We Love Nature - Japanese No.1 Green Tea Brand | ITO EN

We Love Nature

Long-Term Vision & Medium and Long Term Management Plan

Our Long-Term Vision P.18

Medium and Long-Term Management Plan P.19

Appendix

ESG & SDGs Activities P.20

ESG in the Value Chains P.21

Project of the Developing Green Tea-Producing Regions

P.22

Data Collection (Data Base)

Management Index (Consolidated) P.23

INDEX Beverage Market in Japan P.1

Results of Operations FYE April 2017 P.2

Forecasts FYE April 2018 P.3

Management Policy P.4

ITO EN Brand Strategy

Results & Forecasts by Category (Non-Consolidated) P.6

Brand Strategy P.7

Tea Leaf Products P.8

Oi Ocha (Green Tea) P.9

Healthy Mineral Barley Tea & Other RTD Tea P.11

One day Veggie & Other Vegetable Beverage P.12

TULLY'S COFFEE (RTD) P.13

Group Business Overview

Tully's Coffee Japan P.14

Chichiyasu (Yogurt Company) P.15

Overseas Business P.16

85.2 217.1

447.0 405.0 401.0 415.0 435.0 445.0

579.3

484.3 480.0 475.5 458.0 477.0 487.5

648.9 538.5 698.0 705.0 720.0 725.0 725.0

922.3 955.1 938.7 929.3 942.0

951.0 952.0

145.6 159.2

164.4 147.2 140.0 152.2 153.5

447.4 376.4 329.9 317.0 305.0

306.0 306.0 97.7 157.5

244.0 258.2 267.0 284.0 280.0 260.1

276.3

260.0 244.2 244.0 246.0 246.0 222.0

218.4 160.0 182.6 187.0

193.8 195.0

0

1,000

2,000

3,000

4,000

1980 1985 1990 1995 2000 2005 2013 2014 2015 2016 2017

Forecast

(¥ billion)

(885.0)

1

Beverage Market in Japan

(Tea total) Other Tea

Carbonated

Coffee

Vegetable

Fruit

Mineral Water

Others/Functional

Sports Drink

Green Tea

Monthly Sales Volume Trends (ITO EN vs. Market)

RTD Market Trends

1980 1985 1990 1995 2000 2005 2013 2014 2015 20162017

Forecast

Total (\ billion) - - 2,707.5 3,100.1 3,540.3 3,612.7 3,680.0 3,660.0 3,678.0 3,770.0 3,790.0

YOY %Change - - - - - - 1% -1% 0% 3% 1%

-2.0 -1.0

1.0

3.0

7.0

1.0

3.0

0.0

4.0

-1.0

1.0

-5.0

1.0

0.0 1.0

4.0

6.0

0.0

2.0

2.0

4.0

0.0

3.0

-3.0

-5

0

5

10

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

YOY (％)

Source: ITO EN, (Chart) May 2016 to Apr 2017

ITO EN Kumamoto

earthquakes (Apr. 2016)

Market

Topics of Beverage Market (2016)

・RTD Green Tea Market: Performed well

(RTD Green Tea, Blended Tea and Barley Tea)

・RTD Coffee Market: Steady

(Bottle Cans Led Market)

・Vegetable Beverage: Recovered

(Especially Tomato Beverages)

Carbonated has become popular

Coffee has become popular

Tea has become Popular Start of the Unsweetened RTD Tea Market

1980 Pioneering of

Canned Oolong Tea

Source: ITO EN, Calendar year

(932.5) (912.0) (873.0) (876.5)

(931.3)

(796.4)

1985 Pioneering of

Canned Green Tea

Results of Operations FYE April 2017

2

■Summary of Operations （Consolidated and Non-Consolidated） (\ million)

Sales

Composition

Sales

Composition

YOY %

Change

465,579 100.0% 475,866 100.0% 2.2%

218,818 47.0% 226,170 47.5% 3.4%

　Sales Commission 77,574 16.7% 79,034 16.6% 1.9%

　Advertising 11,056 2.4% 12,937 2.7% 17.0%

　Transportation 12,184 2.6% 12,940 2.7% 6.2%

　Depreciation and　Amortization

13,988 3.0% 10,312 2.2% -26.3%

201,574 43.3% 204,395 43.0% 1.4%

17,243 3.7% 21,774 4.6% 26.3%

15,074 3.2% 21,524 4.5% 42.8%

-148 -　 -801 - -

8,615 1.9% 13,693 2.9% 58.9%

365,276 100.0% 371,831 100.0% 1.8%

170,229 46.6% 174,999 47.1% 2.8%

11,934 3.3% 15,646 4.2% 31.1%

12,821 3.5% 17,460 4.7% 36.2%　Ordinary IncomeNon-C

onso

lidate

d 　Net Sales

　Gross Profit

　Operating Income

FYE Apr. 30,2016

FYE Apr. 30,2017

Conso

lidat

ed

　Net Sales

　Gross Profit

　　　Extraordinary Losses　　　and Income

　Net Income

　Operating Income

　Ordinary Income

　　　Selling, General and　　　Administrative Expenses

■Performances of Subsidiaries (\ million, $ thousand)

