TOKAI Holdings Medium-Term Management Plan

Innovation Plan 2024
“Design the Future Life”

Tuesday, May 11, 2021
TOKAI Holdings Corporation (Code: 3167)
Katsuhiko Tokita, President & CEO

AgendaI. FY03/21 results summary
II. Review of 10 years since the establishment of Tokai Holdings Corporation
III. Basic concept for the next ten years
IV. Basic policy for Innovation Plan 2024 “Design the Future Life”
V. Capital policy
VI. Management indicators
VII. Message for the coming ten years(Contact for inquiries)
Management Strategy Department, Management
Strategy Division, TOKAI Holdings Corporation
E-mail: hd-info@tokaigroup.co.jp
Phone: +81-54-273-4804
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

1

I. FY03/21 results summary2

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

I. FY03/21 results summary
 Sales increased for the fourth consecutive year and operating profit increased for the third.
Both reached record-high levels for the third consecutive fiscal year.
 In addition to an improvement in its financial position, the Company achieved customer
numbers exceeding the 3 million mark at the end of FY03/20.
FY03/18

FY03/19

FY03/20

FY03/21

ResultResultResultResultSales (billion yen)

186.1

191.6

196.0

196.7

Operating profit(billion yen)

11.0

13.1

14.2

15.2

Net income (billion
yen)

6.6

7.8

8.2

8.8

Interest-bearing
debt/EBITDA

1.9X

1.8X

1.6X

1.4X

Equity ratio

36.3%

37.4%

38.0%

41.6%

ROE

11.4%

12.6%

13.0%

12.7%

2.88

2.90

3.00

3.10

Customernumbers (millions)

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

3II. Review of 10 years since the establishment of Tokai Holdings Corporation

4

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

II. Review of 10 years since the establishment of Tokai Holdings Corporation

1. Corporate Philosophy of the TOKAI Group (TOKAI-WAY) The TOKAI Group provides Total Life Concierge services for customers’ livelihoods.

Corporate
Philosophy

For Customers Livelihood Along with the region, together
with the earth, we will continue to grow and develop.

(The TOKAI Group's credo)

MissionChange, Challenge and Realize.

(The mission that the TOKAI Group should fulfill forthe good of society, customers, and shareholders)Vision(Long-term business goal the
TOKAI Group should target)

ValuesThrough sustained progress from nationwide to global, we
provide customers with the products or services in one stop.

Always smile and impression with you.

(Shared values of TOKAI Group employeesthat they should value in taking actions)

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

5II. Review of 10 years since the establishment of Tokai Holdings Corporation

2. The TOKAI Group’s growth achieved in a community-based manner The Group has expanded its regional networks, which are rooted in each area, to the entire
country. Further, the Group is accelerating overseas expansion with a focus on Asia.

3.1 million customers(1)
Shanghai, China
TOKAI (Shanghai) Trade & Commerce Co. Ltd.
Presence establishedin April 2012all over Japan

Overseas expansion
with a focus on Asia

Overwhelming sharein Shizuoka Prefecture in particular, with two-thirdsof all households being the Group’s customers.

(2)
Taiwan(CloudMaster Co., Ltd.)
Presence establishedin March 2013

(4)
Vietnam(Petro Center Group)(3)
Presence established
Myanmarin June 2020
(Tokai Myanmar Co., Ltd.)
Presence establishedin April 2014

6

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

II. Review of 10 years since the establishment of Tokai Holdings Corporation

3. History of the TOKAI Group’s enhancement of its lifestyle services
 Lineup of life infrastructure services enhanced in response to social issues and consumer
needs
1950

1960

1970

Postwar quantitative expansion of
housing (until 1970)

1980

Peak of property
crime (1985)

Second baby boom
(1971 to 1974)

1990

2000

2010

Integration of broadcasting and Proportion of senior citizens
telecommunication (2005)
reaches 1/4. (2014)
Release of Windows95(1995)

Electric power
deregulation (2016)

