11-Year Consolidated Financial Highlights

As of March 31, 20162006.32007.32008.32009.3

1,266,501

1,376,958

1,487,496

1,660,162

112,345

162,31570,04865,204

8.87

11.79

4.71

3.93

Ordinary Income (¥ million)

98,689156,039

66,83258,337Net Income (¥ million)

62,114

100,699

42,48741,708Equity (¥ million)

728,231

795,101

769,072

772,365

1,693,898

1,692,635

1,703,651

1,764,185

Interest-bearing Debt (¥ million)

559,911525,467

558,716

593,230

Operating Cash Flow (¥ million)

198,490

233,841

184,908

182,791

Free Cash Flow (¥ million)

79,057109,285

46,90236,862

EBITDA (¥ million)

248,721295,457

212,469

206,287

Capital Expenditure (¥ million)

119,435

124,556

138,006

145,929

Depreciation (¥ million)

136,376

133,142

142,421141,083

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

21.70

35.69

15.50

15.37

BPS (Book Value per Share) (¥)

270.46293.11

289.49284.722,810,171

2,810,171

2,741,571

2,717,571

78

88

DOE (Dividends on Equity) (%)

2.71

2.83

2.72

2.78

Payout Ratio (%)

29.81

21.3350.19

51.18

Total Payout Ratio (%)

84.29

60.14

73.56

63.35

Current Ratio (%)

102.91112.60106.76118.99D/E (Debt-Equity) Ratio (times)

0.77

0.66

0.73

0.77

Equity Ratio (%)

42.99

46.97

45.14

43.78

ROE (Return on Equity) (%)

9.02

13.22

5.43

5.41

ROA (Return on Assets) (%)

3.69

5.95

2.50

2.41

Total Asset Turnover (times)

0.75

0.81

0.88

0.96

TEP (¥100 million)

229

538

17(48)

WACC (%)

3.7

3.8

3.6

3.4

Number of Customers (thousands)

10,016

10,207

10,38010,513Gas Sales Volume (million m3)

13,09813,315

14,215

13,942————Net Sales (¥ million)
Operating Income (¥ million)
Operating Income Margin (%)

Total Assets (¥ million)

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

2020 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 investors’guide is based on certified financial statements.

TOKYO GAS ANNUAL REPORT 201649

Financial data

2010.32011.32012.32013.32014.32015.32016.3

1,415,718

1,535,242

1,754,257

1,915,639

2,112,117

2,292,548

1,884,656

85,229122,451

77,075

145,633

166,044

171,753

192,008

6.02

7.98

4.39

7.60

7.86

7.49

10.19

83,519121,548

75,620147,453

159,613

168,169

188,80953,781

95,46746,060101,678

108,45195,828

111,936

813,886

858,920

839,166

927,634

1,011,787

1,069,515

1,100,271

1,840,972

1,829,661

1,863,885

1,992,403

2,176,816

2,257,662

2,251,518

555,919584,169

625,830

642,550

713,823

730,739715,769

199,898

244,803

194,565

240,448

248,831237,680

257,12251,712

94,60048,15256,651827

13,08425,089231,346

271,788

225,580

284,403

306,424

313,605

337,194

148,186

150,202

146,413

183,797

248,004

224,596

232,033

146,117

149,336

148,505

138,770

140,380

141,852145,187

19.86

35.63

17.70

39.52

43.10

39.15

46.68

301.58320.70324.67360.70402.91438.28460.352,703,761

2,684,193

2,590,715

2,577,919

2,517,551

2,446,778

2,396,778

9

9

9

10

10

10

11

3.07

2.88

2.74

2.91

2.59

2.34

2.58

45.32

25.26

50.85

25.30

23.20

25.55

23.57

60.11

60.87

61.36

60.70

60.00

60.80

60.10

120.93142.26156.89162.16

156.67150.63155.48

0.68

0.68

0.75

0.69

0.71

0.68

0.65

44.21

46.94

45.02

46.56

46.48

47.37

48.87

6.78

11.41

5.42

11.51

11.18

9.21

10.32

2.98

5.20

2.49

5.27

5.20

4.32

4.96

0.79

0.84

0.95

0.99

1.01

1.03

0.84

186

640

91

598

507

434

676

3.2

3.3

3.1

3.2

3.2

3.6

3.4

10,637

10,73910,855

10,978

11,111

11,263

11,39813,666

14,745

15,19015,39014,735

15,541

15,436——

15,833

16,741

17,22518,36018,587

Computations
Operating Cash Flow = Net Income + Amortization of Long-term Prepaid Expenses + Depreciation
Free Cash Flow = Net Income + 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) = After-tax & pre-interest-payment profit – capital cost (cost of interest-bearing debt+shareholder capital cost)

