Itoen integrated report 2020

ITO EN Group's management principle

"Always Putting the Customer First"

The key value of our management principle is to

"Always Putting the Customer First"

The ITO EN Group's central way of thinking is to be constantly mindful of what customers are still now dissatisfied with, and always think and act from a customer point of view.

Make integrity our stock in trade

Good faith is the gradual buildup of small promises: keeping promises with customers, making honest products, and responding and providing services with sincerity and good faith.

Spare no effort

We make constant efforts to improve ourselves amid continuously changing external environmental conditions.

Earn the confidence and trust of society

We aim to become a company that people feel they can entrust with things, and that is widely trusted and considered necessary by society.

Definition of "our" customers

Consumers

Shareholders

Financial institutions

Retailers

Management Message

"Always Putting the Customer First" is the ITO EN Group's management principle, representing the fact that the foundation of business management at ITO EN is our commitment to placing importance on each and every customer.

Our definition of customers includes consumers, shareholders, retailers, suppliers, financial institutions and local communities.

We regard everyone involved with the ITO EN Group as our customer, and earnestly strive to address our customers' needs through the opinions and requests we receive, and by always using the perspective of our customers as the foundation of our manage-ment strategies. Looking ahead, under this management principle, we will continue working vigorously towards the fulfillment of our long-term vision of becoming a Global Tea Company.

Hachiro Honjo, Chairman of the Board

Daisuke Honjo,

President and CEO

CONTENTS

Strategies and Initiatives for Creating Value

• 6 President's Message

• 10 Shared Value Creation Model

  Based on "Always Putting the Customer First"

• 12 Medium- to Long-Term Vision

• 14 ITO EN Group Material ESG Issues

• 16 Value Circle That Corresponds to "Always Putting the Customer First"

• 18 Research

• 20 Product Planning and Development

• 22 Procurement

• 24 Production and Logistics

• 26 Sales and Distribution

Business Overview

• 43 Commencing Climate Scenario Analysis

• 44 Human Resources Management

• 46 The Value Created by ITO EN TEA TASTERs

• 48 Financial Management

• 50 Main Financial Highlights

• 52 Main Non-Financial Highlights

• 54 Corporate Governance

• 59 Third-party Assurance

• 60 List of Officers

• 62 Activities to Continue and

  Protect Washoku Culture/Glossary of Terms

• 63 External Recognition

• 64 Introduction of Main Group Companies

• 65 Company Profile

"AlwaysPutting theCustomer First" practiceTowardsaGlobal Tea Company

All employees unite as "TeamITO EN" to pursue our management principle of "Always Putting the Customer First."

AtITOEN, in orderto implementeffective marketing, we have prepared the following interpretation of the mechanism for making a sale, which we instill in our employees.

In 1984,ITOEN inventedtheworld's firstgreen tea beverage-canned Sencha (green tea)-ahead of other firms in theindustry, andbegan developing the green tea beveragemarket. Since then we have developed numerous world and industryfirst technologies and delivereda steadystreamofinnovativeproducts, including the launch of Oi Ocha brand in 1989,which is now recognizednotonlyinJapan butaroundthe world.

Today, workingunder our managementprinciple of Always Putting the Customer First, based on our product development

conceptsof "natural," "healthy," "safe," "well-designed" and "delicious," and with our long-term vision of becoming a Global

TeaCompany,weaimto propose enrichedlifestyles that contribute to the health of customers. We have worked to establish ourposition-primarily in Japan-asa comprehensivebeverage manufacturer, producing both tea leaves and tea beverages,and areworking as aGrouptoachievesustainable growth by strengthening our brands and creating synergies.

History of ITO EN

Aug. 1966

Established Frontier Tea Corporation, ITO EN's predecessor, in Shizuoka-shi, Shizuoka.

May 1969

Changed the Company's name to ITO EN, LTD.

Feb. 1972

May 1974

Introduced a high-speed automatic packaging machine manufactured by Industrial Gesellschaft in Switzerland. Developed vacuum packing technology to preserve the freshness of tea leaves. Constructed Shizuoka Sagara Factory at Sagaracho, Haibara-gun (now Makinohara-shi), Shizuoka.

Jun. 1979

Signed a distribution agency agreement with China National Native Produce and Animal By-products Import and Export Corporation to import oolong tea for the first time in Japan, and began selling oolong tea.

Jul. 1987

Established ITO EN (USA) INC. in Hawaii, USA

May 1992

Listed its stock on the over-the-counter market.

Sep. 1994

Established ITO EN AUSTRALIA PTY. LIMITED in Australia.

Sep. 1996

Oct. 1998

Became a listed company on the Second Section of the Tokyo Stock Exchange. Stock advanced to the First Section of the Tokyo Stock Exchange.

Oct. 2000

Released the industry's first products in heated PET plastic bottles.

May 2001

Established ITO EN (North America) INC. in New York, USA.

Oct. 2004

Built a new crude tea leaf plant and commenced production at ITO EN AUSTRALIA PTY. LIMITED.

Jun. 2006

Obtained shares of Mason Distributors, Inc. (based in Florida, USA), which engages in the nutritional supplement business.

Oct. 2006

Obtained shares of FoodX Globe Co., Ltd. (now Tully's Coffee Japan Co., Ltd.), which operates the Tully's Coffee chain.

Sep. 2007

Stock listed as Class 1 preferred stock on the First Section of the Tokyo Stock Exchange.

Mar. 2008

Concluded an exclusive distributor contract for the sale of Evian natural mineral water in Japan with the DANONE Group (headquartered in France).

Feb. 2010

Established GREEN VALUE CO., LTD., which engages in the maintenance and procurement of automated vending machines.

May 2011

Obtained shares of Chichiyasu Company, which manufactures and sells dairy products.

Jun. 2012

Oct. 2012

May 2013

Sep. 2012

Established ITO EN Asia Pacific Holdings Pte. Ltd. in Singapore. Established ITO EN BEVERAGE (SHANGHAI), Ltd. in China. Obtained shares of NEOS Corporation, which engages in automated vending machine business operations. Established ITO EN (Thailand) Co., Ltd. in Thailand.

2010

Jul. 2013

Established PT ITO EN ULTRAJAYA WHOLESALE in Indonesia.

Feb. 2015

ITO EN (North America) INC. obtained the shares of Distant Lands Trading Co., which is involved in the cultivation and sale of coffee beans mainly in the United States.

Jun. 2016

Constructed Matcha Kobo (a specialized matcha production plant) on the site of Shizuoka Sagara Factory.

Sep. 2016

Constructed Kobe Factory in Kobe-shi, Hyogo, which performs finishing processes for tea leaves used in green tea beverages and other beverages.

Jun. 2018

Mar. 2017

Received Ministry of Health, Labour and Welfare (MHLW) approval for the Business Skill test on ITO EN TEA TASTER, as the first in-house business skill test to be certified after the 2016 certification system revision. Agreement reached to conduct clinical trials to validate the effectiveness of matcha in preventing dementia, in association with Shimadzu Corporation and MCBI (Molecular and Clinical Bioinformatics) Inc.

May 2019

Oi Ocha brand recognized as a world record holder by the Guinness WorldRecords

*The world's top selling natural- and healthy unsweetened ready-to-drink (RTD) green tea beverage sales (January-December 2018, actual results)

2020

(FY4/)

Strategies and Initiatives for Creating Value

President's Message

ITO EN will continue to tackle new challenges as it aims to become a Health Creation Company which contributes to the health of customers around the world.

Daisuke Honjo,

President and CEO

Since its founding, the ITO EN Group has continued to engage in corporate activities with a primary focus on con-tact with customers, based on its management principle of "Always Putting the Customer First". "Always Putting the Customer First" means a constant provision of products and services in line with customers' wants and needs and a con-tribution to better lifestyles for customers, in the spirit of "STILL NOW" (considering what customers are still now dissatisfied with.)

ITO EN's list of achievements begins in 1966, with our launch of packaged green tea. In 1980, we achieved the nationwide launch of the world's first canned oolong tea. In 1984, we succeeded in launching the world's first green tea beverage. In 1989, the Oi Ocha brand was born, and in 1990 we succeeded in developing the world's first green tea in a PET plastic bottle. With these and numerous other world and industry firsts, ITO EN has created a market by delivering products and services in line with changes in customer lifestyles.

With the spread of the COVID-19 coronavirus pandemic, the social and economic environments have changed greatly,and the "New Normal Lifestyle" of balancing the prevention of infection with the continuation of economic activities has penetrated our lifestyles. Looking ahead, it is anticipated that this situation will continue for a long period of time and we believe that consumer awareness and behavior will continue to change greatly in the "With COVID-19" era.

While the business environment surrounding the ITO EN Group is also changing drastically, as a company I believe that it is our mission to maintain employment, to ensure business continuity and to contribute to society; and we must not forget this responsibility to contribute to society as we continue to operate our business and to generate earn-ings. Society as a whole must get better, and the ITO EN Group must grow together with it. Precisely because we are in a situation where we cannot see what lies ahead, we must return to the starting point of our management principle of "Always Putting the Customer First." All employees-in their various positions-must face up to customers with sincerity, think constantly about what they can do them-selves, and take on the challenge of converting crisis into opportunity.

Our Response to COVID-19

Since the beginning of 2020, the COVID-19 pandemic has spread around the globe. The ITO EN Group established a COVID-19 virus response headquarters and developed envi-ronments in which its employees can work in safety. We have established a basic response policy and are taking appropri-ate measures. The first and top priority is to ensure health, safety and peace of mind for customers. The second is to ensure the continuity of our Group's business operations; including the stable supply of beverages, which are essential to people's daily lives. The third is to provide tea products (beverages and tea leaves) and coffee pot services, free of charge, to the healthcare professionals fighting from day to day to combat the virus through medical activities.

When the state of emergency was announced, we gave consideration to the safety of our employees and responded flexibly with regard to workstyles, such as by offering stag-gered start and finish times and allowing employees to work-from-home. Through our nationwide sales network, we are providing products to hospitals and accommodation-type treatment and recuperation facilities around the coun-try, free of charge. Going forward, we will continue to work hard and engage in our business activities with a sense of duty as a company that delivers beverages that support customer lifelines, while at the same time employing thor-ough measures to prevent the spread of infection.

Review of Fiscal 2019

The last fiscal year ended with severely challenging results, with a decrease in both sales and profits for the Group's business operations overall. This was due to factors such as inclement weather conditions during the summer season, natural disasters (such as the typhoon in October 2019 which was designated as a Disaster of Extreme Severity), and the COVID-19 pandemic from early 2020 onward. In terms of non-consolidated business results for ITO EN, Ltd., net sales fell to 377,787 million yen (a decrease of 4.2% year-on-year). However, as a result of focusing its energies into continuous initiatives to improve profitability, ITO EN was able to achieve an increase in operating income, which stood at 16,626 million yen (up 4.9% year-on-year). In response to the state of emergency issued in April 2020, Tully's Coffee Japan placed top priority on the safety of customers and employees, implementing thorough measures and toughen-ing its response to prevent the spread of infections. Over 90% of stores were subject to temporary closures and/or shortening of business hours. At overseas Group companies, too, there was a major impact due to the COVID-19 pan-demic. In terms of consolidated business results for the year,the Group posted net sales of 483,360 million yen (down 4.1% year-on-year), operating income of 19,940 million yen (down 12.6% year-on-year), ordinary income of 19,432 million yen (down 16.3% year-on-year), and net income of 7,793 million yen (down 46.1% year-on-year); constituting a decrease in both sales and profits.

Medium- to Long-Term Issues

In its five-year medium- to long-term management plan, which runs until the year ending April 2022 (fiscal 2021), the ITO EN Group set the goal of becoming a Global Tea Company. Under this plan, we have engaged in four key initiatives: enhancing our domestic business operations, accelerating the expansion of our global business operations, strengthening ROE-based corporate management, and enhancing our CSV management and ESG initiatives.

As a company aiming to become a Global Tea Company, ITO EN regarded fiscal 2020 as a year for making major leaps forwards, making use of the many opportunities that would have been offered by the Tokyo 2020 Olympic- and Paralympic Games. As a result of the COVID-19 pandemic, however, the Games were postponed. There was also a mas-sive decrease in the number of foreign visitors to Japan, and global market conditions are changing drastically. In view of these external conditions, the ITO EN Group is currently reviewing and revising its medium- to long-term management plan while working to firmly solidify its current position.

1 Enhancing Domestic Business Operations and Improving Profitability The number of opportunities for consumers to purchase products at convenience stores and vending machines in inner-city areas is decreasing, and consumer behavior is also changing, as seen in the increased use of mail-order services as a means of preventing infection. Our vending machine business has also seen a major impact, primarily in transpor-tation infrastructure in central urban areas, due to the sig-nificant decrease in numbers of people traveling. At the same time, we have made effective use of our strength in commu-nity-based route sales from our 196 locations nationwide, and are working to make more careful and courteous visits to customers than ever. We are placing greater value on our contact with customers than ever before, and working to build strong trusting relationships.

Regarding profitability, despite challenging business conditions both in Japan and overseas during fiscal 2019, ITO EN worked to improve profitability. As a result of these efforts, ITO EN was able to improve its non-consolidated operating income ratio from 4.0% in fiscal 2017 to 4.4% in fiscal 2019. Tully's Coffee Japan and other service businesses are continuing to experience challenging conditions, and

President's Message

overseas subsidiaries are suffering a greater impact from COVID-19 than those in Japan. We therefore believe that improving the profitability of ITO EN on a non-consolidated basis will be more important than ever.

ITO EN has constructed a block-based production and logistics system, in which the country is divided into five blocks and beverages are manufactured by outsourcing partners. Moving forward, we will make thorough efforts to improve both production and logistics efficiency. ITO EN is also pushing ahead with further workstyle reforms and working to improve worker productivity, such as by making more flexible working schemes and proactively incorporat-ing online approaches. We will continue working to improve profitability, in order to achieve an operating income ratio of 5% or higher at the earliest possible stage.

leading to health and lifestyle-related concerns, such as the threat of lifestyle diseases. In particular, the increase in the number of senior citizens with dementia, and the increase in lifestyle diseases such as diabetes and high blood-pressure, which are also considered to be closely related to dementia, are becoming major social issues. In response to these issues, ITO EN is engaged in research relating to the health/func-tional benefits of green tea and matcha. One outcome of these research efforts is Oi Ocha Koicha, which underwent a renewal in August 2019 as a Food with Functional Claims (specifically, the claim of reducing body fat), and which continues to be very well-received by consumers. Moving forward, we will also continue to invest our energies into the development of products which seek to deliver these kinds of health benefits.

2 Strengthening our Overseas Business Foundation

We have developed our overseas business presence primarily in North America, China, Southeast Asia and Australia. Health awareness is increasing in each country, including the United States, where the rising obesity rate is a social prob-lem. ITO EN regards its Oi Ocha beverage products and ITO EN MATCHA GREEN TEA products (tea bag prod-ucts, etc.) as global brand products, and is rolling them out in parallel with locally-developed brands. The global tea beverage market is expected to continue growing in the future, against the backdrop of health-oriented attitudes. In fiscal 2019, the quantity of Oi Ocha sold in North America increased by 15%, while in China it increased by 2%, exceeding the market growth rate in each country despite the impact of the COVID-19 pandemic. Moving forward, we will put our efforts into the growing e-commerce market as we seek to further expand sales of our global brands, with the North American and Chinese markets as key markets.

In our Australian business operations we have estab-lished tea bag production facilities, and manufactured and launched ITO EN MATCHA GREEN TEA tea bag products utilizing Australian-produced green tea starting from May 2020. Looking ahead, we will work to strengthen our business base using the "local production for local consumption" business model.

3 Initiatives to Tackle Customer Health Issues

Supporting the Era of 100-Year Life Expectancy Through Tea

Japan has now entered an age of super population aging, what is referred to as the era of 100-year life expectancy. Extending healthy lifespans is now a major issue to enable people to live long lives with greater fulfillment. Additionally, the arrival of the "With COVID-19" era is also

Developing Products Using Natural Ingredients and Aiming to Contribute to Japanese Agriculture

Over the past 30 years, the percentage of the Japanese beverage market accounted for by sugar-free beverages has grown from 8% to 49%. ITO EN boasts the top share in sugar-free beverages, accounting for 74% of all sugar-free beverages on the market.

