Consolidated Financial Results for theYear ended March 31, 2018 [Japanese GAAP]May 8, 2018
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 27, 2018
Scheduled date to submit Securities Report:
June 27, 2018
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, 2018 (April 1, 2017 to March 31, 2018)(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, 2018

186,069

4.2

10,971(14.0)

11,191(12.4)

6,620

(9.8)

Year ended March 31, 2017

178,631(1.3)

12,75054.6

12,775

56.7

7,337

112.1

(Note) Comprehensive income: 6,373 million yen in the Year ended March 31, 2018 (-26.6%)
8,683 million yen in the Year ended March 31, 2017 (523.3%)
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, 2018

51.19

50.45

11.4

6.8

5.9

Year ended March 31, 2017

64.46

56.31

15.2

7.9

7.1

(Reference) Equity in affiliates accounted for under the equity method: 19 million yen for the ended March 31, 2018
28 million yen for the ended March 31, 2017(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, 2018

166,391

61,45036.3

460.66

Year ended March 31, 2017

161,11256,44634.5

439,04

Cash and Cash
Equivalents at theEnd of the Year

(Reference) Equity: 60,320 million yen for the Year ended March 31, 2018
55,654 million yen for the year ended March 31, 2017(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, 2018

20,909(11,488)(9,527)

3,004

Year ended March 31, 2017

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

3,111

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

End of
Q1
Year ended March 31, 2017

Total

Total
Dividends

Payout Ratio(Consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%



11.00



17.00

28.00

6,416

43.4

Dividend on
Equity(Consolidated)
7.0

Year ending March 31, 2018


14.00
28.00
3,678
54.7
6.2
14.00
Year ending March 31, 2019
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, 2018 to March 31, 2019)(% figures represent year-on-year changes)

Sales

Operating Profit

Recurring Profit

Millions of yen%

Millions of yen%

Six months ending
September 31, 2018

90,1006.1

3,700(18.8)

Year ending March
31, 2019

195,600

5.1

13,960(27.2)

Millions of yen

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

%Millions of yen

%

Yen

3,650

(16.1)

1,890(51.6)

14.43

13,880(24.0)

7,920(19.6)

60.48*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.: No
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):

FY3/2018

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

FY3/2018

8,736,412 shares FY3/2017

12,915,785 shares

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

FY3/2018

129,348,552 shares FY3/2017

113,828,834 shares

139,679,977 shares FY3/2017

139,679,977 shares(Note) Board benefit trust shares(BBT) is included in the number of year-end treasury stock. (416,000 stocks at FY3/2018, 420,000 stocks at
FY3/2017)

For treasury shares to be deducted in calculation of the average number of shares during the fiscal year, the Company's

shares (417,158 stocks at FY3/2018, 210,575 stocks at FY3/2017) owned by the BBT are included.

(Reference) Overview of Non-Consolidated Operating Performance
Operating Performance for the Year Ended March 31, 2018 (April 1, 2017 to March 31, 2018)(% 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, 201813,203

99.9

8,252

472.5

8,248

496.0

7,947

463.4

Year ended March 31, 2017

6,606

6.5

1,441

(20.9)

1,383(22.5)

1,410

2.4

Net Income per
Share

Net Income per
Share (Diluted)

Yen

Yen

Year ended March 31, 2018

61.45

60.56

Year ended March 31, 2017

12.39

10.83

(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, 2018

95,03438,33540.3

292.76

Year ended March 31, 2017

92,934

31,98834.4

252.34(Reference) Equity: 38,335 million yen for the Year ended March 31, 2018
31,988 million yen for the year ended March 31, 2017

*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%

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

[Attachment]

Contents
1. Overview of Operating Results and Financial Position········································································ 2(1)Overview of Operating Results ····························································································· 2(2)Overview of Financial Position ······························································································ 4(3)

Overview of 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 ······································································································· 13(1)

Basic Policy of Corporate Management ················································································ 13(2)Target Management Indices ······························································································· 14(3)Management Strategies and Items to Address over the Medium to Long Term································ 15

4. Basic Perspective on Selection of Accounting Standards ·································································· 16
5. Consolidated Financial Statements ····························································································· 17(1)Consolidated Balance Sheets ····························································································· 17(2)Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ············ 20(3)Statement of Changes in Consolidated Shareholders’ Equity ······················································ 22(4)Consolidated Statements of Cash Flows ··············································································· 24(5)Notes to the Consolidated Financial Statements ······································································ 26(Notes on Premise of Going Concern) ················································································· 26(Significant Matters Forming the Basis of Preparing the Consolidated Financial Statements) ············· 26(Changes in Presentation Method) ····················································································· 29(Additional Information) ··································································································· 29(Notes to the Consolidated Balance Sheets) ········································································· 30(Notes to the Consolidated Statements of Income) ································································· 32(Note to the Consolidated Statements of Comprehensive Income) ·············································· 34(Notes to the Statement of Changes in Consolidated Shareholders’ Equity) ·································· 35(Notes to the Consolidated Statements of Cash Flows) ···························································· 37(Segment Information)····································································································· 38(Per-Share Information) ··································································································· 41(Important Subsequent Events) ························································································· 42

6. Non-Consolidated Financial Statements ·························································································· 43(1)Balance Sheets ··············································································································· 43(2)Statements of Income ········································································································ 45(3)Statement of Changes in Shareholders’ Equity ········································································ 46

7. Other ································································································································· 48(1)Changes in Executive Positions····························································································· 48

1

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

1. Overview of Operating Results and Financial Position(1) Overview of Operating Results
Consolidated operating results for the fiscal year
In the fiscal year ended March 31, 2018, the Japanese economy was on a gradual recovery trend, with an upturn inpersonal consumption and improvement in employment conditions, but the general economic outlook remains clouded byuncertainties in overseas economies such as policy trends in Europe and the U.S.
In May 2017, the TOKAI Group unveiled “Innovation Plan 2020 ‘JUMP’,” a medium-term management plan ending in
the fiscal year ending March 31, 2021, alongside growth strategies to attain plan targets. The plan aims to further propel
the Group by promoting growth strategies such as increasing the number of continuing customers, securing multiple
contracts based on the “Total Life Concierge” (TLC) concept, increasing sales channels through expansion of service
areas, and pursuing M&A and new businesses. On the M&A front, the Group converted Tokyo Bay Network Co., Ltd.
(operator of CATV services in two Tokyo wards) and TV Tsuyama Inc. into new consolidated subsidiaries in July 2017 andFebruary 2018, respectively.
Owing to such initiatives, the number of continuing customers as of March 31, 2018 was 2.876 million (up 312 thousand
year on year), and members of the TLC Membership Service totaled 699 thousand (up 113 thousand).

Against this backdrop, sales for the Group reached 186,069 million yen (up 4.2% year on year) in the fiscal year ended
March 31, 2018. However, due to factors such as increases in costs accompanying customer acquisition and preventionof service cancellations, operating profit came to 10,971 million yen (down 14.0% year on year), recurring profit to 11,191
million yen (down 12.4%), and net income attributable to owners of the parent to 6,620 million yen (down 9.8%).

Performance by segment was as follows.

(Gas and Petroleum)
In the liquefied petroleum gas (LP gas) business, amid intensifying competition from rival operators, the Group focusedon customer growth through measures such as strengthening acquisition in existing service areas, preventing service
cancellations, and expanding into new areas. As a result, the number of customers rose by 19 thousand from March 31,
2017, to 606 thousand. Sales came to 64,512 million yen (up 3.3% year on year) thanks to an increase in sales volume
driven by customer growth and to an increase in selling prices to match higher procurement costs.
In the city gas business, the number of customers was 55 thousand, on par with the level as of March 31, 2017, andsales totaled 11,561 million yen (up 6.1% year on year) due to factors such as an increase in selling prices from the raw
material price adjustment system.
Due to these factors, segment sales came to 76,073 million yen (up 3.7% year on year), but operating profit was 4,967
million yen (down 28.5%), reflecting an increase in costs accompanying customer acquisition and prevention of service
cancellations.

(Building and Real Estate)
In the Building and Real Estate business, segment sales came to 19,807 million yen (up 1.5% year on year) andoperating profit to 655 million yen (up 42.0%), reflecting declines in renovation business, housing sales, and other areas,
alongside increases in equipment sales, equipment installation, building management support, and other services.

