Tokyo Gas Co., Ltd. ANNUAL REPORT 2017

Financial and Industry Data (EXCEL Spreadsheet Data Available)

Investors’ Guide
http://www.tokyo-gas.co.jp/IR/english/library/invguid_e.html

Quarterly Financial Results

Earnings Announcements
http://www.tokyo-gas.co.jp/IR/english/event/earn_e.html

Consolidated Financial Results Bulletin
http://www.tokyo-gas.co.jp/IR/english/library/earn_e.html

Details of Challenge 2020 Vision
The Tokyo Gas Group’s Vision for Energy and the Future~Challenge 2020 Vision~ (Released in November 2011)
http://www.tokyo-gas.co.jp/IR/english/manage/vision_e.html

Details of Corporate GovernanceCorporate Governance Report
http://www.tokyo-gas.co.jp/IR/english/gvnnc/index_e.html

CSR Activities

Tokyo Gas Group CSR Report
http://www.tokyo-gas.co.jp/csr/index_e.html

Tokyo Gas Co., Ltd. ANNUAL REPORT 2017
Stock Code 9531
IR Contact E-mail:tgir@tokyo-gas.co.jp

1-5-20 Kaigan, Minato-ku, Tokyo 105-8527, Japan

http://www.tokyo-gas.co.jp/index_e.html
Published on August, 2017
For inquiries regarding planning and editing of this report:
Investor Relations Sect., Finance Dept., Tokyo Gas Co., Ltd.

This annual report is printed on Tokyo Gas Recycled Paper (madefrom recycled paper from Tokyo Gas offices, trimmings fromafforestation activities, and reused and unused wood materials)
using vegetable oil ink that contains low levels of organic solvents.

TOKYO GASANNUAL REPORT

2017

Printed in Japan

Corporate message

The Tokyo Gas Group aims to be a true power source for people’s lives, and for society.
Over 130 years, our work kept us in a kind of face-to-face relation with our customers.
Based on the accumulated experience and trust derived from that history,
we want to help create a bright, safe, and pleasant tomorrow.
We will continue to be very close to our customers and be deliberate in taking action on their behalf.
Our efforts will be group-wide as will be our bold, confident approach to the challenges ahead.

01

03 Our history

Tokyo Gas continues to grow as“New Energy Frontier”

05 LNG value chain for value creation
07 President’s message“I am committed to the Second
Foundation of Tokyo Gas.”

13 CFO’s message“Tokyo Gas will make sustainablegrowth investment and dedication toshareholder return, while staying alert
to maintain financial health.”

TOKYO GAS ANNUAL REPORT 2017

CONTENTS 01 Corporate message

15 Deregulation

Meaning and objectives of electricity
and gas system reforms and schedule
milestones

17 Challenge 2020 Vision

Toward achieving the Challenge 2020
VisionCHALLENGE
2020
VISION
21 Business overview
21 Gas business
25 Electric power business
29 Overseas business
31 Other business35 Corporate governance
41 Board of directors
43 Audit & supervisory board

members and executive officers

44 Message from an outside audit &supervisory board member

45 Invisible assets
46 Stable supply of energy
47 Relationships of trust with over 11
million customers

48 Technology development/Business
partners

49 Human resources
Forward-Looking Statements
This annual report includes various management goals and other forecasts relating to the“Challenge 2020 Vision” announced in November 2011 and other strategies. This information isbased on forecasts, assumptions, and available information when preparing the “Challenge
2020 Vision” and other strategies and does not guarantee the achievement of goals andforecasts or future business results.
Further, this information may change due to changes in business conditions. Therefore, placing
undue reliance on this information is not advised. In addition, the target figures for fiscal 2017
are based on the judgment of management and the information available when the figures were
published (April 28, 2017). The company will disclose the latest information to the Tokyo Stock
Exchange in a timely manner and at the same time publish it in the investor relations section of
its website (http://www.tokyo-gas. co.jp/IR/english/index.html).

51 Financial data
51 11-year consolidated financial
highlights

53 Consolidated balance sheet
54 Consolidated statement of

Income/Consolidated statement ofcomprehensive Income
55 Consolidated statements of cash
flows

02

Our history

Tokyo Gas
continues to grow as“New Energy Frontier”
1950
Number ofcustomers591

Gas sales volume

0.15

thousand*1

1970

2000

2017.3

4,004

8,872

thousand*1

11,536billion m3 *1

15.72

1.66

billion m3 *1-

Consolidated

Number of
employees*2

5,837

Parent-based(projects)

9.08

billion m3 *1

10,258*30

LNG suppliers

thousand*1*3

10,756

Power stations(Tokyo Gas power
generation capacity)

0Electric powersales volume023,194km

16,823

12,339

8,219

7

12

kW

0

kWh

0

47,908km

billion m3

16,3071

Length of pipeline
network*1

thousand

kW

0

kWh

0

63,062

km

kW

1.58

kWh

12,654km

million kW

million kWh*1 Parent-based*2 Employees include full-time employees and excludes seconded or temporary employees.
*3 Regular employeesRawmaterials

Coal is heated in the coke oven anddry distillated to produce gas.

Coal

1885

1890

1895

1900

1905

Lighting

Heating

Gas lamp

Gas Kamado oven

1910

1915

1920

Gas
usage

03

Gas heater

1925

1930

1935

1940

1945

TOKYO GAS ANNUAL REPORT 2017(billion m3)

16

12

For generations of Japanese people the Tokyo Gas
Group has provided a stable and reliable supply of gas
for industries and households, to support economic
development of all, and ensure comfortable homeenvironments and desirable lifestyles. At the sametime, we have raised our corporate value of Group
companies.
We believe we are in the midst of an era we callthe Second Foundation of the company as the fullderegulation of the electric power and gas markets
draws. In this context, we are pledged to make our“Challenge 2020 Vision” adopted in 2011 a reality andensure the unfaltering growth of the Tokyo Gas Groupin the years to come.

1995

FY2016-end

11.54 million

FY2015-end

11.40 million

2013

11 million

2007

10 million

8 million* The numbers of gas customers and gas sales volumes are parent-based up to
fiscal 2002 and consolidated-based from fiscal 2003.

8
Gas sales volume (billion m3)
Number of customers (million)
1974

1966

5 million

3 million

4

0
1950

1955

1960

1965

1970

Crude oil isthermal cracked
to generate gas.

1980

1985

1990

1995

2000

2005

2010

2016

1995

2000

2005

2010

2016

1972-1988
Operations to change the calorificvalue of gas

Oil

1950

1975

Natural Gas

1955

1960

1965

1970

1975

1980

1985

1990

Heating and electricity

Automatic gas rice cooker

Kuramae Kokugikan
The old Shinjuku
First natural gas
First gas heating and District Heating andcogeneration system
cooling system
Cooling Center

Gas built-in cook stove

Residential fuel cell
“ENE-FARM”

04

LNG value chain for value creation

LNG Value Chain
for Value Creation
The Tokyo Gas Group contributes to society by advancing its LNG Value Chain.

Examples of
Sustainable
Development
Goals (SDGs)
relevant toTokyo Gas

1

2

3

4

Material
procurement (LNG)

Materialtransportation

Production ofcity gas

Power generation

Production,
generation, andsupplyProcurement andtransportation

Strengths

Stable and affordable LNG
procurement capacity

Reliable solid infrastructure

Track record of stable supply; natural gas technology and maintenance know-how;
Human resources; business partners in Japan and overseas
Invisible assets
In response to expectations
and requirements fromsociety in Japan andoverseas, the Tokyo Gas
Group has adopted and is
implementing its CSR Basic
Policy to help solve social
issues through its businessactivities, and is vigorously
promoting CSR activities.
We have reviewed the SDGs
concerning its relevance toour business activities.*

05

Managerial
assets to realize
and support
strengths

LNG procurement volume 14.25
million tons (equal to approx.
17% of Japan’s total)
Diversified resource suppliers
contracts and network

4 LNG terminals
63,000 km gas pipelines in total
4 highly-efficient power stations(approx. 1.6 million kW in equity stake)

Enhancing of overseas business (11 overseas bases)
Continual reduction in environmental burden during material procurement,
transportation, and production* See the CSR Report for more on CSR of Tokyo Gas Group. http://www.tokyo-gas.co.jp/csr/index_e.html

56Supply ofcity gas

Delivery to homes
and business users

Products andservices

OUTCOME
Customers

Social value
outcomeTOKYO GAS ANNUAL REPORT 2017

OUTPUT

1

Individual andcorporate
customers

Energy security improvement

11

million2

Households
StoresGas

Offices

Environmental contribution

Public facilities

3

PlantsSales andenergy solutions

Power generation
customers

People’s safe and reliable lives
and community development

Gas
operators

Community-based sales network
Capability to propose total energy
solutions that combine gas, electricity,and services

Electricity(wholesale customersof Tokyo Gas)

Economic value
FY2020 targets

City gas wholesalecustomers of Tokyo Gas

Relationships of trust with over
11 million customers(via pipeline connections)

19

Sales outlet network
Tokyo Gas Lifeval, Enesta, and Enefit(194 outlets; approx. 14,000 staff)

companies

LNG wholesalecustomers of Tokyo Gas

Engineeringsolutions

9

¥ 250

billion(by use of ocean going ships,
domestic ships, and trucks)

Increased use of natural gas to help
reduce customers’ environmental burden

Operating cash flow

ROE

ROA

8

%

4

%

Total payout ratio

companies

60% (see page 14)

06

President's message

Michiaki Hirose
Representative Director, President

My commitment to the Second Foundation ofTokyo Gas

07

My mission is to create corporate value within the Tokyo Gas
Group. For over 130 years since 1885, Tokyo Gas has
provided a stable and reliable supply of gas to industries andhouseholds in the Greater Tokyo Area and has supported its
economic development and quality of life of its people.
Following the full deregulation of the electric power retailmarket in 2016, the gas retail market was fully deregulated
in April 2017. This thrust us into a new era of competition.
While it is not widely known, in 1872 during the civilizationand enlightenment period, it was the gas lamp whichbrightened the streets at night in Japan. A few years later,
Tokyo Gas was born. Since then, we were the first in Japanto adopt liquefied natural gas (LNG), gas-fired air cooling,
and a large-scale cogeneration system, leading towidespread use of natural gas, clean energy, andexploration at the energy frontier.
I regard the deregulation of the energy market as a great

opportunity for the Tokyo Gas Group to go beyond theregulatory frameworks of the gas business in the Greater
Tokyo Area and to provide electric power retail and various
other businesses and services nationwide and overseas. I
am thrilled and excited to be at the helm during thismomentous time.
I believe Tokyo Gas is in the midst of an era I call the Second
Foundation of the company to create new value, since its
first foundation during the civilization and enlightenmentage. I am fully committed to managing Tokyo Gas at thisimportant juncture.

Shifting management from the Mt. Fuji type to the
Yatsugatake Mountains type
We have been taking up the challenge of the full deregulationof the electric power and gas markets as a management
challenge not passively but proactively. The Great East Japan
Earthquake of March 2011 prompted us to significantly review
our management as an energy company. Within the same

TOKYO GAS ANNUAL REPORT 2017

I am committed to theSecond Foundation ofTokyo Gas
Taking the deregulation of the energy market in Japan as a great opportunity, I
am thrilled and excited.
I believe Tokyo Gas is in the midst of an era I call the Second Foundation of thecompany, since the first foundation in 1885 during the period when post-feudal
Japan was rushing headlong to become “civilized and enlightened.” At thisspecial time in the company’s history, I am doing my best to enhance
corporate value.

In front of gas lamps of the Tokyo Gas Headquarters

year we drew up the Challenge 2020 Vision, a nine-year plan,in which we have targeted business portfolio reform, in
anticipation of a full-scale deregulation.
We aim to shift away from management focused on one
dominant business in city gas, corresponding to Mt. Fuji, tomanagement of several large businesses, including theelectric power business, overseas activity, and various otherbusinesses, corresponding to the Yatsugatake Mountains, anentire mountain range, for achieving sustainable growth.
I personally like the Yatsugatake Mountains and often visit
there. While each of the eight (yatsu) mountains has
distinctive and individualistic features, the range of themountains collectively looks attractive with a variety ofdifferent views, depending on the time and the place fromwhich to view them. I envision the renovation of our businessportfolio in a similar way.

Prioritizing investment that will contribute toraising corporate value

In fiscal 2016, ended March 31, 2017, our operating profit
decreased 70% year-on-year to ¥58.3 billion. This was mainly
due to the absence of the sliding time lag benefits that
occurred in the previous year, an increase in depreciation
burden following the start-up of large domestic infrastructure
projects, and actuarial gain or loss. The results, however, were
better than initially expected, thanks to a reduction in
expenditures and to better sales efforts.
For fiscal 2017, ending March 31, 2018, assuming the exchange
rate of ¥115 per U.S. dollar and an oil price of $55/bbl,
operating profit is expected to be ¥82 billion (up 41% y-o-y),mainly due to the absence of one-off accounting factors.
Despite expecting a significant profit increase from fiscal
2016, I do not think that the current level of profit
indicates our true earnings power. Let me emphasize thatcurrent substandard profits resulted from our forwardlooking investment and implementation of measures,targeted to raise future corporate value, during theSecond Foundation phase of the company, in addition to
one-off accounting factors.

08

President's message

Challenge 2020 Vision, prompted by the Great East Japan
Earthquake of 2011, is steadily be implemented to realign thebusiness portfolio
Robust securing of user contracts in the first yearof the deregulated electricity market
The electricity market in the Kanto Region alone is as large as¥3 trillion. Its deregulation is certainly posing a great
opportunity to Tokyo Gas. We are targeting acquisition of
about 10% of demand in the Greater Tokyo Area by 2020, by
expanding sales to the deregulated residential and smallcommercial customer sectors, in addition to our existing
wholesale business.
As the development of power supply (power generation)required for electricity sale is proceeding smoothly, our focus
is to acquire customers. As a result of our concerted groupwide efforts, we have acquired 730,000 customers, far
exceeding our plan (400,000) for fiscal 2016, the first year in
the electric power retail business. We were able to start thisnew chapter in our industry’s history as the No. 1 new entrant.
This was supported by our customers’ trust extended toTokyo Gas and efforts by our Group companies, including
Tokyo Gas Lifeval, which has a community-based sales
network. We are targeting one million customers, cumulative,in fiscal 2017.

Entering the second year since deregulation, we are
anticipating consolidation or other moves among the electric
power new entrants. Keeping an eye on various possibilities,
we are aiming at non-linear expansion. In this year again, we
will not hesitate to invest the management resources requiredin this business.

Taking an offensive stance toward the fullderegulation of gas retail sales
The retail gas market has also been fully deregulated sinceApril 2017. We are taking an offensive, not defensive stance,by considering deregulation as a great opportunity for the
Tokyo Gas Group to go beyond the regulatory frameworks ofthe city gas business.
Following our strategy to be a one-stop provider of gas,
electricity, and services, according to customer needs, wewill strive to be chosen by customers based on the overall
energy cost and added value.
As a general gas operator, we are coordinating smoothly witheach gas retailer to ensure transparency, neutrality, andfairness and to enable safe and reliable usage of gas evenGas Sales Volume (based on the Vision)(billion m3 )An increaseof approx.
2.9 billion m3

22.0

Electric Power Sales Volume

22.0

An increaseof approx.
17.3 billion
kWh(billion kWh)30.0

Approx.
30.0

19.1

16.5

22.5
15.3

11.0

15.0
12.7

09

5.5

7.5

0

0
2012.3
Launch of the 2020 Vision

2017.32021.3

8.3

2012.3
Launch of the 2020 Vision

2017.32021.3

and the Kashima Industrial zone. Upon completion of the

supply and expansion of services, we are strengthening our

Ibaraki Line and pipeline loops, we can confidently

natural gas infrastructure. Construction of the Koga-Moka
Line will be completed around the fall of 2017, ahead of theschedule, and construction of the Ibaraki Line will belaunched after the selection of its final route.
Demand for gas, from LNG, a relatively clean energy, hasgrown through conversion from reliance on other energy andis expected to continue to expand. Maintenance know-how is
indispensable for safe use of gas. We are in advantageous
position in this regard, as we have strong relationships oftrust, accumulated over many years, with customers.

accommodate future additional gas demand in the Kanto.
In the context of accelerating global business development,
we have established new business operation sites andincreased our workforces. We have established ourselves
mainly in North America and Southeast Asia and havespecific projects in hand. Specifically, in 2017, we purchased
a 30% equity share in Castleton Resources, a company
which has 660km² of leasehold in eastern Texas in May. While
we acquired equity stakes in the U.S. gas development
business in the past, this is the first equity investment in an
upstream company.
Concerning the realignment of our corporate group, in April,
we defined seven business domains: City gas business,
Electric power business, Liquid gas business, Living service
business, Engineering service, Urban development service,
and Overseas business. These are seven businesses, noteight as Yatsugatake (literally eight peaks) may indicate, but
retain the potential for us to add other new businesses, aslong as they can contribute to raise corporate value.
In the area of corporate governance, since April, we havemade clearer separation of supervision and execution andhave enhanced a monitoring function of the Board of
Directors. Meanwhile, the Board is becoming a place to draw
up important strategies for the entire Tokyo Gas Group, notmerely a place to deal with details of each execution. We
have also strengthened our risk management system,
foreseeing an increase in business volatility as the onceregulated industry has become deregulated.

