TOKA
AI Holdings C
Corporation (33167) Financia
al Results forr the year ended March 31
1, 2016Cons
solidated F
Financial Results foor theYear endded Marchh 31, 2016 [Japanes
se GAAP]May 10, 2016
6
TOKAI Hooldings Corporation
Stock listing:Tokyo StockS
Exchangee
URL http://toka
3167
aiholdings.co.jp
Katsuhikoo Tokita, Presideent & CEOHiroyuki Ozawa,
O
Managinng Executive Offficer, General Manager
Mof Admministrative Headdquarters
Telephone
e: +81-54-275-0
0007
Scheduled datte of regular gen
neral shareholdeers’ meeting:June 24
4, 2016
Scheduled datte of dividend pa
ayment:June 27
7, 2016
Scheduled datte of filing quarte
erly report
June 24
4, 2016
Supplementaryy materials on financial results::
Yes
Yes (Institutional inves
Financial resullts briefing:stors only)
Company namme:
Stock code:
Representativee:Contact:(Figurees are rounded to thee nearest million yen)d Financial Results for the Year En
nded March 31, 2
2016 (April 1, 2015–March 31, 20016)
1. Consolidated
Operating Resultss(1) Consolidated O(% figuress represent year-os)
on-year changes
Salees

Operating Profitt

Millions of yeenYear ended Ma
arch 31, 2016
Year ended Ma
arch 31, 2015
(Note) Compreh
hensive income:%Net Inc
come
Attributable to OwnersOof thePare
ent

Recurrring Profit
Millions of
o yen

%

Millions off yen%

180,94
40
(3.5)
8,245
(8.4)
8,150
187,511
(0.8)
9,003
21.8
8,549
1,393 million yen
y in the year eended March 31, 2016 (down 78.4
4%)6,435 million yen
y in the year eended March 31, 2015 (up 130.0%
%)

(4.7)
21.9

3,458
3,934

(12.1))
51.4
4

Net Income per
Share
e

M
Millions of yen%

Net Income per
Sha re (Diluted)
Yen

Yen

Year ended Ma
arch 31, 2016
30.01
Year ended Ma
arch 31, 2015
34.16
(Reference) Equafor undder the equity meethod:uity in affiliates accounted

Recurringg Profit to
AssetsTotal A

Return on Equity%

Op
perating Profit
Margin
%

%

26.89
8.3
5.0
34.12
9.9
5.0
0 millionn yen for the year ended March 331, 2016minus 6 million yen for the year ended M
March 31, 2015

4.6
6
4.8
8

(2) Consolidate
ed Financial Po
ositionTotal Assets
A

Net Assetts

Millions of yen

Equity Ratio

Net Asse
ets per Share

Millions of yen

%

Yen
n

41,97043,46725.6
25.7

362.77
7368.15
5

Year ended Ma
arch 31, 2016
160,303
Year ended Ma
arch 31, 2015
165,702(Reference) Equyended Marcch 31, 2016
uity: 41,063 milllion yen for the year
42,544 milllion yen for the yearyended Marcch 31, 2015

(33) Consolidated Cash Flows
Cash Flows fromm
Investing Activities

Cash Flows fromOperating Activities
MillionsMof yenCash Flows fromFina
ancing Activities

Cash and CashC
Equivalents
at the Ennd of the Year

Millions of yen

Millions off yen

Millions of yenn(1
11,015)(8,851)(9,1150)(18,7764)

4,044
4
2,821

Year ended Ma
arch 31, 2016
21,395
Year ended Ma
arch 31, 2015
27,265(Reference) Equuity: 41,063 milllion yen for the yearyended Marcch 31, 2016
42,544 milllion yen for the yearyended Marcch 31, 2015

2. Dividends
Annual Dividend
End of Q1

En
nd of Q2

Yen

Year ended Ma
arch 31, 2015
Year ended Ma
arch 31, 2016
Year ending Ma
arch 31, 2017
(Forecast)End of Q3

Yen

Total Dividennds
Yen

Yen
Y

Millions off yen%(Consolidated))%

1,,3901,,601

35
5.1
46
6.7

3.5
5
3.8
8

Year-eend

YenDividend on
EquityPayout Ratio(Consolidate
ed)

Total

―
―

6.00
6.00

―
―

6.00
8.00

12.00
14.00

―

11.00

―

11.00
1

22.00

40
0.0

3.. Consolidated E
Earnings Foreca
asts for the Yea
ar Ending Marchh 31, 2017 (April 1, 2016–Marchh 31, 2017)(% figures represeent year-on-year chan
nges)

Sales
Six months end
ding
September 30, 2016
Year ending Ma
arch 31, 2017

Operrating Profit
Miillions of ye

ble Net Income
Net I ncome Attributab
to Ow
wners of the Pareent per Share

Recurring Profit
P

Millions of ye
en

%

%

Millions of ye

%

Yen
n

85,3000.6

3,380 82.1%

Millions of ye

3,270 83.8

1,120

30
04.0

9.89
9

187,100

3.4

12,560 52.3

11,830 45.1

6,240

80.4
8

55.13
3

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

Notes
(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries affecting the scope of
consolidation): No
Newly consolidated (company name): —Eliminated (company name): —(2) Changes in accounting policies, estimates, and restatements
1) Changes in accounting policies accompanying revisions in accounting standards, etc.:
2) Changes in accounting policies other than 1):
3) Changes in accounting estimates:

Yes
No
No

4) 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 end of year (including treasury stock):

FY3/2016

139,679,977 shares FY3/2015

155,199,977 shares

2) Number of shares of treasury stock at end of year:

FY3/2016

26,488,216 shares FY3/2015

39,637,942 shares

3) Average number of shares during the period:

FY3/2016

115,825,434 shares FY3/2015

115,061,833 shares(Note)The number of shares of treasury stock at the end of the year includes shares of the Company held in trust accounts for the employee stock ownership plan (ESOP) (0shares as of March 31, 2016; 509,800 shares as of March 31, 2015). Furthermore, the average number of shares of treasury stock held in ESOP trust accounts during the year
(120,833 shares for the year ended March 31, 2016; 682,470 shares for the year ended March 31, 2015) are included in the treasury stock, which is subtracted from calculationsof the average number of shares during the period.

(Reference) Overview of Non-Consolidated Operating Performance
Operating Performance for the Year Ended March 31, 2016 (April 1, 2015–March 31, 2016)(1) Non-Consolidated Operating Performance(% figures represent year-on-year changes)

Sales

Operating Profit

Millions of yen

Year ended March 31, 2016
Year ended March 31, 2015

%

6,204
1.4
6,116 (2.7)%

1,821 (11.4)
2,057
7.9

Millions of yen

Net Income
%

1,785
0.6
1,774 (3.7)

Millions of yen%

1,377 10.1
1,250 (20.5)

Net Income per Share(Diluted)

Net Income per ShareYear ended March 31, 2016
Year ended March 31, 2015

Recurring Profit

Millions of yen

Yen

Yen

11.62
10.56

10.44
10.55

(2) Non-Consolidated Financial Condition
Total Assets

Net Assets

Millions of yen

Year ended March 31, 2016
102,334
Year ended March 31, 2015
100,062(Reference) Equity: 24,586 million yen for the year ended March 31, 2016
27,836 million yen for the year ended March 31, 2015

Equity Ratio

Net Assets per Share

Millions of yen%

Yen

24,79428,09724.0
27.8

217.21
234.21*Information Regarding Execution of Audit ProceduresThis financial statement is not subject to the audit procedures pursuant to the Financial Instruments and Exchange Act, and the audit procedures of financial statements pursuant to
the Financial Instruments and Exchange Act have not been completed as of the release of this document.

*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 fromforecasts due to various factors going forward.

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

[Attachment]

Contents
1. Analysis of Operating Performance and Financial Condition ················································································ 2(1)Analysis of Operating Performance ········································································································· 2(2)Analysis of Financial Position ················································································································· 3(3)Basic Profit Distribution Policies and Dividends for the Current and Next Fiscal Years ······························ 4(4)Business and Other Risks ··················································································································· 4

2. Status of the Corporate Group ····················································································································· 8
3. Group Management Policy ························································································································· 11(1)

Basic Policy of Corporate Management ······························································································· 11(2)Target Management Indices ··············································································································· 11(3)Management Strategies and Items to Address over the Medium to Long Term ········································ 11

4. Basic Perspective on Selection of Accounting Standards ··············································································14
5. Consolidated Financial Statements ·············································································································15(1)Consolidated Balance Sheets ·············································································································15(2) Consolidated Statements of Income andConsolidated Statements of Comprehensive Income ··············································································17(3)Statement of Changes in Consolidated Shareholders’ Equity ·································································19(4)Consolidated Statements of Cash Flows ·····························································································21(5)Notes to the Consolidated Financial Statements···················································································23(Notes on Premise of Going Concern) ···································································································23(Significant Matters Forming the Basis of Preparing theConsolidated Financial Statements) ······································································································23(Changes in Accounting Policies) ··········································································································25(Changes in Presentation Method) ········································································································25(Additional Information) ························································································································26(Notes to the Consolidated Balance Sheets) ··························································································28(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) ·························································································································37(Omissions from Disclosure) ·················································································································41(Per-Share Information) ·······················································································································41(Important Subsequent Events)·············································································································41

6. Non-Consolidated Financial Statements··········································································································42(1)Balance Sheets ··································································································································42(2)Statements of Income··························································································································44(3)Statement of Changes in Shareholders’ Equity ·····················································································45

7. Other ····················································································································································· 47(1)

Changes in Executive Positions·············································································································471TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

1. Analysis of Operating Performance and Financial Condition(1) Analysis of Operating Performance
During the year ended March 31, 2016, the Japanese economy was in a moderate recovery phase, buoyed by thegovernment’s economic measures and additional monetary policies by the Bank of Japan. Nevertheless, the economic
outlook remained opaque, due to such factors as a slowdown in China and other emerging markets, falling oil prices andrapid yen appreciation from the beginning of 2016.
Under such conditions, in the year ended March 31, 2016, the Group conducted its business operations in line with thethree basic policies of its medium-term management plan, “Innovation Plan 2016 ‘Growing’”: 1) continue to increase sales
by winning new customers and improve profitability, 2) continue to improve the Group’s financial profile and increase
management stability, and 3) provide continuous and stable returns to shareholders.
By conducting its sales activities in line with these basic policies, the Group increased its number of continuing customers
by 20 thousand from March 31, 2015, to 2,558 thousand. Members of the TLC Membership Service—aimed at enhancing
customer interactions and offering benefits to members—rose by 96 thousand from March 31, 2015, to 491 thousand
members.
During this year, we worked diligently to respond to changes in the operating environment in two main ways.
First, in the communications sector we began offering “Hikari Collaboration” services that combine our services with fiber
optic services offered by NTT East Japan and NTT West Japan. These services offer the Group an opportunity toregenerate growth in the broadband business, boosting market share by encouraging existing customer transfers andwinning new customers.
Our second response involves initiatives in the energy sector in line with the full-fledged liberalization of electric power
retail sales from April 2016. With businesses from various industries entering this market, we partnered with Tokyo ElectricPower Company, Inc. (“TEPCO”) and began selling high-voltage power to corporate customers in October 2015. In January
2016, we began accepting subscriptions for set service plans for households that combine TEPCO’s low-voltage power with
the Group’s LP gas, internet, and CATV services.
Meanwhile, we worked to enhance and improve our financial profile. In overseas markets, chiefly the Swiss Confederation,
we issued 10.0 billion yen in non-interest-bearing convertible bonds with stock acquisition rights that can boost equity if thebonds are converted to shares. In this manner, we worked to lower fundraising costs and diversify our sources of funding.
In addition to these initiatives, during the year ended March 31, 2016, gas selling prices fell in line with procurement prices.
As a result, the Group booked sales of 180,940 million yen (down 3.5% year-on-year). Due to higher upfront costs to win
customers and promote customer transfers to Hikari Collaboration, operating profit was 8,245 million yen (down 8.4%),
recurring profit was 8,150 million yen (down 4.7%), and net income attributable to owners of the parent was 3,458 million
yen (down 12.1%).
Performance by segment was as follows.
(Gas and Petroleum)
In the LP gas business, we expanded operations into Iwaki and Sennan area and Aichi Prefecture, and continued
measures to prevent service cancellations were successful. As a result, the number of customers increased by 8 thousand
from March 31, 2015, to 580 thousand. Sales volume of LP gas was flat year-on-year, but sales were down as selling prices
were lowered to reflect a drop in procurement prices.
In the city gas business, the number of customers was 54 thousand, largely unchanged from the level as of March 31,
2015, but sales fell year-on-year due to a decline in selling prices stemming from the raw material price adjustment system.
Due to these factors, segment sales came to 80,745 million yen (down 13.2% year-on-year), but operating profit was
6,973 million yen (up 25.7%), reflecting lower costs as LP gas procurement prices fell, as well as successful efforts toincrease operating efficiency.
(Building and Real Estate)
In the Building and Real Estate segment, sales were up year-on-year in areas such as housing sales, new construction ofretail stores, and building management support services.
Accordingly, segment sales increased to 20,975 million yen (up 4.8% year-on-year). Bolstered by higher sales, operating
profit was 676 million yen (up 36.4% year-on-year).
(CATV)In the CATV segment, we worked proactively to sell set services combining broadcasting and communications services.
In addition to offering set discounts for broadcasting and communications, we worked to attract new customers by offeringsmartphone set discounts through alliances with multiple mobile phone carriers. We created community channels to deliver
high-quality regional information, and reinforced our customer center in an effort to prevent cancellations. These initiatives
led to a year-on-year increase of 6 thousand customers in the broadcasting service to 499 thousand as of March 31, 2016.
In addition, subscribers to communications services increased by 14 thousand to 211 thousand (156 thousand CATV-FTTH
customers and 54 thousand CATV internet subscribers).
Owing to these efforts, segment sales totaled 24,608 million yen (up 1.0% year-on-year), and operating profit was 1,161