(CATV)In the CATV business, the Group aimed to increase customers through enhanced price competitiveness in the form of
discounts offered to customers signing up for broadcasting and communications packaged services, and discounts for
smartphone-related packaged services through alliances with major mobile phone carriers, and also worked to prevent
service cancellations. In addition, we aimed to improve customer satisfaction in the following areas. In broadcasting
services, we broadcasted programs with extensive regional information, and promoted a switch to fiber-optic services that2

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

support 4K broadcasting. In telecommunications services, we expanded our services through initiatives such as thelaunch of an ultra-high-speed fiber-optic network service with a maximum speed of 10Gbps.
Owing to such initiatives, and thanks to a 273 thousand increase in customers from M&A (broadcasting 254 thousand,telecommunications 18 thousand), subscribers to the broadcasting service increased substantially by 267 thousand fromMarch 31, 2017, to 775 thousand, and subscribers to telecommunications services increased by 32 thousand from March
31, 2017, to 257 thousand.
Due to these factors, segment sales came to 28,386 million yen (up 11.8% year on year) and operating profit to 3,035
million yen (up 30.2%).

(Information and Communications Service)
In consumer-oriented services, the Group acquired new customers for its Hikari Collaboration services in the broadband
business, and actively encouraged existing customers to switch to Hikari Collaboration services. As a result, the number of
Hikari Collaboration customers increased by 24 thousand from March 31, 2017, to 323 thousand. However, the number ofcustomers for overall FTTH declined 29 thousand to 691 thousand due to increasingly fierce competition from major
mobile phone carriers. In addition, the number of customers for overall broadband fell by 39 thousand to 755 thousand as
a result of service cancellations by ADSL and other customers. Meanwhile, in the MVNO business, which the Group
entered in earnest from February 2017, the number of customers in the TOKAI-brand MVNO service LIBMO reached 29
thousand as of March 31, 2018, contributing to sales of 31,703 million yen (down 0.7% year on year).
In corporate services, sales came to 19,191 million yen (up 9.2% year on year), reflecting factors such as an increase inrecurring-revenue operations and an increase in contracted system development projects.
Due to these factors, segment sales were 50,894 million yen (up 2.8% year on year), but operating profit came to 1,866
million yen (down 39.1%) owing to an increase in sales promotion costs for MVNO and other services.

(Aqua)In the Aqua business, the Group actively worked to acquire customers mainly for “The gift of delicious water: Ulunom”
brand, targeting large-scale commercial and other facilities, and the number of customers accordingly increased by 11
thousand from March 31, 2017, to 146 thousand.
As a result, segment sales were 6,200 million yen (up 7.6% year on year), but operating profit came to 26 million yen(down 74.4%) due to an increase in customer acquisition costs.

(Others)
Turning to other businesses, sales in the nursing care business came to 1,036 million yen (up 18.0% year on year),
supported by an increase in the number of users. In the shipbuilding business, sales came to 1,437 million yen (down
5.9% year on year), reflecting a decline in work volume for ship repairs. In the bridal events business, sales came to 1,534
million yen (down 23.2% year on year) due to the closure of wedding hall and reception facility Vrai Cloche Bouquet Tokai
Mishima as of March 31, 2017.
As a result, segment sales were 4,706 million yen (down 7.9% year on year), but operating profit came to 301 million
yen (up 167.4%), supported by improved earnings.
・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. Our goal is to realize the TLC concept as a
Total Life Concierge providing a range of daily life-related infrastructure, while aiming to strengthen and expand theearnings capability of our businesses, and working to achieve the targets in our medium-term management plan
“Innovation Plan 2020 ‘JUMP’.”3

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

<Consolidated operating results forecast for fiscal year ending March 31, 2019>

Sales

195,600 million yen(5.1% year-on-year increase)

Operating profit

13,960 million yen(27.2% year-on-year increase )Recurring profit

13,880 million yen(24.0% year-on-year increase )Net Income attributable to owners of the parent

7,920 million yen(19.6% year-on-year increase )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) Overview of Financial Position
As of March 31, 2018, total assets amounted to 166,391 million yen, up 5,279 million yen from March 31, 2017. This was
mainly attributable to an increase of 3,162 million yen in property, plant and equipment due to factors such as the conversionof Tokyo Bay Network Co., Ltd. into a consolidated subsidiary, an increase of 967 million yen in notes and accounts
receivable–trade driven by growth in large orders, and an increase of 945 million yen in “Other” current assets due to factors
such as a higher withholding tax refund amount.
Total liabilities amounted to 104,940 million yen, up 274 million yen from March 31, 2017. This mainly reflected a decreaseof 3,157 million yen in interest-bearing debt due to factors such as the conversion of convertible bonds with stock acquisitionrights and loan repayments, alongside an increase of 1,596 million yen in “Other” under “Current liabilities” driven by factors
such as higher equipment-related spending, an increase of 891 million yen in notes and accounts payable–trade due tofactors such as a higher number of large orders, and an increase of 823 million yen in lease obligations driven by factors
such as growth in the number of lease agreements.
Net assets amounted to 61,450 million yen, up 5,004 million yen from March 31, 2017. This mainly reflected the paymentof 4,001 million yen in dividends from surplus, alongside the booking of 6,620 million yen in net income attributable to ownersof the parent, and a 2,400 million yen increase in assets from the conversion of convertible bonds with stock acquisitionrights.

(3) Overview of Cash Flows
Cash and cash equivalents stood at 3,004 million yen as of March 31, 2018, down 106 million yen from March 31, 2017.
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 20,909 million yen (down 5,782 million yen year on year). Funds
increased chiefly due to net income before income taxes and the effect of depreciation and amortization expenses (noncash items).

(Cash flows from investing activities)
Net cash used in investing activities was 11,488 million yen (down 502 million yen year on year). Cash was used mainly
for the acquisition of tangible and intangible assets, and the acquisition of shares of subsidiaries resulting in a change in thescope of consolidation.

(Cash flows from financing activities)
Net cash used in financing activities was 9,527 million yen (up 7,115 million yen year on year). This was mainly due topayments of dividend and repayments of lease obligations.

Below is a summary of major cash flow indicators.

4

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018Year ended

Year ended

Year ended

Year ended

March 31, 2014

March 31, 2015

March 31, 2016

March 31, 2017

March 31, 2018

21.6

25.7

25.6

34.5

36.3

23.2

36.3

41.4

67.4

84.8

3.7

2.7

3.3

2.0

2.4

19.1

28.0

29.3

48.9

46.6

Equity ratio (%)
Equity ratio on a marketvalue basis (%)
Ratio of interest-bearing
debt to cash flow
Interest coverage ratio(Note)

Year ended

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, 2018, we plan to award total dividends of 28 yen per share, comprising an interim
dividend of 14 yen and a year-end dividend of 14 yen.
Similarly, for the fiscal year ending March 31, 2019, we plan to award total dividends of 28 yen per share, comprisinginterim and year-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, 2018.
・Impact of Capital Procurement Structure and 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 have worked to lower interest-bearing debt
and improve our equity ratio through cash flow management in accordance with our medium-term management plan.
However, interest-bearing debt may rise as we continue to expand M&A and other investments going forward, and theGroup’s operating performance and financial condition may also be affected by future interest rate fluctuations.
・Business Alliances and M&A Activity
The Group has a policy of proactively exploring business alliances and M&A opportunities when doing so can be
expected to deliver synergies with existing services or when launching new services could lead to future businessdevelopment. Nevertheless, business partners’ operations and acquired businesses may not develop according to plan,and if results fall short 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 or

5

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

revision 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 obliged
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 the Act Against Unjustifiable Premiums and Misleading Representations, and businesses
involving the use of subcontractors are subject to the Act against Delay in Payment 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 we cannot currently anticipate and an
inability to respond appropriately to such legislation could subject the Group to guidance and censure by the administrative
authorities. Rumors could lead to a loss of social credibility, and the Group could be obliged to pay compensation fordamages. Such a situation could affect the Group’s operating performance and financial condition.
・Trouble, complaints, and lawsuits

6

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

Through its business activities, the Group interacts with companies and individuals, and may therefore experience
trouble or receive complaints. To prevent such occurrences, the Group thoroughly educates its employees, and strives to
respond adequately to its customers (including potential customers) and provide accurate explanations. In addition, if
deemed necessary, the Group’s Legal Affairs Office, Compliance Risk and Management Office, or other specialized
departments conduct legal and credit-related examinations such as checking agreements in advance, and running credit
checks on counterparties to agreements. In addition, when trouble or complaints occur, the Group strives to achieve an
early resolution, determines the causes of the occurrence, and works to prevent recurrence of similar trouble or complaints.
Depending on the severity of the trouble or complaints from a management perspective, progress with remedial activities isreported to the Board of Directors and the Board of Corporate Auditors. However, if trouble, complaints, or other problems
drag on, become social problems, or lead to lawsuits, rumors could lead to a loss of social credibility, and the Group could
incur costs while working toward a resolution, such as paying compensation for damages. Such a situation could affect theGroup’s operating performance and financial condition.
・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 Information and Communications segment, and otherdivisions are involved in overseas 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 ofsocial 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.