WACC calculation data (fiscal 2015 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 0.44%∙ Risk premium: 5.5%, Beta coefficient of 0.75

50TOKYO GAS ANNUAL REPORT 2016

Consolidated Balance Sheet(Millions of yen)

Assets2015.3.31

2016.3.31

Production facilities

174,760

241,842

Distribution facilities

479,060

550,713Service and maintenance facilities

60,52559,560

Other facilities

326,424

351,950

Non-current assets
Property, plant and equipment

Inactive facilities
Construction in progress
Total property, plant and equipment

387

316

223,821

107,685

1,264,979

1,312,068

Intangible assets
503

841

OtherGoodwill

134,937

136,348

Total intangible assets

135,441

137,189

Investment securities

199,166

179,410Long-term loans receivable

16,14924,013Net defined benefit asset

5,541

229

Deferred tax assets

24,73140,447

Other

30,33534,741

Investments and other assets

Allowance for doubtful accounts

(444)

(394)

275,480

278,447

1,675,901

1,727,705

Cash and deposits

86,493

170,262

Notes and accounts receivable - trade250,326

201,344

Lease receivables and investment assets

26,37924,054

Securities

43,010—Merchandise and finished goods

3,189

3,501

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

Work in process

14,046

10,784

Raw materials and supplies

71,63046,525

Deferred tax assets

12,637

8,004

Other

74,63259,808

Allowance for doubtful accounts

(584)

(472)

581,761

523,8122,257,662

2,251,518

Bonds payable

312,697

284,997

Long-term loans payable339,214363,393

Deferred tax liabilities

11,436

11,321

Net defined benefit liability

75,071

89,405

Provision for gas holder repairs

3,421

3,455Provision for safety measures

868

466

3,675

9,538

Total current assets
Total assets
Liabilities

Non-current liabilities

Provision for appliance warranties
Provision for loss on guarantees

1,562

1,678

Asset retirement obligations

11,448

10,695

Other

24,79824,490Total non-current liabilities

784,193

799,443

Current portion of non-current liabilities

58,02047,044

Notes and accounts payable - trade108,948

82,352

Short-term loans payable

18,547

16,512

Income taxes payable

43,64028,914

Deferred tax liabilities

21

3,839

—

Current liabilities

Provision for safety measures
Asset retirement obligations
Other
Total current liabilities

53
162,023

386,206

336,903

1,170,400

1,136,346

Capital stock

141,844

141,844

Capital surplus

2,065

1,878

855,776

910,353

Total liabilities
Net assets—
153,208

Shareholders' equity

Retained earnings
Treasury shares(3,715)(4,441)

Total shareholders' equity

995,971

1,049,634
26,298

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

34,455

Deferred gains or losses on hedges(1,820)(2,573)Foreign currency translation adjustment

43,071

44,945Remeasurements of defined benefit plans(2,163)(18,033)

Total accumulated other comprehensive income

73,54350,636

Non-controlling interests

TOKYO GAS ANNUAL REPORT 2016

51

17,747

14,900Total net assets

1,087,262

1,115,172

Total liabilities and net assets

2,257,662

2,251,518

Financial data

Consolidated Statement of Income(Millions of yen)

2014.4.1 - 2015.3.31

2015.4.1 - 2016.3.31

Net sales

2,292,548

1,884,656

Cost of sales

1,668,041

1,239,020

Gross profit

624,506

645,636

Supply and sales expenses

383,749

385,572

General and administrative expenses

69,00368,054

Total selling, general and administrative expenses

452,752

453,627

171,753

192,008

Selling, general and administrative expenses

Operating income
Non-operating income
Interest income

770

615

Dividend income

3,891

1,878

Rent income

1,622

2,177

148

1,733

Share of profit of entities accounted for using equity method

3,313

2,122

Miscellaneous income

7,796

7,043

Total non-operating income

17,542

15,570Foreign exchange gains

Non-operating expenses
Interest expenses

12,65912,158Adjustments of charges for construction of distribution facilities

2,054

2,189

Miscellaneous expenses

6,413

4,421

Total non-operating expenses

21,126

18,769168,169

188,809

Gain on sales of non-current assets

6,134

—

Gain on sales of investment securities

5,062

—

Total extraordinary income

11,197—30,98728,293

Ordinary income
Extraordinary income

Extraordinary losses
Impairment loss
Loss on reduction of non-current assets

505—

Loss on valuation of investment securities

622

4,747

Total extraordinary losses32,115

33,040

Profit before income taxes

147,251

155,768

Income taxes - current

51,451

43,782

Income taxes - deferred

(847)

(991)