Sugar-free beverages-as represented by Oi Ocha-do not make use of ingredients such as sugar or milk, and the natural ingredients themselves lead to the flavor and quality of the products. For this reason, ITO EN is very particular about agricultural produce, which is the source of raw materials for these products. The Tea-Producing Region Development Project is one initiative that is representative of this attitude. ITO EN handles around one quarter of the total volume of crude tea produced in Japan. In order to ensure stable procurement of high-quality raw materials, we have worked together with tea farmers to produce raw materials to match their purpose of use in products. Through the expansion of the Tea-Producing Region Development Project, we are also contributing to the resolution of social issues, such as by facilitating the stable management of tea plantations and enabling the effective use of abandoned farmlands. By applying this knowledge and engaging in the cultivation of ingredients for vegetable beverages under contract, moving forward we will continue to invest further efforts into the development and procurement of agricultural produce raw materials. We will also continue to cater to customers' health, security and safety-oriented attitudes and contribute to the sustainable development of Japanese agriculture, including tea farming.

The definition of "customer" in the ITO EN Group's man-agement principle of "Always Putting the Customer First" includes consumers, shareholders, retailers, suppliers, finan-cial institutions and local communities. Since the time of our founding, we have worked together with customers to create shared value and resolve various social issues through our core business operations.

4 Enhancing ESG Initiatives

In recent years, problems such as those of marine plastic waste and climate change have become urgent global issues. In June 2019, the ITO EN Group announced its policy to shift from regular PET plastic bottles to 100% recycled PET bottles for all products in its Oi Ocha brand by 2030. After further consideration, in September 2020, we formulated the "ITO EN Group Policy on Plastics," and decided to aim to increase the percentage of recycled materials and the like used in PET plastic bottles to 100% by 2030. With regard to climate change, we have established the targets of reducing total CO2 emissions for Scope 1 and 2 by 26% by fiscal 2030 and 50% by fiscal 2050; and for Scope 3 by 26% and 50% for those years respectively, on an emission intensity basis (the baseline year for all of these values is fiscal 2018). We have also conducted impact analyses for tea leaf cultiva-tion as a climate scenario analysis.

With regard to social issues, in April 2020 we formulated the ITO EN Group Human Rights Policy, based on the UN Guiding Principles on Business and Human Rights. We are engaged in various initiatives in cooperation with our stake-holders based on these Group policies and targets.

Aiming to Become a "Health Creation Company"

At the ITO EN Group, we are aiming to achieve something that cannot be achieved by any other company: to contribute to the health of customers in countries around the world as a Global Tea Company, and support the enriched lifestyles of each and every person. Going forward, we will continue to push ahead with our aim of becoming a Health Creation Company that proposes enriched lifestyles that contribute to the health of people in countries around the world through tea.

President and CEO

Shared Value Creation Model

Based on "Always Putting the Customer First"

Inputs

Corporate Strategy

Corporate Governance (page 54) Human Resources Management (page 44) /

Finance Management (page 48)

ITO EN aims to achieve long-term, continuous improvements in corporate value with a key focus on achieving sustained profit-able growth and contributing to a sustainable society. Until now, we have refined our strengths utilizing management capital and created various innovations. Moving forward, we will continue to execute strategies aimed at increasing corporate value in the medium- to long-term through the implementation of "Always Putting the Customer First."

Production and

Logistics

Sales and

Distribution

Contributing to a sustainable societyIncreasing corporate value

Medium- to Long-Term Vision

Under its current medium- to long-term management plan (fiscal 2017-21), ITO EN was engaged in business activities aimed at proposing healthy and enriched life-styles and culture through Japanese tea to customers both in Japan and overseas, as the leading Japanese tea company, making use of the opportunities offered by the Tokyo 2020 Olympic- and Paralympic Games. As a result of the COVID-19 coronavirus pandemic, however, the number of foreign nationals visiting Japan has dras-tically decreased, and global market conditions have changed dramatically. As people are required to adapt to the new style of living referred to as the "New Normal," the ITO EN Group aims to pursue roles and possibilities for tea in this new era, and to contribute in offering healthy and enriched lifestyles and culture to customers. We are currently reviewing and revising the medium- to long-term management plan based on the drastic changes taking place in the external environment.

Material ESG issues

ITO EN has identified and highlighted three of the seven core subjects outlined by the ISO26000 international standard as key themes that are particularly relevant to the Group. They are: "consumer issues," "community involvement and development," and the "environment."

Previous Medium- to Long-Term Management Plan

FY4/2015-FY4/2017 (fiscal 2014-16)

FY4/2017

Consolidated net sales

Total return ratio

ROE

105%

108%

Medium- to Long-Term Vision

Becoming a Global Tea Company that proposes healthy and enriched lifestyles and culture for customers around the world

Expanding the global presence of ITO EN as a representative

Japanese tea companyProposing food culture utilizing natural ingredients

(attempting new challenges in the Japanese food market domain)

Growth through implementation of CSV management Enhancing ESG initiatives

Enhancing ROE-based corporate management

ROE

Total return ratio

10% 40% (maintain)

ITO EN Group Material ESG Issues

In order to drive CSR management, in April 2012, the ITO EN Group adopted the ISO26000 international standard as its com-pass, and established seven key themes in line with the standard's core subjects: organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement and development. We have identified three of those themes in particular as material issues for the ITO EN Group: consumer issues, community and society, and global environment.

ISO26000- Seven Core Subjects and Issues

Material Issues

• 1. Organizational governance

• 2. Human rights

• 1 Due diligence

• 2 Human rights risk situations

• 3 Avoidance of complicity

• 4 Resolving grievances

• 5 Discrimination and vulnerable groups

• 6 Civil and political rights

• 7 Economic, social and cultural rights

• 8 Fundamental principles and rights to work

3. Labor practices

• 1 Employment and employment relationships

• 2 Conditions of work and social protection

• 3 Social dialogue

• 4 Health and safety at work

• 5 Human development and training in the workplace

4. The environment

• 1 Prevention of pollution

• 2 Sustainable resource use

• 3 Climate change mitigation and adaptation

• 4 Protection of the environment, biodiversity and restoration of natural habitats

5. Fair operating practices

• 1 Anti-corruption

• 2 Responsible political involvement

• 3 Fair competition

• 4 Promoting social responsibility in the value chain

• 5 Respect for property rights

6. Consumer issues

• 1 Fair marketing, factual and unbiased information and fair contractual practices

• 2 Protecting consumers' health and safety

• 3 Sustainable consumption

• 4 Consumer service, support and complaint and dispute resolution

• 5 Consumer data protection and privacy

• 6 Access to essential services

• 7 Education and awareness

7. Community involvement and development

• 1 Community involvement

• 2 Education and culture

• 3 Employment creation and skills development

• 4 Technology development and access

• 5 Wealth and income creation

• 6 Health

• 7 Social investment

*Source: ISO26000: 2010 Guidance on Social Responsibility (Japanese translation)

Social issues

ITO EN Policies and Initiatives

ITO EN Material Issues and Main KPIs

The ITO EN Group has set main key performance indicators (KPIs) based on its three material issues as listed below.

Material Issues

· Expansion of range of FOSHU, Foods with Functional Claims (FFC) and Foods with Nutrient Function Claims (FNFC): total of 65 products · Research and announcements relating to health value of foods: 15 items per year

Main KPIs

• · Driving initiatives for tackling human rights issues through business activities

• · Strengthening of relationships with local communities

• · Programs for the promotion of tea culture utilizing the ITO EN TEA TASTER in-house busi-ness skill test certification

• · Quality meetings: 10 per year, Group quality meetings: 1 per year

• · Regular audits of overseas raw material suppliers and overseas production outsourcing partners

• · Continuous ISO9001 and FSSC22000 certification

• · Obtaining GAP certification for suppliers under The Tea-Producing Region Development Project (page 22)

  · Enhancing activities to promote awareness of Japanese culture and tea culture, through initia-tives such as the ITO EN Oi Ocha New Haiku Contest and seminars on how to prepare tea.

  · Expanding crude tea production volumes and plantation areas under the Tea-Producing Region Development Project (new tea plantations business)

  · Continuation of assistance to earthquake-affected areas through tea (holding of Ochakko-Kai tea parties;* "Ochakko-Kai": a heartwarming tea party in the Northeastern Tohoku Region of Japan")

  · Reduction of CO2 emissions

  Fiscal 2030 SCOPE 1 & 2 26% reduction of total emissions (comparison with fiscal 2018)SCOPE 3 26% reduction of emission intensity (comparison with fiscal 2018)

  Fiscal 2050

  SCOPE 1 & 2 50% reduction of total emissions (comparison with fiscal 2018)

  SCOPE 3 50% reduction of emission intensity (comparison with fiscal 2018)

  • · Enhancement of management system for water consumption and wastewater output during production

  • · Advancing the lightening and use of recycled materials in PET plastic bottles 2030 100% use of recycled materials, etc.* for PET plastic bottles

    *Includes bio-derived materials

  • · Advancing the use of biodegradable materials for the tea-leaves packaging materials and for the straws

  • · Reducing use of raw materials for containers and maintaining lightweight ratios

  • · Advancing the use of aluminum-free paper pack containers

  • · Reducing product waste

  • · Maintaining a recycling rate of 90% or higher for foodstuffs

  • · Maintaining a recycling rate of 100% at green tea packaging plants

  • · Promoting the recycling of used tea leaves

  • · Maintaining registered varieties under the Tea-Producing Region Development Project

  • · Obtaining GAP certification for suppliers under the Tea-Producing Region Development Project

  Main related

  SDGs

  Note: Targets with no fiscal year displayed are targets for the year ending April 2022 (fiscal 2021).

Value Circle That Corresponds to "Always Putting the Customer First"

In all of its business operations, from research, product planning and development to procurement, production, logistics, sales and distribution, ITO EN creates value not only for itself, but also in terms of environmental and social aspects, forming a circle of value or "value circle." We are also working to enhance our corporate governance as the foundation for this value circle. By working in conjunction with stakeholders, the value circle generates further chains of value, and continues in a repeating cycle. This unique value circle content is the source of ITO EN's competitive advantage towards achieving sustainable growth.

"Always Putting the Customer

Research

P.18

World and industry-first tea research and technology development · Discovering and explaining the health benefits of catechins, theanine and other substances · Patent strategy

Research and technology devel-opment regarding health ben-efits and manufacturing technologies for tea, vegetables and other beverage- and food ingredients

Investigative research regarding cultivation and processing meth-ods for raw materials

Research regarding solutions to consumer issues, such as super population aging and lifestyle related diseases

Used Tea Leaves Recycling System (conserving and recycling of resources)

Research aimed at spreading resource-saving and energy-saving products

Product Planning andDevelopment

P.20

• · Product development capabili-ties (FOSHU, etc.)

  Capabilities for developing prod-ucts that contribute to health

• · Ratio of sugar-free beverages 74%

• · Voice system (group-wide inter-nal proposal system)

A wide range of products · Meeting the needs of consumers through beverages and tea leaves products · Unique raw material-processing technologies utilizing natural ingredients

Providing health value to a wide range of customers Providing beverages that cater to diverse needs

E Environmentally friendly container- and packaging initiatives

Towards a "Global Tea

Research

Our aim is to propose lifestyle improvements for living affluently in the era of 100-year life expectancy, by grasping tea value with the eyes of Science.

A healthy body and mind are our greatest assets for living a fulfilling life in the era of 100-year life expectancy, and the key theme for us is that how much can the differences between the average life expectancy and the healthy life expectancy be shortened.

By scientifically researching and explaining the delicious taste and various health benefits of tea-which have been recognized through experience since ancient times-and making new suggestions, we will propose dietary lifestyle improvements and contribute to the improvement of lifestyle habits for the future.

Research Organization Structure of the Central Research Institute

ITO EN Central Research Institute conducts fundamental and applied research on tea and other food products. The Central Research Institute and various other departments responsible for expanding business activities with consideration for society and the environment also contribute to increase the sustainability of business operations and contribute to society and the environment.

Basic Approach

ITO EN's R&D division engages in fundamental and applied research based on the product development concepts: "Natural", "Healthy", "Safe", "Well-Designed", and "Delicious". In addition to providing further health value to customers through collaboration with a diverse range of stakeholders, we also develop new beverage containers and filling methods, systematize the effective utilization of the used tea leaves output by production processes, and engage in other researchThree key priority research themes based on our basic stance

General Manager,

ITO EN Central Research InstituteFundamental and applied research relating to delicious taste, health and the environment

Development of raw material processing- and manufacturing technologies, etc.

Product development utilizing the Used Tea Leaves Recycling System

Investigative research regarding cultivation and processing methods for raw materials

Development of the Quality Control System, ensuring traceability and establishing an import inspection system

paying consideration to society and the environment, and advance the commercialization of research outcomes.

Looking ahead, we will continue to engage tirelessly in research and technology development relating to delicious taste and the environment, as well as the health benefits of ingredients, and to propose healthy and enriched lifestyles to customers; both as a top tea manufacturer and also as a comprehensive beverage manufacturer.

Setting Research Themes with a View to the Era of 100-Year Life Expectancy

A key social issue in the so-called "era of 100-year life expec-tancy" is the theme of extending our healthy life expectancy, keeping ourselves in good health. At the Central Research Institute, we have established three research themes with a view to the era of 100-year life expectancy, based on our belief that we can improve the quality of day-to-day life byimproving our dietary lifestyles with tea. In addition to the outcomes obtained through our research, we also held the "ITO EN Health Forum" in May-and November 2019, and communicated information regarding the health benefits of tea, with the input of an outside expert.

"ITO EN Health Forum"

ITO EN held an event on the theme of health value of tea, entitled "ITO EN Health Forum: Wisdom for Living a Fulfilling Life in the Era of 100-Year Life Expectancy," in order to communicate the health benefits of tea. Looking ahead, as a tea company, ITO EN will continue to appeal to consumers about the health value of tea, a key aspect of Japanese culture, and contribute to the health of customers.

Opportunities to Learn

In terms of learning opportuni-ties, we held a panel discussion in which we invited a group of experts to discuss and consider smart ways of consuming tea and catechins in order to increase quality of life, such as during seasons where we are prone to become ill.

Opportunities to Experience

In terms of opportunities for hands-on experience, we offered a space where partici-pants could experience how to incorporate tea in their daily lives, based on the keyword "ochakatsu" (activities for enjoying tea in the daily life), and displayed exhibits intro-ducing our R&D efforts.

For more details of the ITO EN Health Forum, please refer to the following URL.

https://itoen-forum.com/

Product Planning and Development

In Product Planning and Development, we refer constantly to the opinions of customers, based on our spirit of "STILL NOW" (finding things that customers are still now dissatisfied with). We make proposals for healthy customer lifestyles with safe and secure quality utilizing natural ingredients, and engage in recycling of resources throughout the product lifecycle.

General Director, Marketing Headquarters

ITO EN has continually referred to the opinions of customers obtained by various means, including route sales and its Voice System, in order to develop products based on its five concepts for product development, and to create markets. Today, in addition to issues such as super population aging and the diversification of workstyles, there is also a growing interest in an increase in stress and healthy lifestyles due to the effects of the COVID-19 pandemic. Moving forward, we will consolidate our R&D and proposal-making capabilities developed so far, and utilize the power of tea and other natural ingredients that have been familiar since ancient times, in order to contribute to the resolution of customer health issues.

5 Concepts for Product Development

Number of employee suggestions made based on the Voice System

(fiscal 2019)

9,462 suggestions

Expanding Know-How Developed Through Tea to Other Product Categories

ITO EN's key advantage is its value chain, which enables us to pay particular attention to- and to achieve both a consistent commitment to quality and a reduction of the environmental impact; from the procurement of raw materials from plantations to the delivery of products into the hands of customers. We are now applying the same vertically-integrated business model developed through our tea business-which spans the entire product life cycle from raw materials to final products to waste-to other product categories.

