Financial Results for the Fiscal Year Ending
March 31, 2020
May 11, 2020TOKAI Holdings Corporation(Securities Code: 3167)

Agenda
１．FY03/20 Summary and FY03/21 Initiatives

２．Key points for FY03/20 financial results and FY03/21
financial forecasts

1

Countermeasures for COVID-19 infection◎ Promote infection control under high risk management
so that no one person is infected◎ Responding to requests from the government byfocusing on working and service systems that give top
priority to ensuring the health and safety of customers
and employees◎ As a business operator that provides services related tomaintaining social functions, we will make even morethorough compliance with BCP and make every effort toprovide stable service and ensure site safety.
2

FY03/20 Summary and
FY03/21 Initiatives
Katsuhiko Tokita
President & CEO
TOKAI Holdings Corporation

3

Key Points of FY03/20 Financial Results

Achieved 3 million customers

Record high business performance for thesecond consecutive year
Entering full-scale profit growth phase
4

Results of M&A in FY03/20(Five acquisitions and two business alliances)5

Steady progress in wide-area development of city gas business In March 2019, acquired preferential negotiation rights on a gas business operated by the city of
Nikaho, Akita Prefecture; concluded a business transfer contract for the gas business in May 2019;and scheduled to take over the business in April 2020
 This was the second M&A in the city gas business and the Group's first entry into Akita Prefecture Based on the Group's Total Life Concierge (TLC) vision, we will provide a variety of life-related
services in order to contribute to the realization of a more affluent lifestyle. We also aim to further
expand the scope of our city gas businessTotal Life Concierge
Providing various
TOKAI Group services

AomoriPrefecture

EnergyRenewableenergyElectricity

Information andcommunications

Iwate
Prefecture
Akita
Prefecture

City gas

LP gasLow-cost
mobile carriersInternet
CATV

NikahoRealization of an affluent lifestyle＋
Expansion of the scope ofthe city gas business

Facilityequipment

Facilities

Residential

Renovation
Insurance

Security
Security

Selected as a preferred negotiator for the transfer of Nikaho gas business inMarch 2019Concluded a business transfer contract for the gas business in May 2019
Business takeover scheduled for April 2020

Nursing
care

Healthcare
Aqua

Agriculture

Medicalcare

Education

6

Model case of new collaboration of community-based companies
 In April 2019, it acquired shares in Isesaki Gas Co., Ltd., a city gas company in Isesaki City, Gunma
Prefecture, making it an equity-method affiliate, and concluded a capital and business allianceagreement in August of the same year.
 TOKAI seeks benefits from partnering with community-based businesses. TOKAI and Isesaki Gas will
cooperate in the city gas and LP gas businesses by sharing management resources and expertise,and promoting the utilization of each other’s services

 Operates LP gas business in Gunma
Prefecture In April, took over city gas business in
Shimonita, Gunma Prefecture

Capital alliance

Active development of businessrooted in regional communities

Cooperation in thecity gas business Provides an essential service supporting
the regional community
 Plays a large role in promoting the regional
economyAn essential company in theregional community

Cooperation in the
LP gas business

Reciprocal service
referrals

7

Expand city gas sales area to Chukyo area
 In October 2019, TOKAI established T&T Energy Co., Ltd. with TEPCO Energy Partner, Inc.
 The companies will develop a city gas retail business in the Tokai area (Aichi, Gifu, and Mie
prefectures) by leveraging TEPCO Energy Partner’s city gas retail expertise (especially gas
procurement capability) and TOKAI’s sales network in the Tokai area
 We will also consider providing various life-related services such as electricity and gas, and expanding
the sales area outside the three Tokai prefectures.

TOKAI

TEPCO Energy
Partner

50%

50%

T&T Energy Co., Ltd. (new company)

Tokai area sales
network

Gas procurement
capability
City gas retail expertise

City gas sales throughbusiness partners

Exploreopportunities toprovide lifestyleservices including
electricity and gas

Expand beyond
the Tokai area

8

General customers (households in the Tokai area)

Creating synergy in CATV business Acquired the CATV business operated by Shioya Co., Ltd. in October 2019, which covers part of theeastern part of Shizuoka prefecture Providing advanced CATV services through regional-based channels and FTTH networks, which are
the characteristics of the Group's CATV business, and aim to create synergies with other businesses
based on the TLC vision.

