TOKYO GAS ANNUAL REPORT 2018

GPS2020

Tokyo Gas Group FY2018-2020
Medium-Term Management Plan

GPS2020
In November 2011, the Tokyo Gas Group released its Group Management Vision:“Challenge 2020 Vision - Initiatives by the Tokyo Gas Groupfor Energy and for the Future” .
In our previous management plans, “Hop” (FY2012-2014) and “Step” (FY2015-2017), ourgoals were to realize a total energy and global corporate group. In addition to widely
expanding our business domains and areas, and forming seven business domains, wealso built a new group formation.
During the “Jump” period, we will deploy the Tokyo Gas Group’s “GPSxG” system
to generate real new value in “the things we can do” while pressing forward withongoing a comprehensive vision of non-continuous reform (business transformation
unprecedented in its boldness and fundamental reform of our organizational structure).
The 2020s will be a period of solid growth and forward movement.

FY2015~FY2017

FY2012~FY2014

HOPSTEP

stage

Operating cash flow

Operating cash flow

¥240.3 billion

A step in
the right direction

Major advancements toward
the realization of our visionstage¥237.6 billion

2011

Operating cash flow

¥194.5 billion
Formulation ofthe Challenge 2020 Vision
The Great East Japan Earthquake andthe subsequent nuclear power plant
accident and the issue of demand andsupply of electricity forced the country to
examine the state of our energy, thefoundation of the lives of the public andindustrial activities.
Amid such an environment, we aim to
make contributions through theadvancement of the LNG value chain.

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Significantly expand our business domains and areas, establish seven business domains andconstruct a new group formation, with the aim of becoming a global, total energy corporate group

Main initiatives

Main initiatives

Diversification of raw materials
Procurement and expansion of overseas
business

Evolving into a total energy businessAccelerating global businessdevelopment

Upgrading and expanding infrastructure
to contribute to safe and stable supply

Construct a new group formation

Proposing energy solutions aligned withcustomer needs

Drafting and releasing our corporate
message, “Supporting you Always andbettering every day”

In formulating our management plan, Tokyo Gas has summarized its awareness of the coming new
era in terms of three specific perspectives.
The three perspectives are: “The Era of Natural Gas,” “The Era of Single-Source Providers ofElectricity and Gas,” and “The Era of Next-Dimensional Innovation Fueledby the Rapid Digital Evolution.”

2With its excellent stability, economics, andenvironmentally friendly characteristics,
natural gas is becoming an increasingly
important energy source, both in Japanand around the world.
Going forward, natural gas is expected tobecome more widely used, in a greater
range of fields and areas, as it expands
dynamically on a global scale.

Until now, customers in Japan were only able
to buy electricity from electric powercompanies, and gas from gas companies. But
now, with the full deregulation of the electricpower and gas retail markets, consumers inJapan can now purchase both electricity andgas from a single supplier.
Moving forward, it will now be possible for us topropose and introduce optimal energy systems
combining both gas and electric power.

3

The Era of Next-Dimensional
Innovation Fueled by the Rapid
Digital Evolution
The rapid evolution of digital technologies
such as IoT and AI is having an enormous
impact on daily life and industry. These
technologies are expected to spur newkinds of innovation that differ fromanything seen before.
We will pay close attention to suchchanges as we move forward.

Overall image after
full deregulation

FY2018~FY2020

Business overview

JUMPGPS2020

The Era of Natural Gas

The Era of Single-Source
Providers of Electricity and Gas

Message

1

Introduction

Tokyo Gas’s Concept of the Coming Era

stage

Operating cash flow

¥ 280 billion
Transition from “Goals” to “Capabilities”
During the “Jump” period, we will deploy the Tokyo Gas Group’s “GPSxG” system to generate real new value in “the things wecan do” while pressing forward with ongoing a comprehensive vision of non-continuous reform (business transformation
unprecedented in its boldness and fundamental reform of our organizational structure). The 2020s will be a period of solid
growth and forward movement.

Provide optimal energy, featuring gas and electricity
as a packaged service.

We will provide energy services and engineering forour commercial and industrial customers to reduce
their energy usage and costs.

Establish offices in strategic areas and concentrate
management resources to engage in proposalplanning.
Contribute to building energy infrastructure incoordination with the governments and enterprisesin the fast-growing countries of Southeast Asia andother regions as the energy supply and demand
structure of these regions continues to evolve.
Build a firm foundation for profitability in North
America and other regions where deregulation andmarket trading of energy is advancing, while acquiringand using the know-how that will contribute to ourother businesses in Japan and overseas.

