,316)(3,260)Net cash provided by operating activities

21,395

26,692

Interest and dividend income received

229

245

Payment into time deposits

(33)

(0)

Loss on retirement of non-current assets
Increase (decrease) in notes and accounts payable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable–trade
Increase (decrease) in accounts payable–other
Increase (decrease) in accrued consumption taxes

Cash flows from investing activities

40

－

(17)

(27)

0

0

(11,435)(11,331)

Proceeds from sales of tangible and intangible assets

162

202

Proceeds from contribution received for construction

117

138

Collection of loans receivable

170

66

Other

(250)

(279)

(11,015)(10,985)

Proceeds from withdrawal of time deposits
Purchase of securities
Proceeds from sales of securities
Purchase of tangible and intangible assets

Net cash provided by (used in) in investing activities

25

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Millions of yen)
Fiscal Year Ended

Fiscal Year Ended

March 31, 2016

March 31, 2017

Cash flows from financing activities

(729)

(545)

Net increase (decrease) in short-term loans payable(3,239)(4,350)

Repayments of lease obligations(3,928)(3,902)

Proceeds from long-term loans payable

9,594

7,850

Repayment of long-term loans payable(15,553)(12,815)

Redemption of bonds(2,458)(758)

Proceeds from issuance of convertible bonds with stock acquisition rights

9,980

－

Payments for acquisition of treasury stock(1,801)

(262)

－

(91)

429

384

(1,392)(2,158)

(6)

(5)

－

12

(44)

－

(9,150)(16,643)(5)

3

Net increase (decrease) in cash and cash equivalents

1,223

(933)

Cash and cash equivalents at beginning of period

2,821

4,044

*1 4,044*1 3,111

Interest expenses paid

Payments to establish financial trust for acquisition of treasury stock
Proceeds from disposal of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Proceeds from sales of investments in subsidiaries not resulting in change inscope of consolidation
Payments for sale and leaseback transactions
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

Cash and cash equivalents at end of period

26

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017(5) Notes to the Consolidated Financial Statements(Notes on Premise of Going Concern)
No items to report(Significant Matters Forming the Basis of Preparing the Consolidated Financial Statements)
1. Scope of Consolidation
All 22 of the Company’s subsidiaries are included in the scope of consolidation.
2. Application of the Equity Method
The equity method is applied to all five of the Company’s affiliated companies.
Tokyo Bay Network Co., Ltd. will be included among equity-method affiliates from the fiscal year
ended March 31, 2017 after it was acquired on March 15, 2017.
Among the equity-method affiliates, the fiscal year-end of CloudMaster Co., Ltd., is December 31. In
preparing the consolidated financial statements for the year under review, the financial statements as ofDecember 31, 2016, were used for the said equity-method affiliate.
3. Fiscal Year-End of Consolidated Subsidiaries
Among the consolidated subsidiaries, the fiscal year-end of TOKAI (Shanghai) Trade & Commerce Co.,
Ltd., is December 31. In preparing the consolidated financial statements for the year under review, thefinancial statements as of December 31, 2016, were used for the said consolidated subsidiary.
Any necessary adjustments were made on a consolidated basis to account for significant
transactions that occurred between the consolidated subsidiary’s fiscal year-end and the consolidated
fiscal year-end.

27

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

4. Matters Related to Accounting Policy(1) Valuation Bases and Methods for Significant Assets
1) Securities
Other securities (available-for-sale securities)
Securities with fair market value
Stated at market value based on fair market value etc. as of the consolidated fiscal year-end (Netunrealized holding gains or losses are directly included in a component of shareholders’ equity. The costof securities sold is measured using the moving-average method)
Securities with no market value
Stated at cost using the moving-average method
2) Derivatives
Stated at fair market value
3) Inventories
Mainly stated at cost using the first-in first-out method. However, the individual cost method is used forreal estate held for sale and work in process.
Figures on the balance sheet are adjusted by writing down the book value when profitability declines.
(2) Method of Depreciation for Significant Depreciable Assets
1) Property, Plant and Equipment (Excluding Leased Assets)
Depreciated mainly by the straight-line method
Useful lives of major property, plant and equipment are as follows.
Buildings and structures

10–50 years

Machinery, equipment and vehicles

9–15 years

2) Intangible Assets (Excluding Leased Assets)
Straight-line method
Software for internal use is amortized over the internally estimated useful life of the software (5 years)
using the straight-line method.
3) Leased Assets
Leased assets related to finance lease transactions other than those that transfer ownership
Depreciated to a residual value of zero using the straight-line method, taking the lease period as theservice life. Of finance lease transactions other than those that transfer ownership, lease transactions thatcommenced on or before March 31, 2008, are accounted for as standard lease transactions.
4) Deferred Assets
Straight-line method
Principal depreciation periods are as follows
Bond issuance cost Redemption period(3) Accounting for Significant Reserves
1) Allowance for Doubtful Accounts
To provide reserve for potential losses from bad debts stemming from notes and accounts receivable orloans receivable, the Company recognizes and records allowance for doubtful accounts based on
historical uncollectible rate for general accounts receivables, and on an estimate of collectability of specificaccounts for which collection appears doubtful.
2) Provision for Bonuses
Provisions for the payment of employee bonuses are recorded at the amount expected to be paid during
28

