Consolidated Financial Results for the First Six Months of the
Fiscal Year Ending March 31, 2020 [Japanese GAAP]
October 31, 2019
Company name: TOKAI Holdings Corporation
Stock listing:Tokyo Stock Exchange
Stock code:
3167
URL:
https://www.tokaiholdings.co.jp/english/
Representative:
Katsukiho Tokita, President & CEO
Contact:
Kuniyoshi Muramatsu, Managing Executive Officer, General Manager of General Affairs
Division Headquarters
Telephone: +81-54-275-0007
Scheduled date of filing quarterly report:
November 13, 2019
Scheduled date of dividend payment:
November 29, 2019
Supplementary materials on quarterly financial results:
Yes
Quarterly financial results briefing:
Yes (For institutional investors)(Figures are rounded to the nearest million yen)

1. Consolidated Financial Results for the Six-months Ended September 30, 2019
(April 1, 2019 to September 30, 2019)(1) Consolidated Operating Results (cumulative)(% figures represent year-on-year changes)

Sales

Operating Profit

Millions of yen%

Millions of yen

Quarterly Net
IncomeAttributable to
Owners of the
ParentRecurring Profit%

Millions ofyen%Millions of yen

Six-months Ended
93,015
4.7
5,500
58.3
5,608
56.6
3,492
September 30, 2019
Six-months ended
88,840
4.6
3,475
11.6
3,580
13.9
1,736
September 30, 2018
(Note) Comprehensive income: 2,924 million yen in the Six-months Ended September 30, 2019 (3.7%)
2,819 million yen in the Six-months ended September 30, 2018 (47.6%)
Quarterly Net Income
per ShareSix-months Ended
September 30, 2019
Six-months ended
September 30, 2018

%

101.1
39.3

Quarterly Net Income
per Share (Diluted)

Yen

Yen

26.67

-

13.26

-

(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Millions of yen

Millions of yen%

Six-months Ended
165,606
64,982September 30, 2019Year ended
167,606
63,894
March 31, 2019
(Reference) Equity: 63,602 million yen for the Six-months Ended September 30, 2019
62,627 million yen for the year ended March 31, 2019

38.4
37.4

2. Dividends
End of Q1

End of Q2
Yen

Yen

Year ended March 31, 2017―
14.00
Year ending March 31, 2018―
14.00
Year ending March 31, 2018
(Forecast)(Note) Revisions to most recently announced dividend forecasts: No

Annual Dividend
End of Q3

Year-end

Total

Yen

Yen

Yen

―

14.00

28.00

―

14.00

28.00

3. Consolidated Earnings Forecasts for the Year Ending March 31, 2020 (April 1, 2019 to March 31,
2020)(% figures represent year-on-year changes)

Sales
Millions ofyen%Operating Profit

Recurring Profit

Net Income
Attributable to
Owners of the
ParentMillions ofyenMillions ofyen%Millions of
yen

%

Yen

5.9

8,230

5.9

62.85

%

Year ending March
200,800
4.8
14,1708.5
14,04031, 2020(Note) Revisions to most recently announced earnings forecasts: No

Net Income
per Share

業績予想欄については、上場会社各社の実情に応じて、開示対象項目や開示対象期間の追加又は削除、開示形式の変更を行うことが可能です。
*Notes(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries affecting the scope of consolidation): No(2) Application of special accounting procedures in the preparation of quarterly consolidated financial statements: No(3) 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(4) Number of shares issued (common stock)
1) Shares issued at the end of each period (including treasury stock):

Q2 FY3/2020

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

Q2 FY3/2020

8,731,837 shares FY3/2019

8,731,411 shares

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

Q2 FY3/2020

130,951,794 shares Q2 FY3/2019

130,945,409 shares

139,679,977 shares FY3/2019

139,679,977 shares(Note) Board benefit trust shares(BBT) is included in the number of year-end treasury stock.(400,700 stocks at Q2 FY3/2020, 410,800
stocks at FY3/2019) And the company shares held in ESOP trust accounts are included in the treasury stock, which is subtracted
from calculations of the average number of shares during the period (407,378 shares for the Six-months Ended September 30,
2019; 414,634 shares for the Six-months ended September 30, 2018).