Green teaBarley tea

Coffee beveragesVegetable beverages

Development of tea leaves specialized for drink products The Tea-Producing Region Development Project Acquisition of a GAP certificationInitiatives for cultivation of barley under contract in Japan

RFA certification*1 for DLTC's company coffee plantations (Costa Rica)Specialized raw materials (Shui carrots, barley grass, etc.)

Increasing the fragrance and flavor of ingredients (tea leaves) through microwave heating and blending for freshness ("Freshness heating")Attention to "kettle quality" ("hot air roasting" and "medium roasting")

100% roasting in JapanNatural Sweetness Production Method, etc.

Used Tea Leaves Recycling System

Reducing the weight of containersBarley tea Used Tea Leaves Recycling System Reducing the weight of containers

Catechins and theanine contained in green teaPrecautions against heat (hydration / fluid and mineral replenishment)Chlorogenic acid, etc. contained in coffee

Enables casual intake of vegetables and vitamins

Caffeine-free

*1 RFA certification: Rainforest Alliance (obtained by DLTC for a portion of its plantations and coffee bean selection plants) *2 Silver skin: the thin skin removed during the process of roasting raw coffee beans.

Proposals to Support Healthy Lifestyles

Throughout its history, ITO EN has proposed products based on green tea-essentially the national drink of the Japanese people-to match customer lifestyle changes, drinking situations, and the needs of a wide range of age groups. In addition to supporting healthy lifestyle habits for customers

FFC (Food with Functional Claims) proposals: reducing body fat Oi Ocha Koicha has been recognized for the action of the gallate-type catechins that it con-tains, which give it the functional property of reducing body fat. Since its launch in 2004, ITO EN has sold a total of over 5 billion bottles of Oi Ocha Koicha, as a beverage that offers casual support for healthy lifestyle habits.

through this familiar beverage, we will also expand the range of high added-value products and services that we propose with respect to diversifying health problems and issues such as stress.

ITO EN's first caffeine-free green tea beverage In June 2020, ITO EN released caffeine-free Oi Ocha Decaf, aimed at pregnant women and nursing mothers who want to limit their intake of caffeine, as well as young children and other such customers.

Supporting customers in their time at home: #IeTimeOEN Project

In response to the increase in the number of customers working from home, and time spent at home in general as a result of the COVID-19 pandemic, between May and June 2020, ITO EN launched the #IeTimeOEN initiative. In this initiative, ITO EN TEA TASTERs utilize digital technologies to stream informa-tion on enjoying tea and various tea-drinking situations.

ITO EN TEA TASTERs

#IeTimeOEN Project

Procurement

ITO EN ensures stable procurement of high-quality raw materials and contributes to the development of sustainable agriculture in Japan, by producing high-quality ingredients through collaboration with produc-ers and building strong relationships based on harmonious coexistence and mutual prosperity.

General Manager, Agricultural Technology

Department

ITO EN develops optimal raw materials according to the purpose or way in which tea is to be consumed, such as green tea for use with a traditional teapot kyusu or in green tea beverage products. In the Tea-Producing Region Development Project-which we have worked on over many years-we work with producers to create tea cultivation methods to match the purpose of use, and achieve stable procurement of high-quality raw materials and product differentiation. We also contribute to stable tea planta-tion management and effective use of abandoned farmlands by sharing our proprietary technologies and know-how with producers, and adopting a cultivation under contract approach whereby we purchase the full amount of tea leaves produced.

Main Initiatives to Secure a Sustainable Competitive Advantage and to Promote a Sustainable Agriculture

Development of raw materials including tea leaves for specialized beverage use, tea leaves with suppressed amounts of caffeine, and raw materials of matcha meeting the overseas demand

Expanding new tea plantations business in the five prefectures of Kyushu region and in Shizuoka Prefecture, and expanding the Tea-Producing Region Development Project through efforts such as cultivation under contract in Shimane prefecture

Conducting assessments of suppliers

• · Conducting questionnaire-based assessments of suppliers and regular on-site visits based on the Group Procurement Policy

• · Continuous improvement of quality through annual quality assurance meetings

• · Conducting assessments of primary suppliers and quality assurance meetings once a year with regard to market procurement via wholesalers and trading companies

Advancing GAP certification's acquisition

Almost all of tea plantations under the Tea-Producing Region Development Project have obtained GAP certification* (ITO EN plans to obtain certification for 100% of them during fiscal 2020)

*GAP (Good Agricultural Practice) certifications are granted to farms that engage in food safety and environmental conservation initiatives. In addition to the Global GAP international standard, other schemes include JGAP and ASIAGAP, which are granted by the Japan GAP Foundation. GAP certification here refers to plantations that have obtained one of those three certifications.

The Tea-Producing Region Development Project

The Tea-Producing Region Development Project consists of two key initiatives: cultivation under contract in existing production regions and the new tea plantations business, which begins with the creation of new tea plantations. Cultivation under contract is a system whereby ITO EN commissions existing farmers to produce tea leaves for use in its products, and purchases the full volume of tea leaves produced. In the new tea plantations business, local business operators take a leading role, cooperating with local governments to create new large-scale plantations, such as by making use of abandoned farmlands, while ITO EN provides technical guidance and know-how. The plantations then produce tea leaves for use by ITO EN.

New tea plantations business rolled out in 8 districts in 6 Japanese prefectures

Total area of tea plantations: 443ha

(as of fiscal year 2019)

Five prefectures of Kyushu

Shizuoka Prefecture

(commenced rollout

in August 2020)

Progress of the Tea-Producing Region Development Project

7,122

8,068t

6,419

12/4

16/4

17/4

18/4

19/4

20/4

Production volume

21/4

(planned)

Cultivation Under Contract Utilizing Tea Cultivation Know-How (Aojiru (Barley Grass Green Juice) and Shui Carrots)

Some new tea plantations business locations are seeking to improve productivity through combined production of barley grass-an ingredient used in Aojiru (Barley Grass Green Juice)-during the off-season for tea cultivation. They are also engaged in the cultivation of Shui* carrots, a variety of carrot reserved especially for use by ITO EN in its vegetable beverages.

*ITO EN eventually selected the Shui variety from around 50 varieties of carrot, after many years of comparative cultivation and processing evaluations. The three distinctive features of Shui carrots are that they (1) contain around 1.5 times the amount of β-Carotene contained in typical carrots, (2) are around 1.1-1.3 times sweeter, and (3) contain minimal amounts of scum. Shui carrots have also been recognized by specialists, such as in their selection in First Place in the "Carrots - Raw and Steamed" category at the 5th Japan Vegetable Sommelier Association Summit-a gathering of vegetable experts-in 2011.

Production and Logistics

ITO EN will build a sustainable supply chain with consideration for a stable supply of safe products that offer peace of mind to customers as well as both environmental and social aspects, while deepening its level of collaboration with partner companies.

Director, Senior Managing Executive Officer and General Director of the

Production Headquarters

Nationwide Five-Block Production and Logistics System Utilizing the Fabless Method

ITO EN has adopted a fabless method* of production. While we still handle the initial processes of heating and blending the crude tea leaves that we procure to manufacture the raw mate-rials for our products, we outsource the subsequent tea brew-ing, extraction and bottling processes to beverage production companies (except in Okinawa prefecture). In this way, we have achieved a more efficient business model that enables us to reduce capital investment costs, adjust our production volume according to the level of actual demand, and build optimal production lines by taking advantage of the distinctive characteristics of our outsourcing partners.

Quality Control

The ITO EN Group has established policies on quality and the environment and is working in collaboration with its stakeholders, including partner plants, to establish a supply framework that pays due care and consideration to both environmental and social aspects. Our products are only manufactured in factories that satisfy ITO EN quality man-agement standards and we thoroughly ensure safety and security in the manufacture of our products by holding regu-lar quality assurance meetings.

In terms of logistics, we conduct regular assessments, audits and meetings for each partner company with regard to transport and storage-related rules and other regulations established by ITO EN, in order to thoroughly ensure safetyIn order to deliver safe products that offer greater peace of mind to customers as quickly as possible, we have created a block-based production and logistics scheme in which the country is divided into five blocks, with around 50 partner plants. Producing products at plants that are close to the actual consumption zones enables us not only to improve logistics efficiency, but also to deliver fresher products to customers.

In terms of quality, we ensure thorough quality control and traceability from the raw material stages right up until our products reach the hands of our customers.

*Fabless method: A method of production in which a company does not have its own factory.

and peace of mind.

Furthermore, in order to bolster our response to urgent issues of marine plastic waste, climate change and social issues in the supply chain, in January 2020 we held an ESG liaison meeting with our main outsourcing partners.

Ensuring Traceability

With regard to domestic green tea beverage and tea leaf prod-ucts, we are able to grasp the production plant location, date of production, raw materials and state of cultivation by farm-ers based on the lot numbers of final products delivered into the hands of customers. We also ensure traceability for veg-etable beverages that make use of imported raw materials.

Our supply chain for achieving freshness and delicious taste (Oi Ocha)

· Half of crude tea process-ing time · Freshness management starts immediately after picking

Tea-heating

Microwave tea-heating is used to slowly remove the shin-mizu (the tea-leaves-core water) from inside the core, protecting the freshness of flavor and fragrance

Freshness and quality of tea leaves are managed while shipping

Tea leaves are stored in a location with carefully controlled temperature and humidity, and only the required amount of tea leaves are shipped

Freshly roasted tea leaves are extracted immediately after roasting

The aroma of the tea is drawn out by roasting the tea leaves directly before extraction, using a traditional-teapot (kyusu)-type extractor

Bottling (Filling)

Minimizing the amount of oxygen-one of the great natural enemies of the fresh tea-during bottling helps to reduce the oxidative degradation

Container design that protects the delicious taste of the tea from another of its great natural enemies: light

Solving Issues Through Cooperation with Partner Companies

Development of eco-friendly containers

The NS System*, developed in collaboration with Toyo Seikan Co., Ltd., is a method that enables aseptic bottling at room temperature without the use of sterilizing agents to sterilize bottles. This eliminates the need to use large volumes of water that would otherwise be required to wash away sterilants. Additionally, since the only time when bottles are exposed to high temperatures is during sterilization using hot water, we are able to minimize the level of heat resistance required, allowing us to produce more lightweight bottles. The use of more lightweight bottles leads to a reduction in the amount of materials used in production, and CO2 emissions during delivery.

*NS System: Non-Sterilant (Not using any kind of sterilizers)

Initiatives to improve logistics efficiency and reduce environmental impact

By dividing the country into five blocks and producing beverages through outsourced production, we are able to shorten transpor-tation distances between production plants and consumption areas and to minimize energy consumption during transportation. We are also engaged in modal shift initiatives, shifting from trans-portation of cargo using trucks and other road vehicles to other modes of transportation with lower environmental impact, such as railways and ships.

Nationwide 5-block production and logistics system

• • Reduces logistics costs and enables speedy supply of products

• • Environmentally-friendly logistics initiatives

Sales and Distribution

ITO EN will utilize the distinctive nature of its community-based sales network to achieve sustainable growth by working to understand the needs of customers in the "With COVID-19" era and to build stronger trusting relationships with all of our customers than ever before.

Team ITO EN's Wide-Area and Community Sales Network

The source of ITO EN's marketing power is in its community-based route sales system. The advantage of route sales is in gathering and understanding market information in locations that are closer to customers. ITO EN has approximately 3,500 sales personnel at 196 sales branch offices based nationwide, who personally engage in product explanations, sales negotia-tions and deliveries. By valuing contact with all of our custom-ers, we use this network to obtain the latest information from the field and utilize it in our marketing- and sales activities via the "Voice System". Although lifestyle conditions have changed significantly due to the COVID-19 pandemic, we are working to respond agilely in order to enable stable delivery of products to customers via our route sales network.

We have also established an effective framework that enables finely-tuned business negotiations to meet the needs of various types of retailers, including corporate business sales to major companies and distribution-based sales to convenience stores (CVS) and supermarket chains. In the retail division, we have opened specialty tea shops at locations such as depart-ment stores, shopping malls and airports (122 stores nation-wide). Feeding back the market information obtained at those locations into product development and other activities of our company is another of ITO EN's key strengths.

By directly connecting our company with our customers and by strengthening those connections in ways such as those already mentioned above, Team ITO EN is rolling out

Vice President, Representative Director,

Executive Officer and

General Director of the Sales Headquarters

wide-area and community-based sales activities that will enable it to make the most optimal proposals on the sales floor.

Route sales system scheme

Initiatives to Provide Vending Machines Needed by Customers in the With COVID-19 Era

Vending machines are an important sales channel for ITO EN, and we are engaged in sales efforts with an emphasis on find-ing good locations leading to increased profitability. We are working to support healthy customer lifestyles and creating sales locations that customers can use with peace of mind, based on three key pillars: cleanliness (hygiene), cashless (con-tactless payment) and wellness (health). In addition to disaster response-ready vending machines and antibacterial action, weare also seeking to differentiate from other firms with our own vending machine solutions. For example, vending machines equipped with used tea leaf composition sheets, which are effective in mitigating the heat island phenomenon, and vend-ing machines that contribute to society from the perspective of key ESG issues such as community and human rights.

Initiatives to provide vending machines needed by customers

1 Cleanliness (hygiene)

In addition to thoroughly alcohol sanitizing and cleaning pur-chase buttons and other parts of vending machines touched by consumers, we are also working to roll out sanitary vending machines that enable customers to purchase products with peace of mind; through the application of antibacterial used tea leaf stickers*1 (containing an antibacterial formu-lation with used tea leaves) and

antiviral stickers*2.

2 Cashless (contactless payment) We have proactively introduced vending machines with IT access, enabling payment using QR codes, and have deployed 20,000 vending machines that support cashless payment (as of July 2020).

Antibacterial used tea leaf stickers

3 Wellness (health)

We have rolled out "wellness vending machines" with an extensive lineup of wealth-conscious products geared towards the era of 100-year life expectancy. These vending machines have also been adopted by companies engaged in health and productivity management, and also provide opportunities to increase the health awareness of customers. Clients who have installed these vending machines have commented that they provide powerful support for maintaining good health, and help to revitalize their organizations.

*1 The stickers were found to display effective antibacterial action based on antibacterial assessment tests using E.coli, MRSA, salmonella and ringworm.

Test method: Used tea-leaf formulated sheets were exposed to bacterial solutions (E.coli, Methicillin-resistant Staphylococcus aureus (MRSA), salmonella and ringworm) in accor-dance with the JIS L 1902:2002 bacterial solution absorption method. The number of bacteria was then measured after 18 hours stored at 37°C.

*2 ITO EN uses RIKEGUARD® FILM produced by RIKEN Technos Corporation. The film displays a reduction in the number of specific viruses on its surface, for both enveloped and non-enveloped viruses.

Test method: 0.4ml of viral solution were applied to 5cm square samples (one treated with the antiviral product and one untreated). The level of viral infection was then measured after leaving the samples for 24 hours at 25°C and washing the virus off the surface of the samples (in accordance with the ISO21702 standard).

*The action of the stickers was not validated for all viruses.

Support for healthcare professionals and accommodation facilities that have pledged to accept mildly symptomaticpatients in response to the COVID-19 pandemic

ITO EN has donated approximately 78 million yen's worth of products-including tea beverages and tea leaves (tea bags and instant tea) products-to 596 hospitals, including designated infectious disease hospitals, and 56 accommodation facilities that have pledged to accept mildly symptomatic patients.

Examples of products donated

Oi Ocha Green Tea 280ml PET bottles: approx.420,000

Oi Ocha Green Tea 190g cans: approx.160,000

Tea leaf products (for hotels and restaurants):

approx.860,000

Initiatives for Solving Environmental Issues Through Sales Activities

Collection of empty bottles and containers by the route sales personnel

The cans and PET plastic bottles collected directly by ITO EN route sales personnel from the recycling boxes (boxes for empty containers installed next to vending machines) are also recycled into useful resources by appropriate recycling business operators, rather than being committed to landfill or incineration.

Reduction of CO2 emissions

Introduction of low-pollution vehicles and promotion ofeco-friendly driving

We are engaged in efforts to reduce vehicles' fuel consumption and related CO2 emissions through the proactive introduction of low-pollution vehicles, improved efficiency of sales routes and promotion of eco-friendly driving.

