Tokyo Gas Co., Ltd.
INTEGRATED REPORT 2020

CONTENTS

TOKYO GAS INTEGRATED REPORT 2020

02 Introduction
02 Who we are
03 At a Glance
04 Our performance
05 Long-Term Performance01

33 Tokyo Gas Group FY2020 - 2022
Medium-Term Management Plan
41 Corporate governance41

Corporate governance

47 Board of Directors

06 Message
06 CEO’s message
10

49 Audit & Supervisory Board Members
50 Messages from Outside Directors
52 Messages from New Outside Officers

CFO’s message

53 Business overview
12 LNG value chain

CONTENTS

53 Gas business
54 Electric power business

14 Promoting sustainability

55 Overseas business
56 Service business

Energy-related business

57 Service business

15

Urban Development Service (Real Estate)

Tokyo Gas Group Management Vision

Compass 2030

16 What do you mean by “a business groupwhich continues to create value”?

58 Financial data

18 How do you plan to“lead the future energy systems”?

58 10-Year Consolidated Financial
Highlights

20 How do you “continue to create value”?

60 Consolidated Balance Sheet

21

61

1

Transformation of the LNG value chain to
maximize each of its functions

23 2 Resolving problems in daily life and businesses
25 3 Leading the transition to a decarbonized society
27 4 Overseas expansion
29 Personnel strategy
31 Support for TCFD recommendations
and information disclosure

Consolidated Statement of Income /Consolidated Statement ofComprehensive Income

62 Consolidated Statement of Cash
Flows
63 Delayed Impact of Gas Rate
Adjustment System

Who we are

TOKYO GAS INTEGRATED REPORT 2020

Providing energy andenergy solutions for
future lifestyles,
society and the earth

Established in

1885
Personnel (consolidated)

16,591peopleThe Tokyo Gas Group will explore the future
together with you. For 135 years, we have served
every single customer, developing our highaspirations towards establishing trust and acting
in the public interest. Based on this, we identify
issues together with customers, society and ourbusiness partners to quickly and flexibly provide
energy and solutions.

Management
Philosophy(as of the end of March 2020)

02

Number of customer accounts*including those for gas, electricity and services

12.11
million(as of the end of March 2020)

LNG procurement volume

13.23
million tons
(actual for FY2019)

Management Philosophy

Corporate Action Philosophy

Total pipeline length

64,545km

Electric power sales volume

Tokyo Gas GroupManagement Vision
FY2020 -2022 Medium-termManagement Plan

20.6
billion kWh

Missions of the individual departments(as of the end of March 2020)(actual for FY2019)
Day-to-day business activities of theindividual employees

Management Philosophy

Corporate Action Philosophy

As a leading energy company with focus on its
natural gas businesses, the Tokyo Gas Groupshall actively contribute to create a pleasant
lifestyle and environmentally friendly society,maintain and enhance its trust from ourcustomers, shareholders, and society.

1 We will continue to grow while maintaining awareness of our company’s public mission andsocial responsibilities.

2 We will provide quality products and services, and always endeavor to improve customer satisfaction.
3 We will hold ourselves to high ethical standards, and fairly and transparently conduct corporate
activities while observing both the letter and the spirit of related laws and ordinances.

4 We will contribute to alleviating global environmental problems as a leader inenvironmental management.

5 We will remain keenly aware of our obligations to be a good corporate citizen and work towards
the betterment of society by contributing to community activities.

6 We will pursue continual innovation to promote a cost effective business approach that is both
flexible and resilient.

7 We will aspire to build organizations that are based upon the full exercise of and respect for thetalents, desires, and creativity of each and every employee.

At a GlanceTOKYO GAS INTEGRATED REPORT 2020

At a Glance
Consolidated net sales

Electric power sales volume

Returns for shareholders (total payout ratio)(billion yen)(billion kWh)

(%)

3,000

30

100

2,000

1,415.7

1,925.2

20.6

20

75

7.0

10

1,000

2019

Number of customer accounts (gas and electricity)(billion yen)(thousand)150

20,000

85.2

101.5

Number of customers for city gas retail sales
Number of customers for electricity retail sales

15,00010,00050

011,492

9,472

5,000

2019

2019

Ratio of women in management
(%)

15

8.7

10

2,363

4.3

5
9,472

9,129

2009

2019

0

2009

2009

0

2010

2019

Consolidated operating profit

100

61.0

25

0

0

2009

60.1

50

0

2010.4.1

2020.4.1

Consolidated city gas sales volume

Segment profit (FY2019)

Ratio of outside executives(directors and auditors)(million m 3)

Others(%)

20,00015,00013,666

13,855¥5.7 billion

100Real estate¥ 9.6 billion

10,000

Energy-related

5,000

Overseas¥ 16.9 billion

Gas

Total

¥ 102.4 billion¥ 106.7
billion*¥ 13.2 billion

0

2009

2019

50

38

50
(7/14)(6/16)

25
0Electric power¥ 10.1 billion

75* Including consolidation adjustment (- ¥51.5 billion)

2009

2019

03

Our performanceTOKYO GAS INTEGRATED REPORT 202004

Our performance

Segment profit

ROE (Return on Equity)

ROA (Return on Assets)(billion yen)

(%)

(%)

200

12

194.1

8.0

10.3
150

9

118.7
100

96.4

106.7

6.0

6.7

5.0

7.4

6

4.0

3.6
3.3
2.4

4.8

61.9
50

3

0

3.8

0
2015

2016

2017

2018

2019

1.7

2.0

0
2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

D/E ratio

Total payout ratio

Contribution to CO 2 emission reductions*(times)(%)(ten thousand tons)

80

1.00

0.69

0.75

0.65

0.65

0.79

60

900

60.1

60.7

60.2

60.3

61.0

650
600

0.64

0.50

40

0.25

20

488

300

0

0

0
2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

2019

2022 target* Base year: FY2013; including CO 2 reduction contribution at customers sites.

Long-Term PerformanceTOKYO GAS INTEGRATED REPORT 2020

Tokyo Gas continues togrow as “Energy Frontier”

2010

2019

Kawasaki Natural
Gas Power
Generation Co., Ltd.

Ohgishima Power
Co., Ltd.

Moka Power Station
starts operations.

1998* The figures for number of customers and gas sales volume are on a non-consolidated basis up to fiscal 2002 and on aconsolidated basis from fiscal 2003 onwards.
* The gas sales volume for fiscal 2011 onwards includes the volume used in-house under tolling arrangements and the LNG sales volume.
* The number of retail customers up to fiscal 2008 are estimated by multiplying the number of gas meters installed by theactive account ratio.

(thousands)

15,000

Hitachi LNG Terminal
starts operations.

Tokyo Gas Yokosuka
Power Co., Ltd.

Gas sales volume (thousand tons)

50th Anniversaryof LNG

2016

2006

The Tokyo Gas Group aims to be a true power source for people’s lives and for society.
Over 135 years, our work kept us in a face-to-face relationship with our customers.
Based on the accumulated experience and trust derived from that history, we want tohelp create a bright, safe and pleasant tomorrow.
Number of customers for city gas and electricity retail sales (thousands)
Electric power sales volume (billion kWh)

2008

05

1 1,492

2003(thousands)

10,000Ohgishima LNG
Terminal starts
operations.

Tokyo Gas Bay
Power Co., Ltd.

14,133(thousand tons)

1966

20.6

1973

(billion kWh)

Negishi LNG Terminal
starts operations.

1969

Sodegaura LNG
Terminal starts
operations.

5,000Japan starts LNG
imports.

0

1970

1980
1973 First oil crisis
1979 Second oil crisis

Era of coaland oil

Era of LNG

1990
Japan's economic
1986-1991
bubble2000
Start of the deregulation
1995 of the city gas market oflarge-scale gas customers
Start of the deregulationof the electric power
1999
market of large-scale
electricity customers

2010
2008 Global Financial Crisis

2019

Great East Japan2011
Earthquake
2016

Full deregulation of theelectric power retail market

2017

Full deregulation of the city
gas retail market

CEO's message

TOKYO GAS INTEGRATED REPORT 2020

06

Leading energy companies
around the world in the effort
to achieve Net-Zero CO2“Never ever stop the energy supply.”
We are committed to fulfilling this mission to
support our customers’ normal lives.
First, I would like to express my sincerest condolences tothe families and friends of those who have lost their lives
due to the novel coronavirus (COVID-19), and my profoundsympathies to those that are suffering from it. I would also
like to express my heartfelt gratitude to the medical
professionals and others dedicated to stopping the spreadof infection.
“Never ever stop the energy supply.” This is the phrasethat immediately came to mind as the CEO as the COVID-19
outbreak began, and the slogan that I shared with all Group
employees. I think that we as a utility company have threeduties to meet in unusual or emergency situations, beyond
just this ongoing pandemic, to ensure that all customers
can lead normal lives.
The first is the duty we have as an energy provider that
supplies electric power in addition to gas. Our Groupsupplies gas and electricity not only to general households

Uchida Takashi
Representative Director,
President and CEO

but to medical institutions, public facilities, factories andother facilities that cannot close down. We have a
responsibility to stably supply energy, even during
emergencies like the one we are now experiencing. To fulfill
this responsibility, we must procure raw materials without
disruption, safely produce gas and electric power andthoroughly maintain and manage our supply and safetysystems under any circumstances. These are the greatest,
fundamental duties that we must meet as an energy
supplier. Lifeval, the outlets of Tokyo Gas, have to serve
customers using gas and electric power at home. Gaslight
24 bases must deal with a gas leak on site. I feel grateful forthe staff of our Group, for their contribution to the stablesupply of energy despite the mounting strain on themselves
and their families.
The second duty is a social responsibility that we haveas a corporate citizen to build a community where people
can live safely, without worries. The current pandemic has
caused many people to experience financial difficulties. Our
Group has swiftly introduced a special measure extending
bill payment due dates by up to three months for ourcustomers who are having temporary difficulties making bill
payments. To aid households experiencing financial
difficulties, we donated food to food banks. We also
provided 15,000 N95 face masks that we had stockpiled for* This interview took place on May 18, 2020.
The state of the spread of COVID-19, our Group’s actions, the status of announcement of
the consolidated forecast for the fiscal year ending March 31, 2021, and other details arecorrect as of the interview date.

CEO's message

TOKYO GAS INTEGRATED REPORT 2020

a novel influenza to medical workers. We are thus carryingout support activities positively.
And the third duty is our responsibility to increase
corporate value as a public stock company. We will not stop
the implementation of our management vision Compass
2030, or the FY2020 - 2022 Medium-Term Management
Plan (hereafter, the new Medium-Term Management Plan).
We will soundly announce our financial results and hold themeeting of shareholders to present our Group’s policy andgain the support of stakeholders. These are a part of the
responsibilities that our Group has to meet. While the closingof the financial statements was disrupted by the COVID-19
outbreak, as a result of the concerted efforts of the group
staff, we were able to report our financial results on schedule.
The COVID-19 outbreak impacts customers inmany different ways

been deemed difficult to accurately understand andestimate specific circumstances and the severity of theirimpact. To date, we are aware that, among our commercial
customers, hotels and restaurants are severely affected. In
addition, demand for air conditioning energy and electricity
at schools that have been closed for a long time fell sharply.
With regard to industrial customers, it has been successively
reported that some automobile factories have suspended
operations and that steel manufacturers have suspended
the operation of blast furnaces or closed them. It is thoughtthat gas and electricity sales volumes will change considerably
depending on the future moves of these large customers.
We will also need to closely watch the trends of
crude oil and LNG prices that are vulnerable tosevere fluctuationinternational trade of crude oil. In addition, there are a pileof questions regarding crude oil prices, such as how long
OPEC Plus will maintain its coordinated reduction of
production and how the United States, which is now
effectively the world’s largest oil producer, will respond.
Some forecast that the market will remain unstable for theforeseeable future.
Our Group uses LNG and LPG as raw materials for citygas. Raw material expenses depend on foreign exchange
rates and crude oil prices. The decline in raw material prices
is expected to produce a positive effect on our Group’s
domestic gas business and a negative impact on theoverseas business, since we own upstream interests inAustralia and in North America. In view of future trends of
crude oil and LNG prices, we will assess the extent of
positive and negative effects, and we will announce ourfinancial forecast at the earliest possible timing.

Our commercial and industrial customers running storesand other commercial facilities, hotels, schools, offices,
factories and other facilities are affected in many different
ways by the COVID-19 outbreak. As we begin the fiscal
year, we have yet to determine the consolidated forecast
for the fiscal year ending March 31, 2021, because it has

Now, the outlook for not only energy demand but also LNG
prices is uncertain. Late in April, the New York Mercantile
Exchange saw the West Texas Intermediate (WTI) crude oil
futures for May delivery plunge sharply and temporarily
mark a negative figure for the first time in history amid
concern about the deterioration of the Chinese and otherworld economies. The WTI futures are a benchmark for the

As I have mentioned, the current business environment isvery harsh and uncertain for reason of the COVID-19

Profit level

Number of customer accounts

Natural gas transaction volume(billion yen)

Approx. 200

200

25%

20

20

118.5

25%

(million)

20

20

16.7
15

10%

We have formulated a long-term management
vision by means of backcastingfrom 20 to 30 years in the future

Overseas

150

100(million)

07

15

12.2

Solutions, etc.
10

10

5

5

27%

50 %

50

Energy

63%
0

0

2019*

2030

0

2019*

2030

2019*

2030

*FY2019 forecast at the time of formulating the medium-term management plan

CEO's message

TOKYO GAS INTEGRATED REPORT 202008

We have formulated our management vision Compass 2030 by backcasting from 20 to 30 years in the future.
The management vision Compass 2030 spelled out our Group's policy aiming Net-Zero CO 2 with an eye to2050 and beyond. In the effort to achieve Net-Zero CO 2 , we will lead energy companies around the world.

What I want to tell you

Our awareness of changes in the market environment presented in the new Medium-Term Management Plan
has not changed following the beginning of the COVID-19 pandemic. Rather, it is anticipated that thesechanges will speed up. We will accelerate the actions specified in the new Medium-Term Management Plan.
We will develop our personnel into a force driving corporate development.
We have set a target for a total payout ratio of around 60% for each fiscal year up to fiscal 2022.
Our DNA drives us to seek coexistence with multiple stakeholders and a balance between social and economic value.

outbreak. Our Group’s management vision Compass 2030
and the new Medium-Term Management Plan for FY2020
to 2022 formulated in March 2020 referred to ourawareness of changes in market environment in the mediumto long-term future. This view has not been changed.
Rather, it is anticipated that the changes will speed up.
In the past, when our group formulated its long-term
management vision, it had a forecast for the coming 10
years. For the latest vision, we started by foreseeing thesituation 20 to 30 years into the future, and carried out
backcasting from that future time to identify the things weshould be doing now. Ten years from now, natural gas fired
thermal power generation and natural gas as its fuel will
have a greater role to play in line with the expansion ofrenewable energy, since it can make up for variation in the
output of renewable energy power generation methods
that depend on weather conditions. However, we thoughtthat if we had only thought of the target for 10 years fromnow, the resulting plan would have failed to deal with thesocial change that will occur beyond that time, in the formof decarbonization.

We have selected four words starting with the letter D
as key terms that represent changes in the businessenvironment and in the trends of the times that we project.
We believe that we cannot picture the future of our company
without devising measures to address these four D challenges.
The first is Decarbonization. Today, society seeks
decarbonization as well as low carbonization. In Japan aswell, there are increasing discussions about whether it isreally appropriate for businesses to merely seek low carbon
emissions and whether they need to aim for
decarbonization in the future. It is the top priority challenge
for us. We have made it clear how our Group will respondto this demand.
The second is Digitalization. This change is gaining
momentum. In recent years, some companies started todisruptively change society and the economy using thelatest digital technologies. In the future, similar moves will
emerge in the energy sector as well. Our Group has thepolicy of strongly pushing ahead with digitalization.
The third is Diversity, particularly in value. Many
customers are no longer in favor of the conventional mass

production of single items. They now choose items that arematched to their own sense of value. Meanwhile,increasingly people are happy to share goods instead ofowning them. It is presumable that the way of using energy
at households may change given that they can achieveself-sufficiency by effectively using renewable sources ofenergy, such as solar power generation, and storage
batteries. Another important challenge is to address thediversification of our customers and their sense of value toimprove the services of our Group.
The fourth is Deregulation. To survive the increasingly
intense competition between operators, we will takeactions, including the formulation of strategies involving
not only our competitors but also other businesses beyond
the boundaries of the industry.
In the effort to achieve Net-Zero CO2 , we will leadenergy companies around the world
Our Group launched its policy aiming Net-Zero CO2 with aneye to 2050 and beyond in our management vision
Compass 2030. This created a great reaction, not only from

CEO's message

TOKYO GAS INTEGRATED REPORT 2020

the energy industry but also from many different businesssectors. The term of Net-Zero CO2 embodies our aspiration
to lead energy companies around the world, our sense of
the crisis regarding the survival of companies that do nottake action and see results for decarbonization and oursense of mission as an energy company. Personally, I felt
obliged to provide an answer through the Management
Vision to our young employees who nervously feel thechanges in society and feel strongly uneasy about survivalof the Tokyo Gas Group in its present state.

comments. For example, one said, “We would like to be acompany achieving decarbonization,” and another said,“We aspire to create new value in relationships withcustomers.” The Management Vision declares that we will
establish a value co-creation ecosystem that creates value
together with customers, the local community, local
governments, and business partners that include companies
in different industries and venture firms.
This new attempt is based on these comments from ouryoung employees.

We will develop our personnel into a force driving
the company

We will seek to attain a balance between growthinvestments and return to shareholders

I see our employees as key stakeholders who invest theirown lives in our Group. Personnel are the driving force behind
corporate development. No matter how brilliant the vision
we make is, it is personnel who carry it out. I realize thatthe biggest management issue is to motivate the personnel.
For our Group, dedication to the maintenance of thestable supply of energy and safety is an important part ofour corporate culture that has taken root since ourfoundation. While it is a good thing, emphasis on protection
may have led to excessive prudence regarding the changes
required in the coming era of shifting paradigms.
I believe that in order for people to change, thecorporate culture must change. It is the young personnel
who can change the corporate culture. As these young
personnel grow, the company will change significantly.
Therefore, I hope that they will try many new things, even if
they make mistakes. Without this progressive spirit, no
company can develop.
That is why we established Engagement with Current
and Future Colleagues at the end of Management Vision
Compass 2030. In the process of formulating theManagement Vision, we introduced two totally new
approaches. One was backcasting. The other was to holddiscussions with around 20 young employees. They are theclosest to the future generations. They gave vigorous

Our Group has paid dividends at a total payout ratio of 60%
since 2006. We are proud to have taken measures topositively return profit to shareholders since our early days
as a Japanese energy firm. The new Medium-Term
Management Plan set a total payout ratio target atapproximately 60% in each fiscal year through fiscal 2022,
since we judged that we would be able to attain a total
payout ratio of 60% as in the past while making growthinvestments. We will continue to regard treasury shareacquisition as part of shareholder returns and maintain ourpolicy of stably paying dividends according to our growth.

09

We will follow the principle of The Analects andthe Abacus by our founder Shibusawa Eiichi
In 1885, Tokyo Gas was established by Shibusawa Eiichi, theFather of Japanese Capitalism. The principles discussed in
his book, Rongo to Soroban (The Analects and the Abacus),
coexistence with multiple stakeholders and the balancing
between social and economic value, has been passed down
through the generations to us. In our history, there weretough times following the emergence of new energy andequipment. I think that we were able to maintain ourbusiness because he set a process for development.
However, we must open the way towards the future
ourselves and hand it down to the next generation.

Now, our Group stands on the cusp of a new age ofinnovation towards 2030. Thinking of the coming days as
an opportunity to take a big leap, we will develop into a
corporate group that will be capable of continuously
creating value while leading energy in the next generation. I
hope that our stakeholders will look forward to the future
development of Tokyo Gas Group and continue to support
us for years to come.

CFO's message

TOKYO GAS INTEGRATED REPORT 2020

Tokyo Gas is committed tofollowing its basic financial policy
and accomplishing the MediumTerm Management Plan
Senior Management Executive Officer, CFO

Hayakawa Koki

Basic Financial Strategy Policy
Working to increase corporate value throughconstructive dialogue
One year has passed since I became the chief financial
officer (CFO). In that time, I have had many discussions witha large number of investors. As I am in a position partly
responsible for management, I keep in mind that inconstructive dialog with investors it is essential to closely
communicate views of our Group and make themunderstood, and to listen to investors and incorporating
their views into decision-making.
We announced management vision Compass 2030 in
November 2019. It envisions what we wish to be in 2030 bybackcasting from 2050, not by extrapolating from current
trends. Among the points in the plan, many people were
surprised that a city gas operator launched an effort toachieve Net-Zero CO2. We understand that this is part ofour responsibility to seriously address climate change, oneof the ESG challenges. As an LNG pioneer, we have worked
on carbon reduction by popularizing the use of natural gas
in the past half century. The vision manifested our stance ofworking on the utilization of renewable energy and on the
decarbonization of gas as a source of energy, to leadsocietal trends in the next half century.

