Tokyo Gas : Financial Results for FY2020 1Q ended June 2020

July 29, 2020

Consolidated Financial Results Bulletin for the 1st Quarter Ended June 30, 2020 (J-GAAP)

Tokyo Gas Co., Ltd.

Securities code: 9531

(URL https://www.tokyo-gas.co.jp/IR/english/index.html)

Representative:	Mr. Takashi UCHIDA, President
Contact:	Mr. Rikiya KOMORI, Chief Manager,
	Consolidated Settlements Sect.

Scheduled date of the filing of quarterly report: Scheduled date of the start of dividend payments: Preparation of 1Q earnings presentation material (yes/no): Holding of 1Q earnings announcement (yes/no):

Stock listings:

Tokyo Stock Exchange, Nagoya Stock Exchange

Location of head office: Tokyo

August 14, 2020

-

Yes

Yes (for institutional investors)

(Amounts are rounded down to the nearest million yen)

1. Consolidated Performance for 1st Quarter (from April 1, 2020 to June 30, 2020)

								(Unit: million yen)
(1) Consolidated Business Performance		(% of change from the corresponding period of previous year)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Three months ended	415,654		-11.0%	27,447	-37.7%	28,040	-42.1%	16,354	-53.2%
Jun. 30, 2020
Three months ended	467,218		16.4%	44,021	89.1%	48,390	101.4%	34,927	-7.4%
Jun. 30, 2019

Note: Total comprehensive income

Three months ended June 30, 2020: 15,813 million yen (-53.2%) Three months ended June 30, 2019: 33,809 million yen (55.9%)

	Profit per share	Diluted profit
	per share
Three months ended	37.08 yen	-
Jun. 30, 2020
Three months ended	78.23 yen	-
Jun. 30, 2019

(2) Consolidated Financial Position

					(Unit: million yen)
		Total assets		Total net assets	Equity ratio
As of Jun. 30, 2020		2,530,625		1,161,544	45.4%
As of Mar. 31, 2020		2,537,724		1,159,228	45.2%
Reference: Shareholders' equity
As of June 30, 2020: 1,150,133 million yen	As of March 31, 2020: 1,147,836 million yen

2. Dividend

			Dividend per share (Unit: yen)
		End of 1Q	End of 2Q		End of 3Q		End of 4Q	Annual
FY2019 ended Mar. 31,		-	30.00		-		30.00	60.00
2020
FY2020 ending Mar. 31,		-
2021
FY2020 ending Mar. 31,			30.00			-		30.00	60.00
2021 (Forecast)
Note: Revision to the dividend forecast that has been disclosed lastly: No

3. Consolidated Results Forecast for FY2020 ending March 31, 2021 (April 1, 2020 - March 31, 2021)

(Unit: million yen) (% of change from the corresponding period of previous year)

Operating profit

Full-year	73,000	-28.1%

Note: Revision to the consolidated results forecast that has been disclosed lastly: Yes

Notes on the Consolidated Results Forecast

Since it is difficult to reasonably quantify the impact of the global outbreak of the new coronavirus (COVID-19) on the Company's business, we are refraining from publishing our consolidated results forecasts for net sales, ordinary profit and profit attributable to owners of parent for the fiscal year ending March 2021 at this moment. We will disclose them as soon as reasonable estimations have become possible.

*Notes

1. Significant changes in consolidated subsidiaries (changes in specified subsidiaries resulting in change of scope of consolidation during the quarter) (yes/no): No
   (Reference) Scope of consolidation and application of equity method
   Number of consolidated subsidiaries: 83 (increased: 1, decreased: 1)
   Number of equity method affiliates: 15
2. Application of accounting treatment peculiar to quarterly consolidated financial statement preparation (yes/no): Yes
   Note: Please see page 8 of the Attachment, "2. Consolidated Financial Statements and Main Notes: (3) Notes on consolidated financial statements (Application of accounting treatment peculiar to quarterly consolidated financial statement preparation)" for details.
3. Change in accounting policies or estimates and retrospective restatements

1. Change in accounting policies in accordance with revision of accounting standards: No
2. Change in accounting policies other than item 1) above: No
3. Change in accounting estimates: No
4. Retrospective restatements: No

1. Number of issued shares (common stock)

							(Unit: share)
1)	Number of issued shares at end of period		Jun. 30, 2020	442,436,059		Mar. 31, 2020	442,436,059
	(including treasury stock):
2)	Number of shares of treasury stock		Jun. 30, 2020	1,426,191		Mar. 31, 2020	1,424,746
	at end of period:
3)	Average number of shares during period:		Apr. - Jun. 2020	441,010,385		Apr. - Jun. 2019	446,471,083