Fuel consumption and CO2 emissions per vehicle

2,5705.9

2,478 ℓ /vehicle

1,542

1,381 ℓ /vehicle

5.6t-CO2/vehicle

Promoting energy saving by increasing the number of heat pump vending machines

We are increasing the number of heat pump vending machines, which heat products using heat generated by their internal refrigeration systems.

Vending machine equipped with used tea leaf formulated sheets

2019/4

2020/4

ITO EN's used tea leaf formulated sheets have antibacterial, deodorizing properties and also help mitigating the heat island phenomenon. These vending machines are installed inside hospitals and nursing care facilities, and outdoor locations where there are environmental and scenic considerations.

Activities to conserve water resources: the "Making Lake Biwa Beautiful Through Tea" campaign

Lake Biwa is Japan's largest lake. In 2008, ITO EN launched the "Making Lake Biwa Beautiful Through Tea" campaign, with the objective of preserving the lake's water resources. In addition to the company donating a portion of its sales revenues from Oi Ocha products sold in the Kansai region, ITO EN employees and participants recruited from the general public also engage continuously in the cutting of reeds on an annual basis.

*Area of Lake Biwa reed community conservation zone in 1955: 260ha, 1991: 127ha, 2016: 184ha

Please refer to the following URL for reports on activities carried out so far as part of the "Making Lake Biwa Beautiful Through Tea" campaign.

https://www.itoen.co.jp/itoen-motherlake/

Involvement in Local Communities

Communicating the appeal of tea and sales promotion activities through ITO EN TEA TASTERs

ITO EN TEA TASTERs have a great store of tea-related knowl-

edge. By participating in Dai-Cha-Kai (demonstration sales and tasting events of green tea) and other events at locations across Japan and giving demonstrations of how to prepare tea, TEA TASTERs communicate the appeal and attraction of tea to cus-tomers and link this on to sales promotion.

TEA TASTERS participate in the Dai-Cha-Kai that ITO EN holds on October 1 of each year-Nihoncha no hi (Japanese Green Tea Day)-and at other times of year when there is high demand for tea leaf products, such as during the first tea picking of the season.

"Making Japan Beautiful Through Tea" campaign

Since 2010, ITO EN has been conducting the "Making Japan Beautiful Through Tea" campaign, in which it donates a portion of the sales revenues from Oi Ocha products to envi-ronmental activities around Japan. In addition to donating funds to local governments, ITO EN employees also partici-pate in environmental conservation and development activi-ties, and seek to promote greater recognition and understanding of these activities. These activities form a foundation for marketing activities that enable us to make maximum effective use of the strengths of our nationwide sales network, while at the same time contributing to the resolution of local community issues.

TEA TASTER

"Oi Ocha-kun" TEA

TASTER avatarInteraction with customers on the sales floor

In 2020, ITO EN deployed the remotely operated "Oi Ocha-kun" TEA TASTER avatar at some of its in-store sales areas.

* "Oi Ocha-kun" TEA TASTER avatar: A system that enables TEA TASTERs to recommend products, answer questions and interact with customers remotely, without actually having to visit the store in person.

Forest conservation and tree nurturing activities in Fukushima Prefecture

Business Overview

Ever-evolving Oi Ocha

This year, Oi Ocha marks the 31st anniversary of its launch. Over the course of its history, Oi Ocha has pursued the delicious taste and casual convenience demanded by consumers, catering to various drinking situations and demographics in order to match customer lifestyles as they change with the times.

Today, lifestyles and living conditions are changing greatly due to background such as super population aging and the COVID-19 pandemic, and there is increasing interest in health. Since ancient times, green tea has been used as a medicine, as a tool for social interaction, as a source of nutrition for replenishing nutri-ents, and as a food. Looking ahead, Oi Ocha will continue to evolve with the aim of contributing to healthy and enriched customer lifestyles through the various possibilities that green tea has to offer.

Evolving with a focus on "drinking"

Initiatives to tackle social and environmental issues

Oi Ocha has been certified by Guinness World Records® as the world's No.1 tea beverage brand in terms of sales for the second successive year.

No.1 tea beverage brand

Made using 100% domestically pro-duced tea leaves

Matcha beverages are a Food with Functional Claims: increasing the accuracy of cognitive functions* through the action of theanine and tea catechins

*Attention and judgment, which are known to be one part of cognitive function

(January-December 2019, according to research by ITO EN)

ITO EN market share 33%

ITO EN share

*January to December

Use

Make effective use of tea leaves as a resource for industrial products uti-lizing the functional benefits of tea

See page 37, Used Tea Leaves Recycling SystemRecord name: Largest natural healthy RTD green tea

Target brand: Oi Ocha brand (excluding roasted green tea beverages) Target year: 2019

Certified figure: US$1,882,900,000 (estimated)

Cardboard box containing used tea leaves

Overseas Strategy

ITO EN has developed a global presence as a representative Japanese brand, in order to communicate the value of green tea to overseas customers and cater to the growing health-conscious attitudes worldwide. By applying the "From Tea plantations to Used Tea Leaves" business model that it has developed in Japan on a global scale, ITO EN aims to advance localized production with the aim of becoming a Global Tea Company.

Overseas brand strategy

Progress in overseas expansion

The United States of America (USA)

ITO EN (Hawaii) LLC

ITO EN (North America) INC.

China

Fujian New Oolong Drink Co., Ltd. Ningbo Shunyi Tea Products Co., Ltd ITO EN Beverage (Shanghai), Ltd.

ITO EN AUSTRALIA PTY. LIMITED

ITO EN is operating the Tea-Producing Region Development Project (new tea plantation business) and crude tea plants in the state of Victoria, Australia.

1987 Hawaii

1994 Australia

1995

2000

2005

2010

2015

2020

FY4/2017

FY4/2018

FY4/2019

FY4/2017

FY4/2018

FY4/2019

FY4/2020

Hong Kong

Taiwan

Korea

Thailand

Indonesia

Size and Growth Potential of the Global Tea Beverage Market

The global tea beverage market is expected to continue growing in the future due to factors such as the global boom in washoku (traditional Japanese cuisine) and matcha, and the increase in health-oriented attitudes. By 2022, the Chinese market is expected to become the largest market, on par with the Japanese market. The North American market is also expected to display continu-ous growth. Looking ahead, as the North American-, Chinese- and other markets continue to grow, ITO EN will deploy global brands-with a primary emphasis on Oi Ocha-and seek to expand sales while utilizing e-commerce.

Business presence in China

In the United States, we are seeking to achieve penetration of green tea into everyday life and to expand the market by spreading sales of authentic green tea to more consumers at major national retail chains, while at the same time seeking to establish the "ITO EN brand".

Oi Ocha and Mugicha (Barley tea) sold in China

Flagship products in the US Market are Oi Ocha and MATCHA GREEN TEA

Commitment

Comprehensive proposals from product develop-ment to sales floor creation

ITO EN has conducted detailed analyses of the tea leaf market and regional market trends ranging from home use to carry bottle and commercial segments, and created a wide range of products catering to different customer preferences and purposes of use. We are also working to propose tea leaf products sales opportunities and revitalize the market through initiatives such as sales floor suggestions using shelv-ing-allocation systems, the proposal of iced-water-brewed products and the hosting of events such as our Dai-Cha-Kai (demonstration sales and tasting events of green tea) run by ITO EN TEA TASTERs.

In the tea leaf market, ITO EN boasts an overwhelming No.1 share of 38.7% in 2019 at around 4,000 stores- including mass retailers and convenience stores-nationwide.

*Green tea, barley tea, oolong tea and health teas

*Source: INTAGE SRI / January-December 2019 / monetary basis

Market overview

Although the green tea leaf market has seen a continued trend of decline, an increase in household demand as a result of factors such as an increase in health-oriented attitudes and consciousness, and the impact of the COVID-19 pandemic resulted in cumulative market growth of 6.4% in the Japanese green tea leaf market between February and April 2020.

In particular, the market for easy-to-enjoy green tea tea-bags grew by 13%, with ITO EN achieving growth of 16% year-on-year to a share of 42% in that market. Looking ahead, we will continue working to increase the quality of our easy-to-prepare and convenient products based on con-sumer needs for products that are easy and delicious to drink and enhance proposals of those products.

Green tea leaf market trends*

6.4% market growth

Green tea teabag market trends

*Average purchase amount per 100 people

13% market growth

February- February- April 2019 April 2020

*Source: research by ITO EN

Revitalizing the matcha market

Matcha is one part of Japan's proud traditional food culture, which is highly regarded for its compatibility with food, its delicious taste, and its health benefits. In response to the global increase in demand for matcha, in 2016, ITO EN opened and commenced operation of a specialized matchaproduction plant at its Shizuoka Sagara Factory. ITO EN is now working to revitalize the matcha market through a wide range of proposals, ranging from authentic matcha to pro-cessed matcha for food products, beverages and other com-mercial uses.

Developing matcha-growing regions

We are expanding contracted cultivation of matcha raw materials (tencha) in areas such as the Kyoto- and Kagoshima prefectures.

Change in production volume of matcha raw materials (tencha)

*Source: research by the Japanese Association of Tea Production

Unique clean processing techniques

We produce good quality matcha for various purposes using unique processing techniques.

ITO EN MATCHA PROJECT launched in an attempt to solve issues relating to cognitive function through matcha

Over the course of 20 years, in pursuit of the various possibilities of tea, ITO EN has engaged in research to scientifically prove the effect of active ingredients in tea on brain functions, based on fundamental research into cat-echins. During this time, it has also been confirmed that theanine-another active ingredient contained in matcha- has the action of protecting cranial nerves, and that contin-ued consumption of matcha partially improves cognitive function in healthy middle-aged people. Based on this discovery, we have launched the ITO EN MATCHA PROJECT*1, which aims to utilize matcha to contribute further to resolving issues relating to cognitive function.

As the first activity in this project, we have launched Japan's first*2 matcha product that increases cognitive function (attention and judgment) as a Food with Functional Claims. Going forward, we will continue to develop further products.

The project will not stop at transforming research out-comes into products. With a primary focus on dietary life-styles, we will engage in a wide range of activities that enrich customer lifestyles, including exercise and everyday conversa-tion, and work to tackle local community issues in the era of 100-year life expectancy from the perspectives of prevention and coexistence.

*1 ITO EN MATCHA PROJECT

Based on over 20 years of its research outcomes,

ITO EN will contribute to resolving cognitive

function-related issues using matcha, which is rich

in active ingredients that influence brain function.

ITO EN will roll out multi-faceted project activities

including product development based on research

outcomes, research through collaboration between

industry and academia, and CSR activities. We will

also work to resolve issues by engaging in collabo-

rations with local governments and other industries. *2 ITO EN is the first in Japan to release a Food with

Functional Claims in the cognitive function category

through the combination of theanine and tea catechins

(According to research by ITO EN in 2020).

Market Overview

The barley tea beverage market is growing continually year by year, due to background factors such as the sugar-free and caffeine-free characteristics of barley tea. In 2019, the market grew to a scale of around 110.5 billion yen. The market has grown in size by around 3.5 times over a 10 year period.

Kenko Mineral Mugicha (Healthy Mineral Barley Tea) is currently the No.1 caffeine-free tea beverage (in terms of quantity sold)*, and leads the market with a 42% share.

Barley tea is a caffeine-free beverage which can be drunk with peace of mind by a wide range of consumers, from children to senior citizens, and enjoys the support of custom-ers throughout the year. In addition to bottled drinks, ITO EN also offers a lineup of teabag and instant barley tea prod-ucts. Looking ahead, we will seek to further expand sales of the Kenko Mineral Mugicha (Healthy Mineral Barley Tea) brand through linked in-store sales of bottled drinks, tea leaves (teabags) and instant products.

*According to research by Inryo Soken research for January-December 2019

Quality management for safety and peace of mind

Kenko Mineral Mugicha (Healthy Mineral Barley Tea) is man-aged in the same way as food products for which infant stan-dards apply*. It is a product that can be consumed safely and with peace of mind by babies and other members of the family. We have a rigorous quality management system that enables the results of radioactive materials inspection measurements to be verified via a QR code displayed on the product itself.

Progress in the barley tea market

(billion yen)

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Barley tea beverage market

Sales of Kenko Mineral Mugicha (right axis)

*Market: January-December, ITO EN: May-April *Source: research by ITO EN

A beverage for all seasons

Against the backdrop of increasing health-oriented attitudes, ITO EN proposes barley tea as an ideal beverage not only for combating the midsummer heat but also for hydration (fluid replenishment) and mineral replenishment when exercising or playing sports in any season, including during the winter, when we are prone to become dehydrated.

Water and minerals lost due to sweating

Barley tea value chain

Product Planning and Development

A wide range of products

Beverages, teabags, powdered teaCaffeine-free, hydration and mineral replenishment

Quality products that can be drunk by the whole family members with safety and peace of mind

Procurement and Processing of Raw Materials

Kenko Mineral Mugicha

(10,000 cases)

0

Phosphorus

Rollout of sales areas for bever-age products and tea leaves products in mass retailers, conve-nience stores, etc.

Barley tea beverage market No.1 Cosponsor* of Atsui Machi Summit (Hot City Summit) as a beverage for combating hot weather

*An organization formed through the teaming-up of private-sector organiza-tions from the cities of Yamagata in Yamagata Prefecture, Kumagaya in Saitama Prefecture, Tajimi in Gifu Prefecture and Shimanto in Kochi Prefecture

Vegetable and Aojiru

(Barley grass green juice) Products

Market Overview

The vegetable beverage market in January-April 2020 has progressed strongly at a level exceeding sales for the same period of the previous fiscal year, due to increased interest in vegetable beverages with good nutritional balance, against the backdrop of factors such as a growing number of con-sumers with health-oriented attitudes and consciousness.

The Aojiru (Barley grass green juice) market (powder and beverage products) has grown by 14% in comparison with five years ago, expanding to a scale of around 105.0 billion yen in 2019. The beverage product market has grown by 73% over the past five years, to 14.2 billion yen in 2019.

Progress in sales of vegetable beverage series

(10,000 cases)

4,000 250

2014

2015

2016

Mainichi-1pai-no-Aojiru (one glass of barley grass green juice a day)Vitamin Yasai (Vegetables & Vitamins)Ichinichibun no Yasai (A day's worth of vegetables)OthersVegetable beverage market (right axis) *Market: January-December, ITO EN: May-April

*Source: research by ITO EN

Value creation and communication with a focus on nutrition: increasing the awareness of the delicious and nutritious vegetable beverages

In view of factors such as the global increase in health-oriented attitudes and changes in consumer lifestyles, ITO EN is respond-ing to nutritional issues-such as deficiencies in consumption of vitamins and minerals and excessive consumption of fats, sugars and salt-by developing food and beverage products which contribute to good health, and proposing healthy dietary lifestyles to match the needs of customers.

ITO EN launched the carrot-based Jujitsu Yasai (vegetable and fruit mix juice) in 1992, as a response to consumer health-oriented needs. In 1999, we began research into carrots with high nutritional value with optimal delicious taste for use in vegetable beverages. We now use the Shui variety of carrot as the principle ingredient, selected from among around 50 varieties. In addition to careful selection of ingredients, we also make our vegetable beverages easier to drink through the use of our unique "Natural Sweetness Production Method"*1.

Shui carrots contain around 2.5 times more GABA than ordinary carrots, and it has been reported that GABA has the

Vegetable-related value chain

Research, Planning and Development

A wide range of products

Expansion of the beverage market, business negations with major distributors and flexible response to consumer needs

Patent and trademark strategy

Differentiation from other firms'

products and improved brand powerAppropriate disclosure of information

Labelling requirements of raw materials' origin and production areas' geographical features / provi-sion of health-related information

action of lowering blood pressure in people with high blood pressure. Regarding that fact, in October 2020, ITO EN launched Jujitsu Yasai Shui Carrot Mix, as a Food with Functional Claims that lowers high blood pressure through the action of GABA. We also give consideration to the environment by adopting brick-shaped aluminum-free paper pack-type drink containers (com-monly referred to as eco-containers*2) which can be recycled in the same way as milk cartons. Going forward, we will continue to contribute to healthy consumer lifestyles by bolstering product development efforts with a central focus on Shui carrots.