YOY %

Change

31,741 30,469 -4.0%

1,581 1,687 6.7%

$264,929 $281,268 6.2%

$13,206 $15,573 17.9%

27,751 30,268 9.1%

2,879 3,130 8.7%

13,890 14,621 5.3%

253 300 18.8%

77,915 58,588 -24.8%

2,106 1,947 -7.6%

4,438 4,393 -1.0%

275 538 95.6%

-55,431 -34,307 -

-1,785 -1,476 -

Exchange rate (US$) ¥119.3 ¥108.4

(average during a year)

Elimination of Internal

Transactions

Other OverseasSubsidiaries

　Upper: Net Sales

　Bottom: Operating Income

FYE Apr. 30,2016

FYE Apr. 30,2017

US Business

Tully's CoffeeJapan Co., Ltd.

Other DomesticSubsidiaries

ChichiyasuCompany

■Breakdown of Gross Profit Change (Non-Consolidated)

(\ billion)

FYE Apr. 30,2016

FYE Apr. 30,2017

Sales Changes 5.3 3.0

Changes inProduct Mix, etc.

0.2 0.5

Fluctuations in

Raw Material Costs, etc.0.4 1.2

Forecasts FYE April 2018

3

■Summary of Operations （Consolidated and Non-Consolidated） (\ million)

Sales

Composition

Sales

Composition

YOY %

Change

475,866 100.0% 492,500 100.0% 3.5%

226,170 47.5% 232,500 47.2% 2.8%

　Sales Commission 79,034 16.6% 80,119 16.3% 1.4%

　Advertising 12,937 2.7% 13,229 2.7% 2.3%

　Transportation 12,940 2.7% 13,166 2.7% 1.7%

　Depreciation and　Amortization

10,312 2.2% 10,852 2.2% 5.2%

204,395 43.0% 209,900 42.6% 2.7%

21,774 4.6% 22,600 4.6% 3.8%

21,524 4.5% 22,000 4.5% 2.2%

-801 - -325 - -

13,693 2.9% 14,000 2.8% 2.2%

371,831 100.0% 381,000 100.0% 2.5%

174,999 47.1% 178,603 46.9% 2.1%

15,646 4.2% 16,500 4.3% 5.5%

17,460 4.7% 18,300 4.8% 4.8%　Ordinary IncomeNon-C

onso

lidate

d 　Net Sales

　Gross Profit

　Operating Income

FYE Apr. 30,2017

FYE Apr. 30,2018 Est.

Conso

lidat

ed

　Net Sales

　Gross Profit

　　　Extraordinary Losses　　　and Income

　Net Income

　Operating Income

　Ordinary Income

　　　Selling, General and　　　Administrative Expenses

■Performances of Subsidiaries (\ million, $ thousand)

YOY %

Change

30,469 34,596 13.5%

1,687 2,003 18.8%

$281,268 $314,562 11.8%

$15,573 $18,215 17.0%

30,268 32,300 6.7%

3,130 3,250 3.8%

14,621 15,600 6.7%

300 370 22.9%

58,588 55,881 -4.6%

1,947 1,553 -20.2%

4,393 4,516 2.8%

538 496 -7.7%

-34,307 -31,393 -

-1,476 -1,573 -

Exchange rate (US$) ¥108.4 ¥110


Elimination of Internal

Transactions

Other OverseasSubsidiaries

　Upper: Net Sales

　Bottom: Operating Income

FYE Apr. 30,2017


US Business

Tully's CoffeeJapan Co., Ltd.

Other DomesticSubsidiaries

ChichiyasuCompany

■Breakdown of Gross Profit Change (Non-Consolidated)

(\ billion)

FYE Apr. 30,2017


Sales Changes 3.0 4.3

Changes inProduct Mix, etc.

0.5 0.2

Fluctuations in

Raw Material Costs, etc.1.2 -0.9

4

Management Policy (1)

To be a "Global Tea Company" with Sustainable Growth

Enlargement of the Group's Synergy

Double-digit Growth, Mainly in the North American Business

1. Strengthening of the Domestic Business

2. Strengthening of the International Business

3. Strengthening ROE Management

Increasing Company's Share in the Beverage Market

4. Strengthening of CSR/CSV Management

・Strengthening of major brands' sales ・Strengthening relationship with customer (more frequent face-to-face communication) ・Acquiring new customers ・Strengthening of the "Digital Marketing" and the "Direct Communication"

Priority theme Activities

・Improvement of productivity

・Strengthening of control on sales promotion and sales commission

・Reducing total costs

Improvement of Profitability

・Strengthening of the Development of the "Oi Ocha" Brand ・Strengthening of Tea Leaf Products' Sales, mainly Global Brand Products

