Tokyo Gas Group

Medium-term management plan FY2009 - 2013

- Evolution and advancement of integrated energy business -

January 2009

Tokyo Gas Co., Ltd.

I. Foreword P01

II. Changes in the business environment surrounding the Group P02

III. Target vision for the Group P03

IV. Business strategy and action plan P04

1. Evolution and advancement of integrated energy business with emphasis on
the "Three Es" P04

(1) Eco-friendly - creation of value keyed by the environment P04

(2) Excellent service - improvement of value for customers P06

(3) Expansion - rigorous in-depth cultivation and widening of markets P08

2. Strengthening of the LNG value chain P10

(1) Stable LNG procurement with flexible adaptation to changes in business
environment P10
(2) Active augmentation of the wide-area infrastructure toward the future P10

3. Reinforcement of the synergy of “All Tokyo Gas” P12

(1) Consolidated Group management P12

(2) Human resource foundation P12

(3) Technology development for a solid foundation to the next generation P12
(4) IT Infrastructure P13
(5) CSR-oriented management in All Tokyo Gas P13
(6) Efficient utilization of real estate and increase in its asset value P13

V. Basic policy on cash flow allocation and financial strategy P14

1. Basic policy on cash flow allocation P14
2. Financial strategy P14

1
I. Foreword

The Tokyo Gas Group formulated its medium-term management plan for fiscal years 2006 - 2010
under the watchwords "creation and cultivation of new natural gas markets" in January 2006, and
has since been steadily executing initiatives for early establishment of "integrated energy
business." More specifically, it is aspiring to sustained growth through development, in more
wide-area markets, of integrated energy business rooted in multi-energy supply of gas, electricity,
and other forms of energy while retaining natural gas at the core, plus energy services offering
one-stop solutions to satisfy customers.

Natural gas offers environmental merits for action against global warming, a high level of
economicality and supply stability as compared to crude oil, and a convenient ability to cope with
demand for thermal, electrical, and various other forms of energy. Backed by these benefits, we
foresee no change in its superiority and importance as a type of energy, and expect needs for it to
continue expanding among societies and customers.

Meanwhile, we are seeing the emergence of changes in the climate of our business that could exert
a major impact on the Group's execution of integrated energy business strategy. These include the
further rise in expectations for environmental preservation in the market and society as a whole,
intensified competition with different types of energy and different suppliers of the same type, and
changes in the circumstances of gas resource procurement due to sharp fluctuation of crude oil
prices and other such factors. In addition, the both steep and worldwide economic deceleration that
set in late last year will presumably have an influence on the energy demand over the short term.

This medium-term Group management plan for fiscal years 2009 - 2013 was prepared with a view
to responding to these changes in the business environment both promptly and accurately, and
more vigorously promoting the integrated energy business strategy. It targets the evolution and
advancement of our integrated energy business through emphasis on the "Three Es", i.e.,
"Eco-friendly" (creation of value keyed by environment), "Excellent service" (improvement
of value for customers), and "Expansion" (in-depth cultivation and widening of markets). It
also calls for steps to strengthen the LNG value chain and reinforce the synergy of “All Tokyo
Gas”* for achievement of these ends. In the field of strategy deployment, we are planning for
aggressive input of fund resources and reinforcement of the business foundation from the medium-
and long-term perspectives while looking ahead to the second half of the 2010s.

Through action on these agenda, we hope to simultaneously further the diffusion and expansion of
natural gas use based on even higher levels of added value, and both widen and deepen the Group
business in the energy field, so that we will be able to cope flexibly with future changes in the
business climate and continue to advance as a resilient corporate group achieving sustained growth
while constantly remaining trusted by its customers, shareholders, and society as a whole.

