ＴＯＫＡＩホールディングス（3167） – [Delayed]Consolidated Financial Results for the Year ended March 31, 2022 [Japanese GAAP]

Consolidated Financial Results for the Year ended March 31, 2022 [Japanese GAAP] May 10, 2022 3167 Katsukiho Tokita, President & CEO Junichi Yamada, Managing Executive Officer, General Manager of Administrative HeadquartersTelephone: +81-54-275-0007 Stock listing: URL: Tokyo Stock Exchange http://tokaiholdings.co.jp Company name: TOKAI Holdings Corporation Stock code: Representative: Contact: Scheduled date of General shareholders’ meeting: Scheduled start date of dividend payment: Scheduled date to submit Securities Report: Supplementary materials on financial results: Quarterly financial results briefing: June 29, 2022 June 28, 2022 June 28, 2022 Yes Yes (Institutional Investors only) 1. Consolidated financial results for the year ending March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Consolidated Operating Results (% figures represent year-on-year changes) (Figures are rounded to the nearest million yen) Sales Operating Profit Recurring Profit Net Income Attributable to Owners of the Parent Year ended March 31, 2022 Year ended March 31, 2021 Millions of yen % Millions of yen % Millions of yen % Millions of yen 210,691 196,726 7.1 0.4 15,794 15,226 3.7 7.0 15,907 15,312 3.9 5.8 8,969 8,815 (Note) Comprehensive income: 7,131 million yen in the Year ended March 31, 2022 (-48.1%) 13,748 million yen in the Year ended March 31, 2021 (135.7%) Net Income per Share Net Income per Share (Diluted) Return on Equity Recurring Profit to Total Assets Operating Profit Margin Year ended March 31, 2022 Year ended March 31, 2021 Yen 68.49 67.32 Yen – – % 11.8 12.7 % 8.8 8.8 % 1.7 7.0 % 7.5 7.7 (Reference) Equity in affiliates accounted for under the equity method:-259 million yen for the ended March 31, 2022 -136 million yen for the ended March 31, 2021 (2) Consolidated Financial Position Total Assets Net Assets Equity Ratio Year ended March 31, 2022 Year ended March 31, 2021 Millions of yen 184,473 178,974 Millions of yen 78,946 76,056 (Reference) Equity: 77,234 million yen for the Year ended March 31, 2022 74,510 million yen for the Year ended March 31, 2021 (3) Consolidated Cash Flows Net Assets per Share Yen 590.21 568.93 % 41.9 41.6 Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Year ended March 31, 2022 Year ended March 31, 2021 Millions of yen 20,808 32,223 Millions of yen (14,592) (17,068) Millions of yen (6,905) (14,064) Cash and Cash Equivalents at the End of the Year Millions of yen 4,447 5,136 5.6 5.5 2. Dividends Year ending March 31, 2021 End of Q1 Annual Dividend End of Q3 Year-end End of Q2 Yen 14.00 Yen ― ― Yen ― ― Total Total Dividends Payout Ratio (Consolidated) Yen 16.00 Yen Millions of yen 3,940 30.00 % 44.6 Dividend on Equity (Consolidated) 15.00 Year ending March 31, 2022 Year ending March 31, 2023 (Forecast) 3. Consolidated Earnings Forecasts for the Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023) 4,203 16.00 32.00 32.00 16.00 17.00 46.7 50.5 ― ― Sales Operating Profit Recurring Profit (% figures represent year-on-year changes) Net Income Attributable to Owners of the Parent Net Income per Share Millions of yen % Millions of yen % Millions of yen% Millions of yen % Yen 223,000 5.8 14,500 (8.2) 14,300 (10.1) 8,300 (7.5) 63.43 Year ending March 31, 2023 *Notes (1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries affecting the scope of consolidation): No (2) Changes in accounting policies, estimates, and restatements 1) Changes in accounting policies accompanying revisions in accounting standards, etc.: Yes 2) Changes in accounting policies other than 1): No 3) Changes in accounting estimates: 4) Restatements: No No Policy)” on page 15 of the Attachment. (3) Number of shares issued (common stock) (Note) For details, see “3. Consolidated Financial Statements and Main Notes (5) Notes on Consolidated Financial Statements (Changes in Accounting 1) Shares issued at the end of each period (including treasury stock): 139,679,977 shares FY2020 139,679,977 shares 2) Number of shares of treasury stock at the end of each period: 8,819,780 shares FY2020 3) Average number of shares during the period (cumulative): (Note) Board benefit trust shares(BBT) is included in the number of year-end treasury stock. (496,900 stocks at FY3/2022, 391,300 stocks at FY3/2021) For treasury shares to be deducted in calculation of the average number of shares during the fiscal year, the Company’s FY2021 130,971,865 shares FY2020 8,713,335 shares 130,963,743 shares FY2021 FY2021 shares (385,805 stocks at FY3/2022, 394,416 stocks at FY3/2020) owned by the BBT are included. Net Income Attributable to Owners of the Parent (Reference) Overview of Non-Consolidated Operating Performance Operating Performance for the Year ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Non-Consolidated Operating Results (% figures represent year-on-year changes) Sales Operating Profit Recurring Profit Year ended March 31, 2022 Year ended March 31, 2021 Millions of yen % Millions of yen % Millions of yen % Millions of yen % 10,127 9,373 8.0 3.8 4,863 18.5 4,877 18.2 4,910 32.2 4,104 (0.1) 4,127 (0.2) 3,714 (7.8) Net Income per Share Net Income per Share (Diluted) Year ended March 31, 2022 Year ended March 31, 2021 (2) Non-Consolidated financial Position Yen 37.50 28.36 Yen – – Year ended March 31, 2022 Year ended March 31, 2021 Millions of yen 99,149 99,896 Millions of yen 41,124 40,381 Total Assets Net Assets Equity Ratio Net Assets per Share Yen 314.19 308.33 % 41.5 40.4 (Reference) Equity: 41,115 million yen for the Year ended March 31, 2022 40.381 million yen for the Year ended March 31, 2021 * Information Regarding Execution of Quarterly Review Procedures * 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 from forecasts due to various