Improvement of Profitability and Capital Efficiency Increasing EPS Stable return to Stockholders

Sustainable Community Sustainable Production and Consumption Legacy Creation

・Social Activities by taking advantage for our core business

・Stable Raw Materials Procurement and Quality Control Systems

・Appealing of Tea Culture

・Enlargement of "ITO EN" Brand ・Enhancing Exchange Training Programs

・Continuing activities/projects to improve profitability

・Total Return Ratio 40%

5

Management Policy (2)

2017 Change Current assets 159,517 174,657 15,140

　　 Cash and deposits 53,259 64,202 10,942

　　 Accounts receivable-trade and

　　 inventories88,609 92,577 3,967

Property, plant and equipment 81,018 83,039 2,020　　 Land 20,644 21,587 942

　　 Leased assets 29,154 27,889 -1,265

　　 Other 31,219 33,562 2,342

Intangible fixed assets 27,154 24,454 -2,700　　 Goodwill 20,179 18,371 -1,807

Investments and other assets 20,012 20,254 242　Total assets 287,702 302,405 14,703 Current liabilities 100,756 81,560 -19,196

　　 Accounts payable 33,353 33,061 -291

　　 Short-term loans payable 1,801 2,364 563

　　 Current portion of bonds 20,000 - -20,000

　　 Lease obligations 10,442 8,995 -1,447

　　 Income taxes payable 3,945 4,490 544

　Non-current liabilities 59,729 84,135 24,405　　 Corporate bonds - 10,000 10,000

　　 Long-term loans payable 29,653 47,433 17,779

　　 Lease obligations　 16,630 13,468 -3,162

　Total liabilities 160,486 165,696 5,209　Net assets 127,215 136,709 9,493

2016

(\ million)

Consolidated Balance Sheet （as of April 30, 2016 and 2017）

Consolidated Cash Flows

■Topics・Main Investment ・Acquisition of Own Shares (Stock Buyback)Jun. 2016: "Matcha Ko Bo " Issued: Feb. 2017 Class of shares: Class-A Preferred Stock

(manufacturing plant of real Matcha Powder Total amount of issue: \10,000 million Total number of shares: 341,500 shares

in ITO EN Shizuoka Sagara Plant) Unissued: \30,000 million Total value of shares: \700 million

Sep. 2016: Kobe Plant Use of funds: Redemption of bonds Period: Feb to Mar 2017

(Hyogo Prefecture) Rating: A+

・ITO EN, LTD. 2nd Series Unsecured Pari Passu Bonds

24,300

17,751

30,085

27,098 28,000

-4,598

-9,242 -8,150 -8,243

-14,603

19,702

8,508

21,935

18,854 13,397

-15,000

-5,000

5,000

15,000

25,000

35,000

'14/4 '15/4 '16/4 '17/4 '18/4

Est.

(¥ Million) ＣＦ from Operating Activities

ＣＦ from Investing Activities

Free ＣＦ

'14/4 '15/4 '16/4 '17/4'18/4Est.

Capital

Investments4,663 3,359 8,241 8,135 13,477

Depreciation

Amortization4,204 4,568 5,203 5,418 6,376

Leased

Assets Depr.10,936 11,085 10,872 7,051 7,065

Lease obligations

(Repayment) -12,456 -12,143 -11,236 -10,361 -8,793

ITO EN Brand Strategy

Results & Forecasts by Category (Non-Consolidated)

6

(\ million)