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

the fiscal year under review.
(4) Accounting Treatment Related to Defined Benefit Plans
1) Method of Attributing the Projected Benefits to Periods of Service
In calculation of defined benefit obligations, the method of attributing the projected benefits until the end of thecurrent fiscal year is based on the benefit formula basis.
2) Method of Amortization of Actuarial Gains or Losses and Prior Service Cost
Prior service cost is recognized as expenses by amortizing the amount by the straight-line method over a certain
period of time (15–18 years) that is shorter than the employees’ average remaining service period at the time ofoccurrence.
Actuarial gains or losses are amortized as incurred over the periods, which are shorter than the averageremaining service years of employees (mainly 12–18 years), by the straight-line method, starting from thefollowing fiscal years.
3) Application of Compendium Method for Small Companies
Certain of the Company’s consolidated subsidiaries use the compendium method to calculate defined benefit
obligations and defined benefit expenses, stating defined benefit obligations at the necessary payment amounts
for voluntary retirement as of the end of the fiscal year.
(5) Basis for Recording Significant Income and Expenses
Basis for recording the amount of completed work and the cost of completed work
Construction for which progress can be measured with certainty as of the fiscal year-end is based on the percentage-ofcompletion method (cost-to-cost method is used to estimate a progression rate on construction). Other construction isbased on the completed contracts method.
(6) Basis for Translating Significant Foreign Currency Assets and Liabilities to Japanese Yen
Monetary assets and liabilities denominated in foreign currencies are translated to Japanese yen at the spot exchange rateon the consolidated closing date, and translation adjustments are recorded as income or losses. Assets and liabilities ofoverseas subsidiaries are translated to Japanese yen at the spot exchange rate on the consolidated closing date, with profits,losses, and expenses translated at the average rate during the accounting period, and translation adjustments are recorded
within foreign currency translation adjustments within net assets.
(7) Important Methods of Hedge Accounting
1) Methods of Hedge Accounting
In principle, deferred hedge accounting is used.
Hedging transactions using interest rate swaps are accounted for using exceptional treatment. Allocation accounting isused for interest rate currency swaps with foreign currency denominated monetary liabilities.
2) Hedging Instruments and Hedged Items(Hedging instruments)
Interest rate swaps, interest rate currency swaps, forward exchange contracts, currency options, and commodity
swaps(Hedged items)
Interest on loans payable, principal and interest on loans payable denominated in foreign currencies, LP gas
procurement prices3) Hedging Policy
In accordance with resolutions based on the Group’s regulations for risk management, the Group primarily uses hedging
instruments within a certain scope of risks on hedged items: interest rate fluctuation risk, exchange rate fluctuation risk,
and LP gas procurement price fluctuation risk.
4) Methods to Evaluate Hedging Effectiveness
Assessment of effectiveness is conducted by comparing cumulative cash flow fluctuations of the hedged item against the
cumulative cash flows of the hedging instrument, and determined based on the amount of fluctuation of the two. The
evaluation of hedging effectiveness is omitted in transactions that satisfy the conditions for exceptional treatment or thatare recorded using allocation accounting.
(8) Goodwill Amortization Method and Amortization Period
Goodwill is amortized using the straight-line method over a period of five to 20 years, during which investment effect isvisible. Lump-sum amortization is applied to items whose monetary amounts are small.
(9) Scope of Cash in the Consolidated Statements of Cash Flow
Cash (cash and cash equivalents) in the consolidated statement of cash flow includes cash on hand, deposits drawable

29

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017at any time or readily convertible to cash, and price-change-insensitive short-term investments whose maturity comesdue within three months.
(10) Treatment of Consumption Taxes
The tax exclusion method is used for the accounting treatment of consumption taxes and regional consumption taxes.
Non-deductable consumption taxes and regional consumption taxes are recognized as expenses in the fiscal year
incurred.
(11) Criteria for the Capitalization of Interest Payments on Long-Term, Large-Scale Real Estate Development Work
1) Interest payments made during the normal development period on real estate development work having a period of
two years or more from the start of development and involving total operational expenses of 3.0 billion yen or moreis capitalized.
2) Capitalized interest payments total 9 million yen as of March 31, 2016.

(Changes in Accounting Policies)(Application of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016)
Following the revision to the Corporation Tax Act, the company has applied the “Practical Solution on a
Change in Depreciation Method Due to Tax Reform 2016” (ASBJ PITF No. 32, June 17, 2016) from thefiscal year ended March 31, 2017, and changed the depreciation method for facilities attached to buildings
and structures acquired on or after April 1, 2016 from the declining balance method to the straight line
method.
The effect of this change on results is insignificant.
(Changes in Presentation Method)(Consolidated Statements of Income)The importance of the amount of “ Insurance income” listed under “Non-operating income” as anindependent line item in the fiscal year ended March 31, 2016 became insignificant. As a result, this item
was included in “Other” under within “Non-operating income.” The consolidated financial statements for the
fiscal year ended March 31, 2016 have been restated to reflect this change in presentation method.
As a result, the 120 million yen listed in “ Insurance income” within “Non-operating income” in the
consolidated financial statements of the fiscal year ended March 31, 2016 has be added to “Other.”(Additional Information)(Implementation Guidance on Recoverability of Deferred Tax Assets)
The “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March
28, 2016) has been applied from the fiscal year ended March 31, 2017.
(Board Benefit Trust (BBT))(1) Overview of Transactions
At a Board of Directors Meeting held on May 10th, 2016, the Company approved the introduction of a board
benefit trust (BBT) plan as a new stock-based compensation system (hereinafter referred to as “the System”)
for the Company’s Directors, Executive Officers, Administrative Officers, and the Directors and Administrative
Officers of some of the Company’s subsidiaries (excluding Outside Directors; hereinafter referred to as“Executives”). This Executive compensation was approved at the 5th Annual General Meeting of Shareholders
held on June 24, 2016.
The System is a stock-based compensation system in which the Company will acquire the shares of theCompany using funds the Company first contributes. The Company’s shares and the amount of cash
equivalent to the market price of the Company’s shares as of the date of the Executive’s retirement (hereinafterreferred to as the “Company’s Shares, etc.”) will be provided through the trust to the Executives in accordancewith executive stock-based compensation rules stipulated by the Company and subsidiaries of the Company
30

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

covered by the System. In principle, Executives shall receive the Company’s Shares, etc. upon their retirement.
The Company has applied the gross method for this transaction in accordance to “Practical Solution on
Transactions of Delivering the Company’s Own Stock to Employees etc. through Trusts” (ASBJ PITF No. 30,
March 26, 2015).
(2) Company stock remaining in the trust
The Company is recording Company stock which remains in the trust as treasury stocks under net assets atbook value (excluding attached expenses). The book value of such Company stocks was 261 million yen as ofMarch 31, 2017. The number of stock was 420 thousand shares.