factors going forward. TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 [Attachment] Contents 1. Overview of Operating Results and Financial Position········································································ 2 (1) Overview of Operating Results ····························································································· 2 (2) Overview of Financial Position ······························································································ 4 (3) Overview of Cash Flows ····································································································· 4 (4) Future Outlook ·················································································································· 5 (5) Basic Profit Distribution Policies and Dividends for the Current and Next Fiscal Years ······························· 5 2. Basic Perspective on Selection of Accounting Standards ········································································ 6 3. Consolidated Financial Statements ······························································································ 7 (1) Consolidated Balance Sheets ······························································································ 7 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ············· 9 (3) Statement of Changes in Consolidated Shareholders’ Equity ······················································ 11 (4) Consolidated Statements of Cash Flows ··············································································· 13 (5) Notes to the Consolidated Financial Statements ······································································ 15 (Notes on Premise of Going Concern) ················································································· 15 (Changes in Accounting Policies) ························································································· 15 (Additional Information) ··································································································· 15 (Segment Information) ····································································································· 16 (Per-Share Information) ··································································································· 21 (Important Subsequent Events) ························································································· 21 4. Other ································································································································· 22 (1) Changes in Executive Positions ····························································································· 22 1 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 1. Overview of Operating Results and Financial Position (1) Overview of Operating Results Consolidated operating results for the fiscal year under review For the consolidated fiscal year under review, the Japanese economy remained under adverse circumstances due to COVID-19, as in the previous fiscal year. Its outlook is still uncertain amid different factors including soaring crude oil prices resulting from the crisis in Ukraine and the sharp depreciation of the yen due to a widening U.S.-Japan gap in interest rates. In this environment, the Group announced a new medium-term management plan, Innovation Plan 2024 “Design the Future Life” (IP24), which covers the period up to and including the fiscal year ending March 31, 2025, in May 2021. IP24 has five key messages: (i) implementation of the LNG strategy (expansion of business areas), (ii) evolution of the TLC concept, (iii) Stepping up of the DX strategy, (iv) Optimal allocation of management resources, and (v) Strengthening of SDG initiatives. The first year of IP24 is a fiscal year to lay the foundation to achieve the goals expressed by those key messages. The Group has started initiatives to achieve growth in the existing businesses and promote M&A. The Group has started also to implement a new “green growth strategy,” which is intended to achieve carbon neutral, and workstyle reform. In its operating activities, the Group actively sought to gain customers, while thoroughly taking steps to prevent infection. These activities resulted in the number of continuing customers rising to 3,194,000 as of March 31, 2022, an increase of 95,000 from the end of the previous fiscal year. The number of TLC Membership Service members rose 107,000, to 1,086,000. new record highs. life-related services. For the consolidated fiscal year under review, the Group posted net sales of 210,691 million yen, up 7.1% year on year, operating profit of 15,794 million yen, up 3.7% year on year, recurring profit of 15,907 million ye, up 3.9% year on year and net income attributable to owners of parent of 8,969 million yen, up 1.7% year on year. Net sales rose for the fifth consecutive fiscal year and all profit and income figures for the fourth consecutive fiscal year. All these figures reached In April 2021, the Company established TOKAI Venture Capital & Incubation Corporation (Minato-ku, Tokyo), as a topic in this fiscal year. The company will help develop TLC through synergies with the existing businesses and the creation of new In the same month, the Company acquired shares in Marco Polo inc. (Toyota, Aichi), which engages in the remodeling of condominiums, in the Construction, Equipment, and Real Estate segment, and made it a consolidated subsidiary and acquired shares also in QUERY Co. Ltd. (Toshima-ku, Tokyo), which engages in system development, in the Information and Communications segment, making it a consolidated subsidiary. The Company also set up new LP gas sales bases in Kumamoto City, Kumamoto Prefecture, in October 2021, and Fukuyama City, Hiroshima