Sales

Composition

YOY %

Change

Sales

Composition

YOY %

Change

Sales

Composition

YOY %

Change

365,276 100.0% 3.3% 371,831 100.0% 1.8% 381,000 100.0% 2.5%

32,468 8.9% 4.7% 33,675 9.1% 3.7% 35,740 9.4% 6.1%

329,455 90.2% 3.1% 334,843 90.0% 1.6% 341,947 89.7% 2.1%

3,351 0.9% 2.9% 3,312 0.9% -1.2% 3,311 0.9% 0.0%

181,126 49.6% 4.6% 183,644 49.4% 1.4% 188,826 49.6% 2.8%

17,483 4.8% 6.4% 17,037 4.6% -2.6% 17,354 4.5% 1.9%

42,931 11.7% -2.5% 44,300 11.9% 3.2% 44,877 11.8% 1.3%

10,933 3.0% -18.2% 10,739 2.9% -1.8% 11,027 2.9% 2.7%

41,143 11.3% 21.2% 42,399 11.4% 3.1% 43,643 11.4% 2.9%

6,082 1.7% -42.3% 4,900 1.3% -19.4% 4,486 1.2% -8.5%

6,918 1.9% 28.8% 7,064 1.9% 2.1% 7,201 1.9% 1.9%

9,312 2.5% 14.6% 10,958 2.9% 17.7% 10,535 2.8% -3.9%

9,751 2.7% -3.3% 9,988 2.7% 2.4% 10,488 2.7% 5.0%

3,772 1.0% -13.9% 3,809 1.0% 1.0% 3,506 0.9% -8.0%

　Others

FYE Apr. 30,2016

FYE Apr. 30,2017


　Tea Leaves

　Drinks

Net Sales

　Others

Bre

akdo

wn o

f D

rinks

　Japanese Tea /　Healthy Tea

　Chinese Tea

　Vegetable

　Fruit

　Coffee

　Black Tea

　Functional

　Mineral Water

　Carbonated

7

Brand Strategy

1. Strengthening of the Major Brands 2. Enhancing synergy - Tea Leaf Products and RTD Products

Major brands

over

10 million

cases *

Tea Leaves

Tea Bags

Instant

Demand Expansion through Tea Enlightenment Activities

Accelerated Introduction through Variety Development

Adaptation to the Changes in the Life Style

Oi Ocha

Healthy Mineral

Barley Tea

One Day Veggie

Increasing market share by providing many variety of flavors and sizes

Expanding business by appealing "Caffeine Free" and "Mineral Ingredients"

Enhancing consumption by appealing Nutritional Values

TULLY'S COFFEE Further Brand Strengthening by Products' Lineup Expansion

Leaf Major Beverage Brand

Mega Brands

over

30 million

cases *

* sales annually

8

Tea Leaf Products

■Market Overview (2016)

Estimated that the Market Size (monetary amount) is 2% lower than previous year

Easy-to-Use Green Tea Products Market continued to perform well

■Sales Strategy

Increase in the Products' Sales Counter Occupancy Ratio ・Expansion of the Tea Leaves and the Tea Beverages Interlocking Sales Counters

Creation and Evocation of the Products' Demand ・Abundant Products' Lineup and Products' Forms ・Provision of Original Pots for Cold Water-Brewed Tea and Original Japanese Style Kettles "Kyusu"

Strengthening of the Unique to ITO EN Sales Proposal Power, as Specialized Company in the Tea Field ・Enlightenment Activities by Employees, having the Tea Taster Qualification Certificates

■TOPICS

"Skilled Professional on ITO EN TEA TASTER "

"The Tea Taster System" that had been operated as an in-house qualification system was approved by "Skilled Professional on ITO EN TEA TASTER " by Ministry of Health, Labor and Welfare on March 24, 2017.

Green Tea Leaf Product Market

Sales Activities with Special Features

Interlocking Sales with

Beverage Products

The Tea Tasters* are

participating events at the

stores to demonstrate how to

serve tea

Source: ITO EN, Market: Calendar year ITO EN: May to Apr

Evoking Tea Leaves Products'

Demand by the Summer season

Iced-Water-Brewed Tea Proposal

* Employees having the Tea Taster Qualification Certificates

17.2 18.3 19.2 20.4 22.7 23.9 25.0 25.9

280.8 270.3

254.9 242.5

227.9 221.9 216.6 210.9

298.0 288.6

274.1 262.9

250.6 245.8 241.6 236.8

9% 11% 11% 11%

12% 13% 13%

14%

0

50

100

150

200

250

300

'09 '10 '11 '12 '13 '14 '15 '16

(¥ billion)

Leaf

Easy-to-Use ITO EN Share

of Packaged Tea Leaf

9

Oi Ocha (1)


An Expansion Trend, Coming Along with the Market Revitalization

■Brand Strategy

No.1 Brand Awareness

Increasing market share by providing many variety of flavors and sizes

■TOPICS

The Cumulative Sales Volume has exceeded 30 Billion Bottles *1

New "Oi Ocha "

・Quality "From Farm to Bottle" (Vertical Integration) Fresh, Safe and Delicious

・Taste Mild and Clear Umami Taste

・Design A New Type of a Bamboo Pipe-Shaped PET Bottle, with added English Inscription on its Label

No.1 Tea Category Beverage Brand *2

A New Type of a PET Bottle, Possessing both

Excellent Design- and Functional Properties

(Protecting the Tea's Delicious Taste

from the light's influence)

*2 Source: ITO EN, Jan 2016 to Dec 2016 *1 Valid As of May 2017, 500ml PET Bottle Conversion Calculation Result

217.1

268.5 279.2 309.4

409.3

447.0 421.0 415.0

402.0 382.0 375.0 375.0 383.0

405.0 401.0 415.0

435.0 445.0

31%

28% 31% 33%

29% 29% 32%

34% 36% 37% 39% 38% 37% 35% 35% 35% 33% 34%

0

2

3

4

5

6

8

0

100

200

300

400

500

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Est.