Aqua

1984

City gas

1950

CATV

LP gasBridal

1959

1972

LP gas distribution systemdeveloped by using largescale computers, providing
an opportunity to enter the
Information andCommunications business

WWW

CATV

Internet

1988

1996

WWW

ADSL/FTTH Mobile phone

2001

SIer

Systemdevelopment

Data center

1983

Telecom
network

1985

2001

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

2006

2016
Transition to a holding company structure

2007

Security

2011

Toward the realization of TLC (Total Life Concierge)

Electricity
Nursing care

1973

1970

Digital economy

City gas deregulation (2017)

Revision of the NTT Act (2001)

Insurance

Housing

Present
Cashless
economy,sharing
economy, etc.

Utilizationof
ABCIR+S
DMP*, etc.

2011
* Data management platform

7

II. Review of 10 years since the establishment of Tokai Holdings Corporation

4. Taking on challenges to realize TLC (Total Life Concierge)
 At the base of the Group’s growth is the challenges it takes on to realize the TLC concept,
in which it provides comprehensive, meticulous support for the life of diverse customers.

BridalInsurance

LP gasElectricity

City gas

Aqua

Nursingcare

Housing

Budget mobile
services

Security

Internet

Membership
Service

Number of TLC members:(As of the end of FY03/21)

980,000
8

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

II. Review of 10 years since the establishment of Tokai Holdings Corporation

5. History of Innovation Plans: 1/2
 Commencement of group management with top priority given to improving its financial
position

Innovation Plan 2020
“JUMP"
 From Defensive to Proactive Management
 Progress M&A
 Prioritize profit growth and ROE
 Shareholders are always a priority

Innovation Plan 2013

April 2021
10th anniversaryof the holding
company structure Start operating under the holding company
structure by giving top priority to improving
our financial position
 A company working on social infrastructure
has a mission to ensure stable managementwith a sound financial position.

Innovation Plan 2016
“Growing”
April 2011
Start operating under aholding company structure Continue to increase sales by increasing customer numbers, thus recoveringprofitability.
 Continue to improve the financial position to improve the stability of management.
 Keep rewarding shareholders with a sustainable, stable shareholder return policy.

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

9II. Review of 10 years since the establishment of Tokai Holdings Corporation

5. History of Innovation Plans: 2/2

FY03/11☛ Transformation to a stablefinancial position(Before transition to theholding company structure)

Equity ratio

Innovation Plan

FY03/217.7%+33.9%

41.6%

2.34 million

1.3 times

3.10 million¥10.8 billion

1.4 times¥15.2 billion☛ Expansion of earnings base
Customer numbers☛ Improvement of profitability
Operating profit☛ Maintaining high capital efficiency
ROE

12.7%

15.0%

☛ Doubling of market capitalization
Market capitalization(Calculated based on the total number of shares
outstanding including treasury shares)¥52.7 billion

2.5 times¥133.5 billion
10

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

II. Review of 10 years since the establishment of Tokai Holdings Corporation

6. Achievements from the Innovation Plan 2020 “JUMP“ Innovation Plan 2020 “JUMP“ was carried forward steadily with a focus on profits.
Innovation Plan 2016
“Growing”
Innovation Plan 2013

Innovation Plan 2020 “JUMP“
Values announced
in May 2020

ResultSales¥205.3 billion¥196.7 billion

Operating profit¥15.0 billion¥15.2 billion

EPS↗
¥14.9 billion ↗
¥8.5 billion ↗
¥64.6↗

Year-end customer
numbers

3.11 million

3.10 million

Ordinary profit
Net income

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

¥15.3 billion¥8.8 billion[Review]
The amount ofinvestment in M&A
was ¥16.7 billion asa result ofinvestments madewith investment
discipline.
↓
Make investments in
TLC-related fields
selectively andintensively.

¥67.3
11

III. Basic concept for the next ten years

12

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

III. Basic concept for the next ten years

1. Outlook on the market environment
 The COVID-19 pandemic has caused environmental changes related to Life, includingchanges in customers’ lifestyles and acceleration of social changes, such as ones related to
SDGs.
New lifestyles established due to COVID-19
・ Growth of demand related to the stay-at-homelifestyle・ Social distancing, etc.