* Quarterly financial results not covered by quarterly review* 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 thisdocument. Actual results may differ from forecasts due to various factors going forward.

[Attachment]

Contents
1. Qualitative Information on Financial Results for the Period Under Review(1)

Explanation of Consolidated Operating Performance ···································································· 2(2)Explanation of Consolidated Financial Position············································································ 4(3)Explanation of Consolidated Earnings Forecasts and Other Forward-Looking Information ···················· 4

2. Quarterly Consolidated Financial Statements and Notes(1)

Quarterly Consolidated Balance Sheets ····················································································· 6(2)Quarterly Consolidated Statements of Income, Consolidated Statements of Comprehensive Income ······ 8(3)Quarterly Consolidated Statements of Cash Flows ····································································· 10(4)Notes to Quarterly Consolidated Financial Statements ································································· 11(Notes to Premise of Going Concern) ··························································································· 11(Notes to Significant Changes in Shareholders’ Equity) ···································································· 11(Segment Information, etc) ········································································································· 11

11. Qualitative Information on Financial Results for the Period Under Review(1) Explanation of Consolidated Operating Performance
In the first six months of the fiscal year ending March 31, 2020, the Japanese economy was on a gradual recovery
path, with a rally in personal consumption and steady improvement in the employment situation. However, theeconomic outlook continued to remain clouded by uncertainties in overseas economies, including US–China trade
friction and other factors.
Against this backdrop, the TOKAI Group passed the halfway point of its four-year medium-term management plan,
Innovation Plan 2020 “JUMP,” in the current fiscal year, which is the third year of the plan. The Group continued to
implement strategies aimed at expanding its earnings base, such as developing existing businesses, making
acquisitions, and entering new businesses. The key themes underlying these strategies were realizing the Group’s
vision of becoming a Total Life Concierge (TLC)*1, and ABCIR+S*2 initiatives.
In the six months ended September 30, 2019, with the success of measures to acquire new customers andincrease orders, the Group booked sales of 93,015 million yen (+4.7% year on year) and posted significant growth inall profit categories, with operating profit of 5,500 million yen (+58.3% year on year), recurring profit of 5,608 million
yen (+56.6% year on year), and net income attributable to owners of the parent of 3,492 million yen (+101.1% year
on year). The results for sales and all profit categories were at record highs.
As of September 30, 2019, the number of continuing customers rose by 16 thousand from March 31, 2019 to
2,918 thousand, and members of the TLC Membership Service increased by 47 thousand to 852 thousand.
Major topics in the six months ended September 30, 2019 included the following:
In July 2019, the Group acquired 99.0% of outstanding shares in software development company AM’s Brain Inc.
(Kita-ku, Okayama, Okayama Prefecture) to strengthen its development structure in the Information andCommunications business. In August 2019, the Group entered into a business alliance agreement with Isesaki Gas
Co., Ltd., which operates city gas and LP gas businesses in Isesaki, Gunma Prefecture, and acquired 20.7% of its
outstanding shares. Also in August 2019, the Group established Nikaho Gas Corporation to take over the city gas
business operated by the city of Nikaho, Akita Prefecture. In September 2019, the Group acquired all shares in
Nissan Tri Star Construction, Inc., a general construction company based in Gero, Gifu Prefecture, to expand its
Building and Real Estate business.
*1

Vision of becoming a TLC: The Group seeks to support comfortable living of customers in a comprehensive
and detail-oriented way through various services it offers, with an aim of enhancing customer satisfaction.

*2

ABCIR+S: An acronym formed by the first letters of AI, big data, cloud, IoT, robotics, and smartphones. It
refers to the Group’s strategies toward technological innovation.

Performance by segment was as follows.