(billion yen)

2017

2018

2019

*1 In the "Natural Sweetness Production Method," the carrot tops are removed, and the carrots are peeled to remove the grassy smell. The carrots are then blanched (boiled) and finely grated to remove the "scummy" constituents, leaving the natural sweetness of the carrots. (Method Patent No. 3771919)

*2 200ml brick-shaped paper pack-type containers produced by Nippon

Paper Industries Co., Ltd., in which the conventional aluminum foil lining has been replaced with a transparent barrier film (GL film) developed by Toppan Printing Co., Ltd.

Jujitsu Yasai Shui Carrot Mix

Fabless Method

Reduces capital investment costs Enables adjustment of production volume to match demandAluminum-free paper pack containers

Environmentally-friendly containers Product differentiation through high added value products

Block production and logistics system

Reduces logistics costs and enables speedy supply of products

"Natural Sweetness Production Method"

Unique production method chosen to match the raw materials used

Coffee Beverage Products

TULLY's COFFEE and ITO EN Group Synergies

ITO EN sells products created through joint development with Tully's Coffee Japan Co., Ltd. (Tully's Coffee Japan). Canned and PET bottled coffee products value the spirit of Tully's Coffee, with a characteristic full-bodied flavor and aroma, where everything from raw materi-als to production methods are carefully selected by Tully's baristas. Only high-quality Arabica coffee beans are used as raw materials. The beans are roasted in Japan to thoroughly unlock their delicious flavor. Looking ahead, we will continue to launch products that leverage the respective strengths and character of both ITO EN and Tully's Coffee, as we seek to further increase the value of the TULLY'S COFFEE brand.

Market Overview

going out. At the same time, the number of people brewing and drinking authentic coffee at home and elsewhere increased. With the increase in the number of opportunities to experience regular coffee, it is thought that the level of consumer selectivity with regard to production regions and quality, and sensitivity with regard to flavor has increased. (According to research by ITO EN, the home-use regular coffee market has grown by over 20% year-on-year in terms of sales for March-May 2020.)

(%)

In view of these background factors, in October 2020, Tully's Coffee Japan launched two new products with a particular emphasis on production region: Brazil 100% Clear Bitter, which uses 100% Brazilian-produced Arabica beans, and Kilimanjaro Black, which uses 51% Tanzanian coffee beans.

400 92

0 90

2009

2011

2013

2015

2017

2018

2019

Sales of TULLY'S COFFEE brand beverage products

The TULLY'S COFFEE brand will continue to meet increas-ingly diverse customer needs by proposing products that unlock

Coffee beverage market (where 2009 = 100) (right axis) *Market: January-December, ITO EN: May-April

*Source: research by ITO EN

Value creation through the coffee value chain

ITO EN Group company Distant Lands Trading Co. (DLTC) engages in all coffee business processes from cultivation to sales, operating primarily in the United States. ITO EN is pur-suing Group synergies with DLTC by purchasing a portion of the coffee beans produced by DLTC as raw materials for use in its bottle-type canned coffee. DLTC is also promoting sustain-able production with care and consideration for environmen-tal, social and economic aspects, such as by obtaining Rainforest Alliance certification for a portion of its proprietary plantations and coffee bean sorting & selection plants.

以下のサイトをOごv参e照rsくeだ aさs:いD。 LTC (primarily USA［)インドネシア］ ⃝PT ITO

▶http://www.itoen.co.jp/company/group/

［タイ］ ⃝ITO EN

Japan: ITO EN (mass retailers,

convenience stores and グル ープ 会 社トピックス vending machines), Tully's

■ タリーズコーヒージャCパoンffe株e 式Ja会pa社n (stores) 東西に700号記念店舗をオープ▶http://www.tullys.co.jp

スペシャルティコーヒーショップとして、

Enoden Railway

「タリーズコーヒー」などの飲食店の経営、

Enoshima Station store フランチャイズ展開を行っています。

•好立地への積極的な新規出店 総店舗数：706店舗

"江ノ電江ノ島駅店"

"花のれんタ なんばグラ

■ チチヤス株式会社

主にヨーグルトや牛乳などの乳製品を製造・販売しています。

•アンテナショップ「CHICHI YASU」を2017年4月にオープン

Corporate Strategy

ITO EN Group Medium- to Long-Term Environmental Goals

Based on its management principle of "Always Putting the Customer First", the ITO EN Group believes that it is its corporate social responsibility to protect the global environment shared by all of humanity, and pass it on to the next generation. Global environ-mental problems such as the increase in intensely hot weather, floods and landslides as a result of climate change due to global warming, and the problem of marine plastic garbage are now pressing issues for global society.

These kinds of issues are also key issues in the ITO EN Group's business activities. In September 2020, we formulated the ITO EN Group Medium- to Long-Term Environmental Goals with regard to our containers and packaging, and our response to climate change, based on the ITO EN Group Environmental Policy. Through these goals, we are further driving our initiatives to tackle environmental problems, with the aim of contributing to the creation of a sustainable society.

Medium- to Long-Term Environmental Goals

*Scope 1: Direct emissions from use of fuels by the company itself.

Scope 2: Indirect emissions accompanying use of electricity purchased by the company. Scope 3: Other indirect emissions aside from those covered by Scope 1 and 2.

For details of the ITO EN Group Environmental Policy, please refer to the following link.

https://www.itoen-global.com/management/ csr_csv/environment.php

Environmental Management System

The CSR/ESG Promotion Committee (chaired by President & CEO Daisuke Honjo) keeps track of the actual state of issues relating to the environment, deliberates on policies, goals and strategic measures to respond to these issues, and reports to senior management (the Board of Directors and the Executive Board).

The ITO EN Group also sets KPIs within its environmental management system, based on the ISO14001 standard, to drive initiatives for achieving its environmental targets. So far, we have obtained certification for our production, sales, and head office divisions, and some of our affiliated companies*.

* In terms of affiliated companies, we have obtained certification for ITO EN Sangyo, Ltd., Okinawa ITO EN, Ltd. and Green Value Co., Ltd.

Representative Director

Executive Board

Containers and packaging

The ITO EN Group is engaged in proactive efforts such as the development of technologies that contribute to creating more lightweight PET plastic bottles and reducing plastic usage, and introducing environmentally friendly paper containers.

At the same time, in September 2020, we developed the ITO EN Group Policy on Plastics, in an effort to tackle the challenges of transforming into a more environmentally friendly recycling-based society, against the backdrop of problems such as marine plastic garbage, climate change, and other problems which are now pressing issues for global society. By doing so, the ITO EN Group aims to contribute to the creation of a sustainable society by further driving initiatives aimed at achieving more effective utilization of resources and reducing environmental impact throughout the entire life cycles of the products that it sells.

ITO EN Group Policy on PlasticsRecycling (circulation of resources)

• ∙ Aim to increase the ratio of recycled materials, including bio-derived materials, used as materials for producing PET bottles to 100% by 2030.

• ∙ We will promote the use of recycled materials for purposes other than PET bottle production.

• ∙ We will carry out activities to increase the recycling ratio in collaboration with governments, industry associations and business partners.

  Reduce (resource-saving)

• ∙ We will change container designs and improve produc-tion methods with a view to continuously cutting the weight of containers and packages and reducing their consumption.

Initiatives to create lightweight containers and packaging

ITO EN is seeking to reduce the weight of its PET plastic bottles-which account for a large portion of its containers and packaging- through the development of more environmentally friendly PET plastic bottles.

Recycling initiatives

Microwaveable Oi Ocha 345ml PET plastic bottle

Uses 100% recyclable PET plastic bottlesReplacement initiatives

Replacing & Reusing (replacing with environmentally friendly materials and reusable containers)

• ∙ We will increasingly use bio-derived materials and biodegradable materials.

• ∙ We will encourage food and drink businesses to switch to reusable containers.

  Clean (environmental conservation)

• ∙ We will encourage sorted collection of plastic waste for effective use of plastic resources, take part in cleanup and other social contribution activities and provide constant support for environmental conservation activities at different locations.

Oi Ocha (525ml)

Bottle weight: 19g

Approx. 30% lighter than the previous design

Cap weight: 2.6g

Approx. 13% lighter than the previous design

Label thickness: 20 micrometers

Approx. 40-50% thinner than the previous design

Tully's Coffee Japan initiatives

Kenko Mineral Mugicha (Healthy Mineral Barley Tea) (2L)

Bottle weight: 28.4g

Developed and released Japan's first* environmentally friendly teabag products

*The first single-chamber teabag (with gusset) in Japan

Response to climate change

CO2 emissions reduction targets

In September 2020, the ITO EN Group highlighted responding to climate change as one of its most important issues, and set the targets of reducing overall CO2 emissions for Scope 1 and Scope 2 by 26% and emission intensity for Scope 3 by 26%, in comparison with FY2018 levels, by FY2030. We also set the targets of reducing overall CO2 emissions for Scope 1 and Scope 2 by 50% and emission intensity for Scope 3 by 50%, in comparison with FY2018 levels, by FY2050.

So far, we have worked to reduce emissions through efforts such as introducing environmentally friendly bottle-filling systems at beverage production plants, modal shift, promotion of eco-friendly driving of sales vehicles, and the proactive introduction of heat-pump vending machines. ITO EN has adopted a fabless production method, in which it does not possess its own beverage production plants, and instead outsources production to external partners. We are therefore working with around 50 outsourced production plants in five regional blocks, engaging in more cooperative efforts than ever before with a view to achieving our emission reduction targets for FY2030.

Scope 1 and 2 total emission reduction targets

Scope 3 emission intensity reduction targets 35,583

(t-CO2)

(t-CO2/net sales (million yen))

38,626

2.26

35,583

Target 26%reductionTarget 50% reduction

FY2018

FY2019

FY2030

FY2050

FY2018

FY2019

FY2030

FY2050

Main initiatives to reduce CO2 emissions

Scope 3 Category 1 (purchased products and services) Category 4 (transportation and delivery (upstream))

Based on the ITO EN Group Policy on Plastics, ITO EN aims to ensure that 100% of materials used in its PET plasticbottles are recyclable materials*1 by 2030. By using recyclable materials, we can expect to see major benefits in terms of reducing CO2 emissions in comparison with virgin plastics.

Value chain emissions

In addition, the introduction of the NS System*2 room-temperature aseptic filling method developed in collaboration with Toyo Seikan Co., Ltd. in 2010 is achieving reductions in water usage and energy consumption during production. We have also successfully developed PET plastic bottles that are around 30% lighter than previous designs, contributing to more lightweight products overall and reductions in energy consumption during transportation.

Moving forward, we will continue working to achieve effective use of resources and reduce CO2 emissions throughout product life cycles through cooperation with suppliers.

*1 Includes bio-derived materials

*2 NS: "NS" stands for "Non-Sterilant", meaning that sterilants are not used. A room-temperature aseptic filling system that makes it possible to bottle products without the need for chemical sterilization of bottles.

Human Resources Management

Basic policy

Until now, the ITO EN Group has invested efforts into human resources development through initiatives such as the ITO EN Business College & ITO EN Graduate School, which offers learning opportunities for all employees, based on the concept of performance-based evaluation. We are also working to drive workstyle reforms and promote diversity, through initiatives such as enhancing our personnel schemes and promoting a healthy work-life balance, with the aim of creating environments in which all of our employees can work healthily and energetically.

Society is currently undergoing major changes, not least asa result of the impact of the COVID-19 pandemic, and social issues are becoming increasingly complex. It is precisely because we are facing such a period of transition that is important for us not only to reform our workstyles but also to review the methods that we have used until now and reform the awareness and mindset of each individual employee, with a fundamental focus on executing our management principle of "Always Putting the Customer First." Moving forward, we will work with a sense of speed and urgency to develop environments in which all employees can be filled with enthusiasm and positive determination to take an active role as members of Team ITO EN.

Approach to human resources management

∙ Reducing overtime work and improving the rate of paid-leave usage ∙ Promoting a healthy work-life balance

Number of graduates from ITO EN Business College & ITO EN Graduate School

749 persons

Actual Results in FY4/2020

(Cumulative total number of graduates: 14,844 persons)

Number of qualified ITO EN TEA TASTERs*

2,289 persons

*As of May 2020

Employee education and training costs

169 million yenRatio of female managers

Employment rate for people with disabilities*

2.6%

Percentage of employees returning to work after child care leave

2.33%

* As of June 1, 2020

95.2%

Human resources development

Through its unique self-improvement schemes, the ITO EN Business College and ITO EN Graduate School, ITO EN offers 14 courses (in FY2019) including sales, finance, marketing and global organization. In addition to enabling participants to acquire specialist knowledge over the course of a one-year program, these courses also act as requirements upon consideration for promotion.

ITO EN Business College self-improvement program

ITO EN TEA TASTER business skill tests are conducted once every year. Training tea experts enables us to conduct tea-related enlightenment activities both within and outside the company. The system provides opportunities for TEA TASTER qualification holders to develop as human resources and tea professionals through mutual encouragement and competitiveness, without being constrained by their daily work duties or posts within the company.

The Management Problem Solving Course is a selective training scheme that aims to develop the next generation of senior management candidates. Through both internal and external training, the course provides opportunities for participants to develop their aspirations and viewpoints as the next generation of corporate leaders by acquiring a wide-range of management-related knowledge and considering solutions to problems faced by the company, with a medium to long-term perspective.

In our overseas training scheme, human resources who have passed internal recruitment exams undergo a year of training at one of our overseas Group companies, covering topics such as market research, sales and accounting. In this way, we train human resources with a view to expanding our global business operations.

Enhancing personnel schemes and promoting health and productivity management

ITO EN provides comprehensive support to the various life stages of its employees and their families (e.g. childbirth, childcare and nursing care) in terms of welfare / benefit support, work support and salary support schemes. Specifically, we are working to enhance our childcare leavescheme, with the aim of encouraging male employees to take childcare leave; expanding the applicable scope of our shortened working hours and earlier finish / later start times, with the objective of facilitating a balance between work and illness, childcare and nursing care commitments; introducing and expanding a leave of absence scheme for accompanying family members (working overseas, etc.); and enhancing our support for employees undergoing fertility treatment. In 2020, we received "Kurumin" certification as a company that supports employees with childcare commitments, based on the Act on Advancement of Measures to Support Raising Next-Generation Children.

In order to maintain and improve the health of our employees, we continue to conduct regular health checks covering more than the minimal statutory requirements, and stress checks at all business locations both in Japan and overseas. Most recently, we have introduced gastroscopic examinations to enhance early stage detection and prevention of cancer. We also conduct health promotion programs utilizing Catechin Ryokucha, for employees at potential risk of requiring treatment, with the objective of improving their lifestyles.

In 2020, these efforts were recognized again with our certification under the large-scale enterprise category of the 2020 Certified Health and Productivity Management Organization Recognition Program run by the Ministry of Economy, Trade and Industry (METI) and the Nippon Kenko Kaigi (Japan Health Council. Goal: economic and medical private organizations, and local governments collaborating to realize concrete countermeasures in the workplace and in the community). This is the third successive year that ITO EN has been recognized under the scheme.

Initiatives to ensure respect for human rights

We consider respect for human rights to be a fundamental part of our management principle of "Always Putting the Customer First", and the foundation for all our business activities.

In April 2020, we formulated the ITO EN Group Human Rights Policy based on the UN's Guiding Principles on Business and Human Rights, in order to enhance our initiatives for ensuring respect for human rights based on international norms to accompany the diversification of our business activities and the expansion of our overseas presence. Currently, we are working to instill the policy within the Group, and pursuing efforts such as conducting harassment prevention training for all employees utilizing e-learning. Looking ahead, we will continue to build a framework for promoting respect for human rights and advance a program of due diligence with regard to human rights, such as by assessing human rights risks and taking measures to reduce such risks.

For details of the ITO EN Human Rights Policy, please refer to the following link.

https://www.itoen-global.com/management/csr_csv/human_rights.php

The Value Created by ITO EN TEA TASTERs

ITO EN's Tea Taster System is an in-house qualification system designed to train employees who are capable of making active contributions in all areas of the value circle, from tea-related research, through product planning and development, procurement, production and logistics, to sales and distribution. The qualification has a human resources development aspect of acquiring wide-ranging tea-related knowledge, and also plays an important role in communicating the appeal of tea to customers, building connections with customers, and creating places to propose tea drinking opportunities.