2

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

million yen (up 34.6%).
(Information and Communications Service)
In the broadband business, we actively marketed to encourage existing customers to switch to “@TCOM Hikari” and“TNC Hikari,” services that use Hikari Collaboration. Some 160 thousand customers have switched to these services(conversion rate of 27.8%). Although many new entrants—including major mobile phone carriers—are beginning the Hikari
Collaboration model, creating an increasingly competitive environment, our proactive efforts to attract new customers led to
an increase by 4 thousand FTTH customers from March 31, 2015, to 748 thousand customers.
Still, the number of ADSL customers was down by 17 thousand from March 31, 2015, and as a result the overall numberof broadband customers decreased by 13 thousand from March 31, 2015, to 833 thousand customers.
Consequently, segment sales were 44,246 million yen (up 10.3% year-on-year), but operating profit was 829 million yen(down 76.2%) due to higher upfront costs to win Hikari Collaboration customers and promote service conversions.
(Aqua)In the Aqua business, the Company was working proactively to expand its customer reach across Japan through sales
activities targeting mainly large-scale commercial facilities in the Shizuoka and Kanto regions, as well as in the Kansai,
Hokuriku, and Tohoku regions. By adopting the character of “Doraemon” as a mascot and promoting the brand message“The gift of delicious water: Ulunom,” the Company succeeded in increasing the number of customers to 133 thousand, up
by 3 thousand from March 31, 2015.
Sales in this segment came to 5,487 million yen (up 10.7% year-on-year). We succeeded in reducing the operating loss to
1,275 million yen (from an operating loss of 1,448 million yen in the preceding fiscal year), putting the segment on the pathto profitability.
(Others)
In the nursing care business, sales increased due to the larger number of users thanks to efforts to operate facilities
where residents feel comfortable and safe.
In the ships business, although the number of ships repaired was down year-on-year, per-ship repair prices rose, leading
to higher sales.
In the bridal events business, sales were down in line with the closing of Creation M Bouquet Tokai Gotemba at the end of
March 2015.
As a result, segment sales came to 4,875 million yen (down 2.2% year-on-year), and the operating loss was 197 million
yen (compared with an operating loss of 386 million yen in the preceding fiscal year).
・Outlook for the Year Ending March 31, 2017
In the year ending March 31, 2017, we anticipate firm economic recovery. At the same time, we expect competition forcustomers to increase as liberalization prompts companies from other industries and sectors to enter our market throughalliances and other methods.
In the Group’s mainstay business of providing services to retail customers, we will act as a Total Life Concierge (TLC)
providing a variety of lifestyle infrastructure services. We will work to reinforce and increase operating profitability byproactively promoting cross-selling measures that newly include electricity.
As a result of these initiatives, in the year ending March 31, 2017, we anticipate sales for the Group of 187,100 million
yen (up 3.4% year-on-year). We expect robust performance in the LP gas and CATV businesses, recovered profitability inthe broadband business thanks to the addition of Hikari Collaboration customers, and a move into the black in the Aqua
business. Spurred by these improvements, we look forward to record-level profits in all categories: operating profit of 12,560
million yen (up 52.3%), recurring profit of 11,830 million yen (up 45.1%), and net income attributable to owners of the parentof 6,240 million yen (up 80.4%).
By segment, we forecast sales of 75,900 million yen (down 6.0% year-on-year) in the Gas and Petroleum segment,
22,500 million yen (up 7.3%) in the Building and Real Estate segment, 25,400 million yen (up 3.2%) in the CATV segment,
51,800 million yen (up 17.1%) in the Information and Communications segment, 5,800 million yen (up 5.7%) in the Aqua
segment, and 5,700 million yen (up 16.9%) in the Others segment.
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) Analysis of Financial Position
1) Assets, Liabilities, and Net Assets
Total assets amounted to 160,303 million yen as of March 31, 2016, down 5,399 million yen from March 31, 2015. Thisdecline was mainly attributable to a 3,871 million yen decrease in property, plant and equipment stemming fromdepreciation, and decreases of 1,828 million yen in net defined benefit assets and 1,799 million yen in investment securities.
Total liabilities were 118,332 million yen, down 3,902 million yen from March 31, 2015. The issuance of 10,000 million

3

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

yen in convertible bonds with stock acquisition rights pushed liabilities up, but total liabilities declined due to decreases of
1,063 million yen in lease obligations (including those due within one year), and 11,703 million yen in loans and other factors
As of March 31, 2016, net assets totaled 41,970 million yen, down 1,496 million yen from March 31, 2015. Despite
recording net income attributable to owners of the parent of 3,458 million yen, this decrease was principally due to theacquisition of treasury stock, which reduced net assets by 1,801 million yen. Other reductions included 1,391 million yen
due to the payment of dividends from surplus, 1,224 million yen in valuation difference on available-for-sale securities, and1,172 million yen in remeasurement of defined benefit plans.
Due to the cancellation of treasury shares, capital surplus and treasury stock each fell by 3,198 million yen, although
total net assets were unaffected.
2) Cash Flows
Cash and cash equivalents stood at 4,044 million yen as of March 31, 2016, up 1,223 million yen from March 31, 2015.
Cash flows from each activity during the year under review and the factors behind them are as follows.
(Cash flows from operating activities)
Net cash provided by operating activities was 21,395 million yen (down 5,870 million yen year-on-year). Funds increased
due to net income before adjustments for income taxes and depreciation and amortization (non-cash items).
The reason for the major year-on-year decrease in cash flow from operating activities includes a rise in notes andaccounts payable as existing information and communications service customers switched to the Hikari Collaboration
service, as well as an increase in the amount of consumption tax paid.
(Cash flows from investing activities)
Net cash used in investing activities was 11,015 million yen (down 2,164 million yen year-on-year). Cash was used mainly
for the acquisition of tangible and intangible assets.
(Cash flows from financing activities)
Financing activities used net cash of 9,150 million yen (up 9,613 million yen year-on-year). Sources of cash included theissuance of convertible bonds with stock acquisition rights, while cash was used mainly to repay borrowings, leaseobligations, and the acquisition of treasury stock.
Below is a summary of major cash flow indicators.

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

Year ended
March 31, 2012
14.3

Year ended
March 31, 2013
18.6

Year ended
March 31, 2014
21.6

Year ended
March 31, 2015
25.7

Year ended
March 31, 2016
25.6

21.6

21.0

23.2

36.3

41.4

3.6

3.6

3.7

2.7

3.3

15.8

17.4

19.1

28.0

29.3

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 year-end (after
deducting treasury stock).
*Operating cash flow is based on cash flows from operating activities in the consolidated statements of cash flows. Interest-bearing debt
covers bonds payable and loans payable in the consolidated balance sheets. Interest payments are based on the interest paid amounts
shown in the consolidated statements of cash flows.

(3) 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 year ended March 31, 2016, we plan to award total dividends of 14 yen per share, comprising an interim dividendof 6 yen and a year-end dividend of 8 yen.
For the year ending March 31, 2017, we plan to award total dividends of 22 per share comprising interim and year-end
dividends of 11 each.
(4) 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, 2016.

4

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

・Impact of Interest Rate Fluctuations
The Group strives to strengthen and enhance its management base in the Gas and Petroleum, Building and Real Estate,
CATV, Information and Communications, and Aqua segments. In addition, we are working to lower interest-bearing debt andimprove our equity ratio through cash flow management based on our medium-term management plan. However, futureinterest rate fluctuations could affect the Group’s operating performance and financial condition.
・Business Alliances and M&A Activity
The Group has a policy of engaging proactively in business alliances and M&A activity when doing so can be expected todeliver synergies with existing services or when launching new services could lead to future business development.
Nevertheless, business partners’ operations and acquired businesses may not develop according to plan, and if results fallshort of expectations, the Group’s operating performance and financial condition could be affected.
・Recoverability of Invested Assets
The Group engages in large-scale capital investment to expand business in its core segments: Gas and Petroleum, CATV,
and Information and Communications services. Furthermore, existing investment plans may require change or revision due
to the development and launch of new technologies and the resulting provision of new services, as well as to expand
operations. The Group takes proper steps to evaluate investment results and review investment plans, but investment
performance may fall below initial expectations due to major changes in conditions, such as economic and market
fluctuations. In such instances, the recoverability of invested assets may be delayed. Departments in charge of investment
project work consistently to stringently manage the recoverability of invested cash, such as assessing the status of eachindividual investment and revising business plans where necessary. Even so, if it is unable to respond to changes in theoperating environment, such as sharp economic fluctuations and sudden drops in demand, the Group may be obliged torecord impairment losses on property, plant and equipment if investment results fall short of expectations. This situation
could affect the Group’s operating performance and financial condition.
・Credit Management
The Group formulates credit management regulations and other internal rules, and enacts and strives to enhance its
systems for managing business partner credit and receivables. Nevertheless, the Group’s operating performance andfinancial condition could be affected if a business partner’s management conditions were to worsen, the Group were toexperience delays in accounts and loans receivable, or if debts were to become irrecoverable.
・Management of Personal Information
As an entity handling personal information, the Group has formulated a Personal Information Protection Policy, which isdisclosed on its website. The Group takes the utmost care to handle customer information in accordance with the Act on theProtection of Personal Information and other legislation, as well as its internal regulations. If a large-scale leak of customer
information were to occur despite these efforts, rumors could lead to a loss of social credibility, and the Group could be
obliged to pay compensation for damages. Such a situation could affect the Group’s operating performance and financial
condition.
・Information System Failure
Particularly in the Information and Communications segment, the Group provides services via its own information
processing systems, data centers, and communication lines. We work meticulously to prevent system failure, but
information systems could fail or malfunction nevertheless as a result of equipment malfunction, human error, large-scale
natural disasters, or other factors. Such an accident could render the Group’s continued service provision problematic,rumors could lead to a loss of social credibility, and the Group could be obliged to pay compensation for damages. Such asituation could affect the Group’s operating performance and financial condition.
・Legal Restrictions
Across its multifaceted businesses, the Group is subject to the Law Concerning the Securing of Safety and the
Optimization of Transaction of Liquefied Petroleum Gas, the Gas Business Act, the Building Lots and Buildings Transaction
Business Act, the Construction Business Act, the Broadcast Act, the Telecommunications Business Act, and the Act on
Establishment of Enhanced Environment for Youth’s Safe and Secure Internet Use, as well as related legislation andregulation by competent authorities. The Group’s door-to-door sales businesses is subject to the Act on Specified
Commercial Transactions, and businesses involving the use of subcontractors are subject to the Act against Delay inPayment of Subcontract Proceeds, Etc. to Subcontractors. Also, many of the Group’s businesses involve direct interaction
with general consumers, and current legislation is trending toward greater levels of consumer protection and heightened
administrative guidance in the way legislation is applied. Furthermore, the future enactment of legal restrictions that wecannot currently anticipate and an inability to respond appropriately to such legislation could subject the Group to guidanceand censure by the administrative authorities. Rumors could lead to a loss of social credibility, and the Group could be
obliged to pay compensation for damages. Such a situation could affect the Group’s operating performance and financial

5TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

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

6

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

innovation 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 othercompanies. If trouble were to arise with these suppliers, outsourcing partners, or subcontractors, the Group’s ability toprovide customers with a stable supply of products and services could suffer, affecting the Group’s operating performanceand financial condition.
・Dependence on Specific Entities for Business and Orders
In its software development business, the Group is relatively highly reliant on specific system integrators. We have built
robust relationships with entities that have proven able to precisely respond to sophisticated requirements and havecultivated expertise in system configuration and operational knowhow. However, changes in management conditions orbusiness strategies at these system integrators could affect the Group’s operating performance and financial condition.
In broadband services, the Group forms alliances with telecommunications carriers, selling services to individuals via
consumer electronics retailers under sales agency agreements, and wholesaling though alliances with internet service
providers (ISPs). Changes in business strategies on the part of these telecommunications carriers, consumer electronics
retailers, and ISPs could affect the Group’s operating performance and financial condition.
The Group engages in the mobile business as an agent for SoftBank Corp. Significant changes in that company’sbusiness strategies or agency policies 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
incidents. Such factors could affect the Group’s operating performance and financial condition.
・Sanitation and Quality Management in the Provision of Food Products
In the Aqua business, the Group engages in the production and sale of bottled water for delivery, and as part of theweddings business we provide food and beverages. If any problems were to arise with respect to the quality or hygiene
management of such food and beverages, rumors could lead to a loss of social credibility, and the Group could be obliged
to pay compensation for damages. As a result, the Group’s operating performance and financial condition could be affected.
・Impact of Liberalization
Reforms are being steadily enacted to the electricity and city gas systems under the liberalization of the household
electricity retail markets. In the telecommunications sector, the wholesaling of fiber-optic lines by NTT East Japan and NTT
West Japan is prompting market entry from businesses other industries, and large-scale players are expected to increase
their service areas. If selling competition and price competition become more severe than the Group expects, its operating
performance and financial condition could be affected.

7

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

2. Status of the Corporate GroupThe TOKAI Group comprises the Company, 22 subsidiaries, and four 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 GASCORPORATION, 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 construction
related to LP gas.
TOKAI HOME GAS CORPORATION was established on April 1, 2015.
(City gas business)
TOKAI GAS CORPORATION provides city gas (natural gas) in Shizuoka Prefecture, such as the cities of Yaizu and Fuji.
(High-pressure gas business)
TOKAI CORPORATION sells oxygen, nitrogen, and other high-pressure gases, as well as related equipment. Affiliatedcompany SHIZUOKA OXYGEN CORPORATION produces high-pressure gases.
(Security business)
TOKAI CORPORATION provides automated security services.
(2) Building and Real Estate Segment
TOKAI CORPORATION builds and designs homes and shops, sells related equipment, and develops, buys andsells, 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 COMMUNICATIONSCOMPANY LIMITED, LCV CORPORATION, KURASHIKI CABLE TELEVISION Inc., and Toco Channel Shizuoka
Corporation; Net Technology Shizuoka Corporation handles related businesses.
(4) Information and Communications Segment
The Information and Communications segment comprises the following four businesses.
(System innovation service business)
TOKAI Communications Corporation develops software, provides information processing services, and sells related
equipment.
Affiliated company CloudMaster Co., Ltd., located in Taipei, Taiwan, develops software, provides information processing
services, and sells related equipment.
(Corporate telecommunications business)
TOKAI Communications Corporation provides fiber-optic leasing and data transmission services.
(ADSL and FTTH business)
TOKAI Communications Corporation sells TOKAI Network Club (TNC) and Web Shizuoka services within Shizuoka
Prefecture, and sells directly under the @TCOM brand nationwide outside Shizuoka Prefecture. The company also
wholesales ADSL lines in Shizuoka Prefecture and the Kanto region.

8

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Mobile phone business)
TOKAI Communications Corporation acts as a distributor for SoftBank Corp., handling shop operations and customer
agency services.
(5) Aqua Segment
TOKAI CORPORATION uses natural water to produce and sell drinking water, and Tokaizosen-unyu Corporation
handles overland transport and home delivery.
TOKAI (Shanghai) Trade & Commerce Co., Ltd. sells drinking water in and around Shanghai, China.
(6) Others Segment
The Others segment is made up of three businesses.
(Weddings and hotel business)
Bouquet Tokai Mishima Corporation operates a comprehensive wedding hall and reception facilities in the city ofMishima, Shizuoka Prefecture. TOKAI City Service Corporation operates Grandair Bouquet Tokai, a wedding hall in Aoi
Tower, in the city of Shizuoka.
Affiliated company Waei Co., Ltd. operates a hotel business.
(Note) Bouquet Tokai Gotemba Corporation was liquidated on March 10, 2016.
(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.
(Note) Bouquet Tokai Mishima Corporation discontinued its travel agency business on September 30, 2015.

9

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(As of March 31, 2016)
The status of the corporate group is as follows.
(Company) (Segments) (Businesses)(Operating companies)

Gas and Petroleum

LP gas,petroleum

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

TOKAI GAS CORPORATION○

High-pressure
gas
Security

TOKAI CORPORATION○,SHIZUOKA OXYGEN CORPORATION*
TOKAI CORPORATION○

Building and Real
EstateTOKAI CORPORATION○, TOKAI GAS CORPORATION○CATVTOKAI Cable Network Corporation○, ICHIHARA COMMUNITYNETWORK TELEVISION CORPORATION○, ATSUGI ISEHARACABLE NETWORK CORPORATION○, EASTCOMMUNICATIONS COMPANY LIMITED○,LCV CORPORATION○, KURASHIKI CABLE TELEVISION Inc.
○, Toco Channel Shizuoka Corporation○, Net Technology
Shizuoka Co., Ltd○

Information and Communications

Systeminnovation
service

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

Corporate
telecommunications

TOKAI Communications Corporation○

ADSL, FTTH

TOKAI Communications Corporation○

Mobile phone

Aqua

Aqua

TOKAI Communications Corporation○

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

Weddings andhotel

Bouquet Tokai Mishima Corporation○, TOKAI City Service
Corporation○, Waei Co., Ltd.*

Ship repair

Tokaizosen-unyu Corporation○

Other services

TOKAI CORPORATION○, Bouquet Tokai Mishima Corporation○, TOKAI Life Plus Corporation○, TOKAI Human Resource Evol
Corporation*(Notes) 1. ○ Consolidated subsidiaries (22 companies), *Affiliates accounted for under the equity method (fourcompanies)
2. Arrows indicate the flow of products and services.
3. In addition to the above, TOKAI Management Service Corporation (consolidated subsidiary) undertakes humanresource, accounting, general administration, and other back-office activities for Group companies.

10

Customers

CATV

TOKAI Holdings Corporation

Building andreal estateTOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

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 growthby operating as a unified group and taking full advantage of the strength of our 2.56-million-strong customer base,comprehensive services, and agility.
1) Corporate Philosophy (Beliefs of the TOKAI Group)“To improve the lives of our customers, we will continue to grow and develop together with local communities and theearth.”As a corporation providing comprehensive support for daily life and driven by the capabilities and the potential we havenurtured 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, andjoyful and meaningful lives.
3) Vision (Long-term business goals the TOKAI Group must aim for)“Through continued expansion throughout Japan and the world, we will strive to be a TLC (Total Life Concierge) as a onestop 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 successionof 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 the finest
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 our work,
driven by the freedom to create new ideas.
・Growing toward the future together with the communities we serve.
We are helping revitalize communities, creating a natural environment, and local community life, so everyone fromchildren to the elderly can live free from anxiety.
(2) Target Management Indices“Innovation Plan 2016 ‘Growing,’” our medium-term management plan for the year ended March 31, 2015 to the year
ending March 31, 2017, calls for ongoing improvements in our financial position and sets major targets for recoveringprofitability. Due to our concentration of expenses to attract customers under the Hikari Collaboration model, profits declinedin the information and communications business, but profits rose in the gas and other businesses, leading to operating profitof 8.2 billion yen in the year ended March 31, 2016. Consequently, we were able to minimize the drop in profits whilebuilding up a strong earnings base under the Hikari Collaboration model. We aim to further enhance profitability going
forward.
(3) Management Strategies and Items to Address over the Medium to Long Term
The Group transitioned to a holding company structure in April 2011. Since that time, we have prioritized management
initiatives to improve our financial position. These efforts have delivered some success. Prior to management integration,interest-bearing debt stood at 124.0 billion yen; we have reduced this to 71.4 billion yen. Also, by accumulating profits anddisposing of treasury stock, we have improved our equity ratio from 7.7% before the integration to 25.6%. Because ofconcentrating expenses on attracting customers under the Hikari Collaboration model, profits in the information andcommunications business declined, but thanks to increased profits from the gas and other businesses, we generated