Making steady progress toward realization of ourlong-term vision
Fiscal 2017 is a final year of the second “Step” stage of the
Challenge 2020 Vision. We are making steady progress in its
three main measures: to evolve into the total energy business;to accelerate global business development; and toreconstruct our corporate group. We will continue ourprogress in fiscal 2017.
To evolve into the total energy business, we have made agood start in the electricity retail business. Development ofelectricity supply capacity is also proceeding as planned. In
the city gas business, we began operation of our Northern
Kanto Area infrastructure, including the Hitachi LNG Terminal,
our first receiving terminal located outside of the Tokyo Bay
area, as well as the Ibaraki-Tochigi Line. In addition, we havedecided to build the Ibaraki Line between the Hitachi Terminal

TOKYO GAS ANNUAL REPORT 2017

after the deregulation. With the objective of ensuring a stable

10President's message

What I want to tell you
Lighting street lamps, it was the
begining of Tokyo Gas’ history.
We embrace the spirit of our founder,
Eiichi Shibusawa, to balance social
value and economic value.
Since the Company was founded, we
have tackled continuous challenges ofcompetition and need for reform. We
will accelerate self-generated change
during this Second Foundation.
The gas industry is a growth industry
for us. We are based in the highdemand Great Tokyo Area and will
expand into the Northern Kanto Area.
We aim at acquiring one million
customers for electricity within 2017,with a medium-term target of a 10%
share in the Kanto Region.
We are developing overseas activities.
We are shifting away from the Mt. Fuji
type management to the Yatsugatake
Mountains type management.
We make use of our invisible assets.

11

Shaping up the management plan for 3-year“JUMP” stage
From fiscal 2018, we will enter the next 3-year “JUMP”
stage, to complete our Challenge 2020 Vision. We will plan
specific strategies and launch them by the fall.
We intend to draw up management strategies, heeding
implications and requirements of the Basic Energy Plan of
the Japanese Government and keeping an eye on moves by
JERA (a joint venture of Tokyo Electric Power and Chubu
Electric Power), our competitor in the energy market. Major
issues to focus include how far we shall expand in theelectric power business, how much we shall invest overseas,
and whether we need to scrap and build businesses.
For example, the Challenge 2020 Vision targets expansionof our electric power generation capacity from 1.6 million
kW at present to about 3 million kW by 2020. Aiming toincrease the capacity to 5 million kW by 2025, we will planmeasures of the three years.
Looking ahead, we are likely to need alliances with othercompanies more than ever for the promotion of the totalenergy business and for global development. We havealready established Synergia Power with Tohoku ElectricPower in high-voltage power sales. We will be flexible inconsidering other options in the context of a wider
framework.

common good AND profit, which is needed for sustainable

Continuing to enhance “invisible assets”
Since the company was founded in 1885, we haveaccumulated “invisible value” which does not appear on
financial statements. Our sources of competence include
our customers’ trust, accumulated knowledge, richly
experienced human resources, a track record in stablesupply, LNG procurement capacity, a network in the Greater
Tokyo Area of Lifeval and other service Companies, andvarious business partners. In addition, we haveinfrastructure facilities such as pipelines, which appear on
the financial statements but are installed underground andcannot be seen. When we launched retail electricity sales,
we recognized anew the brand value of Tokyo Gas astrustworthy by customers. We consider that undergroundpipes and trust are also invisible assets. We intend totreasure and use such advantages in dealing with the gas
retail market after deregulation.

Balancing social contribution and creation of
corporate value
Eiichi Shibusawa, the first president of Tokyo Gas and aformidable industrialist and financier in the 19th century,
wrote in his book “Rongo to Soroban (The Analects and the
Abacus)” the importance of balancing social value andgrowth. Shibusawa started the company with that prescientconcept present in today’s CSV or Creating Shared Value.
For 130 years, we have kept this concept foremost in ourmanagement and have consistently endeavored tocontribute to society by safely and stably supplying energy,
which is indispensable to people’s lives, and have achieved
sustainable profit growth of the company. This dedication isshared by all of our employees and is the origin of ourcorporate social responsibility (CSR) and the ultimate
source of corporate value. This underlying principle willremain unchanged when we handle not only gas but also
electric power and services to engage in the total energy
business and when we do business not only in the Greater
Tokyo Area but also across Japan and abroad.
Employees are the driver for business promotion. Under theview that business cannot be sustained unless each one ofthem works enthusiastically, we are establishing various
programs and working on raising awareness of various
subjects. Establishing an environment where our people are
motivated to work is resulting in orienting our corporate
culture to respect diversity and human rights.
I believe our “corporate value” is the sum of value we offer
to customers, shareholders, business partners,
communities, and all other stakeholders. Concerning
shareholder return, we intend to maintain our basic policy oftargeting a total payout ratio of approximately 60% by
combining dividends with share repurchase (assuming
subsequent cancellation) up to 2020. In fiscal 2016 werecorded a significant decrease in earnings but did not cut
dividends. We intend to gradually increase dividends in linewith growth in earnings.

TOKYO GAS ANNUAL REPORT 2017

economic value. Not common good OR profit. Rather,

We will keep growing
Lastly, I will manage the Tokyo Gas Group so as to keep it agrowth company. While gas demand in Japan is expected toincrease, due to a shift into clean and competitive LNG,
Tokyo Gas is aiming at increasing sales in the Northern
Kanto Area where we are establishing infrastructure.
Moreover, we also have growth opportunities, including
electric power business and overseas markets.
We will embrace the values incorporated in our corporate
message, “Supporting you Always and bettering every day.”We will continue dialogues with many stakeholders andraise long-term corporate value through our new system inthis new era. The Tokyo Gas Group is taking up challenges
for the Second Foundation. I ask for the continued
understanding and support of our stakeholders.

Representative Director, President
Michiaki Hirose

12

CFO’s message

Tokyo Gas is committed tosustainable growth investment
and enhancing shareholder
return, while remaining alert tomaintaining financial healthIsao Nakajima
Senior Executive Officer, CFO

As CFO, I participate in the process of reviewing anddeciding on management strategy and am in charge offinancial and capital policy. The basic financial andinvestment policy of Tokyo Gas is to achieve threeobjectives that are mutually related: (1) to make sustainable
investment for growth; (2) to maintain financial health; and(3) to deliver stable and appropriate shareholder return.

Based on a solid financial position as shown by the equity
ratio of 49% and debt-to-equity ratio of 0.65 as of March
31, 2017, we are determined to continue active growthinvestment and maintain our current competitive
shareholder return (total payout ratio of 60%) in fiscal 2017.
Our ordinary income in fiscal 2016 decreased 70% yearon-year to ¥55.6 billion. This does not necessarily indicate
the degree of our earning power. The decline was mainly
due to the sliding time lag associated with changes in oil
prices and actuarial gain or loss, which wiped out profit by

Capital Expenditures and Gas Sales Volume

Shareholder Returns

We have made investments toenhance earning power(¥ billion)

Capital expenditures (LH)

Gas sales volume (RH)

(billion m 3 )(¥ billion)

80

225

15

60

58.1

150

10

40

34.0

31.2

75

5

20

0

0

0

10.0

21.3

1995.3

2000.3

Ohgishima LNG Terminal,
Keihin Line, etc.

13

Share repurchases

20

300

2005.32010.32017.3Chiba-Kashima Line,
Hitachi LNG Terminal, IbarakiTochigi Line, etc.

*1 Non-consolidated basis up to fiscal 1998; consolidated-basis from fiscal 1999

32.2
26.4
5.0
21.4

61.7

36.0

67.3

65.1
58.2

40.0

41.0
33.8

32.3

28.3

7.9

24.3

Dividends paid

7.0

5.0

24.1

23.3

25.7

25.1

24.4

26.3

25.3

2008.3 2009.3 2010.3 2011.3 2012.3 2013.3 2014.3 2015.3 2016.3 2017.3
Total payout ratio

73.6% 63.4% 60.1% 60.9% 61.4% 60.7% 60.0% 60.8% 60.1% 60.7%*2 Gas sales volumes from fiscal 2011 are on a 2020 Vision basis. (Including the portion used in tolling and the LNG sales volume.)

1

Steadily implement growthinvestments, with consideration
given to investment efficiency
and cost of capital

2

Ensure financial health, to support
sustainable growth investment andstable shareholder returnroughly ¥120 billion. In addition to these one-off factors,
upfront investment for newly-entered retail electricity
business and depreciation expenses in projects, such as
for start-up of the Hitachi LNG Terminal (to greatly improvecity gas supply capacity), depressed profit. However, we
strongly believe that these are advance investments for
future growth, leading to enhance our medium- to longterm earning power.

Shifting into a Yatsugatake Mountains typemanagement to facilitate steady execution ofvarious strategies
Our Challenge 2020 Vision can be summarized as
constructing a business portfolio that enables us to firmly
make money in city gas, our original core business, as wellas in other businesses. Our specific target is to earn in theratio of 2:1:1 in the city gas, overseas, and otherbusinesses including LNG sales and electric power. We aremoving away from management focused on one dominantbusiness, city gas, “Mt. Fuji type”, to management ofseveral large businesses, “Yatsugatake Mountains type”.
Initially, when we launched the Challenge 2020 Vision, we
did not have a fully articulate image. Subsequently, throughcarrying out initiatives, we have organized our vision into
seven business domains: City gas business, Electric powerbusiness, Liquid gas (LPG and industrial gas) business,
Living service business (life support, ideas and hints forliving, comprehensive facilities, etc.), Engineering service
business (energy service, LNG facilities, etc.), Urban
development service business (real estate usage andmanagement), and Overseas business.
In the electric power business, we plan to increase thenumber of customers from about 730,000 in fiscal 2016 to
one million in fiscal 2017. Since April 1, 2017, retailing ofcity gas has become fully deregulated. We will not merely
continue our city gas business as it has been. We think it
is important to proactively provide customers with valueadded services by combining city gas, electricity, andlife-related services.
Overseas, we focus on North America and Southeast Asia,
where our initiatives to participate in shale gas or gas-fired
power generation businesses in cooperation with local
major companies have been making progress. We certainly
consider feasibility, risk management, and other factors,
and cautiously make investment decisions. At the sametime, we want to realize a virtuous cycle, in which each3

Sustain specific shareholder
return policy (Total payout ratioof 60%)

achievement is accumulated and leads us to the next
business opportunity.
In the urban development service business, we arecollaborating with a major developer for a large-scale
project “msb Tamachi” in the East Exit area of JR Tamachi
Station in central Tokyo , to be completed by 2020.
As such, each business, representing each peak of amountain range, independently carries out growthstrategies, while the group-wide comprehensive
management system covering all businesses is beingenhanced to realize the Challenge 2020 Vision.

TOKYO GAS ANNUAL REPORT 2017

Basic Financial Policy

Alert to the cost of capital in making investment
decisions; moving toward achieving 8% ROE
The Challenge 2020 Vision has set the amount ofinvestment and loans at ¥2,060 billion for nine years to
fiscal 2020. We have already invested over 50% of thistarget amount. In fiscal 2017 and after, we plan to enhancemaintenance, such as pipeline replacement, and to invest
in a high-pressure pipeline network from a longer-term
perspective. Particularly in the overseas business,engineering service business, and real estate business, weare mindful of the cost of capital in making investment
decisions, in order to improve ROE.
Our ROE target in the Challenge 2020 Vision is 8% by
fiscal 2020. While ROE in fiscal 2016 fell short at about 5%,
partly due to the effect of the sliding time lag, a one-off
negative factor, we will steadily maintain and expand
earnings of each business, that comprises our“Yatsugatake Mountains”, so as to achieve our target.

Maintaining a total payout ratio of 60% in
dividends and share buyback
We are on record as pledged to return approximately 60%
of consolidated net profit in dividends and stock
repurchases to shareholders through fiscal 2020. Thismeans we will raise dividends step by step, while returning
earnings, or the outcome of business, on a timely basis toshareholders. Our target of 60% reflects balanced
consideration given to shareholder return, future growthinvestment, and financial health, as diligent use of thegenerated cash flow. We are making our policy on
distribution of the surplus as clear as possible, as a part ofefforts to ask for continued understanding and support ofshareholders.

14Deregulation of the Electric Power and Gas Markets
Deregulation

Meaning and Objectives of Electricity and Gas System Reforms and Schedule Milestones
40

26

Deregulation
progress

Electricity

1995
2 million m3 or more
Large-scale factories andhospitals

62

%

%

%

2,000kW or more
Large-scale factories, etc.

500kW or more
Medium-scale
factories, etc.

50kW or more
Small factories, etc.

1999

2004

2005

1 million m3 or more
Manufacturers and largescalecommercial facilities

500,000 m3 or more
Medium-scale factories,
etc.

Establishment ofOrganization for Crossregional Cordinationof Transmission
Operators, Japan

2007

2015

100,000 m3 or more
Small factories, etc.

Gas

49

Deregulation
progress

%

53

57

%

64

%

%

Gas System Reforms

Tokyo Gas Group’s Actions

Since April 2017, regional monopolies and regulation on prices
for small-scale gas retail have been abolished. In the past,
general gas business operators provided a one-stop service
from production to supply and sales. The gas system reform has
separated the gas industry into three types: gas pipeline business(general and dedicated); gas retail business; and gas production
business. Retail operators (new entrants) are now able to use
the pipelines of the pipeline business operator, upon payment ofusage rates, and to sell gas to residential and small-scale businesscustomers.

In fiscal 2016, we made a good start by entering the electricity
retail business and getting prepared for the full deregulation of theretail gas business of April 2017, as a priority issue.

Small-lot segment

Tokyo Gas~2017.3

Production

SupplySales

2017.4~

Production

SupplySales

New entrants

Business Operators’ Major Roles, Major Changes from the Gas System Reform, and Tokyo Gas Group’s Strengths
Type of business

Major roles of eachbusiness operator

LNG terminal business (gas production business)[Notification system]

Production of gas, based on request from owncompany’s retail division and contracts with othercompanies

General gas pipeline business[License system]

Gas retail business[Registration system]

Transportation service for delivery to specified service
points via pipelines that the service provider maintains andoperates*1

Securing and supplying the supply capacity needed todeliver to own customers

Fair management as a pipeline operator available to all retail
operators
Last resort service obligation
Safety: emergency safety, inner-pipe leakage testing2
Major institutional
measures triggered
from the gas system
reformProvisions on the use of LNG terminal by third
parties within the extent of excess capacity
Provisions to promote entry of various retail
operators

Safety: gas appliance inspection; safety awarenesspromotion
Retail gas business shift from a license system to aregistration system
Abolition of regional monopoly
Enabling all customers, large and small, select a retail
operator out of those with various services and rateschemes

1 The pipeline is commonly used by all retail operators.

Establishment of a fair retail competitive environment
and an appropriate gas pipeline network

3

From rates based on the full cost principle to free pricesetting by retail operators*2
Realizing competition-driven decline in rates

Tokyo Gas Group’s
Strengths

15

Stable and efficient terminal operation

Stable and reliable management of gas pipeline network

Community-based sales structure

Expansion of optimal new infrastructure to improve supply
capacity

Capacity to propose energy solutions

Emergency safety measures

LNG procurement capability of 14 million tons per year

After the phased and subsequent full deregulation of the electric power retail market in April
2016 and of the retail gas market in April 2017, Japan’s energy market has become fully
deregulated.

%

Full deregulation of theretail market

Securing a stable supply of electricity
Lowering electricity rates
Legal separation of thepower transmission anddistributions networks

Less than 50kW
Residential and small
commercial users

2016

2017

Expanding choices for customers

2020

2022

Less than 100,000 m3
Residential and small
commercial users

Meaning and Objectives of Gas
System Reforms

Legal separation of thegas pipeline network

Securing a stable supply of gas andincreasing its use

Full deregulation of theretail market

Lowering gas rates andhigher customer satisfaction

100

Expanding choices for customers andenhancing safety at customer sites%

Full deregulation of retail businessOverall Image after the Full
Deregulation of City Gas Retail
Business
LNG
procurement

TOKYO GAS ANNUAL REPORT 2017

Meaning and Objectives ofElectricity System Reforms

100

April 2017 and after

Previously deregulated area

LNG
terminal

Up to March 2017
Approx. 11 million residential and small
business customers*3

Large-lot customers of 100,000m3 and over

The pipeline network is usedby all retail operators.

