New mid-term management plan

Final Stage

Positioning of the new mid-term management plan

Realizing our Vision2026-2028

2nd Stage2023-2025

Delivering the results of change
Strengthen human capital management andthe financial base, steadily commercialize andmonetize the decarbonization field, establish thesolutions business as a second pillar of businessafter energy

1st Stage

Compass
Transformation

2020-2022

23-25

Economic frame for 2025
Crude oil price = 90$/bbl / Exchange rate = 140 yen/$

Financial & environmental indicators

Company witha Nominating
Committee, etc.

Transition toholdings typegroup structure

Redefining
material issues

Business
investment
to realize ourvision22 average)

Segment profits*1 (operating profit ¥130.0 billion+ equity income of subsidiaries)
Finan- ROA*1
cial
1
ROE*

D/E ratio

Environ- CO reduction contribution
2
mentalFY2025¥150.0 billion

3.0%

Approx. 4%

7.3%

Approx. 8%

0.91

Approx. 0.9

6.00 mn tons*2

12.00 mn tons*3

Energy¥200.0 billion

Cash flow & investment plan

FY2020–22

Cumulative operating cash flow (profit
attributable to owners of parent + depreciation)¥960.0 billion¥1.1 trillion¥530.0 billion¥650.0 billion(¥230.0 billion)

Solutions, etc.

¥370.0 billion¥350.0 billion¥900.0 billion¥1 trillion¥260.0 billion

Growth investments (portion

Formulationof a newmanagement
philosophy

Now (FY2020–

for decarbonization-related

Invest- investments)
ments Infrastructure investments
Total (3 years)(estimated)(¥190.0 billion)

FY2023–25

Overseas¥190.0 billion*1 Profits after sliding time lag effects *2 Average for FY2020–21, Japan only *3 Includes overseas

Financial Data

Laying the foundation for 10 years from now

Maximize cash flow generated
from the core energy business andactively invest in new growth areas
such as decarbonization andsolutions, etc., while identifying
core and non-core businesses
and business life cycles, andpromoting asset replacement

Preconditions

Corporate Strategy

Transforming our business modelBusiness Strategy

Decarbonization
Digitalization
Fluctuations in energy
markets

Providing energy and solutions to the future of
our life, society and the earth

How We Create Value

3rd Stage
Tokyo Gas GroupManagement Vision

External environment

Contents

2029-2030
CEO’s Message

The business environment continues to change rapidly due to heightening
geopolitical risks and the associated volatility in energy markets.
We have positioned the 2023–2025 period of the mid-term management plan as
one in which “We transform our own business model in pursuit of the sustainable
development of society and the provision of greater value to customers withsolutions and business groups that transcend conventional energy frameworks.”
Through this, we will make steady progress toward the vision outlined in theGroup’s management vision, Compass2030.

Introduction

Compass Transformation 23-25

Introduction

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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Sustainability Factbook

17%
10%
12%

Overseas*1
Solutions, etc.*2
Energy*3 (gas + electricity +networks)

28%

73%

25%
50%

60%
FY2022 results

Management guidelines
and key figures in
Compass2030¥140.0 billion¥417.0 billion

Approx. 200 bn yen overseas business (particularly upstream interests) due to

Key contributing factors and sentiments

Strong performance driven mainly by competitive accessto raw materials, and by increased revenues fromskyrocketing oil prices, and sharp yen depreciation

Financial indicators
Approx. 4%

8.3%

4% Profitability indicators soared with strong earnings

ROE

Approx. 8%

20.0%

8% Profitability indicators soared with strong earnings

D/E ratio
Factoring in hybrid bonds/loans

Approx. 0.9
—

0.81
0.76

No. of customer accounts, million (FY-end)

14.80

13.00

20.00 growth in services & solutions accounts has stalled

Natural gas transaction volume, million
tons (FY)

17.00

19.00

20.00 power generation industry and other factors

Segment profit from Overseas Business,¥billion (FY)

16.0

67.9

— owing to higher oil prices and other factors

Approx. 0.9

Borrowings are expanding due to focused investment ingrowth areas, etc., but D/E ratio is advancing as planned
thanks to strong earnings

KPI

6.35

17.00* customer equipment

Renewable power source transaction
volume, million kW (FY-end)

2.00

1.633

6.00*5 conditions and fiercer competition

Cost structure reform, ¥billion (vs. FY2019)

-30.0

-30.0

— other costs are moving on track

4 Plateauing due to factors such as decreased operation of

Growth is being slowed down by shifting market

Corporate Strategy

Upstream and shale business performance is robust

6.50

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Reforms for reducing consignment, repair, indirect, andFY2021–30 plan

Financial Data

FY2020–22 plan FY2020–23 results

CEO’s Message

Tracking strongly, buoyed by increased demand fromCO2 reduction contribution , million tons
(Base year: FY2013)