11

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

operating profit of 8.2 billion yen in the year ended March 31, 2016. Consequently, we were able to minimize the drop in
profits while building up a strong earnings base under Hikari Collaboration. Going forward, we aim to further strengthenGroup profitability, reinforce competitiveness in our retail businesses, and maintain and expand our customer base.
In the energy sector, to take advantage of the electricity and city gas system reforms in October 2015 the Group signed abusiness partnership agreement with Tokyo Electric Power Company, Inc. Under this agreement, in January 2016 we began
accepting household subscriptions for set service plans that combine electric power services with the Group’s service
offerings. Following the full liberalization of the electricity retail market in April 2016, we have begun providing set service
offerings combining LP and city gas or the Group’s other lifestyle services—information and communications, CATV, andAqua—with electric power services. By providing comprehensive offerings, we intend to differentiate ourselves fromcompetitors, prevent cancellations from existing customers, and work proactively to attract new customers.
Based on the Group’s TLC (Total Life Concierge) concept, the Group will aim to respond flexibly to changes in thebusiness environment, generate new businesses and services, as well as reinforce points of contact with customers, andprovide comprehensive offerings combining a host of lifestyle services.
The environment surrounding the Group’s gas business is characterized by a declining population, changing consumer
lifestyles, competition between energy providers, and fluctuating crude oil prices. Given these factors, we expect sales andprice competition to grow increasingly fierce.
In the LP gas business, recognition of the social importance of LP gas is growing, as consumers see how LP gas supports
lifestyles in local communities and serves as a source of energy that can be distributed in times of emergency. The Groupwill promote better efficiency in its customer operations, such as delivery and meter inspection, aiming to heighten pricecompetitiveness through increased efficiency and cost reductions. At the same time, we will endeavor to maintain and growour customer base, attracting new customers by expanding our service area and through M&A activity.
In the city gas business, numerous new participants are expected to enter the market in view of the full-scale retailliberalization of city gas in 2017. As a city gas provider with close community ties, the Group will respond to this challenge
by further augmenting its security systems, providing additional services and products with firmly rooted community andcustomer ties, thereby establishing our business foundation and achieving sustainable growth.
In the CATV business, the conversion to antenna-based terrestrial, BS, and CS digital broadcasting is complete, butmarket conditions are difficult as major telecommunication companies continue to compete on the broadcasting,communications, and telephone services. We will respond by promoting the acquisition of core broadcasting service
customers and offering set products combining communications services. Meanwhile, our independent community channel
service broadcasts programs featuring people from the community, allowing us to promote closer local ties and distributeinformation through live broadcasts of local events and sports tournaments. We will leverage this content in our sales
activities. By developing and expanding services with close community ties, we will endeavor to pursue CATV value while
maintaining and expanding revenues.
Competition in the information and communications business is intense, as technological innovation proceeds at a rapid
pace, while companies are being called on to respond swiftly to customer needs. In the area of information andcommunication systems, in tandem with progress in cloud computing, we are developing solution services that provide atrinity of offerings: the Group’s fiber-optic networks, data centers, and systems development. In this manner, we are striving
to grow further by expanding our recurring revenue business model. In the area of broadband and mobile communications,
the Japanese broadband market is projected to see a leveling off in FTTH growth. Against this backdrop, we have begun
the one-stop provision of Hikari Collaboration services based on NTT’s provision of wholesale fiber-optic connections.
During the year under review, we concentrated on encouraging existing ISP customers to switch (transfer) to Hikari
Collaboration services in an effort to boost average revenue per customer (ARPU) through one-stop provision.
Consequently, our number of Hikari Collaboration customers exceeded 200 thousand in February 2016. Going forward, we
will work to further strengthen our business foundation by actively promoting new customer acquisitions and service
transfers.
In the Aqua business, since the Great East Japan Earthquake, consumer demand for delicious water that is safe andsecure has grown sharply; taking advantage of this demand as the market matures has been a matter of some urgency. In
Shizuoka Prefecture, the Group has developed the “Oishii Mizu no Takuhaibin” (“Tasty Water Delivered to your Door”) brand,
providing mineral-rich natural water from the base of Mt. Fuji in returnable bottles. Nationwide, we are developing the“Ulunom” brand, using disposable bottles. We are boosting awareness and working to attract customers by adopting the“Doraemon” character as a brand mascot, which has wide-ranging appeal. Meanwhile, we are enhancing quality by
refurbishing production facilities and enhancing management systems at our plants such as the Aqua Fujisan Plant, tocontinue providing high-quality drinking water that is safe and secure. TOKAI (Shanghai) Trade & Commerce Co., Ltd. isdeveloping a bottled water delivery service in Shanghai, China, under the Fujishigen brand. By leveraging the brandstrength of Mt. Fuji, which has been registered as a World Heritage site, and aesthetically pleasing water servers newly
developed in-house combined with periodic maintenance services, we are promoting safety and security, targeting wealthy
customers.
In our nursing care business, we commenced facility operations in April 2011. This business has progressed steadily, andwe currently operate seven facilities in Shizuoka Prefecture, including day services, short-stay, and fee-based elderly homes
with nursing care. As Japanese society continues to age, the Group’s business development will need to respond to the

12TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016changing social environment. We intend to continue expanding our operations in fee-based elderly homes with nursing care,centered on day services. By also leveraging the information and communications technologies the Group has cultivated,
we will work to develop services that connect nursing care residents with their families, to provide services that consider theconvenience for nursing care users.
As a provider of various lifestyle infrastructure services, maintaining ongoing customer transactions and promoting
multiple transactions is key to expanding the Group’s overall transactions.
In December 2012, we launched the TLC Membership Service, a membership service spanning the Group. Under thissystem, members can earn proprietary “TLC points” based on the number of times they use our services and the amountspent. Customers who use many of our services can enjoy greater benefits.
The number of members is growing steadily, and surpassed 490 thousand members as of March 31, 2016. The system isbeing established to increase the level of return to customers and create customer contact points across the Group. We
plan to expand and enhance the reward points menu, offer events and services for members, and promote other benefits to
help attract new customers, curtail cancellations, and strengthen our earnings base in each business.
Meanwhile, to make better comprehensive use of the Group’s contact points with customers, in addition to initiatives at
each of our businesses and services, we are working to strengthen various channels throughout the Group, including faceto-face, call center, and web-based communication. By analyzing the customer information we amass on a daily basis, wewill build a system to propose and provide services optimized to customer needs and lifestyles.
Through the above-mentioned initiatives under the holding company structure, we aim to offer our myriad of products andservices to the Group’s important base of 2.56 million customers, as well as continuing to provide new products andservices. In this manner, we strive to realize the TLC (total life concierge) concept.

13

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

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.

14

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

5. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of yen)
As of March 31, 2015
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable–trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Buildings and structures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Other, net
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Total assets

2,861
20,085
5,367
583
745
1,052
3
* 5,590(326)
35,9594,077
21,305
4,307
610
694
886
3
* 6,626(391)
38,117

103,850(65,436)
38,41385,994(64,310)1, 4* * 21,684
22,00622,890(11,070)
11,8201,019
12,925(8,934)4* 3,9906* 98,935

104,921(69,743)
35,17889,236(67,162)1* 22,074
21,82523,294(12,315)
10,979868
13,540(9,401)
4,138
6* 95,064

8,270
801
4
* 2,152

6,589
675
3,674

11,224

10,9402* 9,035
147
1,043
4,188
6,013
(890)
19,539129,699
43
165,70215

As of March 31, 20162

* 7,236
105
1,790
2,360
5,255
(599)
16,149122,15331
160,303

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Millions of yen)
As of March 31, 2015

As of March 31, 2016

Liabilities
Current liabilities
Notes and accounts payable–trade

13,035

Short-term loans payable

*

6, *8

33,821

13,511*

6, *8

27,828Current portion of bonds

2,458

758

lease obligations

3,884

3,815

Income taxes payable

2,089

1,954

Provision for bonuses

1,261

1,247

178

212

* 14,432

13,63071,16062,958

1,742

984

Other accruals
4

Other
Total current liabilities
Non-current liabilities
Bonds payable
Convertible bonds with stock acquisition rights—

Long-term loans payable

*

6, *8

35,04810,000*6, *8

31,839Lease obligations

9,917

8,923

Other accruals

209

68

Net defined benefit liability

271

308

Other

3,885

3,249

Total non-current liabilities

51,07455,373

122,234

118,332

Capital stock

14,00014,000Capital surplus

22,315

19,258Retained earnings

7,803

9,870

Treasury stock(8,033)(6,409)Total shareholders’ equity

36,08536,719

2,378

1,153

(94)

230

Total liabilities
Net assets
Shareholders’ equity

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

44

1

Remeasurement of defined benefit plans

4,130

2,958

Total accumulated other comprehensive income

6,458

4,343

Stock acquisition rights

260

208

Non-controlling interests

662

699

43,467

41,970165,702160,303

Total net assets
Total liabilities and net assets

16

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Millions of yen)
Year ended

Year ended

March 31, 2015

March 31, 2016

Sales

187,5111

Cost of sales* 118,579

Gross profit

180,940
1* 111,127

68,9322

Selling, general and administrative expenses

69,812
2* 59,928* 61,566

9,003

8,245

Interest income

20

14

Dividend income

151

159

Operating profit
Non-operating profit

Commission fee

105

81

Insurance income

62

120

Other

406

395

Total non-operating profit

747

772

Interest expenses

958

710

Other

242

157

1,201

868

8,549

8,150

Non-operating expenses

Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sales of non-current assets

* 8

3

* 7

3

Transmission line facility subsidies

58

68

Subsidy income

104

138

Gain on sales of investment securities

31

0

Total extraordinary income

203

215

* 0

4

* 0

Loss on retirement of non-current assets

* 929

5

* 1,002

Impairment loss

* 280

6

* 693

—

* 234

Total extraordinary losses

1,210

1,929

Net income before income taxes

7,541

6,436

Income taxes (current)

3,671

2,900

Income taxes (deferred)

(97)

23

Total income taxes

3,573

2,924

Net income

3,968

3,511

33

52

3,934

3,458

Extraordinary losses
Loss on sales of non-current assets

Bad debts expenses

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

17

4

5

6
7

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Consolidated Statements of Comprehensive Income)(Millions of yen)
Year ended

Year ended

March 31, 2015

March 31, 2016

Net income

3,968

3,511

1,227

(1,227)

Deferred gains (losses) on hedges

(98)

324

Foreign currency translation adjustment

(6)

(37)

Remeasurement of defined benefit plans

1,332(1,172)11(5)* 2,467* (2,118)

6,435

1,393

6,400

1,343

35

50

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

Share of other comprehensive income of entities accounted for using theequity method
1

Total other comprehensive income
Comprehensive income1(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

18

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016(3) Statement of Changes in Consolidated Shareholders’ Equity
Year ended March 31, 2015 (April 1, 2014–March 31, 2015)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning of period

Capital surplus

14,000Retainedearnings

22,183

5,436

Cumulative impact of changes in accounting policies

Total
shareholders’equityTreasury stock(8,191)33,428(179)

Balance at beginning of period, reflecting changes inaccounting policies

14,00022,183

(179)

5,257

(8,191)

33,249Change during the year
Cash dividends from retained earnings(1,388)Net income attributable to owners of the parent

3,934(1,388)3,934

Acquisition of treasury shares
Disposition of treasury shares

131

(1)

(1)

159

291

Cancellation of treasury shares―

Increase by share exchanges―

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

14,000

131

2,546

158

2,836

22,315

7,803(8,033)36,085

Accumulated other comprehensive income
Valuation
Deferreddifference on gains oravailable-for- losses onsale securities hedges
Balance at beginning of
period

1,151

Total
Subscription
Remeasureaccumulated
rights toments ofother compresharesdefinedhensivebenefit plansincomeForeigncurrencytranslation
adjustment
4

39

2,797

3,992

318

Noncontrollinginterests

588

Cumulative impact ofchanges in accounting
policies
Balance at beginning of
period, reflecting changes inaccounting policies

Total net
assets38,329
(179)

1,151

4

39

2,797

3,992

318

588

38,149Change during the year
Cash dividends from retained
earnings(1,388)Net income attributable toowners of the parent

3,934

Acquisition of treasury shares(1)

Disposition of treasury shares

291

Cancellation of treasury
shares―Increase by share exchanges―

Net change in items otherthan shareholders’ equity

1,226

(98)

5

1,332

2,466

(57)

73

2,481

Total change during the year

1,226

(98)

5

1,332

2,466

(57)

73

5,318

Balance at end of period

2,378

(94)

44

4,130

6,458

260

662

43,46719

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

Year ended March 31, 2016 (April 1, 2015–March 31, 2016)(Millions of yen)
Shareholders’ equity
CapitalsurplusCapital stock
Balance at beginning of period

14,000Retainedearnings

22,315

Total
shareholders’equityTreasury
stock

7,803

(8,033)36,085

Cumulative impact of changes in accounting
policies―

Balance at beginning of period, reflecting changes
in accounting policies

14,00022,315

7,803(8,033)36,085

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

Net income attributable to owners of the parent

3,458(1,391)
3,458

Acquisition of treasury shares(1,801)(1,801)

Disposition of treasury shares

149

211

360

Cancellation of treasury shares(3,198)

3,198

―

(7)

15

7

Increase by share exchanges
Net change in items other than shareholders’equityTotal change during the year
Balance at end of period

14,000(3,057)

2,066

1,624

634

19,2589,870(6,409)36,719

Accumulated other comprehensive income

Balance at beginning of
periodValuationdifference on
available-forsale
securities

Deferred
gains orlosses onhedges

2,378

(94)

Total
Foreign
Remeasure- Accumulated
Subscription
currency
ments ofotherrights totranslation
definedcompresharesadjustment benefit plans
hensiveincome
44

4,130

6,458

260

Noncontrollinginterests

Total net
assets662

43,467

Cumulative impact ofchanges in accounting
policies
Balance at beginning of
period, reflecting changes
in accounting policies

―

2,378

(94)