(Gas and Petroleum)
In the LP gas business, amid intensifying competition from rival operators, the Group focused on customer growththrough measures such as strengthening efforts to acquire new customers and preventing contract cancellations inexisting service areas, as well as expanding into new areas. As a result, in the six months ended September 30,
2019, the number of customers rose by 11 thousand from March 31, 2019 to 639 thousand, and sales came to29,240 million yen (+3.5% year on year).
In the city gas business, the number of customers largely remained unchanged from that of March 31, 2019 at 56

2

thousand. Still, sales rose to 6,526 million yen (+14.8% year on year), supported by a higher unit sales price on theback of fuel cost adjustment regulations and increased equipment sales.
As a result, segment sales amounted to 35,766 million yen (+5.4% year on year) and operating profit to 787 million
yen (versus a loss of 52 million yen during the same period of the previous fiscal year).

(Building and Real Estate)
In the Building and Real Estate business, segment sales came to 9,736 million yen (+8.3% year on year) andoperating profit to 487 million yen (+117.9% year on year), thanks to increases in equipment sales and the number ofprojects in the renovation business.

(CATV)In the CATV business, amid intensifying competition from telecommunications companies, the Group worked toincrease competitiveness and boost customer count, and took steps to prevent contract cancellations. It offereddiscounts for broadcasting and communications bundles and packaged services with smartphones in partnershipwith major mobile phone carriers. The Group also stepped up efforts to create community channel programs with alocal focus. As a result, broadcasting services had 794 thousand customers, up by five thousand from March 31,
2019, and communications services had 282 thousand customers, up by nine thousand.
Consequently, segment sales amounted to 15,593 million yen (+3.0% year on year) and operating profit to 2,304
million yen (+10.6% year on year).

(Information and Communications)
In consumer-oriented services, amid intensifying competition from major mobile phone carriers, the Group worked
to attract customers by expanding service offerings. In addition to the TOKAI-brand MVNO service LIBMO on its own,
it offered Hikari Collaboration bundled with LIBMO. The LIBMO service added three thousand customers since
March 31, 2019 to bring customer count to 43 thousand, but the number of ISP customers declined by 20 thousand
to 727 thousand (324 thousand Hikari Collaboration and 403 thousand conventional ISP customers). As a result,sales came to 14,563 million yen (-6.1% year on year).
In corporate services, sales rose to 11,347 million yen (+17.6% year on year), mainly reflecting increases inrecurring-revenue operations and contracted system development projects.
Due to these factors, segment sales were 25,911 million yen (+3.0% year on year), and operating profit was 1,657
million yen (+64.6% year on year).

(Aqua)In the Aqua business, the Group actively worked to acquire customers mainly for “The gift of delicious water:
Ulunom” brand, targeting large commercial and other facilities. The number of customers increased by three
thousand from March 31, 2019 to 159 thousand. The Group also worked to reduce manufacturing and logistics costs.
As a result, segment sales came to 3,752 million yen (+7.5% year on year) and operating profit to 257 million yen(+61.5% year on year).

(Others)
Turning to other businesses, sales in the nursing care business totaled 574 million yen (+8.0% year on year),
supported by an increase in the number of care recipients. In the shipbuilding business, sales amounted to 726

3million yen (+15.9% year on year), reflecting an increase in work volume for ship repairs. In the bridal events
business, sales came to 574 million yen (-8.1% year on year) due to a decline in the number of wedding ceremonies.
As a result, segment sales were 2,255 million yen (+6.2% year on year), and operating profit was 51 million yen(versus a loss of 10 million yen in the same period of the previous fiscal year).

(2) Explanation of Consolidated Financial Position
1) Assets, Liabilities, and Net Assets
As of September 30, 2019, total assets amounted to 165,616 million yen, down 1,990 million yen from March 31,
2019. This mainly reflected a 2,856 million yen decrease in notes and accounts receivable–trade owing to seasonal
factors, partially offset by a 1,146 million yen increase in cash and deposits attributed to newly consolidated
subsidiaries through acquisitions.
Total liabilities stood at 100,633 million yen, down 3,078 million yen from March 31, 2019. This was primarily due
to decreases of 821 million yen in notes and accounts payable–trade stemming from seasonal factors and 1,784
million yen in income taxes payable resulting from income tax payments.
Net assets totaled 64,982 million yen, up 1,088 million yen from March 31, 2019. This was mainly attributable tothe booking of 3,492 million yen in net income attributable to owners of the parent, offsetting the payment of 1,839
million yen in dividends of surplus.