1

2

The retail business shifted from alicense system to a registration system.
Regional monopoly was abolished.

3

Change from rates based on the full costprinciple to free price setting by retail
operators*2

Division of safety responsibility
Safety responsibility
Safetyregulation

Gas facilities

Gas appliances

Gas meter
Boundary ofpropertyGas
valvesUser’s site
Assetseparation

Gas appliance inspection and risk prevention publicity are
identified as responsibility of gas retail operators. As the existinggas operators have know-how in gas appliance inspection, newentrants should find it easy to entrust gas appliance inspection
and related operations to the existing operator. Meanwhile, thegas pipeline operator is responsible for emergency response
and inner-pipe leakage testing.
Safety responsibilities and responsible entity (Small–lot segment)

Business
operator

User
Gas pipeline operator

Gas retail operator

Inner-pipe leakage
testing

Gas applianceinspection, etc.

Safetyresponsibility

Emergency
maintenanceGas applianceinspection,risk prevention publicity General gas operator
Emergency response

Tokyo Gas

Inner-pipe leakage
testing

Gas retail operator
Tokyo Gas and new entrants

General gas pipeline operator
Tokyo Gas

BeforeAfter*1 “Transportation service” means to receive gas from the gas supply operator (who requests transportation service) in the pipeline of the gas operator and to supply the same amount at a different
spot through the same pipeline to the gas supply operator. The transportation rate is the pipeline usage rate that the gas retail operator uses in gas supply and is approved by the government.
*2 As a transitional measure so that the amendment would not result in increased gas retail prices due to insufficient competition with other gas retail operators, LP gas, all-electric operators andother players, the designated former general gas operator is required to provide retail price menus reviewed and approved by the Ministry of Economy, Trade and Industry (“METI”).
*3 Number of customers of Tokyo Gas

16

Challenge 2020 Vision

CHALLE2020
VISION
Toward Achieving the
Challenge 2020 Vision
In November 2011, we released “The Tokyo Gas Group’s Vision for Energy andthe Future: Challenge 2020 Vision” as a guideline to lead us to what we aim to

be up to 2020. It was based on extensive internal discussions about the role ofan energy company in society that can enable it to realize a prosperous,

fulfilling way of life for people, contribute to the competitiveness of domestic
industries, and be friendly toward the environment.

We will develop and expand our business structure
and base, in order to enhance the value of our
LNG value chain, return profits to customers andshareholders, and contribute to society.

Gist of
Challenge2020 Vision

Five action plans to advance the LNG value chain

Area
expansion

1

2

3

Reduce LNG purchasecosts and expand
overseas operations

Deliver safe and stablesupply of energy

Provide energy
solutions adapted to avariety of needs

Procurement andtransportation

Production and supply

Energy solution

4
17

LNG value chain from theGreater Tokyo Area tonationwide

LNG value chain: fromJapan to the world

Pursue technical development
and IT utilization with a focus
on the future

5

Realize a leaner andstronger businessstructure

N

TOKYO GAS ANNUAL REPORT 2017

ENGE

Toward becoming the “total energy corporate group”
and the “global corporate group”
Tokyo Gas will make further progress in its core city gas business and develop the electric
power, engineering, wide-area gas supply, and other businesses into new sources ofstrength whereby to make being the “total energy corporate group” a reality. At the sametime, we will maintain our business base in the Greater Tokyo Area and develop businessacross Japan and overseas, aiming to become a “global corporate group” with about aquarter of earnings to be generated from overseas businesses in fiscal 2020.
Challenge Performance Indicators of
Gas Supply Volumes by Application

22.0 billion m

Business Structure(Consolidated Net Income Ratio by Business)

3.5

Residential

3.3

Commercial

7.0

Industrial

5.2

Industrial

1.9

3.0

Wholesale2012.32021.315.0 billion m

3

3.5
2.7
3.4

25 %

10 %

Targets for
FY2020(general use)

20 %(power generation use)

3.5

Reference values as of the time
the Vision was put in place

Gas business
LNG sales, electric power, and other businesses
Overseas business3

As of the time
the Vision was
adopted

50 %

25 %

Average for
FY2009-2011
70 %MILESTONEThe Challenge 2020 Vision comprises the following
three periods or what we call “stages” with different
themes and initiatives to implement for each stage.

JUMP

stage

Fiscal 2018-2020
Our target

Advanced LNG value chain
Fiscal 2020

STEP

stage

Fiscal 2015-2017

Main initiatives

HOP

stage

Fiscal 2012-2014

Main initiatives•Diversification and expansionof LNG procurement andoverseas business•Safe and stable energy supply•Energy solutions that meetcustomer needs•Evolve into the total energy
business•Accelerate global businessdevelopment•Reconstruct the corporate
group

Consolidated operating
cash flow¥250 billion
D/E ratio

ROE

ROA

8%

4%

Total payout ratio

Approx. 0.8 Approx. 60%(each fiscal year)

Where we are at present

P19

In fiscal 2017, the final year of the “STEP” stage, we will
increase added-value by making total-energy proposals thatcombine services to the city gas, electric power, and liquid gas
businesses, and enhance initiatives to make the Tokyo Gas
Group to be chosen as a supplier of gas, electricity, andservices. Further, we are accelerating expansion of theoverseas business under a new structure, including 11 overseas
bases. We have defined seven business domains each of which
will have a specific growth plan and arrangements to generatesynergies among them.

18Challenge 2020 Vision

STEP stage
Final fiscal year

Fiscal
2017

CH
202

What we will do

Regarding the specific business strategies for the seven business domains
we have identified, we will adjust conditions in our corporate groups tofacilitate growth and expansion, and generate synergies. This means wewill seek to deliver more added-value to customers. We will also strive tostrengthen our foundations to support business growth.

Business domains’ specific business strategies
City gas business
Enhancing alliances in
LNG procurement and forterminals; increasing use ofgas and securing its stablesupply under the newly
deregulated conditions

Electric power business

Overseas business

Liquid gas business

Expanding power sources
Stable low-cost supply

LPG sales via enhanced
alliances

One million low-voltage retailcustomers

Business expansion in
North America and Asia,with opening of newbases and increasing
manpower
Enhancing risk
governance

Living service businessEngineering service
business

Urban development
service business

Creating added-value forcustomers

Expansion of business areaand domain
Enhancing engineeringsolutions

Effective use andmanagement of real estate
Growth strategy planning

Accelerating global
business development

Evolving into the total energy business

Strengthening of foundations
Digitalization strategy

Environmental (low-carbon)
strategy

Workflow and workstylereformPromotion of digitalization;enhancing IT infrastructure

Research and development andstrategy planning, assuming progress
toward a low-carbon society

Drastic innovations in work,business structure, and workstyle

Engineering service business

Expanding business area and domain inengineering services that match the needs ofcustomers

19

Liquid gas business

LPG business: Raising logistics efficiency andenhancing safety level and customer service via
alliances with various players
Industrial gas business: Enhancing one-stop
solutions, by combining LNG, engineering
services, and other services

City gas business
Aiming at enhancing alliances
in material procurement,
LNG terminals, and power
stations and at achieving both
stable supply of energy andcompetitive resource prices
Securing transparency,
neutrality, and fairness as a
new gas pipeline operator, andstriving for safety, stable supply,and promotion of use

Electric power business

Living service businessRealizing stable low-cost
electric power procurement
and sales expansion throughthe procurement and sales
optimization, in order to beable to service about a million
customers

In addition to the energy
business in the residential
market, expanding newvalues and services that help
make customers’ life more
comfortable

City gas, Electric power, Living service
Group-wide efforts to deliver proposals for a more
comfortable life to residential customers, offering
comprehensive choices in gas, electric power, andservices
Alliances with gas wholesale operators in providing
gas, electric power, and services. Expanding electric
power sales via business alliances in low-voltage
power with gas wholesale operators and others;
establishing arrangements for alliances in gas,
electric power, and services

Urban development
service (real estate)business
Contributing to communitybased energy plans anddisaster-resilient urban
planning through effective
use and management of realestate, and cooperating withstrong players in the realestate industry, with an aim ofprofit growthTOKYO GAS ANNUAL REPORT 2017

HALLENGE
020 VISIONCity gas, Electric power, Engineering service

Providing gas, electric power, and services tocommercial and industrial customers. Promoting
energy solution proposals that meet customers’
needs, not limited to the gas supply area of Tokyo
Gas, for raising convenience and amenity ofcustomers’ business operations

Overseas businessParticipating in new projects, mainly in North
America and Southeast Asia, and studying
business expansion in new areas by leveraging
the existing overseas bases and staff and aiming
for higher and more stable profit
Enhancing risk management by using pastexperiences and raising added-value of business,
as risk will be diversified and increased, in linewith acceleration of expansion in area served andlines of businessInitiatives
towardstrengthening
businessfoundations
Digitalization
strategy;
Environmental(low-carbon)
strategy;
Workflow andworkstylereform20

GAS BUSINESSBusiness overview

Applications of gas from the Tokyo Gas Group spans a wide range, from householdcooking, heating, and hot water, commercial air conditioning, industrial use, power
generation, and other usage. The Tokyo Gas Group has also extended coverage from
Tokyo and its adjacent three prefectures (Kanagawa, Chiba, and Saitama) to North Kanto(Ibaraki and Tochigi) by lengthening its pipeline network so as to serve more customers.

OutlineSales Volume and Operating Profit(¥ billion)

200

Operating profit (LH)

(million m3 )20,000150

15,000Gas sales volume

Net sales

100

10,00011,536 thousand

15.7billion m¥1,040 billion

50

5,000

FY2016Equivalent to approximately 45% of gas
sales volume in Japan in FY2016

Number of customers

3

FY2016002008.3 2010.3

Strengths

Sales volume (RH)

2012.32014.32016.3 2017.3

Factors affecting revenues and expenses• Over 11 million customers as a base and the relationship of trust with them
• Delivery of safety and reliability to customers for many years

P.55

Crude Oil Price and Foreign Exchange Rate

• The Kanto Region with its robust production/consumption activities (representing
about 40% of Japan’s GDP) is now in the service area($/bbl)

120

(¥/$)

Crude Oil Price (LH)
Foreign Exchange Rate (RH)200

• Safety-related know-how and energy solution technology• Potential difficulty in material procurement caused by the impact of country risks atimport sources

Risks• Supply issues due to damage to production facilities stemming from a large-scaledisaster

90

150

60

100

30

50

• Intensified competition driven by market deregulation; decline in demand causedby changing lifestyle

1
2

3

0

0
2008.3 2010.3

2012.32016.3 2017.3

Diversify resource suppliers
New LNG Project

Tokyo Gas is beginning to receive LNG from the Cove PointLNG Project, our first from the gas-rich shale source in North
America. This resulted in increasing the number of LNG
suppliers to 13 projects in 6 countries, and making Tokyo Gas
one of the foremost purchasers with diversified contracts inJapan. To enhance procurement stability we are considering
widening LNG procurement areas from Southeast Asia,
Australia, and North America to include Africa.

SakhalinTokyo

Existing LNG Project■

LNG suppliersSpecific
examples

2002

2017

7 projects

13 projects

Procurement from the Cove Point
shale gas project, achieving three
ways of diversification

In fiscal 2017, Tokyo Gas is beginning to receive LNG from the Cove PointLNG Project, our first from the gas-rich shale source in North America.
In addition to diversification of our suppliers and total contract terms
and conditions through the procurement from Cove Point, we signed amemorandum of understanding on a strategic alliance with Centrica, theUK’s leading energy and services company in November 2016, which
contributes to diversification of the LNG network.

Cove Point

Cameron

Qatar
BruneiMalaysia
Pluto
Gorgon21

2014.3

NWS

DarwinIchthys

QC(Queensland Curtis)Japan heavily relies on imports for natural gas procurements. Prices forimported LNG generally set under a mechanism linked to the price of crude
oil. Aiming for stable and affordable LNG procurement with these given
conditions in the background, the Tokyo Gas Group has been using an
LNG procurement strategy that calls for diversified procurement sources,
flexibility in setting contract terms and conditions,and developing its LNG supply network.

1

TOKYO GAS ANNUAL REPORT 2017

Anticipatory diversification toachieve stable and affordable LNG
procurement

Resource
suppliers
for stableprocurement

Three Ways ofDiversification

2

1
2

3

Diversify contract terms andconditions

By adding contracts linked to the U.S. natural gas prices andother benchmarks, in addition to conventional crude oil
price-linked contracts, we aim to have a better balanced
portfolio of contracts and thereby to stabilize procurement
costs. We also intend to increase the number of contracts
which allow us freedom to determine shipment destinations
and other matters to enhance our flexibility.
Present

FutureMostly linked to crude
oil price

Linked to crude oil price
Linked to Henry Hub prices
Linked to NBP prices

Mostly long-term
contracts
Forwarding withdestination clauses(National Balancing Point)

Diversified contract periods
Destination free clauseStableprices3

Contract terms
and conditions

LNG network

for stablepricesfor more
flexibility

123

Diversify our LNG network

By establishing an LNG network that connects the markets in
Europe, Asia, and North America, we aim to reduce costdifferentials among regions and to position ourselves toflexibly adjust demand and supply.

Present

Mainly trade
between Japan andits export-market
countries

FutureNetwork that connects
places such as gas fields
and power plants across theglobe

Procurement from Cove Point
1

Diversify resource
suppliers

Being supplied from the LNG project originated from the shale gas source in the U.S.A.

2

Diversify contract terms
and conditions

Linked to the U.S. natural gas prices, no restrictions on destinations

3

Diversify our LNG network

LNG that Tokyo Gas procures from the U.S.
project will be exchanged with LNG Centrica
procures in the Asia Pacific region on a cargo
unit basis, toward realizing cost reduction byincreasing the efficiency of LNG transport

The tie-up between between Centrica, which isa major LNG buyer on the Atlantic market, andTokyo Gas, a major LNG business operator in the
Pacific market, also has objective of conducting
flexible LNG trading bridging both markets

Signed a memorandum of understanding on a strategic alliance with Centrica (UK)22

Potential toincrease

Kanto 100-200km radiusBusiness overview

2.0 billion m3

Expansion of Natural Gas Usage
through Infrastructure Development

Total

9.0 billion m

Kanto 100km radius

7.0 billion m3

3

Kiyohara Industrial Park

Hitachi LNG
TerminalMoka Power Station(Kobelco Power Moka)(Scheduled for 2019)

Ibaraki Line

Koga-Moka Line

(Scheduled for 2020)(Scheduled for October 2017)

Saito Line
Kashima
Waterfront
Industrial Zone

Kashima
Waterfront Line
Chiba-Kashima
Line

Ohgishima LNG Terminal
Negishi LNG Terminal

Sodegaura LNG Terminal

Investment of ¥730 billion in nine years indomestic infrastructure
Under the Challenge 2020 Vision, Tokyo Gas plans to invest
around ¥730 billion, equivalent to 35% of its total investment
budget, in domestic infrastructure upgrades over the nineyear period from fiscal 2012 to fiscal 2020.
We are expanding and improving the pipeline network tosecure stable and reliable supply of our gas to users and toincrease use of natural gas. In keeping with our plan to makea high-pressure line network in the form of a loop forenhancement of supply stability and increase in transportcapacity, we are preparing to start constructing of the Ibaraki
Line, connecting the Ibaraki-Tochigi Line and the Hitachi LNG
Terminal with the Chiba-Kashima Line.

Northern Kanto, a region of significant potential
demandTokyo Gas puts particular strategic emphasis on Northern
Kanto which has strong potential demand growth for natural
gas owing to the region’s large-scale industrial zones. We
aim to expand gas sales volume from 15.0 billion m3 in fiscal
2011 to 22.0 billion m3 by advancing on two fronts: 1) further

Advantages of natural gas
Benefits of fuel conversion
Eco-friendly; no need for storage; improved operability(no clean-up); labor saving; stable supply
CO2 emission reduction by fuel conversion
Comparison of CO2 Emissions (Coal=100)
Natural gas

Oil

Coal

60

80

100

Promoting the widespread use andexpansion of distributed energy systems

CO2 emission reduction by use of advanced(high efficiency) facilities
Gas processing facilities designed for high efficiency
require less energy for industrial heat sources and emit
less CO2
CO 2 emission reduction by conversion
from fuel oil A to natural gas

Fuel oil A
Fuel+
Conventional conversion
burners
CO2
Emissions

100

Examples ofadvanced utilization
measures23

To naturalgas

75

Advancedutilization

enhancing the stability of supply through expanded supply
capacity for the development of potential demand andthe completion of the pipeline loop; and 2) promoting fuelconversion from heavy oil and kerosene as fuel to natural gas
and advanced utilization of natural gas.

