Januaary 29, 2016
6TOKAI Holdings CorporationCnKats
suhiko Tokiita, Presideent & CEOO(Code No.
N 3167 Tok
kyo Stock Exxchange Firrst Section))
To whom itt may conceern

Resultts for the Third Quarter
Qo f the Fiscal Year Ending M
March 31, 2016and Fu
ull-Year Outlook
O
TOKAI Holdings CorporationC(Headquarrters: Shizuo
oka City, Shhizuoka; Preesident & CEO:Cy”) on Januaary 29, 2016
6 announced
d cumulativve results foor the third
Katsuhiko Tokita; “the Company
2016 (the nine month periodpfromm April to De
ecemberquarter of the fiscal year ending March 31, 22015).
T
Quarter Results ((P/L)
1. (Conssolidated) Third
Groowth in custtomer numbbers led to a 3.7 billion
n yen revenu
ue increase for Hikari
Collaborration,1 andd a 400 million yen revvenue increa
ase for Aquaa (bottled w
water deliverry), but thiss
was nott enough to offset the 8.2
8 billion yeen in distrib
butions to customers (66.4 billion yenydistribu
uted for LP gas; 1.6 billlion yen for city gas) reesulting fromm price reviisions in lin
ne with thefall in crrude oil prices, and ove
erall sales ddeclined.
In tterms of opeerating proffit, LP gas p
profits rose by 800 milllion yen, annd Aqua (botttled waterdeliveryy) profits reccovered by 200 million
n yen due to the increas
se in custom
mers. As a result,overall ooperating profit
pwas loower by onlyy 900 millio
on yen comppared to thee same perio
od last yearr(-17.7% year-on-yeaar), despite 2.4 billion yyen in upfro
ont costs forr Hikari Colllaboration,, a businesss
mpany has beenbfocusin
ng on this yyear.
the Com(Unit: billion yen))q
Third quarter

Results

YYear-on-yearrof previo
ous yearSales

130. 1136.0-5.9-4.3%%

Operatingg profit

4. 0

4.9-0.9-17.7%%

Recurringg profit

3. 9

4.5-0.6-13.2%%

Quarterly
y net incomee

1. 4

1.8-0.4-23.3%%

2. Full-Y
Year Outloook for the Fiscal Year E
Ending Marrch 31, 2016
6
Opeerating proffit at the ennd of the firsst half of th
he fiscal yeaar (April to S
September 2015) was
1.9 billion yen, 1.0 billion yen above the iinitial forecast of 0.9 biillion yen.
d half, in thee third quarrter (Octobe
er to Decemmber 2015), tthe pace of winning
Forr the second
new cusstomers (larrger profit marginsmthaan existing ISPI
customers who swiwitch) for HikariCollaboration via mass retailer channels outpaced initial forecasts. The resulting growth inupfront costs, etc. has led to a 400 million yen drag on initial operating profit forecast. For thefourth quarter, there is some uncertainty, such as the impact of fluctuating temperatures on thegas business, but at this point the Company expects full-year operating profit to meet initial
forecasts.
3. Progress of Hikari Collaboration
Hikari Collaboration had 173 thousand customers as of the end of the third quarter of thefiscal year ending March 31, 2016. The Company booked a 1.0 billion yen gross profit in thisbusiness, but with customer acquisition costs being booked ahead of revenue, operating loss was
2.4 billion yen.
The Company expects this business to have 224 thousand customers by the end of the fiscal
year ending March 31, 2016. The Company forecasts 1.7 billion yen in gross profit, and anoperating loss of 3.1 billion yen after factoring in customer acquisition costs. This is roughly inline with initial forecasts.
The Company is targeting 380 thousand customers by the end of the fiscal year ending
March 31, 2017. With the growth in customer numbers this year and the resulting increase ingross profit, the Company expects earnings for Hikari Collaboration to recover significantly andcome back into balance with expenditures, in line with the initial plan.
4. Changes in Contract Price for LP Gas
Prices of raw materials for LP gas have declined with the fall in crude oil prices.
The Company expects the average LP gas price this year to be about 47,000 yen/ton, which isabout 25,000 yen/ton (34%) lower than the previous year.
Currently major LP gas suppliers are forecasting the contract price to remain low during thenext year, at around 330 to 390 US dollars/ton. The Company’s initial plan assumes a contract
price of 500 US dollars/ton for the fiscal year ending March 31, 2017, so lower procurement costs
are projected.
A fall in procurement costs is a major tailwind for gas-related businesses, and can be
anticipated to improve both competitiveness and profitability.
5. Shareholder Returns for Fiscal Year Ending March 31, 2016
For the fiscal year ending March 31, 2016, the Company forecasts the total amount ofannual dividends at 1.4 billion yen, with an interim dividend of 6 yen per share and a year-end
dividend of 6 yen per share, for a total annual dividend of 12 yen per share.
In addition, on November 6, 2015 the Company cancelled treasury shares equivalent to 10%of the total issued shares, and also began a share buyback from October 30, 2015 (maximum: 1.8billion yen), with the aim of providing a 100% return to shareholders when combining dividends
and share buybacks.
With earnings remaining solid going into the last year of the Company’s medium-termbusiness plan IP162 for FY2014 through FY2016, which was announced in June 2014, we arealso considering additional share buybacks next year.