Capital expenditure

200.0

153.3

Approx. 500.0

110.0

61.7

—

Solutions, etc. (¥ billion)*2

200.0

130.3

Approx. 1,000

Energy (¥ billion)*

380.0

436.0

Approx. 500.0

30.0

107.4

—

Web SiteCommon (¥ billion)

220.0

106.3

—

Investor Relations Website

Total (¥ billion)

1,000

826.1

2,000

Overseas business (¥ billion)*1
Renewable energy (¥ billion)*1 All overseas businesses*2 Energy-related, real estate, other*3 Gas and electricity business in Japan*4 The Compass2030 initial target: 10 million tons (Japan only)*5 The Compass2030 initial target: 5 million kW

Gas and electricity accounts have steadily risen, but

Business Strategy

ROA

How We Create ValueFY2022 plan

KGI
operating profit + equity income ofsubsidiaries

Contents

25%
CEO’s Message

Despite an uncertain business environment owing
to the spread of COVID-19 and the expansion ofmarket volatility, our efforts to achieve the mid-term
management plan were progressing smoothly.
As for KPIs and KGIs, while some issues remain,such as growth in the No. of customer accounts
and renewable power source transaction volume
due to ongoing competitive pressure, we were able
to generally achieve our targets for the most part.
We will continue to monitor trends in the LNG andelectricity markets, international situations, andother factors, and promote initiatives to achieve ourvision and the new mid-term management plan.

Introduction

Looking Back on thePrevious Mid-termManagement Plan

Business portfolio composition: operating profit + equity income of subsidiaries

Introduction

3

Renewable energy (¥ billion)

Financial Data

Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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Introduction

Deriving Strategy from remaining challenges

Introduction
Contents

Achievements and challenges under the previous medium-term plan

Three challenges to realizing our vision01* LNG deemed to have net-zero
CO2 emissions because
carbon credits from forest
conservation projects, etc. areused to offset GHG emissionsof the processes from
exploration to combustion

Establish a value cocreation ecosystem

Transform the LNG
value chain

 ctively invested in renewables inAJapan & abroad
Expanded carbon-neutral LNG*

Partner with Octopus Energy Group Limited
E xpanded decentralized energy systems &smart city development

 ransition to holdings type groupT
structureL aunched new LNG trading company &new services (last-mile, etc.)

 ecure procurement of energy andSstable supply amid risinggeopolitical risks
Gain additional strengths in the
decarbonization field

Achieve green transformation(GX) while maintaining stableenergy procurement & supplyImprove service quality andawareness thereofStrengthen customer experience(CX) by accelerating digitaltransformation (DX)
Establish new business to join
gas and electricity businesses

Strengthen the system to realize Vision01

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

02
Financial Data

Remaining
challenges to befocused on in the
new mid-term
management
plan

Lead transition to
net-zero CO 2

Corporate Strategy

Challenges
under theprevious
mid-termmanagement
plan

03

Business Strategy

Achievements
under theprevious
mid-termmanagement
plan

02

How We Create Value

promoting commercialization and increasing profitability, and in improving the quality andrecognition of services amid ongoing competitive aggressiveness.
Based on the achievements and challenges under the previous mid-term management plan,
the new mid-term management plan aims to maximize the diverse values of LNG while actively
investing resources in the GX field (renewable energy, e-methane, etc.), expand solutions byutilizing digital technology based on our real strengths, establish a profit model, and reform staff
operations and Human Capital Management through the use of digital technology.

CEO’s Message

By actively investing in the renewable energy field in Japan and overseas, partnering with
Octopus Energy Group Limited, and shifting to a holdings type group structure through FY2022,
we have built the foundation to achieve the vision we set for ourselves in Compass2030.
However, as LNG procurement risks due to the external environment, such as
geopolitical risks, have become apparent, this was also a period in which we strongly felt
the importance of continuing stable procurement and supply.
In addition, challenges remained in acquiring strengths in the decarbonization field,

Strengthen human capital
Drive structural reforms withdigital tools (DX)

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

24

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strategy

01

strategy

02

strategy

Strategy

Achieve both
stable energy
supply &decarbonization

Fully roll out
Solutionsbusiness

Realize a flexible
corporate culture
resilient tochangeAction Plan everaging value chain flexibility toLaddress market volatility and maintainstable supplyR esponsibly leading the transition

Commercialize and monetize thebusiness in decarbonization area, while
continuing to stably supply energy

 trengthening customer communication
Sthrough our strengths in face-to-faceengagement and through digitaltechnologies
 o-creating value with communities byCproviding them with optimized solutions thatleverage our strong root in the community

Develop Solution business as a center next
to Energy business, by integrating solutions
which incorporate GX & DX

Implementing 3 key DX actions
 xercising human capitalEmanagement p.50
S trengthening our financial base
p.38