TOKAI Cable Network
Corporation

Business transfer
contract

Shioya Limited

CATV business
TOKAI’s CATV business

Covering a part of eastern
Shizuoka Prefecture Delivers a community channel withhigh-quality content
 Provides ultra-high-speed
communications through FTTH
 Supports advanced 4K and 8K
broadcasting

Synergy creation

Variety of lifestyleservices based on
the TLC vision9

Expanding the group business basein the Tohoku area
 In March 2020, Sendai CATV, which serves the areas of Sendai and Natori in Miyagi Prefecture,
became a consolidated subsidiary This area is centered on Sendai City, the only city designated by government ordinance in the Tohoku
region, and is expected to see population growth and economic growth in the future.
 Aim to achieve great growth by instilling the technology and know-how of the Group's CATV businessand strengthen cooperation with other businesses to expand the business base in the area.

Tohoku area
Expand business baseSendai CATV
( 57,000 customers )ＣＡＴＶSendai City
Cooperation

Natori City

Internet

Aqua(Miyagi
Prefecture)

10

ＬＰ gasExpand into new regions as a general construction company
 Acquired Nissan Tri Star Construction, Inc., which operates a community-based general construction
business in Gifu Prefecture Nissan Tri Star exhibits strength in public works projects in particular. It has a large number of highly
qualified personnel and a solid reputation earned over many years
 TOKAI will leverage Nissan Tri Star’s technical prowess to expand as a general construction company
into Shizuoka Prefecture and the Chukyo and Kanto areas

Nissan Tri Star Construction, Inc.

Construction
Facilities construction
Real estate sales

Kanto
area

General construction(Especially public works)

Chukyoarea

Expand into new regions as a
general construction company

Area coveredby TOKAI

Promote TLC, aided by synergy
effects with the LP gas business

11Creating synergy in Information and Communications business Acquired AM’s Brain Inc. in July 2019, which offers information services such as contracted softwaredevelopment and systems operation and maintenance TOKAI provides one-stop optimized solutions for corporate clients by embracing cutting-edge
technology such as AI and IoT and leveraging its data centers and fiber-optic networks
 Strengthen the development system in the western Japan area to expand customer base and createsynergies centered on our own data center
Infrastructure supporting TOKAI’s corporate information communication businessOkayama Data Center

AM’s Brain Inc.

LCV Data Center

Tsuyama Contracted softwaredevelopment
 Systems operation andmaintenance

NaganoNagoyaOkayamaOkayamaTokyo
Shizuoka

Kurashiki(Okayama Prefecture)

Shizuoka Data Center
TOKAI fiber-optic network (approx. 7,000km installed)

Note: Green denotes areas with other Groupbusinesses

Strengthen system development capabilities in western Japan
Expand customer base and create synergies centered on our own data center

12

ABCIR+S Strategy Progress

An acronym formed by the first letters of AI, big data, cloud, IoT, robotics, andsmartphones. It refers to the Group’s strategy toward technological innovation.
13

TOKAI Group DMP named "D-sapiens" completed
 TOKAI’s key ABCIR+S strategy focuses on developing new services and a new customer base while
increasing competitiveness and continuing to leverage the marketing capabilities it has cultivated since
its founding TOKAI completed the development of a data management platform (DMP) conducted mainly by the
Next-generation Management Strategy Division
ABCIR+S concept

Marketingcapabilities

CATV

IoT

Cloud

SurveillancecameraBig data
AI
Network(traditional strength)

Robotics
AI speaker

Smartphone

Focus on expanding the customer base, becoming more competitive, and developing new services

Complete development of a data management platform (DMP)
created mainly by the Next-generation Management Strategy Division

14

FY03/20 Summary
 Steady progress toward the final year of the mid-term management plan IP20 “JUMP”①Record high business performance forthe second consecutive year
②Expansion of business profit baseincluding M & A③Progress of “ABCIR + S” strategy
15

FY03/21 Initiatives

FY03/21 is an important phase In fiscal 2020, in addition to the overall finishing of the mid-term management plan IP20 “JUMP”, an
important phase to lay the foundation for the next mid-term plan We believe that expanding the customer base will lead to the expansion of the top line and the
expansion of the profit base, and will lead to the growth of the Group in the medium to long term, so
we will continue to actively pursue growth strategies.
 As concrete measures, 1) promotion of M & A, 2) practice of ABCIR + S, and 3) efforts to promote thedeepening of TLC are planned, and as a result, sales of 205.3 billion yen, operating income of 15
billion yen, and 3.11 million customers are planned.