6. Impact on Earnings
No changes have been made to the most recent consolidated earnings forecasts for the fiscal
year ending March 31, 2016.
For details, please refer to the “Q3 FY03/16 Earnings Highlights.”
1 “Hikari Collaboration” is a service where internet service providers, etc. are able to use NTT fiber-optic lines to provide
fiber-optic services under their own corporate branding.
2 “IP16” stands for Innovation Plan 2016, the Company’s medium-term business plan.

Contact: Yoshihiro Taniguchi
Public Relations and Investor Relations Office
TEL: +81-(0)54-669-7676
Email: overseas_IR@tokaigroup.co.jp

Q3 FY03/16(Third quarter of fiscal year ending March 31, 2016)

Earnings Highlights
TOKAI Holdings CO., LTD.
(Code: 3167)
January 29, 2016

(Consolidated) Q3 Earnings (P/L)
Growth in customer numbers led to a ¥3.7 billion revenue increase in “Hikari Collaboration,”1 and a ¥400 million revenue increase forAqua (bottled water delivery), but this was not enough to offset the ¥8.2 billion in distributions to customers (¥6.4 billion for LP gas; ¥1.6billion for city gas) resulting from price revisions in line with the fall in prices of raw materials for gas (negative impact of 4.9%), andoverall sales declined.

In terms of operating profit, LP gas profit rose by ¥800 million, and Aqua (bottled water delivery) profit recovered by ¥200 million due tothe increase in customers. As a result, overall operating profit was lower by only ¥900 million compared the same period last year (17.7% YoY), despite ¥ 2.4 billion in upfront costs for Hikari Collaboration, a business the company has been focusing on this period.

(Unit: ¥ billion)

ActualPrevious Year

Year-on-year(April 1 to December 31, 2015) (April 1 to December 31, 2014)

130.1

136.0

-5.9

-4.3％

Operating profit

4.0

4.9

-0.9

-17.7％

Recurring profit

3.94.5-0.6-13.2％

Quarterly net
income1.4

1.8-0.4-23.3％

Sales1Full-year FY03/16 Outlook
 1H operating profit finished ¥1.0 billion above initial 1H forecast (result: ¥1.9 billion vs initial forecast of ¥0.9 billion).
 At the end of Q3, operating profit was ¥400 million behind initial forecasts (for 2H).
 There is some uncertainty for Q4 such as the impact of temperatures on the gas business, but at this point full-year operating
profit is expected to meet initial forecasts.

(Unit: ¥ billion).

InitialplanResults/forecast

1H operating profit

0.9
Hikari Collaboration -1.9
Existing business
2.8

1.9
Hikari Collaboration -1.5
Existing business
3.4

2H operating profit（Q1+ Q2） + ¥1.0 billion＋¥0.3bn
Lower upfront costs due
to delays in transferring
existing ISP customers
to Hikari Collaboration＋¥0.7bn
Core businesses
performed better thanexpected (Recovery inLP Gas businessprofitability; increase incustomers in the CATVbusiness)

6.9
Hikari Collaboration -1.2
Existing business
8.1（Q3）-¥400 million-¥300 million
Higher upfront costs due tomore new customers thanexpected (with larger profit
margins than for existing ISP
customers who switch) for
Hikari Collaboration via
electronic retail channels-¥100 million
Delays in orders for corporate
information services（5.9）
Hikari Collaboration -1.6
Existing business
7.5

(Q4)
Expects to meet full-year
forecasts despite uncertain
factors, such as the impact oftemperature on the gas
business