The system also contributes to spreading tea culture through ITO EN's business activities and strengthening contact with local communities, from the perspective of "Community and Society", which is one of our key ESG themes.

About the Tea Taster System

ITO EN's Tea Taster System is an in-house business skill test system that has been in operation since 1994, with the objectives of instilling employees of "tea-company ITO EN" with a high level of tea-related knowledge, and conducting tea-related enlightenment activities both inside and outside the company. Candidates wishing to obtain the qualification participate in a skill test held once annually, with successful candidates being determined by a strict screening process. The test is conducted based on academic content, tea tasting and oral recitation, and requires a wide range of skills and knowledge on topics from tea culture to how to make great-tasting tea. The system was the first in-house business skill test to be certi-fied by the Ministry of Health, Labour and Welfare (MHLW) after the revision of the certification system* in 2016.

As of May 2020, there are a total of 2,289 TEA TASTER qualification holders, conducting tea culture enlightenment activities at various locations throughout Japan. As a repre-sentative example of their efforts, in fiscal 2019, TEA TASTERs held a total of 1,166 events, including Dai-Cha-Kai (demonstration sales and tasting events of green tea) and seminars on how to prepare delicious Japanese green tea.

*Ministry of Health, Labour and Welfare (MHLW) Business Skill Test certification system: a system whereby the Minister of Health, Labour and Welfare certifies in-house test schemes-established by individual enterprises or organizations to test the skills of their workers-which fulfill certain criteria, and are recognized as deserving of encouragement for promoting the improvement of skills.

Test certification system logo

Initiatives status in fiscal 2019

Qualified TEA TASTERs take active roles as tea professionals

TEA TASTER qualifications range from Grade 3 to Grade 1. Grade 1 qualification holders in particular not only possess wide-ranging, high-level tea-related knowledge and skills, but have also acquired an understanding of Japanese traditional culture such as the tea ceremony, manners and etiquette, and work to widely communicate information regarding the appeal of tea and the strengths of ITO EN, both inside and outside the company, as tea professionals.

TEA TASTER qualification holders also engage in training with the objective of improving knowledge and skills required by the qualification, and conduct training at each grade level in order to develop the next generation of TEA TASTERs.

Grade levels and numbers of qualification holders

-

-

-

-

Total

Internal enlightenment activities for each grade

363

1,909

2,289

(As of May 2020)

Training of Grade 3 qualification holders Study meetings within ITO EN departments / branches

Tea culture enlightenment activities

As representatives of tea company ITO EN, TEA TASTER qualification holders act as lecturers spreading and enlightening people of all ages both in Japan and overseas about tea culture, holding various kinds of events to share knowledge on the history and health benefits of tea, and to explain and demonstrate how to make delicious tea.

Until now, ITO EN TEA TASTERs have held events at various locations including sightseeing spots, educational institutions, welfare facilities, in-stores, and in disaster-stricken areas. Even under the conditions of the COVID-19 pandemic, where face-to-face communication with customers is restricted, TEA TASTERs continue to engage in various activities to communicate the appeal of tea and ways of enjoying it, using online approaches and other inventive means.

Responding to changes in customer lifestyles

TEA TASTER qualification holders are responding to changes in customer lifestyles-such as customers spending more time at home-such as by communicating ways of enjoying tea at home via ITO EN's official twitter account and holding online tea seminars, and engaging in other activi-ties that enable customers to feel more closely connected and familiar with tea.

The #IeTimeOEN project, in which TEA TASTERs communicate ways to enjoy tea via ITO EN's official Twitter account.

Collaborating with educational institutions and students ITO EN communicates tea culture through collaborations with educational institutions and other organizations that introduce the appeal of Japanese culture both in Japan and abroad. For example, Tsuda University runs projects that introduce various aspects of Japanese culture to many people, including visiting foreign nationals. ITO EN collaborates with students in the Japanese Tea Culture Working Group- who have English language and general communication abili-ties-to conduct activities that communicate the various attractions of Japanese tea.

Online tea parties and other events are conducted with the aim of increasing the level of students' tea-related knowledge and skills in preparing tea for consumption, and having them become influencers for spreading Japanese tea around the world in the future

Benefits of the Tea Taster System

The TEA TASTER System enables employees to improve the level of their skills and gain knowledge and experience which are then utilized in their daily work duties, creating value in the various areas of the value circle, and resulting in a stronger and more robust value circle overall. Tea culture enlightenment activities also provide opportunities for communication, to hear the voices of customers first hand and to create connec-tions with them. Creating this kind of community enables us to ascertain customer needs in order to propose more enriched dietary lifestyles, and is also utilized in our development of better products, leading to sustainable growth for the company.

Benefits of the Tea Taster System for the value circle

Financial management

Basic policy

In July 2002, ITO EN discontinued the system for providing retirement allowances and bonuses to its officers. In April 2004, we introduced stock options as a form of performance-linked remuneration. We chose six management indices as our assessment indices for this process: growth (net sales), profitability (operating income and EPS), efficiency (ROE), cash earning capacity (operating cash flow) and return to shareholders (total return ratio). Among these, we regard ROE as a particularly important indicator.

In addition to these, in order to drive management with an awareness of ESG investment, since fiscal 2018 we have also been considering the results of ESG assessments conducted by external assessment bodies.

Management with an emphasis on cost of capital

In our medium- to long-term management plan, we have set the target of an ROE of at least 10%. Factors for increasing ROE are increasing profitability, increasing asset efficiency and utilizing financial leverage, but ITO EN places a particular emphasis on profitability and asset efficiency. Since both profitability and asset efficiency worsened due to the impact of the COVID-19 pandemic, ROE for fiscal 2019 stood at 5.2% (down 4.7 points year on year).

ROE Transition (Return on Equity)

FY4/2018

2.9%

1.67 times 19/4

2.07 times

1.63 times 20/4

2.00 times

* ROE = 1 Ratio of net income to net sales × 2 Asset turnover ratio ×

3 Financial leverage

1 Improving profitability

In order to improve ROE in the future, we believe that the key issues in profitability are strengthening our domestic revenue base and achieving growth of overseas businesses. In terms of strengthening our domestic revenue base, we are working to expand our market share and to reform our cost structure through selection of and focus on mainstay brands. In particular, we are working to improve logistics efficiency and reduce costs by seeking to optimize and ensure thorough implementation of our five-block nationwide production and logistics network. In June 2020, we also established the Business Creation Department, and are now working to create new domestic business operations in the areas of food and environmental products, with the aim of achieving new medium- to long-term growth.

In overseas business, against the backdrop of growing health-oriented attitudes, we will continue to put our efforts into the expansion of the North American and Chinese markets as key markets, based around the core pillar of global brands such as Oi Ocha and MATCHA GREEN TEA. In fiscal 2019, we declared goodwill impairments for the full balance of 4,904 million yen in unamortized goodwill for Distant Lands Trading Co., our coffee bean production and sales company in the United States. Business conditions worsened as a result of progressing oligopoly of the market due to the reorganization of the coffee industry, and the resulting loss of major customers was a factor in the fall in earning power. Moving forward, we will endeavor to recover our earning power by shifting away from a sales strategy centered primarily on commercial and PB products, and investing our energies into strengthening our own brands and developing new customers.

FY4/2020

1.6%

2 Increasing asset efficiency

We will prioritize improvement of our operating capital, including the optimization of inventory assets, and investment in growth areas. With regard to capital investment, in addition to investing in the acquisition of production facilities and opening of new Tully's Coffee stores, we are also proceeding gradually with a changeover from leasing of vending machines and other sales promotion fixtures to outright purchasing, given the current interest rate conditions. We are also periodically reviewing and revising our medium- to long-term capital investment plans based on the state of profitability of each business.

As a result of continuous efforts until now, in fiscal 2019, non-consolidated operating income for ITO EN, LTD. increased by 4.9% year on year, and the operating income ratio stood at 4.4% (an increase of 0.4 points year on year). Moving forward, we will work to further improve productivity and asset efficiency, with a target operating income ratio of at least 5%, and work to achieve an ROE of 10%.

Consolidated cash flow transition

25,322

26,128

24,719 million yen

r11,359

FY4/2018

Operating cash flow

r10,635

FY4/2019

Investment cash flow

FY4/2020

Free cash flow

Change in amount of capital investment and depreciation

(million yen)

FY4/2018

3 Ensuring financial stability

FY4/2019

FY4/2020

10,006

6,735

9,990

7,022

6,675

6,081

(6,514)

(4,679)

We have secured sufficient liquidity of cash on hand to respond to the rapid changes taking place in financial markets triggered by the COVID-19 pandemic, and to ensure financial safety in times of crisis. We have sought to diversify our fundraising methods, such as by issuing corporate bonds and borrowingfrom financial institutions, and established a commitment line as a response to unpredictable situations. Looking ahead, we will procure capital through interest-bearing liabilities as needed, while maintaining financial stability.

Our basic policy is to ensure stable and continuous returns to shareholders, with a target total return ratio of at least 40%. With regard to dividends, we will continue to make stable and continuous dividend payouts, with the basic policy of not reducing dividends. Regarding the acquisition of treasury stock, as a shareholder return strategy that contributes to improving capital efficiency, we will expeditiously acquire treasury stock when we judge it to be necessary, and ensure a consolidated total return ratio of at least 40%.

Total return ratio and EPS

92.1%

FY4/2018

EPS (Common stock)

FY4/2019

Main Financial Highlights (ITO EN and Consolidated Group Companies)

Key Financial Indicators

(over the past 5 years) (consolidated)

For more details regarding finances, please refer to the following link.

https://www.itoen-global.com/ir/

(Units)FY4/2016

P/L

Net sales

Year-on-year comparison Details of main sales

ITO EN, LTD.

Total of overseas businesses

Tully's Coffee Japan Co., Ltd.

Chichiyasu Company

Cost rate

Selling, general and administrative expenses

Sales ratio Operating income

Profit ratio Details of main profits

ITO EN, LTD.

Total of overseas businesses

Tully's Coffee Japan Co., Ltd.

Chichiyasu Company Ordinary income

Profit ratio Extraordinary income Extraordinary losses

Net income attributable to owners of parent

Profit ratio

(million yen)

FY4/2017

(%)

465,579 8.1

(million yen) (million yen) (million yen) (million yen)

365,276

36,180

27,751

13,890

(%)

475,866 2.2

371,831

34,863

30,268

14,621

53.0

(million yen)

52.5

201,574

(%) (million yen)

(%)

43.3 17,243 3.7

(million yen) (million yen) (million yen) (million yen) (million yen)

11,934

1,856

2,879

253

15,074

(%) (million yen) (million yen)

3.2

205

353

(million yen)

204,395

43.0 21,774 4.6

15,646

2,225

3,130

300

21,524

4.5

53

854

8,615

(%)

13,693

1.9

FY4/2018

494,793 4.0

383,212

40,362

32,589

14,398

52.7

211,939

42.8 22,043 4.5

15,394

2,619

3,250

305

21,441

4.3

75

526

12,553

2.9

FY4/2019

504,153 1.9

394,495

38,168

34,568

14,409

52.3

217,555

43.2 22,819 4.5

15,851

2,738

3,504

269

23,211

4.6

726

1,451

14,462

2.5

FY4/2020

483,360

(4.1)

377,787

36,282

32,811

14,251

51.8

212,814

44.0 19,940 4.1

16,626

1,617

1,725

410

19,432

4.0

645

5,709

7,793

2.9

1.6

Main Non-Financial Highlights

Ratio of female managers

Rate of taking annual paid leave

2.6

2.6%

52.0%FY4/2016 FY4/2017 FY4/2018 FY4/2019 FY4/2020

FY4/2016 FY4/2017 FY4/2018 FY4/2019 FY4/2020

Number of employees taking child care leave and percent-age of employees returning to work after child care leave

60

43

34

27

FY4/2016 FY4/2017 FY4/2018 FY4/2019 FY4/2020

Number of employees taking child care leave

Percentage of employees returning to work after child care leave

Employment rate of people with disabilitiesInvesting in human resources

Percentage CO2 emissions through the ITO EN value chain (results for fiscal 2019)

(FY4/2020)

CO2 emissions amount, actual results

Year-on-year change

*Data boundary of emissions for Scope 1 and Scope 2: ITO EN, LTD. (company-owned domestic plants and research centers, buildings and business locations).

Data boundary of emissions for Scope 3: ITO EN, LTD. on a non-consolidated basis

*Calculation methods:

Scope 1: Calculated by multiplying the amounts of each fuel consumed by the CO2 emission coefficient stipulated under the Act on Promotion of Global Warming Countermeasures. Scope 2: Calculated by multiplying the amounts of electric power purchased by the basic emission coefficient for each power company operator

*Scope 3 emissions: Other indirect emissions aside from those covered by Scopes 1 and 2

*Calculation methods for each category:

Category 1: Calculated as the sum of emissions at the production stage for raw materials and emissions accompanying the use of energy by outsourced beverage production part-ners. Calculated by multiplying the weights or purchase amounts of raw materials by emission intensity units published by the Ministry of the Environment (MOE) in the "Database on Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain" (Ver. 3.0) (hereinafter "the database"). Emissions accompanying energy use at beverage production outsourcing partners are calculated using the same methods as for Scope 1 and Scope 2, covering energy used by outsourcing partners for production of ITO EN products.

Category 2: Calculated by multiplying the purchase amount for property, plant and equipment by emission intensity unit values in the database.

Category 3: Calculated by multiplying the purchase amounts for fuels and electric power by emission intensity unit values in the database for each energy type.

Category 4: Calculated based on the volume of products transported with ITO EN as the consigner, according to the method of calculation published by the Ministry of Economy, Trade and Industry (METI) in its "Joint guidelines on methods for calculating carbon dioxide emissions in the logistics sector" (Ver. 3.1).

Category 5: Calculated by multiplying emissions for each type of waste by the emission intensity unit values in the database.

Category 6: Calculated by multiplying numbers of employees by the emission intensity unit values in the database.

Category 7: Calculated by multiplying numbers of employees by the number of working days, and multiplying the result by the emission intensity unit values in the database for the city districts in which their places of work are located.

Category 12: Calculated by multiplying the weight of waste after deducting the amount of waste collected by the company itself from the weight of materials used in products sold

(report values under the Act on the Promotion of Sorted Collection and Recycling of Containers and Packaging) by the emission intensity unit values in the database.

Category 13: Calculated by multiplying power consumption for vending machines and display cases by the emission coefficient (substitute value)

*For beverage production outsourcing partners in Category 1, emissions for Scope 1 and Scope 2 are tabulated for outsourcing partners through annual energy consumption surveys *Emission intensity is expressed as emissions amount per million yen of net sales

*CO2 emissions are assured by KPMG AZSA Sustainability Co., Ltd. The figures covered by the third party assurance are indicated by amark

*For FY2018 and FY2019, CO2 emissions are tabulated for the period May 1 through April 30. For Category 12 of Scope 3, however, values are calculated from actual emission results in the previous year reported for calculation of fees paid by ITO EN for outsourced recycling into new products, in accordance with the Act on the Promotion of Sorted Collection and Recycling of Containers and Packaging

*N/A: Not Applicable

Corporate governance

Corporate Governance Policy

Under the management principle of "Always Putting the Customer First," ITO EN provides in the ITO EN Group Founding Charter that "the ITO EN Group has developed the basics for management to continually grow and develop as an enterprise and enhance corporate value: cooperate with its stakeholders, including the government, local communities, consumers, shareholders, retailers, suppliers, and financial institutions, and fulfill its corporate social responsibility (CSR)." The management principle above is the basic concept of ITO EN's corporate ethics and the foundation that supports our corporate governance. Based on this principle, every officer and employee of ITO EN is active in promoting concerted efforts to achieve a sustainable society in line with the interests of all stakeholders and strives to repay their trust.

In addition, to conduct appropriate corporate governance, a Board of Corporate Auditors system has been adopted and our corporate auditors check and audit business conditions, the decision-making process, and other matters regarding the respective representative directors, the directors in charge, and the employees of ITO EN Group companies. Internal and outside corporate auditors attend every meeting of the Board of Directors, offering fair and impartial advice and audit opinions on overall corporate affairs and each item of business, and audit business execution by the directors in accordance with the audit policy stipulated by the Board of Corporate Auditors.