31

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Notes to the Consolidated Balance Sheets)*1. The following reduction entry amounts were deducted from the acquisition costs of machinery, equipment and vehicles, due
to the acceptance of construction contributions, etc.
As of March 31, 2016
Reduction entry
Cumulative reduction entries

As of March 31, 2017

33 million

65 million

5,998 million

6,037 million*2. Amounts for affiliated companies were as follows.
As of March 31, 2016
Investment securities (shares)

As of March 31, 2017

310 million yen

1,085 million yen*3. Payments pending on the transfer of rights due to the liquidation of receivables (notes and accounts receivable–trade) wereas follows.
As of March 31, 2016
Payments pending

As of March 31, 2017

342 million yen

270 million yen

4. Contingent liabilities(1) Guarantees
As of March 31, 2016

As of March 31, 2017

(Debt obligation)(Debt obligation)

TOKAI Group Association

446 million yen

TOKAI Group Association

340 million yen(2) Repurchase obligation due to liquidation of receivables
As of March 31, 2016
Repurchase obligation due to liquidation

As of March 31, 2017

902 million yenof receivables

1,303 million yen*5. Pledged assets and secured liabilities
Pledged assets are as follows.
As of March 31, 2016

As of March 31, 2017

Property, plant and equipment
Buildings and structures

3,522 million yen (3,414 million yen)

3,143 million yen (3,081 million yen)

Machinery, equipment and vehicles

5,594 million yen (5,593 million yen)

5,626 million yen (5,625 million yen)Land

596 million yen (596 million yen)

596 million yen (596 million yen)Other

146 million yen (146 million yen)

135 million yen (135 million yen)

9,860 million yen (9,752 million yen)

9,502 million yen (9,439 million yen)

Total

Figures in parentheses above indicate plant foundation mortgages.

Secured liabilities are as follows.
As of March 31, 2016
Long-term loans payable (including current portion)
Total

As of March 31, 2017

652 million yen

275 million yen

652 million yen

275 million yen

6. The Group has credit line agreements in place with three banks in order to ensure the stable procurement of funds. Thesecredit lines and loan amounts currently executed as of the end of the fiscal year under review are as follows.
As of March 31, 201632

As of March 31, 2017

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

As of March 31, 2016
Credit line
Loan amount currently executed
Outstanding unused overdraft amount

As of March 31, 2017

6,000 million yen

6,000 million yen－－

6,000 million yen

6,000 million yen

The above-mentioned credit line involves certain financial covenants with all three banks. As of March 31, 2016,
the Company was in conflict with none of these covenants.

*7. Syndicated loan agreements
Fiscal year ended March 31, 2017
(1) The Company entered into a syndicated loan agreement for 1,000 million yen (balance of 775 million yen as of March
31, 2016 and 675 million yen as of March 31, 2017) in December 2013, which contains financial covenants. These
special contract requirements are as follows.
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2014 must be 70% or more of the amount of net assets in the consolidated balance sheets at the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2014.
(2) The Company entered into a syndicated loan agreement for 900 million yen (balance of 640 million yen as of March 31,
2016 and 511 million yen as of March 31, 2017) in February 2014, which contains financial covenants. These special
contract requirements are as follows.
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2014 must be 70% or more of the amount of net assets in the consolidated balance sheets at the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2014.
(3) The Company entered into a syndicated loan agreement for 650 million yen (balance of 509 million yen as of March 31,
2016 and 416 million yen as of March 31, 2017) in September 2014, which contains financial covenants. These special
contract requirements are as follows
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2015 must be 70% or more of the amount of net assets in the consolidated balance sheets at theend of the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2015.
(4) The Company entered into a syndicated loan agreement for 700 million yen (balance of 612 million yen as of March 31,
2016 and 542 million yen as of March 31, 2017) in December 2014, which contains financial covenants. These special
contract requirements are as follows.
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2015 must be 70% or more of the amount of net assets in the consolidated balance sheets at theend of the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2015.

33

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Notes to the Consolidated Statements of Income)*1. Inventories as of the end of the fiscal year is the amount after writing down the book value in line with the decline inprofitability. The following inventory valuation losses are included in cost of sales.
Year ended March 31, 2016
(April 1, 2015–March 31, 2016)

Year ended March 31, 2017
(April 1, 2016–March 31, 2017)

27 million yen

129 million yen*2. Principal expense items contained in selling, general and administrative expenses are as follows.
Year ended March 31, 2016
(April 1, 2015–March 31, 2016)

Year ended March 31, 2017
(April 1, 2016–March 31, 2017)16,985 million yen

17,357 million yen

Provision for bonuses

900 million yen

925 million yen

Defined benefit expenses

752 million yen

640 million yen

17,880 million yen

16,463 million yen

182 million yen

228 million yen

Year ended March 31, 2016
(April 1, 2015–March 31, 2016)

Year ended March 31, 2017
(April 1, 2016–March 31, 2017)

Machinery, equipment and vehicles

7 million yen

7 million yen

Buildings and structures

0 million yen

0 million yen

Other

0 million yen

0 million yen

Total

7 million yen

8 million yen

Year ended March 31, 2016
(April 1, 2015–March 31, 2016)

Year ended March 31, 2017
(April 1, 2016–March 31, 2017)

Buildings and structures－million yen

8 million yen

Machinery, equipment and vehicles

0 million yen

0 million yen

Total

0 million yen

8 million yen

Salaries and commissions

Fees
Provision of allowance for doubtful accounts*3. Details of the gain on sales of non-current assets are as follows.