44

4,130

6,458

260

662

43,467

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

Net income attributableto owners of the parent

3,458

Acquisition of treasury
shares(1,801)

Disposition of treasury
shares360

Cancellation of treasury
shares―Increase by shareexchanges

7

Net change in items
other thanshareholders’ equity(1,224)324(42)(1,172)(2,115)(52)

37(2,131)

Total change during theyear(1,224)324(42)(1,172)(2,115)(52)

37(1,496)

Balance at end of period

1,153

230

1

2,958

4,343

208

699

41,97020

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(4) Consolidated Statements of Cash Flows(Millions of yen)
Year ended

Year ended

March 31, 2015

March 31, 2016

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

7,541

6,436

Depreciation

14,86014,701

Amortization of goodwill

2,369

2,033

Impairment loss

280

693

Increase in net defined benefit asset and liability

128

63

Interest and dividend income

(172)

(174)

(Gain) loss on sale of investment securities

(31)

(0)

Interest expenses

958

710

(Gain) loss on sales of non-current assets

(7)

(7)

Loss on retirement of non-current assets

929

1,002

Increase (decrease) in notes and accounts payable

1,988(1,140)(Increase) decrease in inventories

1,483

1,083

Increase (decrease) in notes and accounts payable–trade

(445)

351

112

1,378

Increase (decrease) in accrued consumption taxes

1,582(1,170)

Increase (decrease) in deposits received

(112)

(878)

Other

(506)

(371)

Subtotal

30,96024,711

Income taxes paid

(3,694)(3,316)

Net cash provided by operating activities

27,265

21,395Interest and dividend income received

232

229

Payment into time deposits

(8)

(33)

Proceeds from withdrawal of time deposits―

40

Purchase of securities

(14)

(17)

Proceeds from sales of securities

64

0(9,712)(11,435)

218

162

Increase (decrease) in accounts payable–otherCash flows from investing activities

Purchase of tangible and intangible assets
Proceeds from sales of tangible and intangible assets
Proceeds from contribution received for construction

94

117

Payment of loans receivable(0)―

Collection of loans receivable

417

170

Other

(143)

(250)

(8,851)(11,015)

Net cash provided by (used in) in investing activities

21

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Millions of yen)
Year EndedYear Ended

March 31, 2015

March 31, 2016

Cash flows from financing activities
Interest expenses paid

(973)

(729)

Net increase (decrease) in short-term loans payable

915(3,239)

Repayments of lease obligations(3,948)(3,928)Proceeds from long-term loans payable

13,714

9,594

Repayment of long-term loans payable(23,966)(15,553)694―(3,660)(2,458)―

9,980

Payments for acquisition of treasury stock(1)(1,801)

Proceeds from disposal of treasury stock

317

429

(1,389)(1,392)

(7)

(6)

(458)

(44)

(18,764)(9,150)

20

(5)

(329)

1,223

Proceeds from issuance of bonds
Redemption of bonds
Proceeds from issuance of convertible bonds with stock acquisition rights

Cash dividends paid
Dividends paid to non-controlling interests
Payments for sale and leaseback transactions
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

3,150
1

Cash and cash equivalents at end of period* 2,821

22

2,821
1

* 4,044TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016(5) Notes to the Consolidated Financial Statements(Notes on Premise of Going Concern)
No items to report(Significant Matters Forming the Basis of Preparing the Consolidated Financial Statements)
1. Scope of Consolidation
All 22 of the Company’s subsidiaries are included in the scope of consolidation.
As TOKAI HOME GAS CORPORATION was newly established on April 1, 2015, this company was included in thescope of consolidation. Liquidation proceedings on Bouquet Tokai Gotemba Corporation were completed on March 10,
2016; the company is included on the statement of income up to liquidation.
2. Application of the Equity Method
The equity method is applied to all four of the Company’s affiliated companies.
Among the equity-method affiliates, the fiscal year-end of CloudMaster Co., Ltd. is December 31. In preparing theconsolidated financial statements for the year under review, the financial statements as of December 31, 2015, wereused 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 asof December 31, 2015, 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. Accounting Policies(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 (Net unrealized
holding gains or losses are directly included in a component of shareholders’ equity. The cost of securities sold ismeasured 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 real estate
held for sale and work in process
Figures on the balance sheet are adjusted by writing down the book value when profitability declines.
(2) Method of Depreciation for Significant Depreciable Assets
1) Property, Plant and Equipment (Excluding Leased Assets)
Depreciated mainly by the straight-line method
Useful lives of major property, plant and equipment are as follows.
Buildings and structures
10–50 years
Machinery, equipment and vehicles 9–15 years
2) Intangible Assets (Excluding Leased Assets)
Straight-line method
Software for internal use is amortized over the internally estimated useful life of the software (5 years) using thestraight-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 the service life. Of
finance lease transactions other than those that transfer ownership, lease transactions that commenced on or before
March 31, 2008, are accounted for as standard lease transactions.

23

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 20164) 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 historical uncollectible
rate for general accounts receivables, and on an estimate of collectability of specific accounts for which collection
appears doubtful.
2) Provision for Bonuses
Provisions for the payment of employee bonuses are recorded at the amount expected to be paid during the fiscal
year under review.
(4) Accounting Treatment Related to Retirement Benefit Plans
1) Method of Attributing the Projected Retirement Benefits to Periods of Service
In calculation of retirement benefit obligations, the method of attributing the projected retirement benefits until
the end 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 over acertain period of time (15–18 years) that is shorter than the employees’ average remaining service period at thetime of occurrence.
Actuarial gains or losses are amortized as incurred over the periods, which are shorter than the averageremaining service years of employees (mainly 12–18 years), by the straight-line method, starting from thefollowing fiscal years.
3) Application of Compendium Method for Small Companies
Certain of the Company’s consolidated subsidiaries use the compendium method to calculate defined benefit
obligations and retirement benefit expenses, stating defined benefit obligations at the necessary payment
amounts for voluntary retirement as of the end of the fiscal year.
(5) Basis for Recording Significant Income and Expenses
Basis for recording the amount of completed work and the cost of completed work
Construction for which progress can be measured with certainty as of the fiscal year-end is based on 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, and commodity swaps(Hedged items)
Interest on loans payable, principal and interest on loans payable denominated in foreign currencies, LP gas
procurement prices3) Hedging Policy
In accordance with resolutions based on the Group’s regulations for risk management, the Group primarily uses
hedging instruments within a certain scope of risks on hedged items: interest rate fluctuation risk, exchange rate
fluctuation risk, and LP gas procurement price fluctuation risk.
4) Methods to Evaluate Hedging Effectiveness24

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

Assessment of effectiveness is conducted by comparing cumulative cash flow fluctuations of the hedged item
against the cumulative cash flows of the hedging instrument, and determined based on the amount of fluctuation of thetwo. The evaluation of hedging effectiveness is omitted in transactions that satisfy the conditions 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 which investment effect isvisible. Lump-sum amortization is applied to items whose monetary amounts are small.
(9) Scope of Cash in the Consolidated Statements of Cash Flow
Cash (cash and cash equivalents) in the consolidated statement of cash flow includes cash on hand, deposits
drawable 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-deductible consumption taxes and regional consumption taxes are recognized as expenses in the fiscal year
incurred.
(11) Criteria for the Capitalization of Interest Payments on Long-Term, Large-Scale Real Estate Development Work
1) Interest payments made during the normal development period on real estate development work having a period of
two years or more from the start of development and involving total operational expenses of 3.0 billion yen or more iscapitalized.
2) Capitalized interest payments total 10 million yen as of March 31, 2016.
(Changes in Accounting Policies)(Application of Accounting Standard for Business Combinations)
The Company has applied the “Accounting Standard for Business Combinations” (ASBJ Statement No. 21,
September 13, 2013), the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
September 13, 2013), the “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13,2013), and other standards from the year ended March 31, 2016. As a result, the accounting method has been changed
to record the difference caused by changes in equity in subsidiaries the Company continues to control as capitalsurplus, and to record acquisition-related costs for the fiscal year in which the costs were incurred. Furthermore, forbusiness combinations carried out on or after the beginning of the fiscal year, the accounting method was changed toreflect the reviewed acquisition cost allocation resulting from the finalization of the provisional accounting treatment in
the consolidated financial statements of the year in which the business combination occurs. In addition, the Company
has changed its presentation of net income and related items, and renamed “minority interests” as “non-controllinginterests.” The consolidated financial statements for the year ended March 31, 2015 have been reclassified to reflect
this change.
Application of the Accounting Standard for Business Combinations and other standards is in accordance with thetransitional measures provided for in Article 58-2 (4) of the Accounting Standard for Business Combinations, Article 445 (4) of the Accounting Standard for Consolidated Financial Statements, and Article 57-4 (4) of the Accounting Standard
for Business Divestitures. The Company will continue to apply the standards from the beginning of the fiscal year.
As a result, the capital surplus decreased by 65 million yen as of March 31, 2016. The impact on operating profit,
recurring profit, and net income before income taxes for the year under review was slight.
In the consolidated statements of cash flows for the fiscal year under review, cash flows for the purchase or sale ofshares of subsidiaries without changing the scope of consolidation are listed under “cash flows from financing activities.”
The impact on per-share information for the fiscal year under review is slight.
(Changes in Presentation Method)(Consolidated Statements of Income)As the amount of “insurance income” included within “other” under “non-operating profit” in the year ended March 31,
2015 exceeded 1/10 of non-operating profit, it was stated as an independent line item for the year ended March 31,
2016. The consolidated financial statements for the year ended March 31, 2015, have been restated to reflect thischange in presentation method.
As a result, in the consolidated statements of income for the year ended March 31, 2015, the amount of 469 million
yen presented in “other” under “non-operating profit” was restated as “insurance income” of 62 million yen and “other”
of 406 million yen.

25

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Consolidated Statements of Cash Flows)
Due to an increase in the monetary significance of “increase (decrease) in accounts payable–other” and “increase(decrease) in deposits received,” which were included in “other” within “cash flows from operating activities” in the year
ended March 31, 2015, these have been stated as independent line items for the year ended March 31, 2016. The
consolidated financial statements for the year ended March 31, 2015, have been restated to reflect this change inpresentation method.
As a result, in the consolidated statements of cash flows for the year ended March 31, 2015, the amount of minus
506 million yen presented in “other” under “cash flows from operating activities” was restated as “increase (decrease) in
accounts payable–other” of 112 million yen, “increase (decrease) in deposits received” of minus 112 million yen, and“other” of minus 506 million yen.
(Additional Information)(Employee Shareholding Association Type Employee Stock Ownership Plan “ESOP”)(1) Overview of Transactions
The Group, at a Board of Directors meeting of the Company held on November 29, 2012, resolved to introduce an
employee shareholding association type ESOP as an employee benefit and to augment the Company’s corporate value
by enhancing employee awareness of the stock price and motivation to work. The ESOP involved providing to theemployee shareholding association shares in the Company on a regular basis and distributing to employees the income
gained on the management of trust property. This ESOP trust was concluded on July 31, 2015.
Under this plan, for a period of approximately three years from December 2012, the Company’s shares expected tobe acquired by the TOKAI Group Employee Shareholding Association (hereinafter, the “the Association”) were acquiredin advance by Trust & Custody Services Bank, Ltd. (trust account E) (hereinafter, “Trust Account E”), with the shares in
the Company being sold when acquired by the Association.
(2) Accounting Treatment
Accounting treatment is to continue under the methods employed to date.
This accounting treatment considers the Company and Trust Account E to be the same. Accordingly, the Company’s
shares and other assets, liabilities, income, and expenses held by Trust Account E are included in the consolidatedbalance sheets, consolidated statements of income, consolidated statements of comprehensive income, statement ofchanges in consolidated shareholders’ equity, and consolidated statements of cash flows.
(3) Matters Related to the Company’s Shares Held by Trust Account E
As shares in the Company held by Trust Account E are stated by Trust Account E at book value (excluding ancillarycosts), they are presented as treasury stock under net assets. The book value of this treasury stock was 132 million
yen as of March 31, 2015, and 0 yen as of March 31, 2016.
This treasury stock numbered 509,800 shares as of March 31, 2015, and 0 shares as of March 31, 2016. The
average number of shares during the year ended March 31, 2015, was 682,470 shares, and 120,833 shares during theyear ended March 31, 2016. As these shares are included in treasury stock they are excluded from calculations of pershare information.
This treasury stock was all sold during the year ended March 31, 2016.