7

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

・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 cold summers and warm winters, could affect the Group’s operating
performance and financial condition.
・Technological Obsolescence in the CATV segment and Information and Communications Segment
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 leases networks from telecommunications carriers, sells services to individuals
through direct sales or via consumer electronics retailers, and wholesales through alliances with internet service providers(ISPs). However, 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 asa 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 isdelayed, 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

8

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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 in other industries, and large-scale players are expected to further
increase their service areas and offerings. If selling competition and price competition become more severe than the Group
expects, its operating performance and financial condition could be affected.

9TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

2. Status of the Corporate GroupThe TOKAI Group comprises the Company, 23 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, and Chiba Sogo Gas Center K.K. refills
and sells high-pressure gases.
Note: Chiba Sogo Gas Center K.K. was established on December 18, 2017.
(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, Tokyo Bay Network
Co., Ltd., and TV Tsuyama Inc.; Net Technology Shizuoka Corporation handles related businesses.
Note: Tokyo Bay Network Co., Ltd. was converted into a consolidated subsidiary on July 20, 2017.
TV Tsuyama Inc. was converted into a consolidated subsidiary on February 9, 2018.
(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)

10

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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.
(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)
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: The liquidation of Bouquet Tokai Mishima Corporation was completed on March 8, 2018.
(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

(As of March 31, 2018)
The illustration below provides an overview of the structure of the corporate group.
(Company) (Segment)(Business)(Business Companies)

Gas and Petroleum

LP gasPetroleum

TOKAI CORPORATION ○, TOKAI Gas Corporation○, Osuga Gas Service, Ltd. ○, Tokaizosen-unyu
Corporation ○, JOYNET Co., Ltd. ○, Energy Line
Corporation ○, TOKAI Home Gas Corporation ○,TOKAI Myanmar Co., Ltd. ○City gas

TOKAI Gas Corporation ○High-pressure
gas

TOKAI CORPORATION ○, SHIZUOKA OXYGENCORPORATION *, Chiba Sogo Gas Center K.K. *TOKAI CORPORATION ○Building and Real Estate

Building andreal estate

TOKAI CORPORATION ○,TOKAI Gas Corporation ○

CATV

CATV

TOKAI Cable Network Corporation ○, ICHIHARACOMMUNITY NETWORK TELEVISIONCORPORATION ○, ATSUGI ISEHARA CABLE
NETWORK CORPORATION ○,EAST Communications Co., ltd. ○,LCV CORPORATION ○, KURASHIKI CABLETELEVISION Inc. ○, Toco Channel Shizuoka
Corporation ○, Tokyo Bay Network Co., Ltd. ○,TV Tsuyama Inc. ○, Net Technology Shizuoka
Corporation ○System innovation
service

TOKAI Communications Corporation ○,CloudMaster Co., Ltd. *Corporate
telecommunications

TOKAI Communications Corporation ○ADSL andFTTH

TOKAI Communications Corporation ○Mobile phone

TOKAI Communications Corporation ○

Aqua

Aqua

TOKAI CORPORATION ○, Tokaizosen-unyu
Corporation ○, TOKAI (Shanghai) Trade &Commerce Co., Ltd. ○Others

Weddings andhotel

TOKAI City Service Corporation ○,Waei Co., Ltd. *Ship repair

Tokaizosen-unyu Corporation ○Other services

Customers

Information and Communications

TOKAI Holdings Corporation

Security

TOKAI CORPORATION ○, TOKAI Life Plus
Corporation ○, TOKAI Human Resources Evol
Corporation *(Note) 1. ○ indicates consolidated subsidiaries (23), * indicates equity-method affiliates (5).
（注）2．Arrows show the flow of products and services.
（注）3．In addition to the above, TOKAI Management Service Corporation (consolidated subsidiary) undertakes contracted
administrative work for Group companies such as HR, accounting, and general affairs.

12

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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 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 Total Life Concierge (TLC) 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
Our medium-term management plan “Innovation Plan 2020 ‘Jump’” is founded on four key themes: (1) “Switch fromdefensive to proactive management,” (2) “Progress with M&A,” (3) “Prioritize profit growth and ROE,” and (4) “Shareholders
are always a priority.” The plan calls for achievement of sales of 339.3 billion yen, operating profit of 22.5 billion yen, and ROE

13

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018of 13% in the fiscal year ending March 31, 2021.

(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, 2018 was the first year of our medium-term
management plan “Innovation Plan 2020 ‘JUMP’.” We positioned the year as a period of expansion in our customer basewith an eye toward further earnings growth, and we worked to acquire customers and move forward with M&A . As a resultof a focus on customer acquisition in the core LP gas segment, the Aqua segment, and the LIBMO low-cost mobile phoneservice, operating profit during the fiscal year ended March 31, 2018 declined to 10,971 million yen, but the number ofcustomers reached 2.88 million as of March 31, 2018, representing a sharp increase of 310 thousand from March 31, 2017.
While customer acquisition activities contributed a net increase of 39 thousand customers in existing segments, the Groupmanaged to add a new customer base of 270 thousand customers through M&A activity in the CATV segment.
The Group strives to further maintain and expand its customer base going forward, and works to expand earnings bycreating new businesses and services and providing integrated services based on its TLC (Total Life Concierge) concept,
which provides a one-stop, one-contract model to support customers’ lifestyles.
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 continue.
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, the full-scale retail liberalization of the market from April 2017 is expected to lead to substantialchanges in the business environment. As a city gas provider with close community ties, the Group will respond to thischallenge by further augmenting its security systems, working to provide additional services and products with firmly rooted
community and customer ties, aiming to expand new businesses, and working to strengthen its customer base through theestablishment of business foundation, M&A, and other initiatives.
In the CATV business, market conditions are difficult as major telecommunications companies continue to compete inbroadcasting, communications, and telephone services. Against this backdrop, we achieved sustained growth bystrengthening our customer base through the addition of 270 thousand customers via M&A in the fiscal year ended March
31, 2017, moving forward with customer acquisition for broadcast services (our core operations), and continuing to provide
broadcast service and product packages. Going forward, we expect demand for 4K and 8K broadcasting services toincrease. To capitalize on this trend, the Group in July 2017 launched the “Hikari de TV” service, using its fiber-optic network
to support 4K and 8K broadcasts, and thus started preparations for the second 4K test broadcasts.
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 expanding earnings by strengthening customer acquisition.
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 developing services andsolutions in the fast-growing AI, IoT, and big data fields.
In broadband services, growth of FTTH is expected to slow in the domestic broadband market. The Group worked toraise ARPU by acquiring new customers for the Hikari Collaboration services “@T COM Hikari” and “TNC Hikari,” and by
attracting customers switching from other ISPs. As a result, Hikari Collaboration customers came to 323 thousand as of

14

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

March 31, 2018, and the Group thus continued to establish its earnings base.
In addition, the Group worked to expand sales of its low-cost SIM service LIBMO, and the number of LIBMO customers
totaled 29 thousand as of March 31, 2018. Going forward, we will continue to expand earnings through increased sales of
Hikari Collaboration and LIBMO, and aim to differentiate ourselves from competitors and prevent service cancellations byoffering packages that combines both services.
In the Aqua business, since the Great East Japan Earthquake, consumer demand for delicious water that is safe andsecure has grown sharply. On the other hand, competition among bottled water delivery operators is heating up. 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 andenhancing management systems at our plants such as the Aqua Fujisan Plant, to continue providing high-quality drinking
water that is safe and secure.
In our nursing care business, we commenced facility operations in April 2011. This business has been steadily
expanding. As Japanese society continues to age going forward, the Group will continue to steadily operate various
facilities such as fee-based elderly homes with nursing care, centered on day services.
In recent years, worker shortages in this business field have become a serious problem. In response, the Group will
work to hire and develop human resources by leveraging its comprehensive capabilities. By deploying technology
developed in the Information and Communications Service segment to pursue technological advancement, work-saving
solutions, and efficiency, we will further establish the business and move forward with the development of nursing careservices that also take into account user convenience.
As a provider of various lifestyle infrastructure services, we believe maintaining ongoing customer transactions,promoting multiple transactions, and expanding the Group’s overall transactions is key to the Group’s growth. In December
2012, we launched the TLC Membership Service, a membership service spanning the Group. Under this system, members
can earn proprietary “TLC points” based on the number of times they use our services and the amount spent. Customers
who use many of our services can enjoy greater benefits.
The number of members is growing steadily, and stood at 699 thousand as of March 31, 2018. The system is being
established to increase the level of return to customers and create customer contact points across the Group. We plan toexpand 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, we will 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 2.88 million customers, aswell as continuing to provide new products and services. In this manner, we strive to realize the TLC (Total Life Concierge)
concept.