(¥ billion）

ITO EN

ITO EN Share

Source: ITO EN, Calendar year

Green Tea Beverage Market

10

Oi Ocha (2)

Brand Slogan

Bringing "Oi Ocha" to the World

2011

2017

1985

1989

1996

2006

Long-Term Goals

*1 Developed in 1984

*2 500ml PET Bottle Conversion Calculation Result

The Cumulative Sales Volume exceeded

(Broke through)

10 Billion Bottles *2

Launched the world's first

Canned Green Tea *1

Birth of "Oi Ocha"

Brand

Innovated and Released

PET 500ml Bottle

The Cumulative Sales Volume exceeded

(Broke through)


The Cumulative Sales Volume has Exceeded

(Broke through)


Annual Sales Volume 100 Million Cases

Start of the "Shin Haiku (New Kind of

Haiku Poems) Contest"

Strengthening

Global Business

11

Healthy Mineral Barley Tea & Other RTD Tea


The Barley Tea "Mugi-cha" has growing continuously The Blended Tea has shown recovery tendency in it growth

■Brand Strategy

Expanding business by appealing "Caffeine Free" and "Mineral Ingredients"

Strengthening of the Store Counter Development Ability, as a "Whole-Year-Sold Product"

・Providing many variety of container size ・Seeking more synergy of RTD and Tea Bags

■TOPICS

Double-digit Increase in four (4) Consecutive Fiscal years

Exceeding (Breaking through) 30 Million Cases *

No.1 Share in the "Caffeine Free RTD Tea" category *

* Source: ITO EN, Jan 2016 to Dec 2016

Barley Tea and Blended Tea Markets


Further Pursuing of Possibilities in the Tea Beverages Category

34.5 39.5 45.5 51.0 63.0 71.0

80.0 88.0

126.5 120.0 118.0 114.0

116.0 112.5

128.0 128.0

0

50

100

150

200

'10 '11 '12 '13 '14 '15 '16 '17

Est.

(¥ billion）

Blended Tea

Barley Tea

12

One day Veggie & Other Vegetable Beverage


A Recovery Tendency is observed in the 100% Vegetable Juice Segment, with a Steady Performance

Especially the Tomato Juice Drinks Segment is leading the market

■Brand Strategy

Enhancing consumption by appealing Nutritional Values, doing Demonstration in stores and introducing recipes used our vegetable juice

■One day Veggie (a day' s worth of vegetables)

No.1Brand Share in the 100% Vegetable Juice Segment *

■Jujitsu Yasai (vegetable and fruit mix juice)

25th Sales Release Anniversary in Sep 2017

Original Package

in 1992

School Lunch Program (Red Cup Campaign of the United Nations WFP)

Aojiru

6 Types of Healthy Raw Materials

are used, including Japanese-Grown

Green Barley Grass and Mugworth

("Oomugi-Wakaba")

・Buying of "Jujitsu Yasai "

Big Size PET Bottle Product

・Posting of Pictures with Red

Cup Drinking Scenes on the

SNS Media

⇒Part of sales is donated to WFP

Riso-no Tomato

Containing 30 mg of

Lycopene

（Sugar and Salt

Additive-Free）

Vegetable Juice Market

59.2 61.7

80.8 80.1 73.0

71.6 80.6

81.5

87.6 88.4

86.6 84.3 74.2 68.3 71.6

72.0

146.8 150.1

167.4 164.4

147.2 139.9

152.2 153.5

26% 28% 30% 30% 29% 30% 29% 30%

0

50

100

150

200

'10 '11 '12 '13 '14 '15 '16 '17

Est.

(¥ billion)

Vegetable 100%

Fruit Mix ITO EN Share


* Source: ITO EN, Jan 2016 to Dec 2016

(Tomato Juice) (Green Juice)

13

TULLY'S COFFEE (RTD)


The Market Size is estimated to be 951.0 Billion Yen, growing by 1% compared to previous fiscal year

The Bottle-Can Containers Market's Strong Performance Tendency is estimated to be continued in future as well

■Brand Strategy

We are planning to strengthen Tully's brand by Products' Lineup Expansion

Pursuing the "Tully's Quality" by the Tully's Barista Coffee Professionals ・Supervision of the Coffee Raw Material's Commitment

Shop and RTD Interlocking Campaign

■TOPICS

10th Anniversary of the Sales Release of the Tully's Brand Beverages

Even if only the Black Coffee Product Segment is taken into account, it has broken through 10 Million Cases *

* Source: ITO EN, May 2016 to Apr 2017

Iced-Water-Brewing Extraction

No Natural/Artificial Flavor added

Expansion of the Products' Lineup and Sales Channels

Coffee Beverage Market （share by type of container and size）

11% 12% 13% 14% 16% 20%

24%

40% 41% 39% 38% 35% 31% 28%

0

4

8

12

16

0%

20%

40%

60%

80%

100%

'10 '11 '12 '13 '14 '15 '16

(million cases)