26

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Insufficient earthquake-resistance in condominiums sold by a consolidated subsidiary (TOKAI CORPORATION))
It came to light that condominiums sold by TOKAI CORPORATION in the city of Shizuoka in 2003 fell below theearthquake-resistance standard established by the Building Standards Act in April 21, 2007. Thereafter, TOKAICORPORATION purchased all of these condominiums and demolished them.
TOKAI CORPORATION judged that responsibility for the insufficient earthquake-resistance of these condominiums lies
with Sumitomo Mitsui Construction Co., Ltd. (construction), the city of Shizuoka (building certification), Sun Architects &Engineers, Inc. (architectural design), and that company’s architects, Akira Tsukioka Structural Research Laboratory Y.K.
(structural calculation) and that company’s architects. Accordingly, on December 25, 2007, TOKAI CORPORATION filed alawsuit for damages in the Shizuoka District Court, naming these counterparties. In addition, TOKAI CORPORATION filed
a lawsuit for insurance claims to establish the right of pledge to Akira Tsukioka Structural Research Laboratory Y.K.’s
insurance claim to Tokio Marine & Nichido Fire Insurance Co., Ltd.
A ruling by the Shizuoka District Court on December 7, 2012, ordered Akira Tsukioka Structural Research Laboratory
Y.K. and architects belonging to that company and architects belonging to Sun Architects & Engineers, Inc. to pay to
TOKAI CORPORATION a collective 959 million yen and delayed damages, and ordered the city of Shizuoka and Akira
Tsukioka Structural Research Laboratory Y.K. and others to pay a collective 671 million yen and delayed damages.
However, TOKAI CORPORATION’s case against Sumitomo Mitsui Construction Co., Ltd. and Tokio Marine & Nichido Fire
Insurance Co., Ltd. was rejected. (Sumitomo Mitsui Construction Co., Ltd., and Akira Tsukioka Structural ResearchLaboratory Y.K. and others are confirmed.)
TOKAI CORPORATION appealed against this initial decision, as did the city of Shizuoka, Sun Architects & Engineers,
Inc. and architects belonging to that company. The cases went before the Tokyo High Court on May 15, 2014. The court
reduced the compensation for damages by the city of Shizuoka to 88 million yen and reduced associated delayed
damages, and eliminated responsibility for compensation for one of the architects belonging to Sun Architects &Engineers, Inc. In addition, TOKAI CORPORATION’s suit against Tokio Marine & Nichido Fire Insurance Co., Ltd. wasrejected.
Regarding this appeal decision, on May 27, 2014, TOKAI CORPORATION submitted a final appeal and petition for
acceptance of final appeal to the high court. On October 27, 2015, however, the high court rejected the final appeal andruled non-acceptance on the petition for final appeal, thereby confirming the appeal decision.
Taking into consideration the possibility that some of the related parties would be unable to bear these losses, until theyear ended March 31, 2015, TOKAI CORPORATION had recorded its potential losses at 419 million yen. Based on thecurrent high court decision, TOKAI CORPORATION newly recorded 234 million yen in bad debts expenses under
extraordinary losses for the year ended March 31, 2016.

27

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Notes to the Consolidated Balance Sheets)*1. The following reduction entry amounts were deducted from the acquisition costs of machinery, equipment and vehicles,
due to the acceptance of construction contributions, etc.
As of March 31, 2015
46 million yen
6,014 million yen

Reduction entry
Cumulative reduction entries

As of March 31, 2016
33 million yen
5,998 million yen*2. Amounts for affiliated companies were as follows.
As of March 31, 2015
316 million yen

Investment securities (shares)

As of March 31, 2016
310 million yen*3. Payments pending on the transfer of rights due to the liquidation of receivables (notes and accounts receivable–trade)were as follows.
As of March 31, 2015
433 million yen

Payments pending

As of March 31, 2016
342 million yen*4. Rights held by the seller on assets in sale and leaseback transactions were as follows.
As of March 31, 2015
Breakdown of book
value

Corresponding
liabilities

Machinery, equipment andvehiclesProperty, plant and equipment,“other”
Intangible assets, “other”
Current liabilities, “other”

As of March 31, 2016

146 million yen― million yen

3 million yen―million yen

1 million yen―million yen

44 million yen―million yen*5. Contingent liabilities(1) Guarantees
As of March 31, 2015
(Debt obligation)
TOKAI Group Association
489 million yen

As of March 31, 2016
(Debt obligation)
TOKAI Group Association
446 million yen(2) Repurchase obligation due to liquidation of receivables
As of March 31, 2015
Repurchase obligation due toliquidation of receivables

1,195 million yen

As of March 31, 2016
902 million yen

28

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

*6. Pledged assets and secured liabilities
Pledged assets are as follows.
Property, plant and equipment
Buildings and structures
Machinery, equipment andvehicles
Land
Other
Total

As of March 31, 2015
11,785 million yen(11,621 million yen)
4,650 million yen(4,487 million yen)

As of March 31, 2016
9,860 million yen(9,752 million yen)
3,522 million yen(3,414 million yen)

5,871 million yen(5,870 million yen)

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

1,098 million yen
164 million yen
11,785 million yen(1,098 million yen)(164 million yen)
(11,621 million yen)

596 million yen
146 million yen
9,860 million yen(596 million yen)(146 million yen)
(9,752 million yen)

Figures in parentheses above indicate plant foundation mortgages.
Secured liabilities are as follows.
As of March 31, 2015
Long-term loans payable (including
current portion)
Total

As of March 31, 2016

1,638 million yen

652 million yen

1,638 million yen

652 million yen*7. The Group has credit line agreements in place with three banks in order to ensure the stable procurement of funds.
These credit lines and loan amounts currently executed as of the end of the fiscal year under review are as follows.
Credit line
Loan amount currently executed
Outstanding unused overdraft amount

As of March 31, 2015
6,000 million yen―
6,000 million yen

As of March 31, 2016
6,000 million yen―
6,000 million yen

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

29

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

*8. Syndicated loan agreements
Year ended March 31, 2015
(1) The Company entered into a syndicated loan agreement for 1,000 million yen (balance of 875 million yen as ofMarch 31, 2015) in December 2013, which contains financial covenants. These special contract requirements are as
follows.
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2014 must be 70% or more of the amount of net assets in the consolidated balance sheets at the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2014.
(2) The Company entered into a syndicated loan agreement for 900 million yen (balance of 770 million yen as of March
31, 2015) in February 2014, which contains financial covenants. These special contract requirements are as follows.
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2014 must be 70% or more of the amount of net assets in the consolidated balance sheets at the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2014.
(3) The Company entered into a syndicated loan agreement for 650 million yen (balance of 603 million yen as of March
31, 2015) 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 the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2015.
(4) The Company entered into a syndicated loan agreement for 700 million yen (balance of 682 million yen as of March
31, 2015) 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 the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2015.
Year ended March 31, 2016
(1) The Company entered into a syndicated loan agreement for 1,000 million yen (balance of 775 million yen as ofMarch 31, 2016) in December 2013, which contains financial covenants. These special contract requirements are as
follows.
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2014 must be 70% or more of the amount of net assets in the consolidated balance sheets at the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2014.
(2) The Company entered into a syndicated loan agreement for 900 million yen (balance of 640 million yen as of March
31, 2016) in February 2014, which contains financial covenants. These special contract requirements are as follows.
1) The amount of net assets in the consolidated balance sheets as of the closing date of fiscal years ending in orafter March 2014 must be 70% or more of the amount of net assets in the consolidated balance sheets at the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2014.
(3) The Company entered into a syndicated loan agreement for 650 million yen (balance of 509 million yen as of March
31, 2016) 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 the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2015.
(4) The Company entered into a syndicated loan agreement for 700 million yen (balance of 612 million yen as of March
31, 2016) in December 2014, which contains financial covenants. These special contract requirements are as

30

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

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 the endof the preceding fiscal year.
2) A recurring loss may not be posted in recurring profit or loss in the consolidated statements of income for two
consecutive fiscal years ending in or after March 2015.

31

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(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, 2015
(April 1, 2014–March 31, 2015)

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

27 million yen*2. Principal expense items contained in selling, general and administrative expenses are as follows.

Salaries and commissions
Provision for bonuses
Retirement benefit expenses
Fees
Provision of allowance for
doubtful accounts

Year ended March 31, 2015
(April 1, 2014–March 31, 2015)
17,308 million yen
950 million yen
753 million yen
15,502 million yen

Year ended March 31, 2016
(April 1, 2015–March 31, 2016)
16,985 million yen
900 million yen
752 million yen
17,880 million yen

87 million yen

182 million yen*3. Details of the gain on sales of non-current assets are as follows.
Year ended March 31, 2015
(April 1, 2014–March 31, 2015)
Machinery, equipment andvehiclesBuildings and structures
Land
Other
Total

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

3 million yen

7 million yen

0 million yen
4 million yen
0 million yen
8 million yen

0 million yen― million yen
0 million yen
7 million yen

Year ended March 31, 2015
(April 1, 2014–March 31, 2015)
0 million yen
0 million yen
0 million yen
0 million yen

Year ended March 31, 2016
(April 1, 2015–March 31, 2016)
0 million yen― million yen― million yen
0 million yen*4. Details of the loss on sales of non-current assets are as follows.

Machinery, equipment and vehicles
Buildings and structures
Other
Total

*5. Details of the loss on retirement of non-current assets are as follows.

Buildings and structures
Machinery, equipment andvehicles
Goodwill
Other
Total

Year ended March 31, 2015
(April 1, 2014–March 31, 2015)
502 million yen

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

202 million yen

197 million yen

115 million yen
109 million yen
929 million yen

66 million yen
128 million yen
1,002 million yen

32

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

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

Use

Business segment
Building and Real Estate(Note)

Wedding ceremony facility
Equipment related tocustomer management
systemNumazu, Shizuoka
Prefecture

Category
Buildings and structures, land
Property, plant andequipment, “other”
Intangible assets, “other”

CATV(Note) This property is a facility related to the Others segment (wedding business), but is recorded as an asset in the
Building and Real Estate segment because it is leased internally within the Group.
The Group considers real estate for leasing on a per-property basis. Other assets are grouped by units for which profits
and losses can be reasonably managed, and impairment losses are recognized on this basis.
During the year under review, the Group wrote down book values to their recoverable amounts on a wedding ceremony
facility whose market value had decreased and on equipment related to a customer management system that was nolonger in use. These decreases were posted as impairment losses under extraordinary loss.
Breakdown of impairment losses(Millions of yen)

21

Property, plantandequipment,“other”
―

―

―

4

56

61

198

21

4

56

280

Buildings andstructures

Use
Wedding ceremony facility
Equipment related to customer
management system
Total

Land

198

Intangible
assets, “other”

Total

―

219

The recoverable amount of these assets is measured as their net realizable value. A real estate appraisal was
performed to value the weddings ceremony facility, and equipment related to the customer management system wasvalued at 0 yen.
Year ended March 31, 2016 (April 1, 2015–March 31, 2016)
The Group recorded impairment losses on the following assets during the fiscal year under review.
Location

Use

Reportable segment

Kisarazu, Chiba
Prefecture
Kimitsu, Chiba
Prefecture

OfficeGas and Petroleum

Mishima, Shizuoka
Prefecture

Weddings
ceremony
facility

Yaizu, Shizuoka
Prefecture

OfficeBuilding and Real Estate(Note)
Weddings businessInformation andCommunications services

Shanghai, China

Business
asset

Aqua

Izumi-ku, Yokohama
Aoi-ku, Shizuoka

Shop

Information andCommunications services

Category
Buildings and structures
Machinery, equipment and vehicles
Land
Property, plant and equipment, “leased assets”
Property, plant and equipment, “other”
Intangible assets, “other”
Buildings and structures
Property, plant and equipment, “other”
Intangible assets, “other”
Buildings and structures
Property, plant and equipment, “other”
Property, plant and equipment, “leased assets”
Property, plant and equipment, “other”
Buildings and structures
Property, plant and equipment, “other”(Note) This property is a facility related to Others segment (weddings business), but is recorded as an asset in the
Building and Real Estate segment because it is leased internally within the Group.
The Group considers real estate for leasing on a per-property basis. Other assets are grouped by units for which profits
and losses can be reasonably managed, and impairment losses are recognized on this basis.
During the year under review, the Group wrote down book values to their recoverable amounts on an office and shop
due to decisions to relocate and close, and on a wedding ceremony facility and business asset whose profitability had
decreased. These decreases were posted as impairment losses under extraordinary loss.