Total income taxes

50,60342,791

Profit96,647112,977

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

819

1,040

95,828111,936

Consolidated Statements of Comprehensive Income(Millions of yen)

2014.4.1 - 2015.3.31

2015.4.1 - 2016.3.31

96,647112,977

Valuation difference on available-for-sale securities

8,603(8,363)

Deferred gains or losses on hedges(447)(1,062)

ProfitOther comprehensive income

Foreign currency translation adjustment

20,537

3,614

Remeasurements of defined benefit plans, net of tax(3,402)(15,904)

Share of other comprehensive income of entities accounted for using equity method

3,887(1,387)

Total other comprehensive income

29,179(23,102)125,826

89,874

124,981

89,029845

844

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

52TOKYO GAS ANNUAL REPORT 2016

Consolidated Statements of Cash FlowsFactors Affecting Revenues
and Expenses(Millions of yen)

2014.4.1 - 2015.3.31

2015.4.1 - 2016.3.31

Cash flows from operating activities
Profit before income taxes

147,251

155,768

Depreciation and amortibation

138,635

141,930

Impairment loss

30,98728,293

Amortization of long-term prepaid expenses

3,217

3,256

Loss on retirement of property, plant and equipment

2,001

3,050

Loss (gain) on sales of investment securities(5,062)(1,156)

622

4,747

Loss (gain) on valuation of investment securities
Increase (decrease) in provision for gas appliancewarranties3,675

5,863

Increase (decrease) in net defined benefit liability(4,810)(1,110)

Increase (decrease) in net defined benefit asset(4,474)(1,384)

Increase (decrease) in Provision for safety measures

2,995(4,242)

Interest and dividend income(4,661)(2,494)

Interest expenses

12,65912,158

Share of (profit) loss of entities accounted for using
equity method(3,313)(2,122)

Decrease (increase) in notes and accounts
receivable - trade

2,355

47,350Decrease (increase) in inventories(12,008)

28,117

Increase (decrease) in notes and accounts payable trade(7,305)(22,993)

Decrease (increase) in consumption taxes refund
receivable(4,371)

2,940

Increase (decrease) in accrued consumption taxes

1,137(2,436)

Decrease (increase) in accounts receivable - other(5,603)

12,864

(42)

2,273

Other, net(21,005)(1,253)

Subtotal

272,878

409,422

Interest and dividend income received

13,512

11,954

Interest expenses paid

(12,649)(12,547)

Income taxes paid

(50,515)(54,170)

Net cash provided by (used in) operating activities

223,225354,658

Net decrease (increase) in lease receivables andinvestment assets

Cash flows from investing activities
Proceeds from withdrawal of time deposits

1,846

1,945

Purchase of investment securities(147)(1,850)

Proceeds from sales and redemption of investment
securities

8,705

3,616

Purchase of property, plant and equipment(180,097)(195,060)

Purchase of intangible assets(25,313)(26,131)

Purchase of long-term prepaid expenses(3,276)(10,683)—(1,250)

Payments of long-term loans receivable(2,954)(9,776)

Collection of long-term loans receivable

6,485

1,726

Payments for transfer of business

Other, net
Net cash provided by (used in) investing activities

9,913

1,057

(184,838)(236,406)

241(2,011)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable(975)(1,243)

Proceeds from long-term loans payable

Repayments of lease obligations

29,35951,701

Repayments of long-term loans payable(30,891)(18,012)

Redemption of bonds(20,000)(43,800)

Repayments to non-controlling shareholders—(3,581)

Purchase of treasury shares(40,132)(33,939)

Cash dividends paid

(24,774)(24,173)

Other, net

19,432(356)

Net cash provided by (used in) financing activities(67,741)(75,418)

Effect of exchange rate change on cash and cashequivalents

6,769(1,065)

Net increase (decrease) in cash and cash equivalents(22,585)

41,769Cash and cash equivalents at beginning of period

150,918

128,333

Cash and cash equivalents at end of period

128,333

170,102

Gas Rate Adjustment System’s Medium- toLong-Term Neutralizing Effect on Crude Oil
Price and Exchange Rate Fluctuations
Gas prices are determined using the gas rateadjustment system. Through this system, average
raw material prices over a three-month period
according to trade statistics are compared withthe raw material cost that is used as the standard(standard average raw material cost), and the 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.

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

Feb.

Mar.

53

May.

Jun.

Jul.

Aug.

Jun.

Jul.

Aug.

Sep.

Dec.

Average raw
material price
Average rawmaterial price
Average raw
material price

Reflection in gas rates

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

How the Sliding Time Lag in Rates Works
All Japan LNG price
Average raw material price reflected in gas rate

Under
recoveryFY N

TOKYO GAS ANNUAL REPORT 2016Apr.

Over
recoveryFY N+1