Sales Volume of TULLY'S COFFEE

PET bottles

201～599ml Can

Others

126～200ml Can

Source Market: INTAGE Inc. SRI, 2010 to 2016 ITO EN: May 2010 to Apr 2016 Market share by sales amount for all coffee beverage containers and quantities (total for supermarkets, convenience stores and drug stores)

Group Business Overview

(\ million)

YOY %Change

YOY %Change

YOY %Change

Net Sales 27,751 6.6% 30,268 9.1% 32,300 6.7%

OperatingIncome 2,879 -19.4% 3,130 8.7% 3,250 3.8%

(Shops)

Number ofShops 638 +50 671 +33 700 +29

FYE Apr. 30,2016

FYE Apr. 30,2017


Shop in TAKASHIMAYA GATETOWER MALL

Rare Species of the "Peaberry

Coffee Beans" Used

Tully's Coffee Japan

Concept Shop oriented towards Female Customers

14

Commemorative

Reprinting Menu Edition

（Hot Bagel Sandwich）

Promoting 20th Anniversary Items

13.9 13.9 15.3

19.3 21.0

23.8 26.0

27.7

30.2 32.3

357 375 410

461 513

555 588

638 671 700

0

250

500

750

1,000

0

5

10

15

20

25

30

35

'09/3 '10/3 '11/3 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4

Est

(Shops) (¥ billion)

# of shops

Net Sales

Business Overview Net Sales exceeded 30 Billion Yen

・Actively opening new shops in good Locations

(As of April 2017, 671 shops)

・Strong Performance of the Limited-Sales-Area Products

・Promotion of the Community Café Shops

20th Anniversary since Establishment (Foundation)

・Sequential Sales Release of of a Commemorative Product since March 2017

Result/Forecast of Sales

and Number of Shops New Concept Shop Topics

"Casual & Cozy for Female Customers"

（Nagoya-city, Aichi）

"TULLY‘S BRAZIL FAZENDA BAU

PEABERRY YELLOW BOURBON "

Chichiyasu (Yogurt Company)

Inside the "LECT" Large Scale Commercial Facility

of Izumi Co., Ltd.

(Hiroshima Prefecture, Hiroshima City, West Ward)

(\ million)

YOY %Change

YOY %Change

YOY %Change

Net Sales 13,890 5.3% 14,621 5.3% 15,600 6.7%

OperatingIncome 253 188.4% 300 18.8% 370 22.9%

FYE Apr. 30,2016

FYE Apr. 30,2017


15

Establishment ： 1886 (Foundation)

Head Office: Hiroshima Prefecture

Chichiyasu

First-in-Class Yogurt

Product in Japan

(1917)

Business Overview

100th Anniversary of the Chichiyasu's Yogurt Products Sales Release ・ Pursuing "Safety, Relief, Delicious Taste, Healthiness", as a pioneer of Yogurt product in Japan (for the First Time in the History).

Opened First Flagship Shop ・ Showroom of Chichiyasu's First Opening as an Anniversary Memorial Business Service ・ Appealing of Chichiyasu Brands to all the local residents and community

100th Anniversary of the Chichiyasu's Yogurt Products Sales Release New products

Renewal of the "Classic Yogurt"- and the "Lowered Sugar Contents

Yogurt" Products

Additive-Free Honey Yogurt

Topics

Additive-Free Honey Yogurt,

that Every Mother will be

Happy to Give it to Her

Children, to be Eaten by Them

Opening of the Showroom "CHICHI YASU"

* Japanese Professional Baseball Team, with Home Stadium based in Hiroshima City

A Collaborative Drink

(Beverage) Product with the

"Hiroshima Toyo Carp" * Team

Overseas Business (1)

16

*Excluding ITO EN. Before elimination of internal transactions (\ million, $ thousand)

YOY %

Change

YOY %

Change

YOY %

Change

31,741 169.0% 30,469 -4.0% 34,596 13.5%

$264,929 150.0% $281,268 6.2% $314,562 11.8%

4,438 31.3% 4,393 -1.0% 4,516 2.8%

　Net Sales 36,180 138.3% 34,863 -3.6% 39,112 12.2%

1,581 802.4% 1,687 6.7% 2,003 18.8%

$13,206 603.6% $15,573 17.9% $18,215 17.0%

275 107.5% 538 95.6% 496 -7.7%

　Operating Income 1,856 502.9% 2,225 19.9% 2,500 12.4%

¥119.3 ¥108.4 ¥110


Exchange rate (US$)

FYE Apr. 30,2016

FYE Apr. 30,2017


US Business

US Business

Asia/Australia Business


■US Business

■Asia/Australia Business

： Both Tea Leaf and Tea Beverage Business showed a strong performance, with Double-digit increase in both Revenue and Profit, that is estimated to continue in future as Well (Based on Local Currency Figures)

： Distant Lands Trading Company (DLTC) is also showing a stable performance

： Business in China is showing a strong performance, especially ITO EN BEVERAGE (SHANGHAI), LTD.