*4. Details of the loss on sales of non-current assets are as follows.

*5. Details of the loss on retirement of non-current assets are as follows.
Year ended March 31, 2016
(April 1, 2015–March 31, 2016)

Year ended March 31, 2017
(April 1, 2016–March 31, 2017)

Buildings and structures

610 million yen

536 million yen

Machinery, equipment and vehicles

197 million yen

151 million yen

Goodwill

66 million yen

57 million yen

Other

128 million yen

85 million yen

Total

1,002 million yen

831 million yen

34

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

*6. Impairment losses
Fiscal year ended March 31, 2015 (April 1, 2014–March 31, 2015)
The Group recorded impairment losses on the following assets during the fiscal year.
Impairment
Location

Use

Business segment

Category

losses(Millions of yen)

Buildings and structures
Machinery, equipment and vehicles
Land

Kisarazu, Chiba
Prefecture
Kimitsu, Chiba

OfficeProperty, plant and equipment,“leased assets”
Property, plant and equipment,

Gas and Petroleum

Prefecture

340“other”
Intangible assets, “other”
Building and RealMishima, Shizuoka

Wedding

EstatePrefecture

ceremony facility(Note)

Buildings and structures
Property, plant and equipment,“other” Intangible assets, “other”

Weddings businessYaizu, Shizuoka
Prefecture

Buildings and structures

Information and

Office201

Property, plant and equipment,

Communications

128“other”
Property, plant and equipment,

Shanghai, China“leased assets”

Aqua

Business asset

14

Property, plant and equipment,“other”

Izumi-ku,

Buildings and structures

Information and

Yokohama

Shop

Property, plant and equipment,

Communications

Aoi-ku, Shizuoka

8“other”

Total

693

(Note) This property is a facility related to Others segment (weddings business), but is recorded as an asset in
the Building and Real Estate segment because it is leased internally within the Group.

The Group considers real estate for leasing on a per-property basis. Other assets are grouped by units
for which profits and losses can be reasonably managed, and impairment losses are recognized on thisbasis.
During the year under review, the Group wrote down book values to their recoverable amounts on an
office and shop due to decisions to relocate and close, and on a wedding ceremony facility and businessasset whose profitability had decreased. These decreases were posted as impairment losses under
extraordinary loss.

Breakdown of impairment losses
Use(Millions of yen)

Buildings andstructures

Machinery,equipment andLand

vehiclesProperty, plant Property, plant

Intangible

and equipment, and equipment,

assets,“leased assets”“other”“other”

Total

21

7

299

2

7

1

340

183

－

－

－

14

3

201

Office

114

－

－

－

13

－

128

Business asset

－

－

－

14

0

－

14

OfficeWedding ceremony
facility

35

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

Buildings andUsestructures

Machinery,equipment andLand

vehiclesProperty, plant Property, plant

Intangible

and equipment, and equipment,

assets,“leased assets”“other”“other”

Total

Shop

8

－

－

－

0

－

8

Total

327

7

299

17

35

4

693

The recoverable amount of these assets is measured as their net realizable value. A real estate appraisal
was performed to value land, and other assets were valued at 0 yen.

*7. Bad debt expenses
Fiscal year ended March 31, 2016 (April 1, 2015–March 31, 2016)
A bad debt expense of 234 million yen was recorded in extraordinary loss as the Company’s burden of cost on a lawsuit
for damages related to insufficient earthquake-resistance on condominiums sold by consolidated subsidiary TOKAICORPORATION.

36

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Note to the Consolidated Statements of Comprehensive Income)*1. Reclassification adjustments and tax effects related to other comprehensive income(Millions of yen)

Year ended March 31, 2016

Year ended March 31, 2017

(April 1, 2015–March 31, 2016)(April 1, 2016–March 31, 2017)(1,810)

1,407

－

0

(1,810)

1,407

582

(434)

(1,227)973

Amount generated during the year

(77)

1,603

Adjustment for asset acquisition costs

546

(900)

Before adjustment for tax effects

469

702

(144)

(212)

324

490

(37)

(12)

(37)

(12)

(1,553)

(52)

(249)

(217)

(1,802)

(270)

630

80

(1,172)

(189)

(5)

(0)

(2,118)1,260

Valuation difference on available-for-sale securities
Amount generated during the year
Reclassification adjustments
Before adjustment for tax effects
Tax effects
Valuationdifferenceonavailable-for-salesecurities
Deferred gains (losses) on hedges

Tax effects
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Amount generated during the year
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Amount generated during the year
Reclassification adjustments
Before adjustment for tax effects
Tax effects
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using the equity method
Amount generated during the year
Total other comprehensive income

37

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Notes to the Statement of Changes in Consolidated Shareholders’ Equity)
Fiscal year ended March 31, 2016 (April 1, 2015–March 31, 2016)
1. Categories and Number of Issued Shares and Categories and Number of Shares of Treasury Stock
Beginning of the fiscal

Increase during the

Decrease during the year

End of the fiscal year

year (thousands offiscal year (thousands(thousands of shares)(thousands of shares)

shares)of shares)

Issued shares
Common stock

155,199－

15,520139,679

Total

155,199－

15,520139,679

Common stock

39,637

3,310

16,45926,488

Total

39,637

3,310

16,45926,488Treasury stock(Notes) 1. The 15,520 thousand common share decrease in the total number of issued shares was due to thecancellation of treasury shares.
2. The increase of 3,310 thousand common shares of treasury stock was due to the acquisition of 3,308
thousand shares of treasury stock in accordance with a Board of Directors resolution and the purchase of 2
thousand shares comprising less than one share unit.
3. The decrease of 16,459 common shares of treasury stock included the cancellation of 15,520 thousand
treasury shares, the sale of 509 thousand shares to the TOKAI Group Employee Shareholding Association
for the employee shareholding association type ESOP, a decrease of 385 thousand shares due to theexercise of stock options, a decrease of 44 thousand shares due to share exchanges, and a decrease of 0
thousand shares for transfers of shares comprising less than one share unit.

