11-Year Consolidated Financial Highlights

As of March 31, 2017

Financial data

2007.32008.32009.32010.3

1,376,958

1,487,496

1,660,162

1,415,718

Operating Profit (¥ million)

162,31570,04865,20485,229Operating Profit Margin (%)

11.79

4.71

3.93

6.02

Ordinary Profit (¥ million)

156,039

66,83258,337

83,519Profit attributable to owners of parent (¥ million)

100,699

42,48741,70853,781Equity (¥ million)

795,101

769,072

772,365

813,886

1,692,635

1,703,651

1,764,185

1,840,972

Interest-bearing Debt ( ¥ million)

525,467

558,716

593,230

555,919

Operating Cash Flow (¥ million)

233,841

184,908

182,791

199,898

Free Cash Flow (¥ million)

109,285

46,90236,862

51,712

EBITDA (¥ million)

295,457

212,469

206,287

231,346

Capital Expenditure (¥ million)

124,556

138,006

145,929

148,186

Depreciation (¥ million)

133,142

142,421141,083

146,117

EPS (Earnings per Share, fully diluted EPS) (¥)

35.69

15.50

15.37

19.86

BPS (Book Value per Share) (¥)

293.11

289.49284.72301.582,810,171

2,741,571

2,717,571

2,703,761

8

8

89DOE (Dividends on Equity) (%)

2.83

2.72

2.78

3.07

Payout Ratio (%)

21.33

50.19

51.18

45.32

Total Payout Ratio (%)

60.14

73.56

63.35

60.11

Current Ratio (%)

112.60106.76118.99120.93

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

0.66

0.73

0.77

0.68

Equity Ratio (%)

46.97

45.14

43.78

44.21

ROE (Return on Equity) (%)

13.22

5.43

5.41

6.78

ROA (Return on Assets) (%)

5.95

2.50

2.41

2.98

Total Asset Turnover (times)

0.81

0.88

0.96

0.79

TEP (¥100 million)

538

17-48

186

WACC (%)

3.8

3.6

3.4

3.2

Number of Customers (thousands)

10,207

10,38010,513

10,637

Gas Sales Volume (million m )13,315

14,215

13,942

13,666————Net Sales (¥ million)

Total Assets (¥ million)

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

32020 vision basis** 2020vision basis…These numbers are the numerical results calculated by the same method when we planned our vision. Namely, it is the amount that added self-consuming volume and LNG sales volume(excluded volume for Nijio) to a Consolidated gas sales volume.
* Depreciation includes amortization of long-term prepaid expenses.
* Although unaudited, financial information in this annual report is based on certified financial statements.

51

2012.3

2013.32014.32015.32016.32017.3

1,535,242

1,754,257

1,915,639

2,112,117

2,292,548

1,884,656

1,587,085

122,451

77,075

145,633

166,044

171,753

192,008

58,365

7.98

4.39

7.60

7.86

7.49

10.19

3.7

121,548

75,620147,453

159,613

168,169

188,80955,68895,46746,060101,678

108,451

95,828111,936

53,134

858,920

839,166

927,634

1,011,787

1,069,515

1,100,271

1,101,498

1,829,661

1,863,885

1,992,403

2,176,816

2,257,662

2,251,518

2,230,269

584,169

625,830

642,550

713,823

730,739715,769

713,596244,803

194,565

240,448

248,831237,680

257,122

217,439

94,60048,15256,651827

13,08425,08914,081

271,788

225,580

284,403

306,424

313,605

337,194

222,670

150,202

146,413

183,797

248,004

224,596

232,033

203,358

149,336

148,505

138,770

140,380

141,852

145,187

164,305

35.63

17.70

39.52

43.10

39.15

46.68

23.02

320.70324.67360.70402.91438.28460.35479.74

2,684,193

2,590,715

2,577,919

2,517,551

2,446,778

2,396,778

2,302,856

9

9

10

10

10

11

11

2.88

2.74

2.91

2.59

2.34

2.58

2.29

25.26

50.85

25.30

23.20

25.55

23.57

47.79

60.87

61.36

60.70

60.00

60.80

60.10

60.71

142.26156.89162.16

156.67150.63155.48142.69

0.68

0.75

0.69

0.71

0.68

0.65

0.65

46.94

45.02

46.56

46.48

47.37

48.87

49.39

11.41

5.42

11.51

11.18

9.21

10.32

4.83

5.20

2.49

5.27

5.20

4.32

4.96

2.37

0.84

0.95

0.99

1.01

1.03

0.84

0.71

640

91

598

507

434

676

-62

3.3

3.1

3.2

3.2

3.6

3.4

3.0

10,73910,855

10,978

11,111

11,263

11,398

11,536

14,745

15,19015,39014,735

15,541

15,436

15,720—15,833

16,741

17,22518,36018,587

19,053

TOKYO GAS ANNUAL REPORT 20172011.3

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) = Profit after taxes and before interest payments – Cost of capital (invested capital x WACC)