Prefecture in January 2022. Performance by segment is indicated below. (Energy) In the LP gas business, the number of customers increased 34,000 from the end of the previous fiscal year, to 715,000, reflecting sustained Group efforts to attract customers. Net sales stood at 73,769 million yen (up 12.4% compared to the previous fiscal year), chiefly due to a rise in selling prices linked to purchase prices. In the city gas business, the number of customers grew 7,000 from the end of the previous fiscal year, to 70,000. Net sales for the business rose 10.7% year on year, to 13,000 million yen mainly due to an increase in the sales volume of gas for industrial use and the effects of the gas rate adjustment system. Net sales in this segment stood at 86,770 million yen (up 12.1%). Operating profit came to 6,059 million yen (down 0.9%), reflecting an increase in expense for gaining customers, among other factors. (Construction, Equipment, and Real Estate) In the Construction, Equipment and Real Estate business, net sales stood at 27,780 million yen, up 19.9% year on year, 2 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 and operating profit at 1,706 million yen, up 35.7% year on year. Marco Polo inc., a company based in the city of Toyota in Aichi Prefecture that is a consolidated subsidiary from the fiscal year under review onwards, helped achieve these results. The Group enjoyed brisk orders for existing construction equipment works and civil engineering works. (CATV) In the CATV business, the Group focused on providing local information and the production of programs as a community-based service provider. The Group collaborated with major video distributors to enhance content and enable customers to live a comfortable life amid the COVID-19 pandemic. The Group continued careful and steady sales activities based on actual conditions in each business area. The broadcasting services customer count rose to 887,000, an increase of 12,000 from the end of the previous fiscal year. The communications services customer count increased to 344,000, a rise of 22,000 from the end of the previous fiscal year. Meanwhile, net sales in this segment decreased 3.5% year on year, to 32,572 million yen as a result of the application of the Accounting Standard for Revenue Recognition from the current fiscal year. Meanwhile, operating profit in the segment rose 10.0% year on year, to 5,189 million yen due to an increase in the number of customers. (Information and Communications) In the business for consumers, the Group worked to acquire customers in an effort to achieve a net increase in customers. For example, it expanded its ISP lineup in collaboration with major telecommunications carriers. In the mobile business, the Group appropriately reviewed its service lineup and introduced package plans with fixed lines. Reflecting effects those measures produced, the number of ISP customers stood at 654,000, following a controlled decline by 2,000 from the end of the previous fiscal year. The number of LIBMO customers rose 2,000 from the same point to 55,000. Net sales amounted to 24,400 million yen, down 7.2% year on year. In the business for corporate clients, net sales came to 26,997 million yen (up 10.5%), mainly reflecting steady growth in cloud services and an increase in the contract development projects, which are currently booming. Net sales in this segment were 51,398 million yen (up 1.3%), and operating profit was 3,355 million yen (up 8.7%). In the Aqua (bottled drinking water delivery) business, events at large retail facilities, etc. performed well. The Group also carried out non-face-to-face sales activities, including telemarketing. The number of customers increased 3,000 from the end of the previous fiscal year, to 165,000. Net sales in this segment stood at 7,629 million yen (up 0.1%). Operating profit came to 46 million yen (down 82.1%), reflecting an increase in expense for gaining customers, among other factors. (Aqua) (Others) Net sales in the nursing care business stood at 1,353 million yen (up 2.9%), reflecting an increase in the number of users. Net sales in the shipbuilding business rose to 1,673 million yen (up 11.1%), due to an increase in the number of ships that the Group repaired. Net sales in the bridal events business rose to 646 million yen (up 54.9%) in weddings and meetings. Overall, net sales in this segment came to 4,540 million yen (up 11.7%), and the operating loss was 103 million yen (an operating loss of 244 million yen in the same period of the previous consolidated fiscal year). (2) Overview of Financial Position Total assets at the end of the current consolidated fiscal year under review stood at 184,473 million yen, an increase of 5,499 million yen from the end of the previous fiscal year. The increase was mainly attributable to growth of 4,216 million yen in property, plant and equipment, 2,243 million yen in notes and accounts receivable – trade, and contract assets, 811 million yen in investments and other assets, and 306 million yen in intangible assets despite a decrease of 1,787 million yen in others under current assets resulting chiefly from a slide in derivative valuations. Total liabilities came to 105,527 million yen, an increase of 2,609 million yen from the end of the previous fiscal year. This is due largely to increases of 2,350 million yen in short-term borrowings, 1,540 million yen in lease obligations under non-3 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 current liabilities, and 1,441 million yen in notes and accounts payable – trade despite a decrease in others under current liabilities by 3,027 million yen after a decline in guarantee deposits received for hedge transactions. Total net assets were 78,946 million yen, an increase of 2,890 million yen from the end of the previous fiscal