15

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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.

16

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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

As of March 31, 2017

As of March 31, 2018

AssetsCurrent assets
Cash and deposits

3,239

3,143

Notes and accounts receivable–trade

22,838*8 23,806

Merchandise and finished goods

3,676

3,723

Work in process

645

849

Raw materials and supplies

737

817

Deferred tax assets

743

980

*3 7,045*3 7,990

(332)

(379)

38,59440,931Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

107,539

118,294

Accumulated depreciation(73,821)(84,014)

Buildings and structures, net*1 33,718*1 34,280

Buildings and structures

91,396

93,933

Accumulated depreciation(69,547)(70,836)

Buildings and structures, net*1 21,848*1 23,096

Land

22,634

22,842

Leased assets

23,502

23,675

Accumulated depreciation(12,633)(11,948)

Leased assets, net

10,86911,727189

315

14,33014,713

Accumulated depreciation(9,944)(10,165)

Other, net

4,386

4,548

*5 93,647*5 96,810

5,861

5,430

568

585

Other

4,559

5,182

Total intangible assets

10,988

11,198*2 9,433*2 9,096

87

83

Deferred tax assets

1,350

1,122

Net defined benefit asset

2,397

2,650

Other

5,024

5,013

Allowance for doubtful accounts

(432)

(518)

Total investments and other assets

17,86017,447

122,496

125,455

Machinery, equipment and vehicles

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

17

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

Deferred assets
Total assets

18

21

3

161,112

166,391

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(Millions of yen)
As of March 31, 2017

As of March 31, 2018

Liabilities
Current liabilities

14,779*8 15,670

Short-term loans payable*5, *7 22,912*5, *7 23,672

Current portion of bonds

578

198

lease obligations

3,398

3,488

Income taxes payable

3,484

2,966

Provision for bonuses

1,260

1,329

434

328

Other

14,455

16,051

Total current liabilities

61,30463,705

406

398

2,800

-

Notes and accounts payable–trade

Other accruals

Non-current liabilities
Bonds payable
Convertible bonds with stock acquisition rights*5, *7 27,440*5, *7 26,711

Lease obligations

8,950

9,684

Other accruals

101

132

Net defined benefit liability

364

575

Other

3,299

3,733

Total non-current liabilities

43,361

41,235

104,665

104,940

Capital stock

14,00014,000Capital surplus

24,28625,525Retained earnings

15,04817,768Treasury stock(3,285)(2,223)

Total shareholders’ equity

50,04855,069Long-term loans payable

Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

2,126

2,548

Deferred gains (losses) on hedges

720-

Foreign currency translation adjustment

(9)

(3)

Remeasurements of defined benefit plans

2,768

2,706

Total accumulated other comprehensive income

5,605

5,250

791

1,130

56,44661,450161,112

166,391

Valuation difference on available-for-sale securities

Non-controlling interests
Total net assets
Total liabilities and net assets

19

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(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, 2017

March 31, 2018

178,631

186,069*1 105,590*1 110,733

73,04075,336*2 60,290*2 64,365

12,75010,971

Interest income

1110

Dividend income

176

192

Commission fee

80

91

Other

450

480

Total non-operating profit

719

774

Interest expenses

531

436

Other

161

118

Total non-operating expenses

693

555

12,775

11,191Gain on sales of non-current assets

*3 8

*3 2

Transmission line facility subsidies

63

161

Subsidy income

21

Gain on sales of investment securities

0528

Gain on reversal of subscription rights to shares

98-

Gain on bargain purchase-135

Total extraordinary income

172

829

*4 8

*4 0

*5 831*5 925

Impairment loss

-

*6 66

Loss on sales of investment securities-

0

Loss on valuation of investment securities-

15

Gain on step acquisitions-

105

Total extraordinary losses

840

1,113

Net income before income taxes

12,108

10,907

Income taxes (current)

4,487

3,662

Income taxes (deferred)

197

514

Total income taxes

4,685

4,176

Net income

7,422

6,730

85

109

7,337

6,620

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

Non-operating expenses

Recurring profit
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

20

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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

Fiscal year ended

March 31, 2017

March 31, 2018

7,422

6,730

Valuation difference on available-for-sale securities

973

421

Deferred gains (losses) on hedges

490

(720)

Foreign currency translation adjustment

(12)

(3)

Remeasurements of defined benefit plans, net of tax

(189)

(61)

(0)

8

*1 1,260*1 (356)

8,683

6,373

8,597

6,265

86

108

Net income
Other comprehensive income

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

21

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018(3) Statement of Changes in Consolidated Shareholders’ Equity
Year ended March 31, 2017 (April 1, 2016–March 31, 2017)(Millions of yen)
Shareholders’ equity
Capital stock

Balance at beginning of period

Capital surplus

14,00019,258Retainedearnings

Total shareholders’

Treasury stock

9,870

equity(6,409)36,719Change during the year
Dividends of surplus - other capital surplus
Dividends of surplus(2,159)(2,159)Net income attributable to owners of the parent

7,337

7,337

Conversion of convertible bonds with stockacquisition rights

4,221

2,978

Acquisition of treasury shares
Disposition of treasury shares

806

7,200

(262)

(262)

407

1,213

Purchase of shares of consolidated subsidiaries-

Sales of shares of consolidated subsidiaries

(0)

(0)

Net changes of 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
Subscription NonTotal
Valuation
Foreign
Deferred gains
Remeasurements Total accumulated
rights to controlling net
difference on
currency
or losses onof defined benefit other comprehensive
interests assets
sharesavailable-for-saletranslation
hedgesplans
incomesecurities
adjustment
Balance at beginning of
period

1,153

230

1

2,958

4,343

208

699 41,970

Change during the year
Dividends of surplus other capital surplus-

Dividends of surplus(2,158)Net income attributableto owners of the parent

7,337

Conversion of
convertible bonds withstock acquisition rights

7,200

Acquisition of treasury
shares(262)

Disposition of treasury
shares

1,213

Purchase of shares of
consolidated
subsidiaries-

Sales of shares of
consolidated
subsidiaries(0)

Net changes of items
other thanshareholders' equity

973

490

(11)

(189)

1,262

(208)

92

Total change during the
year

873

490

(11)

(188)

1,262

(208)

92 14,475

Balance at end of period

2,126

720

(9)

2,768

5,605

-

791 56,446

22

1,146

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018Year ended March 31, 2018 (April 1, 2017–March 31, 2018)(Millions of yen)
Shareholders’ equity
Capital stock

Balance at beginning of period

Capital surplus

14,00024,286

Retainedearnings

Total shareholders’

Treasury stock

15,048equity(3,285)50,048Change during the year
Dividends of surplus - other capital surplus

(100)

(100)

Dividends of surplus(3,900)(3,900)Net income attributable to owners of the parent

6,620

6,620

Conversion of convertible bonds with stockacquisition rights

1,338

Acquisition of treasury shares

1,061

2,400

(1)

(1)

1

2

Disposition of treasury shares

0

Purchase of shares of consolidated subsidiaries

00

Sales of shares of consolidated subsidiaries(0)-

Net changes of items other than shareholders' equity
Total change during the year
Balance at end of period

－

1,238

2,720

1,062

5,021

14,00025,525

17,768(2,233)55,069

Accumulated other comprehensive income
Subscription NonTotal
Valuation
Foreign
Deferred gains
Remeasurements Total accumulated
rights to controlling net
difference on
currency
or losses onof defined benefit other comprehensive
sharesinterests assets
available-for-saletranslation
hedgesplans
incomesecurities
adjustment
Balance at beginning of
period

2,126

720

(9)