1

Continue to maintaincompetitive shareholder returns(total payout ratio of 60%)

2

Steadily implement growthinvestments, with consideration
given to investment efficiency
and awareness of achieving an
8% ROE

3

Maintain sound financial base,as a basis for stable
management and securing thetrust and confidence of
stakeholders

10

CFO's message

Appropriating cash flow created for the future to
growth investments
In March 2020, we announced the FY2020 - 2022 MediumTerm Management Plan. The impact of the current
COVID-19 outbreak on the world economy and the changes
in social and economic systems after the end of thepandemic cannot be foreseen currently, but we believe thatthe course of action that we have determined for the
medium- and long-term future will not change and we willtake steady steps forward towards the accomplishment of
the plan. Also, our basic financial policy will continuously
aim to distribute the operating cash flow to ensure
adequate and stable returns for shareholders, investments
for growth and the maintenance of sound financial standing
in a balanced manner.
The new Medium-Term Management Plan defined thesum of operating profits and equity method income as a
key goal indicator (KGI) and set a goal of 140 billion yen forfiscal 2022. With regard to capital efficiency, it set targets
of around 8% in ROE and around 4% in ROA, and forsafety, a target D/E ratio of around 0.9 was set.
While carrying out cost reforms and expanding sales tocreate cash flow and ensure a balance between efficiency,
soundness and shareholder returns, we will implement
growth investments to solidify our foundation for future
growth and enlargement.
Specifically, we are planning to make investments,
including capital investment and financing, worth 1 trillion
yen within the three-year period. Fiscal 2020 marks an end
to our investment in pipelines and LNG terminals in the gas
business. In the future, we will appropriate a large portion
to overseas businesses and promising areas such as
renewable energy and new services.
Returning the management results toshareholders in an appropriate and timely manner
We will return the cash flow created to shareholders properly
and in a timely manner, as we have done in the past.

TOKYO GAS INTEGRATED REPORT 2020

We set a total payout rate target of approximately 60% in
the Challenge 2020 Vision announced in 2011, and we havesteadily implemented dividend payments. When weannounced management vision Compass 2030 last year, we
did not refer to shareholder return. This was because we did
not find it appropriate to present the conventional policy,
including the shareholder return policy, in the vision, whichindicates our desired future shape, rather than crunching of
numbers. Instead, we presented our shareholder policy in the
new Medium-Term Management Plan together with thespecific income and expenditure plan or appropriation of cash
flow to growth investments and others. In the process of
formulating the Medium-Term Management Plan, we assessed
our capacity to create cash flow, financial capabilities, ratingsand others, we believed that we would be able to properly
provide returns to shareholders and to make growthinvestments in the following three years and decided tomaintain our dividend policy with its 60% total payout ratio,reflecting the ratio of dividends and treasury share acquisitions
to consolidated profit.
While maintaining stable dividend payments, we will
increase them according to our growth in overall considerationof medium- and long-term profits.
For fiscal 2019, we posted a huge extraordinary loss in theoverseas business. This resulted in a total payout ratio of 60%
with the total dividend payments only. For the first time since
we announced our policy of attaining a total payout ratio of
60% in 2006, we failed to repurchase treasury shares. We on
the management team take this seriously. As of the end of
April we had not produced earnings forecasts for fiscal 2020
due to the difficulty of estimating the impact of the COVID-19
outbreak. However, we announced that we were planning tocontinue paying annual dividends of 60 yen per share so as toclarify our Group’s stance on shareholder returns.
We will continue to listen to shareholders and investors
and strive for greater corporate value through constructive
communication. We respectfully ask for your continued
support and understanding.

Capital Expenditures and Gas and Electricity Sales Volume
Capital expenditures (LH)
Gas sales volume (billion m3)
Electricity power sales volume (billion kWh)(¥ billion)

300

17.7

225
20.6

150

75

0
2000.32005.32010.32020.3Chiba-Kashima Line, Hitachi LNG
Terminal, Ibaraki-Tochigi Line, etc.

Ohgishima LNG Terminal,
Keihin Line, etc.

1 Non-consolidated basis up to fiscal 1998; consolidated basis from fiscal 1999
2 Gas sales volumes from fiscal 2011 onwards are on a 2020 Vision basis, including the gas
volume used in-house under tolling arrangement and the LNG sales volume.

Shareholder Returns(¥ billion)

Share repurchases

80

Dividends

Total payout ratio

60.9% 61.4% 60.7% 60.0% 60.8% 60.1% 60.7% 60.2% 60.3% 61.0%

60

61.7

58.1

67.3

65.1
58.2

50.9

40

36.0

34.0

33.8

24.0

32.3

28.3

24.1

23.3

20.0

26.4

7.0

5.0

20

45.1

41.0

40.0

25.7

25.1

24.4

26.3

25.3

25.1

26.9

26.4

0
2011.3 2012.3 2013.3 2014.3 2015.3 2016.3 2017.3 2018.3 2019.3 2020.3

11

LNG value chain

TOKYO GAS INTEGRATED REPORT 2020

12Transformation of the LNG value chain for value creation
We will crystallize the business expertise that has been accumulated
in trading, production and power generation, networks and customer
solutions and explore new domains in order to expand the customer
base for whom value is created and provided and maximize each of
the functions of the LNG value chain.
ConventionallyElectricity

Procurement
and production

Supply (pipeline)

Provisionof value

City gas retailServicesTokyo Gas Group's
strengths

Customersolutions

Participation bybusiness partners

Trading
Transformation of
the LNG value chain
Production andpower generation

Networks

Customer base
11 million
customers

The Tokyo
metropolitan area

Human resourcesHighdemandSincerity

A sense of mission Technologicalto serve publiccapabilities
interests

Financialstanding

Customer solutions

Trading

We will crystallize our front-line operations andservices for customers, including equipment
installation and repair services carried out by
Lifeval, which deals with last mile services. In
addition, we will increase our use of digital
infrastructure and business partners and expand
the amount of data, products and technologies
used to discover issues and swiftly propose a wide
range of solutions matched with the customer.

We will optimally operate LNG terminals and our own
ships and other equipment using digital technologies
to improve stability, economic efficiency and flexibility
in raw material procurement. Taking advantage of
flexibility based on the scale of LNG and electricity
power procurement, our own power plants andelectric power and gas retail businesses and mutually
utilizing the strengths and regional differences ofbusiness partners, we will increase added value of
LNG and explore earning opportunities throughtransactions on and off the market.

Community-based

Contact opportunities

Number of Lifeval
outlets*

Repairs, etc. andperiodic safety
inspections*(as of the end of March 2020)* Including Enesta and Enefit
outlets

5.2 million(actual for FY2019)* Including Enesta and Enefit* Repairs, etc. include
opening/closing of gas
fixtures.

Communitybased

Procurement
capabilities

Number of vessels
under ourownership orcontrol

12

Storage capacity

LNG Terminals

3.47

million kiloliters(as of the end of March 2020)(as of the end of March 2020)

Networks

Production and power generation

We will streamline pipeline maintenance andmanagement operations, achieve the opening of the
Ibaraki Line in 2020 to create a second circular trunk
pipeline network, build closer ties with local
governments and infrastructure operators to makethe natural gas infrastructure in the Greater Tokyo
region more resilient. In addition, we will explore
new services using smart meters.

We will digitalize the facility management of LNG
terminals and introduce the real-time remotemonitoring of production and other processes toadvance operations. Leveraging the expertise inengineering and the operation of LNG terminals
and power plants that we have developed, we
will explore expansion in Japan and overseas andbusinesses for other operators.

Stable supply

SafetyTotal pipeline
lengthNumber of serious
supply disruption
incidents

64,545km(as of the end of March 2020)0(actual for FY2019)

Trust
History

We will capitalize on the strengths of the Tokyo Gas Group and continue to create
various types of value through the participation of business partners and customers.

174

Goal for 2030
Participation bycustomers

Strengths

Natural gas-fired
power plants

Operation

Number of power
plants owned

Monitoring andcontrol5(as of the end of March 2020)

On a

24/7

basis

LNG value chain

TOKYO GAS INTEGRATED REPORT 2020

13

Creating and offering various typesof value in Japan and abroadBusinesses

Residences

The Community

The conventional LNG value chain was based on a business model of offering LNG withincreased value in different functions to customers through the retail end-point. However,in view of the trend towards decarbonization, digitalization, the diversification of customers’
values, progress in energy market deregulation, other changes in market conditions andintensifying competition, we will maximize the value of the individual functions of the LNG
value chain in a shift toward a business model of creating and providing various types ofvalue through separate functions for customers.

OUTCOME(indicators)

Achieve peace of mind

Contribution to thepreservation of the
global environment

Reduction of thecost of energy

Create comfortablelives

As a leading company dealing in natural gas, we will contribute to the preservation of the global environment, continuously endeavor to
reduce the cost of energy and create secure and comfortable lives for customers.
Targets in Medium-Term
Management Plan

Management vision: Management guidelines and key figures
Contribution to CO2emissions reduction-10 million tons

Number of customer
accounts

20 million

Natural gas transaction
volume20 million tons

Profit*Total payout ratio

200 billion

aroundApprox. ¥*The sum of operating profit and equity method income

ROE

60% around 8%

Promoting sustainability

TOKYO GAS INTEGRATED REPORT 2020

Contribution to the development of sustainable
society and the realization of the SDGs
Tokyo Gas Group's approachto promoting sustainability

Relationship between materiality (priority issues in terms of sustainability) and the SDGs

Sustainable development of societyInternational goals to be achievedby 2030: SDGs
Contribution

Expectations
and requests

Stakeholders
Provisionof value

ProfitmakingFinancial
value

Value
creation

Socialcorporate
value management

Leadership inthe effort toachieve
Net-Zero CO 2
as a leading
company
dealing in
natural gas

Climate change
Access to energy
Safety and disaster
preparedness
Creation of customer value
Resource efficiency andrecycling society

EnduringSoundrelationships
with society

Business
activities
Corporate social
responsibility (CSR)

Establishment of relationships
with communities
Diversity
Satisfaction through workand labor productivity
Supply chain management

Actions as a
responsible
company

Information security
Governance andcompliance* The relationships portrayed above are subject to revision as appropriate according to changes in the Tokyo Gas Group’s actions.

The Tokyo Gas Group will enhance its social and financial value by
tackling social challenges through our business activities, and we will
strive to contribute to the sustainable development of society going
forward by realizing an enduring corporate management.

In promoting sustainability, we have identified materiality (key sustainability issues)
based on our goal of “taking leadership in the effort to achieve Net-Zero CO2emissions and continuing to create customer value,” in accord with ourmanagement vision Compass 2030, and are implementing its PDCA cycle. This is
how we are contributing to solving social challenges such as climate change andrealizing the SDGs.

Sustainability promoting structure
The Tokyo Gas Group forms in-house committees as appropriate for studying,coordinating or promoting actions to address important management issues. These
include the Sustainability Committee, which is intended to promote climate change
research and other sustainability issues and chaired by the President, and theSustainability Promotion Committee, a subordinate body of the previous
committee chaired by the Officer in charge of sustainability. They deliver reports
on important matters to the Board of Directors.
(See also Corporate Governance System on page 43.)

14

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

15

Tokyo Gas Group Management Vision

Compass

2030
Providing energy and solutions for future lifestyles,
society and the earth
VISION - What we aim to be in 2030 -Our goal will be a business group which continues
to create value together with our customers,
business partners and society as a whole while
becoming a leader in future energy systems.
On November 27, 2019, we announced a new management vision called“Compass 2030”, in which we presented what we aim to be in a decade fromnow, as a leading domestic company dealing in natural gas (a fossil fuel).

Our thoughts
incorporated
in Compass

In the half-century since we introduced LNG in Japan, we have promoted
more widespread use of this new source of energy, leading the way tothe age of natural gas. At present, with decarbonization, digitalization,customer diversification, and deregulation in the energy market, we areon the cusp of a new age of innovation. We believe that the properroles of energy and energy suppliers will be questioned over the nextten years leading up to 2030. Looking toward the next half-century, we
have formulated the “Compass 2030” management vision outlining thecourse that we should pursue in this age of uncertainty.

Management guidelines and key figures
FY2019 forecast*1

2030

200 billion

Profit level¥ 118.5 billion

Approx. ¥Contribution to CO2 emission
reductions-5 million tons

-10 million tons

0.59 million kW

5.0 million kW(base year: FY2013)

Renewable power source
transaction volume (FY-end)

No. of customer accounts (FY-end) 12.2 million

20.0 million

Natural gas transaction volume

20 million tons

(FY)

16.7 million tons

*1 At time of 3Q results

Company portfolio in 2030: Profit levelOverseas*2
Solutions, etc.*3
Energy*4 (Gas + Power)*2 Overseas: All overseas businesses*3 Solutions, etc.: Ongoing service agreements,
engineering, real estate etc.
*4 Energy: Domestic gas and power businessApprox.
¥120 billion

Approx.

200 billion

¥

25%
25%
50%

Current2030

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

A value co-creation ecosystem*1

Q

Lifestyle setting

What do you mean by“a business groupwhich continues tocreate value”?

A

We envision abusiness group that
establishes a “value
co-creation”
ecosystem andprovides a variety ofsolutions.

Business setting
Stable supply

Environmental
awareness

Enhanced resilience

Introduction of
decarbonization
technologies

ComfortEconomic
efficiency

Creation of comfort
tailored to thecustomer

Provision of solutions for the home
•Comfortable living spaces•Lifestyles solutions that match life cycles

Advanced energy
management

Local
community

Expansion of management service•Air conditioning control for office spaces•Inter-area energy exchange between redeveloped
or industrial parks and the local community

Customer participation

Strengths of the Tokyo Gas
GroupBusiness partner participation•Volume of energy use andequipment operation•Data on spaces and living
environments•Excess energy from prosumers•Life cycle and lifestyle preferences•Data and connections withcustomers (primarily through Tokyo
Gas Lifeval)•Provision of gas, electricity andsolutions•Equipment/appliances, construction
and maintenance•Energy technologies (IoT equipment,
storage batteries)•Digital technologies (blockchain)•Data analysis (AI)•Connections with individualcompany customers

Toward our goal in the management vision of becoming a“business group which continues to create value together withour customers, business partners and society as a whole while
becoming a leader in the future energy systems,” we will strive
to establish a value co-creation ecosystem. We will realize thisby leveraging the strengths of our group, such as Tokyo Gas
Lifeval, which functions as our last mile*2, alliances withbusiness partners, including companies in different industries
and venture firms, use of open-innovation, and cooperation
with local governments. Moreover, by having customers
participate in the ecosystem, we will flexibly combine diverse
products, technologies and services, and provide a variety ofsolutions that resolve various issues in areas ranging fromindividual lifestyles to the local community.

*1 Ecosystem: Business environment in which many companies combine their technologies, expertise, and knowledge in their specific areas of strength in order to create new value.
*2 Last mile: Site operations that require human intermediation in the final process of the value chain.

16Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

17

Establishment of a value co-creation ecosystem: the strengths of the Tokyo Gas Group

Lifeval—the last mile
ASSETS
operator of Tokyo Gas

INVISIBLE

Bonds with customers* 1
Communitybased

Directcontacts

Our bonds and relationships of trust with our customers,
developed over the past 135 years, are our greatest strength.
Tokyo Gas Lifeval acts as the face of Tokyo Gas in each
community. We precisely meet customers’ needs and serve
as a one-stop provider of products and services that help
improve the quality of life, in order to build close ties withindividual customers.
Speedy response to customers and various efforts
made in direct contact with them
I am in charge of repairing gas appliances in an area ofaround 150,000 households in Izumi-ku, Totsuka-ku, andSakae-ku in the city of Yokohama and I visit 5-10 customers
per day. When a customer requests a repair, I try my best to
visit the customer as soon as possible and promptly
complete the repair, so as not to cause inconvenience to thecustomer’s life. I also have to tailor my visit to the lifestyleof the customer who will be present for the repair andefficiently and safely complete the repair. In order toaccomplish this, I make continuous efforts to obtainknowledge and know-how needed for the repair, and toprepare in advance and bring all parts which may possibly
be needed, depending on the type of repair.
Communication aimed at obtaining new business
opportunities
I am in my eleventh year with the company. When I was
assigned to repairs, I had little specialized knowledge ofrepairs. I have therefore absorbed knowledge and knowhow from my seniors and steadily accumulated experience.

I have also accompanied my sales associates and learned
how to communicate well with customers. I now can makeproper greetings and explanations to customers by myself,
depending on their situation. I try to speak slowly andclearly to elderly customers, while I explain repair details
concisely and accurately with fewer words to customers
who are busy. To every customer, I make sure to say after
the repair, “Please feel free to let me know if you have any
problems related to your residence, other than gas
appliances.” This has led to consulting about customers’
plumbing problems and receiving a designated order forrenovations in many cases. I will continue to make various
improvements so that I can receive new requests.

Outlets

174 outlets

Employees

13,000

Repairs, etc.*2 andperiodic safety
inspections*3*1 Including Enesta and Enefit*2 Repairs, etc. include opening/closing of gas fixtures.
*3 FY2019 result

As the last-mile operator of Tokyo Gas, we arecommitted to helping support customers’ lives
Our job is to closely ascertain the needs of customers
through direct contact with them and provide solutions thatare actually necessary. This cannot be possible unless weestablish bonds and relationships of trust with customers. In
addition to conducting thorough and reliable repairs, I try
to remember the customer’s name and the conversation I
had in the past and to show up at their residence when I
am in the neighborhood. Such small encounters, when they
accumulate, enhance relationships of trust with customers,
capture their needs in a timely manner, and lead to new
business opportunities. I am determined to continue toenhance my technical skills, cherish the contacts withcustomers, and help them to create a safe, reliable, andpleasant lifestyle.

Maintenance Group,
Izumi Outlet
Yokohama Totsuka
Tokyo Gas LifevalTokyo Gas Ecomo Co., Ltd.

Abe Masaru

5.2

million contacts

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

18

Coordination of renewable energies and natural gas
Acquisition of renewable power sources

New businesses utilizing decentralized power sources

Expand renewable power source transaction
volumes both at home and abroad

Promote new businesses utilizing PV*1,
storage batteries, EV*2, etc. as well as VPP*3

5 million kW
OverseasQ

How do you plan to“lead the futureenergy systems”?

A

We will coordinate
renewable energies
and natural gas.

0.49

million kW

Domestic

2019

2030

Domestic and overseas renewableenergy resource transaction volume

PV

Onshore/offshore
wind power

Hydroelectric
power

Biomass

Stable supply through the combination of renewableenergies and natural gas, using digital technology

Adjustment of fluctuating renewable energy output
using gas-fired power generation and gas
cogeneration systems

Gas-fired power plant

Gas cogeneration systems

ENE-FARM

Effective use of natural gas*1 PV: Photovoltaic power, *2 EV: Electric vehicles,*3 VPP: Virtual power plant. A mechanism that uses IoT to manage and control decentralized power sources, batteries, etc. as if they were a single power plant.

Tokyo Gas Group is striving to coordinate
renewable energies and natural gas
In order to achieve decarbonization, the Tokyo Gas Group isaccelerating efforts to acquire renewable power sources bothin Japan and global markets while striving to combine
renewable energies with clean natural gas, which offers
excellent controllability. Toward the same goal, Tokyo Gas will
also expand the transaction volume of renewable energy
sources by making use of the strengths of domestic andoverseas business partners. However, renewable energy’s
susceptibility to the weather is an issue. In contrast, natural
gas-fired power plants can be flexibly operated andcomplement fluctuation in the generation volume ofrenewable energy. The role of natural gas-fired power plants
will therefore expand along with an increase in the use ofrenewable energies. We are therefore promoting effective useof natural gas that leverages its strength.
We are also developing a service to purchase excess PV
electricity, targeting customers whose Feed-in Tariff (FIT)
purchase period is to be terminated, and a new business to use
PV, storage batteries, and other decentralized power sources.
Further, we are promoting Virtual power plant or VPP, whichuses digital technology to automatically integrate and control
renewable energies, gas cogeneration, and decentralized powersources, such as batteries, as if they were a single power plant.
By combining decentralized power sources with large-scale
power sources, which include renewable energies and natural
gas-fired power plants, we intend to achieve a stable andinexpensive supply of energy, and to enhance environmental
awareness, comfort, stable supply, and economic efficiency.