： Businesses in Australia and in Southeast Asia are also developed in a favorable Manner

： In April 2017, ITO EN Singapore Pte. Ltd. and ITO EN (Thailand) Co., Ltd. had become profitable for the first time in their history after their establishment

3% 4%

8% 7%

8%

0%

5%

10%

15%

0

10

20

30

40

'14/4 '15/4 '16/4 '17/4 '18/4

Est.

(¥ billion) US Business


Overseas Business sales ratio

Overseas Business (2)

17 USA China AUS Thailand

Estimation of the ITO EN's International Business Development Pathway

China

Oceania

Asia

Hawaii (1987～)

Fujian Province (1987～)

Australia (1994～)

Southeast Asia (2012～)

Singapore, Thailand & Others

USA New York (2001～)

Zhejiang Province (1994～)

Shanghai (2012～)

Consolidated DLTC

USA・AUS・Asia China

Barley Tea "Mugi-

Cha" is Very Popular

Local Brand

USA China

Exchange

rate (US$)¥100.6 ¥111.2 ¥119.3 ¥108.4 ¥110

■ International Brand Strategy Strengthening of "Oi Ocha" Brand Development and Expansion ・ Unification of the Label Design ・ Inscriptions in the Corresponding Local Languages on the Product's Label

Strengthening of Sales of Tea Leaf Products

Product Development that is Corresponding to the Specific Area's Characteristics

Development of

"matcha Love"

Long-Term Vision & Medium and Long-Term Management Plan

18

Our Long-Term Vision

Management principle

"Always Putting the Customer First"

WAY We all do our best where ever we are, and we always smile.

That is why we can make you smile.

Strengthening Relationship with the Customers

Medium and Long-Term Vision

Comprehensive Beverage Company in Japan Challenges in New Business Sectors

To be a "Global Tea Company"

"We deliver Smile and Tea to where you are. "

Tea has power to make you smile and healthy.

19

Medium and Long-Term Management Plan

2018 – 2022

Medium and Long-Term Management Plan

2015 – 2017

Medium-Term Management Plan

1. Improving profitability of business in Japan 2. Sales release of Global Brand Products

FYE April 2017

Net Sales

Total Return Ratio

ROE

43.5％

¥475.8 billion

10.5％

FYE April 2022 Plan

Over 40％

Over 10％

¥600.0 billion

Long-Term Vision "Global Tea Company"

To be a "Global Tea Company"

1. Global expansion of " " and "Oi Ocha" Brands

2. #.1 market shares both in Domestic and Global Green Tea Markets

3. Training of "Tea Tasters" who can introduce Tea Culture in all over the world

Comprehensive Domestic Beverage Manufacturer, Challenges in New Business Sectors

1. Brand strengthening, development of new brands

2. Expansion of total number of customers, Improving profitability of business in Japan

3. Challenges in new business sectors

(Consolidated)

30th Anniversary of the "Oi Ocha" (February 2019)

The Tokyo Olympic and Paralympic Games (to be held in Tokyo in 2020)

FYE April 2020

Appendix

ESG and SDGs Activities

20

"Sustainable Development Goals (SDGs)" are Introduced to ITO EN's CSR/CSV Concepts ESG Classification

Major CSR Targets (KPI)

E

S

* These logos belong to the United Nations Information Centre

G

ESG in the Value Chains

21

Shared Values Produced by an Authentic Value Chains

Sales and Distribution Product planning and development

Production and Logistics Procurement

Control of the Value Chains ・Development of the Tea Leaves Raw Materials Producing Regions

・Training of the Tea Farmers

・Whole Volume Deals (Transactions)

The Tea-Producing Regions

Development Project ・Promotion of the Environment- Conservative Type of Agriculture

High Capability of Procuring Crude Tea

The Tea-Producing Regions Development Project ・An Effective Utilization of Abandoned Farmlands

G

S

E

Business Subcontractors Control

Block production and logistics systems

Resource Saving /Energy Saving Production ・NS System *

Used Tea Leaves Recycling System

Quality control system ・Increasing of the Brand Values ・Meet the consumer requests for security and safety

Patent Strategy /Trademark Strategy

ECO (Ecological) Containers ・Beverage Paper Packages, Not Containing Aluminum Sheets

Product Development Ability ・Provision of Healthy Values

Control and monitor sales activities

Compliance with the Regional Laws and Regulations

Prevention of the Global Warming ・Introduction of an Ecologically -Friendly Driving and Environmentally -Friendly Vehicles

Resource Saving and Emissions Reduction ・Collection of Empty Containers ・Recycling of All Waste Quantities by Recycling Agent

Route sales ・The community-based sales system

Tea Tasters System *

・Spreading and Inheriting the Tea Culture

Integrated system from tea plantation to tea grounds

* NS (Non-Sterilant) System * "The Tea Taster System" that had been operated as an in-house qualification system was approved by "Skilled Professional on ITOEN TEA TASTER " by MHLW on March 24, 2017.