Increase resilience to uncertainty bytransforming our business model throughDX, in addition to exercising humancapital management and implementing
financial strategy

Financial Data

Strategy
outcomes

 uilding an integrated business brand &B
expand lineup of solutions

Corporate Strategy

 stablishment of a new model forE
stable energy supply

03

Business Strategy

Transform the LNG valuechain

How We Create Value

Establish a value
co-creation ecosystem

CEO’s Message

Lead transition to
net-zero CO2

VisionIntroduction

Three core strategies derived from remaining challenges

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

25

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01

strategy

Achieve both stable energy supply & decarbonization

Lead the transition to net-zero CO 2

Provide customers with optimal energy solutions by integrating various values such as decarbonization and decentralization using digital technologies

https://www.tokyo-gas.co.jp/en/IR/support/pdf/20230222-05e.pdf#page=14

Secure long-term LNG
contracts and powersources for base load

Value for diverse
range of offerings
Value forflexibility

Expand supply/
demand balancing &trading

A new form of
stable supply
Expand credit offset
products

Demandresponse, etc.

Develop gas/electricity
pricing system alignedwith market fluctuations

Digital utilization

Value for stable supply
Value for balancing
capacity

Diverse solutions
Supply–demand adjustment
and trading

Financial Data

Energy demand

Utilize decentralized
resources

Value forintegration

Corporate Strategy

Energy supply

Value for decarbonization
Value for decentralization

Business Strategy

A new model for stable energy supply

Secure profitability across the entire group
Form optimal assets and strengthen thecustomer baseStrengthen transportcapacity

Provide optimal solutions to our customers

Develop renewable
power sources

How We Create ValueAs an island country with few resources, it is important for Japan to achieve both a stable supply of energy and decarbonization, and the Tokyo Gas Group sees
this as its own responsibility.
The new model for stable energy supply that we are aiming for is to provide optimal energy solutions to customers through a combination of the value for stablesupply of LNG, the value for balancing capacity that flexibly balances supply and demand, the decarbonization and the decentralization value for renewableenergy, in combination with the power of digital technology.
Even in an environment with high volatility, we will promote decarbonization while simultaneously controlling the impact of fluctuations by integrating supply anddemand, customers, and society as a whole, rather than going unidirectionally from supply to demand.
Compass Transformation 23-25

CEO’s Message

Establish a new model for stable energy supply

Introduction

Strategy
Explanation

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site

Toward a decarbonized society

Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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01

strategy

Achieve both stable energy supply & decarbonization

Lead the transition to net-zero CO 2

CEO’s Message

Leverage value chain flexibility to address market volatility andmaintain stable supply

Laid AO&T* groundwork

 uilt platform centered on
B
Singapore & Tokyo for LNG
trading in East Asia & Pacificregion entralize management across the entire
Cvalue chain of market risk and the option
values of our LNG and electricity assets,
which previously we managed individually D ecentralized resources (storage batteries,
PVs, EVs), which are customer equipment,
are also centrally managed across the value
chain and utilized as a coordination force

Expand LNG/electricity trading andincrease sophistication
 trengthen LNG trading in European/AtlanticSmarkets

Financial Data

*Asset optimization & trading: Integrated approach to optimal operation of facilities and trading

Customers

 iversify trading by entering the electricity
D
supply/demand balancing market

LNG market

 C ombine financial products and our assets,
and engage in sophisticated asset operation
using digital technology

Until now, our focus has been on strengthening our own LNG assets and expanding gas andelectricity sales volumes, but going forward, we will expand the value we provide to customers
through energy by integrating supply and demand with our digital trading platform.
By centrally managing not only our company assets but also customer-owned equipment suchas storage batteries and PVs, as well as other companies’ assets, and establishing a series ofenergy supply and demand portfolios including transactions with the market, we aim to optimize
and monetize the option value of each resource, including its adjustability and environmental
friendliness, and respond to risks and opportunities in real time.
For example, when electricity market prices rise, we can realize a stable and competitive energy
supply by procuring electricity not
LNG purchasing
only from among our own assets
Gas & power contracts
LNG
contracts
Customer equipment
carriers
but also from customer
equipment in the value chain. In
addition, if surplus electricity is
generated, it can be traded on the
Digital trading platform
as envisioned for 2026 and beyond
electricity market and monetized.
To achieve this, we will
combine the knowledge weRenewable
LNG terminals
have cultivated so far with
LNG-fired thermal power plants
power sourcesand grid storage batteries
Octopus Energy’s Group
Limited’s technology. In
Electricity market
addition, we will accelerate theacquisition of decentralized
When theProcure electricity not only from among our own assets but
resources and expand ouralso from customer equipment and supply it to customers
electricity
market soars Trading surplus electricity on the electricity market
decarbonization product line.