2,768

5,605

-

791 56,446

Change during the year
Dividends of surplus other capital surplus(100)

Dividends of surplus(3,900)Net income attributableto owners of the parent

6,620

Conversion of
convertible bonds withstock acquisition rights

2,400

Acquisition of treasury
shares(1)

Disposition of treasury
shares2

Purchase of shares of
consolidated
subsidiaries-0

Sales of shares of
consolidated
subsidiaries-

Net changes of items
other thanshareholders' equity

421

(720)

5

(61)

(355)

-

338

(16)

Total change during the
year

421

(720)

5

(61)

(355)

-

338

5,004

Balance at end of period

2,548

-

(3)

2,706

5,250

-

23

1,130 61,450

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(4) Consolidated Statements of Cash Flows(Millions of yen)
Fiscal year ended

Fiscal year ended

March 31, 2017

March 31, 2018

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

12,108

10,907

Depreciation

14,441

14,173

Amortization of goodwill

1,200

1,173

Gain on bargain purchase

－

(135)

Impairment loss－

66

Increase in net defined benefit asset and liability

(251)

(283)

Interest and dividend income

(188)

(202)

(Gain) loss on sale of investment securities

(0)

(528)

Interest expenses

531

436

(Gain) loss on sales of non-current assets

0(2)

Loss on retirement of non-current assets

831

925

－

105

(1,959)

(306)

553

(333)

1,458

757

Increase (decrease) in accounts payable–other

29

530

Increase (decrease) in accrued consumption taxes

(94)

(173)

Increase (decrease) in deposits received

655

76

Other

635

(941)

Subtotal

29,952

26,260

Income taxes paid

(3,260)(5,351)

Net cash provided by operating activities

26,692

20,909Loss (gain) on step acquisitions
Increase (decrease) in notes and accounts payable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable–trade

Cash flows from investing activities
Interest and dividend income received

245

265

Purchase of securities

(27)

(134)

0

884

(11,331)(11,665)

Proceeds from sales of tangible and intangible assets

202

197

Proceeds from contribution received for construction

138

138

－

*2 1,175

－

*2 56

66

54

(279)

(159)

(10,985)(11,488)

Proceeds from sales of securities
Purchase of tangible and intangible assets

Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Collection of loans receivable
Other
Net cash provided by (used in) in investing activities

24

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(Millions of yen)
Fiscal Year Ended

Fiscal Year Ended

March 31, 2017

March 31, 2018

Cash flows from financing activities

(545)

(448)

Net increase (decrease) in short-term loans payable(4,350)(1,313)

Repayments of lease obligations(3,902)(3,560)

Proceeds from long-term loans payable

7,850

10,701

Repayment of long-term loans payable(12,815)(12,483)

(758)

(668)

Redemption of convertible bond-type bonds with share acquisition rights

－

(400)

Proceeds from share issuance to non-controlling shareholders－

20

Payments for acquisition of treasury stock

(262)

(1)

Payments to establish financial trust for acquisition of treasury stock

(91)

－

Interest expenses paid

Redemption of bonds

384

0(2,158)(3,994)

(5)

(5)

12

－

(16,643)(9,527)3(0)

Net increase (decrease) in cash and cash equivalents

(933)

(106)

Cash and cash equivalents at beginning of period

4,044

3,111

*1 3,111*1 3,004

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
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

25

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018(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 23 of the Company’s subsidiaries are included in the scope of consolidation.
Due to the acquisition of additional shares in Tokyo Bay Network Co., Ltd. on July 20, 2017, the company
was included in the scope of consolidation from the fiscal year ended March 31, 2018. Furthermore, due to theacquisition of additional shares in TV Tsuyama Inc. on February 9, 2018, the company was included in thescope of consolidation from the fiscal year ended March 31, 2018.
In addition, the liquidation of Bouquet Tokai Mishima Corporation was completed on March 8, 2018, and its
statement of income until the liquidation has been included in the consolidated financial statements.
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. was included in the scope of consolidation, and therefore excluded from equitymethod affiliates from the fiscal year ended March 31, 2018.
In addition, following the establishment of Chiba Sogo Center K.K. as a new joint venture on December 18,
2017, the company was included among equity-method affiliates from the fiscal year ended March 31, 2018.
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, 2017, 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, the financial
statements as of December 31, 2017, 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.
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
cost of 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 for realestate held for sale and work in process.
Figures on the balance sheet are adjusted by writing down the book value when profitability declines.

26

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(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, but thecontracts for such transactions expired during the fiscal year ended March 31, 2018.
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 or loans
receivable, the Company recognizes and records allowance for doubtful accounts based on historicaluncollectible rate for general accounts receivables, and on an estimate of collectability of specific accounts forwhich collection appears doubtful.
2) Provision for Bonuses
Provisions for the payment of employee bonuses are recorded at the amount expected to be paid during 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 theend of the current 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 overa certain period of time (15–18 years) that is shorter than the employees’ average remaining service
period at the time of occurrence.
Actuarial gains or losses are amortized as incurred over the periods, which are shorter than the
average remaining service years of employees (mainly 12–18 years), by the straight-line method,
starting from the following 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
27

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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 thepercentage-of-completion method (cost-to-cost method is used to estimate a progression rate on
construction). Other construction is based 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 rate on the consolidated closing date, and translation adjustments are recorded as income
or losses. Assets and liabilities of overseas 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. Allocationaccounting is used 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, andcommodity 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 offluctuation of the two. The evaluation of hedging effectiveness is omitted in transactions that satisfy theconditions for exceptional treatment or that are 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 whichinvestment effect is visible. 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 at any time or readily convertible to cash, and price-change-insensitive short-term
investments whose maturity comes due 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
28

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

Work1) 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 more is capitalized.
2) Capitalized interest payments totaled 5 million yen as of March 31, 2018.
(Changes in Presentation Method)(Consolidated Statements of Cash Flows)
The amount of “Payment into time deposits” listed as an independent item under “Cash flows frominvesting activities” in the fiscal year ended March 31, 2017, was insignificant, and this item has therefore
been included in “other” under “cash flows from investing activities” from the fiscal year ended March 31,
2018. The consolidated financial statements for the fiscal year ended March 31, 2017 have been restatedto reflect this change in presentation method.
As a result, the “(0) million yen” listed for “Payment into time deposits” under “Cash flows from investing
activities” in the consolidated statements of cash flows in the fiscal year ended March 31, 2017 has been
added to “Other.”(Additional Information)(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 aboard benefit trust (BBT) plan as a new stock-based compensation system (hereinafter referred to as “theSystem”) for the Company’s Directors, Executive Officers, Administrative Officers, and the Directors andAdministrative Officers of some of the Company’s subsidiaries (excluding Outside Directors; hereinafterreferred to as “Executives”). This Executive compensation was approved at the 5th Annual General Meetingof 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(hereinafter referred to as the “Company’s Shares, etc.”) will be provided through the trust to the
Executives in accordance with executive stock-based compensation rules stipulated by the Company andsubsidiaries of the Company 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
at book value (excluding attached expenses). The book value of such Company stocks was 261 million yen
as of March 31, 2017, and 259 million yen as of March 31, 2018. The number of shares was 420,000 as ofMarch 31, 2017 and 416,600 as of as of March 31, 2018.

29

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(Notes to the Consolidated Balance Sheets)*1. The following reduction entry amounts were deducted from the acquisition costs of property, plant and equipment, due tothe acceptance of construction contributions, etc.
As of March 31, 2017
Buildings and structures

Machinery, equipment and vehicles

Total

As of March 31, 2018

－million yen

220 million yen(2 million yen)(222 million yen)

65 million yen

33 million yen(6,037 million yen)

(5,897 million yen)

65 million yen

253 million yen(6,040 million yen)

(6,120 million yen)

Figures in parentheses above indicate accumulated reduction entry amounts.
Reduction entry amounts and accumulated reduction entry amounts were insignificant in the fiscal year ended
March 31, 2017, and therefore not listed. However, as the respective amounts have increased in importance in thefiscal year ended March 31, 2018, the amounts for the fiscal year ended March 31, 2017 are now presented forcomparison.