(Billions of yen)

Sales
Operating profit
Customers(Thousand)

FY03/19

FY03/20

FY03/21

ResultResultForecast

191.6

196.0

205.3

13.1

14.2

15.0

2,900

3,000

3,110

17

Impact of COVID-19◎ Since the Group provides infrastructure services that are essential to customers'
lives, it is difficult to be affected by the decline in consumer activity due to the
spread of new-type coronavirus infections. However, depending on the future
situation, some businesses such as corporate services may be affected.

◎ The impact of the spread of new-type coronavirus infectious diseases on thebusiness results of the Group is difficult to reasonably calculate at this time, so it is
not included in the business forecast.

◎ In the future, it will be possible to reasonably calculate the amount of impact on
business performance due to the spread of new-type coronavirus infectious
diseases, and if there is a need for disclosure, information will be disclosed promptly.

18

1. Further promotion of M & A

Eleven M&As completed
 Under the M & A strategy of the mid-term business plan IP20 “JUMP”, we completed 9 M & A projects
and 2 alliance projects, for a total of 11 projects
City gas

City gas

City gas

Shimonita gas
business

Isesaki Gas

Nikaho gas business

April 2019 (took overbusiness)

August 2019 (formed
business alliance)

April 2020 (slated to takeover business)

Akita

Building and Real
EstateCATV

Nissan Tri Star
Construction

Tokyo Bay Network
July 2017 (acquired)

September 2019 (acquired)

CATV

CATV

Gunma

Sendai CATVTV Tsuyama
February 2018 (acquired)

Gifu
Okayama
Aichi

March 2020 (acquired)Tokyo

Information andCommunications

Shizuoka

CYZE
September 2018 (acquired)

Information andCommunications

City gas

AM’s Brain
July 2019 (acquired)

CATV

T&T Energy

ShioyaOctober 2019 (established as
joint venture)

October 2019 (took overbusiness)

20

Carefully select projects that contribute to growthand finish them early With 11 projects completed, sales of 7.7 billion yen, operating profit of 600 million
yen, and 350,000 customers are added, expanding the Group's business profit
base【Ｍ＆Ａ, Alliance Result】(Millions of yen)

Business

Number ofcompanies

Investment
amountCity gas

4

1,953

CATV

4

Telecommunications

OperatingprofitCustomers

622

41

6

3,997

4,624

265

344

2

655

385

52

－

Architecture /real estate

1

2,024

2,046

197

－

Total

11

8,629

7,677

555

350

Sales

(thousand)※City gas includes two alliance companies

Currently considering 37 projects and 111.5 billion yen M&A projects（※ Including the above results ）21

2. Practice of ABCIR + S

D-sapiens ～ Strengthen marketing by “Real” x “Digital” ～ Centrally manage customer data built up through communication with customers
 AI analysis accurately predicts customer behavior patterns such as “Uncovering potential demand” and “Priceorientation and sign of cancellation”
 A customer approach that delivers the desired service at an appropriate distance according to the customer's lifestyle（ Customer data ）(Customer approach)
Salesperson

Customer
attributes

Trading History

WEB history

Customerreaction data

➣Centrally manage group customer data
➣ AI analysis (customer behavior
prediction)➣ Segmentation targeting

Operator

DM

WEB site

E-MailPush Notification
Inquiry data
・・・

We will strive to improve sales efficiency and strengthen marketing by using“D-sapiens”, and “Face To Face proposal by a total of 1,600 regional personnel”, which is
our strength.