Global moves to demand and expect
contributions to achieving SDGs seriously

Environmental
changes
Acceleration of lifestyle changes associatedwith COVID-19

Progress in social changes surrounding
businesses● Shift to online shopping● Encouragement of teleworking and staggered
work times, etc.
● Growing health awareness● Emerging regional challenges● Enhanced services provided at home
● Evolution of experience-based services●Trend toward clean energy●Energy deregulation●Digitalization●Workstyle reforms●Population decline/ Falling birthrate and aging
population

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

13III. Basic concept for the next ten years

2. Future vision of the TOKAI Group The TOKAI Group will determine its direction in response to prevailing needs and aim to bea corporate group that continues to grow sustainably and create people’s lifestyles.

Unchanging value
For Customers’ Livelihoods
Along with the region, together
with the earth, we will continue
to grow and develop.

Environment where changes were generated● New lifestyles in the post-COVID-19 era● Acceleration of social changes includingones related to SDGs

Necessity to respond appropriately to changes in customers’ lifestyles,
social environment, and others

A corporate group that continues to grow sustainably
and create people’s lifestyles
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

14III. Basic concept for the next ten years

3. The TOKAI Group’s ten year vision Aim to be a “Life Design Group” ten years from now, toward enhancing TLC

A corporate group that continues to growsustainably and create people’s lifestyles

The Group ten year vision”Life Design Group“
Contribute to solving social issues by designing and suggesting lifestyles
desired by customers.
Take the first step in this stance toward further enhancement of TLC.
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

15

III. Basic concept for the next ten years

4. A turning point towards the Group’s vision Aim to evolve from the provision of lifestyle infrastructure into life support and further into
lifestyle design and suggestion.
Past ten years

IP2024”Service Supply“”Life Support“”Life Design“

Supporting life

Designing and suggesting lifestyles

Providing lifestyle infrastructure

Social issues

Social issues

Apparent
needs in life

Lifestyles❶ Scope
Social life surrounding
each household➀ Scope
Mainly within each household

Potential needs indesired life

Apparent
needs in life

Potential needs indesired lifeNew
Mixing② Services
Essential lifestyleinfrastructure③ How to provide services
Providing services one
by one (one-by-one
addition)❷ Services
Consumption of infrastructureand experience

New

Addition＋➃ RoleSupporting life

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

Service× Service❸ How to provide services
Suggesting value created by
combining multiple services(multiplication)= Take advantage of Total Life
Concierge services as astrength of the Group❹ RoleDesigning and suggesting
lifestyles that cater to potential
16
needs in the desired life

(Reference) Illustration of Life Design initiatives
 Combining multiple services to consider initiatives to suggest experience-based value
E.g., Household energy solutions

E.g., Online services

Gas x Electricity x Power generation x Power storage, etc.

Internet x Life support services x Something extra, etc.

➡ Suggesting eco-friendly lifestyles with the best energy
mix that combines gas, electricity, renewable energy,
storage batteries, and ENE-FARM➡ Comprehensive life support provided by using theinternet Suggesting the comfort of enjoying various
lifestyle services, such as ones for working from
home, healthcare, and education

Medicine and healthcare

EVs
Seniorcitizens

Illustration of Life Design
initiatives

E.g., Home delivery services
Aqua x Recipe suggestions x Ingredient delivery x Cooking classes given
in showrooms x Internet (social media and video distribution) x Mobile app, etc.

➡ Suggesting ways of enjoying convenience and diet, including theprovision of information via social media and video distribution services
and experience of cooking in classes given in showrooms, based onrecipe suggestions and ingredient delivery, in addition to Aqua

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

(Search for nearby clinics providing housecall services, online medical services)

Education
Agriculture

E.g., Services for regional revitalization
Regional tourism x Bicycle sharing service x Health promotion x Outdoor activities
x Warm bath facilities x Community channel x Internet (real-time distribution), etc.