2. Subscription Rights to Shares and Treasury Subscription Rights to SharesClassification

Submitting company(Parent company)

Number of shares subject to subscription rights to

Breakdown ofClass of shares

subscription

subject torights to

subscription

Beginning ofsharesrights to sharesfiscal year

sharesIncrease

Balance at end

Decreaseduring fiscal

during fiscal

year

year

End of fiscal
year

of fiscal year
(millions of yen)

Subscription－

rights to shares

－

－

－

－

208

－

－

－

－

208

as stock options
Total

3. Dividends(1) Dividend Payments(Resolution)

Class of shares

Resolution at regular generalshareholders meeting on June 26, 2015
Board of Directors resolution on October
29, 2015

Total dividends Dividend per

Record date

Effective date

6.00

March 31, 2015

June 29, 2015

6.00

September 30, 2015

November 30, 2015

(millions of yen)share (yen)Common stock

716

Common stock

716(Notes) 1. The total common-stock dividend of 716 million yen resolved at the regular general meeting of shareholders
on June 26, 2015, includes dividends of 20 million yen related to the Company’s shares held by consolidated
subsidiaries and dividends of 3 million yen related to the Company’s shares held by Trust & Custody Services
Bank, Ltd. (Trust Account E).
2. The total common-stock dividend of 716 million yen resolved by the Board of Directors on October 29, 2015,
includes dividends of 20 million yen related to the Company’s shares held by consolidated subsidiaries.

(2) Dividends with a Record Date during the Current Fiscal Year but an Effective Date in the Following Fiscal
Year(Resolution)

Class of shares

Total dividends

Source ofDividend per(millions of yen)

dividends

share (yen)38

Record date

Effective date

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Resolution)

Class of shares

Resolution at regular generalshareholders meeting on June 24, 2016

Total dividends

Source ofDividend per(millions of yen)

dividends

share (yen)Common stock

Retained

905

8.00

earnings

Record date

Effective date

March 31, 2016 June 27, 2016

Fiscal year ended March 31, 2017 (April 1, 2016–March 31, 2017)
1. Categories and Number of Issued Shares and Categories and Number of Shares of Treasury Stock
Beginning of the fiscal

Increase during the

Decrease during the year

End of the fiscal year

year (thousands offiscal year (thousands of(thousands of shares)(thousands of shares)

shares)shares)Issued shares
Common stock

139,679－－

139,679

Total

139,679－－

139,679

Common stock

26,488421

13,994

12,915

Total

26,488421

13,994

12,915

Treasury stock(Notes)1. The 421 thousand share increase in common shares in treasury stock stemmed from the Company
acquiring 420 thousand shares through BBT and one thousand shares in a buyback of fractional shares lessthan a trading unit.
2. The 13,994 thousand share decease in common shares in treasury stock stemmed from 12,309 thousand
shares being converted from convertible bonds with subscription rights to shares, a decrease of 843 thousand
shares through execution of stock options, and a decrease of 840 thousand shares from a third-party
allocation of treasury stock.
3. The number of common shares of treasury stock includes 420 thousand of the Company’s shares held byTrust & Custody Services Bank, Ltd. (Trust Account E) as of the end of the fiscal year.

2. Dividends(1) Dividend Payments(Resolution)

Total dividends

Dividend per(millions of yen)share (yen)Common stock

905

Common stock

1,254

Class of shares

Record date

Effective date

8.00

March 31, 2016

June 27, 2016

11.00

September 30, 2016

November 30, 2016

Resolution at regular generalshareholders meeting on June 24,
2016
Board of Directors resolution on
October 31, 2016

Notes:The total common-stock dividend of 1,254 million yen resolved at a Board of Directors Meeting held on
October 31, 2016, includes dividends of 4 million yen related to the Company’s shares held by Trust &Custody Services Bank, Ltd. (Trust Account E).

(2) Dividends with a Record Date during the Current Fiscal Year but an Effective Date in the Following Fiscal Year
(Resolution)

Class of

Total dividends

Source ofDividend per

RecordEffective

shares(millions of yen)

dividends

share (yen)

date

date

Retained

2,062
Resolution at regular general shareholders
meeting on June 28, 2017

Commonstockearnings

16.21
March 31, June 29,
2017

Capital100

surplus0.79

Notes: 1. The total common-stock dividend of 2,162 million yen includes dividends of 7 million yen related to theCompany’s shares held by Trust & Custody Services Bank, Ltd. (Trust Account E).
2. The dividend per share includes a commemorative dividend of 6 yen.