* All Tokyo Gas = a collective term for Tokyo Gas Co., its affiliated companies, and its cooperating companies

1
II. Changes in the business environment surrounding the Group

(1) Rising societal demands for environmental preservation

z With entry into the first commitment period of the Kyoto Protocol and discussions of a
post-Kyoto framework, approaches to global warming are rapidly gaining momentum on a
global level. In response, the Japanese government announced the long-term target of
reducing carbon dioxide (CO2) emissions by 60 - 80 percent (relative to the level in 2000) by
2050. Corporate enterprises as well have posted CO2 emission reduction targets of their own
and are extensively introducing facilities to increase production efficiency, save energy, or
apply new energy.
z These approaches to the problem of global warming are anticipated to be further accelerated
and bolstered over the coming years. The Tokyo Gas Group, too, must respond to the needs
of customers and communities in a both proactive and comprehensive manner, by providing
new value incorporating new forms of energy in addition to its long-standing endeavors to
promote and expand natural gas use and propose ways of conserving energy.

(2) Changes in the structure of the energy demand

z In the residential market, there is a trend toward a slowing of growth in energy demand over
the long term owing to factors such as low figures for the number of housing construction
starts, decrease in the average number of persons per household, extensive spread of
energy-saving equipment, and construction of houses that are more air-tight and better
insulated. Under these circumstances, it is becoming increasingly important to implement
strategies and approaches to widen the circle of customers who continue to prefer city gas.
z In the industrial and commercial markets, the demand for natural gas is anticipated to dip
over the short term due to factors such as a decline in the operation of plants as the economy
decelerates, but may be expected to expand in the Kanto region due to fuel-switching and
utilization to gas fired power stations and for other purposes by reason of its environmental
features, economic merit, and convenience. It is vital for the Group to accommodate
customer needs over a wide area and firmly seize opportunities for growth.

(3) Intensified competition

z The electrification push exemplified is gathering momentum in the residential market owing
to the amplification of distribution routes, and is also coming to affect the industrial and
commercial markets.
z A further intensification of competition appears to be unavoidable. This makes it
indispensable for the Group to heighten its overall competitiveness, which consists of not
only price competitiveness, but also capabilities in the technical, product, proposal, and other
aspects for proper response to diverse customer needs.

(4) Changes in the climate of gas resource procurement

z Prices for LNG are likely to stay on high levels over the medium and long terms as a result
of worldwide demand expansion and the rise of resource nationalism. Meanwhile, there are
growing risks in forms such as sharp price fluctuation linked to crude oil prices and
exchange rates. These factors may very well influence the Group's competitiveness in the
commercial market, for example. In this procurement climate, it will become even more
important to take measures for stable supply of natural gas at competitive prices.

2
III. Target vision for the Group

The Group has achieved steady growth by efforts to promote the diffusion and expansion of natural
gas use through wide-area development of integrated energy business. Similarly, our approaches to
reinforcing the LNG value chain are spawning new growth fields in areas such as upstream
operations, transportation, and power supply as well as helping to make our integrated energy
business more competitive.
We foresee a further rise in the excellence and importance of natural gas as well as the level of
needs for it among communities and customers. At the same time, the Group will have to respond
swiftly to calls for environmental preservation, intensified competition, changes in the climate of
gas resource procurement, and other trends in the business environment.
Under these circumstances, the medium-term plan for fiscal years 2009 - 2013 targets the
development of business with an emphasis on the "Three Es", i.e., "Eco-friendly" (creation of
value keyed by environment), "Excellent service" (improvement of value for customers), and
"Expansion" (in-depth cultivation and widening of markets) while adhering to the basic strategy
for integrated energy business thus far. To support attainment of this target, it calls for a focus on
strengthening the LNG value chain and reinforcing the synergy of All Tokyo Gas.
By doing so, we shall effect the further diffusion and expansion of natural gas use by increasing its
added value, give our business greater breadth and depth, and aspire to be a resilient corporate
group able to cope with any and all changes in the business environment brought by the future.
Integrated energy business with natural gas at its core
More wide-area development of multi-energy supply (with a competitive strength grounded in the LNG
value chain) and energy services (one-stop supply of solutions that truly satisfy customers)

Development of business with an emphasis on the following approaches while adhering to the basic
strategy for integrated energy business around a natural gas core