WACC calculation data (fiscal 2016 actual)∙ Interest-bearing debt cost: Real interest rate of1.11% (after tax)
∙ Cost of shareholders’ equity∙ Risk-free rate: 10-year JGB yield of 0.11%∙ Risk premium: 5.5%, Beta coefficient of 0.7552Consolidated Balance Sheet
Financial data

(Millions of yen)

Assets2016.3.31

2017.3.31

Production facilities

241,842

235,152

Distribution facilities

550,713539,840

Service and maintenance facilities

59,56053,623

Other facilities

351,950

416,142

Non-current assets
Property, plant and equipment

Inactive facilities
Construction in progress
Total property, plant and equipment

316

316

107,685

147,074

1,312,068

1,392,149

Intangible assets
841

1,600

Other intangible assets

Goodwill

136,348

77,615

Total intangible assets

137,189

79,215Investment securities

179,410

182,443

Long-term loans receivable

24,01328,128Investments and other assets

Net defined benefit asset

229

24

Deferred tax assets

40,447

40,127

Other investments and other assets

34,741

39,100Allowance for doubtful accounts

(394)

(367)

278,447

289,456

1,727,705

1,760,821

Cash and deposits

170,262

132,626

Notes and accounts receivable - trade

201,344

194,240

Lease receivables and investment assets

24,05424,097

Merchandise and finished goods

3,501

2,317

Work in process

10,784

12,466
40,763

Total investments and other assets
Total non-current assets
Current assets

Raw materials and supplies

46,525

Deferred tax assets

8,004

9,050

Other current assets

59,80854,259Allowance for doubtful accounts

(472)

(374)

523,812469,4472,251,518

2,230,269

Bonds payable

284,997

314,997

Long-term loans payable

363,393

326,752

Deferred tax liabilities

11,321

11,299Net defined benefit liability

89,40573,524

Provision for gas holder repairs

3,455

3,262

Provision for safety measures

466

4,711

9,538

10,298

Total current assets
Total assets
Liabilities

Non-current liabilities

Provision for appliance warranties
Provision for loss on guarantees

1,678

-

Asset retirement obligations

10,695

11,975

Other non current liabilities

24,49031,650Total non-current liabilities

799,443

788,474

Current liabilities
Current portion of non-current liabilities

47,04456,395

Notes and accounts payable - trade82,352

96,413

Short-term loans payable

16,512

10,333

Income taxes payable

28,91420,000

Deferred tax liabilities

1-

Asset retirement obligations

53-

162,023

145,843

Other current liabilities
Total current liabilities

336,903

328,987

1,136,346

1,117,461

Capital stock

141,844

141,844

Capital surplus

1,878

1,883

910,353

893,436

Total liabilities
Net assets

Shareholders’ equity

Retained earnings
Treasury shares
Total shareholders’ equity(4,441)(3,087)

1,049,634

1,034,076
27,166

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

26,298Deferred gains or losses on hedges(2,573)(990)

Foreign currency translation adjustment

44,94536,399Remeasurements of defined benefit plans(18,033)

4,845

Total accumulated other comprehensive income

50,63667,422

Non-controlling interests

53

14,90011,309Total net assets

1,115,172

1,112,807

Total liabilities and net assets

2,251,518

2,230,269

Consolidated Statement of Income
2016.4.1 - 2017.3.31

Net sales

1,884,656

1,587,085

Cost of sales

1,239,020

1,051,885

Gross profit

645,636535,200

Supply and sales expenses

385,572

410,125

General and administrative expenses

68,05466,708

Total selling, general and administrative expenses

453,627

476,834

192,008

58,365

Selling, general and administrative expenses

Operating profit
Non-operating income
Interest income

615901Dividend income

1,878

2,178

Rent income

2,177

1,740

Share of profit of entities accounted for using equity method

2,122

3,583

Miscellaneous income

8,776

5,889

Total non-operating income

15,57014,293

Interest expenses

12,158

11,514

Balance on commissioned construction

2,189

2,564

Miscellaneous expenses

4,421

2,893

Total non-operating expenses

18,76916,971

188,80955,688Gain on sales of non-current assets

-

6,610

Gain on sales of investment securities

-

9,120

Total extraordinary income-

15,730

Impairment loss

28,293

2,408

Loss on valuation of investment securities

4,747

-

Total extraordinary losses

33,0402,408

Profit before income taxes

155,768

69,010

Income taxes - current

43,782

25,271

Income taxes - deferred(991)(10,305)