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

19

Coordination of renewable energies and natural gas: the strengths of the Tokyo Gas GroupA track record of achievements and unique
ASSETS latest technologies in district heating andcooling and smart energy networks

INVISIBLETokyo Gas Group’s SEN and DHC
project record in the Tokyo
metropolitan area

The Tokyo Gas Group will evolve its track record ofachievements in the district heating and cooling (DHC) businessof over 40 years into smart energy networks (SEN), using ICTdriven energy management. We have established the most
optimal energy network of heat and electricity for a district andhelped create a low-carbon, low-environmental-burden city.
From district heating and cooling (DHC) to Smart
Energy Networks (SEN)For over 40 years, the Tokyo Gas Group has been engaged in
the DHC service, in which heat for steam and chilled and hot
water used in a certain area are produced together anddistributed to multiple buildings for heating, cooling, and hot
water supply. DHC is now evolving to SEN, which mainly uses
cogeneration that locally generates heat and power, consumes
heat and electricity, and also effectively utilizes renewable andunused energy to enhance energy saving and energy security.
By constructing a network for heat, electricity, andRealizing thesame-time,same-volume asplannedinformation, and using ICT in energy management, an optimalenergy system for an area is established.
Combining SEN with VPP to establish the next
advanced energy business
Using the Tokyo Gas Group’s unique know-how, accumulated
in the establishment and management of SEN, and theadvanced digital technologies of its remote automatic control
system Helionet Advance and central management system
SENEMS, a combination of SENs that have renewable energies,
gas cogeneration, and other decentralized power sources with
VPP*, will lead to the next advanced energy business. Recently,
we commercialized and began operation of VPP, which uses
Helionet Advance and automatically integrates and controls PV
power, batteries, and gas cogeneration, which are installed indecentralized locations of multiple facilities of the Tokyo Gas
Group.
* VPP: Virtual power plant. A mechanism that uses IoT to manage and control decentralized
power sources, batteries, etc. as if they were a single power plant.

Uses its unique logic to forecast electricity load and determine
power transmission and reception volume
Monitors the supply-demand balance and automaticallycontrols volume to realize same-time, same-volume as needed
Information
Electricity

PV power output

Yokohama
Research
Institution

Remaining battery
capacity
Building power load

control

PV power output

Hiranuma
Building

Building power load

Power transmission

Makuhari CGS output
District
Heating and Operation based on the
Cooling
power generation plan
CenterSmart Energy Networks (SEN)

District Heating and Cooling (DHC)

Saitama Pref.

Chiba Pref.
Tokyo

Kanagawa Pref.

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

Q

How do you “continue tocreate value”?

A

We plan to continue
to create value by
taking the following
four measures.

20

1

2

Transformation of the LNG
value chain to maximize
each of its functions

Resolving problems indaily life and businesses

Our existing business model provides value in retail sales,
which is the final function of the LNG value chain. Throughtransformation of the LNG value chain, we intend to create
and provide various types of value in each of the functions—from trading to production and power generation, networks,
and customer solutions— so as to expand our customer base.

We will confront customers’ needs and problems and provide
various solutions, beginning with “Energy as a Service(EaaS)”. A digital infrastructure for value co-creation will also
be established and the range of solutions to be created andprovided will be broadened. This should be facilitated byadvanced digital marketing, as well as the expansion of thenumber of business partners, the amount of data used, andproducts and technologies.

3

4

Leading the transition toa decarbonized society

Overseas expansion

The Tokyo Gas Group is promoting effective use of naturalgas, expansion of renewable energy sources, and developmentof core element technologies for decarbonization, as we aretaking up the challenge to achieve Net-Zero CO2 emissions,
including customer emissions, in our overall business activities.
Our target is to contribute to a reduction in carbon emissions
on a scale of 10 million tons by 2030 (which exceeds Japan’s
target ratio*) and to lead the way to reducing CO2 emissions
on a global scale.

We will develop LNG infrastructure that utilizes the Group’s
strengths in the LNG value chain, such as LNG engineering
capability, exploit shale gas and other resources, invest in
renewable energy businesses, and expand LNG transaction
and LNG trading by making use of our related asset holdings,
such as LNG vessels and receiving terminals. By taking theseactions, we aim to triple overseas profits.

* Japan’s reduction target ratio: The greenhouse gas reduction target in the Intended Nationally Determined Contribution submitted to the United Nations (26% reduction in FY2030 as compared to FY2013).

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

21

Transformation of the LNG value chain
Trading

Production & power generation

Networks

Customer solutions

Pursuit of “safety, security and reliability” through diverse procurement, increased resilience
Persistent improvement in productivity and cost efficiency through innovation of work processes
Crystallize

Stable, inexpensive andflexible purchasing throughthe use of AOT*1

Achievement of world classdigitalized terminals

Streamlining and increased efficiency
for pipeline maintenance work

Deepening of the “last mile”
services*3

Use of digital technologies (AI and IoT)
ExploreFull fledged deployment of LNG
and power trading

Global deployment of Construction of
LNG receiving terminals, power plants,
engineering and O&M*2

Deployment of new services,
including those that utilize
smart meters“Energy as a Service” to expand thedomains in which value is provided indaily life and businesses*4

Expand the customer base for whom value is created and provided
For markets, energy providers and service providers

Transformationof the LNG
value chain to
maximize eachof its functions

Customers in the Tokyo metropolitan area

Nationwide and internationally*1 AOT: Asset Optimization & Trading (use of digital technology for optimal linkage of LNG
transactions, LNG vessels and receiving terminals)*2 O&M: Operation & maintenance*3 Last mile: Site operations that require human intermediation in the final process of the value chain.
*4 Energy as a Service: Sale not of energy alone but of a menu of services combining energy,
equipment, control technologies and maintenance, etc.

We will “crystallize” the business expertise accumulated up
to now through the pursuit of “safety, security andreliability”, which has been realized by diversity inprocurement and increased resilience, as well as persistentimprovement in productivity and cost efficiency throughinnovation of work processes. In addition, we will “explore”
new domains for each function with customers, society,and business partners in order to expand the customer basefor whom value is created and provided, and expand themacross Japan and abroad.

Enhanced resilience functions through the use of natural gas
Enhanced resilience of natural gas infrastructure

2020

Four LNG receiving terminals
interconnected through a main
trunk pipeline network by openingof the Ibaraki LineIn the periodleading up to 2030
Cooperation with local
governments andinfrastructure companies(interconnected pipeline,
etc.)

1999

Three LNG receiving terminals
interconnected through a main
trunk pipeline network in order
to increase and expand natural
gas useLNG terminal
Power plant( = Currently under study)

Natural gas has increasingly become an important energy
source along with its diffusion and expansion, which were
facilitated by the establishment of LNG receiving terminals andpipelines. With the aim of allowing customers to use ourinfrastructure with ease of mind, the Tokyo Gas Group is
working to strengthen the resilience of the natural gas
infrastructure in the Tokyo metropolitan area through theDisaster resilient lifestyles and urban design
Urban design that not only provides electricity in the event of an emergency
but also ensures the stable use of heat, water, and IT and data systems

Redevelopedbuilding

Existing area

Plant
System power

Electrical equipment

City gas

Gas cogeneration
system(medium pressure)Electricity

Heat

Electricity

50% supply of electricity
even during an emergency

Nihonbashi Smart Energy Project

opening of its second circular trunk pipeline network— theIbaraki Main Pipeline— and stronger cooperation with local
governments and other infrastructure companies. By
expanding decentralized energy systems, we will also promotedisaster-resilient lifestyles and urban design that enable
customers to use information telecommunication and data in
addition to energy, even in the event of an emergency.

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

Transformation of the LNG value chain to maximize each of its functions: the strengths of the Tokyo Gas Group

Safe and stable energy
ASSETS
supply infrastructure

INVISIBLE

In order to help our customers use gas with ease of mind, we
are working on various safety measures. They include
earthquake-resistant measures for production and supply
facilities, development of a disaster-readiness system for a large
earthquake, and safety inspection of customers’ gas equipment.
In order to fulfill our public duty as an integrated energy
company, we intend to further enhance the resilience of our
natural gas infrastructure in the Tokyo metropolitan area, whichis the center of politics, the economy, and industries.
Measures to help customers use gas with ease of mind
Earthquake-resistant production and supply facilities
We adopted structural designs with superior anti-seismic properties
for LNG terminals, and introduced materials that are resilient
to ground deformation to our pipeline network. As a result,
our city gas production and supply facilities are highly resistant
to seismic activity, even in the case of major earthquakes, suchas the Great Hanshin-Awaji (Kobe) Earthquake, or the Great
East Japan Earthquake.
Development of a disaster-readiness system
We have developed a disaster-readiness system, which
subdivides our low-pressure pipeline network into
approximately 300 blocks and remotely stops the supply ofgas, in block units, depending on the extent of the damage.
This enables minimization of the impact of supply stoppages
and prevention of secondary damage.
Monitoring and control of production and supply
facilities, and safety inspection of gas facilities
We conduct inner-pipe leakage testing and periodic safety

inspections of gas appliances for all customers at least once
every four years. The Supply Command Center performs 24/7
monitoring and control of the status of operation of city gas
production and supply facilities. When the Safety CommandCenter receives gas leak reports from customers, personnel at
Gaslight 24 will immediately visit the reporting customer totake swift action even on holidays or at night.
Enhancement of resilience functions
We are accelerating enhancement of the resilience of our natural gas
infrastructure in the Tokyo metropolitan area by creating oursecond circular trunk pipeline network through the opening of
the Ibaraki Main Pipeline in 2020 and by enhancing cooperation
with local governments and other infrastructure companies.
Safety know-how and measures toprevent earthquake disasters
Division of the mediumpressure pipeline network
25 medium-pressure blocks

Division of the lowpressure pipeline network
Approximately 300
low-pressure blocks

Resistance to seismic
activityHigh level of resistance to seismic activity, evenin the case of major earthquakes, such as theGreat Hanshin-Awaji (Kobe) Earthquake, or theGreat East Japan Earthquake
Subdivided the medium-pressure pipeline

Subdivision of units for
network into 25 blocks
supply stoppage in the
Subdivided the low-pressure pipeline network
event of an earthquake or into approx. 300 smaller blocks
other disasters

Installation of 4,000 seismometers (SI sensors)

Periodic safety inspection

2.7 million (FY2019)22

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

23

Resolving various customer needs and problems
Accelerate the creation of new solutions including the establishment of new companies

Living security
Smart homes

Needs and problems in daily life
Shift from “owning thingsin daily life” to “using
things in daily life”

Reduced housework /improved diet

Proposal for residencesthat match life cycles

Instantly offering wide-ranging
values tailored to customers

Creating and offering wide-ranging solutions
tailored to customers’ needs and problems
Various kinds of solutions are required today, along withchange and diversification in customers’ values, such as achange in their consumption behavior from “things” to“experiences” and “value”. With the aim of speedily creating
new businesses, the Tokyo Gas Group has started to create
and provide new services which are beyond the existing
business framework of Tokyo Gas. This includes theestablishment of new business-creating companies in FY2019.
We also plan to establish a digital infrastructure for value
co-creation and advance efforts to instantly combine asolution proposal with an energy supply to each individual
customer. This will be realized by using our customer dataobtained from the Tokyo Gas Group’s direct contacts andweb marketing and the data held by our business partners,
and by forecasting a potential need or problem that evencustomers are not aware of via AI analysis and other means.

Establishment of a digital infrastructure for value co-creation
Behavioral data(from meetings, Web, IoT and smart meters)

Expanded rangeof data used

Providing even value thatthe person does not notice
Providing value whendesired and at a time ofthe person’s choosing

Expandedproducts andtechnologies

Wider rangeof solutions
CustomerAI
Predicted
needs
Combined

Expanded number ofpartner companies

Resolvingproblems indaily life andbusinesses

Expanded utilization ofrenewable energyCompass 2030

TOKYO GAS INTEGRATED REPORT 2020

24

Toward resolving problems in daily life and businesses: the strengths of the Tokyo Gas Group

Establishment of new business-creating
ASSETS companies that help solve customers’various needs and problems

INVISIBLETokyo Gas Liv Solutions Co., Ltd. and its subsidiary Hinatao
Energy Co., Ltd., as well as Sumilena Co., Ltd. were
established in December 2019, with the aim of speedily
creating new businesses as a part of establishing a value cocreation ecosystem. Putting emphasis on the “Customer
First” concept, we intend to defy the boundaries of theexisting business of Tokyo Gas and to help solve customers’
needs in daily life through speedy decision-making,promotion of flexible, dynamic corporate alliances, and theuse of external human resources.

Responding to customers’ desires to contribute to thecommunity through their purchase behavior, Hinatao
Energy provides in its gas and electricity retail energy
service business an option plan to support the community.
The first plan of its kind is “F.C. Tokyo Electricity.” Throughpayment of a service charge in addition to the electricity

bill, the customer can participate in community support in
the form of F.C. Tokyo’s football promotion activities andhometown activities. Another business we will expand is toprovide a PV energy service and combine it with anelectricity and gas retail business, given customers’ rising
expectations for renewable energy and greater requests toenhance energy resilience.
In addition, we are developing services to fulfill thechanging needs of customers from owning to using“things”. In June 2020, Sumilena launched a monthly fixedcharge service that enables customers to use the latest
household equipment with no initial cost but by means ofmonthly payments, including installation expenses as wellas emergency visits and repair warranties. Sumilena’s lineup of household equipment is carefully selected based on
its proposal-making capabilities. The company is also offering
a good-value electricity rate plan and a campaign in alliancewith a start-up company in a different industry among
others in order to aggressively expand service offerings.

Customer

Customer

Accelerating creation and offering of EaaS andvarious other solutions

Easy-to-understand website
Simple application methodby multi access

Energy X Service

Hinatao Energy (energy retail service)
Service

Additional service

EnergyService that fulfills
Good-value additional
Hinatao Electricity
needs in daily life service for each energy plan
& Gas

Business partner

One-stop provision

Simple Web application

Sumilena (total lifestyle service)
Housing equipment

Service

EnergyHousing equipmentthat satisfies
customers’ needs

Long-term
maintenance warranty

Sumilena plan

Business partner

Hinatao Energy

Speed creation of new businesses
April 2019
The new business creation project department was established.

December 2019
Three companies were establishedMarch 2020
Hinatao Energy began sales activities.

June 2020
Sumilena began sales activities.

Compass 2030

TOKYO GAS INTEGRATED REPORT 202025

Efforts to achieve Net-Zero CO2 in the Tokyo Gas Group’s style-2030

Efforts
domestically andinternationally1

Zeroemissions2
Zeroemissionsachievedthrough
offsetting-around 2050
Emissions reductions not only in the Tokyo metropolitan area but on a global scale

Expanded use of renewable power sources
Development of decarbonization technologies for gaseous energy
Effective use of natural gas

Decarbonization in theelectricity and heat sectors

energy consumption through efficient use of natural gas,
(reduced
coordination with the fluctuating output of renewable energy sources )Use of CCUS*1 technologies (capture of emitted CO2)

The combinationof these activities
will lead to
Net-Zero CO2

Incorporation of successful reduction efforts overseas*1 CCUS: Carbon Capture, Utilization, and Storage

Roadmap to Net-Zero CO2
Development of essential coretechnologies using open-innovation

CO 2 separation andcapture technologies

Highefficiency fuelcell technology

Partner companies,
universities andresearch institutions

Leading thetransition to a
decarbonizedsociety

Hydrogen production
technology

Degree ofcontribution
to Net-Zero CO 2
Achievement

To NetZero CO2

Combination and use ofvarious means

Introduction and use of hydrogen,methanation technology*2 etc.
Introduction of ultra-high efficiency fuel cells
Introduction and use of CCUS

Optimal use and control of renewable power sources
Advanced use of natural gas
Current

2030

2050

*2 Methanation technology: Producing carbon-neutral methane by combining hydrogen and CO 2

Leadership in the effort to achieve Net-Zero CO2
We believe that a realistic approach toward getting closer
to a decarbonized society is to make use of the propertiesof natural gas, such as its limited environmental impact
among fossil fuels and excellent controllability, andcombine it with renewable energy. We thus mainly focus
on the effective use of natural gas and are working on the
expanded use of renewable power sources, the use of
CCUS (Carbon Capture, Utilization, and Storage)
technologies, and the curbing of CO 2 emissions. Our target
is to achieve a 10 million ton reduction in CO 2 emissions inJapan by 2030. In addition, we will use technologies andexpertise for the effective use of natural gas in promoting
decarbonization in the electricity and heat sectors andCCUS, and implement initiatives aimed at Net-Zero CO 2

emissions (by offsetting the emission amount with theabsorption amount). Our ultimate aim is Net-Zero CO2emissions of the Tokyo Gas Group’s style.
Decarbonization technology innovations
With regard to the development of core element
technologies (i.e., hydrogen production, CCUS, and highefficiency fuel cell technologies) for decarbonization leading
up to 2030, we will promote the open innovation type oftechnology development by incorporating technologies andideas of other companies, universities, and research
institutions in addition to our own. From 2030 onward, we
will introduce and use hydrogen, methanation*2 and othertechnologies and combine various means which may
contribute to Net-Zero CO2 emissions via IoT and AI.

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

Leading the transition to a decarbonized society: the strengths of the Tokyo Gas Group

Innovation of core element
ASSETS technologies, that contributeto decarbonization

INVISIBLEThe Tokyo Gas Group aims at achieving Net-Zero CO2emissions through all of our business activities, including
customer emissions. We will develop CO2 separation andcapture technologies in addition to using various
technologies and know-how for effective uses of naturalgas, with the aim of achieving low carbon in the electricity
and heat sectors. The development of high-efficiency fuelcells will contribute to the reduction in energy consumption
and CO2 emissions and ultimately to the achievement of
Net-Zero CO2 emissions.

Approach to introduction of SOFC systems
Since the developed SOFC system is mono-generation
type, which does not use waste heat, we are thinking of
introducing it to the untapped segment of small-scalebuildings and stores, such as offices and convenience
stores with no demand for hot water. In the future, byadding a function of self-sustaining operation, thesystem can be used in evacuation centers in the case of adisaster and is anticipated to enhance the resilience
function that utilizes the city gas network.

Development of high-efficiency fuel cells
Tokyo Gas and Miura Co., Ltd. have jointly developed
high-efficiency solid oxide fuel cells (SOFC) in the 5kWclass with power generation efficiency of 65%*1 LHV andstarted demonstration tests in April 2020. This is theworld’s first innovative development in realizing highefficiency power generation by combining multiple
technologies, such as the system design of two-stage
SOFC cell stacks and fuel regeneration process so as toutilize supplied fuel effectively. This development will
enable a 53% reduction*2 in CO 2 emissions.

Challenges of innovation in future hydrogengeneration technology
In addition to reducing CO 2 emissions through thedevelopment of high-efficiency fuel cells, we will utilize
our know-how accumulated in these developments totake on the challenge of innovation, such as innovationin hydrogen generation technology, and to lead thetransition to a decarbonized society.

Innovation in element technology
AC power generation efficiency in the world’s
first 5kW-class fuel cell system

Achieved

65% LHV*1

CO 2 emission

53% reduction*2*1 Data by Tokyo Gas and Miura, as of March 3, 2020
*2 Estimate based on using a prototype. Grid power’s emission coefficient of 0.66kg-CO 2 /kWh (emission coefficient of thermal power generation in FY 2030, in the Plan for Global Warming, May 2016)26

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

Utilization of LNG value chain functions
Expansion into renewable energy business

Overseas
Expansion

Expansion of LNG trading

Photovoltaic power generation (Mexico)

TripledRenewableenergybusiness

LNG
and gasinfrastructure

Resource
development

Current

EuropeAsia/Australia

North America

Use in each LNG value chain function
Provided to customers both at home and abroad(Southeast Asia, etc.)
Expansion of trading scale to 5 million tons

2030

The Tokyo Gas Group will utilize its LNG engineering
capability cultivated in the LNG value chain for a half
century and develop the LNG infrastructure business mainlyin Southeast Asia, where the shift to natural gas isadvancing. With regard to investment in shale gas andother resource development in North America andrenewable energy businesses in Europe and North America,
we intend to expand operations at an accelerated pace bymeans of growth engine type investment*1 that utilizes our
expertise cultivated through project investments.

We will also cooperate with business partners, makeuse of respective strengths and different geographicalexposures, and develop full-fledged trading in the LNG
markets. Our target is to optimally combine LNG trading(LNG purchasing contracts, actual demand) and assets(owned LNG vessels, receiving terminals, power generation
facilities, etc.) with digital technologies so as to expand
LNG transaction volume. Trading can be further expanded
by use of transportation and other operations as addedvalue of LNG.