Higherefficiency ofburners

45-70

Adoption of high efficiency burners; collection of
exhaust heat; improved heat insulation and reduced
heat loss at openings; improved combustible air ratio

Cogeneration systems supply electricity and heat by using
city gas as fuel. In addition to the installation of facilities at the
point of demand, cogeneration systems help enhance energy
efficiency, reduce the amount of CO2 emissions, and improve
economic efficiency through the conservation of energy byeffectively utilizing both electricity and waste heat. Having
identified cogeneration system as a strategic product, Tokyo Gas
is promoting adoption of the residential fuel cell system ENEFARM and, for commercial and industrial customers, optimalcogeneration systems matching their demand. Since the firstunit was launched in 2009, we have added smaller, lower-priced
models of this system. As of March 2017, our ENE-FARM installedbase had risen to approximately 80,000 units.
In the commercial and industrial area, against the backdrop ofincreased demand for energy security and business continuity

GAS BUSINESSTOKYO GAS ANNUAL REPORT 2017

Gas sales volume in the Kashima area surged toequal 10% of total

Wider Energy Supply Business in Northern Kanto

Area-wide Energy supply
to Kiyohara Industrial Park

As a first step toward capturing potential demand throughthe development of infrastructure, we completed the ChibaKashima Line in March 2012. Gas sales volume increased
dramatically in the Kashima Waterfront Industrial Zone toabout 10% of our consolidated gas sales volume.

We began construction of an energy center, mainly
consisting of a 30MW-class cogeneration system,to supply electricity and heat to multiple offices(three companies and seven offices) in the Kiyohara
Industrial Park in Utsunomiya City, Tochigi Prefecture
in October 2016. The Tokyo Gas Group, to achieve
maximum efficiency in serving these customers,
will monitor the fluctuating load of each office andengage in optimally balanced operation to supply
energy. This will be one of the largest area-wide
energy supply undertakings in an inland industrial
park in Japan. We are thus promoting widespread
use and expansion of distributed energy systems andtapping industrial demand in Northern Kanto.

Tap Northern Kanto’s potential market for gas byanother fuel conversion initiative
The Saito Line (Soka City, Saitama Prefecture–Koga City,
Ibaraki Prefecture) started service in October 2015, followedby the start of service of the Hitachi LNG Terminal and theIbaraki–Tochigi Line (Hitachi City, Ibaraki Prefecture–Moka
City, Tochigi Prefecture) in March 2016. By linking with ourexisting three terminals in Tokyo Bay and our high-pressure
trunk line network, our supply infrastructure has been mademore stable. Capitalizing on our infrastructure building inNorthern Kanto, Kobelco Power Moka (an affiliate of Kobe
Steel) has decided to construct a gas-fueled thermal power
plant in Moka City, Tochigi Prefecture near our facility. In
addition to the projection of an increased gas sales volume
by supplying gas to this power plant, we anticipate that it will
enable us to increase our business. In order to complete ourinfrastructure base in Northern Kanto, we have decided toconstruct an Ibaraki Line between Hitachi City and Kamisu
City. This will enable us to develop further demand in the
Kashima area and increase use of natural gas in the Kanto
Region.

Provide energy solutions centered on natural gas to promote diversified use of natural
gas and to advance the LNG value chain.
plans, we have been promoting sales of commercial andindustrial cogeneration systems, and the scale of our cumulative
installed base of these systems has reached 2,020 MW. Aiming
at widespread adoption, we are increasing the product line-up
by offering an easy-to-install package type and a model with
reduced low maintenance costs.

Cogeneration System (Commercial, Industrial)Gas
LNG terminal

Pipeline

Cogeneration
Electricalenergy30-48%Heat energy(steam)30-55%

Waste heatthat isdifficult touse
15-30%
Total energy
efficiency

70-85%**Energy efficiency stated above is calculated based on certain assumptions made by Tokyo Gas.

Installation Plans for ENE-FARM (Residential) and
Cogeneration System (Commercial, Industrial)
ENE-FARM (Residential) Installation Plan (LH)
Cogeneration System (Commercial, Industrial) Installation Plan (RH)

(Thousands units)

(MW)

500

5,000

400

4,000 4,000300

300 3,000

200

1,620

1,780

1,790

1,850

43.4

61.4

2015.32016.3

2,020

2,000

79.5

1,000

1,500

100
0

9.6

17.2

29.4

2012.32013.32014.302017.32021.3(Plan)

24

ELECTRIC POWER BU
Business overview

OutlineSince 2000 when the Tokyo Gas Group started to generate and supply the electric
power, it has engaged in a comprehensive range of business activities that extend fromfuel procurement to power generation and sales. Among the new entrants to the sector
following the start of its deregulation program, we own the largest-scale power station in the
Greater Tokyo Area and sell generated power to wholesale and large-lot customers. With
the completion of deregulation of the retail electric power sector in April 2016, we started
electricity sales to residential and commercial customers.
By our responding to customers’ needs for more affordable, reliable, and safe energy, we aim
to significantly expand our electric power business and to raise corporate value.
Net sales

Number of Customers

Electricity Sales Volume¥145.7 billion

728,000

12.7 billion kWh

FY2016FY2016FY2016Net Sales and Operating Profit(¥ billion)

Net Sales (LH)180

Operating Profit (RH)(¥ billion)

30

120

20

60

10

0

0
2012.32013.3 2014.3 2015.3 2016.3 2017.3

Electricity Sales Volume
Strengths• The largest-scale, highly-efficient power sources among the new power suppliers in
the Greater Tokyo Area

(billion kWh)15

• Community-based sales network (operated by Tokyo Gas Lifeval, Enesta, etc.) andover 11 million customers as a base10

• Infrastructure and operating know-how and system

Risks• Decline in price competitiveness of LNG thermal power generation, associated withchanges in prices of raw materials and fuels• Potential damage to power generation facilities and supply issues of raw materials
and fuels, stemming from a large-scale disaster502012.32013.3 2014.3 2015.3 2016.3 2017.3

Toward realizing our Challenge 2020 Vision
Deregulation of the retail market, that completed thegovernment’s program for electric power and gas system
reform, is being used to provide impetus for the Tokyo Gas
Group to greatly advance toward expanding as a “totalenergy” concern. Following the electricity retail deregulation
program in 2016, the gas retail deregulation was completed in2017. While competition is likely to become intensified, we are

Full Deregulated Market of the Electricity and Gas
Number ofcompanies*

Approximate
potential customers(Million)

Approximate
market size(¥trillion)

10

85

8.0

WithinTEPCO’s domain

29

2.8

203

26

2.4

expecting to gain more earnings opportunities by entering themuch bigger electricity retail market.
In the Challenge 2020 Vision, we aim to evolve our total energy
business including the electricity retail business, and expand
the ratio of “electric power, LNG sales, and other business”
from 20% of consolidated net earnings when the plan was
adopted to 25% by fiscal 2020.

Business Structure(Consolidated Net Income Ratio by Business)
Electric power, LNG sales, and other business
Overseas business
Gas businessElectricity

City gas25* Former general electric power operators, former general gas operators

20%

25%

Fiscal 2009-2011 Average

Fiscal 2020 Targets

SINESS
Hitachi LNG
TerminalMoka Power Station(Kobelco Power Moka)(Scheduled for 2019)

Koga-Moka Line

Ibaraki Line

(Scheduled for October 2017)(Scheduled for 2020)

Saito LineTOKYO GAS ANNUAL REPORT 2017

Kiyohara Industrial Park

Kawasaki Natural Gas Power
Generation Co., Ltd.
Kashima Waterfront Line
Ohgishima LNG Terminal/
Ohgishima Power Co., Ltd.

What we achieved in the first yearof the complete deregulation of theelectric power retail market
We have marketed the “Zuttomo Plan”, a package that
includes gas, electric power, and various other services, tosupport our expansion in the electric power retail market. Asof March 31, 2017, we signed plan contracts with 728,000
customers, acquiring the No. 1 position among new entrants
in the low-voltage market.
Entering the second year, we are working on retaining the No.
1 position in the number of contracts among new entrants andintroducing new service menus, in order to achieve the year’s
target of having one million customers. At the same time, we
are aiming at becoming the “Best Power Supplier” in termsof customer satisfaction so that those who have switched toTokyo Gas will be content with their decision.

Objective: Selling about 10% ofelectricity demand in the Greater
Tokyo Area
Using the advent in 2016 of completion of electricity retailderegulation, the Tokyo Gas Group expanded sales to residential
and commercial customers in addition to the wholesale segment,
selling electricity volume of around 12.7 billion kWh in fiscal 2016.
We plan to sell about 30 billion kWh, equivalent to about 10% of
demand in the Greater Tokyo Area, by 2020.

Chiba-Kashima Line

Negishi LNG Terminal

Sodegaura LNG Terminal

Tokyo Gas Yokosuka
Power Co., Ltd.

Tokyo Gas Baypower Co., Ltd.

Number of Low-Voltage Customer Contracts
Best power supplier incustomer satisfaction*

One million
cumulative

No.1 among new
entrants

0.728 million
cumulative

2016.42017.3

From April 2017
(Second year since the power deregulation)* Aiming to become the best power supplier, meaning No. 1 power supplier in customer satisfaction

Electricity Sales Volume
Ohgishima Power Station Startup of No. 3 unit operations(Feb. 2016)

11.0 billion kWh

Complete deregulation ofelectricity retail(April 2016)

30.0 billion kWh12.7 billion kWh
26

2016.32017.32021.3

Business overview

What we will do in and after the second year since the complete deregulationof the electricity retail sector
In light of the objectives of the electric power system
reforms and of the needs of customers, Tokyo Gas is
working at establishing a demand and supply structurethat contributes to greater stability of supply, supplies
affordable energy, and helps diversify services offeredto customers. To do this we established the PowerBusiness Division and are undertaking a variety ofmeasures to expand its electric power business.

Gas/electricity package deal, providing three-way value(good price, reliable, simple & convenience)

Value for
money

Peace
of mind

Simplicity &convenience

Value formoney

Through our gas pricing menu, including our new one “Zuttomo Gas” + “Zuttomo Electricity”, we will provide
customers with highly competitive pricing and services.

Peace ofmind

Reliable services for home life and business (Gas Fixture
Troubleshooting Support and Residential Monitoring Services)
We serve the official app of the service for Web members,“myTOKYOGAS” to customers, which provides them with

Simplicity & various information such as not only the gas and electricity
convenience usage but also the information related to the point and usefultips for everyday.

Expand power sources
Prompted by completion in 2016 of deregulation of electricity
retailing, we are aiming at delivering electricity to low-voltage
residential and commercial customers, in addition to serving thewholesale market, and we plan to expand generation capacityfrom the current level of approximately 1,600 MW (own equitybase) to around 3,000 MW by 2020. In addition to the Tokyo Gas
Group’s power stations, it has been agreed that electric power
generated at Moka Power Station, which is underconstruction by Kobe Steel, one of the largest Independent
Power Producers (IPP), will be supplied to Tokyo Gas.
Adding to our competitive gas-fired thermal power sources andbase load supply sources, we will also promote initiatives aimed
at expanding renewable power sources in order to address theissue of preventing climate change.
Plan to Expand Power Sources (Own Equity)

Recent Initiatives

Sep. 2014

Concluded an agreement with Kobe Steel, Ltd. forthe supply of electricity from the Moka Power Station(1,200 MW; operations scheduled to commence fromfiscal 2019)

Jan. 2016

Submitted the “Environmental Impact Statement” forthe construction plan of the coal-fired thermal power
plant (power generation scale up to a maximum of
2,000 MW by mid-2020s) of Chiba-Sodegaura EnergyCo., Ltd. (investment by Idemitsu Kosan, 33%; Kyushu
Electric Power, 33%; Tokyo Gas, 33%)

Feb. 2016

Ohgishima Power (investment by Showa Shell Sekiyu,
25%; Tokyo Gas, 75%) started operation of the No. 3
of Ohgishima Power Station, expanding the Tokyo Gas
Group’s Power source to approximately 1,600 MW

Mar. 2016

Received the subsidy of Fukushima Prefecture’s wind
power generation optimal location selection businessand began a study of wind conditions.

Feb. 2017

Formed a business alliance with Shizen Energy Inc.,
with the objective of acquiring around 60MW of solar
power generation sources

Approx. 3,000 MW

Moka Power Station
Start-up of operations

Increase of approx.

(1,200 MW)

Ohgishima Power
Station Start-up of No.
3 unit operations(300 MW)

1,400 MW

Approx.
2,800 MW(vs. Feb. 2016)

Approx.

1,600 MW2019-20202016.2(Plan)

2020(Vision Targets)* Shizen Energy Inc. specializes in solar power generation and other renewable energy
businesses and provides total services, from development to operation and maintenance.

The Group’s Natural Gas-Fired Thermal Power Plants

Tokyo Gas Baypower Co., Ltd.
Generation capacity

100MW 100MWx 1 unit

27

Start of operations 2003

Tokyo Gas
generation capacity

100MW
Tokyo Gas interest 100%

Tokyo Gas Yokosuka power Co., Ltd.
Generation capacity

240MW 240MWx 1 unit
Start of operations 2006

Tokyo Gas
generation capacity

180MW
Tokyo Gas interest 75%

Kawasaki Natural Gas Power Generation Co., Ltd.
Generation capacity

840MW 420MWx 2 unit
Start of operations 2008

Ohgishima Power Co., Ltd.

Tokyo Gas
generation capacity

Generation capacity

400MW

1,221MW 407MW
x 3 unit

Tokyo Gas interest 49%

Start of operations 2010

Tokyo Gas
generation capacity

900MW
Tokyo Gas interest 75%

ELECTRIC POWER BUSINESSWe sell electricity through the Tokyo Gas Group companies,
such as Tokyo Gas Lifeval, Enesta, and Enefit, as well as throughpartnerships with companies in various industries, including
nearby city gas and LPG suppliers and businesses in a range ofother industries, including housing, construction, equipment, andtelecommunications services.
Tochigi

Gunma

EnestaEnesta8 outlets

2 outlets
Ibaraki

Saitama

Tokyo Gas
LifevalEnestaEnefit5 outlets
3 outlets

EnestaEnefit9 outlets
5 outlets
9 outlets

194
outlets

Tokyo

Tokyo Gas 55 outlets
LifevalEnefit38 outlets
Kanagawa

Chiba

Tokyo Gas
LifevalEnestaEnefit5 outlets
4 outlets
2 outlets

Community-based sales network and over
11 million customer base
The Tokyo Gas Group has established a community-based
sales network with about 200 outlets in the Kanto region
enabling us to tailor services to individual customers’ needs.
The 10,000 employees of Lifeval, through whom there isdirect interaction with those customers on behalf of the Tokyo
Gas Group, have built strong relationships of trust with over
11 million customers. They are engaged every day inmeticulous services that encompass sales calls andmaintenance of gas appliances to the opening and closing ofgas fixtures when a household moves, gas appliance safety
checking, and gas meter reading.
In the retail sales of electricity, in addition to the push-type
marketing, involving contacts with these customers at theirhomes and places of work, we will use our updated website
for applications and steadily accumulate more contracts toenhance our customer base.

TOKYO GAS ANNUAL REPORT 2017

Expand electricity sales to low-voltage customers

Tokyo Gas 40 outlets
LifevalEnefit9 outlets

Infrastructure and management
know-how and system
In addition to the owned city gas business assets such as
LNG terminals, pipelines, and LNG procurement capacity, theTokyo Gas Group is capable of using distributed-type power
generations, including cogeneration systems and fuel cells,
know-how for management of electricity generation by use of
LNG, and experience in systematic business techniques fromutility rate calculation to billing and collection. We will makeuse of these assets and experiences.

Expand electricity sales to high-voltage and extra-high-voltage customers
By establishing Ennet in 2000, jointly with NTT Facilities andOsaka Gas, we have made another change to expand
electricity sales. In October 2015, we established Synergia
Power Co., Ltd., jointly with Tohoku Electric Power Co., Ltd.

From April 2016, Synergia began electricity sales to highvoltage and extra-high-voltage customers in the Kanto
Region, mainly in its northern area.

Corporate name

ENNET Corporation

Corporate name

Synergia Power Co., Ltd.

Established

July 7, 2000

Established

October 1, 2015

Main businessElectricity trading and electricity generation

Main business

Shareholders

NTT Facilities 40%; Tokyo Gas 30%,
Osaka Gas 30%

Electricity retail supply to high-voltage and extrahigh-voltage customers in the Kanto region,
mainly in its northern area

Shareholders

Tohoku Electric Power 50%; Tokyo Gas 50%

28

OVERSEAS BUSINESSBusiness overview

OutlineWe have expanded and increased overseas bases and staff, and have participatedin the LNG or natural gas related business projects in Australia, North America, andSoutheast Asia, all in order to make overseas business another major earnings sourceof the Tokyo Gas Group, as indicated in the Challenge 2020 Vision. Looking ahead,
the newly-established Global Business Division in April 2017 is spearheading efforts
for further business development, constructing of a new portfolio having stronger
resistance to undesirable effects of changes in energy prices, and for promotion ofadding more value in the existing businesses.

