TOKYO GAS CO.,LTD.

The majority of natural gas feedstock is imported from overseas, and if procurement becomes unavailable for a prolonged period due to country risk, LNG liquefaction terminal trouble, LNG vessel operation trouble, Tokyo Bay port entry restrictions, etc., this could disrupt city gas supply and affect business results. The Company currently procures from 10 projects in 5 countries, promoting diversification, and has built a flexible procurement system through the use of self-managed LNG vessels and trading. No procurement disruption caused by geopolitical risks such as the Russia-Ukraine issue or the Middle East situation has occurred as of the end of May 2026, but monitoring continues.

LNG procurement prices are primarily linked to crude oil prices and, being denominated in US dollars, are directly affected by fluctuations in the yen-dollar exchange rate. Under the raw material cost adjustment system, costs are passed through to gas rates up to five months later; however, if the average raw material price exceeds the adjustment cap, the excess amount remains uncollected, and if this spans fiscal years, the uncollected or over-collected amounts affect the results for that fiscal year. As countermeasures, the Company is working to diversify procurement sources and contract terms and strengthen global LNG trading to reduce and stabilize raw material costs.

Following the acquisition of a natural gas development and production company through TG Natural Resources LLC in the United States in December 2023, and the conclusion of a shale gas joint development agreement with Chevron in March 2025, the Company's earnings structure has become more significantly affected by fluctuations in Henry Hub prices. In addition, fluctuations in crude oil, gas, and electricity prices as well as foreign exchange rates may affect business results. The Company aims to stabilize earnings through the use of hedging, reduction of production costs, expansion into midstream and downstream businesses in the United States, and LNG infrastructure investment in Asia and Oceania.

If manufacturing facilities such as LNG terminals or supply facilities such as pipelines are damaged by a large-scale natural disaster, this could disrupt city gas supply, and restoration costs could affect business results. Major facilities are designed to withstand major earthquakes of the scale of the Great Hanshin-Awaji Earthquake and the Great East Japan Earthquake, and the Company has established BCPs, emergency response systems, regular training, and measures to improve resilience against wind and flood damage. A mutual backup system among multiple LNG terminals has also been established, reducing the risk of supply disruption.

As cyber attacks become more sophisticated and complex, if personal information leaks occur or if control systems related to critical business systems, city gas manufacturing and supply, or power generation stop or malfunction, this could cause tangible and intangible damage such as brand image impairment and the incurrence of social responsibility, potentially having a significant impact on business results. The Company is working to minimize impact through cross-departmental strengthening of information and control systems, enhanced security management across the group, and incident response training. As a critical infrastructure operator, the Company responds appropriately in accordance with the Basic Act on Cybersecurity, the Economic Security Promotion Act, and other relevant laws.

If LNG loses competitiveness against other energy sources due to intensifying competition with other companies, resource price fluctuations, institutional changes driven by the decarbonization trend, or changes in customer preferences, demand may decline and affect business results. Over the medium to long term, existing industrial, commercial, and residential gas demand may partly decline due to progress in energy conservation, changes in industrial structure, decreases in household size, and the spread of energy-saving equipment. As countermeasures, the Company is working to introduce highly environmentally friendly and efficient gas-using equipment and improve competitiveness through cost reduction, while also seeking to shift its business balance through expansion of LNG trading, solutions, overseas business, and Urban Business.

In the gas and electricity businesses, following full retail liberalization, legal separation of the transmission and distribution and gas pipeline divisions has been implemented, and further institutional review is progressing; future energy policy trends and intensifying competition may affect business results. In response to climate change, the Company has set targets of reducing CO2 emissions by 60% by 2040 compared to FY2022, achieving 50% carbon neutrality for domestically supplied gas and electricity, and achieving carbon neutrality by 2050, and is also required to respond to GX-ETS. The Company is promoting improved competitiveness through gas efficiency, balancing electricity sales expansion with efficiency, and establishing a new earnings base through the solutions business brand IGNITURE.

If technology development and commercialization for CO2 reduction is delayed compared to other companies, the Company may be unable to utilize new technologies, or may incur increased costs for intellectual property use and purchase or for developing alternative technologies, potentially reducing competitiveness and affecting business results over the medium to long term. The Company is promoting decarbonization centered on RNG, e-methane (synthetic methane), and expansion of renewable energy, while also aiming to develop innovative methanation technology, floating offshore wind foundation technology, and low-cost green hydrogen production technology through the Green Innovation Fund business. The Company strategically utilizes open innovation and manages progress with an emphasis on speed and intellectual property management.

Large-scale investments related to strengthening the stable supply base, such as pipeline and LNG terminal construction, as well as electricity, renewable energy, energy services, overseas gas field development, LNG transportation, IT, and real estate utilization, may not be properly recovered or may fail to produce the expected results due to changes in economic conditions, potentially resulting in extraordinary losses that adversely affect business results. The Company has established a system in which the Investment Evaluation Committee conducts profitability and risk assessments and refers matters to the Management Committee or the Board of Directors. Changes in economic conditions are managed throughout the year, and when unrecovered investment risk materializes, it is reflected in financial results based on short- and medium-term impact.

If customers' personal information leaks to outside parties, this could affect business results through response costs and brand image impairment, and if critical business systems stop or malfunction, there is also a risk of reduced customer service operations and additional costs. The Company implements human and technical measures including building a group-wide information security promotion system, strengthening oversight functions, information security education, self-inspections, and countermeasures against external unauthorized access. IT systems related to city gas manufacturing and supply adjustment are equipped with backup systems and private wireless networks, and the Company considers the impact of any stoppage of these systems on city gas manufacturing and supply to be low.