ITO EN has established and disclosed the ITO EN Corporate Governance Guidelines to convey its basic approach to and policy on corporate governance. The major items are as follows:

• • Management principle and the basic approach to corporate governance

• • Corporate governance system

• • Response for protecting the interests of stakeholders

Board of Directors

Meetings of the Board of Directors are generally held monthly to discuss and determine the basic policy and strategy for management and other important matters.

The Board of Directors consists of 14 directors, including four outside directors, who make use of their expert knowledge in supervising and checking the execution of duties.

Board of Corporate Auditors

Meetings of the Board of Corporate Auditors are generally held monthly to discuss and determine the important matters relating to audits and share information on the status of audits conducted, the recognition of issues, etc. and exchange opinions, among other tasks.

The Board of Corporate Auditors consists of one standing corporate auditor and three part-time corporate auditors (all of whom are outside corporate auditors). The corporate auditors mainly conduct audits of the legality of the directors' business execution by attending important meetings such as those of the Board of Directors, perusing important documents, conducting visiting audits of departments executing business and expressing opinions as necessary.

Contribution by Independent Officers to Board of Directors and Board of Corporate Auditors

ITO EN has increased the number of its outside officers to strengthen the function of management supervision. The main requirement for the appointment of outside directors and outside corporate auditors is for them to fulfill their auditing and supervisory functions from an objective and independent perspective, thereby contributing to the achievement of sound corporate governance.

Outside Officers

Expressing opinions based on his expert knowledge of legal affairs developed through many years of legal studies as a university professor, from an objective and technical perspective as an outside director

Expressing opinions based on his broad-ranging insight and his diverse experiences as both a police officer and a business manager, from a practical perspective as an outside director

Expressing opinions based on his deep insight concern-ing tax affairs developed through his experience as a licensed tax accountant from an independent and objective perspective as an outside director

Objectively supervising management leveraging his experience and wide-ranging insights from deep participation in management support for various enterprises, during his many years at the Tokyo Chamber of Commerce and Industry

Expressing opinions based on his deep insight concern-ing corporate legal affairs developed through his experience as an attorney from an independent and objective perspective as an outside corporate auditorExpressing opinions based on his deep insight concern-ing accounting developed through his experience as an accountant from an independent and objective perspec-tive as an outside corporate auditor

Engaging in the supervision of management as an outside auditor, based on his extensive experience and wide-ranging knowledge and insights with regard to finance and financial issues

State of attendance by outside directors at Board of Directors and Board of Corporate Auditors meetings (fiscal 2019)

Category

Name

Board of Corporate

Yutaka Tanaka retired as Auditor in July 2019, and was appointed as Director Takashi Miyajima was appointed as Auditor in July 2019

Evaluation of the effectiveness of the Board of Directors

ITO EN has been analyzing and evaluating the effectiveness of its Board of Directors annually since fiscal 2015, and working to improve the Board's functionality. Our analysis and evaluation of the effectiveness of the Board of Directors for fiscal 2019 was as follows.

Fiscal 2019 A questionnaire and interviews were conducted for the purpose of improving the functionality of the Board of Directors. The results were discussed at a board meeting.

1 Surveys conducted

• (1) Survey period: March-April 2020

• (2) Subjects: All directors and corporate auditors

• (3) Survey procedure:

  • (i) Self-assessment by questionnaire

  • (ii) Individual interviews based on the results of the questionnaire

  • (iii) Tabulation and analysis of questionnaire and interview results

  • (iv) Validation of collected results at a Board of Directors meeting

2 Evaluated contents

• (1) Structure and membership of the Board of Directors

• (2) Roles and responsibilities of the Board of Directors

• (3) State of operation of the Board of Directors

• (4) Decision-making and methods of deliberation

• (5) Relationship with shareholders, etc.

3 Results of evaluation

• • It was verified that the Board of Directors is functioning satisfactorily in making management judgments and supervising management, in terms of its size, structure, qualifications and operational methods.

• • With regard to discussions, it was found that the Board of Directors is engaging in free, unrestricted, and constructive discussions with the full participation of both inside and outside directors, and contributing to corporate management.

• • It was found that the Board is making steady progress with regard to issues identified for the previous fiscal year, such as by reviewing standards for matters for deliberation.

• • In terms of new issues, it was pointed out that the Board should share more information regarding medium- to long-term manage-ment plan, including overseas companies, share information regarding the state of execution of business in a timely manner, and engage in deeper discussions.

  4 Future efforts

As a result of discussing opinions and recommendations from each of its directors and corporate auditors, the Board of Directors recog-nizes the above findings as issues to be addressed moving forward, and will endeavor to maintain and improve its effectiveness.

(1) Policy for determination of remuneration amount, for corporate officers

Remuneration for directors at ITO EN consists of fixed remuneration and performance-linked remuneration, while remuneration for corporate auditors consists solely of fixed remuneration. Bonuses and retirement benefits for corporate officers were abolished in July 2002.

Fixed remuneration is determined according to position, within the scope of remuneration agreed by resolution of the General Meeting of Shareholders.

With regard to performance-linked remuneration, ITO EN has introduced a performance-linked remuneration stock options scheme. Amounts of stock options granted to each director are determined by strict evaluations of individual performance.

(2) Amount of remuneration for corporate officers

Total amount of remuneration, total amount by remuneration type, and number of recipient officers by corporate officer category are as follows.

Total amount of remuneration by corporate officer category, total amount of remuneration, etc. by type and number of recipient officers by corporate officer category (fiscal 2019)

Officer category

Total amount of remuneration, etc., by type

Total amount of remunera-tion, etc. (million yen)

(million yen)Fixed remunerationPerformance-linked remunerationRetirement benefits

643

557

86

13

13

-

62

62

-

(3) Nomination & Remuneration Committee

Number of recipient officers (people)

-

9

-

2

-

6

ITO EN has established a Nomination & Remuneration Committee that determines matters such as the nomination of and remuneration for directors and other officers. This enables us to further enhance the independence, objectiveness and accountability of the Board of Directors through the appropriate involvement and advice of outside directors. Membership of the Nomination & Remuneration Committee consists of three or more directors, two or more of whom must be outside directors.

ITO EN seeks to develop top-level management personnel with an emphasis on refining multifaceted management senses, such as by selecting future top-level managers from amongst senior management personnel and allowing them to gain experience in management at Group companies from an early stage.

ITO EN is focusing its energies into the development of human resources who will play active roles in management for the next generation, and has established a "Management Problem Solving Course" to enable future leaders to acquire the skills needed in order to recognize and solve medium to long-term management problems from a company/group-wide perspective. The scheme was launched in 2009, and courses are held throughout the year, with around 15 participants chosen to participate each year. In the final session of the course, participants are evaluated by senior management personnel, as a means of nurturing them into potential senior management candidates for the next generation.

ITO EN has introduced an executive officer scheme, through which it is endeavoring to achieve swifter decision making and enhance supervisory functionality with regard to management by the Board of Directors, and to enhance the system for implemen-tation of management plans by clarifying the responsibilities and authority of officers with regard to execution of duties. Starting from August 2018, we are seeking to enhance our organizational structure for the execution of duties by changing the contractual relationship between the company and its executive officers (from an employment-type contract to a delegation-type con-tract), and by further clarifying the responsibilities and authority of officers with regard to execution of duties.

Compliance

ITO EN established the Compliance Committee and the Compliance Office on May 1, 2004 and stipulated "legal compliance" as our basic management policy, and declared our intention to aim for "the ITO EN Group: a model of corporate compliance."

The ITO EN Group Guidelines for Code of Behavior are distributed to all officers and employees of the ITO EN Group, to ensure compliance with laws and corporate ethics, and respond sincerely to social demands. They encompass a series of initiativesfor compliance including the Code of Conduct based on the principles of the ITO EN Group Founding Charter and the Code of Behavior specifying the detailed provisions.

We are striving to enhance Group compliance, including the prevention of harassment, bribery and other forms of corruption, for instance by establishing a whistle-blowing system and provid-ing comprehensive compliance education. We take strict measures against compliance violations.

Fair operating practices

The ITO EN Group works to thoroughly ensure sound procurement and transactions, and to ensure fair transactions with manufacturing subcontractors and fair competition.

Supply chain management

We have established the ITO EN Group Procurement Policy for procurement paying consideration to social and environmental aspects. Through this policy, we are strengthening our supply chain management in cooperation with various stakeholders.

Protection of intellectual property

The ITO EN Group respects the intellectual property rights of other companies, and makes active use of its own rights.

To see the ITO EN Corporate Governance Guidelines, please visit the following site.

https://www.itoen.co.jp/files/user/pdf/csr/governance/ corporate_governance_guideline2018.pdf

For details about corporate government, please see our Corporate Governance Report.

https://www.itoen.co.jp/files/user/pdf/company/ report202012.pdf

To see the ITO EN Group "Guidelines for Code of Behavior" (Code of Conduct and the ITO EN Group's Compliance System, etc.), please visit the following site.

https://www.itoen.co.jp/csr/governance/

Risk management

Basic policy

ITO EN has approached risk management by establishing a department in charge of risks, formulating regulations and guide-lines, and building a cross-organizational risk management system to deal with risks accurately and appropriately.

The Group is managing risks by developing a system for dealing accurately with risks from the standpoints of (1) compli-ance, (2) information security, (3) quality and the environment, (4) property preservation and (5) disaster and accident. ITO EN has also put in place the Compliance Committee, the Safety and Health Committee and the Disaster Prevention Committee, etc.

Additionally, as risk management strategy based on business continuity planning (BCP), ITO EN also strengthens its ability to achieve business continuity by distributing BCP manuals to each department to instill greater awareness of BCP.

Development of an internal control system

Based on its "Basic Policy on Internal Control Systems," the ITO EN Group has built an internal control system for the purpose of increasing the transparency of its business operations, further increasing their effectiveness and efficiency, increasing the reli-ability of its financial reporting, promoting compliance with laws and regulations, and protecting its assets.

Thorough quality control

As a manufacturer of food and beverage products, delivering safe products and peace of mind to consumers is our top priority mission.

ITO EN Group has established policies on quality management, and is working in collaboration with stakeholders (including outsourced beverage producers) to establish a supply framework that pays due care and consideration to both environmental and social aspects. Our quality management policy dictates rules for the provision of safe and reliable products, compliance with applicable laws and ordinances, and for ensuring safety of products utilizing international standards. On the quality management front, we have built a quality management system certified under the ISO9001 international standard. At our Shizuoka Sagara Factory, we have obtained certification for, and are operating, an FSSC22000 food product safety management system.

Our Quality Control Department conducts inspections for residual agrichemicals at the raw material stage, while flavor tests, instrumental analyses and inspections for microbes, etc., at the product stage are conducted by both our Quality Control Department and outsourced production plants.

Products are produced at plants that meet our quality management standards (beverage manufacture and tea leaf production guidelines). We ensure the production of safe products that offer peace of mind by sharing information on a day-to-day basis and holding quality assurance meetings with plant representatives (joint meetings with outsourcing partners and other stakeholders).

Relationship between risk management and ESG

With growing demands from stakeholders for appropriate response to ESG issues, many problems will arise if we are unable to respond appropriately. To deal with these issues promptly, we undertake management in accordance with the actual conditions by providing a variety of regular training.

In response to the global spread of the COVID-19 pandemic, ITO EN has established a virus response headquarters, headed by the president himself. The headquarters works to prevent the spread of infection such as by gathering information (including information from Group companies), providing sanitary supplies, and making changes to work arrangements, and works to tackle infections at its business locations, with the prerequisite of ensuring business continuity and early-stage re-openings across the board.

Stakeholder Engagement

(Building relationships with customers)

Investor dialogues

Although the Finance and Accounting Department is in charge of communications with ITO EN's investors, responses are consid-ered in consultation with the President and directors with specific responsibilities, among other officers, in order to take the appro-priate actions. Regular interdepartmental meetings are also held between the Public Relations Department and the Finance and Accounting Department to exchange opinions based on each department's professional perspectives, and to engage in collab-orative action for the disclosure and explanation of financial results and other matters, in order to improve and enhance con-tent for dialogues with investors.

We make efforts to ensure timely and appropriate disclosure of information to shareholders through active communication via financial results briefings and the ITO EN website, so that they may deepen their understanding of our management strategies and business environment. In addition, at the meeting of the Board of Directors held after the announcement of the settlement of accounts, the opinions of shareholders and analysts are shared in order to be actively utilized for reviewing management strate-gies, and other purposes.

We also conduct surveys of substantial shareholders as neces-sary to gain an understanding of the shareholder structure.

Promotion of IR activities

ITO EN has established a Finance and Investor Relations Section under its Finance and Accounting Department. The section is controlled by the Administration Headquarters, with top-level management personnel taking a leading role in order to promote proactive and agile IR activities. As for information communica-tion and disclosure, from the perspective of fairness, the consoli-dated financial results and non-consolidated financial results and materials for the financial results briefing (IR reference) are posted on the website promptly after the announcement of the financial results for the full fiscal year and the six-month period so that individual investors, analysts and institutional investors who are unable to attend the financial results briefing can access these reference materials.

Additionally, ITO EN Integrated Reports, performance reports, quarterly sales status reports, news releases, securities reports, convocation notices for the General Meetings of Shareholders and other disclosure information are published to provide a variety of tools that investors can use to deepen their understanding. Consideration is also given to foreign investors by providing English versions of the financial results, the materi-als for the financial results briefing (IR reference), part of news releases and ITO EN Integrated Reports.

Stakeholder dialogues

ITO EN places an emphasis on communication with stakeholders and reflects a wide range of opinions in its management, received through stakeholder dialogues with investors and experts, dialogues with consumers and representatives from consumer organizations, and questionnaire surveys of consumers.

Third-party assurance

In order to improve the reliability of data disclosed, a portion of environmental data in the ITO EN Integrated Report 2020 is third-party assured by KPMG AZSA Sustainability Co., Ltd.

The indicators covered by this assurance are marked with.

List of Officers (As of November 1, 2020)

Directors

Chairman of the Board

Hachiro Honjo

Aug. 1964 Established Japan Family

Service Co., Ltd.

Director

Aug. 1966 Established Frontier Tea

Corporation (The company

name was changed to ITO EN,

LTD. in May 1969) Director

May 1978 Executive Vice President Apr. 1987 Executive Vice President and

Representative Director

May 1988 President

May 2009 Chairman of the Board

(current post)

Hachiro Honjo exhibits strong leadership, drawing on his extensive experience and proven track record gained through his many years of managing the ITO EN Group as its founder.

President and CEO

Daisuke Honjo

Apr. 1987 Joined ITO EN Jul. 1990 Director

May 1997 Managing Director

May 2000 Executive Managing Director Jul. 2002 Executive Vice President and

Representative Director

May 2009 President

May 2019 President and CEO

(current post)

Since his appointment as President, Daisuke Honjo has continued to direct the manage-ment of ITO EN by making effective use of his extensive experience and insight.

Vice President, Director and Executive Officer

Minoru Watanabe

Jul. 1976 Joined ITO EN Jul. 1996 Director

May 2001 Managing Director

May 2003 Executive Managing Director May 2008 Executive Vice President May 2019 Vice President, Director and

Executive Officer (current post)

Minoru Watanabe manages mainly the Administration Headquarters and possesses extensive experience and knowledge in the areas of finance, human resources & general affairs, and overseas operations.

Director and Senior Managing Executive Officer

Mitsuo Yashiro

Apr. 1978 Joined ITO EN Jul. 1992 Director

May 2001 Managing Director

May 2010 Executive Managing Director May 2019 Director and Senior Managing

Executive Officer (current post)

Mitsuo Yashiro manages mainly the Marketing Headquarters, and possesses extensive experience and knowledge in the areas of product development and R&D.

Director

Yosuke Jay Oceanbright Honjo

Mar. 1992 Joined ITO EN

Jul. 2002 Director (current post)

Yosuke Jay Oceanbright Honjo manages all operations in the United States as CEO. He has made strong efforts to enable the Group to further promote its global business management, from the time of its initial expansion into the mainland of the United States, from the beginning at New York.

