Financial Targets / Financial and Capital Policies
Tokyo Gas is committed to maintaining a sound financial base supported by stable business growth to ensure that it can keep its highratings while procuring funds at low costs. For shareholder returns, the Company has established a clear target for the total payout
ratio, and it is steadily returning to shareholders the products of success under the “Challenge 2020 Vision.”“Challenge 2020 Vision” Targets
Time of vision’s formulation(Fiscal 2009–fiscal 2011 average)

Tokyo Gas at fiscal 2020

Approx. ¥210.0 billion / year

Approx. ¥250.0 billion / year

ROE

7.3%

Approx. 8%

ROA

3.3%

Approx. 4%

D/E ratio

0.7 times

Approx. 0.8 times (each fiscal year)

Total payout ratio

60.6%

Approx. 60%

Consolidated operating cash flow

Cash Flow Allocation

Efficiency

The gas business requires large amounts of fixed assets, including
LNG terminals and trunk lines. Capital expenditures for the construction of the Hitachi LNG Terminal as well as trunk line networks
in northern Kanto have been incorporated into plans for the periodof the “Challenge 2020 Vision.”

Tokyo Gas evaluates the potential risks and profitability of each
investment candidate while seeking to improve investment efficiency
and utilize shareholders’ equity more effectively. Return on equity(ROE) and return on assets (ROA) are positioned as key management indicators, and the Company has defined targets of approximately 8% for ROE and approximately 4% for ROA to be achieved
by fiscal 2020. Going forward, we will relentlessly pursue improved
investment efficiency as we seek to exceed these targets.

During the period of the “Challenge 2020 Vision,” we are planning
cash outlays of approximately ¥2,480.0 billion, consisting of capital
expenditures of ¥1,680.0 billion, investments and financing of¥380.0 billion, and shareholder returns of ¥420.0 billion. Of thisamount, ¥2,240.0 billion will be funded by inflows from operating
cash flows, which are to be created through the accumulation of net
income and depreciation and amortization adjustments. The
remaining ¥240.0 billion will be procured by incurring external debt.
Capital Expenditures / Investments and Financing /Shareholder Returns
Fiscal 2012–2020 total: Approx. ¥2,480.0 billionCapital expenditures¥1,680.0 billion

17%

Investments and financing¥380.0 billion
Shareholder returns¥420.0 billion

15%
68%

Consolidated operating cash flow    ¥2,240.0 billion
External debt (interest-bearing debt), etc.
    ¥240.0 billion
Capital expenditures / Investments andfinancing / Shareholder returns    ¥2,480 billion

Use of Capital Expenditures and Investments and Financing
Fiscal 2012–2020 total: Approx. ¥2,060.0 billion(Approx. ¥230.0 billion / year)

7%
13%

35%

29%
16%

11Tokyo Gas Annual Report 2014

Infrastructure:¥730.0 billion
Overseas businesses:¥320.0 billion
New demand cultivation:¥600.0 billion
Operating foundations:¥270.0 billion
Other investments in affiliates: ¥140.0 billion
Reference: Capital expenditures andinvestments and financing in the mediumterm management plan for fiscal
2009–2013: Approx. ¥180.0 billion / year

ROA and ROE%
1510502006 2007 2008 2009 2010 2011 2012 2013 2014
(plan)

ROA

ROE

FY

Financial Position

Ratings

Tokyo Gas aims to maintain the soundness of its financial positionand ensure that its capital structure is optimally balanced based onsuch considerations as capital cost. To facilitate this endeavor, the“Challenge 2020 Vision” sets out the goal of achieving a debtequity (D/E) ratio of approximately 0.8 times each fiscal year during
the period of the vision. Moreover, the Company allocates 60% of
net income to shareholder returns, with the remaining 40% of net
income being retained as internal revenues, while conducting
stock repurchases and cancellations to reduce equity capital andprocuring funds through external debt to maintain the leverage
necessary to prevent equity from becoming excessive.
Furthermore, the Company’s stable business strategies andsound financial position have earned Tokyo Gas high ratings fromboth Japanese and overseas rating institutions. As a result of
these high ratings, we are able to procure funds at exceptionally
low interest rates, during fiscal 2013 at 1.6% on average. We
have built a financial constitution that is resilient to interest rate
fluctuations by raising funds, mainly through medium-to-longterm bonds.

Institution

Long-term debt

Short-term debt

Aa3
AA–AA+
AAA––
a–1+
–

Moody’sStandard & Poor’s
Rating and Investment Information
Japan Credit Rating Agency

D/E RatioTimes1.20.9
0.6
0.3
0.0

2006 2007 2008 2009 2010 2011 2012 2013 2014
(plan)

FY

Shareholder Returns• Stock Repurchases

In 2006, the Company introduced the total payout ratio as a factor
for determining shareholder returns. This ratio uses the total of
dividends and stock repurchases to calculate the total payout toshareholders, and we target a total payout that is approximately
60% of consolidated net income.
The “Challenge 2020 Vision” adheres to that policy, and therefore calls for us to maintain a total payout ratio of approximately
60% up until fiscal 2020.

The Company conducts stock repurchases with the aim of increasing
the value of each share held by its shareholders. Acquired stock isseen as part of shareholder returns and is promptly cancelled.
We have repurchased our own stock for cancellation in fiscal
2014, paying ¥40.0 billion. On March 31, 2015, the cumulative
total of stock cancellations was 363 million shares*, or approximately 13% of the record high number of issued shares.

• Dividends

Earnings Per ShareTokyo Gas practices the policy of issuing stable dividend payments. Over the medium-to-long term, we aim to gradually increase
dividends as we become able to establish clear forecasts for whensufficient income growth will be achieved. In this manner, we aimto return the products of the Company’s growth to shareholders.

Going forward, Tokyo Gas will continue to pursue income growth. At
the same time, we will repurchase stock for cancellation to improveearnings per share (EPS) as well as the Company’s stock value.

* Including 70.8 million shares already cancelled this year.

EPS¥

Total Payout Ratio

50%80Dividends per share¥8¥8¥8¥9¥9¥9¥1025¥1060

Stockrepurchases

4002006 2007 2008 2009 2010 2011 2012 2013 2014
(plan)

20FY

Dividends

02006

2007

Total payout ratio

2008200920102011

2012

2013

FY

Expansion of EPS and Shareholder Returns

Dividend payout ratio

Increases in consolidated net income
Total Payout Ratio in Fiscal 2013

Total payout
ratio
60.0%

Dividends paidin fiscal 2013:¥25.1 billion+

Stock repurchases
in fiscal 2014:¥40.0 billion

Consolidated net income
in fiscal 2013:¥108.4 billion

Stock repurchases /cancellations

Total payout ratio ofapprox. 60%Improvement of EPS /ROE

Gradual increase individends

Tokyo Gas Annual Report 201412