*2. Amounts for affiliated companies were as follows.
As of March 31, 2017
Investment securities (shares)

As of March 31, 2018

1,085 million yen

375 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, 2017
Payments pending

As of March 31, 2018

270 million yen

317 million yen

4. Contingent liabilities(1) Guarantees
As of March 31, 2017

As of March 31, 2018

(Debt obligation)(Debt obligation)

TOKAI Group Association

340 million yen TOKAI Group Association

226 million yen(2) Repurchase obligation due to liquidation of receivables
As of March 31, 2017
Repurchase obligation due to

1,303 million yen

liquidation of receivables

As of March 31, 2018
1,319 million yen*5. Pledged assets and secured liabilities
Pledged assets are as follows.
As of March 31, 2017

As of March 31, 2018

Property, plant and equipment
Buildings and structures

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

445 million yen (445 million yen)

Machinery, equipment and vehicles

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

4,842 million yen (4,842 million yen)Land

596 million yen (596 million yen)

363 million yen (363 million yen)Other

135 million yen (135 million yen)

3 million yen (3 million yen)

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

5,655 million yen (5,655 million yen)

Total

Figures in parentheses above indicate plant foundation mortgages.

30

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

Secured liabilities are as follows.
As of March 31, 2017
Long-term loans payable (including
current portion)
Total

As of March 31, 2018

275 million yen

94 million yen

275 million yen

94 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, 2017
Credit line
Loan amount currently executed
Outstanding unused overdraft
amountAs of March 31, 2018

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, 2018,
the Company was in conflict with none of these covenants.

*7. Syndicated loan agreements
Fiscal year ended March 31, 2018
(1) The Company entered into a syndicated loan agreement for 1,000 million yen (balance of 675 million yen as of March 31,
2017, and 575 million yen as of March 31, 2018) 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 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 2014.
(2) The Company entered into a syndicated loan agreement for 900 million yen (balance of 511 million yen as of March 31,
2017, and 381 million yen as of March 31, 2018) 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 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 2014.
(3) The Company entered into a syndicated loan agreement for 650 million yen (balance of 416 million yen as of March 31,
2017, and 322 million yen as of March 31, 2018) 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 542 million yen as of March 31,
2017, and 472 million yen as of March 31, 2018) 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.

31

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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.

*8．Notes maturing on the last day of the consolidated fiscal year
Notes maturing on the last day of the consolidated fiscal year are settled on their clearing days. Furthermore, since thelast day of the consolidated fiscal year ending March 31, 2018 was a bank holiday, the following notes maturing on thelast day of the consolidated fiscal year have been included in the balance at the end of the consolidated fiscal year.
As of March 31, 2017

As of March 31, 2018

Notes receivable–trade－million yen

42 million yen

Notes payable–trade－million yen

102 million yen(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, 2017
(April 1, 2016–March 31, 2017)

Year ended March 31, 2018
(April 1, 2017–March 31, 2018)

129 million yen

6 million yen*2. Principal expense items contained in selling, general and administrative expenses are as follows.
Year ended March 31, 2017
(April 1, 2016–March 31, 2017)

Year ended March 31, 2018
(April 1, 2017–March 31, 2018)

17,357 million yen

17,746 million yen

Provision for bonuses

925 million yen

943 million yen

Defined benefit expenses

640 million yen

666 million yen

16,463 million yen

18,514 million yen

228 million yen

305 million yen

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

Year ended March 31, 2018
(April 1, 2017–March 31, 2018)

Machinery, equipment and vehicles

7 million yen

2 million yen

Buildings and structures

0 million yen

0 million yen

Other

0 million yen

0 million yen

Total

8 million yen

2 million yen

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

Year ended March 31, 2018
(April 1, 2017–March 31, 2018)Land－million yen

0 million yen

Machinery, equipment and vehicles

0 million yen

0 million yen

Buildings and structures

8 million yen－million yen

Total

8 million yen

0 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.

32

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

*5. Details of the loss on retirement of non-current assets are as follows.
Year ended March 31, 2017
(April 1, 2016–March 31, 2017)

Year ended March 31, 2018
(April 1, 2017–March 31, 2018)

Buildings and structures

536 million yen

495 million yen

Machinery, equipment and vehicles

151 million yen

284 million yen

Goodwill

57 million yen

64 million yen

Other

85 million yen

80 million yen

Total

831 million yen

925 million yen*6. Impairment losses
Fiscal year ended March 31, 2018 (April 1, 2017–March 31, 2018)
The Group recorded impairment losses on the following assets during the fiscal year.
Location

Use

Ashikaga City, Tochigi
Prefecture

Business asset

Aoba-ku, Sendai City

Business asset

Yaizu City, Shizuoka
Prefecture
Shimizu-ku, Shizuoka
City
Tachikawa City, Tokyo

Business asset
Shop
OfficeSuruga-ku, Shimizu-ku, Nursing care
Shizuoka City
facility

Business segment
Information andCommunications
Information andCommunications
Information andCommunications
Information andCommunications
Information andCommunications

Nursing care

Impairment
losses(Millions ofyen)

Category
Buildings and structures
Property, plant and equipment(“other”)

15

Buildings and structures

15

Intangible assets (“other”)

1

Buildings and structures

11

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

Total

1

21

66

(Note) During the year under review, the Group wrote down book values to their recoverable amounts on
business assets and nursing care facilities whose profitability had decreased, and on an office and shop
due to decisions to relocate and close. These decreases were posted as impairment losses under
extraordinary losses.

Breakdown of impairment losses(Millions of yen)

Property, plant
Intangible
Property, plant
assetsIntangible
Buildings and and equipment
and equipment
Total
Use
structures(“leased(“leased
assets (“other”)(“other”)
assets”)
assets”)
Business asset
15
－
0
－
－
Business asset
15
－
－
－
－
Business asset
－
－
－
－
1
Shop
11
－
0
－
－
Office1－0－－
Nursing care facility
11
9
－
0
－
Total
54
9
0
0
1
The recoverable amount of these assets is measured as their net realizable value, and was valued at 0 yen
for all assets.

33

15
15
1
11
1
21
66

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(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, 2017

Year ended March 31, 2018

(April 1, 2016–March 31, 2017)(April 1, 2017–March 31, 2018)

1,407

1,147

0

(528)

Before adjustment for tax effects

1,407

619

Tax effects

(434)

(197)

Valuation difference on available-for-sale securities
Amount generated during the year
Reclassification adjustments

Valuation difference on available-for-salesecurities
Deferred gains (losses) on hedges
Amount generated during the year

973

421

1,603

786

Adjustment for asset acquisition costs(900)(1,818)Before adjustment for tax effects

702(1,032)

Tax effects

(212)

311

Deferred gains (losses) on hedges

490

(720)

Foreign currency translation adjustment
Amount generated during the year

(12)

(3)

Foreign currency translation adjustment

(12)

(3)

Remeasurements of defined benefit plans
Amount generated during the year

(52)

177

(217)

(265)

(270)

(88)

80

26

Remeasurements of defined benefit plans

(189)

(61)

Share of other comprehensive income of entities
accounted for using the equity method
Amount generated during the year

(0)

8

1,260

(356)

Reclassification adjustments
Before adjustment for tax effects
Tax effects

Total other comprehensive income

34

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(Notes to the Statement of Changes in Consolidated Shareholders’ Equity)
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
year (thousands ofshares)Increase during the
fiscal year (thousandsof shares)

Decrease during theyear (thousands ofshares)End of the fiscal year
(thousands of shares)

139,679－－

139,679

139,679－－

139,679

Common stock

26,488421

13,994

12,915

Total

26,488421

13,994

12,915

Issued shares
Common stock
Total
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 less than a
trading unit.
2. The 13,994 thousand share decease in common shares in treasury stock stemmed from a decrease of 12,309
thousand shares being converted from convertible bonds with stock acquisition rights, 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 by Trust& Custody Services Bank, Ltd. (Trust Account E) as of the end of the fiscal year.