Corporate Strategy

 aunched LNG trading with
L
North America, Europe, and thePacific through collaboration with
European alliance partner

Risk management & flexible asset
utilization across the value chain

Achieving advanced asset optimization & trading with a digital trading platform

Business Strategy

 ommenced optimal operation
Cof LNG/electricity procurement,
supply, and trading in ways
leveraging our LNG assets

Actions for FY2023–25

How We Create Value

In order to respond to the increasing fluctuations in the energy market, we will form and manage assets suitable for newly growing markets, such as adjustability
and environmental value, and by building a digital trading platform, we will realize an energy supply that is highly stable, environmentally friendly, and flexible
according to customer needs.
What we’ve done

Introduction

Strategy
Explanation

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

27

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01

strategy

Achieve both stable energy supply & decarbonization

Lead the transition to net-zero CO 2

What we’ve done

Actions for FY2023–25

Sophisticated use of natural gas
 onsumer need for carbonC
neutral LNG: about 120 projects

 xpand solutions, including carbon credit-based
E
CNL, etc.

(As of April 30, 2023)

Conducted small-scale
methanation demonstration testing eveloped innovative methaneD
production technology
 eveloped low-cost waterDelectrolysis cell stack xpanded renewable powerEsources through development &acquisition
 enewable power sourceRtransaction volume*1: 1.49 mn kW egan working to achieve netB
zero emissions of CO 2 from ouractivities*2
 et-zero CO 2 from our activities:
N
Achieved 18% of our target

 evelop Commercial low-cost water electrolysis cellDstack for production of hydrogen cquire renewable power sources toward acquisitionAof new revenue sources ccelerate efforts for early real-world deployment ofAfloating offshore wind power enewable power source transaction volume byR
2025: 2.20 mn kW tudy methods for achieving net-zero CO 2 emissions
S
from our thermal power plants
 chieve net-zero CO 2 emissions from city gas
Aproduction facilities
Implement countermeasures for methane emissions
in shale development
B y 2025, reach 60% net-zero CO 2 from our activities:(vs. FY2020)*1 Total from our assets (including projects targeted for investment), external suppliers, etc.
*2 CO2 emitted from city gas production facilities, buildings, etc. we use, and company vehicles. Target is based on FY2020.

30 bn yen
FY2023–FY2025
Decarbonizationrelated investment
Renewableenergy in Japanand overseas

230 bn yen

200 bn yen

Strengthening the earnings base overseas and contributing to decarbonization
Overseas, in addition to replacing assets, we will promotecollaboration among our businesses and expand
earnings. For example, in the shale gas business, weare considering connecting each business throughtrading functions, rather than generating revenue throughindividual projects. We will also accelerate investments inthe decarbonization field including renewable energy tocontribute to future profits. By 2025, we aim to establish
a stable profit base by making profit contributions inthe shale gas business and contributing to profits in the
decarbonized field including renewable energy.

Financial Data

Reduction of our emissions

 inal investment target decision for building largeF
scale e-methane supply chain overseas in 2025

Hydrogen
Methanation, etc.

Corporate Strategy

Decarbonization of electricity

E stablish large-scale e-methane supply chain

In the domestic renewable energy sector, weplan to expand our earnings through thedevelopment and acquisition of power sources.
For overseas renewable energy, we will invest in
Europe and Southeast Asia to contribute tofuture earnings. In the area of hydrogen andmethanation, we will work on establishment oftechnologies, system compliance, and raw
material procurement to build a large-scale
overseas e-methane supply chain, with the aimof monetization in the future.

Business Strategy

Decarbonization of gas

Investment in the decarbonization sector, including renewableenergy, methanation, and hydrogen

How We Create Value

While further promoting the advanced use of LNG in Japan and overseas to reduce CO 2 emissions, we will use the profits therefrom to invest in advanced
decarbonization fields such as renewable energy (especially offshore wind with its large market), e-methane and hydrogen, and will progressively commercialize
these fields to lead a responsible transition that achieves both stable supply and decarbonization.
In addition to reduction of our emissions, we will provide optimal solutions that meet customer needs, and establish a virtuous cycle of sustainable development
for both our customers and the Tokyo Gas Group, with the aim of achieving both decarbonization and economic growth for society as a whole.

CEO’s Message

Responsibly leading the transition

Introduction

Strategy
Explanation

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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01

strategy

Achieve both stable energy supply & decarbonization

Efforts toward commercialization of floating offshore wind power
generation business

Promotion of business feasibility studyin Malaysia

Promoting projects in the US

Tokyo Gas, SUMITOMO CORPORATION,
Petroliam Nasional Berhad

ImplementerTokyo Gas, Mitsubishi Corporation,
Osaka Gas Co., Ltd., TOHO GAS Co., Ltd.