2) Cash Flows
As of September 30, 2019, cash and cash equivalents stood at 4,204 million yen, up 185 million yen from March
31, 2019.
Cash flows from each activity during the period under review and the factors behind them are as follows.

(Cash flows from operating activities)
Net cash provided by operating activities was 10,706 million yen, up 3,512 million yen from the same period of theprevious fiscal year. Income tax payments and a decline in trade payables led to cash outflows, but higher net
income before income taxes and lower trade receivables, as well as depreciation and amortization expenses (noncash items) increased cash inflows.

(Cash flows from investing activities)
Net cash used in investing activities was 6,859 million yen, up 104 million yen from the same period of theprevious fiscal year, as a result of the purchase of property, plant and equipment and intangible assets.

(Cash flows from financing activities)
Net cash used in financing activities was 3,659 million yen, down 3,718 million yen from the same period of theprevious fiscal year. This was primarily due to repayments of lease obligations and payments of dividends.

(3) Explanation of Consolidated Earnings Forecasts and Other Forward-Looking Information
Earnings results for the six months ended September 30, 2019 were generally in line with forecasts, and theGroup maintains its consolidated earnings forecasts for the fiscal year ending March 31, 2020, which wasannounced on May 9, 2019.
The earnings forecasts are based on information currently available to the Company. Actual results may differ from4

these forecasts due to a variety of factors.

5

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable–trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Total assets

6

Fiscal Year Ended
March 31, 2019

(Millions of yen)
Six Months Ended
September 30, 2019

4,164
24,798
4,173
660
865
8,264
-419
42,506

5,310
21,941
3,694
1,713
863
7,418
-451
40,49133,756
23,592
22,921
16,76097,03033,45623,41723,094
17,24897,216

5,044
6,084
11,128

4,831
5,771
10,6032,365
14,958-386
16,937125,0972
167,606

2,399
15,382-478
17,302
125,1222
165,616

Liabilities
Current liabilities
Notes and accounts payable–trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Accruals
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Accruals
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

7

Fiscal Year Ended
March 31, 2019

(Millions of yen)
Six Months Ended
September 30, 201915,021
22,265
168
3,491
1,705
18,73361,385

14,20021,954
133
1,707
1,759
17,71957,472

230
27,940149
719
13,28642,325
103,711

171
28,669101761
13,456
43,160100,633

14,00025,527
21,863-2,222
59,167

14,00025,53023,516-2,22060,826

1,573
-319
-10
2,217
3,460
1,267
63,894
167,606

1,337
-671
-15
2,124
2,776
1,380
64,982
165,616(2) Quarterly Consolidated Statements of Income, Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Six-months Ended September 30, 2019)

Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit
Interest income
Dividend income
Commission fee
Share of profit of entities accounted for using equity method
Other
Total non-operating profit
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sales of non-current assets
Transmission line facility subsidies
Subsidy income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Loss on sales of investment securities
Impairment loss
Other
Total extraordinary losses
Quarterly net income before income taxes
Income taxes (current)
Income taxes (deferred)
Total income taxes
Quarterly net income
Quarterly net income attributable to non-controlling interests
Quarterly net income attributable to owners of the parent

8(Millions of yen)
Six Months Ended
Six Months Ended
June 30, 2018
September 30, 2019
(April 1, 2018 to(April 1, 2019 toJune 30, 2018)
September 30, 2019)88,84093,01553,75955,85035,081
37,16531,60531,664
3,475
5,500
4
110
45
－
185
345

5
117
16
64
101
306

188
7
43
239
3,580

153
－
44
198
5,608

0
66
5
0
72

13
49
－
108
171

0
317
－
14
36
367
3,285
1,333
146
1,480
1,804
67
1,736

0
384
9
－
115
508
5,271
1,786
-123
1,662
3,608
116
3,492

(Consolidated Statements of Comprehensive Income)(Six-months Ended September 30, 2019)

Quarterly net income
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurement of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income attributable to ownersof the parent
Quarterly comprehensive income attributable to noncontrolling interests