• Quarterly review procedures by a certified public accountant or an audit firm do not apply to quarterly consolidated financial results bulletins.
• Explanation related to appropriate use of results forecasts and other items warranting special mention
• 1. Although it is difficult to reasonably quantify the impact of the global outbreak of the new coronavirus (COVID-19) on the Company's business, we have decided to publish our forecast for operating profit, in which the different impacts of
     COVID-19 on each segment can be appropriately reflected to a certain degree, by estimating the segment impact amounts and adding or subtracting the performance trends from April to June and the elements of change from the previous year. We are refraining from publishing consolidated results forecasts for net sales, ordinary profit and profit attributable to owners of parent as well as non-consolidated results forecasts at this moment. We will disclose them as soon as reasonable estimations have become possible.
  2. The forecast stated above includes numerous elements of significant uncertainty, such as the duration of the impact on near-term operating results, the possibility of a second wave of infections and the government's reissuance of a state of emergency declaration. Therefore, the forecast is subject to drastic changes depending on future developments, which we will reflect on the forecast as needed. For details of the above forecast, please refer to "1. Overview of Business Performance, etc. (2) Future outlook" on page 3 of the Attachment.
  3. The information related to this Financial Results will be posted on the Web site of the Company.

Contents of Attachment
1. Overview of Business Performance, etc.............................................................................................................................	2
(1)	Overview of business performance of the 1st quarter..............................................................................................	2
(2)	Future outlook .............................................................................................................................................................	3
2. Consolidated Financial Statements and Main Notes ........................................................................................................	4
(1)	Consolidated balance sheets .......................................................................................................................................	4
(2)	Consolidated statements of income and comprehensive income .............................................................................	6
	Consolidated statement of income .............................................................................................................................	6
	(Three months ended June 30, 2020)
	Consolidated statement of comprehensive income ...................................................................................................	7
	(Three months ended June 30, 2020)
(3)	Notes on consolidated financial statements ...............................................................................................................	8
	(Note on going concerns' premise) .............................................................................................................................	8
	(Additional information).............................................................................................................................................	8
	(Significant changes in shareholders' equity)............................................................................................................	8
	(Application of accounting treatment peculiar to quarterly consolidated financial statement preparation)......	8

1

1. Overview of Business Performance, etc.

1. Overview of business performance of the 1st quarter

					(Unit: million yen)
		Gas	Electric	Overseas	Energy-	Real estate	Others
		power	related
	FY2020	284,980	89,121	11,990	72,680	11,114	26,682
	(% of total)	(57.5%)	(17.9%)	(2.4%)	(14.6%)	(2.2%)	(5.4%)
Sales	FY2019	343,015	72,156	10,912	70,586	11,153	26,237
(% of total)	(64.3%)	(13.5%)	(2.0%)	(13.2%)	(2.1%)	(4.9%)
	Amount of change	-58,035	16,965	1,078	2,094	-39	445
	(Rate of change)	-16.9%	23.5%	9.9%	3.0%	-0.4%	1.7%
	FY2020	257,209	86,160	9,323	71,264	8,089	25,337
	(% of total)	(56.3%)	(18.8%)	(2.0%)	(15.6%)	(1.8%)	(5.5%)
Operating	FY2019	296,740	70,176	8,835	69,798	8,191	25,025
expenses	(% of total)	(62.0%)	(14.7%)	(1.8%)	(14.6%)	(1.7%)	(5.2%)
	Amount of change	-39,531	15,984	488	1,466	-102	312
	(Rate of change)	-13.3%	22.8%	5.5%	2.1%	-1.2%	1.2%
	FY2020	27,770	2,961	2,794	1,416	3,270	1,333
	(% of total)	(70.1%)	(7.5%)	(7.1%)	(3.6%)	(8.3%)	(3.4%)
Segment	FY2019	46,275	1,980	3,645	787	3,124	1,203
profit	(% of total)	(81.1%)	(3.5%)	(6.4%)	(1.4%)	(5.5%)	(2.1%)
	Amount of change	-18,505	981	-851	629	146	130
	(Rate of change)	-40.0%	49.6%	-23.3%	79.8%	4.7%	10.8%

Note: Figures for sales include internal transactions. Figures for operating expenses do not include expenses that cannot be allocated to specific segments. Figures for segment profit are adjusted against the amount based on operating profit of consolidated financial statements plus or minus investment income or loss on equity method.