*1 Growth engine type investment: Initiative to invest in an operating company, get involved in its management, and help it growWind power generation (Mexico)27

Compass 2030

TOKYO GAS INTEGRATED REPORT 2020

28

Overseas expansion: the strengths of the Tokyo Gas GroupLNG infrastructure
ASSETS
engineering capability

INVISIBLEThe Tokyo Gas Group plans to leverage its LNG
infrastructure engineering capacity, cultivated in the LNG
value chain from upstream to downstream for a half
century, and aims at overseas business expansion mainly in
Asia, where demand for natural gas is increasing.
Accumulated “user know-how” regarding LNG
engineering
Since 1969, when we first imported LNG in Asia, Tokyo Gas
Engineering Solutions Corporation (TGES) has been
engaged in the LNG value chain from upstream todownstream. The company is accumulating “user knowhow”, thanks to its technologies, knowledge, andexperience, obtained from design, construction, andconsulting services for close to one half of the LNG
terminals in Japan (20+), including LNG receiving terminals
owned by Tokyo Gas (Sodegaura, Negishi, Ohgishima and
Hitachi), and their operation and maintenance (O&M).
World top-class LNG engineering capability
We have accumulated “user know-how” regarding LNG
facilities—from tanks and other main facilities to peripheral
ones of LNG terminals— as we became an expert onvarious and numerous LNG facilities in Japan and overseas
and mastered “what works” and “what does not work”
through abundant design experience and O&M practiceover many years. We thus provide numerous engineeringsolutions to improve reliability, reduce risks, and raise
efficiency and achieve labor saving in O&M from thecustomer’s viewpoint. With regard to pipelines for the

stable, safe supply of gas, we are also experienced in awide range of engineering services, from feasibility studies
and planning to design, construction, and O&M.
Overseas achievements
Being accredited for advanced LNG technologies cultivatedin Japan and our abundant experience, we have been
engaged in LNG engineering services overseas since the late1970s. Our list of achievements includes more than 20 LNG

terminals and over 100 projects in 20 countries and regions.
We are further advancing our engineering capability andknow-how by utilizing our network of engineers andengineering companies in various countries, which wasestablished through overseas projects. Such a businessgrowth spiral has helped us to receive a large-scaleconsulting service project that required about 60 personnel
and to acquire an entire management order forconstruction of a large LNG terminal in recent years.

TGES’ Overseas Project Achievements
RussiaU.K.
Spain
Portugal
CyprusUAE

TaiwanPhilippines
VietnamSingapore
Indonesia

Pakistan
India
Bangladesh
MyanmarSouth Korea
China

ThailandAustralia

MexicoCompass 2030

TOKYO GAS INTEGRATED REPORT 2020

29

Toward realization of Compass 2030: the strengths of the Tokyo Gas Group1

Personnel
ASSETS
Strategy

We will produce workthat will have a major
impact on society.

INVISIBLE

We commend a spirit oftaking on challenges andthe ability to learn
from mistakes.

Through the realization of the Three Promises defined in
the Compass 2030, we aim to develop personnel who work
energetically, make maximum effective use of their abilities,
and consistently deliver strong results.
To this end, we are working on promoting workstylereforms and diversity so that each and every employee canmake maximum use of their knowledge, ability, and experience.
Personnel hiring and development
In order to continue to create value with customers,
business partners, and society while becoming a leader inthe future energy system, we strive to hire and foster
personnel who can flexibly cope with the changing businessenvironment and play a core role in diverse fields.
Hiring personnel withhigh levels of expertise

Strategic shift to
growth domains

Developing
business leaders

In addition to hiring new
graduates for specificjob types (in humanities,
sciences and theprofessional domain),
we also engage in
flexible hiring ofexperienced andhighly-specialized
mid-career personnel.

In addition to our gas
business, we alsoprioritize assignment of
personnel tostrategically-importantfields such as ourelectric power andoverseas business
operations. In this way,
we are promoting
growth and expansion
in a diverse range offields.

We train businessleaders who will lead
the Tokyo Gas Group in
the future, with a
training program that
focuses primarily on
development through awide range of on-thejob training (OJT)
experiences gained bymeans of transfers androtations, combinedwith additional
off-the-job educationand training (OFF-JT).

Hiring, fostering and placing of personnel who
realize “Compass 2030”
Selected as aNadeshiko Brand

External
Evaluation

Tokyo Gas was selected forthe fourth consecutive year as
an attractive corporate brandin terms of its proactive efforts
to encourage and empower
women.

2 Three Promises 3
We will create a venue
for encounters withdiversity and friendly
competition.
The Tokyo Gas Group will bea gathering place fordiverse thinking andexperience.

We will emphasize
the self-fulfillment ofeach person.
We believe in the potentia
of each individual and will
support each employees
activities.

Workstyle reform

Promoting diversity(Improving productivity and achieving a healthy work-life balance)(Promoting active roles for diverse personnel)

In order to enable each and every one of our employees towork energetically and make maximum effective use of
their abilities, we are working proactively to rectify andreduce long working hours, and to implement workstylereforms with awareness of “the value of time,” which weregard as important issues for management involvement.

The Tokyo Gas Group is promoting diverse workstyles andthe empowerment of diverse personnel in order to create
an invigorated organization in which each and every Group
employee can make maximum effective use of theirknowledge, skills and experience. With the aim of realizing
the President’s “Diversity Top Management Commitment,”
we are promoting diversity based on various themes,
starting with women’s empowerment, and including more
employment of disabled people and support for the careerdevelopment of employees in their 50s and over.

Specific initiatives
Promoting workstyles withawareness of the value of time
Premium Friday (a program to leave work early on thelast Friday of the month), Day to leave office on time, etc.

Environmental improvement to allow
Collaborative work space ofa new office of the Digitaldiverse personnel to display their full potential
Innovation Division•Introducing a “Work Anywhere” program which eliminates
restrictions on working location (Work at home, mobile work)•Building satellite shared offices•Improving the office environment toward further improvement in productivity•Working to create workplaces that enable innovation to occur•“Work in a Free-form Animated Manner” (Online video conferencing, office reforms, etc.)•Promoting automation / mechanization using ICT, and more sophisticated use ofdata (utilizing RPA, audio AI, etc.)

Granted Kurumin certification
Tokyo Gas was certified by the Ministryof Health, Labour and Welfare as acompany that formulated an action
plan, achieved targets, and met certain
criteria in accordance with the Act on
Advancement of Measures to Support
Raising the Next Generation of Children.

Selected as a Health &Productivity Stock
Tokyo Gas was selected as a
Health & Productivity Stock, inrecognition of its strategic
efforts regarding its employees’
health from a management
perspective.

Specific initiatives
Promotingempowerment of
women in workplace

2016: First female executive officer appointed
2018: First female senior executive officer appointed
Almost 100% return-to-work rate for female
employees returning from childcare leave
Almost no difference in gender in terms of average
years in service of the company

Promoting
employment of people
with disabilities

Employment rate of 2.55%, exceeding the mandatory
rate (as of June 2020)
Established a liaison committee to promote
employment of disabled people as a group
Working to create safe and comfortable working
environments

Career development
support for employees
in their 50s and overEstablished the “Grand Career System” to support
career development for employees in their 50s and over,through training sessions and interviews with career
consultants, etc.

Compass 2030

INVISIBLEASSETS

More diversity to create a new Tokyo Gas
Experience in diverse kinds of work andencounters with many people are my treasure
I joined Tokyo Gas in a research position and carried out
research on gas cookers and rice cookers. Back then, theconcept of diversity was not well established but I was able
to manage both my work and my private life and experience
major life events, such as marriage, childbirth and childrearing. This was because Tokyo Gas had begun to establish
programs for childcare leave, shorter working hours forchildcare, and a flextime system. In addition, I was blessedwith good forward-thinking superiors and was supported
by my family and colleagues as well.
I have kept in mind to “set priorities and prioritize thework that only I can do.” While both work and child rearing
were no easy task, they both allowed me to reset myself,
focus on the task at hand, and keep moving forward. I cannow see that in retrospect.
This consciousness also helped me when I was assigned
to various work and workplaces, such as PR as well as
personnel affairs, general affairs at a group company, andsales. Experience in diverse kinds of work and encounterswith many people in and out of the company have become
my treasure.

Executive Officer
General Manager of Wholesale & Regional Service Dept.,
Regional Development Div.

Konishi Masako
April 1988
April 2012
April 2014
April 2015
April 2016
April 2019
April 202030

TOKYO GAS INTEGRATED REPORT 2020

Joined Tokyo Gas Co., Ltd.
Manager, Residential Sales PR Sect, Residential Sales Planning Dept.
Manager, General Administration Sect, Affiliated Companies Dept
Assistant General Manager, Sales Marketing II Dept
General Manager, Sales Marketing II Dept
General Manager, Wholesale & Regional Service Dept.
Executive Officer
General Manager, Wholesale & Regional Service Dept., Regional
Development Div. (current)

increasingly need more diversity in personnel, such as innationality and career background, in addition to gender.
Fostering various values means developing different
opinions, which may bring disorder or friction within thecompany. This can be overcome if we willingly accept it.
This may not be easy to do but I firmly believe that such
experiences or struggles will result in corporate growth.
Diversity is such an appealing buzzword but it is no easytask to realize diversity and to actually lead it to someaccomplishment.
According to our management vision, Compass 2030,
the company promises to employees that it will enhance thepersonnel strategy and initiatives on diversity. I would liketo encourage employees to have various experiences
through work, develop their strengths gained through theseexperiences, and work without pressure or reserve. Each
employee should have his or her own unique strength. I
believe that is what diversity is.
Ratio of women in management at Tokyo Gas(as of April 1 of each fiscal year)
Management
Women in management
Ratio of women in management(persons)

4,000
3,500

Diversity brings new values– a source of corporate growth

3,000

We are on the cusp of a new age of innovation. The Tokyo
Gas Group aims to creating diverse values in each of its
value chains and offer them across Japan and overseas. To
achieve this, it is important to promptly respond to customers’
needs, be flexible, and appreciate various sets of values.
I think Tokyo Gas has established a great working
environment for women, as evidenced in the return rate of
employees from childcare leave and their years in service ofthe company. In order to create various values, we will

500
0

(%)

10

First female senior executive officer appointed
3,614

5.1%

3,547

3,395

5.3%
5.8%

3,231

6.5%

6.3%

3,106

7.1%
3,033

7.6%

2,960

8.0%

8.7%

7.5
2,920

5

2,897

First female officer appointed

2.5

183

189

197

202

203

214

226

233

251

0

2012

2013

2014

2015

2016

2017

2018

2019

2020

(FY)

* Managerial staff are those who have subordinates or those in equivalent position.

Average Years in Service by Gender:
Almost no difference
PeriodMen
FemaleNon-consolidated
Consolidated
Non-consolidated
Consolidated

Year2018.3
19.3
16.7
19.3
14.8

2019.3
19.5
17.0
18.5
14.5

2020.3
19.7
16.8
18.5
14.1

Compass 2030

Support for TCFD
recommendations
and information
disclosure

TOKYO GAS INTEGRATED REPORT 2020

Climate-related risks and opportunities could significantly affectmany companies’ financial positions and destabilize financial
conditions. In order to reduce such risk, in response to therequest from the G20, the Financial Stability Board (FSB)
established the Task Force on Climate-related Financial
Disclosure (TCFD) in December 2015 and the TCFD released its
recommendations in June 2017.
We recognize climate change as one of the priority issues
that the Tokyo Gas Group is facing today and regard the TCFD
as an effective framework in promoting information disclosureand dialogue with stakeholders on climate-related issues. We
therefore signed the statement of support for the TCFD in May
2019. We intend to disclose information on the impact ofclimate change on the Tokyo Gas Group’s business activities
and the measures we are taking.
Governance
The Tokyo Gas Group forms in-house committees asappropriate for studying, coordinating or promoting actions toaddress important management issues. These include theSustainability Committee, which is intended to promote climatechange research and other sustainability issues and chaired by
the President, and the Sustainability Promotion Committee, asubordinate body of the previous committee chaired by the
Officer in charge of sustainability. They deliver reports onimportant matters to the Board of Directors.
(See also Corporate Governance System on page 43.)
Strategies
In preparation for the next half-century, the Tokyo Gas Grouphas formulated its “Compass 2030” management vision
outlining the course that should be pursued in this age of
uncertainty.
Natural gas, one of the pillars of the Tokyo Gas Group’sbusiness, is expected to play an even larger role due to its
stability, environment-friendly nature, and economic viability, as
well as its affinity for use in combination with inherently
unstable renewable energy sources. In the meantime, as a

31leading company dealing in natural gas, (a fossil fuel), we feel it
is our responsibility to deal forthrightly with the issue of climatechange, look beyond CO2 emission reduction, and promotedecarbonization.
While maintaining S+3E*1 as the bedrock of our businessactivities, we are striving to help reduce CO2 emissions bycustomers by continuing to promote a shift to natural gas infuel conversion and advanced use of natural gas, such as indiversified energy systems. Over the longer-term toward 2030,
we plan to effectively use natural gas as an adjusting function
for renewable energy, which is expected to be increasingly
used. We also intend to globally promote our technology andknow-how regarding natural gas. By doing so, we willcontribute to the stable supply of energy and a reduction in
CO2 emissions in Japan and overseas.
We will promote decarbonization technology innovationfrom a long-term perspective. At the same time, we will
combine various means, including natural gas and renewableenergy, and aim to achieve Net-Zero CO2 emissions by ourentire group, including customer emissions, while leading thetransition to a decarbonized society.
Major risks and opportunities driven by climate change,
and the Tokyo Gas Group’s initiatives
In identifying the Tokyo Gas Group’s risks and opportunities
related to climate change, we referred to two representative
scenarios*2 of the International Energy Agency (IEA) and theIntergovernmental Panel on Climate Change (IPCC)—the below
2C scenario and the 4C scenario. Considering the medium- tolong-term time span of 2030 and after, we comprehensively
summarized important factors that may affect our group’sbusiness and evaluated (mainly qualitatively) the impacts from
two aspects—magnitude of impact and possibility to beaffected—for both scenarios. We then identified major factors
and put together our initiatives for each factor.
We are determined to steadily implement these initiatives
and to realize our business sustainability as well as themeasures against climate change even after 2030.

*1 S+3E: Safety plus 3Es for Energy security, Energy efficiency, and Environment*2 Scenarios for reference:•Scenario of limiting the global average temperature to well below 2C above pre-industrial levels: Sustainable Development Scenario (SDS)(IEA WEO 2019)/B2DS (IEA ETP 2017)/RCP2.6 (IPCC AR5)
•Scenario of limiting the global average temperature to 4C above pre-industrial levels: IEA Stated Policies Scenario (STEPS) (IEA WEO 2019/RTS (IEA ETP 2017)/RCP8.5 (IPCC AR5)

Compass 2030

Opportunities
and risksTOKYO GAS INTEGRATED REPORT 2020

Factors

Details of opportunities
and risksTokyo Gas Group’s Initiatives

Markets

Global increase in demand fornatural gas

Resources development and expansion of LNG/gas infrastructure and otheroverseas business to increase the natural gas transaction volume

Opportunities

Energy source

Affinity of renewable energy
with natural gas

Effective use of natural gas to adjust fluctuation of output of renewableenergyIncrease in renewable energy transaction volume in Japan and overseas
Use of PV, storage batteries, EV, etc. to promote new decentralised
power source business and VPP

Opportunities and risks

Resource
Efficiency;
Technology

Decarbonization technology
innovation

Development of decarbonization technologies for gaseous energy, suchas hydrogen and methanation
Introduction and use of CCUS technologies

Introduction of carbon tax

Fuel conversion, etc. to accelerate shift to natural gas
Effective use of natural gas to adjust fluctuation in output of renewableenergyIncrease in renewable energy transaction volume in Japan and overseas
Use of PV, storage batteries, EV, etc. to promote new decentralised
power source business and VPPDiversified energy systemusing natural gas to enhance
resilience

Enhanced resilience in the natural gas infrastructure
Expanded use of diversified energy system, such as smart energy
networks, co-generation, ENE-FARM, etc. that are highly resilient andreduce energy consumption

Impact on operations,associated with severer
abnormal weather

Enhanced establishment of water hazard-resilient Life Line, such as andfull preparation for BCP., disaster countermeasures of LNG terminals andpower stations

Risk management
The company has established an enterprise risk management(ERM) system, and drawn up risk management regulations
that include documented rules concerning major risks facedby the group.
The Risk Management Committee was established withthe aim of improving the management level of the ERM
system. The Committee checks progress regarding theestablishment and operational status of the ERM system,
including periodic risk assessments. It also reports to the
Corporate Executive Committee and obtains thenecessary approvals.
As for specific initiatives, the environment management
system (EMS) has been established for the entire group, led
by the top management, and we conduct not only
compliance with laws and regulations but also various
initiatives regarding climate change by promoting a PDCA
(Plan-Do-Check-Act) cycle.

Key figures and targets
The Tokyo Gas Group management vision Compass 2030 has
set the management guidelines and key figures for realizing
corporate growth.

4C scenario

Below 2C scenario

Opportunities

Opportunities and risksMarkets;
Policy and Legal

Opportunities

Resilience

Risks

Acute

(Introduction of appropriatelydesigned carbon tax may promote
shift to energies with less CO 2
emissions but excessive taxation
may raise energy cost and negatively
affect the company’s business)(disruption to the operation offacilities for production and supply)

Contribution to
CO 2 emission
reductions-

Renewable powersource transaction
volume5 million kW

No. of customer
accounts

10 million tons

*3(domestic and international, including purchasing)

20 million
Natural gas
transaction volume 20 million tons
*4

*5

*3 Base year: fiscal 2013, including contribution of emission reduction during consumption
by customers*4 Total no. of gas, power, and service agreements (domestically and internationally)*5 LNG equivalent Including overseas business and trading

See TCFD materials for details.

32Medium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

Provide energy and services based on a businessmodel that fuses digital and physical operations.

Tokyo Gas Group FY2020 - 2022

Use assets to provide LNG withincreased value as a product toutility and other customers
both at home and abroad.

Medium-Term
Management Plan
This Medium-Term Management Plan has been
established to enable us to work to make steadyprogress and to reinforce the foundations of ourbusiness for future growth and expansion in thethree-year period starting in FY2020, despite therecent difficult circumstances.

33

Key
Strategies

Utilize accumulated strengths andachievements to provide customers
in other parts of Asia and elsewherewith solutions aimed at achieving
effective use of natural gas.

Key Strategy

1

Evolution of customer
solutions

Key Strategy

2

Key Strategy

3

From the Tokyo
metropolitan area toother parts of Japan andto other countries

Key Straties

Expansion of LNG
business4

Acceleration of overseas
business

Shaping of Net-Zero CO2

Overview of theMedium-Term
Management Plan
In preparation for future growth and expansion, we will
establish the following as key strategies:
1 Evolution of customer solutions
2 Expansion of LNG business3 Acceleration of overseas business4 Shaping of Net-Zero CO2
We will strive to
1 Implement cost structure reform
2 Continue the digital transformation (DX)* and3 Build a flexible organization towards changes
in order to change the revenue and expenditure structure,create resources for future growth and also strengthen ourbusiness foundation.

* DX: Digital transformation. The use of data and digital technologies to transformproducts, services and business models based on customer and societal needs,
and also transform work operations themselves as well as organizations,processes, and corporate culture and climate.

Strengtheningof businessfoundation

Strengthening ofbusiness foundation

1

Implementationof coststructure reform

Strengthening ofbusiness foundation

2

Continuationof DX*

3

Establishment of aflexible organization
towards changes

Challenge

Challenge

Leadership in theeffort to achieve
Net-Zero CO2

Transformation of
the LNG value
chain

1

3 challenges ofCompass
2030

Strengthening ofbusiness foundation

3

Challenge

2

Establishment of avalue co-creation
ecosystem

Offer solutions that
optimize natural gas andrenewable energies, andseek new technologies that
hold promise for the future.

Medium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

Key figures

Supplementary reference

We will achieve operating profits + equity method income of JPY 140.0 billion in FY2022 through a balance between
cost structure reform (primarily in the gas business), the expansion of electricity, solutions, etc., and investment in growth.

Profit planning by segment
FY2019 forecast*1

Real estate

Other

JPY 11.1 billion

Project portfolio composition:
Operating profit + equity method income

JPY 6.3 billion

Energy-related

25%

Overseas*1

JPY 14.5 billion
Overseas12%
10 %JPY 12.5 billion

25%

Solutions, etc* 2

50 %Energy* 3(Gas+Electricity)

28%

27%

60 %

63%

Total for segment

JPY
118.5
billion*2

JPY 10.0 billion

FY2022 targets* 3
OthersJPY 10.0 billion

JPY 15.0 billion
FY2019 forecast*

FY2022

Management Guidelines andkey figures in Compass 2030

KGI
Operating profit + equity method
incomeEnergy-related

JPY 16.0 billion
Overseas

JPY 118.5 billion

JPY 140.0 billion

Approx. JPY 200.0 billion

JPY 109.1 billion

Electricity

Real estate
4

Gas

JPY 16.0 billion

Total for segment

JPY
140.0
billion*2

Gas

JPY 108.0 billion

Electricity

JPY 20.0 billion

Financial indicators
ROA

3.1%

Approx. 4%

ROE

6.6%

Approx. 8%

D/E ratio

0.78

Approx. 0.9

KPI

Segment

Main activities

Gas

Factor in increased depreciation costs and intensifiedcompetition while carrying out drastic cost structurereform and boosting LNG sales (trading).