Priority approaches for evolution and advancement

Eco-friendly Excellent service Expansion
Creation of value keyed by the Rigorous in-depth cultivation and
Improvement of value for customers
environment widening of markets
Ž Spread and expansion of Ž Supply of high-quality satisfaction Ž Rigorous development of natural
commercial goods and services through proactive approaches to gas demand in wide-area markets
with a high environmental value customers Ž Expansion of the number of
(such as fuel cells) Ž Further strengthening of safety and customers in the small-volume
Ž Input of renewable new energy and disaster-prevention measures to market
expansion of networked use of heighten the corporate brand value Ž Diffusion and expansion of natural
energy represented by the words safety, gas use through gas business
security, and reliability operation rooted in the community
Strengthening of the LNG value chain Reinforcement of the synergy of All Tokyo Gas
Ž Stable procurement of LNG with flexible adaptation to change Ž Mobilization of Group-wide capabilities in the aspects of
Ž Active augmentation of the wide-area trunk infrastructure in human and technical resources, for a further solidification of
focus on the future the All Tokyo Gas management foundation

Target vision
<Heightening natural gas value> <Widening and deepening of business>
Further diffusion and expansion of natural gas use by Establishment of a wide-ranging earnings base through
taking maximum advantage of its excellent features, diversification in aspects encompassing the supply of
developing integrated energy business in a diversity of new energy, value delivered to customers, and business
shapes and forms, and heightening the value delivered to operation setup, with linkage to future advancement.
customers.

A resilient corporate group capable of flexibly adapting to all sorts of future changes in the business environment and
achieving sustained growth
3
IV. Business strategy and action plan

1． Evolution and advancement of integrated energy business with emphasis on the "Three

Es"

（1）Eco-friendly - creation of value keyed by the environment

（1）
Approaches thus far
Ž Contribution to reduction of environmental burden in energy use through promotion of
natural gas utilization, and development and diffusion of gas appliances and systems
marked by high efficiency and low environmental burden

Priority approaches for the future

Ž Contribution to the emergence of the low-carbon society by vigorous action on items
such as provision of commercial goods and services applying new energy, and
improvement of energy-saving merit based on supply of new energy and
area-wise/networked use of energy, in addition to expanded sales of natural gas with its
excellent environmental features

① Extensive diffusion of residential-use fuel cells

z We shall launch regular sales of "ENE FARM" (an environmentally excellent
residential-use fuel cell with a one-stop supply of hot water, heating, and electricity),
propose ideas for more environmentally friendly lifestyles to more customers, and take the
initiative in transition to the low-carbon society through its diffusion.

② Diffusion and expansion of environmentally friendly systems incorporating solar light

and heat
z We shall offer systems that apply new energy and incorporate solar light and heat, and
thereby offer solutions for customer needs to save energy without sacrificing lifestyle
comfort.

[Examples of new-energy and energy-saving commercial products]

Gas(fuel cell/gas engine) & solar power generation, high-efficiency
Residential-use
water heater "Eco-JOES", and solar water heaters
Cogeneration & solar power generation, absorption type
Commercial-use
chillers/heaters & commercial boilers, and solar water heaters

③ Evolution into energy service business with a higher environmental value

z We shall develop energy service business that incorporates new-energy and energy-saving
services, and therefore has added environmental value, in addition to our usual
cogeneration-type energy services.
z In community redevelopment projects, we shall construct optimal energy systems on the
community level by incorporating new energy and area-wise/networked energy use.

④ Extensive approach to new energy

z We shall promote use of new energy applying biogas derived from sources such as sewage
sludge and food leavings.
z As means of assisting input of new energy by customers, we shall examine provisions for
green certificate, which is effective to this end, and schemes for buying and selling
emission rights to support CO2 emission reduction.
z We shall examine prospects for creating business related to new energy in ways that make
the most of our strengths.