year. This resulted mainly from posting of 8,969 million yen as net income attributable to owners of parent despite 4,072 million yen paid for dividends of surplus and a decrease in deferred gains or losses on hedges by 1,918 million yen. (3) Overview of Cash Flows Cash and cash equivalents (“cash”) as of the end of the current consolidated fiscal year were 4,447 million yen, a decrease of 688 million yen from the end of the previous fiscal year. Cash flows from each activity during the fiscal year under review and the factors behind them are as follows. (Cash flows from operating activities) Net cash provided by operating activities was 20,808 million yen (11,414 million yen less year on year). Cash inflows were attributable primarily to net income before income taxes, an increase in notes and accounts payable-trade and depreciation, a non-cash account, which were partially offset by income taxes paid and an increase in notes and accounts receivable-trade and a decrease in deposits received among other cash outflows. Net cash used in investing activities 14,592 million yen (2,476 million yen higher year on year). Cash outflows were attributable primarily to the purchase of tangible and intangible assets and the purchase of shares of subsidiaries resulting (Cash flows from investing activities) in a change in scope of consideration. (Cash flows from financing activities) Net cash used in financing activities was 6,905 million yen (7,159 million yen higher year on year). Loans payable and other cash inflows were more than offset by cash outflows, including repayment of loans payable, repayments of lease obligations and payment of cash dividends. Net cash used in financing activities increased substantially year on year mainly due to growth in short-term loans Below is a summary of major cash flow indicators. payable. Equity ratio (%) Equity ratio on a market-value basis (%) Ratio of interest-bearing debt to cash flow (times) Interest coverage ratio (times) 36.3 85.0 2.4 46.6 (Notes) Equity ratio: Shareholders’ equity / Total assets FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 37.4 71.8 2.3 58.2 38.0 72.2 2.1 72.3 41.6 70.0 1.3 108.2 41.9 61.1 2.1 75.4 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 closing share price multiplied by the number of shares outstanding at year-end (excluding 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 expenses paid shown in the consolidated statements of cash flows. 4 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (4) Future Outlook The Group carries out actions aimed at continued growth and development in accordance with the five key messages in the TOKAI Group Medium-Term Management Plan Innovation entitled Plan 2024 (IP24) “Design the Future Life.” For FY2022, the Group will continue to increase customers and to receive more orders in a bid to boost net sales. With regard to profit, there is concern about a rise in gas purchase prices following climbing crude oil prices and escalation of the depreciation of the yen. The Company will work vigorously to win customers by taking pricing and other measures while maintaining price competitiveness. Taking what is mentioned above into account, the consolidated earnings forecast for FY2022 is as follows. Consolidated earnings forecast for FY2022 Sales Operating profit Recurring profit 223,000 million yen (+5.8% year on year) 14,500 million yen (-8.2% year on year) 14,300 million yen (-10.1% year on year) Net income attributable to owners of parent 8,300 million yen (-7.5% year on year) These earnings forecasts are based on information currently available to the Company. Actual results may differ from forecasts due to a variety of factors. (5) 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, as well as a dividend payout ratio of 40–50%. For the fiscal year ended March 31, 2022, we forecast annual dividends of 32 yen per share, consisting of the already-issued interim dividend of 15 yen per share and a year-end dividend of 17 yen per share. We also project annual dividends of 32 yen per share in the fiscal year ending March 31, 2023. 5 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 2. 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 Generally Accepted Accounting Principles (J-GAAP) for the foreseeable future. However, we will consider the adoption of International Financial Reporting Standards (IFRS), taking into account various situations in Japan and overseas. 6 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 As of March 31, 2021 As of March 31, 2022 (Millions of yen)3. Consolidated Financial Statements (1) Consolidated Balance Sheets Assets Current assets Cash and deposits Notes and accounts receivable–trade Notes and accounts receivable – trade and contract assets, net Merchandise and finished goods Work in process Raw materials and supplies Other Allowance for doubtful accounts Total current assets 5,577 26,323 － 3,479 900 1,194 9,860 △403 46,932 131,474 (96,966) 34,508 105,403 (80,788) 24,614 24,054 24,559 (11,155) 13,403 660 16,494 (11,936) 4,558 101,800 5,258 727 4,700 10,687 10,207 57 1,712 3,150 4,698 (273) 19,552 132,041 0 178,974 4,743 － 28,566 4,030 740 1,376 8,072 – 431 47,098 135,544 – 100,043 35,500 108,369 – 83,537 24,832 24,911 26,658 – 11,309 15,348 689 16,927 – 12,194 4,733 106,017 6,040 675 4,278 10,993 9,454 58 2,670 3,769 4,623 – 211 20,364 137,375 － 184,473 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 7 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 Liabilities Current liabilities Notes and accounts payable–trade Short-term loans payable Current portion of bonds lease obligations Income taxes payable Provision for bonuses Other accruals Other Total current liabilities Non-current liabilities Long-term borrowings Lease obligations Other accruals Net defined benefit