33

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

Breakdown of impairment losses

Use(Millions of yen)

21

7

299

Property,plant andequipment,“leasedassets”
2

183

―

―

―

114
―
8
327

―
―
―
7

―
―
―
299

―
14
―
17

Buildings
andstructures

OfficeWedding ceremony
facility
OfficeBusiness asset
Shop
Total

Machinery,equipment
andvehiclesLand

Property,plant andequipment,“other”

Intangible
assets,“other”

7

Total
1

340

14

3

201

13
0
0
35

―
―
―
4

128
14
8
693

The recoverable amount of these assets is measured as their net realizable value. A real estate appraisal was
performed to value land, and other assets were valued at 0 yen.
*7. Bad debt expenses
Year ended March 31, 2016 (April 1, 2015–March 31, 2016)
A bad debt expense of 234 million yen was recorded in extraordinary loss as the Company’s burden of cost on alawsuit for damages related to insufficient earthquake-resistance on condominiums sold by consolidated subsidiary
TOKAI CORPORATION.
For details, please refer to the section under “Additional information” entitled “Insufficient earthquake-resistance incondominiums sold by a consolidated subsidiary (TOKAI CORPORATION).”(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, 2015

Year ended March 31, 2016

(April 1, 2014–March 31, 2015)(April 1, 2015–March 31, 2016)

Valuation difference on available-for-salesecurities
Amount generated during the year

1,733

Reclassification adjustments(1,810)(21)―

Before adjustment for tax effects

1,711(1,810)Tax effects

(484)

582

1,227

(1,227)

Amount generated during the year

(1,230)(77)

Adjustment for asset acquisition costs

1,084

546

Before adjustment for tax effects

(145)

469

Tax effects

47

(144)

Deferred gains (losses) on hedges

(98)

324

Valuation difference on available-for-salesecurities
Deferred gains (losses) on hedges

Foreign currency translation adjustment
Amount generated during the year

(6)

(37)

(6)

(37)

Amount generated during the year

1,867

(1,553)

Reclassification adjustments

(125)

(249)

1,741

(1,802)Foreign currency translation adjustment
Remeasurements of defined benefit plans

Before adjustment for tax effects
Tax effects

(408)

630

Remeasurements of defined benefit plans

1,332(1,172)

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

11

(5)

Total other comprehensive income

2,467(2,118)34

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Notes to the Statement of Changes in Consolidated Shareholders’ Equity)Year ended March 31, 2015 (April 1, 2014–March 31, 2015)
1. Categories and Number of Issued Shares and Categories and Number of Shares of Treasury Stock
Decrease during theyear (thousands ofshares)Beginning of the fiscal
year (thousands ofshares)Increase during the
fiscal year (thousandsof shares)

155,199
155,199――――

155,199
155,199

40,32140,321

2
2

686
686

39,637
39,637

Issued shares
Common stock
Total
Treasury stock
Common stock
Total

End of the fiscal year
(thousands of shares)(Notes) 1. The increase of 2 thousand common shares of treasury stock was the purchase of shares comprising lessthan one share unit.
2. The decrease of 686 thousand common shares of treasury stock included a decrease of 347 thousand
shares due to the exercise of stock options, the sale of 339 thousand shares to the TOKAI Group Employee
Shareholding Association for the employee shareholding association type ESOP, and a decrease of 0
thousand shares for transfers of shares comprising less than one share unit.
3. The number of common shares of treasury stock includes 509 thousand of the Company’s shares held byTrust & Custody Services Bank, Ltd. (Trust Account E) as of the end of the fiscal year under review.
2. Subscription Rights to Shares and Treasury Subscription Rights to SharesClassification

Submitting
company(Parent
company)
Total

Class ofsharessubject to
subscription
rights tosharesBreakdownofsubscription
rights tosharesSubscription
rights toshares as
stock options

Number of shares subject to subscription rights

Balance at
end of fiscal
year(millions ofyen)

Beginning offiscal year

Increaseduring fiscal
year

Decreaseduring fiscal
year

End of fiscal
year

―

―

―

―

―

260

―

―

―

―

―

260

3. Dividends(1) Dividend Payments(Resolution)
Resolution at regular generalshareholders meeting on June 27,
2014
Board of Directors resolution on
October 30, 2014

Class of shares

Total dividends(millions ofyen)

Dividend pershare (yen)Common stock

714

Common stock

714

Record date

Effective date

6.0

March 31, 2014

June 30, 2014

6.0

September 30,
2014

November 28,
2014(Notes)1. The total common-stock dividend of 714 million yen resolved at the regular general meeting ofshareholders on June 27, 2014, includes dividends of 20 million yen related to the Company’s shares heldby consolidated subsidiaries and dividends of 5 million yen related to the Company’s shares held by Trust &Custody Services Bank, Ltd. (Trust Account E).
2. The total common-stock dividend of 714 million yen resolved by the Board of Directors on September 30,
2014, includes dividends of 20 million yen related to the Company’s shares held by consolidated
subsidiaries
and dividends of 4 million yen related to the Company’s shares held by Trust & Custody Services Bank, Ltd. (Trust AccountE).
(2) Dividends with a Record Date during the Current Fiscal Year but an Effective Date in the Following Fiscal year
(Resolution)

Class ofsharesTotal dividends(millions of yen)

Resolution at regular
general shareholders
meeting on June 26, 2015

Commonstock

716

Source ofdividends

Dividend pershare (yen)Record date

Effective date

6.0

March 31,2015

June 29, 2015

(Note) The total common-stock dividend of 716 million yen includes dividends of 20 million yen related to the Company’s
shares held by consolidated subsidiaries and dividends of 3 million yen related to the Company’s shares held by Trust &Custody Services Bank, Ltd. (Trust Account E).

35

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

Year ended March 31, 2016 (April 1, 2015–March 31, 2016)
1. Categories and Number of Issued Shares and Categories and Number of Shares of Treasury Stock
Decrease during theyear (thousands ofshares)Beginning of the fiscal
year (thousands ofshares)Increase during the fiscal
year (thousands ofshares)155,199
155,199――

15,52015,520139,679
139,679

39,637
39,637

3,310
3,310

16,45916,45926,48826,488Issued shares
Common stock
Total
Treasury stock
Common stock
Total

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

Submitting
company(Parent
company)
Total

Breakdown ofsubscription
rights tosharesClass ofsharessubject to
subscription
rights tosharesSubscription
rights toshares as
stock options

Number of shares subject to subscription rights to shares

Balance at
end of fiscal
year(millions ofyen)

Beginning offiscal year

Increaseduring fiscal
year

Decreaseduring fiscal
year

End of fiscal
year

―

―

―

―

―

208

―

―

―

―

―

208

3. Dividends(1) Dividend Payments(Resolution)
Resolution at regular
general shareholders
meeting on June 26, 2015
Board of Directors
resolution on October 29,
2015

Class ofsharesTotal dividends(millions of yen)

Dividend pershare (yen)Common
stock

716

6.0

March 31, 2015

June 29, 2015

Common
stock

716

6.0

September 30, 2015

November 30, 2015

Record date

Effective date

(Notes) 1. The total common-stock dividend of 716 million yen resolved at the regular general meeting ofshareholders on June 26, 2015, includes dividends of 20 million yen related to the Company’s shares heldby consolidated subsidiaries and dividends of 3 million yen related to the Company’s shares held by Trust &Custody Services Bank, Ltd. (Trust Account E).
2. The total common-stock dividend of 716 million yen resolved by the Board of Directors on October 29,
2015, includes dividends of 20 million yen related to the Company’s shares held by consolidated
subsidiaries.
(2) Dividends with a Record Date during the Current Fiscal Year but an Effective Date in the Following Fiscal Year
(Resolution)

Class ofsharesResolution at regular
general shareholders
meeting on June 24,
2016

Commonstock

Total dividends(millions of yen)905

Source ofdividends
Retainedearnings

36

Dividend pershare (yen)8.0

Record date

Effective date

March 31, 2016

June 27, 2016

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(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
consolidated balance sheets

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

Year ended March 31, 2015
(April 1, 2014–March 31, 2015)
2,861 million yen

Year ended March 31, 2016
(April 1, 2015–March 31, 2016)
4,077 million yen(40) million yen(33) million yen

2,821 million yen

4,044 million yen

2. Significant non-cash transactions
Assets and liabilities related to finance lease transactions

Assets and liabilities related to finance leasetransactions

Year ended March 31, 2015
(April 1, 2014–March 31, 2015)

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

3,017 million yen

2,865 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 beobtained, 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,and Aqua.
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 among other businesses.
The Building and Real Estate segment constructs residential facilities and other buildings, develops, sells, and leases
real estate; performs construction on buildings and ancillary structures and facilities; and operates renovations among
other businesses.
The CATV segment operates broadcasting and internet connectivity utilizing CATV networks, among other businesses.
The Information and Communications services segment develops computer software, processes information, provides
internet connectivity, sells communications equipment, and performs agent operations, among other businesses.
The Aqua segment produces and sells drinking water, among 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 those applied in “Significant Matters
Forming the Basis of Preparing the Consolidated Financial Statements.”
Income for reportable segments is based on operating profit, and intersegment sales and transfers are conducted at
prevailing market prices.

37

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

3. Information Related to Sales, Income and Loss, Assets, Liabilities, and Other Items for Each Reportable Segment
For the year ended March 31, 2015 (From April 1, 2014 to March 31, 2015)

Building
Gas andand Real
Petroleum
EstateSales
Sales toexternalcustomers
Intersegment
sales andtransfers
Total
Segment income(loss)
Segment assets
Other items
Depreciation
Goodwill
amortization
Increase inproperty, plantand equipment
and intangible
assets(Note)

Reportable segments
Information
andCATV
Communications

Aqua

Subtotal

Others1

Total(Millions of yen)Amount inconsoliAdjustdated2
ments
statements
3of income

93,06720,01924,35940,118

4,959

182,523

4,987

187,511―

187,511

168

1,915

865

3,317

102

6,369

204

6,573

(6,573)―

93,236

21,93525,22443,435

5,062

188,893

5,191

194,084(6,573)

187,511

5,549

495

862

3,486 (1,448)

8,946

(386)

8,560

443

9,003

66,797

23,21536,34827,463

4,850

158,676

4,855

163,531

2,170

165,702

4,239

510

6,310

2,411

772

14,244206

14,450409

14,860

816

―

1,092

459

―

2,368

0

2,369

―

2,369

3,998

1,352

3,322

2,789

697

12,159268

12,427163

12,5901. 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; andintangible assets are due to increases in company-wide assets; depreciation; property, plant andequipment; 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.