Implementation
details

Considering the establishment of
e-methane production, liquefaction, andtransportation supply chains in Malaysia

Implementation
details

Considering the establishment of
e-methane production, liquefaction, andtransportation supply chains in the US

Introduction of
e-methane in Japan
MiddleEast

Corporate Strategy

Implementer

WindFloat ®
Among floating foundation systems for offshore wind power generation, WindFloat ®
uses what is called a semi-submersible platform, and it has already been commerciallyoperated in the Atlantic Ocean and the North Sea with a total capacity of 72.7 MW. As tothe technical performance of WindFloat ®, it has a track record of being able to operate
without problems even in an environment where waves of a maximum height of 17 m andwind of a maximum speed of 59.4 m/s. occur.

Business Strategy

Consideration for building a large-scale e-methane supply chain overseas

In May 2020, Tokyo Gas invested in Principle Power Inc., developer of its own floating
foundation system for offshore wind power generation, WindFloat ®. WindFloat ®, owned
and developed by Principle Power Inc., has excellent stability at sea and has alreadybeen adopted*1 for large wind turbines in Europe. For Japan, which has few shallow
waters, floating offshore wind power generation using technology that can be installedeven in deep waters is expected to have great potential, and it is expected to be
introduced more and more in the future.
In February 2023, Tokyo Gas and Shinobuyama Fukushima Power Co., Ltd.
announced the start of their study on a floating offshore wind power project off the coastof Fukushima Prefecture. Based on Principle Power’s floating technology, we will aim tocommercialize the project by utilizing the know-how gained through the demonstration
research project*2 conducted off the coast of Fukushima.

How We Create Value

Leveraging the knowledge we have gained from the small-scale demonstration of
e-methane in Japan, we are promoting multiple commercialization projects to establish
the world’s first large-scale manufacturing and supply chain for e-methane overseas. The
goal for FY2025 is to make investment decisions for building a large-scale supply chain
for e-methane overseas, and we will also support the introduction of e-methane in Asia,
where LNG market growth is expected in the future.
In addition, we are developing innovative methanation technologies with the support of
the Green Innovation Fund to reduce the cost of e-methane production.
Furthermore, in order to reduce the cost of production of hydrogen, which is a raw
material for e-methane, we are working with SCREEN Holdings Co., Ltd. to develop
low-cost water electrolysis cell stacks utilizing the knowledge cultivated in fuel cells.

CEO’s Message

Promotion of Large-Scale e-methane Commercialization Projects
Overseas, Development of Innovative Methanation Technologies, andDevelopment of Low-Cost Water Electrolysis Cell Stacks

Lead the transition to net-zero CO 2

Introduction

Strategy
Explanation

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

US

Financial Data

Southeast
Asia

Australia

Promotion of business feasibility studies in foreign countries
ImplementerTokyo Gas, Shell Singapore Pte. Ltd., Osaka Gas Co., Ltd.

Implementation
details

Studying the establishment of e-methane production,liquefaction, and transportation supply chains in foreigncountries

In addition, we are making initialconsiderations with various
businesses for projects in
multiple regions.
Photo of the Kincardine Offshore Wind Farm project courtesy of Principle Power Inc.

Innovation for a decarbonized society
p.44*1 Performance details: commercial operation of three 8.4-MW units offshore Portugal and five 9.5-MW units offshore Scotland*2 Fukushima floating offshore wind farm demonstration research project

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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02

strategy

Fully roll out Solutions business

Establish a value co-creation ecosystem

We have redefined the values we provide to our customers as “Resilience,” “Optimization,” and “Decarbonization,” and we are building a new brand that integrates
solutions related to these. We provide easy-to-understand and easy-to-use solution menus for residential, corporate, and community customers.

Three forms of value provided
Resilience

Underpinning corporate values:
Safety, Security & Reliability

Residential
customers

Provide securityin everyday life

Provide smart
livingCommunity
customers

Provide optimal
solutions alignedwith their life stages
and changes insociety

Contribute to theircontinued growthby combining our
expertise with theirs

Energizecommunities
through cocreation withstakeholders

Increase businessproductivity

Realize ecofriendly living

Community
customers

Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Enhanceenvironmental
value

Solutions

Developresilient urban
infrastructure

Corporate
customers

Sustainable urban
development

Realize cities thatleverage local
characteristics andadvanced technologies

Financial Data

Corporate
customers

Strengthenbusiness
continuity

Corporate Strategy

Concepts

Residential
customers

Decarbonization

Optimization

Business Strategy

In addition to the corporate values of “safety, security, and reliability,” which have beencultivated as the foundation of our business, we will formulate a business brand thatincorporates the three values of “resilience, optimization, and decarbonization” in order
to expand our solutions.
We have been developing each service according to the needs of our customers, but
by branding the solutions we deliver and clarifying the value we provide, we will further
improve recognition and achieve profit growth.