< Consolidated City Gas Sales Volume, etc.>

				Apr. - Jun. 2020	Apr. - Jun. 2019	Change	% change
No. of customers for city	Thousands	9,044	9,607	-563	-5.9
gas retail sales
No. of customers (meters)	Thousands	11,975	11,838	137	1.2
volume	Residential	Mil. m3	819	808	11	1.4
	Commercial	Mil. m3	425	555	-130	-23.4
sales		Industrial	Mil. m3	1,031	1,587	-556	-35.0
	Subtotal	Mil. m3	1,456	2,142	-686	-32.0
gas
Supplies to other utilities	Mil. m3	380	422	-42	-9.9
City
Total	3	2,656	3,372	-716	-21.2
	Mil. m
Average temperature	°C	16.6	16.7	-0.1	-
Notes:

1. No. of customers for city gas retail sales indicates the number of billed customers for city gas retail sales.
2. No. of customers (meters) indicates the number of meters that includes inactive meters and meters for gas supply from other retail companies.
3. "Commercial" indicates sales to commercial, public and medical institutions.
4. City gas sales volumes are on the basis of 45MJ/m3.
5. Average temperature is the average temperature during the period of use by each customer (from date of initial month's meter reading to final month's meter reading).

The aforementioned notes also apply to the relevant tables.

2

< Consolidated Electric Power Sales Volume, etc.>

			Apr. - Jun. 2020	Apr. - Jun. 2019	Change	% change
No. of customers for	Thousands	2,457	1,924	533	27.7
electric power retail sales
Electric	Retail	million kWh	2,148	1,644	504	30.6
power
Wholesale etc.	million kWh	3,083	2,221	862	38.8
sales
Total	million kWh	5,231	3,865	1,366	35.3
volume

Note: No. of customers for electric power retail sales indicates the number of billed customers for electric power retail sales.

			Apr. - Jun.	Apr. - Jun.	Change		Crude oil		Apr. - Jun.		Apr. - Jun.	Change
¥/$ rate		2020		2019		price				2020		2019
				107.64		109.90	-2.26		($/bbl)				32.22		71.47	-39.25
(2) Future outlook
															(Unit: hundred million yen)
				Gas	Electric	Overseas	Energy-		Real	Others	Adjustments	Consolidated
				power		related	estate	amount
		FY2020	885	136	24	132		56	13	-496	750
		(forecast)
Segment	FY2019	1,024	101	132	169		96	57	-515	1,067
profit	(results)
		Change	-139	35	-108	-37		-40	-44	19	-317
		% change	-13.6	34.1	-81.9	-22.3		-42.3	-77.5	-	-29.7

Note: Figures for segment profit are adjusted against the amount based on operating profit of consolidated financial statements plus or minus investment income or loss on equity method.

< Foreign exchange rate and crude oil price forecast for FY2020>

	FY2020	FY2019	Change	Crude oil	FY2020	FY2019	Change
¥/$ rate	(Forecast)	(Results)	price	(Forecast)	(Results)
	109.41	108.71	0.70	($/bbl)	41.38	67.79	-26.41

3

2. Consolidated Financial Statements and Main Notes

1. Consolidated balance sheets

					(Million yen)
				As of March 31,2020	As of June 30,2020
Assets
	Non-current assets
		Property, plant and equipment
		Production facilities	224,515	221,287
		Distribution facilities		548,095	537,985
		Service and maintenance facilities	48,492	17,879
		Other facilities		475,093	500,160
		Inactive facilities	316	316
		Construction in progress		162,862	164,972
		Total property, plant and equipment	1,459,377	1,442,601
		Intangible assets
		Goodwill	16,269	20,761
		Other intangible assets		137,814	141,685
		Total intangible assets		154,084	162,447
		Investments and other assets
		Investment securities	216,052	223,383
		Long-term loans receivable		50,615	55,922
		Retirement benefit asset	29	29
		Deferred tax assets		49,132	49,695
		Other investments and other assets		46,407	45,554
		Allowance for doubtful accounts		-405	-402
		Total investments and other assets	361,831	374,182
		Total non-current assets	1,975,292	1,979,231
	Current assets
		Cash and deposits	151,288	142,864
		Notes and accounts receivable - trade	221,123	174,193
		Lease receivables and investments in leases	20,363	19,955
		Merchandise and finished goods	1,905	2,034
		Work in process	11,868	15,555
		Raw materials and supplies	64,703	68,135
		Other current assets	91,748	129,144
		Allowance for doubtful accounts	-570	-490
		Total current assets	562,431	551,393
	Total assets		2,537,724	2,530,625