23

3. Deepening of TLC

Multiple transaction rate is over 20% by the end of FY03/21
 With TLC (Total Life Concierge) as our group vision, we provide comprehensive and delicate support
for our customers' comfortable lives through various services provided by our group.
 Improve multiple transaction rate to realize TLC vision and increase customer lifetime value
 Plan to increase the multiple transaction rate to over 20% by the end of FY03/21

Insurance

Wedding
Electricity

ＬＰ gasAqua『 Ｔｏｔａｌ Life Concierge 』
City gas

Housing

Nursing

ＣＡＴＶ

Multipletransaction rate

MVNO

Security

Internet

FY03/20

FY03/21

18.8%

20.0%

25

Advance into new fields toward the realization of TLC
 Realizing the provision of "Relief / Safety", "Convenience / Comfort", and "Joy / Worthliving" that anticipate the needs of daily life, which is useful for customers' lives
 Enter into new service fields to realize TLC vision

Relief / Safety

Convenience /ComfortJoy / Worth living

New Fields

New Fields

New Fields

Existing business

Existing business

Existing business

CATV

City gas

ＬＰ gasElectricity

HousingRenovation

CATV

MVNO

WWW

InsuranceSecurity

Aqua

Nursing

Wedding

FarmInternet

Start in February 2019
Rental farm service provision

26

Future growth services will be preventive medicine
 Preventive medicine is taken up by the Future Investment Council and included in the Growth Strategy Execution Plan
decided by the Cabinet in June last year, which is expected as a future growth service field.
 The preventive medicine service market is expected to expand from 9.2 trillion yen (2016) to 12.5 trillion yen by 2025
 Considering such needs, we are considering providing healthcare services to prevent diseases from the pre-ill stage.

Growth strategy execution plan
 Realization of Society 5.0

 Reform to all-generation social
security

Healthmanagement
relatedPlay/Study

Public medical insuranceLong-term care insurance（2016:About 50 trillion yen ）Exercise *Meal
Healing

Sleep
Prevention*
Clothes
Measureme Housingnt *Knowledge
Functioncomplement *Public funding for preventive
medicine

Healthcare industry(Work to maintain and improve health)Promotion of private prevention
services2016 about2020 about2025 about

9.2 bn yen

10.3 bn yen

12.5 bn yen

 Strengthening local policies underpopulation decline
Expected as a future growth service field

Privateinsuranceservice

Products / services forpeople requiring support
and care *Products and services forpeople with disabilities *Disease / nursing
common products /services<Source> “Future discussions of the Next Generation Healthcare
Industry Council” (Ministry of Economy, Trade and Industry Next
Generation Healthcare Industry Council Secretariat, April 12, 2019)(Note) Items marked with * include public insurance services, etc. due
to restrictions on data usage.

Considering the provision ofhealthcare services
27

Started full-scale business modeling Consider providing DNA and RNA tests for cancers that have a high probability of being affected throughoutlife Regarding lifestyle-related diseases, which account for about 50% of the deaths in Japan, we analyze risk
factors based on physical examinations and medical examination data, and provide health promotion
programs as well as physical function maintenance / strengthening programs.
 Established a specialized organization "Healthcare Business Planning Office" and started full-scale business
model

CancerMedicalcheckupdata

Focus ongenes

Lifetime coverage
probability is 1 in 3 maleand 1 in 2 female

DNA test（Test for future onset）（Possible to detect very early）
Regularmedicalexaminatio
n data・・・

Lifestylerelateddiseases
About 50% of thedeaths in Japan

Utilization of
IoT

Utilization ofsmartphoneappsHealth promotion program

Users

RNA test（Improve lifestyle issues）

 Program to maintain and strengthen
physical function（ Scoring evaluation of cognitive and muscle strength ）Established a dedicated organization "Healthcare Business Planning Office" and started full-scale business model

Finally
Supporting the post-corona age

Striving for the final year of the mid-term
management plan IP20 "JUMP"One year to set the direction of group growthfrom the medium- to long-term perspective of
the next medium-term management plan28

Key points for FY03/20 financial resultsand FY03/21 financial forecasts

Key points for FY03/20 financial resultsAchieved 3 million continuous trading customers
at the end of the period◎ A net increase of 101,000 from 2,902 thousand at the beginning of the period, including an increase of
65,000 through M & A (net increase of 26,000 in the previous term)◎ Mainstay LP gas, CATV, and Aqua businesses steadily expand customer base(Thousand)

180
760

Gas (LP, City)

+29

30

713
25

+23

80
720

CATV

+92

10

+298

（Include M&A
+273）

1,200
5

1,154

+11

161

640 0

661

1,032

1,000
-20

1,063

FY2018900-30End of quarter

FY2017FY2019(Current)

146
130

-40
600
FY2017

140

156

950
-25

-20
620

5

160

150

-15

10

170

-10
1,050

66020

684

+5

+10

-5
1,100

+31

40
680

15

Aqua

1,150
0

60
700

+19

20

100
740

15
1,250

Net increase

FY2018End of quarter

FY2019(Current)

120
FY2017

Net increase

FY2018End of quarter

FY2019(Current)

Net increase

32※Round off less than 1,000※Net increase include customer additions from M & A.