➡ Suggesting outdoor, experience-based services to be provided
by taking advantage of the characteristics of each area, including
tourism such as the operation of Aoi Bune boats, health promotion
through sports, and management of outdoor facilities and warm bathfacilities

17III. Basic concept for the next ten years

5. Position of this medium-term management plan Position the coming four years as a stage for building the base for realizing Life Design,under the slogan Innovation Plan 2024 “Design the Future Life”

Life Design
Group

Innovation Plan 2024
“Design the Future Life”

Stage for building the base forrealizing Life Design

Aim to double
earnings
Shift to sustainablecorporate growthInnovation Plan 2020
“JUMP"
Innovation Plan 2016
“Growing”
April 2011
Innovation Plan 2013
Holding company structure
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

18

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

19

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

1. Key messages of the Innovation Plan 2024 “Design the Future Life”
 Five key messages of the Innovation Plan 2024 “Design the Future Life”☛ ❶Implementation of the LNG strategy☛ ❷Evolution of TLC Concept(1) Digital marketing(2) Open Innovation☛ ❸Stepping up of DX strategy☛ ❹Optimal allocation of management resources☛ ❺Strengthening of SDG initiatives
20

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❶ Implementation of the LNG strategy
 Expand business area steadily from Shizuoka & Kanto area  Japan  World Support growth by increasing customer numbers from the perspective of selection andconsolidation with importance attached to profitability

Local
Increasing market share in existing areas

Nationwide
expansion➡ Increase customer
2024年度numbers to 3.56 million

Energy➡ Expansion to Shikoku and West Japan
Construction, Equipment
and Real Estate➡ Expansion to Kanto and Chukyo areas
Information andCommunications➡ Expansion to Kyushu and Hokuriku

Global expansion
EnergyInformation andCommunications
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

➡ Expansion to Southeast Asia including Vietnam➡ Expansion to China and Indonesia
21IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❷ Evolution of TLC Concept
 Promote two strategies as engines in a strategic move for designing and suggesting
lifestyles desired by customers

Home life

Social life

❶ Digital marketing”Life Design“

Suggesting lifestyles desired by customers

Analyze apparent needs andpotential needs
×

α

×

×

×

×

❷ Open innovations

×αEnhanceandcreate newservices
22

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❷ Evolution of TLC Concept (1) Digital marketing Upgrading digital marketing, with which D-sapiens data analysis infrastructure is used toappeal to customer needs

Pursuecustomerunderstanding

ABCIR+S*

ImprovecustomerexperienceCentralized management of data on 3 million customers all over Japan➡ Strategic use of customer data
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

* Term coined by combining A for AI, B for Big Data, C for Cloud, I for IoT, R for Robotics, and (+) S for Smartphone.
It is the Group’s strategy for digital technology innovation.

23

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❷ Evolution of TLC Concept (2) Open Innovation
Start exploring and building a new business of acquiring new technologies, ideas, and human resources
through investments in start-ups, based on corporate venture capital.

Open Innovation strategy

TOKAI Holdings

TOKAI Group
companies

TOKAI Venture Capital &Incubation Corporation(Established on
Apr. 1, 2021)

Consider investment domains
Medicine & healthcare
Education
Agriculture
EVs
Services for seniorcitizens, etc.

Service creation
throughcollaborations
The Group’s customer base
Infrastructure function

Start-up
Company

Start-up
Company

Start-up
Company

Enhance the lineup of services

Services for daily living

24

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❸ Stepping up of DX strategy
 Implement a DX strategy using ABCIR+S to lead initiatives for the future, including the LNG
strategy and evolution of TLC, in a cross-sectoral manner.

❶
Implementation of LNG strategy❷
Evolution of TLC concept

ABCIR+S*

Improve productivity and business efficiency
with digital workplaces

customer understanding and improve& Pursuecustomer experience with D-sapiens* Term coined by combining A for AI, B for Big Data, C for Cloud, I for IoT, R for Robotics, and (+) S for Smartphone. It is the Group’s strategy for digital technology innovation.