4
[Reduction of CO2 through diffusion and expansion of the residential-use fuel cell "ENE FARM"]

63,000 tons
60 As compared to the
60 Amount of CO2 reduction conventional systems, "ENE
42,000 units
FARM" delivers a CO2
Number of units installed 40 reduction of 1.5 tons per
40 (Cumulative total)
household per year.* It
equals to 1kg per person per
20 20 day. (based on Tokyo Gas
2,000 units calculation).
* A household with four
0Amount 0
Number of members house.
of CO2 FY09 FY10 FY11 FY12 FY13 units
reduction installed

[Examples of new-energy and energy-saving commercial products]

Gas power generation plus solar High-efficiency water heater plus solar
power generation water heater
(example of installation for the condominium)
Solar power generation
Grid power Hot water supply
Electricity Solar cell
City (power generation with
gas a pump for heat
medium circulation)

"My Home" (コンクリート手すり) (コ ンク リ ート 手す り )

power generation
Preheating (床水上) (床 水上 )

tank
Heat
Solar heat collector attached to the
City gas balcony rail

Cogeneration plus solar power Absorption type chiller/heater plus

generation solar water heater
Solar heat Absorption type
collection panel chiller/heater
Heat
Electricity City gas

Heat exchanger
Genelight Lighting
unit
Heat Solar power
Hot generation
City Gas water Space Space
Grid power cooling
supply heating

[Networked use of energy within urban areas]

Condominiums
Solar power generation / Solar heat collector
Solar power generation LNG terminals

FC
FC
Electricity grid Biogas supply
FC
FC

FC
FC

FC
FC

FC
FC
District cooling plant
Fuel cells

CGS City gas network

Steam Solar power generation / Solar power generation /
absorption Solar heat collector Solar heat collector
chiller

FC FC
Heat grid
Ordinary
commercial
power
Fuel cells Fuel cells
Office buildings Hospitals and hotels, etc.

5
（2）Excellent service – improvement of value for customers

Approaches thus far

Ž Establishment of new energy service companies (Tokyo Gas LIFEVAL) rooted in the
community by reorganizing and consolidating the capabilities of Tokyo Gas, Enesta, and
Tokyo Gas Customer Service
Ž Proposal of diverse solutions and value to customers through multi-energy supply and
energy services
Ž Concentration on periodic inspection of customer gas facilities and systematic renovation
of gas pipes

Priority approaches for the future

Ž Dynamic contraction of distance from the customers, proposal of solutions and provision
of services that embody higher quality and match various needs, for satisfaction of more
customers
Ž Further heightening of the brand value symbolized by the words "safety, security, and
reliability" through stronger measures to assure the safety of gas appliances and pipes and
to prevent disasters from earthquakes

① Establishment and promotion of the setup for Tokyo Gas LIFEVAL, a close partner for
customers
z Through active communication at all business opportunities, we shall make deeper probes
of the needs of each and every customer, furnish finely-tuned value proposals, and provide
services on a timely basis, in order to deliver satisfaction to more customers as an even
closer partner.

② Satisfaction of customers in the industrial and commercial segments through higher levels of
added value
z We shall take full advantage of the technical, engineering, and sales capabilities nurtured
thus far to deepen our relations with sales persons and customers, and make valuable
proposals for the increasingly sophisticated and diverse needs of our customers.
z We shall meet all the expectations of each and every customer through proposals for
optimization taking account of facility life cycle, consultation regarding the "best mix" of
energy forms including city gas and electricity, and services in financing and risk
management drawing on credit power and hedging transaction.

③ Further strengthening of measures to assure safety and prevent disaster from earthquakes
z We shall strive for the development and diffusion of gas burners with Si sensors and other
highly safe gas appliances for enhancement of safety throughout the industry, and endeavor
to eradicate gas appliance accidents through replacement of gas appliances lacking devices
to prevent incomplete combustion and reinforcement of safety checks.
z We shall continue to promote the systematic replacement of gas pipes and target
implementation of measures for gray cast-iron pipes ahead of schedule. We shall also work
for replacement of buried galvanized gas pipes.
z We shall continue to enhance the infrastructure resistance and early resumption of services
in the event of earthquake disasters, and make initiatives for disaster prevention even
stronger.

6
[Customer satisfaction through establishment of the Tokyo Gas LIFEVAL]
We aim to open about 65 Tokyo Gas LIFEVAL locations, one after the other, by the end of fiscal
2009. We intend to make LIFEVAL into a familiar face that is a reliable partner in the community
as a gas energy sales firm with local roots and closely accommodates the needs of each and every
customer through action based on the local attributes.