4

					(Million yen)
				As of March 31,2020	As of June 30,2020
Liabilities
	Non-current liabilities
		Bonds payable	404,998	444,998
		Long-term borrowings	429,541	456,889
		Deferred tax liabilities	18,531	18,450
		Retirement benefit liability	71,976	71,024
		Provision for gas holder repairs	3,122	3,107
		Provision for safety measures	593	561
		Provision for appliance warranties	12,985	12,556
		Provision for point card certificates	1,000	1,195
		Asset retirement obligations	14,424	15,563
		Other noncurrent liabilities	51,555	52,937
		Total non-current liabilities	1,008,730	1,077,283
	Current liabilities
		Current portion of non-current liabilities	54,428	54,434
		Notes and accounts payable - trade	78,593	58,367
		Short-term borrowings	6,507	7,043
		Income taxes payable	29,708	10,850
		Provision for contract loss	-	1,627
		Other current liabilities	200,527	159,472
		Total current liabilities	369,765	291,797
	Total liabilities	1,378,495	1,369,080
Net assets
	Shareholders' equity
		Share capital	141,844	141,844
		Capital surplus	2,067	2,067
		Retained earnings	967,808	970,932
		Treasury shares	-3,875	-3,879
		Total shareholders' equity	1,107,844	1,110,964
	Accumulated other comprehensive income
		Valuation difference on available-for-sale	15,843	18,284
		securities
		Deferred gains or losses on hedges	1,444	565
		Foreign currency translation adjustment	22,412	20,257
		Remeasurements of defined benefit plans	292	60
		Total accumulated other comprehensive income	39,992	39,169
	Non-controlling interests	11,391	11,410
	Total net assets	1,159,228	1,161,544
Total liabilities and net assets	2,537,724	2,530,625

5

1. Consolidated statements of income and comprehensive income
   (Consolidated statement of income : Three months ended June 30, 2020)

			(Million yen)
		For the three months	For the three months
		ended June 30,2019	ended June 30,2020
Net sales	467,218	415,654
Cost of sales	308,046	277,479
Gross profit	159,171	138,175
Selling, general and administrative expenses
	Supply and sales expenses	98,115	94,784
	General and administrative expenses	17,034	15,943
	Total selling, general and administrative expenses	115,150	110,728
Operating profit	44,021	27,447
Non-operating income
	Interest income	553	600
	Dividend income	4,551	1,331
	Share of profit of entities accounted for using equity	1,723	360
	method
	Miscellaneous income	1,763	2,450
	Total non-operating income	8,591	4,743
Non-operating expenses
	Interest expenses	2,808	2,753
	Miscellaneous expenses	1,414	1,397
	Total non-operating expenses	4,222	4,150
Ordinary profit	48,390	28,040
Extraordinary losses
	Impairment loss	-	4,788
	Total extraordinary losses	-	4,788
Profit before income taxes	48,390	23,252
Income taxes	13,259	6,583
Profit	35,131	16,668
Profit attributable to non-controlling interests	203	313
Profit attributable to owners of parent	34,927	16,354

6

(Consolidated statement of comprehensive income : Three months ended June 30, 2020)

			(Million yen)
		For the three months	For the three months
		ended June 30,2019	ended June 30,2020
Profit	35,131	16,668
Other comprehensive income
	Valuation difference on available-for-sale securities	-3,045	2,446
	Deferred gains or losses on hedges	-438	-1,624
	Foreign currency translation adjustment	1,124	-1,392
	Remeasurements of defined benefit plans, net of tax	1,369	-260
	Share of other comprehensive income of entities	-330	-22
	accounted for using equity method
	Total other comprehensive income	-1,321	-854
Comprehensive income	33,809	15,813
Comprehensive income attributable to
	Comprehensive income attributable to owners of parent	33,612	15,531
	Comprehensive income attributable to non-controlling	197	282
	interests

7

1. Notes on consolidated financial statements
   (Note on going concerns' premise)
   Not applicable

(Additional information)

Accounting estimates of the impact of COVID-19

During the three months ended June 30, 2020, the outbreak of COVID-19 affected the Group's performance in the form of reduced commercial demand for city gas, among others. Since it is impossible to foresee when the disease will abate at this moment, it is difficult to determine its impact on the Group.

In accounting, estimations are required to be based on certain hypotheses. The Group has made various accounting estimates based on external information available at the time of preparation of consolidated financial statements and under the hypothesis that net business performance will gradually recover by the end of FY2020.

(Significant changes in shareholders' equity) Not applicable

(Application of accounting treatment peculiar to quarterly consolidated financial statement preparation) Calculation of taxes

Taxes are calculated by multiplying profit before income taxes for the first-quarter period under review by the reasonably estimated effective tax rate subsequent to the application of tax effect accounting to the profit before income taxes for the current consolidated fiscal year ending March 31, 2021 including the first quarter under review.

8