Electricity

Achieve a balance between reducing marketing costs
and increasing the number of accounts.

12.20 million

14.80 million

20.00 million

Overseas

Growth of upstream, midstream and downstream
projects, primarily in North America.

Natural gas transaction volume

16.70 million tons

17.00 million tons

20.00 million tons

Segment profit from Overseas Business

JPY 12.5 billion

JPY 16.0 billion

Energyrelated

Promote cost structure reform including making
services for profit.

5.0 million tons

6.50 million tons

10.00 million tons

Real estate

Take into account the full-fledged start of the
Tamachi Project.

0.59 million kW

2.00 million kW

5.00 million kW

OthersPromote cost structure reform and create profitabilityof M&A.

--JPY 30.0 billion

No. of customer accounts(as of the end of FY)

Contribution to CO2 emission reductions(as compared to FY2013 levels)

Renewable power source transaction volume(as of the end of FY)

Cost structure reform(compared to FY2019)--*1 Overseas business: All overseas business *2 Solutions, etc.: Energy-related, real estate, other *3 Energy: Gas and electricity business in Japan *4 At time of 3Q results*1 At time of 3Q results
FY2019 3Q results frame: Oil price $68.42/bbl, Exchange rate ¥109.00/$*2 Including consolidation adjustment (-¥45.0 billion)*3 FY2022 anticipated frame: Oil price $60/bbl, Exchange rate ¥110/$34

Medium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

Cash flow allocation plan and shareholder return policy
Using as a primary resource cash flow extended by cost structure reform and increase in sales, we will invest in future growth
while maintaining the balance of asset efficiency, fiscal health and shareholder return.

Cash flow allocation(total for three years)

Cash inCash out
Capital investment

Consolidated
operating cash flow

JPY

900.0

billion

JPY

600.0

billionBreakdown of capital investment and loans and investment
Overseas business(renewable energy, upstream and LNG infrastructure)

Loans and investment

JPY

400.0

billionOutside borrowing,

etc. JPY

250.0

billionJPY
200.0
billionShareholder return

150.0

JPY
billionShareholder return
Distributable income will be applied to the improvement of customer services
and to the achievement of a sustainable society, and also distributed toshareholders in a timely and appropriate manner.
Acquisition of treasury stock for retirement will be considered as one wayof providing shareholder return in addition to dividends, and targets for total
payout ratio (ratio of dividends on current consolidated net income andacquisition of own shares) will be approximately 60% in each fiscal year up
through FY2022.
With regard to dividends, we will continue to provide stable dividends andwill gradually increase dividends in accordance with growth while
comprehensively taking into consideration the profit level over the medium- tolong-term.

Renewableenergy*JPY 110.0
billionNew services
JPY 50.0 billion

Energy services
and district
heating andcooling
JPY 70.0 billion

Upstreamand LNGinfrastructure
JPY 90.0 billion

Solutions, etc.
Real estate
JPY 80.0 billion

JPY
200.0
billion* Total renewable energy including domestic comes to
JPY 140.0 billion.

Electric power:
Thermal power
plants and otherexisting facilities
JPY 30.0 billion
Electricity:
Renewable energy
related investment
JPY 30.0 billion

EnergyJPY
380.0billionCommonGas:
Manufactureand supply
equipment
JPY 320.0
billion

M&A: Expansion ofscale of electricity andgas businesses,
upgrading of service
lineup, acquisition oftechnology related to
Net-Zero CO2 emissions
JPY 100.0 billion

JPY
220.0
billionDX(new services,
customerin
formation system)
JPY 120.0 billion

35

Medium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

Evolution of customer solutions

Key Strategy 1

Through a business model that fuses digital and physical operations, we will provide an improved customer experience to meetincreasingly diverse customer needs, and achieve increase of the number of customer accounts and improvement of profitability.
To provide gas, electricity and services widely, we will deploy a second brand especially designed for digital operations, and build a
new business model by collaborating with our business partners.

Main activities in FY2020 - 2022

Restructuring of
the retail sector

Prioritize operations to balance improved
customer service with more efficient sales costs.
Carefully examine and abolish tariffs and operations in order to create menus that are easy forcustomers to choose.
Reassess and improve the quality of customer contact activities (increasing speed by the use of tech in
the operation of reception and task allocation and make preparations for the use of electronic billing).

2022 KPI

No. of customer accounts(total no. of contracts for gas, electricity and services)

12.2 million

Promotion ofelectric powersales based on a
new approach

Conduct business development that is not limited tothe existing areas by employing a second brand.

Establishment of abusiness modelutilizing the “lastone mile” and theuse of digitaltechnology

Provide a new customer experience by using digitaltechnology and equipment-related strengths.

Expanding business areas with electricity as a foothold for customers who do not have gas contracts
or who have potential service needs.
Establish a Hinatao Energy Co., a second brand that is especially designed for internet sales ofelectricity and gas in order to provide a menu of various services that can meet the wide-ranging
needs of primarily digitally oriented customers.

In addition to conventional appliance sales centering on face-to-face contacts, collaborate with
e-commerce companies as well to establish installation and maintenance services, etc. for customer
appliances and systems (“last one mile”) so as to meet customer needs that include electricity andplumbing.
Create new solution menus beginning with photovoltaic power generation services for homes andbusinesses and gas appliances and home equipment services with fixed payment that include
installation and maintenance (Sumilena).
Provide an improved customer experience, by working with business partners as well as using AI toprovide each customer with optimized menus of services to match needs of each customer.

2019 forecast

14.8 million

2022 KPIOf that amount, electricity

3.8 million

2.4 million

2019 forecast

2022 KPI

36

Medium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

Expansion of LNG business

Key Strategy 2

We have seen LNG as a raw material for gas and electricity business, but we will reassess LNG as a product that provides value tocustomers. Through establishing a new company, we will grow a LNG trading to a mainstay for the Tokyo Gas Group.
As LNG demand continues to increase worldwide, we will optimize LNG supply and demand by utilizing the Tokyo Gas Group assets
and deepening cooperation with other companies in order to expand both transaction volumes and profits.

Main activities in FY2020 - 2022

Expand LNG
trading

Use assets and collaborate with other companies
to pursue transaction opportunities.
Cooperation with Centrica, RWE and other business partners will provide flexibility with respect toprocurement and sales contracts and expand LNG swap transactions* that utilize ships, LNG
terminals, thermal power plants and other assets.

2022 KPI
Natural gas transaction volume

16.7 million tons

17 million tons

2019 forecast

2022 KPI* Transactions in which the price differential is determined in accordance with LNG time, heat quantity and location.

Strengthen
operational
structure

Optimize supply and demand to expand LNG
transaction volumes and increase profits.
Formulate and promote a comprehensive strategy for accommodating LNG supply and demand, andupgrade operational functions for gas and power source procurement, LNG transactions and so on(by establishing a new Asset Optimization & Trading division).
Establish a new company for LNG trading to ensure agile transactions.

Conduct
procurement tohelp expand LNG
business

Achieve a flexible and competitive LNG procurement portfolio.
Meet the diverse needs of domestic gas and electric power customers (mainly industrial users andpower generation use), and domestic and foreign utilities.

* Including overseas business

37

Medium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

Acceleration of overseas business

Key Strategy 3

Using our accumulated LNG strengths and achievements, we will focus on LNG infrastructure business development in Asia where
the demand for natural gas is increasing. We will also work to expand the scale of renewable power generation and increase thevalue of natural resource development business.
We intend to conduct “growth engine type investment” where we invest in business corporations and get involved in the
management. We will use the management resources of invested-in companies to quickly expand business and increase value.

Main activities in FY2020 - 2022

Development of
LNG infrastructurebusiness (Asia)

Expansion of scaleof renewableenergy power
generation (North
America and Europe)

Increase the valueof upstream
business(North America)

Secure LNG demand and develop new LNG terminals in
an integrated manner.
Participate in LNG infrastructure study to discover and develop new projects in each country from themaster plan stage.
Conduct integrated development of LNG terminals and gas power generation business (LNG to
Power), utilizing the strengths and achievements of LNG user’s know-how cultivated in the course of
conducting domestic gas operations.

Expand scale by using business expertise.
Acquire development and business management knowledge through collaboration with Engie in
Mexico and deploy this knowledge in North America and Europe.
Participate in the management of renewable energy development operators, with involvement fromthe initial stages of development, in order to improve profitability.

Increase profits by using the resources of invested-in companies.
Participate in the management of shale gas business corporations and take a leading role throughrefinancing and the expansion of interests to increase asset efficiency.

2022 KPI
Overseas segment profit

JPY 12.5 billion

2019 forecast

JPY

16.0 billion

2022 KPI

38

Medium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

39

Shaping of Net-Zero CO2

Key Strategy 4

To achieve Net-Zero CO2 emissions, we will expand the scale of virtual power plants (VPP) in order to develop a power business that
integrates both renewable energies and natural gas.
We will also make use of investment in domestic and foreign companies that possess new technologies in order to explore
technologies that can aid in decarbonization and pursue innovation of these technologies.

Main activities in FY2020 - 2022

Develop solutions
that combine
renewableenergies andnatural gas

Balance the effective use of natural gas with expand of
renewable energies and VPP.
Utilize digital technologies to combine thermal power, renewable energy and other centralized powersources with photovoltaic power, storage battery, CHP and other distributed power sources toconsolidate diverse customer resources and expand the scale of VPP.
Participate in photovoltaic power, biomass and wind power projects from the initial stages of development
and insource operation and maintenance to expand scale while increasing business profits.
Pursue development of offshore wind farms in Kashima and other promotion zones and take on thechallenge of floating structures that have great development potential.
Make effective use of natural gas by further advancing smart energy systems and energy services thathave been successfully implemented at Nihonbashi Muromachi and Kiyohara Industrial Park and so on,
and by combining with our group’s property development projects.

2022 KPI
CO2

Contribution to CO2 emissions reductions
5 million tons

2019 forecast

6.5 million tons

2022 KPI* As compared to FY2013 levels, including contribution at customer site

Renewable power source
transaction volume

2 million kW

590,000 kW

Developing andcommercializationof new
technologies byutilizing open
innovation

Acquire technologies for CO2 emissions reduction,
capture and use, and zero emissions.
Promote technical development by using technologies and expertise accumulated through fuel cell
development and the like.
- Develop commercially viable fuel cells with the world’s highest power generation efficiency (65%).
- Conduct demonstration tests and begin services regarding CO 2 capture and use systems inredevelopment areas and at factories.
- Develop the core element technologies for hydrogen production systems.
Pursue innovation through collaboration that includes investment in companies that possess
renewable energy, CCUS and other new technologies.

2019 forecast

2022 KPI* Domestic and international, including purchases

Natural gas transaction volume (reposted)
16.7 million tons

17 million tons

2019 forecast

2022 KPI* Including overseas businessMedium-Term Management PlanTOKYO GAS INTEGRATED REPORT 2020

Implementation of cost structure reform, continuation of DX,
establishment of a flexible organization towards changes

Strengthening ofbusiness foundation

Implement cost structure reform to generate growth resources that can be allocated to key strategies.
Continue to implement digital transformation (DX) in order to increase operational efficiency, improve the customer experience andincrease resilience.
Take action with regard to the legal unbundling of the Pipeline Network Division and other changes within and outside the Group,and reassess organization, governance and personnel to increase the engagement of the Group overall.

Main activities in FY2020 - 2022
Strengthening ofbusiness foundation 1

Implementation of
cost structure reform

Conduct a drastic review of operations and mechanisms.

2022 KPI
Cost structure reform

Reduce the workload by simplifying increasingly complex gas fees and IT systems.
Review (with no exceptions) in-house criteria and operations based on appropriate quality.
Reduce costs by means of procurement reform achieved through value engineering* andcrystallization of business operations.

2022 KPI* Compared to FY2019* A systematic method for maximizing the value per cost of products and services (in terms of function, performance, degree of satisfaction, etc.).

-JPY
Strengthening ofbusiness foundation 2

Continuation of DX

Strengthening ofbusiness foundation 3

Establishment of aflexible organization
towards changes

Increase operational efficiency, improve thecustomer experience and increase resilience.
Increase operational efficiency through prediction and optimization based on AI and data.
Increase customer convenience by making services available online, and by offering optimized
proposals and so on, based on understanding of the customer.
Make use of digital technologies to build a system that achieves a balance between ensuring safety/
stable supply and achieving low costs.
Increase meter reading efficiency and build a system that is capable of rapid restoration in
preparation for the comprehensive introduction of smart meters.

Take steps regarding legal unbundling and review theorganization, governance and personnel.
Implement thorough preparations for legal unbundling (introduce a pipeline network company in2020 and establish a new company in 2022).
Reassess Group governance in the light of heightened expectations for the role of subordinates (inaddition to the new pipeline company, a new business company owned by Tokyo Gas Liv Solutions
and a new trading company will be established).
Welcome and train diverse personnel, and create the mechanisms and corporate culture needed totake on challenges.

30.0 billion

40Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

41

CORPORATE GOVERNANCE
Basic Policy on Corporate Governancewww.tokyo-gas.co.jp/IR/english/gvnnc/pdf/policy.pdf

Tokyo Gas works to ensure continued development while consistently earning the trust of customers, shareholders and society. Based on this philosophy, we aim to achieve a continuous increasein our corporate value through enhancing corporate governance systems. We are endeavoring to develop systems with a commitment to management legality, soundness, and transparency.
Tokyo Gas continues to emphasize the importance of accurate and prompt decision making, efficient business operations, strengthening of auditing and monitoring functions, and clarification ofmanagement and executive responsibilities.

Board of Directors
In principle, the Board of Directors meets once a month todiscuss and decide important matters regarding business
operations. Directors must submit reports to the Board of
Directors regarding the status of execution of their duties
periodically and when deemed necessary, allowing the Board
to monitor the performance of directors.
The Board of Directors comprises 9 directors, 4 of whom areoutside directors. In addition, the term of directors is set at one
year with the goal of further clarifying managerial responsibility.
Outside Directors
In accordance with their individual experience and knowledge,
the outside directors strive to secure the soundness andappropriateness of deliberations and decisions regarding businessexecution. From an independent viewpoint, the outside directors
monitor the performance of duties by the directors and exercise
their authority at meetings of the Board of Directors. In this way,
the outside directors contribute to the improvement of therationality and objectivity of the company’s business execution
and of the deliberations and decisions of the Board of Directors.
In making judgments about matters related to the
independence of outside officers, such as capital, transactions,and relationships, we comprehensively verify that they are
unlikely to have conflicts of interest with general shareholders

and they are in a position that enables them to be objective
and neutral, and on that basis we make a judgment on their
independence. (The company discloses the IndependenceStandards for Outside Directors on its website: www.tokyogas.co.jp/IR/english/gvnnc/pdf/independence.pdf) The
Advisory Committee has confirmed that none of the outside
officers has a material conflict of interest with the company—inregard to capital, transactions, or relationships—and has
confirmed their independence in accordance with the above
standards. On the basis of this report, the Board of Directors
has designated them to be independent officers andreported that designation to the stock exchanges on which
the company is listed.
Realizing Accurate and Rapid Decision Making,and Efficient Business Execution
The Corporate Executive Committee, which meets weekly as a
general rule, deliberates on provisions to be resolutions at Boad of
Director’s meetings and important management-related issues.
The company has introduced an executive officer systemfor business execution in accordance with the decisions of
the Board of Directors. Substantial authority has beendelegated to executive officers in their designated areas of
responsibility to ensure efficient business execution.

Meanwhile, they are required to report the state of theirduties to the Board of Directors as necessary to ensure that
their execution of business is appropriately monitored.
Analysis and Evaluation of Effectiveness of theBoard of Directors
To maintain and enhance its effectiveness, the Board of
Directors analyzes and evaluates itself through an annual
questionnaire-based self-evaluation and through discussions
and the exchange of opinions at Board of Directors’ meetings.
Based on the results of the questionnaire and theexchange of opinions at the Board of Directors’ meetings,
efforts to improve the effectiveness of the Board of
Directors are put into practice, including the enhancementof site inspection visits to develop the understanding ofindividual businesses, the increase of executive officers’
attendance at Board of Directors’ meetings and theinspection of deliberations at the Corporate Executive
Committee meetings.
Continuing effort is necessary to further increase theBoard’s effectiveness. The company will continuously
evaluate the effectiveness of the Board of Directors in a bid
to improve its monitoring functions.

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

Improving Corporate Composition of theBoard of Directors
Governance

FY200242

FY2020

Directors
Inside 9

Audit &
Supervisory
Board Members

Inside 3

Outside 2

Outside 2

Inside 5

Outside 4

Inside 2 Outside 3

FemalememberFemalemembers2

1

Audit & Supervisory Board
The Audit & Supervisory Board holds a meeting each monthin principle and whenever necessary. Five Audit & Supervisory
Board members, including three outside members, deliberateand determine audit policies and other matters and receive
reports on the state of the implementation of audits fromone another. They appoint at least one member with adequate
knowledge on financial and accounting affairs to further
improve the effectiveness of the audits they carry out.
In line with the Corporate Auditors’ Audit Standards
formulated by the Audit & Supervisory Board, its members
attend important meetings such as those of the Board of
Directors and the Corporate Executive Committee, inspect
the status of operations at the head office and other businessoffices, and communicate with the accounting auditor to collectinformation. They request explanations as necessary, express
opinions and audit the Directors’ execution of their duties.

Outside Audit & Supervisory Board Members
With capital, transactions, relationships and other factors
defined as criteria for the independence of outside officers,
the company comprehensively verifies that they are unlikely
to have conflicts of interest with general shareholders andthat they are in a position that enables them to be objective
and neutral. On this basis, it makes a judgment on their
independence. The Advisory Committee has confirmed thatnone of the outside officers have any interest with thecompany in regard to capital, transactions, or relationships
and that they are independent in accordance with the above
standards. On the basis of this report, the Board of Directors
has designated them to be independent officers andreported that designation to the stock exchanges on which
the company is listed.
The outside Audit & Supervisory Board members conduct

audits from an independent viewpoint and contribute to theimprovement of the rationality and objectivity of thecompany’s execution of business and the deliberations of theBoard of Directors through their statements at meetings ofthe Board of Directors. In addition, through their statements
and the exercise of their voting rights at meetings of the
Audit & Supervisory Board, the outside Audit & Supervisory
Board members contribute to assuring and improving
rationality and objectivity of the audits.

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

43

Corporate Governance System

Tokyo Gas Co., Ltd.

Overview of Corporate Governance System(As of June 26, 2020)

Shareholders Meeting
Appointment

Appointment
ReportReportAudit & Supervisory Board
Five Audit & Supervisory Board Members(including three outside members)

ReportCollaboration

Auditing
corporation

Appointment

Audit

Board of Directors

Advisory Committee
Two outside directors, one outside
Audit & Supervisory Board Member,the Director and Chairman of theBoard, the President

ReportPresident and CEO
Collaboration

ReportCollaboration

Committees to address
important management issues

Corporate Executive Committee(Independent
auditor)President and CEO, two executive vice presidents,
three senior managing executive officers, andseven managing executive officers

Internal
Audit
Department

OverseeInvestment Evaluation Committee

Management ethics, safety, risk
management, CS, sustainability, etc.

Number of outside directors

4

Number of Audit & Supervisory Board members

5

Number of outside Audit & Supervisory Board
members3

Number of independent officers

7

Participation of outside directors / outside Audit& Supervisory Board members in determinationof remuneration

Yes

Participation of outside directors and outside
Audit & Supervisory Board members in selecting
director candidates

Yes
12

Number of meetings of Board of Directors*
Departments

Audit

Financial
audit

Report62.6

Average age of directors

Nine directors (including four
outside directors)

Supervise

9

Number of directors

ReportManageCollaboration

ReportSubsidiaries

Attendance rate of outside directors at meetingsof Board of Directors*

100%

Term of office of directors

1 yearPerformance-linked remuneration

Yes

Share purchase system to reflect the perspectiveof shareholders in management

Yes* Total for the period from June 2019 to May 2020

Working to Promote Transparent Management andCreate a Flexible and Open Corporate Culture
We have established in-house committees—such as the Management Ethics Committee,
chaired by the President and CEO—to address issues that are important from amanagement perspective, such as compliance, safety, customer satisfaction, and risk
management. This structure facilitates the sharing of information within the group, as
well as deliberations and adjustments regarding the group’s overall direction.

Investment Evaluation Committee
Of the matters to be discussed at the Corporate Executive Committee, the Investment
Evaluation Committee chaired by the Executive Officer in charge of financial affairs
evaluates matters that require the evaluation of the significance, economy and risks
related to investment and post-investment follow-up and reports to the Corporate
Executive Committee.