2. Dividends(1) Dividend Payments(Resolution)
Resolution at regular generalshareholders meeting on
June 24, 2016
Board of Directors resolution
on October 31, 2016

Class ofsharesTotal dividends(millions of yen)

Dividend pershare (yen)Common
stock

905

8.00

Common
stock

1,254

11.00

Record date

Effective date

March 31, 2016

June 27, 2016

September 30, 2016 November 30, 2016

(Note) Total common-stock dividends of 1,254 million yen resolved at the Board of Directors Meeting held on October 31,
2016, include 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 ofsharesResolution at regular
general shareholders
meeting on June 28, 2017

Commonstock

Total dividends
Source of(millions ofdividends
yen)
Retained
2,061
earnings
Capital100
surplusDividend pershare (yen)Record date

Effective date

March 31, 2017

June 29, 2017

16.21
0.79

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

35

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

Fiscal year ended March 31, 2018 (April 1, 2017–March 31, 2018)
1. Categories and Number of Issued Shares and Categories and Number of Shares of Treasury Stock
Beginning of the fiscal Increase during theyear (thousands offiscal year (thousands
shares)of shares)

Decrease during theyear (thousands ofshares)End of the fiscal year
(thousands of shares)

139,679－－

139,679

139,679－－

139,679

Common stock

12,915

1

4,181

8,736

Total

12,915

1

4,181

8,736

Issued shares
Common stock
Total
Treasury stock(Notes)1. The one thousand share increase in common shares in treasury stock stemmed from the buyback of fractional
shares less than a trading unit.
2. The 4,181 thousand share decease in common shares in treasury stock stemmed from a decrease of 4,117
thousand shares being converted from convertible bonds with stock acquisition rights, a decrease of three
thousand shares stemming from stock benefits for executives in accordance with the Regulations Pertaining to
Stock Benefits for Executives, and a decrease of less than one thousand shares from the sale of fractional
shares less than a trading unit.
3. The number of common shares of treasury stock includes 416 thousand of the Company’s shares held by Trust& Custody Services Bank, Ltd. (Trust Account E) as of the end of the fiscal year.

2. Dividends(1) Dividend Payments(Resolution)
Resolution at regular generalshareholders meeting on June 28,
2017
Board of Directors resolution on
October 31, 2017
(Notes)Class ofsharesCommonstock
Commonstock

Total dividends(millions of yen)

Dividend pershare (yen)

2,061

16.21

100

0.79

1,839

14.00

Record date

Effective date

March 31, 2017

June 29, 2017

September 30, 2017

November 30, 2017

1. Total common-stock dividends of 2,162 million yen resolved at the regular general shareholders meeting heldon June 28, 2017, include dividends of 7 million yen related to the Company’s shares held by Trust & Custody
Services Bank, Ltd. (Trust Account E).
2. The dividend per share resolved at the regular general shareholders meeting held on June 28, 2017, includes
a commemorative dividend of 6 yen.
3. Total common-stock dividends of 1,839 million yen resolved at the Board of Directors Meeting held on October
31, 2017, include dividends of 5 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 ofsharesResolution at regular generalshareholders meeting on June27, 2018

Commonstock

Total dividends(millions of yen)
1,839

Source ofdividends

Dividend pershare (yen)Retainedearnings

14.00

Record date

Effective date

March 31, 2018 June 28, 2018

(Note) Total common-stock dividends of 1,839 million yen include dividends of 5 million yen related to the Company’s
shares held by Trust & Custody Services Bank, Ltd. (Trust Account E).

36

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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

Year ended March 31, 2018
(April 1, 2017–March 31, 2018)

3,239 million yen

3,143 million yen(128) million yen(138) million yen

3,111 million yen

3,004 million yen

Cash and deposit accounts
Time deposits with a deposit period exceeding
three months
Cash and cash equivalents*2. Major breakdown of assets and liabilities of new subsidiary resulting from acquisition of shares
Major breakdown of assets and liabilities of new subsidiary resulting from acquisition of shares in the fiscal year ended
March 31, 2018
(1) A breakdown of assets and liabilities at the start of consolidation of Tokyo Bay Network Co., Ltd., a new consolidated
subsidiary resulting from the acquisition of shares, along with details regarding the share acquisition price and related
expenditures (net) are presented below.

Current assets

920

million yen

3,099

million yen

Goodwill

285

million yen

Current liabilities(884)

million yen

Non-current liabilities(1,003)

million yen

Non-controlling interests(209)

million yen

Share acquisition cost

2,208

million yen

Acquisition cost until control was acquired(736)

million yen

Gain on step acquisitions

105

million yen

Cash and cash equivalents of the company(401)

million yen(1,175)

million yen

Non-current assets

Net: Purchase of shares of subsidiaries resulting in change of scope of
consolidation(2) A breakdown of assets and liabilities at the start of consolidation of TV Tsuyama Inc., a new consolidated subsidiary
resulting from the acquisition of shares, along with details regarding the share acquisition price and related expenditures(net) are presented below.

Current assets

151

million yen

Non-current assets

135

million yen

Current liabilities(75)

million yen

Non-current liabilities(45)

million yen

Negative goodwill gains(135)

million yen

Non-controlling interests(6)

million yen

Share acquisition cost24

million yen

Cash and cash equivalents of the company(80)

million yen

Net: Purchase of shares of subsidiaries resulting in change of scope of
consolidation

56

million yen

37

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

3．Significant non-cash transactions(1) Assets and liabilities related to finance lease transactions
Year ended March 31, 2017
(April 1, 2016–
March 31, 2017)
Amount of assets and liabilities for finance lease
3,513 million yen
transactions

Year ended March 31, 2018
(April 1, 2017–
March 31, 20178)
4,093 million yen(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 theBasis 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.

38

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

3. Information Related to Sales, Income and Loss, Assets, Liabilities, and Other Items for Each Reportable Segment
For the fiscal year ended March 31, 2017 (From April 1, 2016 to March 31, 2017)(Millions of yen)
Reportable segments

Amount inInforma-

Gas and Building
Petrole- and Real CATV

tion andAqua

Commu-um

Estate73,344

19,511

25,39649,508

178

1,489

787

3,160

Total

Others1

Total

Adjustments

2 consolidated

statements ofincomenications

3

Sales
Sales to externalcustomers
Intersegment sales
and transfer

5,108

178,631－

178,631

5,760

209

5,970

(5,970)－5,907 179,284

5,762 173,523
145

Subtotal

73,52221,001

26,184

52,668Segment income (loss)

6,942

461

2,331

3,065

5,317

184,601(5,970)178,631

12,903112

13,015(265)

12,750

Segment assets

61,84823,94530,40231,513

4,651 152,362

4,962

157,324

3,787

161,112

4,276

614

5,821

2,478

648

423

－

714

61

－

13,83991

13,930510

14,441

1,199

1

1,200

－

1,200

5,090

1,263

4,321

3,233

524

14,43248

14,480667

15,148101

Other items
Depreciation
Goodwill amortization
Increase in property,
plant and equipment
and intangible assets(Notes) 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.

For the fiscal year ended March 31, 2018 (From April 1, 2017 to March 31, 2018)(Millions of yen)
Reportable segments

Amount inInforma-

Gas and Building
Petrole- and Real CATV

tion andCommu-um

Estate76,07319,80728,38650,894

217

1,204

777

3,295

76,29121,011

29,16354,190

Others
Aqua

1

Total

Adjustments

2

Total

consolidated
statements ofincome3

nications

Sales
Sales to externalcustomers
Intersegment sales
and transfer
Subtotal

4,706

186,069－

186,069

5,658

190

5,848

(5,848)－6,363 187,021

4,896

191,918(5,848)186,069

6,200 181,363
163

Segment income (loss)

4,967

655

3,035

1,866

Segment assets

60,921

24,88434,54732,38010,550301

10,852

118

10,971

4,853 157,586

26

4,941

162,528

3,862

166,391

4,287

692

5,513

2,553

546

413

－

730

28

－

13,59483

13,677495

14,173

1,173

0

1,173

－

1,173

5,382

714

6,309

3,177

615

16,198110

16,309352

16,661Other items
Depreciation
Goodwill amortization
Increase in property,
plant and equipment
and intangible assets(Notes) 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.

39

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(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, 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.

For the fiscal year ended March 31, 2018 (From April 1, 2017 to March 31, 2018)
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, 2017 (From April 1, 2016 to March 31, 2017)
No items to report40

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

For the fiscal year ended March 31, 2018 (From April 1, 2017 to March 31, 2018)(Millions of yen)
Gas and Building andPetroleum Real Estate
Impairment
loss－

Information
andCommunications

CATV

－

－

Aqua

Others－45

Corporate or
elimination
－

21

Total

66

d. Information related to Amortization of Goodwill and Unamortized Balance by Reportable Segment

For the fiscal year ended March 31, 2017 (From April 1, 2016 to March 31, 2017)(Millions of yen)
Information
andCommunications

Gas andPetroleum

Building
and Real
Estate

423

－

714

61

－

1

－

1,200

1,057

－

4,774

28

－

0

－

5,861

Amortization for the year
ended Mar. 31, 2017
Balance on Mar. 31,
2017

CATV

Aqua

Corporateor
elimination

OthersTotal

For the fiscal year ended March 31, 2018 (From April 1, 2017 to March 31, 2018)(Millions of yen)
Information
andCommunications

Gas andPetroleum

Building
and Real
Estate

413

－

730

28

－

0

－

1,173

1,100

－

4,329

－

－

0

－

5,430

Amortization for the year
ended Mar. 31, 2018
Balance on Mar. 31,
2018

CATV

Aqua

Corporateor
elimination

OthersTotal

e. Information on Negative Goodwill Generated for Each Reportable Segment
For the fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)
No items to report

For the fiscal year ended March 31, 2018 (April 1, 2017 to March 31, 2018)
The CATV segment booked 135 million yen in negative goodwill gains, reflecting the net assets acquired and liabilities
assumed with the consolidation of TV Tsuyama Inc. exceeding the acquisition cost for the acquired company.