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

25

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❹ Optimal allocation of management resources Try to ensure an optimal allocation of cash flows generated from businesses and othermanagement resources, aiming for future business growth and improved shareholder value.

ROE

ROIC

(FY03/25)(FY03/25)

13% or higher

9.9% or higher

Shareholder value
improvement

Future businessgrowthShareholder return

Investment in growth(FY03/22 to FY03/25)（FY03/22 to FY03/25)

Dividend payout ratio¥65.0 billion
for expanding
business base

40% to 50%
Acquisition of treasury
shares will also be
implemented
flexibly.

Management resources(FY03/22 to FY03/25)

Operating CF*: ¥95.0 billion* Operating CF = Operating profit + Depreciation – Lease payment – Tax payment

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

26

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❺ Strengthening of SDG initiatives (1) Green strategy
 Procure and sell carbon-neutral gas and decarbonize gas we sell by 2050, thus achievingcarbon neutrality by 2050.

2020
▼

2030
Be proactive in reducing CO2 emissions. However, gas will continue toplay an important role for ensuring resilience in disasters, etc.

▼

2050
Achieve carbon neutrality by introducing
innovative technologies.

Reduce CO2 from business operation

・ Use ABCIR+S (automatic meter reading, optimization of delivery
routes).
・ Reduce CO2 emissions from offices.

Reduce CO2 from houses using gas

・ Promote high-efficiency gas equipment.
・ Promote solar power generation systems for households.
・ Promote equipment related to electrification.
・ Make houses carbon neutral (ZEH, OTS).

Reduce CO2 emissions from our own businessactivities by 13,000 tons.
(Equivalent to 70% of CO2 emissions in FY03/21, which was
18,000 tons）

Promote high-efficiency gas equipment forhouseholds, install solar power generation
systems for households, and take other steps toreduce CO2 emissions by 170,000 tons.

Carbon neutrality

FY03/31 targets▼(Equivalent to 50% of CO2 emissions from household gas,
which is 360,000 tons)

Expand electric power business・ Launch electricity retail business.
・ Offer electricity and gas packages widely.
・ Use renewable energy power sources.

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

27

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❺ Strengthening of SDG initiatives (2) Workstyle reforms
 Promote workstyle reforms to enable the active participation of diverse human resources
with flexible workstyles.

Introduced teleworking in April 2021, in addition to flexible working hours,
aiming to reduce the attendance rate by 50% and office floor area by 40%.
Introduce remote working for all employees in FY03/25.
(Excluding essential workers)

Three essential tools① Lending smartphones② Lending PCs③ Free address office×

Payment ofwork-from-homeallowance×

Establishing digital
workplaces
An environment that permits
employees to work comfortably andsafely anytime, anywhere, throughdigitalization

Active participation of diverse human resources with flexible workstyles
・ Create employment opportunities for women and people
with disabilities.
 Increase the number of female managers by tentimes by 2030.
・ Balance work with nursing care, childcare, etc.
 Reduce the rate of employees who leave thecompany for nursing care to 0% by 2030.

・ Improved work time efficiency and richer life, enabled bysaving the trouble of commuting
・ BCP measure with diversified working styles
・ Going paperless and improving the efficiency of theapproval process
・ Enabling joint work and collaboration with no constraints
on space

28

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

IV. Basic policy for Innovation Plan 2024 “Design the Future Life”

2. Priority strategies: ❺ Strengthening of SDG initiatives (3) Strengthening of corporate governance Strengthen the governance system to improve the corporate value over the medium to longterms.

Compensation
Committee

Nominating
Committee

Environmental
Management
Committee

Investment
Committee

Strengthening
the governance system
Business
Management
Committee

Group Compliance &Risk Management
Committee
Reviewing thedirector
composition

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

29

V. Capital policy

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

30

V. Capital policy

1. Shareholder return Return profits to shareholders proactively in accordance with the TOKAI Group’s growthand improvement of the level of consolidated net income, based on the shareholder return
policy.

Shareholder return policy
Share business achievements with shareholders with continuous,
stable return of profits.