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

44

Officer Remuneration
In 2005, as part of its actions to strengthen corporate
governance, the company formulated the basic policy on
officer remuneration. At the meeting of the Board of
Directors in February 2012, the policy was revised as follows.
1 Role of Officers and Remuneration
The role demanded of officers is to seek to enhance short-,
medium-, and long-term corporate value, and officer
remuneration shall serve as an effective incentive for them toperform that role.
2 Level of Remuneration
The level of officer remuneration shall be suitable for therole, responsibility, and performance of the officer.
3 Composition and Other Details ofRemuneration Paid to Directors(1) Remuneration of directors shall be paid within the scopeof the remuneration limit approved at the General
Shareholders’ Meeting.

(2) Remuneration of inside directors shall comprise monthly
remuneration and bonus. Monthly remuneration shallcomprise fixed remuneration paid in accordance with thepost of each individual and performance-linked
remuneration. A portion of fixed remuneration shall beallocated to the purchase of shares based on a sharepurchase guideline and from the standpoints of reflecting
the perspectives of shareholders on management andimproving shareholder value over the long term. The
amount of performance-linked remuneration shall be
determined after evaluating companywide performanceand performance of operating units from the standpointsof motivating inside directors to execute management
strategies and reflecting their performance clearly in theirremuneration. The amount of bonus to be paid shall be
determined in accordance with the post of each insidedirector after performance evaluation.
(3) Remuneration of outside directors shall comprise monthly
remuneration and bonus. Monthly remuneration shallcomprise only fixed remuneration, while bonus shall be
the same as that of inside directors.

4 Composition and Other Details ofRemuneration Paid to Audit & Supervisory
Board Members(1) Remuneration of Audit & Supervisory Board members
shall be paid within the scope of the remuneration limit
approved at the General Shareholders’ Meeting anddetermined through discussions among Audit &Supervisory Board members.
(2) Remuneration of Audit & Supervisory Board members
shall comprise only fixed monthly remuneration.
5 Assurance of Objectivity and Transparency of
the Remuneration System
The company shall assure the objectivity andtransparency of the system of officer remuneration by
establishing and operating the Advisory Committee
comprising a number of outside directors, outside Audit &Supervisory Board members, and inside directors togovern the system of personnel affairs and remunerationof officers.

Composition of Remuneration for Directors

Fixed
remuneration

Total Remuneration for Directors and Audit & Supervisory Board Members (FY2019)

Performance-linked
remuneration (part of themonthly remuneration and bonuses)

Classification of officers

Total value of
remuneration(¥ million)

Total value of remuneration by type (¥ million)
Fixed remuneration

Performance-linked remuneration

Number of eligible
officers(Monthly remuneration)

Monthly remuneration

Bonuses

331

240

55

34

5

excluding outside
Audit & Supervisory
Board members

74

74

-

-

3

Outside Director

41

35

-

6

6

Outside Audit &Supervisory Board
Members

34

34

-

-

3

* Monthly remuneration of outside directors are fixed remuneration only.

(

Directors
excluding outside
directors)

Audit & Supervisory
Board members()* The number of officers includes two outside directors and one Audit & Supervisory Board member who retired upon the conclusion of the 219th Annual General Meeting of Shareholders.
* It was resolved that the amount of monthly remuneration of all Directors (including Outside Directors) should be under ¥50 million at the 205th Annual General Meeting of Shareholders and that theamount of annual bonus for all Directors should be under ¥90 million at the 206th Annual General Meeting of Shareholders.
* It was resolved that the amount of monthly remuneration of all Audit & Supervisory Board members (including outside members of the Audit & Supervisory Board) should be under ¥12 million at the190th Annual General Meeting of Shareholders.

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

45

Advisory Committee

Internal Control System

Compliance

In February 2005, we established the Advisory Committee
to assure objectiveness and transparency in management.
The committee has up to five members, consisting of the
Chairman, the President and CEO, and up to three directors
selected by the Board of Directors; with over half of its
membership consisting of outside officers, and thecommittee chairman also being an outside officer.

To secure management soundness and transparency, and torealize its management philosophy, the company has
formulated the “Basic Policy on Development of Corporate
Structures and Systems for Internal Control System,” and isapplying this policy in an appropriate manner.
Specifically, the company has established systems toensure that directors and their assistants perform theirduties in a manner that is compliant to relevant laws andregulations, the articles of incorporation, and other rules. In
addition, crisis management provisions have beenformulated to limit losses from risks related to investments
and natural disasters. The company also defines guidelines
for ensuring the independence of Audit & Supervisory Board
members and guaranteeing the effectiveness of the Audit &Supervisory Board.

Compliance Structure
The company has established the Management Ethics
Committee chaired by the President and CEO. It discusses at theexecutive level overall actions for maintaining and improving
compliance awareness, monitors the implementation ofcompliance-related measures, and checks activity programsfrom the year following its establishment. If necessary, it issues
instructions to correct insufficiencies. In response to this,individual divisions and subsidiaries set up compliancecommittees to carry out inspections and improvements suiting
their own operations. The Tokyo Gas Group maintains the Codeof Conduct as the standard for behavior when carrying out
duties. We are making continued efforts to ensure the Code of
Conduct is known and observed by employees throughworkplace discussions including the participation of all
employees at their workplaces and through rank-specifictraining sessions on the occasions of entry and promotion.

Advisory Committee Membership (as of June 26, 2020)

Committee chairman

Committee members
Takami Kazunori(Outside Director)

Nohara Sawako

Saito Hitoshi(Outside Director)(Outside Audit & Supervisory Board
Member)Hirose Michiaki(Director, Chairman of the Board)

Uchida Takashi(Representative Director, President)

In accordance with inquiries from the Board of
Directors, the Advisory Committee deliberates on officer
candidates and officer remuneration in a fair andappropriate manner and makes reports to the Board of
Directors. The committee also deliberates on the
independence of outside officer candidates.

Independent Auditors
The company has concluded an auditing contract with
KPMG AZSA LLC for auditing services based on the
Companies Act and auditing services based on the Financial
Instruments and Exchange Act, as well as internal control
audits based on the Financial Instruments and ExchangeAct, and the company is being audited on that basis. The
company’s audits are handled by three certified public
accountants: Shishido Michitaka, Tamura Toshiyuki and
Uehara Yoshihiro. For these auditors, the number ofconsecutive years of auditing service is 1 year, 3 years and 5
years, respectively (as of June 26, 2020).
Compensation for Independent Auditors (FY2019)
Compensation for auditing services

262 Million yen

Compensation for non-auditing services

15 Million yen

Total

277 Million yen

Compliance Risk Management
Through the formulation and implementation of escalation rulesthat encourage any employee finding anything unusual to notify
their manager without hesitation and through the effective
operation of internal and external advisory systems, we areendeavoring to ensure that compliance-related problems are
discovered and resolved quickly so that our corporate selfregulatory processes will continue to function effectively. We
monitor the effectiveness of Group compliance promotion
activities by conducting regular compliance awareness surveys ofall employees. The results of these surveys are reflected ininitiatives for the following years. Moreover, the Internal Audit
Department conducts internal audits of the Company and its
subsidiaries, focusing on the probability that risks will materialize
and their degree of importance from the viewpoint of strict
compliance with laws and regulations, corporate ethics and social
norms. The status of improvement concerning any
recommendations made as a result of the internal audits ischecked in a follow-up audit in the following year to ensure
steady improvement in risk management.

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

46

Risk Management System
Enterprise Risk Management System
The company has established an enterprise risk management (ERM) system, and drawn up
risk management regulations that include documented rules concerning major risks facedby the group.
The Risk Management Committee was established with the aim of improving themanagement level of the ERM system. The Committee checks progress regarding theestablishment and operational status of the ERM system, including periodic risk
assessments. It also reports to the Corporate Executive Committee and obtains thenecessary approvals.
Under the framework, around 150 Risk Management Promotion Officers are deployedin the business departments of Tokyo Gas and its subsidiaries in order to promote ERM.
Each year, we assess risks and the implementation and improvement status ofcountermeasures. This system facilitates the steady implementation of the ERM-PDCA(Plan-Do-Check-Act) cycle.

Crisis Management System
Because the company provides public services that comprise a lifeline, for many years it
has also had a crisis management system that serves as a response system in case an
accident or other risk-related event actually occurs. Specifically, we have formulated
Emergency Response Organization Regulations. In case of major crises, including major
natural disasters, such as earthquakes, or production or supply disruptions arising frommajor accidents at pipelines or LNG terminals, as well as epidemics of highly pathogenic
or infectious diseases, terrorism, failures in mission-critical IT systems, and complianceproblems, the Emergency Response Organization is established to respond to the situation
immediately in accordance with the Emergency Response Organization Regulations.
Periodic training is conducted in relation to major risk response measures. Moreover, thecompany has also formulated a business continuity plan (BCP) outlining its responses inthe event of a major earthquake of the magnitude assumed by Japan’s Cabinet Office, amajor accident disrupting gas supply, a widespread blackout, an epidemic of highly
pathogenic or infectious diseases, etc. This plan is in place to reinforce the company’s risk
management system.

Enterprise Risk Management (ERM) System

Emergency Response Organization*

Securities Markets and Other Stakeholders
Disclosure of risk information through Securities Report, Financial results andSustainability Report

President and CEO (Organization Leader)

Reflection of results of risk assessment

Corporate Executive Committee
Confirmation of major risks, etc.
Reporting and proposal of plans for assessmentof major risks and other necessary matters

Clear statement of risk
management policies

Collaboration
Instructions /ordersReportRisk Management Committee (Executive Office: Corporate Planning Dept.)
Identifying and confirming Group risk management
Report regarding results of risk assessment, status of
implementation of countermeasures, status of
improvement, etc.

Corporate
Planning Dept.
(Group-wide coordination)

Improvement proposals
Convey statement of risk
management policies

Business Departments / Subsidiaries(1) Identifying and evaluating risks, formulating and implementing risk countermeasures(2) Improvement of risk assessment, countermeasures

Business Departments* A department in charge of an executive office is predetermined depending on the type of emergency.

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

Board of Directors (As of July 1, 2020)

April 1974
June 2009

April 2014

Joined the Company
Director, Managing Executive Officer and in charge ofCorporate Planning Dept., Corporate Communications Dept.
and Affiliated Companies Dept.
Representative Director, Executive Vice President and Chief
Executive of Living Energy Div.
Representative Director, President

April 2018

Director and Chairman of the Board

April 2012

April 1979
June 2015
April 2016
April 2018

Reason for appointment In his career, Uchida Takashi has engaged
mainly in planning, resources and overseas business-related work duties.
Since April 2018, he has served as President and CEO, with ultimate
responsibility for the execution of duties within the company. He is highly
knowledgeable, and has extensive work experience with the company.

Reason for appointment

Director, Chairman of the Board

Hirose MichiakiOver the course of his career, Hirose Michiaki
has engaged mainly in planning-related work duties. For four years,
from April 2014 until March 2018, he served as President. Since April
2018, as Director and Chairman, he has served as chairman of the Boardof Directors. He is highly knowledgeable, and has extensive work
experience with the company.

Representative Director,
President and CEO

Uchida Takashi
April 1980
June 2016
April 2018

Joined the Company
Director, Managing Executive Officer and in charge of
Personnel Dept., Secretary Dept., General Administration
Dept., Compliance Dept., and Internal Audit Dept.
Representative Director, Executive Vice President and Chief
Executive of Residential Sales and Service Div.

April 1984
June 2017
April 2018
April 2020

Reason for appointment During his career, Takamatsu Masaru has
engaged mainly in sales to household consumers and planning-related
work duties. He currently serves as Executive Vice President. He is highly
knowledgeable, and has extensive work experience with the company.

Representative Director

Representative Director

Takamatsu Masaru

Nohata Kunio
April 1986
June 2020

Joined the Company
Director, Senior Managing Executive Officer and Chief
Executive of Asset Optimization & Trading Div.

Reason for appointment Sasayama Shinichi has engaged mainly induties related to planning. He currently serves as Senior Managing
Executive Officer in charge of LNG and electric power trading throughoptimal asset management and development of renewable energy andother power sources. He is highly knowledgeable, and has extensive
work experience with the company.

Director

Sasayama Shinichi

Joined the Company
Director, Managing Executive Officer and Chief Executive ofEnergy Resources Business Div.
Representative Director, Executive Vice President and Chief
Executive of Residential Sales and Service Div.
Representative Director, President and CEO

Joined the Company
Director, Managing Executive Officer of the Company, Chief
Executive of Power Business Div., in charge of Environmental
Affairs Dept.
Director, Senior Managing Executive Officer, Chief Executiveof Global Business Div.
Representative Director, Executive Vice President and Chief
Executive of Energy Solution Div., in charge of Sustainability Dept.

Reason for appointment Over the course of his career, Nohata Kunio
has engaged mainly in energy sales, resources and overseas businessrelated work duties. He currently serves as Executive Vice President incharge of sales to commercial and industrial consumers. He is highly
knowledgeable, and has extensive work experience with the company.

47

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

April 1976
June 2011

June 2017
June 2019

Joined Mitsui Fudosan Co., Ltd.
Executive Managing Director and Executive Managing Officerof Mitsui Fudosan Co., Ltd.
Managing Director and Senior Executive Managing Officer of
Mitsui Fudosan Co., Ltd.
Managing Director, Senior Executive Managing Officer and Chief
Executive of International Div. of Mitsui Fudosan Co., Ltd.
Advisor of Mitsui Fudosan Co., Ltd.
Director of the Company

June 2020

Retired from Advisor of Mitsui Fudosan Co., Ltd.

April 2013
April 2015

April 1978
June 2009
April 2012
April 2015
June 2017
March 2018
June 2019

Reason for appointment Mr. Saito Hitoshi is expected to use hisinternational perspective acquired from overseas businesses in the realestate industry, as well as his management capabilities, broad outlook
and in-depth knowledge gained through a wide range of businessdevelopment for the Company’s management.

Director

OutsideSaito Hitoshi

June 2019
October 2019

Director

OutsideTakami Kazunori

Reason for appointment Ms. Indo Mami is expected to use her in-depth
experience as analyst and consultant and in other areas related tocorporate management in the financial sector as well as her extensive
perspectives and advanced knowledge for the Company’s management.

Significant joint responsibilities
OutsideEdahiro Junko

Significant joint responsibilities

Outside Director of Tokyo FM Broadcasting Co., Ltd.
Outside Director of Nojima Corporation
Outside Director of FUJITA KANKO INC.
April 1985
Joined Daiwa Securities Co. Ltd.
April 2016
Senior Managing Director of Daiwa Institute of Research Ltd.
December 2016 Retired from Senior Managing Director of Daiwa Institute of
Research Ltd.
December 2016 Commissioner of Securities and Exchange Surveillance Commission
December 2019 Retired from Commissioner of Securities and Exchange SurveillanceCommission
June 2020
Director of the Company

Representative Director of Edahiroba Inc. (Current e’s Inc.)
Director and Chairperson of Change Agent Inc.
Professor of Shizenkan University Graduate School of
Leadership & Innovation
Director of the Company
Representative Director of Shimokawa Seeds K.K.

Reason for appointment Ms. Edahiro Junko is expected to use her
experience as a corporate manager, advanced specialization related tothe environment and in-depth knowledge as an environmental
journalist for the Company’s management.

Director

Joined Matsushita Electric Industrial Co., Ltd. (Current
Panasonic Corporation)
Managing Director of Panasonic Corporation
Representative Director, Senior Managing Executive officer andPresident of Appliances Company of Panasonic Corporation
Representative Director, Executive Vice President and in
charge of Japan region, Customer Satisfaction, and Design ofPanasonic Corporation
Corporate Advisor of Panasonic Corporation
Retired from Corporate Advisor of Panasonic Corporation
Director of the Company

Reason for appointment Mr. Takami Kazunori is expected to use his
management capabilities, broad outlook and in-depth knowledge
acquired through a wide range of business development in the electricalindustry for the Company’s management.

Significant joint responsibilities Outside Director of GLOBESHIP Corporation

April 2003
May 2006
August 201848

Representative Director of e’s Inc.
Director and Chairperson of Change Agent Inc.
Professor of Shizenkan University Graduate School of Leadership &Innovation
Representative Director of Shimokawa Seeds K.K.

Director

OutsideIndo Mami

Significant joint responsibilities

Audit & Supervisory Board Member (External) of Ajinomoto Co., Inc.
External Audit & Supervisory Board Member of AIG Japan Holdings KK

Executive Officers
Komiyama Tadashi Chief Executive of Regional Development Div.

President and CEO Uchida Takashi
Executive Vice
Presidents

SeniorManaging
Executive
Officers

Takamatsu Masaru Chief Executive of Residential Sales and Service Div.
Nohata Kunio

Chief Executive of Energy Solution Div. and in charge of Sustainability Dept.

Sawada Satoru

The Japan Gas Association

Hayakawa Koki

CFO in charge of Financial Management Dept., Accounting Dept.,
Purchasing Dept. and Internal Audit Dept.

Kishino Hiroshi

In charge of Corporate Planning Dept., General Administration Dept. andBusiness Transformation Project Dept.

Sasayama Shinichi Chief Executive of Asset Optimization & Trading Div.

Managing
Executive
Officers

Kimoto Kentaro

Chief Executive of Gas & Power Div. and Digital Innovation Div.

Shigitani Ayumi

General Manager of CIRIUS Project Dept., Digital Innovation Div. and President, Representative Director ofTOKYO GAS i NET CORP.

Higo Takashi

President, Representative Director of Tokyo Gas Engineering Solutions Corporation

Hosoya Isao

Chief Executive of Pipeline Network Company

Tanazawa Satoshi Chief Executive of Global Business Div.
Ogawa Shinsuke
Executive
Officers

In charge of Personnel Dept., Secretary Dept., Corporate Communications Dept. and Compliance Dept.

Nitta Yohei, Yoshioka Tomoyuki, Kikuyama Yoshiharu, Hanada Hiroshi, Saito Akihiro, Kado Masayuki, Konishi Yasuhiro, Sato Hirofumi,Endo Yo, Sugesawa Nobuhiro, Tsuji Eito, Kurimoto Kazuya, Imai Tomoo, Konishi Masako, Takeuchi Atsunori, Okumura Eigo

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

Audit & Supervisory Board Members (As of July 1, 2020)

April 1979
April 2013
April 2015
March 2017
June 2017

Joined the Company
Senior Executive Officer, Chief Executive of Pipeline Network Div.
Senior Executive Officer, Chief Executive of Regional
Development Marketing Div.
Retired as Senior Executive Officer
Audit & Supervisory Board Member of the Company

April 1982
April 2015
April 2018
March 2019
June 2019

Reason for appointment

Arai Hideaki is highly knowledgeable, and has
extensive work experience with the Company. He has engaged mainly inpipeline and wide-area sales-related work duties, and has also served asa Senior Executive Officer.
Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Arai Hideaki

Nakajima Isao
April 1981
April 2007
April 2016
June 2017

Joined Mitsubishi Corporation
Joined City of Yokohama
Director General of City Growth Strategy Promotion
Department, Economic Affairs Bureau, City of Yokohama
Consultant of Future City Promotion, Climate Change Policy
Headquarters, City of Yokohama
Audit & Supervisory Board Member of the Company
Retired from Yokohama City as a consultant

Reason for appointment Ms. Nohara Sawako is highly knowledgeable,and possesses corporate management experience and high-level
IT-related expertise. We hope that she will make use of these qualities
in her role as an Audit & Supervisory Board member for Tokyo Gas.
Significant joint responsibilities

Audit & Supervisory
Board Member Outside

Audit & Supervisory Board
Member Outside

Nobutoki Masato

Nohara Sawako

April 2013
June 2017
June 2017
June 2020

Joined Ajinomoto Co., Inc.
Member of the Board & Corporate Vice President in charge ofFinance and Purchasing
Member of the Investment Committee of Government Pension
Investment Fund
Retired from Member of the Board of Ajinomoto Co., Inc.
Retired from Member of the Investment Committee ofGovernment Pension Investment Fund
Audit & Supervisory Board Member of the Company

Reason for appointment Mr. Ono Hiromichi possesses a high level ofexperience in business administration and knowledge in finance andaccounting. We hope that he will make use of these qualities in his roleas an Audit & Supervisory Board member for Tokyo Gas.

Audit & Supervisory Board
Member Outside

Ono Hiromichi

Significant joint responsibilities

Outside Director of Mebuki Financial Group, Inc.

Reason for appointment Nakajima Isao is highly knowledgeable infinancial affairs and accounting, and has extensive work experience with
the Company. He has carried out financial and accounting operations
and has served as Senior Managing Executive Officer.