39

2017

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Notes to the Consolidated Statements of Cash Flows)*1. Relation between the year-end balance of cash and cash equivalents and line item amounts presented in the consolidatedbalance sheets
Year ended March 31, 2016

Year ended March 31, 2017

(April 1, 2015–March 31, 2016)(April 1, 2016–March 31, 2017)

4,077million

3,239 million(33) million(128) million

4,044 million

3,111 million

Cash and deposit accounts
Time deposits with a deposit period exceeding threemonthsCash and cash equivalents

2. Significant non-cash transactions
Assets and liabilities related to finance lease transactions
Year ended March 31, 2016

Year ended March 31, 2017

(April 1, 2015–March 31, 2016)(April 1, 2016–March 31, 2017)

2,865 million

3,513 million

Assets and liabilities related to finance leasetransactions(Segment Information)a. Segment Information
1. Overview of Reportable Segments
The Group’s reportable segments are constituent units of the Group for which discrete financial information can be obtained,
and for which the Board of Directors can decide on the allocation of management resources and evaluate operating
performance. Consequently, the segments are principal categories that allow for regular consideration.
The Group establishes operational headquarters by product and service. Each operational headquarters drafts
comprehensive strategies for the products and services it handles, and conducts business activities accordingly.
Consequently, in principle the product- and service-specific operational headquarters that form this base comprise theGroup’s five reportable segments: Gas and Petroleum, Building and Real Estate, CATV, Information and Communications, andAqua.
The Gas and Petroleum segment sells LP gas, liquefied natural gas, other high-pressure gases and petroleum products;
supplies city gas; sells related products; performs construction of related facilities and equipment; and operates security andother businesses.
The Building and Real Estate segment constructs residential facilities and other buildings, develops, sells, and leases realestate; performs construction on buildings and ancillary structures and facilities; and operates renovations and otherbusinesses.
The CATV segment operates broadcasting and internet connectivity utilizing CATV networks, ad other businesses.
The Information and Communications services segment develops computer software, processes information, provides
internet connectivity, sells communications equipment, and performs agent operations, and other businesses.
The Aqua segment produces and sells drinking water, and other businesses.

2. Method of Calculation of Amounts in Sales, Income and Loss, Assets, Liabilities, and Other Items for Each Reportable
Segment
The accounting methods used in reportable business segments are the same as applied in “Significant Matters Forming
the Basis of Preparing the Consolidated Financial Statements.”
Income for reportable segments is based on operating profit, and intersegment sales and transfers are conducted at
prevailing market prices.

40

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

3. Information Related to Sales, Income and Loss, Assets, Liabilities, and Other Items for Each Reportable Segment
For the fiscal year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)(Millions of yen)
Reportable segments
Building

Amount inInformation andOthersGas andand Real

CATV

Communi-1

Total Adjustments

2statements

Aqua Subtotal

Petroleum
Estateconsolidatedof incomecations

3

Sales
Sales to external
80,745

20,975 24,608

44,246

5,487 176,064－

180,940

5,627(5,627)－5,060 186,567(5,627)

180,940

8,167

78

8,245

4,875 180,940

customers
Intersegment sales and
170

955

820

3,361
47,607

133

5,441

185

transfer
Subtotal

80,916

21,930 25,429

5,621 181,506

Segment income (loss)

6,973

676 1,161

Segment assets

60,34924,093 32,776

29,6394,693 151,552

4,806 156,358

3,944

160,303

4,247

591 6,099

2,434

742 14,115

128 14,243

457

14,701543－ 1,050

438

2,033

－

2,033

4,122

1,389 3,787

4,115

42 14,010

200

14,211829 (1,275)

8,364

(197)

Other items
Depreciation
Goodwill amortization

－

2,032

1

Increase in property, plantand equipment and554 13,968

intangible assets(Note)

1. The “Others” category is a business segment not included in the reportable segments. This category
includes businesses such as weddings, ship repair, insurance and nursing care.
2. Adjustments are as follows.
(1) Adjustments to segment income (loss) are eliminations due to intersegment transactions.
(2) Upward adjustments in segment assets; depreciation; property, plant and equipment; and intangible
assets are due to increases in companywide assets; depreciation; property, plant and equipment;
and intangible assets that are not allocated to individual reportable segments.
3. Segment income (loss) is adjusted to match operating profit in the consolidated statements of income.

41

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

For the fiscal year ended March 31, 2017 (From April 1, 2016 to March 31, 2017)(Millions of yen)
Reportable segments
OthersandGas andand Real CATVPetroleum

Adjustments

2

Amount inconsolidated

Information
Building
Gas and1

Aqua
Communi-Petroleum

EstateBuilding

Total

Information andand Real

CATV

Communi-statements
of incomeEstate3

cations
Aqua

cations
Sales
Sales to external

73,344

customers

19,511 25,396

49,508 5,762

1,489

3,160

173,523－

178,631

5,970(5,970)－5,108 178,631

Intersegment sales

178

and transfer
Subtotal

787

145

5,760

52,668 5,907

179,284

5,317 184,601(5,970)178,631

3,065

101

12,903112 13,015(265)

12,75031,513 4,651

152,362

4,962 157,324

3,787

161,112

2,478

648

13,83991 13,930

510

14,441

714

61

－

1,199

1

1,200

－

1,200

1,263 4,321

3,233

524

14,43248 14,480

667

15,14873,52221,001 26,184

6,942

461 2,331

61,84823,945 30,402

4,276

614 5,821

209

Segment income(loss)
Segment assets
Other items
Depreciation

423

Goodwill amortization－

Increase in property,

5,090

plant and equipment
and intangible assets(Note)

1. The “Others” category is a business segment not included in the reportable segments. This category
includes businesses such as weddings, ship repair, insurance and nursing care.
2. Adjustments are as follows.
(1) Adjustments to segment income (loss) are eliminations due to intersegment transactions.
(2) Upward adjustments in segment assets; depreciation; property, plant and equipment; and intangible
assets are due to increases in companywide assets; depreciation; property, plant and equipment;
and intangible assets that are not allocated to individual reportable segments.
3. Segment income (loss) is adjusted to match operating profit in the consolidated statements of income.

b. Reference Information
For the fiscal year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)
1. Information by Product/Service
This information is omitted because the same information is written in the Segment Information.

2. Information by Region(1) Sales
This information is omitted because sales to customers in Japan account for more than 90% of sales in the consolidated
statements of income.

(2) Property, Plant and Equipment
This information is omitted because property, plant and equipment in Japan account for more than 90% of property, plantand equipment in the consolidated balance sheets.