How We Create Value

Role and purpose of building a comprehensive business brand

CEO’s Message

Building an integrated business brand & expand lineup of solutions

Introduction

Strategy
Explanation

Introduction

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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strategy

Fully roll out Solutions business

Establish a value co-creation ecosystem

CEO’s Message

Strengthening customer communication through our strengths inface-to-face engagement and through digital technologies
Enhance residential solutions to serve diverse customer needs

What we’ve done

Actions for FY2023–25
Achieve real growth in energy business

Energy supply aunched Sasutena Denki &Lother new electricity plans
Expansion of products/services
 egan offering products/solutionsB
for PV, storage batteries, etc.

Platform for value provision edesigned platform forRcustomer reception/management

Turn energy & environmental equipment
into solutions
 everage decentralized resources (PV, storage
L
batteries, EV) to build up solutions (demand
response, etc.) through alliances with diverse players

Implement personalized digital marketingthat capitalizes on our strengths in faceto-face engagement
 tandardization and centralization of systems thatS
have until now been subdivided by service

FY2025
Expand internal/external partnerships andco-creation to support customer lifestyles
Total sales

100 billion

Approx. ¥(more than +40%
over 3 years)

Providesecurity ineverydaylife

Providesmart living

Realizeeco-friendly
livingNumber of holders of plumbing
repair qualifications

1,147 persons

As of May 2023

Number of registered equipment
installation workers

3,293 persons As of May 2023

Expanding customer accounts by leveraging TG Octopus Energy’sGroup Limited’s digital technology
We established TG Octopus Energy Group Limited, ajoint venture with Octopus Energy’s Group Limited, aUK-based energy tech company, and began
operations in Japan in November 2021. Octopus
Energy’s Group Limited proprietary systemcentralizes essential functions for energy services
such as customer information management, billing
management, and invoicing, enabling the quick creation of a variety of rate plans andservices. In addition, the same customer support team is always available for eachcustomer, forming a concierge-like service to solve all inquiries.
We will apply this expertise in the gas and power services of the Tokyo Gas Groupto further expand customer accounts.

Financial Data everage digital technology platform to expand interactive
Lcommunication with customers, by shifting to highly responsive
customer-centric processes/systems and optimizing
approaches based on data on customer traits/behavior

2,176 persons As of May 2023

Corporate Strategy

 olled out repair & home support
R
services that leverage our lastmile strengths

 stablishment of price menus and service deliveryEsystems that meet the diverse needs of ourcustomers, such as environmental friendliness anddifferent usage patterns

The strengths of LIFEVAL and Enesta, which areresponsible for Tokyo Gas’ last-mile, lie in their having
many engineers and connections with customers andlocal communities. We leverage these strengths toprovide services such as in-home repair andequipment installation for our customers who demand
technical capability and quality.
Based on these strengths and high-quality services,
we will continue to expand and utilize our digital
infrastructure, including standardizing systems
subdivided by service, and provide solutions that can
immediately respond to customer needs.

repair qualifications

Business Strategy

 xpanded customer base withE
co-creation partners

Strengthening of customer relationships through solutions thatleverage the last-mile
Number of holders of gas appliance

How We Create Value

By utilizing advanced digital technologies such as those of Octopus Energy Group
Limited to enhance communication with our customers, we will further strengthen
the relationships we have cultivated with them through in-person contact.

Introduction

Strategy
Explanation

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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strategy

Fully roll out Solutions business

What we’ve done

Actions for FY2023–25

Energy supply
 xpanded supply of city gas,
E
LNG, and electricity in mainly the
Tokyo metropolitan area
 ecame first in Japan toBintroduce carbon-neutral LNG

 roviding continuous and highly effective solutions inPdomains ranging from environmental consulting to EPC,
from energy services to operation and maintenance nhance/provide decarbonization products and linkEthem with certification (Provide customer-tailored
renewable energy [Solar Advance, biomass,
geothermal, etc.] and carbon credit offsetting products)
 romote large projects combining energy supply andP
decarbonization solutions

 rovided engineering solutions
P
that capitalize on our user knowhow elp customers to improve the value added of their equipment
Hand optimize energy management (VPP*3, demand response,storage batteries, CPPA*4 , corporate EV services, etc.)
 nsure stable energy procurement/supply, expand
Erange of solutions aligned with market conditions

 orporate sales functions wereC
consolidated at TGES

Develop/deploy data-driven solutions
 xpand new solutions that help to streamline workEprocesses and save labor (Helionet Advance, O&MDX, Joy series*5, facility management, etc.)