liability Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains (losses) on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Non-controlling interests Total net assets Total liabilities and net assets (Millions of yen)As of March 31, 2021 As of March 31, 2022 18,668 17,226 14,411 12,061 － 112 4,217 3,934 2,819 2,764 1,443 1,382 318 558 15,942 18,969 57,822 57,009 29,736 29,955 12,889 11,349 368 276 1,038 962 3,671 3,363 47,704 45,908 105,527 102,917 14,000 14,000 25,552 25,542 36,395 31,563 – 2,332 (2,219) 73,615 68,887 605 1,216 － 1,918 369 33 2,643 2,454 3,619 5,623 － 9 1,702 1,545 78,946 76,056 184,473 178,974 8 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated Statements of Income) (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating profit Interest income Dividend income Commission income Other Total non-operating income Non-operating expenses Interest expenses Share of loss of entities accounted for using equity methodOther Total non-operating expenses Recurring profit Extraordinary income Gain on sales of non-current assets Gain on receipt of donated non-current assets Gain on sale of investment securities Transmission line facility subsidies Subsidy income Total extraordinary income Extraordinary losses Loss on sales of non-current assets Loss on retirement of non-current assets Impairment loss Loss on sales of investment securities Loss on valuation of investment securities Anniversary project cost Other Total extraordinary losses Net income before income taxes Income taxes (current) Income taxes (deferred) Total income taxes Net income Net income attributable to non-controlling interests Net income attributable to owners of the parent 196,726 113,856 82,870 67,643 15,226 10 184 30 375 601 289 136 88 515 15,312 57 386 18 144 66 672 0 814 106 16 353 96 26 1,414 14,570 5,247 350 5,597 8,973 157 8,815 210,691 125,479 85,212 69,418 15,794 14 250 37 426 729 268 259 88 615 15,907 7 128 436 127 － 700 1 829 5 13 － 271 496 1,617 14,990 5,936 – 79 5,857 9,133 163 8,969 9 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (Consolidated Statements of Comprehensive Income) (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Net income Other comprehensive income Valuation difference on available-for-sale securities Deferred gains (losses) on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Share of other comprehensive income of entities accounted for using the equity method Total other comprehensive income Comprehensive income (Breakdown) Comprehensive income attributable to owners of the parent Comprehensive income attributable to non-controlling interests 8,973 925 2,802 (0) 1,005 40 4,775 13,748 13,590 157 9,133 – 610 – 1,918 – 5 188 344 – 2,001 7,131 6,965 165 10 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (3) Statement of Changes in Consolidated Shareholders’ Equity Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021) (Millions of yen) Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Balance at beginning of period 14,000 25,542 26,426 (2,221) 63,746 14,000 25,542 26,426 (2,221) 63,746 Total change during the year Balance at end of period － 14,000 25,542 (2,219) 5,137 31,563 Valuation difference on available-for-sale securities Accumulated other comprehensive income Deferred gains or losses on hedges Remeasurements of defined benefit plans Foreign currency translation adjustment Total accumulated other comprehensive income Share acquisition rights Non-controlling interests Total net assets 290 (883) (7) 1,449 848 1,387 65,982 290 (883) (7) 1,449 848 1,387 65,982 Cumulative effects of changes in accounting policies Restated balance Change during the year Dividends of surplus Net income attributable to owners of the parent Acquisition of treasury shares Disposition of treasury shares Increase (decrease) in cash resulting from merger of consolidated subsidiaries Net changes of items other than shareholders’ equity Balance at beginning of period Cumulative effects of changes in accounting policies Restated balance Change during the year Dividends of surplus Net income attributable to owners of the parent Acquisition of treasury shares Disposition of treasury shares Increase (decrease) in cash resulting from merger of consolidated subsidiaries Net changes of items other than shareholders’ equity Total change during the year Balance at end of period 40 40 33 11 3 (3) 0 (3,678) 8,815 (3,678) 8,815 (0) 5 (3) 5,140 68,887 (3,678) 8,815 (0) 5 (3) 2 1 (0) 925 2,802 925 1,216 2,802 1,918 1,005 1,005 2,454 4,774 4,774 5,623 158 4,932 158 10,073 1,545 76,056 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 Consolidated fiscal year under review (from April 1, 2021 to March 31, 2022) Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury stock (Millions of yen)Total shareholders’ equity Balance at beginning of period 14,000 25,542 Cumulative effects of changes in accounting policies 14,000 25,542 Restated balance Change during the year Dividends of surplus Net income attributable to owners of the parent Acquisition of treasury shares Disposition of treasury shares Increase (decrease) in cash resulting from merger of consolidated subsidiaries Net changes of items other than shareholders’ equity 31,563 (66) 31,497 (4,072) 8,969 (2,219) (2,219) (119) 6 9 9 Total change during the year Balance at end of period － 14,000 25,552 4,897 36,395 (112) (2,332) Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Non-controlling interests Total net assets 1,216 1,918 33 2,454 5,6231,545 76,056 1,216 1,918 33 2,454 5,6231,545 75,989 (610) (1,918) 336 188 156 (1,838) (610) 605 (1,918) ‒ 336 369 188 2,643 156 2,956 1,702 78,946 (2,004)(2,004)3,619‒ ‒ 9 9 9 Balance at beginning of period Cumulative effects of changes in accounting policies Restated balance Change during the year Dividends of surplus Net income attributable to owners