Pay dividends at a dividend payout ratio of
40% to 50%.
Acquisition of treasury shares will also be
carried out flexibly.
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

31

V. Capital policy

2. Dividends
 Plan to pay dividends at a payout ratio of 40% to 50% from FY03/22 onward, based on theannual amount for FY03/21, which was increased to 30 yen/share.
［FY03/16]
Acquisition oftreasury shares
Approx. 1.8 billion yen
70

60.0%

54.7%

52.9%
60

Plan to pay dividends

47.2%

46.7%

44.5%

43.4%

44.6%

a payout
ratio44.6%
of
44.6% at44.6%
44.6%
40% to 50%

40.2%

50

40.0%

35.0%
40
30

30

28

28

28

28

yen/shareyen/shareyen/shareyen/share

14

14

14

16

14

14

14

14

FY03/18

FY03/19

FY03/20

FY03/2130.0%

yen/share

6
20

0

14

12

12

12

12

yen/shareyen/shareyen/shareyen/share

6

6

6

8

0.0%
0

6

6

6

6

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

10

50.0%

20.0%

11

yen/share

10.0%
11

0.0%
FY03/17

InterimYear-end

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

Memorial

FY03/22

FY03/23

FY03/24

FY03/25

Dividend payout ratio

32

VI. Management indicators

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

33

VI. Management indicators
 Maintain a level of capital efficiency (ROE and ROIC) that meets market expectations.
 Aim to achieve sustainable growth in sales and profit throughout the four years, although profit will remain
flat in FY03/22 due to enhanced measures to acquire LP gas customers and implementation of workstylereforms.
(Billion yen)

FY03/21

FY03/22

FY03/23

FY03/24

FY03/25

ResultTargetTargetTargetTarget

196.7

207.0

221.0

232.0

245.0

15.2

15.2

15.6

16.5

18.6

Net income

8.8

8.8

9.0

9.5

11.0

Operating CF*

22.4

21.8

23.0

24.0

26.0

Customer numbers(millions)

3.10

3.20

3.32

3.44

3.56

Dividend payout
ratio

44.6%

40% - 50%

ROE

12.7%

→

13 % or higher

ROIC

9.2%

→

9.9% or higher

41.6%

→

Around 40%

Sales
Operating profit

Equity ratio

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

* Operating CF = Operating profit + Depreciation – Lease payment – Tax payment

34

VII. Message for the coming ten years

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

35

VII. Message for the coming ten years
From Service Supply to “Life Design.”
The social environment has gone through changes, such as those related SDGs, clean
energy, and digitalization, not to mention changes in lifestyle reflecting the COVID-19
pandemic.
People’s lifestyles will also change.
To determine our direction in response to prevailing needs,
we will also accelerate our efforts to be a corporate group that continues to achievesustainable growth.
To achieve this, we need to upgrade our activities,
from the provision of lifestyle infrastructure to support for customers’ lives, andfurther to designing and suggesting lifestyles, aiming to realize TLC.
We will contribute to solving social issues bydesigning and suggesting lifestyles desired by customers.
We will invest our management resources in a balanced manner to achieve further growth
based on efforts to increase customer numbers in areas that have expanded to all over Japan,
and then the world.
And we will continue to follow our corporate philosophy:“To improve the lives of our customers,
we will continue to grow and develop together
with local communities and the earth.”36

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

(Reference) Story for the coming ten years
The Group’s ten year vision
New lifestyles established due to COVID-19(Growth in demand related to the stay-at-homelifestyle, social distancing).
- Shift to online shopping- Encouragement of teleworking andstaggered work times, etc.
- Growing health awareness- Emerging regional challenges- Enhanced services provided at home
- Evolution of experience-based services- Global moves to demand and expect
contributions to achieving SDGs seriously- Trend toward clean energy- Energy deregulation- Digitalization- Workstyle reforms- Population decline/ Falling birthrate andaging population

Life DesignGroup Support customers’ lives by identifying their needs,
based on an expansion of the customer base.
 Further, mix multiple services to create experience▲
based value, and then begin to take steps toward
designing and suggesting lifestyles desired by
Double the earnings
customers.
Sales: ¥400.0 billion
 Solve social issues through the above.
Operating profit: ¥30.0 billion
 For this purpose, invest management resources ingrowth and shareholder return in a well-balancedmanner.