Total sales

210 billion

Approx. ¥(+10% over three years)

Enhanceenvironmental
value

Strengthenbusiness
continuity

Increasebusiness
productivity*1 G enerating panel capacity*2 A ccording to research by Narita International Airport Corporation and Tokyo Gas*3 Virtual power plant (a system that provides integrated control of customer-owned power sources and uses them to balance
electricity supply/demand)*4 Corporate power purchase agreement (agreements in which corporate customers [businesses, local governments, etc.]
make long-term purchases of electricity from utilities)*5 Central management software that helps customers with factories, etc. digitalize utility equipment and improve productivity

Financial Data

FY2025
Decarbonization solutions partner thatsolves a wide range of management
challenges and co-creates the future forcustomers that operate offices nationwide

Corporate Strategy

Sales organization realignment

Business Strategy

Sophisticated decentralized energy networks

Provision of solutions

An energy supply company contributing to the decarbonization of
Narita International Airport
Green Energy Frontier, which was established by NARITA INTERNATIONAL AIRPORTCORPORATION and Tokyo Gas to provide energy supply to Narita International Airport,
began operations in April 2023. We will start supplying energy (electricity and heat) to Narita
International Airport and take on the challenge of decarbonizing the energy supplied to it by2050. We plan to invest 100 bn yen by 2050 in the construction of a new energy plant and theinstallation of a 180MW*1 solar
power generation facility which willbe the world’s largest*2 solar power
generation facility at an airport.
The Tokyo Gas Group will engage
in the energy supply business andthe airport decarbonization businessby leveraging the energy supply
know-how it has cultivated over theyears, as well as its knowledge inthe construction and operation oflarge-scale energy plants.

Enhancement and nationwide deployment
of decarbonization solutions

How We Create ValueThe Tokyo Gas Group and its alliance partners will optimally combine a fullrange of environmental solutions, from energy conservation to advanced
decarbonization technologies, to help solve challenges for our customers
and local communities.
Furthermore, we will promote ESG-oriented real estate development andurban development by expanding our solutions, business areas, and fields,
aiming to realize sustainable communities.

Enhance corporate customer solutions for theera of decarbonization & decentralization

CEO’s Message

Co-creating value with communities
by providing them with optimized
solutions that leverage our strong
root in the community

Establish a value co-creation ecosystem

Introduction

Strategy
Explanation

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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strategy

Fully roll out Solutions business

Establish a value co-creation ecosystem

What we’ve done

Actions for FY2023–25
Expand solutions

Expansion of community
collaboration
 ntered into comprehensiveEagreements for carbon-neutral
urban development with local
governments and city gas suppliers
 stablished new communityEelectric power company(Utsunomiya Light & Power) xpand service areaE
based on experience inworking with local
governments, etc.

Increase resilience/efficiency ofcommunity-supporting energy systems

Introduce advanced energy-saving technologies andunused/renewable energy
Provide electricity supply/demand balancing functions,and supply heat/power during disasters

Promotion of alliances
C ollaborated with local
companies and other industries

Achieved stable growth with adevelopment model focused onlong-term properties chieved stable growth byA
developing long-term properties(mainly offices/residences, which
offer stability) on land we own
Provision of solutions thatleverage group synergies suchas optimal energy management,
environmental products, and
BCP measures
Office rental business “msbTamachi”
 he LATIERRA series of urbanTrental condominiums

Sustainable urban
development

Develop resilient urban
infrastructure

Leverage our strong roots
in each community toprovide the best solutions
to local needs

Revitalize cities that leverage
local characteristics andadvanced technologies

Leveraging the strengths of community contribution, execution, and long-term support that wehave cultivated in our business areas, the Group will solve regional issues and maximize profit
opportunities by combining carbon neutral LNG, renewable energy, digital solutions, and EV
charging management. In July 2021, Utsunomiya Light & Power Co., Inc. was establishedthrough joint investment with Utsunomiya City, NTT Anode Energy Corporation, The Ashikaga
Bank, Ltd., and THE TOCHIGI BANK, LTD. With Utsunomiya Light & Power supplying electricity
from biomass power generation and solar power generation in Utsunomiya City to municipal
facilities, we are promoting local production for local consumption of renewable energy.

 nhance eco-friendliness of properties
EProvide decarbonization solutions
Strengthen BCP support and environmental/disasterprevention functions
Acquire sustainability certification and make nonfinancial disclosures

Establish circular development model stablish a real estate fund under concept of providing
E
ESG valueEstablish circular development model that includes ourdeveloped properties in the fund, and accelerate
ESG-oriented development
Achieve both business growth and greater efficiencies

Expand range of development

 aunch development of our Group-led “circular futureLcity” in Shin-Toyosu
Join in ESG-oriented development project in Australia, aleader in ESG-oriented development
E xpand asset holdings to include distribution facilities etc.

Example of ESG-based development:
LATIERRA Ueno-Inaricho (tentative name)
In addition to obtaining the ZEH-M Oriented environmental
certification, we plan to install solar panels on the roof and use
Sasutena Denki, which is effectively 100% renewable energy.