Net sales

Number of participating projects¥31.9 billion

16

FY2016

Segment assets ¥270.7 billion(as of March 31, 2017)

Net Sales and Number of Projects(¥ billion)

Net Sales (LH)50

Projects (RH)

20

40

16

30

12

20

8

10

4

0

0
2012.32013.3 2014.3 2015.3 2016.3 2017.3

Oil Price and Exchange Rate
Strengths• Know-how in the midstream and downstream businesses accumulated in Japan• Global network established through activities such as material procurement
and business participation

Risks($/bbl)(¥/$)

Crude Oil Price (LH)
Foreign Exchange Rate (RH)

120

200

90

150

• Business operation can be stalled or expense burden may rise, in response tolaws and regulations, or business practices, inherent to each country

60

100

• Fluctuation in crude oil/gas prices and foreign exchange rates in the
upstream business

30

50

0

0
2008.3 2010.3

2012.32014.32016.3 2017.3

Forming an LNG value chain
North
America

We are focusing on entry opportunities in the upstream, gas-fired thermal power generation, and gas and electricity supply
areas in North America. We envision forming a North America LNG value chain, in which synergies can be generated among
businesses, such as by stably supplying gas from one of our upstream projects to our operations in gas-fired thermal power
generation and gas supply.

Upstream Business

Monitoring commodity price trends andcarefully estimating the productivity and reserves of gas

When planning gas-fired
power generation we will continue to use well-defined criteria

fields will enable us to form appropriate alliances withexperienced operators and invest in prime assets. Alongthese lines, in May 2017 we acquired rights in a gas
development operating company in Texas.

to select projects in which to participate, giving due
consideration to demand and supply of electricity,
competition with other power sources, regulations andbusiness environment by each regional government. We haveso far participated in two gas power generation business inthe East Coast, where the scale of demand is huge.
In gas supply business, we seek to participate in business, inwhich we can leverage our Group’s strength, such as demand
development.

Project Name

Start ofTokyo Gas
Participation Interests

U.S.A. Barnett shale gas development

Mar. 2013

25%

U.S.A. Eagle Ford shale gas development

Jun. 2016

25%

U.S.A. East Texas gas development business

May 2017

30%

Midstream- and Downstream Business

Project Name

Start ofTokyo Gas
Participation Interests

U.S.A.

Natural gas-fired power plant business
Oct. 2016
in New York State (Empire Power Plant)

25%

U.S.A.

Natural gas-fired power plant business
Apr. 2017
in Pennsylvania (Birdsboro Power Plant)

33.33%

Focus on operation and management of existing projects
Australia

29

We have invested in five projects in Australia,
which has grown as a major LNG supply base to
the Far East. Four of these LNG projects are in
operation today. Including the Ichthys Project,
we will continue to focus on operation andmanagement of those projects, with creation of
maximal value in mind.

Four LNG projects that have already begun
operation in Australia, are proceeding smoothly. We will continue
to focus on operation and management of the five projects,
including the Ichthys Project still in preparation, to maximize
their value.
Upstream BusinessIn the last 12 months, the Tokyo Gas Group decided to participate in six
projects in North America, where various entry opportunities are available,
and Southeast Asia, where use of natural gas is expanding.
Going forward, in addition to new projects mainly in North America andSoutheast Asia, we will promote risk management, partly by using pastexperiences, and add more business values to raise and stabilize earnings.

Birdsboro

Ichthys Darwin

Barnett
EmpireEagle Ford

Pluto
Bang Bo

East Texas
MT Falcon

GorgonLNG Vietnam

BajioTOKYO GAS ANNUAL REPORT 2017

Accelerating global development

Queensland Curtis

Gas Malaysia

Upstream Business

Southeast
Asia

Midstream- and Downstream BusinessNorth America

Southeast Asia

Australia

UpstreamBusiness

Operation and management ofexisting projects; explorationof new projects-

Operation and management ofexisting projects

Midstream- andDownstream
BusinessGas-fired thermal power
generation; gas andelectricity supply

LNG terminal; gas-fired thermal
power generation; gas supply;
energy service-

In Southeast Asia where a greater use of natural gas has been driven by anational policy and high growth of the energy market is projected, we seek toparticipate in LNG terminal, gas-fired thermal power generation, gas supply,and energy service businesses. In addition to opening offices in Indonesia,
Thailand, and Vietnam in 2015, we established a representative office in thePhilippines in April 2017. Our ultimate target is to form a Southeast Asia LNG
value chain.

Midstream- and Downstream BusinessBy building a relationshipwith local governments and through alliances with local
companies, we intend to increase our participation in
midstream- and downstream businesses, while closely
monitoring changes in business environment, including
relevant policies and regulations. In October 2016, weparticipated in a natural gas-fired power generation businessin Thailand.

Tokyo Gas Group’s Basesin Southeast Asia

Hanoi Representative Office

Manila Representative Office

Thailand Representative Office
Ho Chi Minh City Representative Office

Kuala Lumpur Representative Office

Tokyo Gas Asia Pte. Ltd. (Singapore)

Jakarta Representative Office

Project Name

Start ofTokyo Gas
Participation Interests

Thailand

Oct. 2016

Bang Bo Power Plant

28%

LNG Production Capacity(Million tons / year)

Start of
Participation

Tokyo Gas Interest (Equity Stake)Start of Production

Darwin

3.0

2003

3.07%

Jan. 2006

Pluto
GorgonQueensland Curtis
Ichthys

4.7
15.6
8.5
8.9

2008
2009
2011
2012

5.00%
1.00%
1.25% (Gas Field) / 2.50% (No. 2 Liquefaction Plant)
1.575%

Apr. 2012
Mar. 2016
Dec. 2014
By March 2018 (Plan)

Project Name(Operation)

30

OTHER BUSINESSBusiness overview
We have identified seven business domains that comprises the formation of our Group: City gas business, Electric powerbusiness, Liquid gas business, Living service, Engineering service, Urban development service, and Overseas business.
This section contains profiles of the Engineering service, the Urban development service, and the Liquid gas business, three ofthe domains.

Engineering Service Business

Providing customer-oriented engineering solutions and expanding areas andbusiness domains
In April 2015 Tokyo Gas Engineering Solutions Corporation(TGES) was established by integrating capabilities inengineering and energy solutions, which used to be
separately available within the Group. TGES is providing
one-stop solutions that better satisfy the needs of ourcustomers in Japan and abroad in a wide range of domains,
stemming from receipt of transported or conveyed resources
and production of gas to gas supply, power generation, andenergy solutions in the LNG value chain.
In April 2017, we opened new offices in Nagano and Fukuoka.
We will partner with the energy suppliers of each region andprovide engineering solutions to customers. In addition to
expanding business in the Japanese market, we intend to
expand business overseas.
By bundling various engineering solutions available at
TGES, we are emphasizing our ability to provide one-stop,
diversified solutions.

GMEA*
Supplying electricity andsteam to Toray Group Malaysia

Current model

Bundled service model

Providing case-by-caseengineering solutions

Engineering solutions are bundled
to provide optimal services
LNG facilities

LNG facilities

Energy service

Pipelines

District heating
and cooling
service Smart
EnergyEnergy use
facilities

Mapping, Soil
etc.

Pipelines

Energy service

Energy use
facilities

District heating
and cooling service
Smart Energy

Mapping, Soil
etc.

Moreover, Investment

LNG

Diagram of Engineering Solution Supply
PlantsGas network
Heat network
Electricity network
Utility network
ICT network

Middle-pressure
pipeline
High-pressure
pipeline

LNG
receivingterminal

Energy (utility)
service center
Middle-pressure
pipeline

Smart Energy
centerValve station
Governor station

Medical facilities

Nagano Office
Kyushu Office (in Fukuoka)

31

TGES America
Supplying steam, etc. to Toray
Carbon Fiber America* GAS MALAYSIA ENERGY ADVANCE Sdn. Bhd. (Gas Malaysia Co.:66%, TGES:34%)

Hotels andcommercial facilities

Offices andhousingcomplexes

JapanArea-wide use of distributed energy to significantly
conserve energy and reduce CO2 emissions
The cogeneration system (CGS) recovers and uses otherwise
wasted thermal energy to generate electricity for heating.
Higher CGS capacity results in higher efficiency.
One office can install only a small CGS for an optimal balanceof electricity and heat. However, by combining multiple
customers with various needs, a larger CGS can be installed
and realize a higher-level of energy saving than a single-type
CGS can achieve.
As an example, Nissan Motor’s Yokohama Plant wanted to
cut back grid power usage during peak hours by using
in-house power generation and to secure power sources incase of emergency. We therefore installed a large gas
cogeneration system and supplied electric power to the plant.
Then in 2016 we began to supply steam generated by the gas
cogeneration system to J-Oil Mills’ Yokohama Plant, which islocated across the street from Nissan’s plant and had a highthermal energy demand. As a result, approximately 3%energy saving and 6% reduction in CO2 emissions wereachieved in aggregate.
At the Kiyohara Industrial Park in Utsunomiya City, we areconstructing a Smart Energy center to provide energy
services to three companies and seven offices in the park.
This will be Japan’s first “integrated energy-saving businessserving multiple plants” to supply electricity and heat to
multiple businesses of different sectors in an inland-typeindustrial park. Due to adoption of a large-scale CGS and an
energy management system, approximately 20% in energy
saving and reduction in CO2 emissions are projected.
Without being hindered by the conventional methods, we arethus providing valuable services and contributing to energy
saving and reduction in CO2 emissions.

Overseas

Energy service business
TGES’ overseas subsidiary will provide energy services to
the Toray Group’s plants in Malaysia and the U.S.A. Theenergy services comprise construction of an energy plantthat has gas cogeneration systems, boilers, and equipment
such as for air-conditioning and water treatment, and efficient
supply of a wide range of services involving generated
electricity, steam, water, and other resources.
Based on its proven achievement, TGES’ plant design andmaintenance will enable to realize energy savings from its
optimal systems and long-running cost reductions. In return,
TGES will receive energy service fees, based on its long-term
customer contract.

TOKYO GAS ANNUAL REPORT 2017

Unique engineering solutions, leveraging accumulated know-how

Engineering business
TGES was awarded an order for assignment as a project
management contractor (PMC) of the capacity expansion
construction project of PPT LNG Map Ta Phut Receiving
Terminals, Thailand. This is the first PMC order of its kindreceived by a Japanese company outside Japan. This is also
the first LNG terminal in Thailand in anticipation of substantial
growth in energy demand in keeping with the nation’s
economic development.
The Tokyo Gas Group intends to further promote overseas
business development, leveraging by its frontrunnerexperience and strengths in construction, operation,
maintenance, and management of LNG terminals.

32

Business overview

Chiyoda-ku
Shimbashi
StationShibuya-ku

Tokyo Station
Chuo-ku

Tamachi
Setagaya-ku

Koto-kuToyosuMinatoku

Meguroku

Shinagawa
StationShinagawa-ku

Ota-kuUrban Development Service (Real Estate) Business

Generating stable earnings by effective use of high-potential sites owned by Tokyo Gas
The Tokyo Gas Group owns high-potential, large-scale
properties in locations such as Tamachi and Toyosu in Tokyo.
We are developing those properties, while limiting associatedrisks, in order to improve asset value by their effective use.
In April 2017, we established Tokyo Gas Real Estate Holdings
Co., Ltd. as a general management company. As the Group’s
Tamachi

Large-scale development with directconnections to JR Tamachi Station

urban development service business, we aim for expanding
profits to contribute to community-based energy proposals
and community development through effective use andmanagement of properties and cooperation with strong
players in the real estate industry.

ToyosuTamachi Station and its surrounding area are expected toplay the role of a gateway to Tokyo, as it is close to the Linear
Chuo Shinkansen Line route and has easy access to Haneda
Airport which has a plan for further development. Office andhotel buildings and commercial facilities are underconstruction on this 2.8ha site, and will be directly connected
to Tamachi Station.
October 2015

Started construction of the Tamachi Station Tower S, the Hotel Tower,
and the Smart Energy Center

Summer 2017

Started construction of the Tamachi Station Tower N

April

2018

Complete construction of the Smart Energy Center (plan)

May

2018

Complete construction of the Tamachi Station Tower S and the Hotel
Tower (plan)

Fall

2018

Start hotel operation (plan)

Spring2020

Complete construction of the Tamachi Station Tower N (plan)

Complex town planning project in the intended
locations of the Tokyo 2020 Olympics

The redevelopment area in Toyosu is a prime location, about
4km away from Tokyo Station. The Tokyo Bay area, including
Toyosu, is getting increased attention as it will be a major
location of the Tokyo 2020 Olympics and Paralympics events.
The Tokyo Gas Group is involved in construction of a
combination of residential, office, and commercial facilities inthis widespread development area of approximately 20ha.

Intended location of the Tokyo 2020
Olympics and Paralympics Athletes’ Village

Toyosu-ohashi Bridge

JR Tamachi Station(Yamanote Line)

Harumi-ohashi
BridgeTokyo Gas Group site
Toyosu Market

HotelStoresPedestriandeck
Tamachi
StationTower S

Tamachi
StationTower NSocialServices
Facility

Redevelopment area33

msb Tamachi

Minato Park Shibaura

Urban Planning
Park

Aiiku
Hospital

Shijoumae
StationToyosuMarketToyosu Market

Fujimi Bridge

Ariake North
Bridge

Shintoyosu
StationToyosu Smart Energy Center

Ariake Tennis noMori Station
Intended location of the Tokyo 2020
Olympics and Paralympics Stadium

Kiyari Bridge

ToyosuStationYurikamome

OTHER BUSINESSTOKYO GAS ANNUAL REPORT 2017

Liquid Gas Business
In April 2016 we established Tokyo Gas Liquid Holdings Co.,
Ltd. to integrate and enhance strategy planning and promotionof the liquid gas business, to sell LPG and manufacture andsell industrial gas, using LNG cold energy, and the cold storage
warehouse business.
In the LPG sales business, we aim to grow it as one of profit
pillars of the Tokyo Gas Group, by strengthening sales
capacity, mergers and acquisitions, and through alliances.
Specifically, as a new measure to help construct a highlyefficient logistics network and improve maintenance levels andcustomer services, we are seeking alliances with LPG players
who have different strengths. Our target is to have one million
or more customers by 2020, including 300,000 direct sales
customers from the Tokyo Gas Group.
As for industrial gas, we make effective use of LNG coldenergy, and manufacture and sell high-grade affordable
industrial gas. We also plan to enhance sales capability byoffering one-stop solutions to large-account customers by
combining LNG, engineering, and other services of Tokyo Gas.

Alliances

Structure of Tokyo Gas Liquid Holdings

October 2016

February 2017Concluded the Basic Agreement for aComprehensive Alliance with Astomos Energy

Concluded the Basic Agreement for aComprehensive Alliance with Saisan

Tokyo Gas Liquid Holdings
Tokyo Gas Energy

Tokyo Gas Chemical

Japan Super Freeze

Sales of LPG

Manufacturing andsales of industrial gas,using LNG cold energy

Cold storage
warehousing, using
LNG cold energy

LPG Business: Target in Number of Customers(thousand)

1,200

1,000 Distributors andfriendly LPG
operators

800

Direct sales

400

300

Direct sales

60

240 Distributors

0March 2017

34

2020
A cold storage warehouse of Japan Super FreezeCorporate governanceCorporate GovernanceTokyo 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 increase in our corporate value through enhancing corporate
governance systems. We are endeavoring to develop systems with a commitment to management legality, soundness, andtransparency. Tokyo Gas continues to emphasize the importance of accurate and prompt decision making, efficient business
operations, strengthening of auditing and monitoring functions, and clarification of management 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 11 directors, 3 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
business execution. From an independent viewpoint, theoutside directors monitor the performance of duties by the
directors and exercise their authority at meetings of the Boardof Directors. In this way, the outside directors contribute to theimprovement of the rationality and objectivity of the company’sbusiness 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 generalshareholders and they are in a position that enables them tobe objective and neutral, and on that basis we make a
judgment on their independence. (The company discloses the
Independence Standards for Outside Directors on its website:
http://www.tokyo-gas.co.jp/IR/english/gvnnc/pdf/
independence.pdf) The Advisory Committee has confirmedthat none of the outside officers has a material conflict ofinterest with the company—in regard to capital, transactions,or relationships—and has confirmed their independence inaccordance with the above standards. The committee’s
decision has been reported to the Board of Directors, which
has designated them as independent officers and reported
that designation to the stock exchanges on which thecompany is listed.
Realizing Accurate and Rapid Decision Making, andEfficient Business Execution

35

The Corporate Executive Committee, which meets weekly asa general rule, deliberates on provisions stemming from
Board of Directors’ resolutions and important management-

related issues. The company has introduced an executive
officer system for business execution in accordance withdecisions of the Board of Directors. Substantial authority has
been delegated to executive officers in their designated areasof responsibility, while directors, as appropriate, receive
reports on the status of execution from executive officers andmonitor the executive officers. In addition, executive officers
report to the Board of Directors as needed. (To clarify
management responsibility and executive responsibility, theterms of office of directors and executive officers have been
fixed at one year.)
Analysis and Evaluation of Effectivenessof the Board of Directors
To maintain and enhance effectiveness of the Board of
Directors, the Board analyzed and evaluated its effectiveness infiscal 2016 as last year. Specifically, the Board took into accountof self-evaluation of each director in the form of a questionnaire,and discussed its outcome and the Board’s effectiveness.
According to the results of the questionnaire, no item scoredless than 4 on average in the five-point scale, and no item
showed a decline of 0.5 or more on the average score. It has
therefore been confirmed that no major improvement is needed.
Concerning the items related to the Board’s function as aplace to discuss medium- to long-term policies andstrategies, the scores were lower than those of other items
again, as in fiscal 2015. We will further enhance theeffectiveness of the Board of Directors in this area, by taking
into account their numerous discussions in fiscal 2016.