Full-year operating
profit7.8
Hikari Collaboration -3.1
Existing business
10.9

Hikari Collaboration
impact limited toFY03/16（7.8）
Hikari Collaboration -3.1
Existing business10.9¥12.6 billion
in FY03/17(Reference)

FY03/14
Results

1.8

7.2

9.02

Progress of Hikari Collaboration
 Hikari Collaboration had 173 thousand customers as of the end of Q3. It booked a ¥1.0 billion gross profit, but withcustomer acquisition costs running ahead of revenue, operating profit was down by ¥2.4 billion.
 TOKAI Holdings forecasts 224 thousand customers by the end of FY03/16 (¥1.7 billion in gross profit; factoring incustomer acquisition costs, we expect an operating loss of ¥3.1 billion, which is roughly in line with initialforecasts.
 TOKAI Holdings is targeting 380 thousand customers by the end of FY03/17. With the growth in customer
numbers in FY03/16 and the resulting increase in gross profit, we expect earnings to recover significantly andcome back into balance with expenditures, in line with initial forecasts.

5Gross profit

Acqusition cost

Operating costs, etc.

(Unit: ¥ billion)

Operating profit(/loss)

34.0
1
ᇞ1
ᇞ30.1

0.4
‐0.7 ‐0‐0.6‐1.7‐0.2

‐1.5

‐0.4
‐3.0‐2.4

ᇞ5
HikariCollaboration
customernumbers0.1

1.7

1.0‐0.8‐4.0

‐0.8
‐3.1

‐3.1

Q1 Actual

Q2 Cumulative

Q3 Cumulative

Full‐year 2015
forecast

FY201663 thousand

117 thousand

173 thousand

224 thousand

380 thousand3

LP Gas Contract Price Trends
 The price of raw materials for LP gas has fallen, in line with the drop in crude oil prices.
 The average LP gas procurement cost this year is expected to be about ¥47,000/ton, about ¥25,000/ton (34%)
lower than last year.
 Currently major suppliers are forecasting prices will remain low next year at around $330 to $390/ton (TOKAI
Holdings’ FY03/17 medium‐term plan assumes $500/ton).
 This is a major tailwind for gas‐related businesses, and should improve both competitiveness and profitability.
1,000(CP: $)

913
813

800

823 828
790

800
763

740
673

Same period last year at $650/ton (¥ / $ : 110.1)
580

600

480

488

400

-$257/ton (-¥10.6 on FX) fromsame period last year
¥71,565/t
This year ¥47,435/t(-34% year-on-year)200

438 475

This year at around $393/ton (¥ / $: 120.7)

Our medium‐term plan:$500/ton

463
435

428
400

380

340

378338403336
326

Supplier A Supplier B Supplier C$391/ton $367/ton $329/ton

Low price continues

4Shareholder returns for FY03/16
 Expected annual dividends to total ¥1.4 billion (¥6 interim dividend at the end of 1H, and ¥6 year-end dividend at the end of
FY03/16 for a total annual dividend of ¥12 per share).
 This year, TOKAI Holdings plans to cancel treasury shares equivalent to 10% of its total issued shares, and to buyback anadditional ¥1.8 billion in treasury shares, providing a 100% of profits to shareholders, when combined with dividends.
 With performance remaining solid going into the last year of the IP16 plan, we are also considering additional share buybacks
next year.

Currently buying back up to ¥1.8 billion in treasury shares,
to provide a 100% shareholder return.

100.0%

1.8

52.9%

44.2%

40.2%

1.2

1.3

1.4

1.4

1.4

FY03/122012/3月期

FY03/132013/3月期

FY03/142014/3月期

FY03/15
2015/3月期

FY03/162016/3月期

Dividends (¥ billion)
配当金（億円）

35.1%

自己株式取得（億円）
Share buyback (¥ billion)

Payout ratio
配当性向5The performance forecasts and forward-looking statements in this material are calculated
according to currently available information, and include potential risks and uncertainty.
Please be aware that due to the changes in various factors, there is a possibility that actual
results may differ materially from projections and other forward-looking statements madewithin these materials.

For inquiries regarding these materials, please contact us at the following.

TOKAI Holdings Corporation Public Relations and Investor Relations Office
2‐6‐8, Tokiwa‐cho, Aoi‐ku, Shizuoka City 420‐0034
TEL：+81‐(0)54‐669‐7676
FAX：+81‐(0)54‐275‐1110
http://tokaiholdings.co.jp
E-mail：overseas_IR@tokaigroup.co.jp