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.

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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 toProcurement

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 ourfeatures. 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.

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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.

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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-carbonsocietyHydrogen-oriented Development of technology for establishing a supply
base of hydrogen, a form of clean energy with highsociety
potential, 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)

12,0009,000
6,000
3,00002011

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 ChainUsing technology and know-how concerning the total energy
business, we provide energy solutions to customers who areexpanding 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.

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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.

LGBT2Promotingempowermentof women inworkplace

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

Promotion ofemploymentof people withdisabilities

3Careerdevelopment
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

Nursing
careCareer 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 inApril 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 themandatory 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 inApril 2016 to support career development ofpeople in their 50s, through training sessions
and interviews with career consultants in thePersonnel Department.

Recognizing that people growthrough their work, we aredeveloping capabilities and skillsof employees mainly throughon-the-job training and byeffectively combining it withoff-the-job training and learning,self-development, and job transferand 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 theYatsugatake 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 ofemployees, 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 ofwomen)

Selected as a Health& Productivity Stock2017 by the Ministry ofEconomy, 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

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