(Per-Share Information)
Year ended March 31, 2017
(April 1, 2016–March 31, 2017)(April 1, 2017–March 31, 2018)

Net assets per share (yen)439.04460.66

Net income per share (yen)

64.46

51.19

Diluted net income per share (yen)

56.31

50.45

41

Year ended March 31, 2018

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(Notes) 1. The standards used to calculate net income per share are as follows.
Year ended March 31, 2017 Year ended March 31, 2018
(April 1, 2016–(April 1, 2017–
March 31, 2017)
March 31, 2018)
Net income per share
Net income attributable to owners of the parent (millionsof yen)Amounts not attributable to ordinary shareholders(millions of 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(millions of 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 ofdiluted net income per share as they have no dilutive effect

7,337

6,620

－

－

7,337

6,620

113,828

129,348－－

16,477

1,889(16,327)(1,889)

(150)

(－)

－

－

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) (420,000 shares in
the fiscal year ended March 31, 2017, 416,600 shares in the fiscal year ended March 31, 2018). The average
number of shares of common stock outstanding during the period used in the calculation of net income per shareexcludes the Company’s shares held by the Trust & Custody Service Bank Ltd. (Trust Account E) (210,575 shares in
the fiscal year ended March 31, 2017, 417,158 shares in the fiscal year ended March 31, 2018).

(Important Subsequent Events)
No items to report42

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

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

Fiscal Year Ended

March 31, 2017

March 31, 2018

AssetsCurrent assets

1,131

693

Accounts receivable from subsidiaries and associates–trade

361

419

Supplies

1711

Prepaid expenses

18

19

Deferred tax assets

77

50

23,84043,895

Other

553

1,808

Allowance for doubtful accounts

(945)

(802)

25,05646,096

Buildings

401

495

Structures

29

36

Vehicles0－

Tools, furniture and fixtures

59

81

Land

26

26

Leased assets

35

48

Total property, plant and equipment

554

688

Software488

309

Leased assets

499

521

1

3

990

834

35,587

37,154112

030,444

10,306

Deferred tax assets

114

21

Other

55

28

Allowance for doubtful accounts

－

(100)

66,31347,411

67,85848,934

Bond issuance cost20

3

Total deferred assets

20

3

92,934

95,034

Cash and deposits

Short-term loans receivable from subsidiaries and associates

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

Intangible assets

Other
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

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

Total assets

43

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

(Millions of yen)
Fiscal Year Ended

Fiscal Year Ended

March 31, 2016

March 31, 2018

Liabilities
Current liabilities
Short-term loans payable

11,00012,300Current portion of long-term loans payable

11,632

11,123Current portion of bonds

578

98

Lease obligations

248

189

Accounts payable–other

360

379

Accrued expenses

36

29

Income taxes payable21

17

Accrued consumption taxes

0

63

31

54

6,101

5,310

Provision for bonuses

29

31

Provision for directors’ bonuses

83

49

Provision for point card certificates

197

215

Other

108

49

30,42929,910406

308

Convertible bonds with stock acquisition rights

2,800

－

Long-term loans payable

26,85325,999Lease obligations

294

382

Provision for retirement benefits

20

7

Provision for executive stock benefits

18

18

Other

124

71

30,517

26,78760,946

56,69814,00014,000Legal capital surplus

3,500

3,500

Other capital surplus

17,22518,004

Total capital surplus

20,72521,504

2,073

6,120

2,073

6,120

Treasury stock(4,810)(3,289)Total shareholders’ equity

31,98838,33531,98838,33592,934

95,034

Deposits received
Deposits received from subsidiaries and associates

Total current liabilities
Non-current liabilities
Bonds payable

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

Total net assets
Total liabilities and net assets

44

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018(2) Statements of Income(Millions of yen)
Fiscal Year Ended

Fiscal Year Ended

March 31, 2017

March 31, 2018

Operating revenue
Fiduciary obligation fee

448

503

Management fee income

3,361

3,850

Interest income

523

473

Dividend income

2,259

8,354

Other operating revenue

13

21

Total operating revenue

6,606

13,203348

324

Selling, general and administrative expenses

4,816

4,625

Total operating expenses

5,165

4,950

1,441

8,252

Other

21

17

Total non-operating profit

21

17

Interest expenses

68

13

Other

10

8

Total non-operating expenses

79

21

1,383

8,248

Gain on reversal of subscription rights to shares

98－

Total extraordinary income

98－

Loss on sales of non-current assets－

0Loss on valuation of shares of subsidiaries and associates－

152

Loss on sales of shares of subsidiaries

10－

Total extraordinary losses

10

153

Income before income taxes

1,472

8,095

Income taxes (current)

30

28

Income taxes (deferred)

31

119

Total income taxes

61

147

1,410

7,947

Operating expenses
Financial expenses

Operating profit
Non-operating profit

Non-operating expenses

Recurring profit
Extraordinary income

Extraordinary losses

Net income

45

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018(3) Statement of Changes in Shareholders’ Equity
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

Change during the year
Dividends of surplus - other－capital surplus
Cash dividends from retained
earnings
Net income(2,158)(2,159)(2,159)

1,410

1,410

1,410

Conversion of convertible
2,718

bonds with stock acquisition

2,718

4,481

7,200

(262)

(262)

613

1,213

rightsAcquisition of treasury shares
Disposition of treasury shares

600

600

Net change in items otherthan shareholders’ equity
Total change during the year
Balance at end of period

－

－

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 shares
Balance at beginning of period

208

Total net assets
24,794

Change during the year－

Dividends of surplus - other capital surplus
Cash dividends from retained earnings(2,159)Net income

1,410

Conversion of convertible bonds with stock

7,200

acquisition rights
Acquisition of treasury stock(262)

Disposition of treasury stock

1,213

Net change in items other thanshareholders’ equity
Total change during the year
Balance at end of period

46

(208)

(208)

(208)

(7,193)－31,988

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018Year ended March 31, 2018 (April 1, 2017–March 31, 2018)(Millions of yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other retained

Capitalstock

Balance at beginning of period

14,000

Legal

Other

Total capitalearnings

Total retained

surplusRetained earnings

earnings

capitalcapitalsurplussurplus

3,500

17,225

20,725

(100)

(100)

Treasury
stock

Total
shareholders’equitybrought forward
2,073

2,073

(4,810)31,988Change during the year
Dividends of surplus - othercapital surplus
Cash dividends from retained(100)(3,900)(3,900)(3,900)

7,947

7,947

7,947

earnings
Net income
Conversion of convertible
878

bonds with stock acquisition

878

1,521

2,400

(1)

(1)

2

2

rightsAcquisition of treasury shares
Disposition of treasury shares

00

Net change in items otherthan shareholders’ equity
Total change during the year
Balance at end of period

－

－

778

778

4,047

4,047

1,521

6,347

14,0003,500

18,00421,504

6,120

6,120

(3,289)38,335

Subscription rights
to shares－

Balance at beginning of period

Total net assets
31,988Change during the year
Dividends of surplus - other capital surplus(100)

Cash dividends from retained earnings(3,900)Net income

7,947

Conversion of convertible bonds with stock2,400

acquisition rights
Acquisition of treasury stock(1)

Disposition of treasury stock2

Net change in items other than－－

Total change during the year

－

6,347

Balance at end of period－

38,335

shareholders’ equity

47

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2018

7. Other(1) Changes in Executive Positions

1) Changes in President & CEO
No items to report2) Other Changes in Executive Positions (Scheduled for June 27, 2018)
1. New director candidates
Director

Masahiro Goto

* Mr. Masahiro Goto is a candidate for outside director.

2. Scheduled retirement director
Director

Kenichi Kobayashi* Mr. Kenichi Kobayashi is an outside director.

48