Augmentation of the Proposal of life value in

service setup response to the needs of each
■Detailed determination of the current
■Amplification of the customer Gas facility Gas Proposal of gas
status of customer facilities and their
service setup, improvement of safety taps appliances and
points of dissatisfaction and need, and
services even at night and on checks facilities
timely proposal of optimal solutions
holidays, and expansion of
opportunities for communication
in contact with customers Repair of gas Installation of Cooking classes Demonstration-based
appliances gas appliances and events communication
■One-stop accommodation of
■Opening of demonstration-based
various customer needs and
showrooms in each block enabling
improvement of customer
firsthand experience of the comfort and
convenience
Gas Meter safety of the latest new gas appliances
Showrooms
construction reading and participation in cooking classes

[Provision of value to customers in line with facility life cycle]

We shall meet the increasingly sophisticated and diverse needs and expectations of industrial
and commercial customers with the synergy of All Tokyo Gas.

Renewal of
facilities
Needs/demands ■ Operational supports and
maintenance matching
Delivery of customer demands
• Energy conservation
Deepening our
relations with

Solutions for
customers

diagnosis and other

■Determination of the customer monitoring
Proposal

latest customer • Operational management

needs and demands
demands
on consignment
• Risk management
• Safety service
(reinforcement of safety
checks)

System selection Operation/

Design/ maintenance
construction

■Consultation taking advantage of the technical and engineering capabilities

• Proposal of optimal energy
• Proposal of extensive use of energy-saving technology and technology
applying new energy
• Financing service
• Further improvement in gas appliance safety

7
（3）Expansion – rigorous in-depth cultivation and widening markets

Approaches thus far

Ž Diffusion of natural gas use over a wider area within a 200-kilometer radius around
Tokyo in the Kanto region
Ž One-stop supply of multi-energy (gas, electricity, etc.) services

Priority approaches for the future

Ž Aim for sure acquisition of demand within the wide-area radius and amplification of the
wide-area infrastructure
Ž Demand development through rigorous in-depth cultivation of the residential market
Ž Diffusion and expansion of natural gas use over a wider area through gas companies
rooted in the community

① Aggressive demand development within the wide-area radius

z Besides aggressively developing the immense latent demand, in the area within a
200-kilometer radius around Tokyo, mainly in connection with industrial use, we shall
make plans for the construction of an additional LNG terminal to support this development.
z For customers who are difficult to supply with gas pipes, we shall meet needs for natural
gas through the optimal means of transportation, including LNG lorries and domestic
vessels.

② Demand development through rigorous in-depth cultivation of the residential-use market

z We shall strive for a further increase in the number of customers and thorough demand
development by further bolstering the sales setup of All Tokyo Gas, making high-quality
fine-tuned value proposals to more sub-users and residential customers, and practicing
more effective improvement of pipe networks.

③ Steady expansion of power business to support multi-energy supply

z In addition to the large power plants in operation at three locations, we shall start up
Ohgishima Power toward the close of fiscal 2009 and steadily expand our power business
while pursuing the maximum synergy with our gas business.

④ Diffusion and expansion of natural gas use through optimal operation of gas business
within the wide-area radius
z To meet regional market characteristics and needs, we shall build an effective setup for
sales that encompasses schemes of partnership with peripheral gas businesses revolving
around our wide-area branches. More specifically, we shall develop business through gas
companies with local roots, beginning with Nagano Toshi Gas and Yamanashi new
company (to be inaugurated in October 2009).
z We shall consider initiatives for partnership with other businesses linked to an increase in
corporate value on both sides, such as effective use of infrastructures and gas resource
accommodation.
z We shall strengthen partnership with city gas and LP gas companies which we supply on a
wholesale basis, and work for the further diffusion of gaseous energy.