Progress in Governance Composition of the Board of Directors
2017

2002
Directors

9

OutsideDirectors

Inside Audit &Supervisory Board
members

Outside Audit &InsideDirectors

2

InsideDirectors

8

OutsideDirectors

3

Audit &
Supervisory
Board members
Board 23 Supervisory
members

Inside Audit &Supervisory Board
members

Outside Audit &Board 32 Supervisory
members

TOKYO GAS ANNUAL REPORT 2017

Corporate Governance System

Customers

Local Communities

Shareholders / Investors

General Shareholders’ Meeting
Appointment

ReportAppointment

Appointment

ReportReport and proposal

Board of Directors1
Inquiry

Audit,
etc.

MonitorCollaboration

Collaboration

Audit

Internal Audit Department

Collaboration

Audit & Supervisory Board3

Independent Auditors

AnswerAdvisory Committee2

ReportReport and proposal

President (Corporate Executive Committee4 )Management Ethics Committee
Safety Committee

Approval

Customer Satisfaction
Promotion Committee

Deliberation
and report

Investment Evaluation Committee
Environmental Committee
Settlement andmonitorCorporate Communications
Promotion Committee

Reportsubmission

Risk Management Committee

Audit
General Shareholders’Meeting
Stakeholders
Tokyo Gas Co., Ltd.

Other In-House Committees
Add to agenda
and report

Business Departments / Subsidiaries
Decision and monitoring

Business Operations

1 Board of Directors: 11 directors (3 outside directors and 8 internal directors), 5 Audit & Supervisory Board members (3 outside auditors and 2 internal auditors)
2 Advisory Committee: 3 representatives from outside directors and outside Audit & Supervisory Board members, Chairman (1), and President (1)3 Audit & Supervisory Board: 5 Audit & Supervisory Board members (3 outside auditors and 2 internal auditors)
4 Corporate Executive Committee: President, 2 Executive Vice Presidents, and 11 Senior Executive Officers (3 of the representative directors also serve as President and Executive Vice Presidents)

Overview of Corporate Governance System (As of June 29, 2017)
Number of directors
Average age of directors

11
62.0

Participation of outside directors in determination of
director candidates

Yes

Number of meetings of Board of Directors*

12

Number of outside directors

3

Attendance rate of outside directors at meetings of Board of
Directors*

Number of Audit & Supervisory Board members

5

Term of office of directors

Number of outside Audit & Supervisory Board members

3

Performance-linked remuneration

Yes

6

Share purchase system to reflect the perspective ofshareholders in management

Yes

Number of independent officers
Participation of outside directors / outside Audit & Supervisory
Board members in determination of remuneration

Yes

100%
One year* Total for the period from April 2016 to March 2017

Working to Promote Transparent Management and Create a Flexible and Open Corporate Culture
In fiscal 2002, the company established the Management
Ethics Committee, chaired by the President. We also formed
in-house committees to address issues that are importantfrom a management 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.

36

Corporate governance

Audit & Supervisory Board Members
The Audit & Supervisory Board members meet once a month
as a general rule and otherwise as needed. The 5 membersof the board, which include 3 outside Audit & Supervisory
Board members, conduct deliberations and make reports.
In line with the Corporate Auditor’s Audit Standards, each
Audit & Supervisory Board member conducts effective audits
through the following principal initiatives.
The Audit & Supervisory Board members attend meetings ofthe Board of Directors, the Corporate Executive Committee,
and other important meetings. They state their opinions
relating to legality and other perspectives when necessary.
The Audit & Supervisory Board members conduct research
into the state of operations at the head office, businessoffices, and subsidiaries and hold discussions with directors
to exchange opinions, both on a regular basis and otherwise
as needed.
In regard to the internal control system for financial reporting,
the Audit & Supervisory Board members receive evaluationsof internal control and reports on the status of audits from theBoard of Directors, etc., and KPMG AZSA LLC.

Outside Audit & Supervisory Board Members

37

The outside Audit & Supervisory Board members conduct
audits monitoring from an independent viewpoint andcontribute to improving the rationality and objectivity of thecompany’s business execution and of 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 majority voting rights at meetings of
the Audit & Supervisory Board, the outside Audit &Supervisory Board members contribute to assuring andimproving the legality, appropriateness, rationality, andobjectivity of the audits by the Audit & Supervisory Board
members. In addition, with the objective of assuring theeffectiveness of audits by the Audit & Supervisory Board
members, the company invites outside Audit & Supervisory
Board members who have a substantial degree of knowledge
about finance and accounting.
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 generalshareholders and they are in a position that enables them tobe objective and neutral, and on that basis we make a
judgment on their independence. The Advisory Committee
has confirmed that none of the outside officers has a materialinterest with the company—in regard to capital, transactions,or relationships—and has confirmed their independence inaccordance with the above standards. The committee’s
decision has been reported to the Board of Directors, which
has designated them as independent officers and reported
that designation to the stock exchanges on which thecompany is listed.

In 2005, the company formulated the basic policy on officer
remuneration, which outlines the method of remuneration for
directors, etc. At a meeting of the Board of Directors in
February 2012, the policy was revised as follows.
(3) Remuneration of outside directors shall comprise monthly
remuneration and bonus. Monthly remuneration shallcomprise only fixed remuneration, while bonus shall be thesame as that of inside directors.

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.

4 Composition and Other Details of Remuneration Paid to
Audit & Supervisory Board Members

2 Level of Remuneration
The level of officer remuneration shall be suitable for the role,
responsibility, and performance of the officer.
3 Composition and Other Details of Remuneration 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 be allocated to thepurchase of shares based on a share-purchase guideline andfrom the standpoints of reflecting the perspectives ofshareholders on management and improving shareholder
value over the long term. The amount of performance-linked
remuneration shall be determined after evaluating companywide performance and performance of operating units fromthe standpoints of motivating inside directors to execute
management strategies and reflecting their performanceclearly in their remuneration. The amount of bonus to be paid
shall be determined in accordance with the post of each
inside director after performance evaluation.

TOKYO GAS ANNUAL REPORT 2017

Officer Remuneration(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 theRemuneration System
The company shall assure the objectivity and transparency ofthe system of officer remuneration by establishing andoperating the Advisory Committee comprising a number ofoutside directors, outside Audit & Supervisory Board
members, and inside directors to govern the system of
personnel affairs and remuneration of officers.

Composition of Remuneration for Directors
Fixed remuneration

Performance-linked
remuneration* Monthly remuneration of outside directors are fixed remuneration only.

Total Remuneration for Directors and Audit & Supervisory Board Members (Fiscal 2016)
Number of officers*1 Total value of remuneration

Remuneration for directors(excluding outside directors)

Remuneration for Audit & Supervisory Board members(excluding outside Audit & Supervisory Board members)

Remuneration for outside officers(outside directors and outside Audit & Supervisory Board members)

Base

Bonuses

10¥467 million¥405 million¥62 million

2¥74 million¥74 million-

7¥64 million¥58 million¥6 million*1 The number of officers included in the total value of remuneration for directors, Audit & Supervisory Board members, and outside officers includes three directors (of which one was outside officer)
who retired upon the conclusion of the 216th Annual Shareholders’ Meeting.

38

Corporate governance

Advisory Committee

Compliance

In February 2005, we established the Advisory Committee toassure objectiveness and transparency in management. It
has been defined that this committee will have no more than
6 members consisting of no more than 3 representatives fromoutside of the company and no more than 3 internal
representatives, and that one of the outside representatives
will serve as the committee’s chairman.
Today, the Advisory Committee has 5 members: 3
representatives from the outside directors and outside Audit& Supervisory Board members as well as the Chairman and
the President. In accordance with inquiries from the Board of
Directors, the Advisory Committee deliberates on officer
candidates and officer remuneration in a fair and appropriatemanner and makes reports to the Board of Directors. The
committee also deliberates on the independence of outside
officer candidates.

Internal Control System
To secure management legality, soundness, and transparency
and to realize its management philosophy, the company has
formulated the “Basic Policy on Development of Corporate
Structures and Systems for Internal Control System” and thecompany is applying this policy in an appropriate manner.
Specifically, the company has established systems to ensurethat directors and their assistants perform their duties in amanner that is compliant to relevant laws and regulations, thearticles of incorporation, and other rules. In addition, crisis
management provisions have been formulated to limit losses
from risks related to investments and natural disasters. The
company also defines guidelines for ensuring theindependence of Audit & Supervisory Board members andguaranteeing the effectiveness of the Audit & Supervisory Board.

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 andExchange Act, as well as internal control audits based on the
Financial Instruments and Exchange Act, and the company isbeing audited on that basis. The company’s audits arehandled by 3 certified public accountants: Teruhiko Tanaka,
Yoshihide Takehisa, and Yoshihiro Uehara. For each of theseauditors, the number of consecutive years of auditing service
is seven years or less (as of June 29 2017).
Compensation for Independent Auditors (Fiscal 2016)

39

Compensation for auditing services¥257 million

Compensation for non-auditing services¥21 million

Total¥278 million

Compliance Structure
The company has identified the following three points as its
basic policy and is promoting compliance on that basis.

Fostering of a compliance oriented mentality
Compliance efforts through coordination among
divisions based on the fundamental policy
Promotion of the compliance PDCA cycle

We have established the Management Ethics Committee,
chaired by the President. This committee discusses at theexecutive level basic compliance policies and all aspects ofcompliance initiatives by the company, monitors theimplementation of compliance-related measures, andconfirms activity programs from the following year andthereafter. The Compliance Department operates counselingservice counters, distributes information within and beyond
the Tokyo Gas Group companies, and promotes a thoroughawareness of ongoing activities related to our Code of
Conduct, which represents a compliance standard of theTokyo Gas Group and was revised in April 2017, so as tofurther meet the expectations of society. The ComplianceDepartment also supports a wide range of compliance-related
activities for each department. These include development ofcompliance promotion systems, encouragement awarenessand educational campaigns about the Code of Conduct, andcompliance risk reduction measures.
Compliance Risk Management
Through the effective operation of internal and external
advisory systems, we are endeavoring to ensure thatcompliance-related problems are discovered and resolved
quickly so that our corporate self-regulatory processes willcontinue to function effectively. We monitor the effectivenessof Group compliance promotion activities by conducting
regular compliance awareness surveys of all employees. The
results of these surveys are reflected in initiatives for thefollowing years. The Compliance Audit Sect. of the Internal
Audit Dept. conducts audits of the company and its
subsidiaries focusing on the probability that risks willmaterialize and their degree of importance from the viewpointof strict compliance with laws, corporate ethics, and social
norms. When concerns are identified, the group conducts
follow-up audits in the following year to verify progress intackling those concerns.

Enterprise Risk Management System

Crisis Management System

In fiscal 2003, the company established an enterprise risk
management (ERM) system and drew up risk management
regulations, which include documented rules concerning
major risks faced by the group.
The Risk Management Committee was established in fiscal
2008 with the aim of tracking progress regarding theestablishment and the operational status of the ERM system
as well as improving the level of ERM. The committee
periodically undertakes risk assessments and checks on thestatus of the ERM system. It also reports to the Corporate
Executive Committee and obtains the necessary approvals.
Moreover, in fiscal 2011, the risk management function wasmade the responsibility of the Corporate Planning
Department, and there has been a framework in place for
implementing unified ERM in conjunction with operational
management.
Under the framework, around 120 Risk Management
Promotion Officers are deployed in the business departmentsof Tokyo Gas and its subsidiaries in order to promote ERM.
Each year, we assess risks and the implementation andimprovement status of countermeasures. This systemfacilitates the steady implementation of the ERM-PDCA (PlanDo-Check-Act) cycle.

Because the company provides public services that comprisea 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 crises, including major natural
disasters, such as earthquakes, or production or supply
disruptions arising from major accidents at pipelines or
terminals, as well as influenza, terrorism, failures in missioncritical IT systems, and compliance problems, the Emergency
Response Organization responds to the situation immediately
in accordance with the Emergency Response Organization
Regulations. Periodic training is conducted in relation to
major risk response measures. Moreover, the company has
also formulated a business continuity plan (BCP), outlining its
responses in the event of a major earthquake of themagnitude assumed by Japan’s Cabinet Office, a major
accident disrupting gas supply, a widespread blackout, an
outbreak of influenza, etc. This plan is in place to reinforce
the company’s risk management system.

Enterprise Risk Management (ERM) System

Emergency Response Organization

TOKYO GAS ANNUAL REPORT 2017

Risk Management System

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

President

Executive Office*(Organization Leader)
Reflection of results of risk assessment
Suggestion of
establishmentof Emergency
Response
Organization, etc.

Corporate Executive Committee
Confirmation of major Group risks

Report / proposal for plan forassessment of major Group risks /other essential matters

Clear statement of risk
management policies

Instructions /ordersReportCollaboration

Risk Management Committee(Executive Office: Corporate Planning Dept.)
Identifying and confirming Group risk management
Feedback of evaluation results /Report regarding results of risk assessment,
improvement proposals
status of implementation of countermeasures, Clear statement of risk management policies
status of improvement, etc.

Business Departments

Corporate
Planning Dept.

Business Departments / Subsidiaries(1) Identifying and evaluating risks, formulating andimplementing risk countermeasures(2) Improvement of risk assessment, countermeasures* The organizational unit in charge of the executive office isdetermined in advance in accordance with the type of theemergency.

(Group-wide coordination)

40

Corporate governance

Board of Directors (As of June 29, 2017)

Tsuyoshi Okamoto

Michiaki Hirose

Takashi UchidaDirector, Chairman

Representative Director,
President

Representative Director

April1970 Joined the Company

April

June

1997 Deputy Chief Executive of Northern Regional

April

Business Div.
1998 General Manager of Documents Dept.
1999 Assistant to Director in charge of General
Administration Dept.
2002 Executive Officer and General Manager ofCorporate Planning Dept. of Strategic Planning Div.
2004 Senior Executive Officer and Chief Executive ofStrategic Planning Div.
2004 Director, Senior Executive Officer and Chief
Executive of Strategic Planning Div.
2006 Director, Senior Executive Officer, Chief Executiveof Corporate Communication Div. and in charge ofCompliance Dept. and Internal Audit Dept.
2007 Representative Director, Executive Vice President
and in charge of Personnel Dept., Secretary Dept.,
General Administration Dept., Compliance Dept.
and Internal Audit Dept.
2009 Representative Director, Executive Vice President
and in charge of Personnel Dept., Secretary Dept.,
General Administration Dept. and Compliance Dept.
2010 Representative Director, President
2014 Director and Chairman of the Board
2016 Outside Director of JAPAN POST BANK Co., Ltd

of Corporate Communication Div.
April
2006 Executive Officer and General Manager ofCorporate Planning Dept. of Strategic Planning Div.
April
2007 Senior Executive Officer and in charge ofCorporate Planning Dept., Infrastructure Project
Dept., Finance Dept., Accounting Dept. and
Affiliated Companies Dept.
April
2008 Senior Executive Officer and in charge ofCorporate Planning Dept., Investor Relations
Dept., Finance Dept., Accounting Dept., AffiliatedCompanies Dept. and Gas Industry Privatization
Research Project Dept.
April
2009 Senior Executive Officer and in charge of Corporate
Planning Dept. and Affiliated Companies Dept.
June2009 Director, Senior Executive Officer and in
charge of Corporate Planning Dept., Corporate
Communications Dept. and Affiliated Companies
Dept.
January 2010 Director, Senior Executive Officer and in charge ofCorporate Planning Dept., Project Management
Dept., Corporate Communications Dept. and
Affiliated Companies Dept.
April
2012 Representative Director, Executive Vice President
and Chief Executive of Living Energy Div.
April
2013 Representative Director, Executive Vice President andChief Executive of Residential Sales and Service Div.
April
2014 Representative Director, President

June
June
June
April
June
April

April

April

April
April
June

41

1974 Joined the Company
2004 Executive Officer and Assistant to Chief Executive

April1979 Joined the Company

June

2006 General Manager of Pipeline Planning Dept. ofApril

2009 General Manager of Corporate Planning Dept.

April

2010 Executive Officer and General Manager ofApril

2012 Senior Executive Officer and in charge of Personnel

Pipeline Network Div.