ITO EN was ranked #18 "50 Companies That Are Changing The World"

Activities such as "Tea Harvesting Fields Development Project" and "Used Tea Leaves Recycling System" were Highly Evaluated. Those Activities were Featured in the Article of the Business Magazine "FORTUNE", which ranked ITO EN on the 18th Place, the Highest Position among All Japanese Companies. (Issue dated 1st September 2016)

©2016 Time Inc. All rights reserved. FORTUNE September 1, 2016 issue

Project of the Developing Green Tea-Producing Regions

22

Since 1970s Cultivation under contract with individual tea farms

Since 2001 The large-scale new tea farms business that uses abandoned farmlands, etc.

・Stable Procurement of a High Quality Green Tea Leaf made in Japan

・Training of the Tea Farmers

・Proactive Use of Abandoned Farmlands

Business Purpose Project of the Developing

Green Tea-Producing Regions

Green Tea Leaf for Matcha Used Tea Leaves Recycling System

A Recycling System that transforms "Used Tea Leaves" from manufacturing process of tea beverages into "Useful Resources"

Used Tea Leaves

(Annual Emission Amount: 49,000 Tons)

* Partially Including Budged Plan Values

Contracted Farms of Green Tea Leaf for Matcha (Tencha) in Kyoto and Kagoshima

3,285

3,630

4,371 4,892

957 1,034

1,226 1,401

2,000

0

500

1,000

1,500

2,000

2,500

0

1,000

2,000

3,000

4,000

5,000

6,000

'14 '15 '16 17

Est.

（ha） (Tons) Production volume (ton)

Dimention of green tea farms (ha)

Long-term target

2,000ha

* Including contract cultivation farms

Total Volume of Domestic Green Tea Leaf Production

89,300

100,000

85,000 84,800 83,500 79,500 80,200

18% 21%

27% 24% 24% 25% 25%

0%

10%

20%

30%

40%

50%

60%

0

20,000

40,000

60,000

80,000

100,000

'00 '05 '10 '13 '14 '15 '16

(Tons) Total Domestic Tea Leaf Production

ITO EN Consumption

ITO EN Consumption (%)

Data Collection (Data Base)

23

Management Indexes (Consolidated)

351.6 369.2

403.9

437.7 430.5

465.5 475.8 492.5

50.6

52.1 52.4 51.6 51.8

53.0 52.5 52.8

35

45

55

65

0

100

200

300

400

500

'11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4

Est.

（％） (¥ billion) Net Sales

% Cost of Sales

17.6

18.9 20.2 21.1

11.3

17.2

21.7 22.6

5.0 5.1 5.0 4.8 2.6

3.7

4.6 4.6

2

4

6

8

10

12

0

5

10

15

20

25

'11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4

Est.

（％） (¥ billion) Operating Income

% Operating Income

7.6

9.2

11.2 12.0

7.2

8.6

13.6 14.0

7.6 8.9

10.3 10.4

5.9 6.8

10.5 10.0

0

5

10

15

20

25

0

5

10

15

'11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4

Est.

（％） (¥ billion) Net Income

ROE

19.7 21.4

24.0 24.3

17.7

30.0 27.0 28.0

-2.1

-8.0 -9.2

-4.5

-9.2 -8.1 -8.2

-14.6

17.5

13.3 14.7

19.7

8.5

21.9

18.8 13.3

-20

-10

0

10

20

30

'11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4

Est.

(¥ billion) ＣＦ from Operating Activities

ＣＦ from Investing Activities

Free ＣＦ

2.0

5.6 6.6 4.8

3.7

8.6

8.1

13.4

3.4 3.6 3.9 4.2 4.5

5.2 5.4

6.3

5.5

7.2

9.8

10.9 11.0 10.8

7.0 7.0

0

2

4

6

8

10

12

14

'11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4

Est.

(¥ billion) Capital Investments

Depr. & Amort.

Leased Assets Depr.

48 48 48 49

50 50 50 50

38 38 38 39

40 40 40 40

65.6

54.4 44.5

42.4

72.0

61.0

38.3 37.4

0

20

40

60

80

100

0

20

40

60

80

'11/4 '12/4 '13/4 '14/4 '15/4 '16/4 '17/4 '18/4

Est.

（％） (¥) Dividend（Preferred Stock）

Dividend（Common Stock）

Payout Ratio

Net Sales & % Cost of Sales Operating Income Net Income & ROE

Cash Flows Capital investments & Depr. & Amort. Dividend & Payout Ratio

The purpose of the materials you have received is to provide the means for a more thorough understanding of ITO EN and should not necessarily be regarded as

a recommendation to invest. Furthermore, the data in these materials is based on what we believe is the most accurate information. However, please understand

that even without advance notice, both past data and future forecasts may be revised.

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