Sales and profit items are record highs◎ Sales increased by 4.4 billion yen due to an increase in the number of customers, the favorable
information and telecommunications business for corporations and M & A◎ Operating profit also increased by ¥ 1.2 billion (8.9% increase) mainly due to an increase in monthly
charges due to an increase in the number of customers, and an increase in profit from the corporate
information communication business and M & A.
◎ Each profit item also outperformed the earnings forecast.

FY2019Results

FY2018Results

InitialForecasts(Million of yen)

YoY
ChangeVersus forecast
Percent
ChangeChangePercent
Change195,952 191,600 200,800 +4,352+2.3-4,848-2.4

Operating profit

14,224 13,057 14,170 +1,166

+8.9

+54

+0.4

Recurring profit

14,479 13,259 14,040 +1,219

+9.2

+439

+3.1

Net income

8,241

7,772

8,230

+468

+6.0

+11

+0.1

EPS (Yen)

62.93

59.36

62.85

+3.57

+6.0

+0.08

+0.1

Sales

33

Significant increase in monthly charges for corebusinesses◎ Expand the number of customers, which is the revenue base, and increase thenumber of monthly bills, leading to increased profits
Number of monthly bills（Thousand）

5,344
3,180
5,156

1,944

5,269

1,957 1,956 1,955
1,909

5,040

3,126

300 thousand（up 10.5％）

5,210

1,844

1,340 thousand（up 33.5％）

3,063

470 shousand（up 32.2％）
1,711

4,539

3,010

2,950
2,908

4,039

2,878 2,878

4,002

1st half 2nd 1st half 2nd 1st half 2nd 1st half 2nd
half
half
half
half

1st half 2nd 1st half 2nd 1st half 2nd 1st half 2nd
half
half
half
half

FY20161,471

FY2017FY2018FY2019FY2016FY2017

LP gas

FY2018FY2019

1st half 2nd 1st half 2nd 1st half 2nd 1st half 2nd
half
half
half
half
FY2016CATV

FY2017FY2018FY2019Hikari collaboration

34

Points for operating income increase◎ As a result of the increase in the number of customers (2.9 million at the end of 2018, 3 million at theend of 2019, thus increasing by 100,000), the increase in profit due to the monthly number of billingetc. improved by 2.4 billion yen and LIBMO improved by 200 million yen.
◎ The impact of purchasing costs, which was affected in the previous term, also improved.
Operating Profit（Billions of yen）

+0.2

155

-0.6

+0.2

150

149.9

145

+2.4

140

MVNO

Customers
135

2.9 mn

LIBMO

+0.2

13.1

Increase in thenumber ofcustomers
Gas

120

CATV
Communic
ation
Constructi
on

115
110

分類 1
FY2018ResultCommunicati
on BB

-0.6

130
125

Customers-1.1

Customeracquisition
andmaintenance
costs

-0.2

Gas

+0.8
+0.2

Communication BB

+0.3

CATV

+0.1

Systemreinforcement
costs, etc.
Gas
CommunicationCompany-wide

3.0 mn+0.5-0.4

Purchasing
cost impact

Specialfactors of theprevious term

Gas

+0.5

-0.4

Gas

-0.1

-0.3

CATV

-0.2

-0.4

Aqua

-0.1

14.2

+0.8
+0.5

分類 2

分類 3

分類 5

分類 5

分類 7

分類 7

FY2019
分類 7
Result35

Develop growth investments against the backdrop ofstrengthening equity capital◎ Equity ratio further improved by 0.6 points.
◎ Operating cash flow increased due to an increase in operating profit, an
increase in debt collection and a decrease in trade payables.
◎ Actively invest in growth, increase free cash flow, and improve interest-bearing
debt / EBITDA ratio.
Equity ratio