Corporate Planning Dept.

April
June
April

April

Dept., Secretary Dept., Compliance Dept. andInternal Audit Dept.
2013 Senior Executive Officer and Chief Executive ofEnergy Resources Div.
2015 Director, Senior Executive Officer and Chief
Executive of Energy Resources Div.
2016 Representative Director, Executive Vice President
and Chief Executive of Residential Sales andService Div.
2017 Representative Director, Executive Vice President
and Chief Executive of Residential Service Div.

Kunio Nohata

Takashi Anamizu

Akihiko Ide

Director

Director

Outside Director

April1984 Joined the Company
November 2006 General Manager of Infrastructure Project Dept.
April
2008 Acting General Manager of Energy Sales & Service
Planning Dept. of Energy Solution Div.
April
2009 General Manager of Total Energy Business Dept. ofEnergy Solution Div.
April
2011 General Manager of Gas Resources Dept. ofEnergy Resources Business Div.
April
2013 Executive Officer and General Manager of Gas
Resources Dept. of Energy Resources Business Div.
April
2015 Senior Executive Officer,
President, Representative Director of Tokyo Gas
Engineering Solutions Corporation
April
2017 Senior Executive Officer of the Company, Chief
Executive of Power Business Div., In charge ofEnvironmental Affairs Dept.
June
2017 Director, Senior Executive Officer of the Company,
Chief Executive of Power Business Div., In chargeof Environmental Affairs Dept.

April
1985 Joined the Company
January 2010 General Manager of Project Management Dept.
April
2012 General Manager of Residential Fuel Cell Business
Development Dept. of Living Energy Div.
April
2015 Executive Officer and General Manager of Sales
Innovation Planning Dept.
April
2016 Senior Executive Officer, Chief Executive of Energy
Resources & Global Business Division.
April
2017 Senior Executive Officer, Chief Executive of Global
Business Div.
June
2017 Director, Senior Executive Officer, Chief Executiveof Global Business Div.

April

1965 Joined Mitsubishi Metal Mining Company Ltd.

June

1994 General Manager of General Affairs &June1997 Director of Mitsubishi Materials CorporationJune

2000 Managing Director of Mitsubishi Materials

June2002 Executive Vice President of Mitsubishi Materials

June2004 President of Mitsubishi Materials CorporationJune

2010 Chairman of Mitsubishi Materials Corporation

April

2015 Senior Advisor of Mitsubishi Materials CorporationJune

2015 Advisor of Mitsubishi Materials CorporationJune

2017 Retired as Advisor of Mitsubishi Materials Corporation(Current Mitsubishi Materials Corporation)
Administration Dept. at Mitsubishi Materials
Corporation

Corporation
Corporation

Director of Sakai Chemical Industry Co., Ltd.

Outside Director of the Company

Fumio Murazeki

Masaru Takamatsu

Representative Director

Director

Director

April

1979 Joined the Company

April1979 Joined the Company

April1980 Joined the Company

April2006 General Manager of Industrial Gas Sales Dept. ofApril

2009 General Manager of Residential Sales Planning

April

2005 General Manager of Home Service Planning Dept.

Energy Sales and Service Div.
2008 General Manager of Gas Resources Dept. ofEnergy Resources Div.
2010 Executive Officer and General Manager of Gas
Resources Dept. of Energy Resources Div.
2011 Executive Officer and General Manager of Sales
Marketing 1 Dept. of Living Corporate Sales andServices Div.
2012 Senior Executive Officer and Chief Executive ofRegional Development Marketing Div.
2015 Senior Executive Officer and Chief Executive of IT
Div. and in charge of Environmental Affairs Dept.
and Fundamental Technology Dept.
2015 Director, Senior Executive Officer and Chief
Executive of IT Div. and in charge of Environmental
Affairs Dept. and Fundamental Technology Dept.
2016 Director, Senior Executive Officer and Chief
Executive of Energy Solution Div., General Manager
of Volume Sales Dept. of Energy Solution Div.
2017 Representative Director, Executive Vice President
and Chief Executive of Energy Solution Div.

Dept. of Living Energy Div.
April
2010 Executive Officer and General Manager of Residential
Sales Planning Dept. of Living Energy Div.
April
2013 Senior Executive Officer and Head of Sales
Marketing of Energy Solution Div.
October 2014 Senior Executive Officer and Head of Sales
Marketing of Energy Solution Div. and General
Manager of Energy Sales & Service Planning Dept.
April
2015 Senior Executive Officer and Chief Executive ofEnergy Solution Div. and General Manager of Volume
Sales Dept. of Energy Solution Div.
April
2016 Senior Executive Officer of the Company
President, Representative Director of TOKYO GASLIQUID HOLDINGS CO., LTD.
June
2016 Director, Senior Executive Officer of the Company
President, Representative Director of TOKYO GASLIQUID HOLDINGS CO., LTD.

April

2006 General Manager of Business Partnership Support

April

2010 General Manager of LIFVAL Project Management

April2011 Executive Officer and General Manager of LIFVAL

April

2012 Executive Officer and General Manager of Corporate

April

2014 Senior Executive Officer and in charge ofApril

2015 Senior Executive Officer and in charge of

April
April
April

April
April

June

April

April

of Home Service Div.
Dept. of Home Service Div.
Dept. of Living Energy Div.
Project Management Dept. of Living Energy Div.
Planning Dept.
Corporate Planning Dept. and Affiliated Companies
Dept.

April

June

April

Yoshinori Katori

Chika Igarashi

Outside Director

Outside Director

TOKYO GAS ANNUAL REPORT 2017

Satoru Yasuoka

Corporate Planning Dept., Personnel Dept., ChibaIbaraki Project Dept., Group Management Project
Dept., and Group Personnel System Project Dept.
2016 Senior Executive Officer and in charge of Personnel
Dept., Secretary Dept., General Administration
Dept., Compliance Dept., and Internal Audit Dept.
2016 Director, Senior Executive Officer and in chargeof Personnel Dept., Secretary Dept., General
Administration Dept., Compliance Dept., andInternal Audit Dept.
2017 Director, Senior Executive Officer and in chargeof Purchasing Dept., Secretary Dept., General
Administration Dept., Compliance Dept., andInternal Audit Dept.

Reasons for selecting
Outside Directors
Akihiko Ide
The company’s management will
benefit from Akihiko Ide’s cosmopolitan
outlook he has acquired in overseas
businesses in the general materials
industry, particularly in Asia, as well as
the strong management capabilities anddeep insight he has acquired through awide range of business development inresource business and others.

April1973 Joined Ministry of Foreign Affairs
August 2004 Director-General of Consular Affairs Bureau
August 2005 Press Secretary/Director-General for Press andPublic Diplomacy of Minister’s Secretariat
August 2006 Ambassador Extraordinary and Plenipotentiary to
the State of Israel
October 2008 Ambassador for ASEAN, and Science andTechnology Cooperation, Ministry of Foreign
Affairs
April2010 Director-General of Foreign Service Training Institute,
Ministry of Foreign Affairs
March 2011 Ambassador Extraordinary and Plenipotentiary to
the State of Indonesia
October 2014 Retired from Ministry of Foreign AffairsJune2015 Outside Director of the Company

April1997 Registered as an attorney at law

April1997 Joined a law firm in Tokyo Metropolitan area

July

2006 Joined Asahi Law Office (Currently Nishimura &

June
June

Asahi Law Office)2007 Registered as an attorney at law in New York State,
USA2016 Outside Director of the Company

Yoshinori Katori
The company’s management will benefit
from Yoshinori Katori’s cosmopolitan andbroad outlook as well as the deep insighthe has acquired over his many years as a
diplomat.

Chika Igarashi
The company’s management will benefit
from Chika Igarashi’s advanced legal
expertise, broad perspective, and deep
insight she has acquired over her many
years in corporate legal affairs.

42Corporate governance

Audit & Supervisory Board Members (As of June 29, 2017)

Hideaki Obana

Hideaki Arai

Yoshihiko Morita

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Outside Audit &Supervisory Board
Member1979 Joined the Company

April1978 Joined the Company

April

July

2003 General Manager of Marketing Dept., Living

April

2007 General Manager of Pipeline Network Div.

Planning Div.
2004 General Manager of Home Service Planning Dept.,
Home Service Div.
2005 General Manager of Kanagawa Branch, Corporate
Communication Div.
2007 General Manager of Corporate Communications
Dept.
2009 Executive Officer and General Manager of Corporate
Communications Dept.
2012 Senior Executive Officer and in charge ofPurchasing Dept., Real Estate Management Dept.,
and Major Site Development Dept.
2013 Senior Executive Officer and in charge of Purchasing
Dept., Real Estate Management Dept., Personnel
Dept., and Internal Audit Dept.
2015 Retired as Senior Executive Officer
2015 Audit & Supervisory Board Member of the Company

April2010 Executive Officer, General Manager of Pipeline

April2013 Senior Executive Officer, Chief Executive of

April

2015 Senior Executive Officer, Chief Executive of Regional

April

2016 Senior Executive Officer, Chief Executive of Region Div.

March2017 Retired as Senior Executive Officer
2017 Audit & Supervisory Board Member of the Company

April
April
April
April
April

April

March
June

Dept., Pipeline Network Div.
Pipeline Network Div.
Development Marketing Div.

June

Executive Officers
President
Executive
Vice Presidents
SeniorExecutive
Officers

Michiaki Hirose
Takashi Uchida

Chief Executive of Residential Sales and Service Div.

Satoru Yasuoka

Chief Executive of Energy Solution Div.

Fumio Murazeki

President, Representative Director of TOKYO GAS LIQUIDHOLDINGS

Masaru Takamatsu In charge of Purchasing Dept., Secretary Dept., General

Administration Dept., Compliance Dept., and Internal Audit Dept.

Kunio Nohata

Chief Executive of Power Business Div., in charge ofEnvironmental Affairs Dept.

Takashi Anamizu

Chief Executive of Global Business Div.

Shin Yamagami

Chief Executive of Information Technology Div. and Technology
Research & Innovation Div.

Isao Nakajima

CFO, in charge of Finance Dept., Accounting Dept. and
Personnel Dept.

Satoru Sawada

In charge of Corporate Planning Dept., Corporate
Communications Dept., and Tokyo 2020 Olympic and Paralympic

Tadashi Komiyama Chief Executive of Pipeline Network Div.

43

Koki Hayakawa

Chief Executive of Region Div.

Kentaro Kimoto

Chief Executive of Gas Resources & Energy Production Div.

Hiroshi Kishino

President, Representative Director of Tokyo Gas Living
Holdings, and General Manager of Residential Sales & Service
Innovation Project Dept. of Residential Sales & Service Div.

Executive
Officers

Shinichi Takagi Toshiyasu Ishii Nobuhisa Kobayashi Yohei Nitta Tomoyuki Yoshioka
Shinichi Sasayama Ayumi Shigitani Minoru Sanari Yoshiharu Kikuyama
Akihiko Matsuda Takashi Higo Isao Hosoya

Executive
Specialist

Masami Takayanagi

April
1969 Joined Export-Import Bank of Japan
October 1999 Full-time Auditor of Japan Bank for International
Cooperation
October 2000 Director of Japan Bank for International
Cooperation
October 2004 Vice Governor of Japan Bank for International
Cooperation
October 2008 Representative Director and Senior Managing
Executive Officer of Japan Finance Corporation
Deputy CEO of Japan Bank for International
CooperationJune
2011 Retired as Deputy CEO of Japan Bank forInternational Cooperation
December 2011 Advisor of Sumitomo Mitsui Banking CorporationJune
2012 President (Chief Executive Officer) of Japan
Institute for Overseas Investment
Outside Audit & Supervisory Board Member of theCompany
June2013 Outside Director of Kawasaki Heavy Industries, Ltd.
Retired as Advisor of Sumitomo Mitsui Banking
Corporation
December 2014 Retired as President (Chief Executive Officer) of Japan
Institute for Overseas Investment

Masato Nobutoki

Outside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberYoshihiko Morita
The company’s auditing will benefit
from Yoshihiko Morita’s expansive
international way of thinking and deep
insight nurtured through work in the fields
of international finance and overseas
economic cooperation.

April
1985 Joined The Yomiuri Shimbun
March 1991 Retired from The Yomiuri Shimbun
Freelance journalist
2007 Part-time lecturer at School of Social and
AprilInternational Studies of University of Tsukuba
2014 Outside Audit & Supervisory Board Member of the
June
Company

April

April

April

April
May
April

April
June

Message from an
Outside Audit &Supervisory
Board Member

Masato Nobutoki

1981 Joined Mitsubishi Corporation

September 2002 Head of the secretariat of Government Exhibition

Projects for EXPO 2005 Aichi, Japan, Producer
Associates Co. Ltd.
2004 General Manager of Planning & Event Office ofGovernment Exhibition Projects Dept., Japan
Association for the 2005 World Exposition
2007 Joined City of Yokohama
Director General of City Growth Strategy
Promotion Department, Economic Affairs Bureau,
City of Yokohama
2009 General Manager of Climate Change Policy
Project, City of Yokohama
2011 General Manager of Climate Change Policy
Headquarters, City of Yokohama
2012 Executive Director of Future City Promotion,
Climate Change Policy Headquarters, City of
Yokohama
2016 Consultant of Future City Promotion, Climate
Change Policy Headquarters, City of Yokohama
2017 Outside Audit & Supervisory Board Member of theCompany

Major concurrent positions
Outside Director of Kawasaki
Heavy Industries, Ltd.

Wako Tojima
The company’s auditing will benefit from
Wako Tojima’s wealth of expertise anddeep insight as a science journalist.

Masato Nobutoki
The company’s auditing will benefit from
Masato Nobutoki’s abundant experienceacquired in corporate and local
government as well as his deep insight.

Using my experience in the industry,
government, and academics, I intend
to contribute to Tokyo Gas’s value
creation.

of accelerating movement toward local production
and local consumption of energy in Japan (andelsewhere), I strongly believe that the communitycentered network of Tokyo Gas is a big advantage.

Appointed as Outside Audit & Supervisory

projects, in relation to energy policies

Board Member in June 2017

Anticipating diversification of energy supply (suchas increases in solar and biomass energy) and amore networked environment, integration of citymanagement, energy policy, and environmental
policy will undoubtedly become even moreof a major social challenge. Tokyo Gas, as anenergy supplier, will be heavily involved with local
governments, companies, and citizens. As I haveexperience in projects to cutting across sectionsof a major company or a local government that
suffered from sectionalism, I would like to use thisexperience and support information exchange
and coordination of different departments or withoutside organizations.
Diffusion of renewable energy, electric cars, andother products may change the prevailing conceptof energy in addition to changing people’s lives.
Tokyo Gas may evolve from an energy supplier toa total life service provider. Without staying in aframework of Outside Audit & Supervisory Board
Member, I intend to endeavor to help Tokyo Gas
become an even more valuable company for thesociety of the next-generation.

After working in a major trading company, I
served as administrative head of the main officeof Government Exhibition Projects for EXPO 2005
Aichi, and have since been involved in various
other capacities, such as in the area of community
alliance business at a university. In 2007 I joined
City of Yokohama and became engaged in citymanagement and various climate change policies
in positions such as Director General of the City
Growth Strategy Promotion Department and General
Manager of Climate Change Policy Headquarters.
I have had business relations with Tokyo Gas
through a smart grid experiment that City of
Yokohama was designated to conduct by thenational government in 2010. My impression ofTokyo Gas since that time is that its employees go
about their work from a citizen’s point of view andare not as arrogant as oftentimes seen with many
people in big companies. I think it has much to
do with the fact that Tokyo Gas provides special
services based on a sales network focused on avast number of individual households. In the context

TOKYO GAS ANNUAL REPORT 2017

Wako Tojima

Reasons for Selecting
Outside Audit & Supervisory
Board Members

Using my experience in interdisciplinary

44

Invisible assets

Tokyo Gas Group’s
Invisible Assets
Enhance “invisible assets” and achieve sustainable growth in our Second Foundation phase

Stable supply of energy
Relationships of trust withover 11 million customers
Research and Development

Business partners

Human resources

Three contributions for realizing sustainable growth1

Enhancement of energy security

The Tokyo Gas Group supplies stable affordable energy in the context of risinginterest in using the potential of natural gas and of significant changes in Japan’s
energy industry triggered by the electricity and gas system reformIn the residential market, the Tokyo Gas Group is offering new values and services

2

Evolving into a total energy businessto enrich customers’ lifestyles, as additions to our supply of gas and electricity. In
the commercial and industrial markets, the Group continues working to provide
energy solutions that suit customer needs, in order to increase the convenience andpleasantness of business conducted by our customers.