8
[Steady increase of gas sales volume and customers’ number（Consolidated）]
（ 0.1 billion m3， 45ＭＪ /m3） （10 thous a nd cus tomers )
180 1,200
16.4billion m3
160
14.1 bilion m3
140
11.2 million 1,100
120 customers

100 10.5 million

cusotmers 1,000
80

60
900
40

20

0 800
FY08 forecast FY09 FY10 FY11 FY12 FY13

Residential Industrial Commercial & ohers

Wholesale Customer number

[Potential demand of industrial and commercial use within a 200 kilometer radius around Tokyo
（our research）]

Within a 100~200 Cogeneration/ Total：about 9 billon m3

kilometer radius Power generation use:
around Tokyo： 0.3 billion m3
2 billion m3
Conversion from
other fuels:
1.7 billion m3

Conversion from
Cogeneration/
other fuels:
Power generation use: Conversion from
about 6.8 billion m3
1.9 billion m3 other fuels:
5.1 billion m3
Within a 100
Cogeneration/
kilometer radius
Power generation use:
around Tokyo：
about 2.2 billion m3
7 billion m3

[Power plants in group’s power generation business］

Name Capacity Composition of State of operation

shareholding
Tokyo Gas Baypower 100MW 100% In October 2003
Tokyo Gas Yokosuka Power 240MW 75% In July 2006
Kawasaki Natural Gas
800MW 49% In April 2008
Power Generation
After FY2009, plan to start
Ohgishima Power 1,200MW 75%
gradually

9
2． Strengthening of the LNG value chain

（1）Stable LNG procurement with flexible adaptation to changes in business environment

z In addition to the ten existing long-term contracts with six countries, we shall launch new
projects such as Pluto and Gorgon. At the same time, we shall conclude short- and
medium-term contracts for stable LNG procurement enabling sure response to the demand
as it expands over the coming years.
z Through approaches to overseas projects for acquisition of upstream rights or otherwise
related to the LNG value chain, we shall adapt to the changes in the business environment
exemplified by crude oil price and exchange rate fluctuation, and steadily procure
competitive LNG.
z We shall increase our number of LNG vesssels, which current consists of six carriers, to
eight by the end of fiscal 2011, reduce our transportation costs, and actively develop
business in LNG transportation for other companies.

（2）Active augmentation of the wide-area trunk infrastructure toward the future

z We shall construct the fourth LNG tank at the Ohgishima terminal and bolster our
infrastructure for stable supply to meet the expanding demand.
z We shall build the new Yashio-Goka Line and take action to acquire latent demand centered
around the northern part of the Kanto region.
z To expand our integrated energy business over the medium and long terms, meet the natural
gas expectations and needs among communities and customers, and strengthen further
safety supply basement, we shall advance the consideration on planning for construction of
an LNG terminal at the port of Hitachi in Ibaraki Prefecture as well as a pipeline linking
and the existing network.

[Major plans for enhancement of the trunk infrastructure]

Scheduled start
Objectives Lines
of service
Gunma Line, Phase I FY2009
Chiba-Kashima Line FY2011
Enhancement of the Around
Yashio-Goka Line
wide-area infrastructure FY2015
Around
Hitachi Terminal & Hitachi-Moka Line
FY2017
Ohgishima Terminal, No.4 LNG Tank FY2013
Pressure Increase at the Negishi
Enhancement of the FY2013
Terminal
foundation for stable
Chuo Line, Phase II FY2010
supply
Shin-Negishi Line FY2013
Yokohama Line, Phase II FY2013

10
[Tokyo Gas LNG Project]

[Main infrastructure formation plan]

11
3． Reinforcement of the synergy of All Tokyo Gas

（1）Consolidated Group management

z To harness the synergy of All Tokyo Gas to meet the requirements for more diverse and
wide-area business as well as the more sophisticated needs of our customers, we shall
reconstruct the setup for business execution from the perspective of the overall optimum.
The agenda to this end include reorganization of customer-related work and its
consolidation in LIFEVAL, and transfer of pipe maintenance and management work to
affiliates.
z We shall continue to put resources into the business of affiliates deploying our integrated
energy business strategy. We shall achieve growth and increase profitability in the Group as
a whole by bringing business in the fields of upstream operations, overseas projects, energy
services, and power supply to fruition.