3. Information by Major Customer

42

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

This information is omitted because no customers account for 10% or more of sales in the consolidated statements ofincome.

For the fiscal year ended March 31, 2017 (From April 1, 2016 to March 31, 2017)
1. Information by Product/Service
This information is omitted because the same information is written in the Segment Information.

2. Information by Region(1) Sales
This information is omitted because sales to customers in Japan account for more than 90% of sales in the consolidated
statements of income.

(2) Property, Plant and Equipment
This information is omitted because property, plant and equipment in Japan account for more than 90% of property, plantand equipment in the consolidated balance sheets.

3. Information by Major Customer
This information is omitted because no customers account for 10% or more of sales in the consolidated statements ofincome.

c. Information related to Impairment Loss of Noncurrent Assets by Reportable Segment
For the fiscal year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)(Millions of yen)
Gas and

Building and RealPetroleum

EstateImpairment
loss

340

Information and

CATV

－

149

Aqua

Communications

137

Others14

Corporate or
elimination

Total

－ 693

51

For the fiscal year ended March 31, 2016 (From April 1, 2016 to March 31, 2017)
None

d. Information related to Amortization of Goodwill and Unamortized Balance by Reportable Segment
For the fiscal year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)(Millions of yen)Amortization for the year
ended Mar. 31, 2016
Balance on Mar. 31, 2016

Gas and

Building andPetroleum

Real Estate

543

－

1,050

1,008

－

5,488

CATV

Information andCorporate or

Aqua

Others438－

1－ 2,03390－

1－ 6,589

Communications

elimination

Total

For the fiscal year ended March 31, 2016 (From April 1, 2016 to March 31, 2017)(Millions of yen)Amortization for the year
ended Mar. 31, 2017
Balance on Mar. 31, 2017

Gas and

Building andPetroleum

Real Estate

423

－

714

1,057

－

4,774

CATV

Information ande. Information on Negative Goodwill Generated for Each Reportable Segment

43

Corporate or

Aqua

Others61－1－ 1,200

28－

0－ 5,861

Communications

elimination

Total

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

For the fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
None

For the fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)
None(Per-Share Information)
Year ended March 31, 2016

Year ended March 31, 2016

(April 1, 2015–March 31, 2016)(April 1, 2015–March 31, 2016)

Net assets per share (yen)362.77439.04

Net income per share (yen)

30.01

64.46

Diluted net income per share (yen)

26.89

56.31

(Note) 1. The standards used to calculate net income per share are as follows.

Year ended March 31, 2016 Year ended March 31, 2016
(April 1, 2015–March 31,(April 1, 2015–March 31,

2016)

2016)

Net income per share
Net income attributable to owners of the parent (millions of yen)Amounts not attributable to ordinary shareholders (millions of

3,458

7,337

－

－

3,458

7,337

115,237

113,828－－

13,383

16,477(13,124)(16,327)

(259)

(150)

－

－

yen)
Net income for common stock attributable to owners of the parent(millions of yen)
Average number of shares of common stock outstanding during
the period (thousands of shares)
Net income per share (diluted)
Adjusted net income attributable to owners of the parent (millionsof yen)Increase in common stock (thousands of shares)(from convertible bonds (thousands of shares))(from subscription rights to shares (thousands of shares))
Overview of dilutive shares omitted from the calculation of diluted
net income per share as they have no dilutive effect

2. The number of shares of common stock at the end of the fiscal year used in the calculation of net assets per shareexcludes the Company’s shares held by the Trust & Custody Service Bank Ltd. (Trust Account E) through BBT (0 shares infiscal year ended March 31, 2016, 420,000 shares in fiscal year ended March 31, 2017). The average number of shares ofcommon stock outstanding during the period used in the calculation of net income per share excludes the Company’s
shares held by the Trust & Custody Service Bank Ltd. (Trust Account E) through an employee stock ownership associationtype ESOP trust (120,833 shares in fiscal year ended March 31, 2016) and through the Board Benefit Trust (BBT) (210,575
shares in fiscal year ended March 31, 2017).

(Important Subsequent Events)
No items to report

44

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

6. Non-Consolidated Financial Statements(1) Balance Sheets(Millions of yen)
Fiscal Year Ended

Fiscal Year Ended

March 31, 2016

March 31, 2017

AssetsCurrent assets

2,172

1,131

410

361

Supplies

917Prepaid expenses

19

18

Deferred tax assets

65

77

25,41523,840

Other

499

553

Allowance for doubtful accounts

(260)

(945)

28,33025,056

Buildings

6401Structures－

29

Vehicles－0

Tools, furniture and fixtures

20

59

Land

26

26

Leased assets

61

35

Construction in progress

370－

Total property, plant and equipment

485

554

Software454

488

Leased assets

596

499

Other

58

1

1,109

990

34,86035,587

112

112

37,21330,4440－

Deferred tax assets

157

114

Other

34

55

72,37866,31373,97467,858Bond issuance cost

30

20

Total deferred assets

30

20

102,334

92,934

Cash and deposits
Accounts receivable from subsidiaries and associates–trade

Short-term loans receivable from subsidiaries and associates

Total current assets
Non-current assets
Property, plant and equipment

Intangible assets

Total intangible assets
Investments and other assets
Shares of subsidiaries and associates
Investments in capital of subsidiaries and associates
Long-term loans receivable from subsidiaries and associates
Long-term prepaid expenses

Total investments and other assets
Total non-current assets
Deferred assets

Total assets

45

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

(Millions of yen)
Fiscal Year Ended March 31, 2016 Fiscal Year Ended March 31, 2017
Liabilities
Current liabilities
Short-term loans payable