3

45

Accelerating global expansion

Using its know-how and experience, the Tokyo Gas Group is contributing to otherJapanese companies in Japan and overseas with energy solutions, and to local
energy infrastructure-building.

Natural gas reserves are abundant in various parts of the world. The Tokyo Gas Group wasamong the first to notice the potential of natural gas and became the first in Japan to

Procurement

import LNG from Alaska. That was in 1969. Today, by procuring LNG mainly fromSoutheast Asia and Australia, our low dependence on the Middle East is one of our
features. We also participate in the upstream gas field projects, which enable us toTOKYO GAS ANNUAL REPORT 2017

Stable supply of energy

procure stable, price-competitive LNG.

We import LNG by tankers and store it in tanks at the LNG terminals. LNG is thenreconverted into gas and adjusted in calorific value to be distributed as city gas tocustomers through our pipeline network of over 60,000 km. Main facilities such as plants

Supplyand pipelines have adopted latest knowledge and technologies to withstand even a major
earthquake (7.0 on the Japanese scale of an earthquake) as intense as the Great HanshinAwaji Earthquake of 1995. Unlike other energy sources, as city gas is made by conversion
from LNG to gas at an LNG terminal and is distributed via pipeline, there is no energy
conversion loss or transport loss to a point of consumption.

In order to deliver natural gas safely and steadily to over 11 million customers 24 hours a day

Maintenance knowhow to support
stable supply andmeasures to prevent
earthquake disasterand 365 days a year, we are continually developing human resources involved in safety. To
support the stable supply of city gas, it is indispensable to have human resources that are
equipped with advanced specialized skills in facility design, construction, and maintenanceas well as decision-making capabilities that enable the reliable execution of gas supply andsafety responsibilities at times of emergencies. The trust of customers that has been earned
as a result of expertise and efforts related to safety operations that we have accumulated
during the group’s history of 130 years has also become a strength of the Tokyo Gas Group.

46

Invisible assets

Relationships of trust withover 11 million customers
Our relationships of trust with over 11 million customers,
accumulated over the past 130 years, are our biggest strength.
Tokyo Gas Lifeval (over one-third owned by Tokyo Gas),
Enesta, and Enefit have 194 outlets and over 10,000
employees, providing services with the background of strong
local community relationships and providing one-stop support
for the daily life of customers in local communities. Theirservice menu includes gas tap opening and shutoff; safety
inspection of gas taps and gas facilities; sales, installation andrepair of gas appliances and other home appliances;renovation mainly of bathrooms and kitchens; and handlinginquiries and applications for electricity services.
We believe strong relationships of trust with customers, basedon these community-based sales organization is a driverbehind our becoming the No. 1 new electric power entrant. In
operations of the retail gas business, which was fully
deregulated this year, we are determined to augment andstrengthen our relationships of trust with customers.

Sales and Service Network

Outlets

Employees

194
14,000Help in gas and electricity planning
Gas tap opening and shutoff
at the time of moving
Meter reading
Safety inspection and repair ofgas appliances and equipment

Customers
Interfacewith thecommunity

Sales and installation of gas appliancesand housing appliances
Gas plumbing
Design and installation of plumbing
equipment and air conditioners
Home improvement
etc.

47

We are developing energy application technology that
supports customers in their daily life and business, andtechnology to support safety and reliability of the city gas
infrastructure. Moreover, in order to enhance competitivenessand expand our business domains, we are taking up thechallenges of developing new technology in light of changes
in the social environment, such as for low-carbon anddigitalization.

R&D Expenditures (consolidated)

Technology Development Themes of Tokyo Gas
Low-carbon
society

Hydrogen-oriented Development of technology for establishing a supply
base of hydrogen, a form of clean energy with highsocietypotential, and for advanced use of hydrogen

Smart Society

Development of technology that responds to various
needs of customers for energy saving, cost reduction,and reduction in environment burden. Smart energy
network and smart meter system of gas are included.

Earthquake
disasterprevention andstable supply

R&D for supporting the city gas infrastructure, including
LNG terminals and pipelines; development of system towithstand a major earthquake

Comfortable,
convenient andsecure living

R&D for creating more values for customers. Researchon lifestyle and development of services, using IoT, AI,
and other digital technology are included.

(Millions of yen)

12,000
9,000
6,000
3,000

0
2011

2012

2013

2014

2015

2016

(FY)

Development of technology for realizing a low-carbon
society. Raising efficiency of gas appliances andsystems, such as fuel cells and gas cogeneration
system, and use of renewable energy are included.

TOKYO GAS ANNUAL REPORT 2017

Research and Development

Business partners
In this period of transformation of the energy industry, namely,
the full deregulation of the electricity and gas retail markets, weare exchanging information broadly with not only electricity andgas companies but also players in various industries. Moreover,
we are promoting cooperation in areas where we foresee mutualsynergies such as gas resource procurement and the electricity
business (power plant construction and electricity sales).

Power Generation
Expand competitive power sources
JXTG Energy (Kawasaki Natural Gas Power Generation)
Showa Shell Sekiyu (Ohgishima Power)
Kobe Steel(Electricity procurement from Moka Power Station)

Idemitsu Kosan and Kyushu Electric Power(Chiba-Sodegaura Energy)

LNG Value Chain
Using technology and know-how concerning the total energy
business, we provide energy solutions to customers who are
expanding business in Southeast Asia and North America, andcontribute to infrastructure-building.
PetroVietnam Gas(Signing of a Memorandum of Understanding to conduct a feasibility study on energy
solution businesses)

PT Pertamina(Signing of a Memorandum of Understanding with Pertamina towards Forming a
Strategic Alliance -Cooperation for Development of LNG Value Chain in Indonesia-)

PT Miura Indonesia(Signing of a Memorandum of Understanding on Mutual Cooperation in Indonesia)

Petronas LNG Ltd.

(Signing of a Memorandum of Collaboration)

Gas resource procurement
Ensure flexibility and realize cost-competitive LNG procurement byenhancing and expanding alliance with LNG players in Japan and overseas
Kansai Electric Power; Kyushu Electric Power;
Korea Gas Corporation; CPC Corporation, Taiwan; Centrica, U.K.

Shizen Energy(Development of photovoltaic power generation)

Electricity Sales
Expand sales to high-voltage and extra-high-voltage customers
Tohoku Electric Power (Synergia Power)
NTT Facilities and Osaka Gas (Ennet)
Expand sales to low-voltage customers
Business alliances with 21 companies including gas operators
which are our city gas wholesale customers(approx. 620,000 city gas customers)

Business alliances with 27 LP gas sales companies(approx. 310,000 LP gas customers)

Making progress with talks about sales through partnerships
with companies in housing, construction, equipment,
telecommunication, information service, and other industries.

48

Invisible assets

Human resources
Because we see human resources as the underlying sourceof creation of corporate value, the Tokyo Gas Group is striving
to develop employees who have high-level expertise andintegrity, and flexibly respond to changes in society andbusiness environment. Moreover, we are promoting creationof workplaces, where diverse employees can excel, as well asworkstyle innovation.

Shift into a Yatsugatake Mountains
type management structure

Reorientation of theTokyo Gas Group

Evolution of the total energy
business
Acceleration of global
development

Promotion of diversity
Work innovation and workstyleinnovation by use of ICT

Achieving sustainable growth

Promotion of Empowerment for Human Resources1

Promotion of diversity
Top Management Commitment

The Tokyo Gas Group will promote diversity to ensuresustainable growth and development into the futureWith competition between companies in the energy market
continuing to intensify, the Tokyo Gas Group aims to maintain its
position as the customer’s choice and achieve sustainablegrowth and development in the future by realizing its Challenge
2020 Vision. One important priority for the Group as a whole isthe promotion of diversity. For us to continue to meet diversifying

customer needs, it is vital that every single person employed by
the Group should have the chance to excel and make maximum
use of his or her knowledge, ability, and experience. We arecommitted as a corporate group to developing and expanding
systems to achieve this goal and foster employee awareness of it
while continuing to proactively create an organizational culture inwhich everyone can excel, regardless of gender, age, disability,
nationality, or whether they were hired straight out of university or
mid-career.

Basic Policy Regarding Promotion of Diversity
Childcare

Realize diversity
in working styles,
and productivity
enhancement

We aim to realize an organization in which every
person accepts each other’s working style while
enhancing productivity.

LGBT

2

Promotingempowermentof women in
workplace

We regard promoting the success of women as the
beginning of the promotion of diversity, and willcontinue to undertake this proactively.

Promotion of
employmentof people withdisabilities

3

Careerdevelopment
system

We will establish a “Group Diversity Promotion
Team” and promote diversity in the entire Group in
an integrated manner with management.

1

Young
staff

Empowermentof women

Mid-career
hired staff

Nursingcare

Career support
for seniors

Diverse working
styles andproductivity
enhancement

Foreignnationals

Specific Examples of Promoting Diversity
Promotion and empowerment of women•49

Increase in women in management positions•(the first female corporate officer was appointed in
April 2016)••

Active promotion of initiatives, targeting 10% in theratio of women in management positions by 2020•

Almost no difference in gender in terms of theaverage years of service

Support careers of employees over
50s and over

Employment of people with disabilities
Employment rate of 2.19%, exceeding the
mandatory rate (as of June 2017)

Established a Liaison Committee to Promote
Employment of Disabled People. Expand thelocations and scope of work opportunities in thecompany for people with disabilities, and support
initiatives by Group companies.
• Promote safe and comfortable working environment.

•

A “Grand Career System” was established in
April 2016 to support career development ofpeople in their 50s, through training sessions
and interviews with career consultants in the
Personnel Department.

Recognizing that people growthrough their work, we aredeveloping capabilities and skillsof employees mainly throughon-the-job training and byeffectively combining it with
off-the-job training and learning,self-development, and job transfer
and rotations.

2With the objective of developing next-generation executives, we
conduct a program for those candidates, for them to discuss
management with executive officers and others of various divisions.

Development ofexecutives
Development and assignmentof human resources, withconsideration given to the
Yatsugatake Mountains typemanagement structure

We promote growth of the strategically-important electric power andoverseas businesses by assigning more employees. In addition, we hire
mid-career personnel with relevant experience and expertise.

Management
philosophy to be known
by all Group employees

Tokyo Gas Group mindset training sessions are conducted for new
employees of the Group to nurture a sense of cohesion and unity. We
promote our management philosophy for those employees to achieve
our own sustainable growth while contributing to our business andoverall social endeavors.

Occupational safety and health

Safety and health, or protection of the life and health of
employees, are basic to the very existence of a company.
With the aim of helping employees maintain and enhance
health, we have a mental health initiative and an initiative toprevent adult lifestyle-related diseases. We also encourage a
100% participation in regular medical examinations to detect

TOKYO GAS ANNUAL REPORT 2017

Development andoptimal placement

disease at an early stage and make effective use of outside
medical institutions.
In order to prevent a health problem caused by long working
hours, overtime work after 10 pm is banned in principle. By
maintaining a sharp distinction between work and off-time,
we aim at streamlining performance and raising productivity.

External Evaluation
Granted Kurumin
certification by the
Minister of Health,Labour and Welfare as acompany that provides
superior childcare
supportSelected as aNadeshiko Brand(being outstanding interms of encouraging
the empowerment of
women)

Selected as a Health& Productivity Stock2017 by the Ministry of
Economy, Trade andIndustry and the Tokyo
Stock ExchangeWork Innovation Project “Work with Enthusiasm”
Aiming at taking up challenges to changes in the external environment, deregulations, we have promoted a work innovation
project Work with Enthusiasm, using ICT. Employees working with enthusiasm are expected to result in the creation of value
and the improvement in productivity.

Workstyle Innovation“Work anywhere”“Work in a free-form
animated manner”

Overcoming restrictions on
where to work

Enhancing knowledge sharing
and communication

We will continue to verify theeffects, use the PDCA cycle, andimplement and settle tools andrules for promoting changes inmindsets.

Ex. Work at home, reforms of offices, etc.

Work Process Innovation“Work to be entrusted”
Automation, use of machines, advancement of work
Ex. Study use of AI technology in work, etc.

Multi-purpose space in the new office ofTokyo Gas Engineering Solutions

50

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

8

9

DOE (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 of
1.11% (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

615

901

Dividend 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 Revenues
and 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 on
guarantees

Gas Rate Adjustment System’s Medium- to
Long-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 gas
rates 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 of
investment 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 price
Average 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

Ibaraki–Tochigi Line

North Kanto
Industrial Zone

Hitachi LNG Terminal

Ibaraki Line (Scheduled for 2020)
Saito Line

Kashima Waterfront
Industrial Zone

Kashima Waterfront LineTOKYO GAS ANNUAL REPORT 2017

Koga–Moka Line
(Scheduled for Oct.2017)

Chiba–Kashima Line

Tokyo Gas Group pipelines

Tokyo–Yokohama
Industrial Zone

Tokyo–Chiba
Industrial Zone

Tokyo Gas Group pipelines(under construction and planning)

Other companies’ pipelines(existing)Tokyo Gas Group Supply Area
Industrial zones

Sodegaura LNG Terminal

Factories

Ohgishima LNG Terminal

Negishi LNG Terminal

Our Potential

Energy demand concentration in the
Kanto Region
100km

Potential for Industrial and Commercial Demand in the
Kanto Region (200-kilometer radius around Tokyo)
100~200-km area

100-km area

2.0 billion m 3

7.0 billion m 3

Cogeneration system /Power generation
0.3 billion m 3

Fuel conversion
5.1 billion m 3
Cogeneration system /Power generation
1.9 billion m 3

Fuel conversion
1.7 billion m 3
Total

9.0 billion m3

The Kanto Region, the company’s service area, is ripe with latentdemand for natural gas present in such areas as industrial zones
populated by factories using heavy fuel oil. By extending ourpipeline network into these areas, we will be well placed tocapture this latent demand.

“Challenge 2020 Vision” Targets :Gas Supply Volumes by Application

1.5 times

22.0 billion m

3

3.5

Residential

3.3

Commercial

7.0

Industrial

5.2

Industrial

1.9

3.0

Wholesale2012.32021.315.0 billion m

3

3.5
2.7
3.4
3.5

Reference value as of the time
the Vision was put in place(general use)(power generation use)

56

Tokyo Gas Co., Ltd. ANNUAL REPORT 2017

Financial and Industry Data (EXCEL Spreadsheet Data Available)

Investors’ Guide
http://www.tokyo-gas.co.jp/IR/english/library/invguid_e.html

Quarterly Financial Results

Earnings Announcements
http://www.tokyo-gas.co.jp/IR/english/event/earn_e.html

Consolidated Financial Results Bulletin
http://www.tokyo-gas.co.jp/IR/english/library/earn_e.html

Details of Challenge 2020 Vision
The Tokyo Gas Group’s Vision for Energy and the Future~Challenge 2020 Vision~ (Released in November 2011)
http://www.tokyo-gas.co.jp/IR/english/manage/vision_e.html

Details of Corporate GovernanceCorporate Governance Report
http://www.tokyo-gas.co.jp/IR/english/gvnnc/index_e.html

CSR Activities

Tokyo Gas Group CSR Report
http://www.tokyo-gas.co.jp/csr/index_e.html

Tokyo Gas Co., Ltd. ANNUAL REPORT 2017
Stock Code 9531
IR Contact E-mail:tgir@tokyo-gas.co.jp

1-5-20 Kaigan, Minato-ku, Tokyo 105-8527, Japan

http://www.tokyo-gas.co.jp/index_e.html
Published on August, 2017
For inquiries regarding planning and editing of this report:
Investor Relations Sect., Finance Dept., Tokyo Gas Co., Ltd.

This annual report is printed on Tokyo Gas Recycled Paper (madefrom recycled paper from Tokyo Gas offices, trimmings fromafforestation activities, and reused and unused wood materials)
using vegetable oil ink that contains low levels of organic solvents.

TOKYO GASANNUAL REPORT

2017

Printed in Japan