38

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

For the year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)

Building
Gas andand Real
Petroleum
EstateSales
Sales toexternalcustomers
Intersegment
sales andtransfer
Subtotal
Segment
income (loss)
Segment assets
Other items
Depreciation
Goodwill
amortization
Increase inproperty, plantand equipment
and intangible
assets(Note)

Reportable segments
Information
andCATV
Communications

Aqua

Subtotal

Others1

Total(Millions of yen)Amount inconsoliAdjustdated2
ments
statements
3of income

80,745

20,97524,60844,246

5,487

176,064

4,875

180,940―

180,940

170

955

820

3,361

133

5,441

185

5,627

(5,627)―80,916

21,93025,42947,607

5,621

181,506

5,060

186,567(5,627)

180,940

6,973

676

1,161

829

(1,275)

8,364

(197)

8,167

78

8,245

60,34924,09332,776

29,6394,693

151,552

4,806

156,358

3,944

160,303

4,247

591

6,099

2,434

742

14,115

128

14,243457

14,701

543

―

1,050

438

―

2,032

1

2,033

―

2,033

4,122

1,389

3,787

4,115

554

13,96842

14,010200

14,211

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; andintangible 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 year ended March 31, 2015 (From April 1, 2014 to March 31, 2015)
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,
plant and 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.

39

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

For the year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)
1. Information by Product/Service
This information is omitted because the same information is written in the Segment Information.
2. Information by Region(1) Sales
This information is omitted because sales to customers in Japan account for more than 90% of sales in the
consolidated statements of income.
(2) Property, Plant and Equipment
This information is omitted because property, plant and equipment in Japan account for more than 90% of property,
plant and 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
of income.
c. Information related to Impairment Loss of Noncurrent Assets by Reportable Segment
For the year ended March 31, 2015 (From April 1, 2014 to March 31, 2015)
Gas andPetroleum
Impairment
loss

Building andReal Estate―

Information
andCommunications

CATV

219

61

Aqua

―

(Millions of yen)
Corporate or
elimination

Others―――For the year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)
Gas andPetroleum
Impairment
loss

340

Building andReal Estate
149

Information
andCommunications

CATV
―

137

280

(Millions of yen)

Aqua
14

Total

Corporate or
elimination

Others
51

―

Total
693

d. Information related to Amortization of Goodwill and Unamortized Balance by Reportable Segment
For the year ended March 31, 2015 (From April 1, 2014 to March 31, 2015)(Millions of yen)Amortization forthe year ended
Mar. 31, 2015
Balance on Mar.
31, 2015

Information
andCommunications

Gas andPetroleum

Building andReal Estate

816

―

1,092

459

―

0

―

2,369

1,202

―

6,539

528

―

0

―

8,270

CATV

Aqua

Corporate or
elimination

OthersFor the year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)

Amortization for theyear ended Mar.
31, 2016
Balance on Mar.
31, 2016

Information
andCommunications

Total(Millions of yen)

Gas andPetroleum

Building andReal Estate

543

―

1,050

438

―

1

―

2,033

1,008

―

5,488

90

―

1

―

6,589

CATV

Aqua

e. Information on Negative Goodwill Generated for Each Reportable Segment
For the year ended March 31, 2015 (April 1, 2014 to March 31, 2015)
None
For the year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
None

40

Corporate or
elimination

OthersTotal

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Omissions from Disclosure)Notes concerning lease transactions, related party information, tax-effect accounting, financial products, available-forsale securities, derivative transactions, defined benefits, stock options, corporate combinations, asset retirement
obligations, and lease real estate are omitted from disclosure, as the Company does not consider their disclosure to beof major importance to this presentation of financial results.
(Per-Share Information)

Net assets per share (yen)Net income per share (yen)Diluted net income per share (yen)Year ended March 31, 2015
(April 1, 2014–March 31, 2015)
368.15
34.16
34.12

Year ended March 31, 2016
(April 1, 2015–March 31, 2016)362.7730.01
26.89(Note) 1. The standards used to calculate net income per share are as follows.
Year ended March 31, 2015
(April 1, 2014–March 31, 2015)
Net income per share
Net income attributable to owners of the3,934
parent (millions of yen)Amounts not attributable to ordinary―
shareholders (millions of yen)
Net income for common stock
attributable to owners of the parent
3,934(millions of yen)
Average number of shares of common
stock outstanding during the period
115,163(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 of142
shares)Overview of dilutive shares omitted fromNo. 5 subscription rights to shares andthe calculation of diluted net income per
No. 6 subscription rights to sharesshare as they have no dilutive effectYear ended March 31, 2016
(April 1, 2015–March 31, 2016)
3,458
―
3,458
115,237―
13,383―

2. The number of shares of common stock at fiscal year-end used in the calculation of net assets per shareexcludes the Company’s shares held by Trust & Custody Services Bank, Ltd. (Trust Account E) (509,800 shares asof March 31, 2015, 0 shares as of March 31, 2016). Also, the average number of shares of common stock used in
the calculation of net income per share excludes the Company’s shares held by Trust & Custody Services Bank,
Ltd. (Trust Account E) (682,470 shares for the year ended March 31, 2015, 120,833 shares for the year ended
March 31, 2016).
(Important Subsequent Events)
No items to report41

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

6. Non-Consolidated Financial Statements(1) Balance Sheets(Millions of yen)
Year Ended
March 31, 2015
AssetsCurrent assets
Cash and deposits
Accounts receivable from subsidiaries and associates–trade
Supplies
Prepaid expenses
Deferred tax assets
Short-term loans receivable from subsidiaries and associates
Other
Allowance for doubtful accounts
Total current assets

Year Ended
March 31, 2016

245
395
58
24
138
23,718
318
(550)

2,172
410
9
19
65
25,415499(260)

24,349Non-current assets
Property, plant and equipment
Buildings
Tools, furniture and fixtures
Land
Leased assets
Construction in progress
Total property, plant and equipment
Intangible assets
SoftwareLeased 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
Long-term prepaid expenses
Deferred tax assets
Other
Total investments and other assets
Total non-current assets

6
17
―
83
―

6
20
26
61
370

107

485

606
690
2

454
596
58

1,299

1,109

35,2190
38,9850
47
33

34,860112
37,2130157
3474,28572,37875,69373,974

Deferred assets
Bond issuance cost

1930

Total deferred assets

19

30

100,062

102,334

Total assets

42

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

(Millions of yen)

Liabilities
Current liabilities
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Lease obligations
Accounts payable–otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Deposits received
Deposits received from subsidiaries and associates
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on guarantees
Provision for point card certificates
Other
Total current liabilities
Non-current liabilities
Bonds payable
Convertible bonds with stock acquisition rights
Long-term loans payable
Lease obligations
Provision for retirement benefits
Other
Total non-current liabilities
Total liabilities

Year ended March 31,
2015

Year ended March 31,
2016

18,35012,033
758
267
345
40
77
78
157
2,949
25
29
242
111
202

15,35011,987
758
273
345
38
5
21
212
5,651
28
33
―
142
161

35,66835,0091,742―
33,690
518
34
311

984
10,00030,972393
30
149

36,29642,53071,96477,540Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus

14,00014,0003,500
18,5123,500
13,906

Total capital surplus

22,012

17,406

Retained earnings
Other retained earnings
Retained earnings brought forward

2,877

2,822

2,877

2,822

Treasury stock(11,053)(9,643)

Total shareholders’ equity

27,836

24,586

Total retained earnings

Stock acquisition rights
Total net assets
Total liabilities and net assets

43

260

208

28,097

24,794

100,062

102,334

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016(2) Statements of Income(Millions of yen)
Year Ended
March 31, 2015

Year Ended
March 31, 2016

Operating revenue
Fiduciary obligation fee
Management fee income
Interest income
Dividend income
Other operating revenue

521
3,253
631
1,695
13

441
3,294
631
1,823
13

Total operating revenue

6,116

6,204

530
3,528

491
3,890

Operating expenses
Financial expenses
Selling, general and administrative expenses
Total operating expenses
Operating profit
Non-operating profit
Other
Total non-operating profit
Non-operating expenses
Interest expenses
Reversal of provision for loss on guarantees
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sales of non-current assets
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on valuation of shares of subsidiaries and associates

4,058

4,382

2,057

1,821

32

27

32

27

63
242
9

50
―
12

315

63

1,774

1,785

0
92

―
67

92

67

474

495

Total extraordinary losses

474

495

Income before income taxes

1,392

1,357

Income taxes (current)
Income taxes (deferred)

248
(106)

16
(36)

Total income taxes
Net income

44

141

(20)

1,250

1,377

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016(3) Statement of Changes in Shareholders’ Equity
Year ended March 31, 2015 (April 1, 2014–March 31, 2015)(Millions of yen)
Shareholders’ equity
Capital surplus

Capitalstock

Balance at beginning of period

14,000Legalcapitalsurplus

3,500

Other
capitalsurplusRetained earnings

Total
capitalsurplus18,415

21,915

Otherretainedearnings
Retainedearnings
brought
forwardTotal
retainedearnings

3,064

3,064

(7)

(7)

3,056

3,056

Cash dividends from retained
earnings(1,429)(1,429)Net income

1,250

1,250

Cumulative impact of changes inaccounting policies
Balance at beginning of period,
reflecting changes in accounting
policies

14,0003,500

18,415

21,915

Treasury
stock

Total
shareholders’equity(11,246)

27,732(7)(11,246)

27,725

Change during the year

Acquisition of treasury shares
Disposition of treasury shares

97

97(1,429)
1,250
(1)

(1)

193

291

Cancellation of treasury shares―

Increase by share exchanges―

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

Balance at beginning of period
Cumulative impact of changes inaccounting policies
Balance at beginning of period,
reflecting changes in accounting
policies
Change during the year
Cash dividends from retained
earnings
Net income
Acquisition of treasury shares
Disposition of treasury sharescancellation of treasury shares
Increase by share exchanges
Net change in items other thanshareholders’ equity
Total change during the year
Balance at end of period

―

―

97

97

(178)

(178)

192

111

14,0003,500

18,51222,012

2,877

2,877

(11,053)

27,836

Subscription rights
to shares
318

Total net assets
28,051(7)318

28,043(1,429)
1,250
(1)
291
―
―
(57)

(57)

(57)
260

54
28,09745

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

Year ended March 31, 2016 (April 1, 2015–March 31, 2016)(Millions of yen)
Shareholders’ equity
Capital surplus

Capitalstock

Balance at beginning of period

14,000Legalcapitalsurplus

3,500

Retained earnings
Otherretainedearnings

Other
Total capital
capitalRetained
surplussurplusearnings
brought
forward18,51222,012

2,877

Total
retainedearnings

2,877

Treasurystock(11,053)

Cumulative impact of changes inaccounting policies
Balance at beginning of period,
reflecting changes in accounting
policies

Total
shareholders’equity27,836―

14,0003,500

18,51222,012

2,877

2,877

Cash dividends from retained
earnings(1,432)(1,432)

Net income

1,377

1,377

(11,053)

27,836

Change during the year

Acquisition of treasury shares(1,432)
1,377(3,645)(3,645)360

Disposition of treasury shares

96

96

263

Cancellation of treasury shares(4,740)(4,740)

4,740

―

37

37

51

89

Increase by share exchanges
Net change in items other thanshareholders’ equity
Total change during the year
Balance at end of period――(4,605)(4,605)

(55)

(55)

1,410

(3,250)14,0003,500

13,936

17,406

2,822

2,822

(9,643)

24,586

Subscription rights
to shares
Balance at beginning of period

Total net assets

260

28,097

Cumulative impact of changes
in accounting policies
Balance at beginning of period,
reflecting changes in accounting
policies―

260

28,097

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

Net income

1,377

Acquisition of treasury stock(3,645)

Disposition of treasury stock

360

Cancellation of treasury shares―

Increase by share exchanges

89

Net change in items other thanshareholders’ equity

(52)

(52)

Total change during the year(52)

(3,303)

Balance at end of period

208

24,79446

TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2016

7. Other(1) Changes in Executive Positions
1) Changes in President & CEO
No items to report2) Other Changes in Executive Positions (Scheduled for June 24, 2016)
1. Candidate for new director appointment
Kazuhiro Maruyama, Director (Managing Executive Officer)
2. Director scheduled to step down
Masahiko Takada, Director

47