15,35011,000Current portion of long-term loans payable

11,987

11,632Current portion of bonds

758

578

Lease obligations

273

248

Accounts payable–other

345

360

Accrued expenses

38

36

Income taxes payable

521

Accrued consumption taxes

210

Deposits received

212

31

5,651

6,101

Provision for bonuses

28

29

Provision for directors’ bonuses

33

83

Provision for point card certificates

142

197

Other

161

108

35,00930,429984

406

Convertible bonds with stock acquisition rights

10,0002,800Long-term loans payable

30,972

26,853

Lease obligations

393

294

Provision for retirement benefits

30

20

Provision for executive stock benefits

－

18

149

124

42,53030,517

77,54060,946

14,00014,000Legal capital surplus

3,500

3,500

Other capital surplus

13,906

17,225

Total capital surplus

17,406

20,725

2,822

2,073

2,822

2,073

Treasury stock(9,643)(4,810)Total shareholders’ equity

24,58631,988208－

24,794

31,988102,334

92,934

Deposits received from subsidiaries and associates

Total current liabilities
Non-current liabilities
Bonds payable

Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus

Retained earnings
Other retained earnings
Retained earnings brought forward
Total retained earnings

Stock acquisition rights
Total net assets
Total liabilities and net assets

46

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017(2) Statements of Income(Millions of yen)
Fiscal Year Ended

Fiscal Year Ended

March 31, 2016

March 31, 2017

Operating revenue
Fiduciary obligation fee

441

448

Management fee income

3,294

3,361

Interest income

631

523

Dividend income

1,823

2,259

Other operating revenue

13

13

Total operating revenue

6,204

6,606

491

348

Selling, general and administrative expenses

3,890

4,816

Total operating expenses

4,382

5,165

1,821

1,441

Other

27

21

Total non-operating profit

27

21

Interest expenses

50

68

Other

12

10

Total non-operating expenses

63

79

1,785

1,383

Subsidy income

67－

Gain on reversal of subscription rights to shares－

98

Total extraordinary income

67

98

495

－

－

10

Total extraordinary losses

495

10

Income before income taxes

1,357

1,472

Income taxes (current)

16

30

Income taxes (deferred)

(36)

31

Total income taxes

(20)

61

1,377

1,410

Operating expenses
Financial expenses

Operating profit
Non-operating profit

Non-operating expenses

Recurring profit
Extraordinary income

Extraordinary losses
Loss on valuation of shares of subsidiaries and associates
Loss on sales of shares of subsidiaries

Net income

47

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017(3) Statement of Changes in Shareholders’ Equity
Year ended March 31, 2016 (April 1, 2015–March 31, 2016)(Millions of yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other retained

Capitalstock

Balance at beginning of period

14,000

Legal

Other

Total

earnings

Total retained

Retained earnings

earnings

capitalcapitalcapitalsurplussurplussurplus

3,500

18,512

Treasury
stock

Total
shareholders’equitybrought forward

22,012

2,877

2,877

(11,053)

27,836(1,432)(1,432)(1,432)

1,377

1,377

1,377

Change during the year
Cash dividends from retained
earnings
Net income
Conversion of convertible－

bonds with stock acquisitionrightsAcquisition of treasury shares
Disposition of treasury shares
Cancellation of treasury(3,645)(3,645)

96

96

263

360

(4,740)(4,740)

4,740

－

37

37

51

89

sharesIncrease by share exchanges
Net change in items otherthan shareholders’ equity－－(4,605)(4,605)

(55)

(55)

1,410

(3,250)14,0003,500

13,906

17,406

2,822

2,822

(9,643)

24,586

Subscription rights to

Total net

sharesassetsTotal change during the year
Balance at end of period

Balance at beginning of period

260

28,097

Change during the year
Cash dividends from retained earnings(1,432)

Net income

1,377

Conversion of convertible bonds with－stock acquisition rights
Acquisition of treasury stock(3,645)

Disposition of treasury stock

360

Cancellation of treasury shares－

Increase by share exchanges

89

Net change in items other than

(52)

(52)

Total change during the year(52)

(3,303)

Balance at end of period

208

24,794

shareholders’ equity

48

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

Year ended March 31, 2017 (April 1, 2016–March 31, 2017)(Millions of yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other retained

Capitalstock

Balance at beginning of period

14,000

Legal

Other

capitalcapitalsurplussurplus

3,500

13,906

Total capitalearnings

Total retained

surplusRetained earnings

earnings

Treasury
stock

Total
shareholders’equitybrought forward
17,406

2,822

2,822

(9,643)

24,586(2,159)(2,159)(2,159)

1,410

1,410

1,410

Change during the year
Cash dividends from retained
earnings
Net income
Conversion of convertible
2,718

bonds with stock acquisition

2,718

4,481

7,200

(262)

(262)

613

1,213

rightsAcquisition of treasury shares
600

Disposition of treasury shares

600

Cancellation of treasury－

shares－Increase by share exchanges
Net change in items other thanshareholders’ equity
－

－

3,318

3,318

(749)

(749)

4,832

7,401

14,0003,500

17,225

20,725

2,073

2,073

(4,810)31,988Subscription rights to

Total net

sharesassetsTotal change during the year
Balance at end of period

Balance at beginning of period

208

24,794

Change during the year
Cash dividends from retained earnings(2,159)Net income

1,410

Conversion of convertible bonds with

7,200

stock acquisition rights
Acquisition of treasury stock(262)

Disposition of treasury stock

1,213

Cancellation of treasury shares－

Increase by share exchanges－

Net change in items other than

(208)

(208)

(208)

7,193

－

31,988shareholders’ equity
Total change during the year
Balance at end of period

49

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2017

7. Other(1) Changes in Executive Positions

1) Changes in President & CEO
No items to report2) Other Changes in Executive Positions (Scheduled for June 24, 2016)
No items to report50