9

Six Months Ended
September 30, 2018
(April 1, 2018 toSeptember 30, 2018)
1,804(Millions of yen)
Six Months Ended
September 30, 2019
(April 1, 2019 to
September 30, 2019)
3,608

21
1,106
3
-108

-236
-351
0
-92

-7

-5

1,015
2,819

-684
2,924

2,750

2,808

69

115

(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)
Six Months
Six Months Ended
Ended
September 30, 2019
June 30, 2018
(April 1, 2019 to(April 1, 2018 toSeptember 30,
June 30, 2018)2019)
Cash flows from operating activities
Quarterly net income before income taxes
Depreciation
Amortization of goodwill
Impairment loss
Increase (decrease) in net defined benefit asset and liability
Interest and dividend income
Loss (gain) on sales of investment securities
Interest expenses
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable – trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable–trade
Other
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Interest and dividend income received
Purchase of securities
Proceeds from sales of securities
Purchase of tangible and intangible assets
Proceeds from sales of tangible and intangible assets
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Payments of loans receivableCollection of loans receivable
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Interest expenses paid
Net increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Payments for acquisition of treasury stock
Proceeds from disposal of treasury shares
Cash dividends paid
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

10

3,285
6,832
584
14
-132
-114
-0
188
-0
317
2,459
-370
-2,304-1,883
8,876-1,683
7,193

5,271
7,080
535
－
-122
-123
-99
153
-13
384
3,346
249
-1,312-2,17813,172-2,466
10,706139-306
0-6,743
122

146
-6
247
-5,750107-202-1,408-200
10215-6,964－10-206-6,859-194
4,450-1,852
4,800-5,196-104-0
0-1,835
-7
58
1
289
3,004
3,294

-162
-375
-1,8585,400-4,722-94-0
0-1,838-8-3,659
-1
185
4,018
4,204

(4) Notes on Quarterly Consolidated Financial Statements(Notes to Premise of Going Concern)
Not applicable.
(Notes on Significant Changes in Shareholders’ Equity)
Not applicable.
(Segment Information, etc.)[Segment Information]
I. Six-months ended September 30, 2018 (April 1, 2018 to September 30, 2018)
Sales and Income of Losses by Reportable Segment
Reportable segments
Building
Information
1
Other
Gas and
and
and
CATV
Aqua Subtotal
Petroleum Real
CommuniEstatecations
Sales
Sales toexternalcustomers
Intersegment
sales andtransfers
Subtotal
Segment income(loss)(Notes)33,948

8,987

96

554

34,045

9,542

-52

223

15,13
5
370
15,50
6
2,084

25,154

1,503

26,6571,006

3,490 86,716

90

2,615

3,580 89,332
159

3,422

(Millions of yen)Amount inquarterly
consolidated
statements of
3
Income

Total

Adjustments2

2,123 88,840－

88,8402,697-2,697－2,204 91,537-2,697

88,840

63

3,475

81

-10

3,411

1. The “Other” 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 to segment income (loss) are mainly eliminations due to intersegment transactions.
3. Segment income (loss) is adjusted to match operating profit in the quarterly consolidated statements of income.

II. Six-months Ended September 30, 2019 (April 1, 2019 to September 30, 2019)
Sales and Income of Losses by Reportable Segment
Reportable segments
Building
Information
1
Other
Gas and
and
and
CATV
Aqua Subtotal
Petroleum Real
CommuniEstatecations

Total Adjustments2(Millions of yen)Amount inquarterly
consolidated
statements of
3
IncomeSales
Sales toexternalcustomers
Intersegment
sales andtransfers
Subtotal
Segment
income (loss)

35,76687

9,736 15,593

494

344

35,853 10,231 15,937
787

487

2,304

25,911 3,752 90,760

1,746

98

2,771

27,658 3,851 93,532
1,657

11

257

5,494

－

93,0152,857-2,857－2,340 95,872-2,85793,015-45

5,500

2,255 93,015

85

51

5,545

(Notes)

1. The “Other” 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 to segment income (loss) are mainly eliminations due to intersegment transactions.
3. Segment income (loss) is adjusted to match operating profit in the quarterly consolidated statements of income.

12