December 1988 Joined Life Science Institute Co., Ltd.
July 1995
Joined InfoCom Research, Inc.
December 2001 President and Representative Director of IPSe Marketing. Inc.
June 2018
Audit & Supervisory Board Member of the Company
April 2020
Project Professor, Graduate School of Media and Governance,
Keio University

Reason for appointment Mr. Nobutoki Masato is highly
knowledgeable and has extensive experience, both as a company
employee and as a member of staff at regional public bodies. We hopethat he will make use of these qualities in his role as an Audit &Supervisory Board member for Tokyo Gas.

April 1979
June 2011

Joined the Company
Senior Executive Officer, CFO and in charge of Finance Dept.,
Accounting Dept., Purchasing Dept. and Real EstateManagement Dept.
Senior Managing Executive Officer, CFO and in charge ofFinance Dept., Accounting Dept., Personnel Dept. andPurchasing Dept.
Retired as Senior Managing Executive Officer
Audit & Supervisory Board Member of the Company

President and Representative Director of IPSe Marketing. Inc.
Outside Director of Sompo Holdings, Inc.
Outside Director of DAIICHI SANKYO COMPANY, LIMITED49

Corporate governance

Messages from Outside Directors
Our Outside Directors that were involved in the formulation of
the Management Vision Compass 2030 (hereinafter “theVision”) talk about their discussions at the Board of Directors
meeting and their expectations of Tokyo Gas and its Group.

TOKYO GAS INTEGRATED REPORT 2020

50

I pushed for a plain message
Fifty years after Tokyo Gas began
importing LNG, we are now at a turning
point in energy. In addition to theworldwide trend towards
decarbonization, the deregulation of themarket is proceeding in Japan. The Tokyo
Gas Group needs to adapt to two strong
tides. Picturing the future 10 years fromnow and beyond was a challenging
process when drawing up the latest
long-term vision.
For the Vision, we, the Outside
Directors, took part not only in theformulation of strategy but also in otheraspects ranging from the framework to
how it was communicated. It was totallynew to me. The approach impressed on
me a strong desire to incorporate theopinions of people outside the company
into the Vision. I think it was verysignificant that executives exchanged
different opinions based on their own
backgrounds even though it was a little
time-consuming.
However, this resulted in a message
that was too large to be clearly
understandable. After that, I persistently
requested that the message should be
simple and short. I think that the final
form of the message, or the Vision, is
plain and sharp.
Director Outside

Saito Hitoshi

It includes the target of increasing the
profits of the overseas business to triple
their current level in 2030. In light of mypast experience in overseas business, I
think it is necessary that individual
employees build up their skills to keep up
with the high speed of overseas business.
Unlike in Japan, Tokyo Gas does nothave a solid platform or brand poweroverseas. Personal negotiating skills anddecision-making capabilities count there.
I hope that they will work towards
achieving the Vision with a businessmind full of a sense of ownership and acan-do spirit.

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

It may take time to carry out thetransformation, but it is important toaddress it with a focus on swiftness
We, the Outside Directors, were deeply
involved in the process of formulating the
Vision. We were often asked to give
opinions and the members actively
exchanged opinions based on their richexpertise in their areas of specialization.
The decision to address the challengeof achieving Net-Zero CO2 was based on
the company’s pride and its sense of its
mission to lead energy systems as Japan’s
first importer of natural gas.
Another highlight of the Vision is thereference to the transformation of the
LNG value chain. The action of expanding
business across the diverse functions of
the value chain and the creation ofdifferent kinds of value meanstransforming the conventional businessstructure. It may take time to carry out
the transformation. I said that it would
be important to address it with a focus
on swiftness.
I added that it would also benecessary to change employees’ mindset.
In a wait-and-see attitude, working is themere performance of a task. Essentially,“business” means thinking from a higher
perspective to take action. It is creativeand exciting. It is very challenging tomotivate individuals to act on thetransformation. However, it is fulfillingfor employees.
The key to success is humans. Achange of the business structure may
make some employees anxious about
their future. Diversification of the staff
will accelerate. In consideration of this,the Vision has engagement with current
and future colleagues as its final part.
I suppose that few corporate visions
carry messages to their employees. Fromthe perspective of my experience, I believethat employee satisfaction is a verysignificant element of business management
and highly appreciate the management’s
stance of valuing employees.

The Vision must define goals thatshould be attained, not just thethings that can be attained
When working out the Vision, the mostimportant thing was the time
perspective. Natural gas is moreenvironmentally friendly than oil or coal,
as it emits less CO 2. In addition, it iscompatible with renewable energy.
Towards 2030, its role will expand. On
the other hand, since it is a fossil fuel,its consumption should be reduced in
the long run to realize a decarbonizedsociety.
I do not think that the Tokyo Gas
Group’s role of supporting energy insociety will change. However, I
anticipate that what we sell and how wesell will change. I therefore said that weneed to distinguish between two
different time perspectives, namely theshort term and the long term, and todeliver messages to society from these
two separate perspectives.
In the process of drawing up avision, we discussed with an eye on the
future decarbonized society and made a
proposal of leading the world in nextgeneration energy systems. The Visionmust define goals that should be
attained, not just the things that can beattained. This goal will first inspire
employees, and then inspire society. It
can be achieved when all of us work

Director Outside

Director Outside

Takami Kazunori

Edahiro Junko

together. Businesses can only exist
within the scope in which they areneeded in society. I am convinced that
the Tokyo Gas Group has a strong will
and is capable of changing in responseto the future demands of society.
Specific actions towards Net-Zero CO 2
are already underway.
Tokyo Gas has a well-establishedsystem for preparing and providing
materials to ensure effective
deliberations at the Board of Directors
meetings. I feel that its members with
their respective expertise, including
myself, can freely deliberate as a teamwithout being urged to make hasty
decisions.

51

Corporate governanceTOKYO GAS INTEGRATED REPORT 2020

52

Messages from New Outside Officers
Utilizing my experiencein the capital market andunderstanding manydifferent points of view, I
will present my opinions
Director Outside

I will fulfill my role with afocus on the macro
perspective and foresight
Audit & Supervisory Board Member Outside

Ono Hiromichi

Indo Mami

To date, I have engaged in financial
analysis, investment banking andconsulting services. This gave me
opportunities to meet many different
business managers in various sectors andallowed me to broaden my views on
management. In different councils andcommittees of the Ministry of Economy,
Trade and Industry, I gained in-depth
knowledge on energy businesses andcommented from the perspective of thecapital market.
The energy industry is experiencing
drastic changes like no other in the past,
including intensifying competition
following deregulation and thedesignation of climate change as a key
management issue. I feel that the Tokyo
Gas Group is actively working to change
itself in this situation. I think that, tosustainably increase corporate value, it isimportant that every employee
understands the mission and thinks

themselves about how to take action.
In Compass 2030, the Tokyo Gas
Group committed to offer new value toall stakeholders, instead of merely
advancing its business. I hope that theGroup will try to develop its customers’
recognition of this new value, and notjust expand its business on the basis of
its own values or assets alone. For this, it
is vital to introduce value and assets
owned by diverse stakeholders and toinnovate in collaboration with them.
Understanding the perspectives ofdifferent stakeholders is significant inbusiness management. I believe that myrole is to advise in a way that will help
increase corporate value from manydifferent standpoints, including those of
the investors.

I have long worked in the field of financeand accounting for a food company.
When I worked in Thailand, I experienced
the Asian currency crisis. After returning toJapan, I took action to comply with theinternational accounting standards and theinternal control reporting system and copedwith the 2008 global financial crisis and manyother difficulties.
As a corporate officer in charge offinancial affairs, I took part in theadministration of business and spoke withinvestors. I also served as a member of theInvestment Committee of the Government
Pension Investment Fund (GPIF). I have been
involved in the capital market in several ways.
I feel honored to be able to serve Tokyo
Gas as an outside member of the Audit &Supervisory Board. Tokyo Gas is a company
not only serving the public interest but also
addressing the need for harmony with theenvironment, the competition following
deregulation and the further global

expansion of business.
The energy business invests hugeamounts of money. Its balance sheet
portfolio differs from food companies. In
addition, it has a different competitiveenvironment for reasons of the public
utilities service. Responsible for social
infrastructure, Tokyo Gas has the missions ofworking for stable energy prices, the stablesupply of energy and of making a profit as alisted company.
That being said, I strongly feel required
to view the business environment, businessstructure and other aspects of the businessfrom two perspectives, the public interest
and efficiency. I will use my past experience
to work towards achieving things in the
public interest and efficiency. With a focus
on the macro perspective and foresight aswell as on legal compliance in corporate
management, I will fulfill my role as an
Outside Audit & Supervisory Board Member.

Business overview: Gas business

TOKYO GAS INTEGRATED REPORT 2020

GAS BUSINESS
OutlineWe have been operating the city gas business in the Greater
Tokyo Area while the applications of city gas expanded tohousehold, commercial and industrial consumption as well asuse for power generation and other purposes. We will strive
to enlarge our sales areas by promoting electricity andservices. We will redefine LNG, which is a raw material forcity gas, as a commodity and increase the flexibility and pricecompetitiveness of the procurement portfolio to expand the
LNG business, including asset-backed trading.
Number of retailcustomers(active)

City gas sales volume

9.129 million 13.85 billion m
As of the endof March 2020

Segment profit

3

FY2019Equivalent to approximately 37%
of total nationwide gas sales
volume in Japan¥102.4 billion
FY2019Net sales and segment profit(¥ billion)

Net sales (LH)

2,000

Segment profit (RH)(¥ billion)

200

1,500

150

1,000

100

500

50

0

0
2016.32017.32018.32019.32020.3

City gas sales volume and number of active retail consumers(billion m )3

20

Sales volume (LH)

Number of retail customers (RH)

(million)

20

City Gas and LNG sales

Japan relies heavily on LNG imports for procuring natural gas, and LNG import prices are generally determinedby a mechanism linked to crude oil prices. With the aim of achieving stable and affordable LNG procurement
under these conditions, the Tokyo Gas Group strives to achieve three types of diversification: diversification of
supply sources, contact terms and conditions, and its LNG network.
Diversification 1

Diversification 2

Diversification 3

Supply sources

Contract terms and conditions

LNG Network

In 2018, we started to procure LNG
from the US, while continuing toacquire supplies from existing sources,
including Southeast Asia, Australia
and Sakhalin (Russia). In 2020, theportfolio agreement with Shell Eastern
Trading, under which multiple supply
sources supply us with LNG, came into
effect, increasing our supply sources
to 16 projects in six countries. In the
future, we will work to diversify our
procurement sources, including a
Mozambique LNG project from which
we will jointly purchase LNG with
Centrica, and the LNG Canada Projectin an effort to improve supply stability.

We will add contracts based on the
U.S. natural gas prices and coalprices to conventional contracts
based on crude oil prices to diversify
price indices. In addition, we will
diversify agreements by signing
those without limits on destinations
and those with an eye towardmedium-term, short-term and spot
procurement to make our
procurement more flexible.

We will form strategic alliances withdifferent companies in Japan andabroad to construct an LNG networkthat links the Asian, North Americanand European markets to increase
the transport efficiency of LNG and
to step up efforts to reduce costs
and increase flexibility inprocurement and sales agreements.

15

15

10

10

Number of LNG
procurement projects

5

2009

5
0

0
2016.32017.32018.32019.32020.3

Strengths Customer base of over 11 million customers and a relationship of trustwith customers through close ties with local communities
Established history of providing a safe and reliable supply of gas amongst
our customers
The Kanto region centered around Tokyo, with its high concentration of
production and consumption, as our primary sales area
Safety-related know-how and energy solution capabilities
Risks Difficulties in LNG procurement due to the impact of geopolitical risks,etc., regarding imports
Potential supply issues due to damage to production and supply facilities
caused by a large-scale disasterIntensified competition driven by market deregulation; decline in demandcaused by changing lifestyle53

10
projects

Past

Mainly trade between
Japan and its exportmarket countries

Network connecting
Asian, North Americanand European markets

Past

FutureFutureLinked to crude oil Diversification ofprice indicespricesLong-term contract Diversification ofcontract periods
periods
Destination free
Restrictions on
clausesshipping destinations

Competitive
procurementof LNGTokyo Gas’ long-term contracts (as of April 2020)
2020

16

projects

Sakhalin

LNG Canada
Cove PointTokyo
Cameron

Qatar

BruneiExisting LNG Project
New LNG Project

Malaysia
Mozambique

Pluto(Sales and purchase agreement signed)

GorgonNWS

DarwinIchthys

QC

New LNG Project(Heads of agreement signed)

Business overview: Electric power business

54

TOKYO GAS INTEGRATED REPORT 2020

ELECTRIC POWER BUSINESS
OutlineSince the Tokyo Gas Group began to generate and supply
electricity, it has engaged in a comprehensive range ofbusiness activities that extend from fuel procurement topower generation and sales. As a new power supplier, we
own one of the largest power plants in the Greater Tokyo
Area. In addition to our actions in electricity wholesaling andsales to large-volume consumers, we have been making
efforts to capture retail customers since the electric power
retail market was fully deregulated in 2016. In the future, wewill make further use of online sales and other new sales
approaches in a bid to expand electric power sales.
Number of Retail Electricity Sales
Customers
VolumeMoka Power Station
Kiyohara Industrial ParkFY2019Ibaraki Line
(Scheduled for FY2020)

Segment profit

FY2019(¥ billion)

Segment profit (RH)

30

200

20

100

10

0

0
2017.32018.32019.3

Kashima Waterfront Line

40

300

2016.3Chiba-Kashima Line
Ohgishima LNG Terminal

Sodegaura LNG Terminal

Negishi LNG Terminal

2020.3(billion kWh)(million)

Sales volume (LH)

Strengths

Risks

Number of retail customers (RH)

3

22.5

2.25

15.0

1.5

7.5

0.75

0

0
2016.32017.32018.3All the power generated
will be purchased by the
Tokyo Gas Group.

)

Ohgishima Power Co., Ltd.

Kawasaki Natural Gas
Power Generation Co., Ltd.

Generation
capacity

Generation
capacity

Owned power

2019.32020.3Owning a high-efficiency power plant that is one of the largest
among new power suppliers in the Greater Tokyo Area
A community-based sales network composed of Lifeval, Enesta andother outlets and a customer base of more than 11 million customers.
Decline in price competitiveness of natural gas thermal
power generation, associated with changes in prices ofraw materials and fuels
Potential damage to power generation facilities
and supply issues of raw materials and fuels,
stemming from a large-scale disaster

Achievements over the past four years
since the full deregulation of the electric
power retail market
In the electric power retail business, we offer the“Zuttomo Plan”. It is a one-stop service providing gas,
electricity and services. We supplied electric power to
2.4 million customers as of April 2020, holding thelargest market share for the fourth consecutive year in
the low voltage category among new power suppliers.
In March 2020, our lineup of services grew to include a
new option from a new company, Hinatao Energy. We
will continue our efforts to increase the number ofcustomers of our integrated gas-electricity services.

Owned power

1.22 million kW 0.92 million kW

0.84 million kW 0.42 million kW

Start of operations 2010
Tokyo Gas interest 75%

Start of operations 2008
Tokyo Gas interest 49%

Tokyo Gas BaypowerCo., Ltd.

Tokyo Gas Yokosuka
Power Co., Ltd.

Generation
capacity

Owned power

0.42 million×2 units

Generation
capacity

Owned power

0.10 million kW 0.10 million kW

0.24 million kW 0.18 million kW

Start of operations 2003
Tokyo Gas interest 100%

Start of operations 2006
Tokyo Gas interest 75%

0.1 million×1 unit

Electricity sales volume / Number of retail customers
30.0(

0.407 million×3 units(¥ billion)

Net sales (LH)

Owned power

1.25 million kW 1.25 million kW
Start of operations 2019
Tokyo Gas interest 0%

Net sales and segment profit
400

Generation
capacity
0.624 million×2 units

2.4 million 20.6 billion kWh ¥10.1 billion
April 2020

Hitachi LNG
Terminal

0.24 million×1 unit

Progress in the development of renewable energy
power sources (as of May 2020)
Power generation
capacity ofinterests (million kW)

Number of
power plants

Photovoltaic

0.086

16

Wind power

0.017

4

Biomass

0.027

3

Subtotal

0.130

23

Photovoltaic

0.373

4

Overseas Wind power

0.076

2

0.45

6

0.58

29

Domestic

Subtotal
Total

Business overview: Overseas business

TOKYO GAS INTEGRATED REPORT 2020

55

OVERSEAS BUSINESS
Outline

The Tokyo Gas Group has taken part in LNG- and natural
gas-related projects in Australia, North America andSoutheast Asia. In the future, we will engage in the
renewable energy, gas and electric power supply and LNG
infrastructure businesses as well as the resource
development business to expand our overseas business witha view towards realizing the targets set in Compass 2030.
Net Sales

North America

Upstream Business

Midstream and Downstream Business

Upstream Business
Midstream- and Downstream BusinessBusiness Location
Birdsboro

Monitoring commodity pricetrends and carefully estimating the
productivity and reserves of gas
fields, we are proceeding to form
appropriate alliances withexperienced operators and invest
in prime assets. At present, we aretaking part in three natural gas
development projects in the
United States.

In the natural gas fired power
generation business, we carefully
select the projects in which weparticipate. Currently, we are part of
one gas power generation project on
the East Coast of the United States. In
addition, we will be working on arenewable energy business in Mexico
together with France-based Engie.

East Texas

Segment profit

Barnett

43.9 billion ¥13.2 billion

Eagle Ford¥

FY2019

Cove Point LNG

AcarioBajio

FY2019Heolios EnTG S.A.P.I. de C.V.

Net sales and segment profit(¥ billion)

Net sales (LH)

60

Segment profit (RH)(¥ billion)

20

45

15

30

10

15

5

0

0
2016.32017.32018.32019.32020.3

Crude oil price and foreign exchange rate($/bbl)

120

(¥/$)

Crude Oil Price (LH)

Foreign Exchange Rate (RH)

150

60

100

30

50

Southeast Asia

Midstream and Downstream Business

Downstream BusinessBusiness Location
Bang BoOne Bangkok Co., Ltd.

Gulf WHA MT Natural
Gas Distribution Co., Ltd.

Gas Malaysia Bhd.
Gas Malaysia Energy
Advance Sdn. Bhd.

Petro Vietnam Low Pressure
Gas Distribution

Tokyo Gas Asia Pte. Ltd.
(Singapore)(and six other bases)

In a bid to contribute to the development of natural gas infrastructure,
we offer a broad array of value, ranging from engineering to expertise on
operations and energy conservation services. Specifically, we take part inthe construction of LNG terminals, power plants and other energy
infrastructure and facilities and provide support for demand cultivation,
LNG terminal operations, LNG procurement and other activities. Thus, weare involved in the entire value chain, increasing our presence.

0
2016.3

Risks

200

90

0

Strengths

TGES America
Tokyo Gas America Ltd.
MT Falcon

2017.32018.32019.32020.3Know-how in the midstream and downstream businesses
accumulated in Japan
Global network established through activities such as raw material
procurement and business participation
Business operations may be stalled, the burden of
expenses may increase and business opportunities may be
missed to meet country-specific laws, regulations and/or
business practices.
Fluctuations in crude oil/gas prices and foreign exchange
rates may impact the revenues and expenditures of all
overseas business operations

PT Panji Raya Alamindo

Australia

Upstream BusinessParticipating project
Darwin (Bayu-Undan gas field)
Business Location
Ichthys
Pluto
GorgonQueensland Curtis
Tokyo Gas Australia Pty
Ltd. Perth Office

Australia has grown into a major LNG supply base for East Asia. We haveinvested in five LNG projects in the country, including the Ichthys Project.
We will continue to operate and manage these projects with a view
towards maximizing their value.

Business overview: Energy-related business

TOKYO GAS INTEGRATED REPORT 2020

SERVICE BUSINESS
OutlineFor almost half a century, since introducing LNG to Japanfor the first time in 1969, Tokyo Gas Group has consistently
handled processes across the entire LNG value chain.
Utilizing the technological capabilities and know-how
developed through these processes, Tokyo Gas Group
provides one-stop solutions to match the needs of customers
both in Japan and overseas, including LNG terminals,
pipelines, district heating and cooling, and energy services.
Net Sales

Segment profit

351.9 billion ¥16.9 billion¥

FY2019FY2019(¥ billion)

Net sales (LH)

600

Segment profit (RH)(¥ billion)

40

450

30

300

20

150

10

0

0
2016.32017.32018.3

Energy-related business

Providing engineering solutions leveraging technologicalcapabilities and know-how developed over almost half a century
The Tokyo Gas Group has handled processes across the entire LNG value chain for almost half a century, including both
upstream and downstream processes. We offer the knowledge and expertise that we have accumulated throughactually using the LNG terminals, pipelines, district heating and cooling centers and various other facilities andequipment that we have designed and built during that time as engineering solutions based on user’s know-how, toclients both in Japan and overseas.