Environmental changes

Innovation Plan 2024
“Design the Future Life”
Becoming a corporate groupwhich continues to growsustainablyService Supply❶ Implementation of the LNG strategy❷ Evolution of TLC Concept(Digital marketing & Open Innovation)▲
Sales: ¥196.7 billion
Operating profit: ¥15.2 billion
Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

❸ Stepping up of DX strategy❹ Optimal allocation of management resources❺ Strengthening of SDG initiatives

37

(Reference) Strategy by business38

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

(Reference) Strategy by business

1. Energy business

Energybusiness

Business policy and strategy

Sales ratio in FY03/21○ Streamlining and efficiency improvement
through renovation of the mission-critical system

39.3%●: Contributing to SDGs

● Nationwide expansion of energy business (LP gas, city gas, and electricity)(1) Improving customer intimacy in the
Number of new LP gas customers(Thousand customers)
Chukyo area
2020 2021 2022 2023 2024
(2) Accelerating expansion into new
55
81
76
70
60
areas

● Initiatives to achieve carbon neutrality
 Promotion of decarbonization and use of renewable energy andenergy-saving equipment

Market outlook
 Demand for LP gas for households
will decline while that for LP gas
for industrial use will increase.
(The falling birthrate and the aging
population, smaller household size,energy conservation, conversion to otherenergy sources, competition in the LP
gas industry, etc.)● Acceleration of overseas expansion
 Considering new destinations, including
Vietnam and other Southeast Asian countries
Business targets
Customer numbers
0.74

0.80

0.85

0.90

2021

2022

2023

EBITDA plan
0.95 (Millions)2024(Billion yen)

13.7

13.3

13.4

13.3

13.7

 Response to major disasters
 Expectations for economic growthand demand in Southeast Asia

2020

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

2020年 2021年 2022年 2023年 2024年

39

(Reference) Strategy by business2. Information and Communications business (for individual consumers)

Information andCommunications
businessfor individual consumers
Sales ratio in FY03/21

Business policy and strategy●: Contributing to SDGs

● Providing optimal, high-quality communication services by enhancing
network equipment and improving its efficiency, in response to growing
demand for internet access● Promoting new sales methods, including non-face-to-face sales
activities (online customer services and web-based virtual dealershipnetwork), in addition to face-to-face sales activities at massmerchandise outlets● Promoting the MVNO business (LIBMO) based on its pricecompetitiveness13.4 %● Enhancing solutions for households, including online services

Market outlook
 Increase in internet use reflecting
the spread and expansion ofvideo content, IoT consumer
electronics, etc.
 Intensified competition among
mobile phone carriersBusiness targets
Customer numbers

EBITDA plan
(Billion yen)

0.78

0.79

0.82

0.85

0.89

(Millions)

1.7
1.3

1.3

1.4

1.5

 Emergence of new internet
businesses reflecting an increasein time spent at home

2020

2021

2022

2023

2024

2020年 2021年 2022年 2023年 2024年

40

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

(Reference) Strategy by business3. Information and Communications business (for corporate clients)

Information andCommunications
businessfor corporate clients
Sales ratio in FY03/21

Business policy and strategy●: Contributing to SDGs

● Expansion of network infrastructure for digital transformation (DX) andnew IT strategies● Overseas expansion of cloud integration (to Southeast Asia, etc.) anddevelopment of human resources to support that expansion● Expansion of network services for overseas clients and theirmonetization● Provision of solutions for workstyle changes● Securing engineers

12.4 %

Market outlook
 Growing demand for DX,
accelerated spread ofcomputerization and digitizationof governments Increase in demand for network
expansion reflecting the spreadof 5G

Business targets
Sales
24.4

27.4

30.2

EBITDA plan

(Billion yen)

33.0

(Billion yen)