Outside Director

Yuichi Usui

Oct. 1976 Joined Metropolitan Police Department Feb. 1994 Deputy Chief of the 7th Antiriot Squad,

Metropolitan Police Department

Oct. 2005 General Manager of the 2nd Personnel

Section, Metropolitan Police Department

Feb. 2010 General Manager of Regional Department,

Metropolitan Police Department

Apr. 2011 Joined YAMATO TRANSPORT CO., LTD. as

General Manager of Human Resources and

General Affairs Department

Apr. 2012

Executive Officer and General Manager of CSR Promotion Department, YAMATO TRANSPORT CO., LTD.

Apr. 2014

Managing Executive Officer of YAMATOTRANSPORT CO., LTD.

Apr. 2015 Director and Managing Executive Officer of

YAMATO TRANSPORT CO., LTD.

Apr. 2018

Jun. Jul.

Member of the Board, YAMATO TRANSPORT CO., LTD.

• 2018 Representative of Usui Firm (current post)

• 2018 Outside Director of ITO EN (current post)Yuichi Usui possesses extensive experience and broad-ranging insights gained through his many years as a police officer. He has also had direct involvement in corporate management at a logistics company, and has accumulated a diverse range of knowledge and experience.

Director and Senior Managing Executive Officer

Atsushi Hirata

May 1988 Joined ITO EN

May 2016 General Director of Administration

Headquarters (current post)

Jul. 2020 Director and Senior Managing Executive

Officer (current post)

Atsushi Hirata manages mainly the Administration Headquarters and possesses extensive experience and knowledge in the areas of finance, accounting, human resources and general affairs.

Outside Director

Yutaka Tanaka

Apr. 1966

Jul. Jul.

Vice President, Representative Director and Executive Officer

Shusuke Honjo

Apr. 1994 Joined ITO EN Jul. 2003 Director

May 2005 Managing Director

May 2008 Executive Managing Director May 2010 Executive Vice President Aug. 2014 Executive Vice President and

Representative Director

May 2019 Vice President, Representative

Director and Executive Officer (current post)

Shusuke Honjo has continued to lead the Sales Headquarters for many years and possesses extensive experience and insights into all aspects of corporate management.

Director and Senior Managing Executive Officer

Yoshihisa Nakano

Mar. 1989 Joined ITO EN Jul. 2010 Director

May 2014 Managing Director

May 2019 Director and Senior Managing

Executive Officer (current post)

Yoshihisa Nakano has so far managed the Sales and Human Resources & General Affairs Headquarters. With respect to the Sales Headquarters, he possesses knowledge and experience in various sales formats, including community sales, mass retail and convenience stores. He currently manages the Production Headquarters.

Outside Director

Morikazu Taguchi

Apr. 1975 Full-Time Lecturer of Faculty of Law, Aichi

Gakuin University

Jan.

Morikazu Taguchi possesses expert knowledge and various experiences accumulated over many years in legal studies

Outside Director

Hideo Takano

Entered the Sapporo Regional Taxation Bureau

• 2003 District Director, Tokyo Ueno Tax Office

• 2006 Director-General, Takamatsu National Tax Tribunal

  Jul.

• 2007 Attached to the Commissioner's Secretariat, National Tax Agency

Aug. 2007 Head of Tanaka Tax Certified Accountant

Office (current post)

Jul. 2013 Outside Audit & Supervisory Board Member of ITO EN

Jul. 2019 Outside Director of ITO EN (current post)

Yutaka Tanaka possesses expert insights, broad-ranging knowledge and experiences as a tax attorney

Vice Chairman

Shunji Hashimoto

Jan. 1970 Joined ITO EN Jul. 1990 Director

May 1994 Managing Director

May 1997 Executive Managing Director May 2000 Executive Vice President May 2019 Vice Chairman (current post)

Shunji Hashimoto manages mainly the Production and Logistics Headquarters, and possesses extensive experience and knowl-edge in the areas of purchasing, R&D, quality control, and logistics.

Director and Senior Managing Executive Officer

Shigeru Kamiya

Mar. 1982 Joined ITO EN Jul. 2014 Director

May 2016 Managing Director

May 2019 Director and Senior Managing

Executive Officer (current post)

Shigeru Kamiya manages mainly the Sales Headquarters. So far he has driven sales proactively through channels such as convenience stores and mass retailers, and is making strong efforts to strengthen relation-ships with these clients.

• 1984 Professor of Faculty of Law, Aichi Gakuin University

  Apr. Apr.

• 1995 Professor of Faculty of Law, Waseda University

• 2004 Professor of Waseda Graduate Law School, Waseda University

  Jul. Apr.

• 2013 Outside Director of ITO EN (current post)

• 2014 Professor Emeritus of Waseda University (current post)

Apr. 1977

Joined Tokyo Chamber of Commerce and Industry

Apr. 2006 General Unification Manager, General Affairs

Department, Tokyo Chamber of Commerce and Industry

Apr. 2009

Director and Administration Secretary-General, Tokyo Chamber of Commerce and Industry

Apr. 2012

Executive Director, Tokyo Chamber of Commerce and Industry

Nov. 2015 Director and Chairman, General Incorporated

Foundation and Association for the Preservation of Japanese Folk Crafts and Technology (current post)

Jun. 2016

Standing Councilor, Tokyo Chamber of Commerce and Industry

Jul. 2020 Outside Director of ITO EN (current post)

Hideo Takano possesses extensive experience and broad-ranging insights gained through his many years at the Tokyo Chamber of Commerce and Industry, where he was involved in the provision of management support for various enterprises.

Auditors

Standing Corporate Auditor

Shuji Nakagomi

Mar. 1981 Joined ITO EN

May 2007 General Manager, Product Department

May 2010 Deputy Director-General of Area Sales Administration Headquarters May 2012 Executive Officer and General Director, Area Sales Administration

Headquarters

Jul. 2014 Director

May 2017 General Director of Logistics Headquarters May 2018 Managing Executive Officer

May 2019 Special Advisor

Jul. 2019 Standing Corporate Auditor (current post)

Shuji Nakagomi has an in-depth knowledge of ITO EN's products, sales and logistics activities, based on his leadership of the Sales Administration- and Logistics Headquarters over many years.

Outside Audit & Supervisory Board Member

Yoshiaki Takasawa

Yoshiaki Takasawa possesses expert insights, broad-ranging knowledge and experiences as an attorney.

Outside Audit & Supervisory Board Member

Masahiro Nagasawa

Outside Audit & Supervisory Board Member

Takashi Miyajima

Oct. 1981 Joined Price Waterhouse (now PricewaterhouseCoopers Aarata LLC) Apr. 1984 Joined Shinwa Audit Corporation (now KPMG AZSA LLC)

Aug. 2002 Representative Partner, Asahi Audit Corporation (now KPMG AZSA LLC) Jul. 2012 Representative, Nagasawa CPA Firm (current post)

Jul. 2013 Outside Audit & Supervisory Board Member of ITO EN (current post) May 2014 Outside Audit & Supervisory Board Member of Tokyo Individualized

Educational Institute, Inc. (current post)

Masahiro Nagasawa possesses expert insights, broad-ranging knowledge and experiences as a certified public accountant.

Apr. 1984 Joined The Saitama Bank, Ltd.

Nov. 2003 Manager, Nagaoka Branch, Resona Bank, Ltd.

Apr. 2008 General Manager, 1st Sales Department, Ueno & Nippori Area, Resona

Bank, Ltd.

Jun. 2010 Executive Officer with responsibility for Tama Area, Resona Bank, Ltd.

Apr.

Apr. Apr.

Jul.

Takashi Miyajima possesses broad-ranging knowledge and experience in finance and financial affairs, developed over his many years working at financial institutions.

Executive Officers (excluding directors with executive officer status)

• 2015 Executive Officer with responsibility for Financing Department, Saitama Resona Bank, Ltd.

• 2016 Managing Executive Officer, Saitama Resona Bank, Ltd.

• 2017 President and Representative Director, Resona Capital Co., Ltd. (current post)

• 2019 Outside Audit & Supervisory Board Member of ITO EN (current post)

Kiyoshi Kondo

General Director of Sales Unified Administration Headquarters and General Manager of Office Administration Center

Shinji Karasawa

Deputy Director-General of Specialized Sales Headquarters

Activities to continue and protect washoku culture

Visiting lessons on tea, aimed at the next generation of children

ITO EN has participated in Washoku Japan since its initial establishment in 2015, and is working to popularize and enlighten people about washoku (traditional dietary cultures of the Japanese) through tea culture.

Washoku Japan organizes visiting lessons on washoku given by its members, as food education activities aimed at educating the children who will play active roles in the next generation. Japanese tea is an important ingredient and element of washoku culture that has traditionally been served together with Japanese food, and which plays a major part in the dietary lifestyles of Japanese people. As one part of ITO EN's dietary education activities, ITO EN TEA TASTERs visit preschools, elementary schools, junior high schools and other educational facilities and act as lecturers giving visiting lessons on tea, and conducting activities to carry on the traditions of Japanese tea, which plays an important part in washoku culture.

Glossary of Terms

Scientific validation of the affinity between washoku and Japanese tea

ITO EN participates in meetings of Washoku Japan's subcommittee for popularization and enlightenment, and announces results on Japanese tea and its ability to accentuate the "umami" (or "savory" taste) of Japanese cuisine. We are also engaged in other activities to share the value of these efforts with the Japanese people as a whole, such as by opening booths as part of national dietary education projects in collaboration with Washoku Japan*.

Scientifically determining the compatibility of green tea with a variety of washoku dishes and systemizing our findings is enabling us to appeal to consumers both in Japan and overseas about the high compatibility of green tea with traditional Japanese cuisine, and to make new proposals for ways of enjoying green tea.

This glossary explains the meanings of key terms needed to understand this report. Please refer to it when reading this report.

External recognition

All aspects of ITO EN's activities, including its business management in general, from procurement to distribution, have gained external recognition (the following table shows the honors received in the past few years).

*1 Years shown indicate the year the award was received.

*2 Awards were given for the following KEEP IN MY BOTTLE varieties: Jasmine Tea (7 bags), Cereal Tea (7 bags), Premium Rooibos Tea (7 bags), Rooibos & Herb Tea (7 bags).

Introduction of Main Group Companies (as of April 30, 2020)

Domestic

Tully's Coffee Japan Co., Ltd. Chichiyasu Company OKINAWA ITO EN, LTD.

ITO EN · ITOCHU MINERAL WATERS CO., LTD. NEOS Corporation

GREEN VALUE CO., LTD. ITO EN SANGYO, LTD.

ITO EN KANSAI CHAGYO, LTD.

Overseas

[United States of America (USA)]

ITO EN (North America) INC. ITO EN (Hawaii) LLC Mason Distributors, Inc. Distant Lands Trading Co.

[Australia]

ITO EN AUSTRALIA PTY. LIMITED

[Singapore]

ITO EN Asia Pacific Holdings Pte. Ltd. ITO EN Singapore Pte. Ltd.

[China]

Fujian New Oolong Drink Co., Ltd.

ITO EN BEVERAGE (SHANGHAI), LTD.

[Indonesia]

PT ITO EN ULTRAJAYA WHOLESALE

[Thailand]

ITO EN (Thailand) Co., Ltd.

For detailed information on major Group companies, please refer to the following site.

https://www.itoen.co.jp/company/group/

Status of major consolidated subsidiaries

TOPICS

Tully's Coffee Japan Co., Ltd.

http://www.tullys.co.jp

As a specialty coffee shop chain, Tully's Coffee Japan manages the Tully's Coffee eateries and it also develops its franchise chain store system.

Chichiyasu Companyhttps://www.chichiyasu.com/

Chichiyasu Company engages mainly in the manufacture and sale of yoghurt, milk and other dairy products.

ITO EN (North America) INC.https://www.itoen.com

ITO EN (North America) sells beverage- and tea leaf products, including Oi Ocha and TEAS' TEA. It also introduces tradi-tional Japanese washoku food culture, with a central focus on tea.

(100 million yen)

108.39 yen

*1 Includes ITO EN (North America) INC., ITO EN (Hawaii) LLC etc. *2 Average for the fiscal year

108 yen

Company Outline (as of April 30, 2020)

Company Profile

Shares and Shareholders

Company name Head office

Established Capital

Number of employees

URL

Branches, sales offices and local offices

47-10, Honmachi 3-chome, Shibuya-ku, Tokyo

August 22, 1966 19,912,300,000 yen

5,403 persons (non-consolidated basis)

http://www.itoen.co.jp

196 offices in 30 areas throughout Japan

Shops / stores Factories

122 stores nationwide

Shizuoka Sagara Factory

(21, Mekami, Makinohara-shi, Shizuoka)

Kobe Factory

(5-4-2, Mitsugaoka, Nishi-ku, Kobe-shi, Hyogo)

Hamaoka Factory

(3406-4, Niino, Omaezaki-shi, Shizuoka)

Fukushima Factory

(1-2-9, Araikita, Fukushima-shi, Fukushima)

Okinawa Nago Factory

(112, Isagawa, Nago-shi, Okinawa)

Research Institute Central Research Institute

(21, Mekami, Makinohara-shi, Shizuoka)

CSR / ESG pagehttps://www.itoen.co.jp/csr/

Corporate Governance Reporthttps://www.itoen.co.jp/files/user/pdf/company/ report202012.pdf

Financial information

Annual Securities Reporthttps://www.itoen.co.jp/files/user/pdf/ir/ securities/202004.pdf

Total number of authorized sharesTotal number of issued shares

Number of shareholders

Major shareholders

Name of shareholder

Green Core Co., Ltd.

State Street Bank and Trust Company 505223

Honjo International Scholarship Foundation The Master Trust Bank of Japan, Ltd. (trust account) Hachiro Honjo

The Bank of New York 134104

ITO EN Employees' Shareholding Association Japan Trustee Services Bank, Ltd. (trust account 9)

The Bank of New York Mellon (International) Limited 131800

Toyo Seikan Group Holdings, Ltd.

*In addition to the above, ITO EN retains 1,023 thousand shares of common stock and 1,192 thousand shares of Class 1 preferred stock as treasury stock, for a total of 2,215 thousand shares of treasury stock retained (1.79%).

*Percentage ownership of total shares as given above is calculated with the exclusion of treasury stock.

Preferred stock

Common stock

Preferred stock

89,212,380 shares

34,246,962 shares

Common stock

Preferred stock

200,000,000 shares

44,775 persons

61,599 persons

Number of shares owned

(1,000 shares)

Percentage ownershipClass 1

Common stock

preferred Total shares shoafretost(a%l )

stock

17,403

5,893

23,297 19.22

7,585

-

7,585 6.26

5,200

1,560

6,760 5.58

3,795

2,446

89

3,884 3.20

882

3,329 2.75

-

3,304

3,304 2.73

2,090 2,137

268

2,358 1.95

-

2,137 1.76

2,098

-

2,098 1.73

1,955

126

2,081 1.72

Preferred stock can receive dividends of profits preferentially compared to common stock.

*2 The first decimal place is rounded up to the nearest whole number. The lower limit is 15 yen. Even when no dividend is paid for common stock, 15 yen per share is paid for preferred stock

*3 If any accrued amount is accumulated, the shortfall in the payment is paid to the shareholders of preferred stock before the payment for common stock

*4 In the specific cases shown below, the Company may obtain preferred stock in exchange for common stock at the ratio of 1:1

[Specific cases]

• 1. Merger in which the Company becomes an extinct company and share exchange and share transfer in which the Company becomes a wholly owned subsidiary (except those implemented by the Company alone)

• 2. When, due to a tender offer for the Company's common stock, the shareholding ratio of the tender offeror exceeds 50%

• 3. When the listing of the preferred stock of the Company is abolished

[For further information on ITO EN Integrated Report 2020]

CSR/ESG Promotion Department

47-10 Honmachi 3-chome, Shibuya-ku, Tokyo, Japan 151-8550

TEL: +81-3-5371-7213 | FAX: +81-3-5371-7196

E-mailcsr@itoen.co.jp

URLhttps://www.itoen.co.jp

February 2021 Printed in Japan