of the parent Acquisition of treasury shares Disposition of treasury shares Increase (decrease) in cash resulting from merger of consolidated subsidiaries Net changes of items other than shareholders’ equity Total change during the year Balance at end of period 68,887 (66) 68,820 (4,072) 8,969 (119) 15 4,794 73,615 (66) (4,072) 8,969 (119) 15 – 12 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (4) Consolidated Statements of Cash Flows Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 (Millions of yen) 14,570 14,657 1,143 106 – 30 – 194 – 1 289 – 56 353 814 286 17 2,104 – 186 2,127 958 36,960 – 4,736 32,223 245 339 – 15 214 – 12,925 366 – 153 359 – 1,085 – 3,021 – 1,630 － 249 – 11 – 17,068 14,990 14,957 975 5 – 259 – 265 – 423 268 – 6 － 829 – 3,321 156 1,341 – 319 – 1,921 – 297 26,709 – 5,900 20,808 305 843 – 178 880 – 13,345 267 – 243 260 – 2,664 – 45 － – 571 16 – 117 – 14,592 Cash flows from operating activities Net income before income taxes and minority interests Depreciation Amortization of goodwill Impairment loss Increase in net defined benefit asset and liability Interest and dividend income (Gain) loss on sale of investment securities Interest expenses (Gain) loss on sales of non-current assets Loss (gain) on valuation of investment securities Loss on retirement of non-current assets Increase (decrease) in notes and accounts payable (Increase) decrease in inventories Increase (decrease) payable–trade Increase (decrease) in accrued consumption taxes Increase (decrease) in deposits received Other Subtotal Income taxes paid Net cash provided by operating activities in notes and accounts from contribution Interest and dividend income received Proceeds from withdrawal of time deposits Purchase of securities Proceeds from sales of securities Purchase of tangible and intangible assets Proceeds from sales of tangible and intangible assets Payments for retirement of non-current assets Proceeds received construction Purchase of shares of subsidiaries resulting in change in scope of consolidation Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation Payments for transfer of business Loan advances Collection of loans receivable Other Net cash provided by (used activities investing for in) in Cash flows from investing activities 13 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (Millions of yen) Fiscal Year Ended March 31, 2021 Fiscal Year Ended March 31, 2022 – 275 1,370 – 4,039 10,500 – 10,148 – 112 – 119 – 4,072 – 6 – 6,905 0 – 688 5,136 4,447 – 297 – 8,475 – 3,935 12,436 – 9,987 – 118 – 0 – 3,678 – 7 – 14,064 – 0 1,089 4,046 5,136 Cash flows from financing activities Interest expenses paid Net increase (decrease) in short-term loans payable Repayments of lease obligations Proceeds from long-term loans payable Repayment of long-term loans payable Redemption of bonds Payments for acquisition of treasury stock Cash dividends paid Other Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 14 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (5) Notes to the Consolidated Financial Statements (Notes on Premise of Going Concern) There is no relevant information. (Changes in Accounting Policies) (Application of Accounting Standard for Revenue Recognition) The Company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020, hereinafter referred to as the “Accounting Standard for Revenue Recognition”) from the beginning of the current fiscal year and recognized revenue when control of promised goods or services is transferred to customers in an amount that is expected to be received in exchange for those goods or services. With regard to the application of the revenue recognition accounting standard, etc., in accordance with the transitional treatment stipulated in the provisions of paragraph 84 of the Accounting Standard for Revenue Recognition, the cumulative effect of retrospectively applying the new accounting policy prior to the beginning of the current fiscal year is added or deducted from retained earnings at the beginning of the current fiscal year, and the new accounting policy is applied from the beginning balance of the current fiscal year. However, the new accounting policy has not been applied retrospectively to contracts for which the method set forth in paragraph 86 of the Revenue Recognition Accounting Standard has been applied and substantially all revenue amounts have been recognized in accordance with previous treatment prior to the beginning of the current fiscal year. In addition, the Company applies the method stipulated in paragraph 86 of the Revenue Recognition Accounting Standard and paragraph (1) of the Written Accounting Standard. Contract modifications made prior to the beginning of the first quarter of the current fiscal year are accounted for under the terms of the contract after reflecting all contract modifications, and the cumulative effect of these modifications is adjusted to retained earnings at the beginning of the current fiscal year. From the current fiscal year, the Company changed its practice to state notes and accounts receivable – trade, which had been stated under current assets in Consolidated Balance Sheets for the previous fiscal year, as part of notes and accounts receivable – trade, and contract assets. However, pursuant to the transitional provisions in Paragraph 89-2 of the Revenue Recognition Accounting Standard, the Company did not reclassify balance sheet amounts for the previous fiscal year according to a new presentation. The adoption of this accounting standard is not expected to have a material impact on the consolidated financial statements. (Application of Accounting Standard for Calculation of Fair Value) The Accounting Standard for Calculation of Fair Value (ASBJ Statement No. 30, July 4, 2019, hereinafter referred to as the “Accounting Standard for Calculation of