Total income taxes

42,791

14,966

Profit112,977

54,044

TOKYO GAS ANNUAL REPORT 2017

(Millions of yen)

2015.4.1 - 2016.3.31

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent

1,040

910

111,936

53,134

Consolidated Statements of Comprehensive Income(Millions of yen)

2015.4.1 - 2016.3.31
Profit112,977

2016.4.1 - 2017.3.31
54,044

Other comprehensive income
Valuation difference on available-for-sale securities(8,363)

870

Deferred gains or losses on hedges(1,062)

1,360

Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity
methodTotal other comprehensive income
Comprehensive income

3,614(6,470)(15,904)

22,875(1,387)(1,844)(23,102)

16,79189,87470,83589,02969,919844

915

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

54Consolidated Statements of Cash Flows

Factors Affecting Revenuesand Expenses

Financial data(Millions of yen)
2015.4.1 - 2016.3.31

2016.4.1 - 2017.3.31

Cash flows from operating activities
Profit before income taxes

155,768

69,010Depreciation

141,930

160,871

Impairment loss

28,293

2,408

344

1,059

Amortization of long-term prepaid expenses

3,256

3,433

Loss on retirement of property, plant andequipment

3,050

2,047

Loss (gain) on sale of non-current assets(268)(6,555)

Loss (gain) on sales of investment securities(1,156)(9,120)

Amortization of goodwill

Increase (decrease) in net defined benefit
liability(1,110)(3,374)

Decrease (increase) in net defined benefit asset(1,384)22,058115(1,678)

Increase (decrease) in provision for loss onguarantees

Gas Rate Adjustment System’s Medium- toLong-Term Neutralizing Effect on Crude Oil
Price and Exchange Rate Fluctuations
Gas prices are determined using the gas rateadjustment 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), and the gasrates are adjusted using a defined calculation
method based on the differences. A time lag offour 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 andexchange rates may result in the under-recovery
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 aneutralizing effect on the income impacts offluctuations in raw material costs.

Increase (decrease) in provision for safetymeasures(4,242)

4,245Interest and dividend income(2,494)(3,080)Interest expenses

12,158

11,514

Share of (profit) loss of entities accounted forusing equity method(2,122)(3,583)

Decrease (increase) in notes and accounts
receivable - trade47,3504,286

Decrease (increase) in inventories

28,117

3,700

Increase (decrease) in notes and accounts
payable - trade(22,993)

17,567

Increase (decrease) in accrued consumption
taxes(2,436)(4,326)(31)(1,411)

12,864

1,997

Timing of the Standard Average Raw Material
Cost Calculation and Reflection in Gas Rates
Timing of standard average raw material cost calculation

Decrease (increase) in prepaid expenses
Decrease (increase) in accounts receivable other
Other, net

14,410(1,809)Subtotal

409,422

269,261Interest and dividend income received

11,954

14,593

Interest expenses paid

(12,547)(11,509)

Income taxes paid

(54,170)(33,610)

Net cash provided by (used in) operating
activities

354,658

238,734

Cash flows from investing activities
Purchase of investment securities(1,850)(9,922)

Proceeds from sales and redemption ofinvestment securities

3,616

9,489

Purchase of property, plant and equipment(195,060)(165,918)

Purchase of intangible assets(26,131)(29,542)

Purchase of long-term prepaid expenses(10,683)(8,322)

Proceeds from sale of non-current assets

858

7,124

Payments of long-term loans receivable(9,776)(6,073)

Collection of long-term loans receivable

1,726

1,675

Other, net

Jan.

Feb.

Mar.

May. Jun.

Jul.

Aug.

Jul.

Aug.

Sep.

Dec.

Average raw
material priceAverage raw
material price
Average raw
material price

Reflection in gas rates

Jun.

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

894(3,383)(236,406)(204,873)

Net increase (decrease) in short-term loans
payable(2,011)(6,260)

Repayments of lease obligations(1,243)(1,399)All Japan LNG price

Proceeds from long-term loans payable

51,701

22,670

Average raw material price reflected in gas rate

Repayments of long-term loans payable(18,012)(19,982)

Net cash provided by (used in) investing
activities
Cash flows from financing activities

Proceeds from bonds-30,000

Redemption of bonds(43,800)(27,700)

Purchase of treasury shares(33,939)(41,065)

Cash dividends paid

(24,173)(26,969)

Other, net(3,938)(192)

Net cash provided by (used in) financing
activities(75,418)(70,899)(1,065)(498)

Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents

41,769(37,536)

Cash and cash equivalents at beginning of period

128,333

170,102

Cash and cash equivalents at end of period

170,102132,566

How the Sliding Time Lag in Rates Works

Under
recovery

FY N

55

Apr.

Over
recoveryFY N+1