Zero CO2
emissions inshared areas

FY2025Contributing to sustainable urban
development by co-creating
value with investors throughESG-based development as anengine for growth

Electric vehicles
Installation of
charging outlets

Profit growth of
more than 10%
over three years

Real estate fundsize of 40 billion
yen

Financial Data

Provision of solutions in collaboration with local governments and city
gas companies

Engage in ESG-oriented development

Corporate Strategy

Launch community
support services in atleast ten areas

Actions for FY2023–25

Business Strategy

Provision of solutions
Contributed to urban developmentwith Smart Energy Network(Tamachi, Yaesu Smart Energy)

FY2025
Partner that helps communities/
local governments to advancedecarbonization measures

Expand service area

What we’ve done

How We Create Value nhance/provideE
environmental products/
solutions that arecompetitive (CNL, Joy
series, demand
response, EV services,
environmental education
programs etc.)

Engage in ESG-oriented real estate development

CEO’s Message

Expand community solutions through co-creation

Introduction

Strategy
Explanation

Startedlarge-scale
development in
Shin-Toyosu

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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strategy

Realize a flexible corporate culture resilient to change

Development of data and digital infrastructures,
Expansion of DX human resources bystrengthening recruitment of external humanresources and actively investing in education

We will promote the following measures as the three pillars of DX, with the aim ofincorporating the knowledge of advanced companies and evolving systems andbusiness processes that take advantage of the characteristics of digital technology.
p.50

Strengthening our financial basep.38

What we’ve done
Implemented DX measures ineach value chain function

Establishment of a digital trading platform that contributes to both supply anddemand adjustment and profit generation
Core strategies in the new
mid-term management plan1

Digital trading platform

p.27

Built an integrated platform forGroup-wide data analysis
Established Digital Innovation
Division to lead Group-wide DX
Systematized DX talent training(800 DX leaders)

Improve CX by centralizing and standardizing customer management
systems platform
Core strategies in the new
mid-term management plan

2

Centralization and standardization of customer
management system platform trengthen data platform for value co-creation throughS
internal/external data coordination and for AI-enhanced
sophisticated processing
Build digital technology platform for supporting
implementation of focused DX actions (use Octopus
Energy’s technologies)

Increase pool of DX talent and strengtheninter-organization coordination through DX
promotion committee nhance DX training that emphasizes practical expertiseE
and actively invest in trainingIncrease recruitment of high-level DX talent and develop
career paths
Establish DX promotion committee chaired by CDO

Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

p.31

DX leaders: 3,000

High-level/
core DX talent: 500

Development of DX human resources

p.51

Corporate Strategy

FY2025
Begin operating data/digitaltechnology platform

In order to fully roll out the Solutions business, we will promote the centralization andstandardization of the customer management system platform. We will realize thetransition to customer-centric, highly responsive operations and systems, and digitalmarketing based on customer demographic and behavior data.

3

Build a data/digital platform

Business Strategy

To achieve both stable energy supply & decarbonization, we will proceed withbuilding a digital trading platform. We aim to provide stable supplies of energy andgas, electricity, and environmental value that meet our customers’ needs.

2

Actions for FY2023–25

How We Create Value

1

Exercising Human Capital Management

CEO’s Message

Implementing three key DX actions

Transform the LNG value chain

Introduction

Strategy
Explanation

Introduction

Corporate Strategy
Sustainability
Corporate Governance

Double the productivity of indirect operations by fundamentally reviewing the business processes of staff operations
Headquarters

Organizations

Group
companies

HR

Standardize/consolidate routine
processes
Integrate systems

Accounting
Planning

Strategically assign personnel

Strategically assign personnel
Establish shared service center
Expand areas where automation is
usedEliminate processes that overlap or have room for improvement, and review specs
Overlap

Overlap

Analyze work processes

Financial Data

We will improve efficiency and strengthen governance by standardizing andconsolidating staff operations and promoting strategies for optimal utilization ofreal estate holdings. In addition, we will utilize digital technology to improve
productivity by visualizing business processes and performance. By 2025, we aim
to achieve a 40–50% reduction in indirect operations and improve earning power
and management agility.

Financial Data

Use digital technologies to visualize work processes/
performance

Develop/cross-train high-level specialists in back-office operations

OthersWeb Site

Systems

Jumble of different, compartmentalized systems

Promotion of optimal CRE* use

Investor Relations Website

Workplaces

Decentralized functions means workplace
operations are also decentralized.

 ake optimal use of CRE based on a review of businesses/operations
MMaximize revenue through sophisticated use, including officeconsolidation, selling off properties, and external leasing

Financial Results Presentation Materials*Corporate Real Estate

Investors’ Guide(Financial Data and Industry Data)
Financial Results Bulletin
Corporate Governance Report

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