35.8
6.5

6.7

7.1

7.5

8.1

 Opportunities for businesses for
new lifestyles, including
workstyles
2020年度 2021年度 2022年度 2023年度 2024年度

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

2020年度 2021年度 2022年度 2023年度 2024年度

41

(Reference) Strategy by business

4. CATV business

CATV
business
Sales ratio in FY03/21

Business policy and strategy●: Contributing to SDGs

● Expanding service areas and customer base mainly through M&A

 Local revitalization with community channels, etc., cooperation withlocal governments, enhancement of disaster control systems, andothers● Providing high-quality CATV services through full conversion to opticalfiber networks● Use of new ICT-related technologies including local 5G
 Increasing use of information and communication technologies inlocal communities● Developing new subscription services following CATV

17.2 %

Market outlook
 Intensified competition amongproviders of video distribution
services Strong evaluation of fixed-line
communication services, which
excel not only in price but also intransmission speed and stability

Business targets
Customer numbers
1.20

1.22

1.27

1.29

EBITDA plan

(Millions)(Billion yen)

1.31
11.1

2020

2021

2022

2023

2024

11.4

11.7

12.2

12.6

2020年 2021年 2022年 2023年 2024年

42

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

(Reference) Strategy by business5. Construction, Equipment, and Real Estate business

Construction,
Equipment, and Real
Estate business
Sales ratio in FY03/21

11.8 %

Market outlook
 Stable demand for construction
work

Business policy and strategy●: Contributing to SDGs

● Full-scale entry into Kanto and Chukyo areas
 Preparing to expand areas and domains by increasing construction
capacity● Collaborations for promoting (1) reciprocal customer transfer and (2)comprehensive proposals for three major forms of equipment installation
work (air conditioners, plumbing systems, and electricity work)○ Increasing orders received for the real estate management services in
Kanto (Kanagawa and Tokyo) and Chukyo areas● Nationwide expansion of OTS House and sales expansion of package
products● Preparing for expansion by increasing
construction capacity and securing qualified
personnel
Business targets

 Upward trend in the renovation
marketSales

EBITDA plan

(Billion yen)(Billion yen)

39.5
29.0

31.6

33.9

2021

2022

2023

3.4

3.7

4.0

4.4

2.9

23.2

2020

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

2024

2020

2021

2022

2023

2024

43

(Reference) Strategy by business

6. Aqua business

Aqua business

Sales ratio in FY03/21

3.9 %Business policy and strategy●: Contributing to SDGs

● Expanding the customer base(1) Nationwide expansion of the one-way bottle service(2) Retaining the customer base of the returnable bottle service
 Promoting event-based sales activities, expanding non-face-toface sales activities such as telemarketing and web-based sales
promotion○ Efficiency improvement and streamlining of distribution● Thorough quality control and productivity improvement

Market outlook
 Modest growth of the bottled
water delivery market expected Higher evaluation of bottled water
delivery service reflecting
increase in time spent at homeand growing demand for the
package drop (contactless)serviceBusiness targets
Customer numbers
0.16

0.17

0.18

0.20

EBITDA plan
0.21(Billion yen)

(Millions)

2.3
2.0
1.7
1.2

1.3

2020

2021

 Concern over rising distribution
cost
2020

2021

2022

2023

2024

2022

2023

2024

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

44

The performance forecasts and forward-looking statements in these materials are based on
information currently available to the Company, and include potential risks and uncertainties.
Please be aware that due to changes in a variety of factors, actual results may differ materiallyfrom the projections and other forward-looking statements in these materials.

Please contact us with any questions regarding these materials.
Management Strategy Department, Management Strategy Division
TOKAI Holdings Corporation
2-6-8 Tokiwa-cho, Aoi-ku, Shizuoka 420-0034, Japan
Phone: +81-(0)54-273-4804
Fax: +81-(0)54-275-1110
https://tokaiholdings.co.jp
e-mail： hd-info@tokaigroup.co.jp

Copyright© 2021 TOKAI Holdings Corporation All rights reserved.

45