Fair Value”) and other standards were applied from the beginning of the current fiscal year, and in accordance with the transitional treatment stipulated in paragraph 19 of the Accounting Standard for Calculation of Fair Value and paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the new accounting policy stipulated by the Accounting Standard for Calculation of Fair Value will be applied in the future. The adoption of this accounting standard will have no impact on the consolidated financial statements. (Additional Information) (Improper Behavior by Our Former Subsidiary Employees) In a tax examination conducted by the Nagoya Regional Taxation Bureau in July 2021, it was discovered that a former employee of two of our subsidiaries had misappropriated the Company’s funds due to fictitious claims, fraudulent remittances, etc. In response, we launched an internal investigation committee chaired by an attorney who conducted an investigation and received a survey report in December 2021. The amount of 496 million yen pointed out by the Nagoya Regional Taxation Bureau for this wrongdoing was recorded as extraordinary loss. I In addition, an estimated amount of 83 million yen for additional tax collection due to fraud detection is included in income taxes, inhabitant taxes and enterprise taxes. 15 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (Segment Information) Segment Information 1. Outline of reportable segments The Group’s reportable segments are constituent units of the Group for which discrete financial information can be obtained, 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 the Group’s five reportable segments: Energy; Construction, Equipment, and Real Estate; CATV; Information and Communications; and Aqua. In the Energy segment, the Group sells LP gas, liquefied natural gas (LNG), and other high-pressure gases; markets petroleum products; supplies city gas; sells relevant products; performs construction of energy-related facilities and equipment; and provides security services. In the Construction, Equipment, and Real Estate segment, the Group constructs residential facilities and other buildings; develops, sells, and leases real estate; sells construction materials and residential equipment; installs pre-furnished equipment and appliances in buildings; and operates home renovation, civil engineering, and electrical construction businesses. In the CATV segment, the Group provides broadcasting and Internet connectivity services utilizing CATV networks. In the Information and Communications segment, the Group develops computer software; processes information; provides Internet connectivity; sells communications equipment; and performs agent operations. In the Aqua segment, the Group produces and sells bottled drinking water. 2. Method of Calculation of Amounts in Sales, Profit and Losses, Assets, Liabilities, and Other Items for Each Reportable Segment The accounting methods used in reportable business segments are the same as specified in “Significant Matters Forming the Basis of Preparing the Consolidated Financial Statements.” Profit for reportable segments is based on operating profit, and intra-segment sales and transfers are conducted at prevailing market prices. 16 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 ‒ (Millions of yen) Amount in consolidated statements of income (Note 3) ‒ 3. Information Related to Sales, Profit and Losses, Assets, Liabilities, and Other Items for Each Reportable Segment For the fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021) Reportable segments Energy CATV Aqua Total Construction, Equipment, and Real Estate Information and Communi-cations Others (Note 1) Total Adjustments (Note 2) Sales Sales to external customers Intra-segment sales and transfer Segment profit (loss) Other items Depreciation Amortization of goodwill Increase in tangible and intangible assets 77,380 23,177 33,745 50,735 7,622 192,661 4,065 196,726 196,726 194 1,035 600 3,835 189 5,855 131 5,986 (5,986) Total 77,574 24,212 34,346 54,570 7,811 198,516 4,196 202,713 (5,986) 196,726 6,115 1,257 4,719 3,086 259 15,438 (244) 15,194 32 15,226 Segment assets 68,046 27,727 38,571 31,068 4,801 170,215 4,944 175,160 3,813 178,974 4,241 417 713 65 5,340 595 3,245 23 640 ‒ 14,182 1,101 77 41 14,260 1,143 397 ‒ 14,657 1,143 7,138 828 7,481 3,080 467 18,996 163 19,159 408 19,567 (Notes) 1. The “others” category is a business segment not included in the reportable segments. This category includes businesses such as bridal events, ship repair, nursing care, and insurance. 2. Adjustments are as follows: (1) Adjustments to segment profit (loss) are eliminations due to intra-segment transactions. (2) Adjustments to segment assets, depreciation, and increase in tangible and intangible assets are due to companywide assets, depreciation, and increase in tangible and intangible assets that are not allocated to individual reportable segments. 3. Segment profit (loss) is adjusted to match operating profit in the consolidated statements of income. 17 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 ‒ (Millions of yen) Amount in consolidated statements of income (Note 3) ‒ Sales Sales to external customers Intra-segment sales and transfer Segment profit (loss) Other items Depreciation Amortization of goodwill Increase in tangible and intangible assets For the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022) Energy CATV Aqua Total Others (Note 1) Total Adjustments (Note 2) Reportable segments Construction, Equipment, and Real Estate Information and Communi-cations 86,770 27,780 32,572 51,398 7,629 206,151 4,540 210,691 210,691 184 1,608 516 5,037 218 7,565 162 7,727 (7,727) Total 86,954 29,388 33,089 56,435 7,847 213,716 4,703 218,419 (7,727) 210,691 6,059 1,706 5,189 3,355 46 16,357 (103) 16,254 (460) 15,794 Segment assets 72,617 30,042 39,606 29,757 5,093 177,117 4,628 181,745 2,728 184,473 4,514 308 746 224 5,364 348 3,143 42 693 ‒ 14,463 923 80 52 14,543 975 413 ‒ 14,957 975 7,698 514 7,401 2,699 717 19,031 61 19,093 401 19,494 (Notes) 1. The “others” category is a business segment not included in the reportable segments. This category includes businesses such as bridal events, ship repair, nursing care, and insurance. 