17

CFO’s message

Tokyo Gas iscommitted to following
its basic financial policy
and maintaining
continuous growth.
Senior Managing Executive Officer, CFO

Koki Hayakawa

Capitalizing on experience tosupport continuous growth from afinancial perspective
My name is Koki Hayakawa. I was just appointed chief
financial officer (CFO). I have worked in energy
production, sales planning, personnel affairs and othersections before acting as a manager on the frontline ofobtaining gas and electricity customers over the past
three years since the full deregulation of the electricityand gas retail markets. Under harsh competitive
circumstances, I always considered how to boost ourcompetitiveness and sow the seeds for future growthby investing in promising areas while streamlining
operations and cutting costs.

Basic Financial Strategy Policy

123Continue to maintain competitive shareholder
returns (total payout ratio of 60%)
Steadily implement growth investments, withconsideration given to investment efficiency andawareness of achieving an 8% ROE
Maintain sound financial base, as a basis forstable management and securing the trust andconfidence of stakeholdersTokyo Gas’s basic policy for its financial strategy is toachieve a balanced distribution of operating cash flow
between full and stable shareholder payouts, growthinvestments, and maintaining sound financial base.
This will continue when I am CFO. I believe that my duty
is to steadily carry out the three tasks mentioned above.
Because energy markets are increasingly
deregulated, competition will become fiercer and theindustrial structure will face substantial changes. I
therefore believe that it is important to return profits to18

TOKYO GAS INTEGRATED REPORT 2019

shareholders while maintaining an appropriate financial

depending on the temporary injection of money. Whilebalance to beat the competition and make steadyalways paying attention to this target, we will work hardinvestments in supplying energy safely and securely toto develop a predisposition for seeking an approximate

achieve continued growth.

ROE level of 8% in the long run.

Actively investing overseas and in Japan
while retaining stable financial foundations

announced that we will maintain a total payout ratio of

We plan to make investments, including capitalcommitment by properly combining dividends and theinvestment and financing, worth around 1 trillion yen

acquisition of treasury shares. Three years have passed

during the three-year period from fiscal 2018 to fiscal

since the last dividend increase. While steadily carrying

2020 under the GPS2020 medium-term managementout the GSP2020, our management team is becoming

plan. This is about 1.5 times the amount under theconfident in the future. We have constructed a financial

previous medium-term plan. To meet the soaring

base that is resilient to an increase in dividends. We

demand for natural gas, we are constructing LNG tankrecently decided to raise dividends from 55 yen per shareNo. 2 in the Hitachi LNG Terminal. Meanwhile,

to 60 yen per share. In parallel with steady investments

construction of a high-pressure gas pipeline called thein promising areas, we will mildly increase dividends toIbaraki Line is in progress towards its inauguration in

return profits to shareholders. The company and I, asfiscal 2020. It will connect two existing lines, theCFO, will continue to listen to shareholders andKashima Waterfront Line and the Ibaraki-Tochigi Line,investors and strive for greater corporate value throughto advance construction of a loop of high-pressure gas

constructive communication. We respectfully ask forpipelines. This will ultimately strengthen the supply

your continued support and understanding.

With respect to returns to shareholders, we have
60% until fiscal 2020. We have firmly fulfilled ourstability in the Greater Tokyo area and boost thetransport capacity of the entire supply network.
In addition, we will invest in mission-criticalsystems that link with customers. We will study thefeasibility of constructing new, independent power

Capital Expenditures and Gas Sales Volume(¥ billion)

Capital expenditures (LH)300

Gas sales volume (RH)

(billion m3 )20

plants and examine our overseas investments andfinancing for further growth in terms of the significance,

225

15

150

1075

5economic efficiency and risks before implementation.
This investment is expected to bring about atemporary rise in the D/E ratio, to 0.9 in fiscal 2020,and I think it is within the allowable limit. With aremarkably low interest rate, corporate bonds may beissued under favorable conditions. We are promptly

0Improvement in profitability is the most significant
issue from the financial perspective. Currently, Kobelco
Power Moka Inc. is constructing a cutting-edge natural
gas thermal power plant in Moka City, Tochigi
Prefecture. After its completion, we will have morecompetitive procurement of power sources. Three2005.3

2010.3*1 Non-consolidated basis up to fiscal 1998; consolidated-basis from fiscal 1999
*2 Gas sales volumes from fiscal 2011 are on a 2020 Vision basis. (Including the gas volume
used in-house under tolling arrangement and the LNG sales volume.)

Shareholder Returns(¥ billion)

Share repurchases

806060.1% 60.9% 61.4% 60.7% 60.0% 60.8% 60.1% 60.7% 60.2% 60.3%
67.3
65.1
61.7
58.2
58.1
50.9

40
32.2

remains solid. I hope that the electricity business will
drive our profit growth.

20

The GPS2020 medium-term management plan sets
the ROE target at around 8%, while the actual ROE
figure was 7.4% for the last fiscal year. ROE fluctuates

Total payout ratio

Shareholder returns

years since the full deregulation of the electricity retailmarket, our pace of gaining electricity customers

2019.3Chiba-Kashima Line, Hitachi LNG
Terminal, Ibaraki-Tochigi Line, etc.

Ohgishima LNG Terminal,Keihin Line, etc.

conditions (10-40 years).

Bolstering profit rate to maintain stable
returns for shareholders

01997.3 2000.3

procuring funds at low interest rates under long-term

40.0
33.8

32.3

28.3

7.9

24.3

36.0

34.0

23.3

24.0
20.0

7.0

5.0

24.1

45.1

41.0

25.7

25.1

24.4

26.3

25.3

25.1

26.90
2010.3 2011.3 2012.3 2013.3 2014.3 2015.3 2016.3 2017.3 2018.3 2019.3