（2）Human resource foundation

z We shall reconstruct the system of human resource development by steps such as mutual
exchange of personnel and sharing of training programs among the members of All Tokyo
Gas, toward the goals of heightening productivity through growth by each employee and
achieving a strong organization that nurtures employee advancement. In particular, we shall
conduct a human resource development program Group total <Number of employees as of FY2013>
especially for Tokyo Gas LIFEVAL, which is about 15,200 Non-consolidated： 7,600
Affiliated companies： 7,400
the seat of priority measures, in order to endow 8,000
Group total
its setup with higher levels of quality and about 15,000

sophistication. 7,500

z For optimal placement of the human 7,000

resources required for business expansion

over the medium and long terms, we shall 6,500

strive for vigorous personnel recruitment,

including increased hiring, on the assumption 6,000

of constant approaches to productivity FY09

Tokyo Gas
FY10 FY11 FY12 FY13

increase by making work more efficient. Affiliated companies(Seconded employees excluded)

（3）Technology development for a solid foundation and linkage to the next generation
We shall build an integrated energy business for the new age while deepening and carrying on
the technology supporting our business foundation, and vigorously promote development of
technology that contributes to the emergence of the low-carbon society.
① Empathy-inducing concept creation and product development
z Based on a deep understanding of needs among communities and customers, we shall create
empathy-inducing concepts that are attuned to the times and local character, and
extensively apply them in product development.
② Development of innovative environmental technology
z We shall accelerate our development of innovative environmental technology, which spans
the fields of fuel cells and other energy-saving equipment, high-efficiency production and
utilization of hydrogen, and utilization of biomass and other renewable energy.
③ Deepening and transmission of technology supporting our business foundation
z We shall deepen, and transmit to the next generation, technology and know-how to
maintain and strengthen our business foundation, and continuously furnish our customers
with value symbolized by the words "safety, security, and reliability."

12
 [Items of priority technology development]
Ž Development of technology for utilization of solar heat and biomass, and of those
next-generation systems
Ž Development and commercialization of next-generation "ENE FARM" products
Ž Development and field tests of all-ceramic solid oxide fuel cells (SOFCs)
Ž Development of technology for high-efficiency hydrogen production and utilization, and CO2
sequestration, recovery, transportation, and processing
Ž Deepening and transmission of technology linked to further increase in the safety level of gas
pipes and production facilities, and reduction of operation and maintenance costs
Ž Deepening and transmission of technology supporting the foundation of our business, in the
areas of combustion, material assessment, and gas quality control

（4）IT Infrastructure
z Looking ahead toward the long future, the Tokyo Gas Group continues to enhance its IT
infrastructure, while at the same time strive to cut down its operational cost.
z We will establish a back-up center as a contingency for natural disasters and other
unexpected incidents.

（5）CSR-oriented management in All Tokyo Gas

z It is our basic policy to fulfill our corporate social responsibility (CSR) and public-service
mission through our routine business activities. We shall earnestly tackle the tasks of
corporate governance, compliance with all pertinent laws and regulations, and risk
management, and respond to the trust placed in us as an enterprise with a pronounced
public-service character by our stakeholders.
z We shall make efforts to see that this basic perspective on CSR is not confined to Tokyo
Gas per se but spreads and takes root among the other members of All Tokyo Gas as well.
z We shall continuously promote the three priority activities for discharge of CSR at Tokyo
Gas, i.e., diverse approaches to environmental preservation as the top runner in
environmental management, further reinforcement of safety and disaster-prevention
measures, and closer partnership with all stakeholders.