37.4

％

End of March 2019

Interest-bearing liabilities

50.6

Bn yenEnd of March 2019

Operating cash Flow

21.6

Bn yenEnd of March 2019

Investment cash flow

-12.4

Bn yenEnd of March 2019

Free cash flow

9.2

Bn yenEnd of March 2019

Interest-bearing
debt/EBITDA ratio

1.8

Times

End of March 2019

➡
➡
➡

38.0

End of March 2020

48.3

Bn yenEnd of March 2020

22.5

Bn yenEnd of March 2020

➡

△12.1

➡

10.4

➡

％

Bn yenEnd of March 2020
Bn yenEnd of March 2020

1.6

Times

End of March 2020

36

Key points for FY03/21 financial forecast

Expand customer base with net increase of 100,000 cases◎ A net increase of 102,000 from 3,003 thousand at the end of the previous fiscal year is expected to reach 3,105
thousand at the end of FY2020.
◎ In particular, focused on net increase of LP gas, CATV net increase over the previous fiscal year (excluding M & A),
and aqua net recovery of pace.
◎ Information and communications also stopped due to a net decline in BB customers and a net increase in LIBMO.
（Thousand）

FY2016
Results

FY2017
Results

FY02018
Results

FY2019Results

FY2020
Plan

642

661

684

713

764

Previous ISP model, etc.

527

465

419

389

368

Hikari Collaboration

299

323

327

324

337

LIBMO

2

29

41

48

63

Mobile

233

227

217

212

207

1,061

1,044

1,004

973

975

CATV

733

1,032

1,063

1,154

1,191

Aqua

135

146

156

161

172

Security

17

17

17

16

17

2,564

2,876

2,902

3,003

3,105

Information andCommunications

Gas (LP and city gas)

Subtotal

Total* Rounded to the nearest thousand. Information services and CATV have overlapping communication services, and are excluded from the total
value.

38

Continued growth trend with increased sales and profits◎ Continued growth trend with 4th consecutive year of sales increase and 3rd consecutive year of
highest profit.
◎ In addition to completing the mid-term business plan IP20 "JUMP," we will continue to focus on
expanding our customer base for medium- to long-term growth, while also providing a foundation for
the growth of the next mid-term plan.
◎ The theme is "further promotion of M & A", "practice of ABCIR + S", and "deepening of TLC".

(Million of yen)

YoY

FY03/21 Forecasts FY03/20 Results(April 1, 2020 toMarch 31, 2021)(April 1, 2019 toMarch 31, 2020)

ChangePercent Change

205,300

195,952+9,348+4.8％Operating profit

15,00014,224

+776

+5.5％

Recurring profit

14,87014,479

+391

+2.7％

Net income

8,460

8,241

+219

+2.7％

EPS (Yen)

64.60

62.93

+1.67

+2.7％

Customer
Number (Thousand)

3,105

3,003

+102

+3.4％
39

Sales

Policy of consistently providing stable dividends◎ Based on the Company's dividend policy, which strives for continuous and stable dividends, theannual dividend is planned to be ¥ 28 / share.
◎ The dividend payout ratio remains high.

40

54.7%

52.9%

45

47.2%

46.7%

44.2%

43.4%

50.0%

44.5%

43.3%

28 yen

35

30

40.2%
35.1%

25

20

15

10

28 yen28 yen28 yen28 yenper shareper shareper shareper share

40.0%

per share

6
14 yen12 yen12 yen12 yen12 yenper shareper shareper shareper share

6

6

6

6

8

6

6

6

6

6

FY2011FY2012FY2013

FY2014FY2015per share

30.0%

14

14

14

14

11

20.0%

10.0%

5

11

14

14

14

14

FY2017FY2018FY2019FY2019(Forecast)

0

0.0%

Interim dividend

Year-end dividend

FY2016

Commemorative dividend

Payout ratio

40

Prospect of business performance and future outlook described in this material are ourestimation based on information available as of this moment, and potential risk anduncertainties are included. Therefore, please note that actual business performance ispossibly very different from the described future outlook due to change of various factors.

For inquiry related to this material, please contact us as follows:
IR Office, TOKAI Holdings Corporation
11F Hamarikyu Intercity, Kaigan 1-9-1, Minato-ku, Tokyo 105-0022
TEL: (03)5404-2891
FAX: (03)5404-2786
http://tokaiholdings.co.jp
e-mail: hd-info@tokaigroup.co.jp

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