2. Adjustments are as follows: (1) Adjustments to segment profit (loss) are eliminations due to intra-segment transactions. (2) Adjustments to segment assets, depreciation, and increase in tangible and intangible assets are due to companywide assets, depreciation, and increase in tangible and intangible assets that are not allocated to individual reportable segments. 3. Segment profit (loss) is adjusted to match operating profit in the consolidated statements of income. [Reference Information] For the fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021) 1. Information by Product and Service This information is omitted because the same information is disclosed in the Segment Information section. 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. 18 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 For the fiscal year ended March 31, 2022 (April 1, 2021– March 31, 2022) 1. Information by Product and Service This information is omitted because the same information is disclosed in the Segment Information section. 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. Information Related to Impairment Losses of Non-current Assets by Reportable Segment For the fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021) Impairment losses Impairment losses ‒ 79 ‒ ‒ ‒ 26 ‒ 106 Energy CATV Aqua Others Construction, Equipment, and Real Estate Construction, Equipment, and Real Estate Information and Communi-cations Information and Communi-cations Energy CATV Aqua Others (Millions of yen) Corporate or elimination Total (Millions of yen) Corporate or elimination Total ‒ 3 ‒ ‒ ‒ 2 ‒ 5 For the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022) 19 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 1,143 5,258 975 6,040 (Millions of yen) Corporate or elimination Total (Millions of yen) Corporate or elimination Total ‒ ‒ ‒ ‒ Information Related to Amortization of Goodwill and Unamortized Balance by Reportable Segment For the fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021) Energy CATV Aqua Others Amortization during the period Balance at end of period 417 1,222 65 684 595 2,986 For the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022) Construction, Equipment, and Real Estate Construction, Equipment, and Real Estate Information and Communi-cations 23 181 Information and Communi-cations 42 328 ‒ ‒ ‒ ‒ 41 183 52 153 Amortization during the period Balance at end of period 308 224 348 1,120 1,800 2,637 Information on Negative Goodwill Generated for Each Reportable Segment For the fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021) Energy CATV Aqua Others Not applicable. Not applicable. For the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022) 20 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 (Per-Share Information) For the fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021) For the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022) Net assets per share (yen) Basic earnings per share (yen) Diluted earnings per share (diluted) 568.93 67.32 ‒ 590.21 68.49 ‒ (Notes) 1. The basis of calculating the basic earnings per share and diluted earnings per share is as follows: For the fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021) For the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022) 67.32 8,815 8,815 130,963 ‒ ‒ ‒ 68.49 8,969 8,969 130,971 ‒ ‒ ‒ ‒ Share acquisition rights following a resolution of the Board of Directors meeting on October 28, 2021 Number of share acquisition rights: 7,739 (Common shares: 773,900 shares) 2. The number of common shares outstanding at the end of the fiscal year used in the calculation of net assets per share excludes the Company’s shares held by Custody Bank of Japan, Ltd. (Trust Account E) (391,300 shares for the fiscal year ended March 31, 2021; 496,900 shares for the fiscal year ended March 31, 2022). The average number of common shares outstanding used in the calculation of basic earnings per share excludes the Company’s shares held by Custody Bank of Japan, Ltd. (Trust Account E) (394,416 shares for the fiscal year ended March 31, 2021; 385,805 shares for the fiscal year ended March 31, 2022). 3. Diluted earnings per share for the previous fiscal year is not stated because there is no potential dilution. Diluted earnings per share in the fiscal year under review is not presented because there are no dilutive shares. (1) Basic earnings per share (yen) (Basis for calculation) Net income attributable to owners of parent (millions of yen) Amounts not attributable to common shareholders (millions of yen) Net income attributable to owners of the parent available to common shareholders (millions of yen) Average number of common shares outstanding during the period (thousands of shares) (2) Diluted earnings per share (Basis for calculation) Adjustments to net income attributable to owners of parent (millions of yen) A summary of those residual shares not included in calculation of diluted earnings per share due to the absence of a dilution effect which involves material changes from the end of the previous consolidated fiscal year (Important Subsequent Events) There is no relevant information. 21 TOKAI Holdings Corporation (3167) Financial Results for the year ended March 31, 2022 4. Other (1) Changes in Executive Positions 1) Change of representative director No items to report 2) Other Changes in Executive Positions No items to report 22