（6）Efficient utilization of real estate and increase in its asset value

z In our real estate business, we shall take action aimed at increasing value as assets and
assuring stable earnings. For our land in Tamachi and Toyosu, we shall initiate development
projects upon limitation of business risks.
z In undertaking development of properties, we shall not only increase asset value but also
contribute to the emergence of the low-carbon society by incorporating forerunning energy
systems.
z We shall reorganize and achieve the optimal arrangement of business locations by action
including the rebuilding of superannuated buildings. We shall sell or lease idle land and
work to compress our assets and increase their efficiency.
Ž Shibaura 1 chome, Minato-ku, Tokyo (land area: 3.2 ha)
Ž We intend to execute land interchange with another Minato-ku site (Shibaura 3 chome) in
accordance with the vision (prepared by Minato-ku) for community improvement in the
district north of the eastern gate of Tamachi Station, and to initiate work for the
development of offices and commercial buildings through a joint project with outside real
Tamachi
estate companies in fiscal 2009.
Ž We are currently making plans for installation of a forerunning district heating and
cooling system to reduce CO2 emissions in a setup integrated with the public and utility
facility area in Minato-ku after the interchange (we are also considering utilization of as
yet unused energy).
Ž Toyosu 6 chome, Koto-ku, Tokyo (land area scheduled for development: about 20 ha)
Toyosu Ž We intend to initiate the development project in fiscal 2009 with a view community
opening in fiscal 2013.

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V. Basic policy on cash flow allocation and financial strategy

1． Basic policy on cash flow allocation

z We estimate the cash flow generated over the five-year period of this medium-term plan
(fiscal 2009 - 2013) at about ¥1,070 billion. We intend to use this cash flow for aggressive
investment on agenda such as reinforcement of the LNG value chain (by involvement in
upstream/overseas projects, infrastructural improvement, and demand development) as the
basis for sustained growth, and also to make proper allocations to our shareholders.
z More specifically, we shall allocate about ¥900 billion (85 percent) to facility investment
and loan, and about ¥150 billion (14 percent) to our shareholders (in the form of dividends
and share buyback).

【Allocation of cash flow】 【Capex,Investment and loan】

Five-year total：about ¥1,070 billion yen Five-year total：about ¥900 billion
※Operating CF＋Other CF

Reduction of
Others Upstream/
interest-bearing
8% overseas/
Shareholders' debt
return 1% Business base LNG fleet
14% 15% 16%

Infrastructure
Investment/ Demand 29%
loan development
32%
85%

2． Financial strategy

While aggressively investing fund resources for sustained growth, we shall deploy a balanced
financial strategy that takes due account of investment efficiency, financial disposition, and
shareholders’ return.

① Investment efficiency
z We shall continue to make individual investment decisions with due consideration of
capital costs. We shall also position return on assets (ROA) as a major management
indicator, and strive for maintenance and improvement of investment efficiency (ROA in
FY2013: 3.7%).

② Financial disposition
z Besides maintaining our current level of funding capability, we shall continue working to
assure the soundness of our financial disposition with consideration of ultra-long-term
plans for infrastructural investment (D/E ratio in FY2013: 0.69).

③ Shareholders’ return and shareholders’ capital

z We shall continue to apply the prevailing target of 60 percent for the total dividend payout
ratio*. We intend to make proper and timely distribution of the fruits of our management to
all of our shareholders. ※Dividends plus share buyback divided by current net income

z We have positioned return on equity (ROE) as a major management indicator, and shall
strive to make effective use of shareholder capital (ROE in FY2013: 7.7%).
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＜Main management index （Consolidated）＞
FY2008 Projection FY2013 Plan
Operating Cash Flow （billion yen） 174.0 Five year total：
1,060.0
ROA （％） 1.9 3.7
ROE （％） 4.2 7.7
TEP ※
（billion yen） ▲13.3 18.0
※TEP：Tokyo Gas Economic Profit
= （After-tax, Pre-interest-payment profit）－（capital cost（Interest-bearing ｄebt ＋ Capital Stock cost）

＜Main data （Consolidated）＞

FY2008 Projection FY2013 Plan
3 3
Gas Sales Volume （billion m ,45MJ/m ） 14.1 16.4
Total Sales （billion yen） 1,699.0 1,720.0
Total Assets （billion yen） 1,766.0 1,920.0
Interest-bearing
（billion yen） 648.0 640.0
Debt
Equity Ratio （%） 45.1 48.4
D／E Ratio 0.81 0.69

［Ref.］ Non-consolidated
（billion yen） 1,236.0 1,180.0
Gas Sales

※Premise
FY2008 Projection as of 10/31（end of 3ｒｄ half）：Crude oil price 91.29$/bbl , Currency rate 100.94 yen/$
FY2009～2013 Plan ：Crude oil price 70$/bbl , Currency rate 100 yen/$

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