Financial data

Provide a one-stop offer for a full range of services
designed to meet life stages and needs of residential
customers.

GlobalInvisible assets

Total energy

Corporate governanceThrough a variety of means, we will deliver global gas and power along with services thatmeet our domestic and overseas customers’ needs

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TOKYO GAS ANNUAL REPORT 2018

GPS2020

Initiatives
Proposing services to meet the needs of customers with GPS
Meeting customer
needs with various
service combinations

Gas and electricity
packages

Using various means

To reach a greaternumber of customers

Visits, stores

Residential customers

GPSG&PS

Gas & PowerServices

Work to achieve morewidespread use of citygas and LPG

Optimal proposals,implementation andmaintenance for energy
facility and equipment

Provide gas andelectricity services as a
set by proposing optimalenergy plans thatcombine gas andelectricity as only Tokyo
Gas canIncrease numbers ofcustomers(Lifeval, etc.)

Smart management utilizing
smart meters, IoT and AI
Lifestyle and businesssupportNew value-added
proposals to address
low-carbon, digitalizationand new technologies

FY2020 profit breakdown

Call center(Customer center)

PCs,smartphones,
IoT

Commercial andIndustrial customers

Digitalmarketing
Energymanagement

Operating profit + equity income

Overseas20%Overseas¥130 billion¥107 billion

Services /Other

Gas50%

Services /Other20%
Gas /Electric power

Electric power

10%FY201717

FY2020Future

Gas handing volume
Number of customers (with city gas meters)

11.90 million

Gas

11.50 million

ElectricPowerTokyo Gas power sources (existing)Tokyo Gas power sources(replaced or new)Alliances or market procurement

2.20 million

Aim to reachapproximately 5.0 million kW

Message

Electric power sales volume
Number of customers(electric power contracts)

Introduction

GPS2020

Tokyo Gas Group FY2018-2020 Medium-Term Management Plan

10.85 million31 billion kWh

1.00 million

15.2

billion m3

20.7

billion m

3.0 million kW
315 billion kWhbillion m3

FY2017FY2011

FY2020In addition to gas and electric power as apackage, we will propose and deliver optimal
service combinations to match customers’
lifestyle and business needs.

GlobalFY2020FY2017

FY20202020s

Utilizing our experience in the LNG value
chain management, we will deepen andexpand our business operations according to
the regional characteristics of each area.
We will participate in upstream,
midstream and downstream business
operations to acquire know-how andenhance our revenue base.

NorthAmerica

This area is expected to see

Southeast further growth. We will continue todrive initiatives in midstream andAsia

Engineering services

downstream business operations.

Regional development services(Real estate)

Australia

244

billion yen

280billion yen

Cash provided
by cash flows

1,180

billion yen(3-year total)

Cash out

1,180

billion yen(ROE)

5.5%

Approx.

8%730

Consolidated
operatingcash flow

billion yen (62%)

billion yen (69%)

290

810

Investment andfinancing(Total payoutratio)

60%

60%
External loans, etc.

370

billion yen (31%)

Stability(Debt-toequity ratio)

0.71

Approx.

(49%)

Shareholder
returns(dividends,treasury stock)

includeing
Real estate
Overseas160

FY2018-2020*Equivalent to 60% of consolidated net profit
in FY2018 to FY2020(3%)

Services / Otherbillion yen (13%)*

0.9

30

Electric power

230
(23%)
100260(25%)

Financial data

billion yen (25%)

Shareholder
returns500

Gas(3-year total)
Capital investment

Profitability

Total amount of investment
over 3 years (¥ billion)

Business

Invisible assets

Consolidated
operatingcash flow

FY2020

Corporate governance

Investments for infrastructure development,
future advancements, and breakthroughs

Cash flow distribution method for FY2018-2020

FY2017

We will seek to maximize the value ofexisting projects, with a primary focus
on upstream interests.

Business overview

Lifestyle services including gas
devices and equipment

FY2017Overall image after
full deregulation

Service

1.6 million kW

8.27 billion kWh

FY2011

GPS2020

19.1

1,020
(Avg. 340 billion yen / year)*Figures for FY2017 are values forecast
at the time of plan formulation.

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