Area-wide Energy Supply BusinessNet sales and segment profit

2019.32020.356

Smart energy project in the Kiyohara Industrial ParkWe built local energy infrastructure in the Kiyohara
Industrial Park in Utsunomiya-shi in Tochigi
Prefecture, with operations commencing in fiscal
2019. It includes an energy center consisting mainlyof a cogeneration system, and independent powerlines and heat conduits. It is an area-wide energy
supply project supplying electric power and heat in
the form of steam and hot water, to seven businessfacilities. With its advanced use of energy, it has
attained a massive reduction in energy consumption
and CO2 emissions and improved the resilience of thearea. The Tokyo Gas Group will promote thewidespread use of distributed energy systems andtap industrial demand in a bid to help attain the
Sustainable Development Goals (SDGs).

Thailand: LNG receiving terminal PMC
We are involved in project management for theconstruction of the Nong Fab LNG Terminal
commissioned by PTT LNG Co., Ltd. based in
Thailand. We received this order in recognition of
our advanced technical capabilities and the richexperience accumulated by Tokyo Gas Engineering
Solutions Corporation through the construction andoperation of LNG terminals in Japan and overseas.
We engage in the management of the entire project,including technological and contractual aspects, inorder to ensure smooth, trouble-free progress indesign, procurement, construction and trial
operations performed by the construction contractor
as scheduled.

Business overview: Real estate business

TOKYO GAS INTEGRATED REPORT 2020

SERVICE BUSINESS
OutlineOver the course of 135 years in business, the Tokyo Gas
Group has acquired large-scale and medium-scale areas ofland with high asset value. Making the most of them, theGroup operates an office and residential real estate leasing
business mainly in city center areas with a basic concept of
securing stable revenues and improving asset value. It will
work on joint projects with business partners in an effort toexpand the regional development services business.
Net Sales

Segment profits

44.5 billion¥

FY2019¥9.6 billion

FY2019Net sales and segment profit(¥ billion)

Net sales (LH)

60

Segment profit (RH)(¥ billion)

20

45

15

30

10

15

5

0

Urban Development Service(Real Estate)

Office leasing business
msb Tamachi (musubu Tamachi)
We engage in the business of leasing highvalue-added office space, chiefly in city center
areas using large properties. At msb Tamachi ,we will introduce a smart energy networkand enhance its business continuity planning(BCP) functionality to contribute to thecreation of an advanced, appealing
community. Phase I of development (Tamachi
Station Tower S and Pullman Tokyo Tamachi)
was completed in May 2018, and Phase II(Tamachi Station Tower N) was completed infiscal 2020.

2018.32019.3

Chiyoda-ku

Ikebukuro (completion
scheduled in fiscal 2025)

Koto-kuChuo-ku
Shimbashi Station

Toshima-ku

Shiba

Minato-ku
TamachiToyosuMeguro-ku
Shinagawa-ku

Shinagawa
Station

JR Tamachi Station

Pullman Tokyo
Tamachi*1
Tamachi
StationPedestrian deck Tower N

msb Tamachi (musubu Tamachi)

2020.3

Tokyo Station

Toranomon

Nagisa Terrace

2017.3

Gofukubashi (completion
scheduled in fiscal 2030)

Note: Phase I: Land leasing business, Phase II: Office leasing business(based on Tokyo Gas capital investment)0
2016.357*

Tamachi
StationTower S

2Minato Park Shibaura

Shibaura
Nursery
SchoolAiiku
Hospital

Shibaura Park

Redevelopment area

msb Tamachi(musubu Tamachi)

Residential leasing businessWe are also engaged in proactive leasing
business operations on small to medium-sizedproperties (as of March 2020, 18 buildings with
640 residential units). In a bid to create goodquality assets that are well suited to leasing, we
will work on the development of our own land
and the acquisition of new properties from thereal estate market. In January 2021,
construction of a rental housing complex in
Itabashi-ku, Tokyo, named Itabashi Rental
Housing Complex, is scheduled for completion.

*1 Hotel*2 Commercial Building

Toyosu mixed land area property development
The Toyosu area is situated in aprime location, approximately
4km away from Tokyo Station.
With significant events such as
the opening of the new Toyosu
Fish Market in October 2018 andthe coming hosting of the
Olympic and Paralympic Games
in 2021, the area is now
attracting even greater attention.
The Tokyo Gas Group aims tocreate a new mixed land area
development in Toyosu that will
include both residential andcommercial properties, in adevelopment area covering
approximately 20 ha.

Intended location of the Tokyo 2021
Olympics and Paralympics Athletes’ Village
Toyosu-ohashi Bridge

Harumi-ohashi
BridgeTokyo Gas
Group site

ToyosuMarketToyosuMarketFujimi Bridge
Ariake Tennis noMori Station

Shijoumae
StationToyosu Market

Shintoyosu Station

Toyosu Smart Energy Center
Ariake North
BridgeKiyari Bridge

Intended location of the Tokyo 2021
Olympics and Paralympics StadiumToyosu Station
Yurikamome

Financial data

TOKYO GAS INTEGRATED REPORT 2020

58

10-Year Consolidated Financial Highlights*1

2011.32012.32013.32014.32015.32016.32017.32018.32019.32020.3

1,535,242

1,754,257

1,915,639

2,112,117

2,292,548

1,884,656

1,587,085

1,777,344

1,962,308

1,925,235

Operating Profit (¥ million)

122,451

77,075

145,633

166,044

171,753

192,008

58,365

116,30293,704

101,508

Operating Profit Margin (%)

7.98

4.39

7.60

7.86

7.49

10.19

3.68

6.54

4.78

5.27

Ordinary Profit (¥ million)

121,548

75,620147,453

159,613

168,169

188,80955,688111,546

89,386

102,735

Profit attributable to owners of parent (¥ million)

95,46746,060101,678

108,451

95,828111,936

53,13474,98784,55543,382Equity (¥ million)

858,920

839,166

927,634

1,011,787

1,069,515

1,100,271

1,101,498

1,136,027

1,159,055

1,147,836

1,829,661

1,863,885

1,992,403

2,176,816

2,257,662

2,251,518

2,230,269

2,334,316

2,428,149

2,537,724

Interest-bearing Debt (¥ million)

584,169

625,830

642,550

713,823

730,739715,769

713,596

724,940

803,216

905,066

Operating Cash Flow (¥ million)

244,803

194,565

240,448

248,831237,680

257,122

217,439

240,328

246,436

213,055

Free Cash Flow (¥ million)

94,60048,15256,651827

13,08425,08914,081

31,58322,655(14,003)

EBITDA (¥ million)

271,788

225,580

284,403

306,424

313,605

337,194

222,670

281,643

255,585

271,181

Capital Expenditure (¥ million)

150,202

146,413

183,797

248,004

224,596

232,033

203,358

208,745

223,781

227,058

Depreciation (¥ million)* 2

149,336

148,505

138,770

140,380

141,852

145,187

164,305

165,342

161,881

169,673

EPS (Earnings per Share) (¥)

35.63

17.70

39.52

43.10

39.15

46.68

23.02

164.12* 3

187.6098.07

BPS (Book Value per Share) (¥)

320.70324.67360.70402.91438.28460.35479.742,487.58* 3

2,575.99

2,602.74

2,684,193

2,590,715

2,577,919

2,517,551

2,446,778

2,396,778

2,302,856

458,073* 3

451,356

442,436

9

9

10

10

10

11

11

55* 3

60

60

DOE (Dividends on Equity) (%)

2.88

2.74

2.91

2.59

2.34

2.42

2.29

2.25

2.35

2.29

Payout Ratio (%)

25.26

50.85

25.30

23.20

25.55

23.57

47.79

33.51

31.98

61.18

Total Payout Ratio (%)

60.87

61.36

60.70

60.00

60.80

60.10

60.71

60.17

60.31

60.99

Net Sales (¥ million)

Total Assets (¥ million)

Number of Issued Shares(Common Stock) (thousands of shares)
Dividend per Share (¥)

Financial data

TOKYO GAS INTEGRATED REPORT 20202011.32012.32013.32014.32015.32016.32017.32018.32019.359

2020.3142.26156.89162.16

156.67150.63155.48142.69135.59156.01152.10D/E (Debt-Equity) Ratio (times)

0.68

0.75

0.69

0.71

0.68

0.65

0.65

0.64

0.69

0.79

Equity Ratio(%)

46.94

45.02

46.56

46.48

47.37

48.87

49.39

48.67

47.73

45.23

ROE (Return on Equity) (%)

11.41

5.42

11.51

11.18

9.21

10.32

4.83

6.70

7.37

3.76

ROA (Return on Assets) (%)

5.20

2.49

5.27

5.20

4.32

4.96

2.37

3.29

3.55

1.75

Total Asset Turnover (times)

0.84

0.95

0.99

1.01

1.03

0.84

0.71

0.78

0.82

0.78

TEP (¥100 million)

640

91

598

507

434

676

-62

244

68

207

WACC (%)

3.3

3.1

3.2

3.2

3.6

3.4

3.0

3.1

3.0

2.7

Number of city gas retail customers (thousand)

9,542.3

9,615.4

9,721.1

9,844.8

9,982.3

10,125.7

10,269.4

10,209.0

9,821.0

9,129.0

Gas Sales Volume

14,745

15,19015,39014,735

15,541

15,436

15,72015,56815,19813,855–

15,833

16,741

17,22518,36018,587

19,05319,052

18,397

17,666

Number of electricity retail customers (thousand)

–

–

–

–

–

–

667

1,130

1,774

2,363

Electric power sales volume (billion kWh)

–

8.2

9.9

9.7

10.6

10.9

12.6

14.6

15.4

20.6

Current Ratio (%)(million m 3 )2020 Vision basis*4

Notes: *1 The financial information contained in this integrated report is based on annual securities report. However, it has not been audited by Audit firms etc.
*2 Depreciation includes amortization of long-term prepaid expenses.
*3 The Company carried out a share consolidation at a ratio of 5 common shares to 1 on October 1, 2017.
The dividend per share of 55.0 yen is calculated on the post-consolidation basis (the interim dividend of 5.50 yen per share before the share consolidation and the year-end dividend of 27.50 yen per share after the share consolidation).
*4 2020 Vision basis … The figures represent baseline values for sales volume targets set forth in our management vision, Challenge 2020 Vision. They are obtained by adding volume for in-house use and LNG sales volume (excluding volume for Nijio) to consolidated gas sales volume.

Computations
Operating Cash Flow = Profit attributable to owners of parent + Amortization of Long-term Prepaid Expenses + Depreciation
Free Cash Flow = Profit attributable to owners of parent + Amortization of Long-term Prepaid Expenses + Depreciation – Capital Expenditure
Current Ratio = Current Assets (year-end) / Current Liabilities (year-end) x 100
Debt-Equity Ratio = Interest-bearing Debt (year-end) / Equity (year-end)

Equity Ratio = Equity (year-end) / Total Assets (year-end) x 100
Total Asset Turnover = Net Sales / Total Assets (average)
TEP (Tokyo Gas Economic Profit) = NOPAT – Cost of capital(invested capital x WACC)

WACC calculation data (fiscal 2019 actual)∙ Interest-bearing debt cost: Real interest rate of 0.75% (after tax)
∙ Cost of shareholders’ equity∙ Risk-free rate: 10-year JGB yield of -0.096%∙ Risk premium: 5.5%, Beta coefficient of 0.75

Financial data

TOKYO GAS INTEGRATED REPORT 2020

60

Consolidated Balance Sheet(¥ million)

2019.3.31(¥ million)

2020.3.31

2019.3.31

AssetsLiabilities

Non-current assets

2020.3.31

24

29

Deferred tax assets

42,425

49,132

Non-current liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Retirement benefit liability
Provision for gas holder repairs
Provision for safety measures
Provision for appliance warranties
Provision for point card certificates
Asset retirement obligations
Other non current liabilities
Total non-current liabilities
Current liabilities
Current portion of non-current liabilities
Notes and accounts payable - trade
Short-term loans payable
Income taxes payable
Other current liabilities
Total current liabilities
Total liabilities

Other investments

47,95046,407

Net assets

Allowance for doubtful accounts

(362)

(405)

355,409361,831

Capital stock

141,844

1,901,403

1,975,292

Capital surplus

1,634

2,067

976,550

967,808

Property, plant and equipment
Production facilities

234,433

224,515

Distribution facilities

548,529

548,095

Service and maintenance facilities

49,58648,492Other facilities

447,608

475,093

Inactive facilities
Construction in progress
Total property, plant and equipment

316

316

145,160

162,862

1,425,634

1,459,377

Intangible assets
Goodwill

1,306

16,269Other intangible assets

119,052

137,814

Total intangible assets

120,359

154,084

Investment securities

225,212

216,052

Long-term loans receivable

40,15850,615Investments and other assets

Retirement benefit asset

Total investments and other assets
Total non-current assets
Cash and deposits

93,092

151,288

Treasury shares
Total shareholders’ equity

Notes and accounts receivable - trade265,225

221,123

Lease receivables and investments in leases

19,647

20,363404,998
429,541
18,531
71,976
3,122593
12,9851,000
14,42451,555
1,008,730

51,566
69,605
5,133
31,283
180,037
337,626

54,42878,593
6,507
29,708200,527
369,765

1,256,803

1,378,495

141,844

Shareholders’ equity

Retained earnings

Current assets

334,998
394,542
17,51775,262
2,990
1,776
14,0571,450
11,94064,640919,176(4,111)(3,875)

1,115,918

1,107,844

22,756

15,843Merchandise and finished goods

2,194

1,905

Work in process

12,73011,868

Accumulated other comprehensive income
Valuation difference on available-forsale
securities
Deferred gains or losses on hedges

1,604

1,444

Raw materials and supplies

63,73564,703Foreign currency translation adjustment

24,77022,412Other current assets

71,306

91,748Remeasurements of defined benefit plans

Allowance for doubtful accounts(1,186)(570)

Total accumulated other comprehensive income( 5,994)
43,13739,992

Total current assets

526,745

562,4312,428,149

2,537,724

Total assets

Non-controlling interests

292

12,28911,391

Total net assets

1,171,345

1,159,228

Total liabilities and net assets

2,428,149

2,537,724

Financial data

TOKYO GAS INTEGRATED REPORT 2020

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income(¥ million)(¥ million)

2018.4.1-2019.3.31

2018.4.1-2019.3.31

2019.4.1-2020.3.31

Net sales

1,962,308

1,925,235

ProfitCost of sales

1,407,345

1,343,965

Other comprehensive income

Gross profit

554,963581,269

Valuation difference on available-for-salesecurities

392,466

408,857

Deferred gains or losses on hedges

Selling, general and administrative expenses
Supply and sales expenses
General and administrative expenses

68,79170,903

Total selling, general and administrative expenses

461,258

479,761

93,704

101,508

Interest income

1,612

2,330

Dividend income

2,812

5,433

Share of profit of entities accounted for using
equity method

2,794

5,211

Miscellaneous income

6,551

7,453

Total non-operating income

13,771

20,429Interest expenses

11,091

11,412

Balance on commissioned construction

1,750

2,151

Miscellaneous expenses

5,247

5,637

Operating profit
Non-operating income

Non-operating expenses

Total non-operating expenses

18,08919,202

89,386

102,735

Gain on sales of non-current assets

29,306–

Gain on sales of investment securities

6,420

–

–

11,62735,727

11,627

Ordinary profit
Extraordinary income

Gain on settlement of contract
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on valuation of investment securities–

28,152

7,865

18,643

Total extraordinary losses

7,865

46,796

Profit before income taxes

117,248

67,566

Income taxes - current

26,11331,196

Income taxes - deferred

6,823(7,197)

Total income taxes

32,93623,999Profit84,311

43,567

Profit (loss) attributable to noncontrolling interests
Profit attributable to owners of parent

61

(244)

184

84,55543,382

2019.4.1-2020.3.31

84,311

43,567(7,528)(6,878)

221

(850)

Foreign currency translation adjustment(6,735)(1,916)

Remeasurements of defined benefit plans, net of tax(2,073)

6,150

(78)

178

(16,193)(3,316)

68,11840,25068,401

40,238(283)

12Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown of comprehensive income)Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

Financial data

TOKYO GAS INTEGRATED REPORT 2020

62

Consolidated Statement of Cash Flows(¥ million)

2018.4.1-2019.3.31
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Gain on settlement of contract
Amortization of long-term prepaid expenses
Loss on retirement of property, plant and equipment
Loss (gain) on valuation of investment securities
Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for safety measures
Increase (decrease) in provision for appliancewarranties
Interest and dividend income
Interest expenses
Share of loss (profit) of entities
accounted for using equity method
Decrease (increase) in notes andaccounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable trade
Increase (decrease) in accrued consumption taxes
Decrease (increase) in accounts receivable - other
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

Purchase of intangible assets
Purchase of long-term prepaid expenses
Payments of long-term loans receivableCollection of long-term loans receivable
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Other, net
Net cash provided by (used in) investing activities

2018.4.1-2019.3.31

2019.4.1-2020.3.31

Cash flows from financing activities

117,248
157,574
888
–
4,306
2,248
7,865
1,039
(1,338)67,566
165,410
28,152(11,627)
4,263
2,164
18,643
5,206(1,182)

4,073(1,072)(4,425)
11,091(7,763)
11,412(2,794)(5,211)(46,191)

52,646(18,336)

172(5,321)

8,952(3,002)(2,541)(53,083)
169,300
9,387(10,809)(26,571)
141,306

7,979(1,619)(9,541)
334,549
14,510(11,087)(31,676)
306,296(17,603)(23,989)

12,082

1,916(168,144)(39,491)(8,561)(12,238)
4,074
(788)
88

(177,664)(41,908)(2,183)(16,989)
4,853(2,709)1,855(1,054)(17,908)

28,174(203,462)

3,930(270,798)

Cash flows from investing activities
Purchase of investment securities
Proceeds from sales and redemption of investment
securities
Purchase of property, plant and equipment(¥ million)

2019.4.1-2020.3.31
Net increase (decrease) in commercial papers
Repayments of lease obligations
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Cash dividends paid
Other, net
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
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at end of period

10,000(1,613)59,354(23,726)
70,000(40,000)(20,051)(24,936)(1,397)
27,628(10,000)(2,646)
71,542(43,390)
90,000(30,000)(24,038)(27,839)(454)
23,171

(710)

(489)

(35,238)
128,271

58,17993,032–

6

93,032

151,218

Financial data

TOKYO GAS INTEGRATED REPORT 2020

63

Delayed Impact of Gas Rate Adjustment System

Gas Rate Adjustment System’s Medium- to Long-Term Neutralizing Effect on Crude
Oil Price and Exchange Rate Formation
Gas prices are determined using the gas rate adjustment system. Through this system, average
raw material prices over a three-month period according to trade statistics are compared withthe raw material cost that is used as the standard (standard average raw material cost), andthe gas rates are adjusted using a defined calculation method based on the differences. A
time lag of four months on average (called a sliding time lag) exists between the payment of

raw material costs and the reflection of such changes in gas rates.
Consequently, fluctuations in crude oil prices and exchange rates may result in the underrecovery or over recovery of raw material costs if this lag cuts across a fiscal year, thereby affecting
income. Looking at the medium- to long-term, however, the gas rate adjustment system has
a neutralizing effect on the income impacts of fluctuations in raw material costs.

Timing of the Standard Average Raw Material Cost Calculation and Reflection in Gas Rates

How the Sliding Time Lag in Rates Works

Timing of standard average raw material cost calculation
Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Dec.

Average raw
material priceOver
recoveryUnder
recoveryAverage raw
material price
Average raw
material price

Average all Japan LNG price
Average raw material price reflected in gas rate

Reflection in gas rates

Jun.

Jul.

Aug.

The average raw material price over the past three months is calculated every month and thenreflected in the gas rate three months later.

FY N

FY N+1

Sustainability activities

Financial and Industry Data (EXCEL Spreadsheet Data Available)

Investors’ Guide

Consolidated Financial Results BulletinTokyo Gas Group Sustainability Reportwww.tokyo-gas.co.jp/IR/english/library/invguid_e.html

www.tokyo-gas.co.jp/IR/english/library/earn_e.html

tokyo-gas.disclosure.site/en

Quarterly Financial Results

Details of Corporate Governance

Earnings Announcements

Corporate Governance Reportwww.tokyo-gas.co.jp/IR/english/event/earn_e.html

www.tokyo-gas.co.jp/IR/english/gvnnc/index_e.html

Tokyo Gas Co., Ltd.
INTEGRATED REPORT 2020
1-5-20 Kaigan, Minato-ku, Tokyo 105-8527, Japan
www.tokyo-gas.co.jp/en/index.html

Stock Code 9531
IR Contact E-mail:tgir@tokyo-gas.co.jp
Published on August, 2020
For inquiries regarding planning and editing of this report:
Investor Relations Sect., Finansial Management Dept.,
Tokyo Gas Co., Ltd.