For the Year Ended April 30, 2013 [2.69MB]PDF

Financial Results for the Fiscal Year Ended April 30, 2013 ～ Towards the Achievement of Medium Term Management Plan ～

June 2013 ITO EN, LTD. Index

1. Beverage Market in Japan 2. Results of Operations FYE April 2013 3. Annual Forecasts FYE April 2014 4. Management 5. Category Results (Non-Consolidated) 6. Category: RTD Japanese Tea "Oi Ocha" 7. Category: RTD Tea "Barley Tea," "Jasmine Tea," & etc. 8. Category: RTD Black Tea and Coffee 9. Category: Vegetable and Dairy Products Beverage 10. TULLY'S COFFEE Business 11. Chichiyasu and Vending Machine Business 12. Overseas Businesses 13. Medium and Long-Term Management Plan

（Appendix） 1. Consumption Valuable Drinks per Capita 2. Market behind Green Tea 3. Developing Tea Farms Business 4. Sales Results by Packaging (Non-Consolidated) 5. Summary of Consolidated Balance Sheet & Other Data 6. ITO EN’s Business Structure 7. Other Topics 8. Key Management Indexes & Cash Flows (Consolidated) 1. Beverage Market in Japan

グラフ② Average Monthly Temperatures and Market Trend Precipitation (Tokyo area) chart① chart②

Processed 1995 2005 2015（Forecast） Monthly ave. temp foods ¥24,079.0 billion ¥23,010.5 billion ¥22,800.0 billion change from prev. yr. Precipitation (mm) 283 Alcoholic Alcoholic Alcoholic Bevarages Bevarages 4℃ 231 Beverages 16.5% 14.0% 215 3.3℃ 19.8% RTD 【Keys of Beverage Market】 RTD Others Others RTD Others Bevarages ・Increasing consumption per capita Bevarages The ratio of RTD 185 47.5% 3℃ 47.1% Beverages 48.8% 15.7% 16.5% composition would 155 154 ・Low birthrate & longevity and be UP 12.9% Confectione Confection Confectio health trend 130 ries Wheat Flour eries 10.4% neries ・Rising food safety and security 2℃ 1.6℃ Flour 9.7% Flour 11.0% products consciousness 1.1℃ 1.1℃ 70 9.8% 9.3% 11.0% 69 1℃ 30 45 (¥ billion) Total 25 4,000.0 -0.1℃ 0.8℃ 4,000 Tea was popular 0.7℃ Others/Functional 0℃ 0.7℃ Coffee was 3,715.6 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr popular 3,637.5 3,700.0 3,612.7 3,631.5 3,616.0 3,607.8 3,603.1 Sports Drink 183.6 -1℃ -0.2℃ 3,540.3 3,527.7 170.0 -0.9℃ 176.2 183.9 165.5 152.3 156.7 Carbonated 218.4 222.0 159.3 250.0 Mineral Water -1.4℃ was popular 288.9 252.2 -2℃ -2.2℃ 282.0 265.9 292.3 260.0 Alternative demand 276.3 259.6 3,100.2 260.1 230.0 211.3 232.0 Fruit -3℃ 206.6 214.0 210.2 252.7 3,000 97.7 157.5 219.2 Source: Japan Meteorological Agency, May 2012 to Apr 2013 325.0 379.6 325.7 Safe & security Vegetable 2,707.5 376.4 359.6 324.2 312.2 325.0 447.4 305.6 health-conscious Pioneering of 175.0 Canned Green Tea 190.0 146.8 167.4 Monthly Sales Trends 159.2 184.5 156.2 144.4 150.1 145.6 chart③ Coffee (YOY %) Pioneering of Canned Oolong Tea 20.2% 950.0 2,000 952.4 952.0 20% ITO EN 1,883.9 955.1 948.2 956.6 969.1 966.2 948.0 922.3 14.2% 15% 8.7% 12.0% 7.8% 8.7% 8.3% 1,424.8 Carbonated 10% Avoidance of alcohol 6.0% 11.2% 6.0% 5.0% 4.7% 710.0 5% 8.0% 538.5 555.9 581.9 592.0 603.3 643.4 642.5 680.0 648.9 3.5% 2.4% 1,000 0% 3.0% 3.0% 3.0% 3.0% 2.0% (Tea total) 1.0% 0.0% (931.3) (918.2) -1.0% (923.4) (910.5) (870.1) (885.0) (872.5) (871.5) (890.0) Other Tea -5% 484.3 497.2 508.4 (796.4) 508.5 488.1 510.0 497.5 488.5 490.0 Consuming increase Market 579.3 in senior-citizen -10% -7.0%

Green Tea -15% 447.0 421.0 415.0 402.0 382.0 375.0 375.0 383.0 400.0 217.1 0 85.2 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 1981 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2020 Forecast Forecast Source: ITO EN, May 2012 to Apr 2013 Source: ITO EN, Market: Calendar year - 1 - 2. Results of Operations FYE April 2013

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

Upper: Net Sales For the Year Ended For the Year Ended For the Year Ended For the Year Ended Bottom: Operating Apr. 30, 2012 Apr. 30, 2013 YOY % Apr. 30, 2012 Sales Apr. 30, 2013 Sales YOY % Income Change Composition Composition Change 5,476 6,487 18.5% ITO EN Net Sales 369,284 100.0% 403,957 100.0% 9.4% 394 471 19.5% (North America) 69,384$thousand 76,658$thousand 10.5% Gross Profit 177,071 47.9% 192,088 47.6% 8.5% INC. 5,078$thousand 5,705$thousand 12.3% Selling Commission 55,033 14.9% 64,000 15.8% 16.3% Tully's Coffee 18,048（19,383） 21,071 16.7% Japan Co., Ltd 2,008（2,126） 2,681 33.5% Advertising 12,156 3.3% 10,369 2.6% -14.7% 10,628 11,076 4.2% Chichiyasu Company 61 -199 － Transportation 8,911 2.4% 9,599 2.4% 7.7% 39,871 56,315 41.2% Domestic Subsidiaries Depreciation and 9,449 2.6% 12,246 3.0% 29.6% 1,468 1,487 1.3% Amortization 1,814 3,000 65.4% Selling, General and Other Subsidiaries 158,164 42.8% 171,837 42.5% 8.6% -65 190 － Administrative Expenses Consolidated Elimination of Internal -40,186 -45,805 － Operating Income 18,907 5.1% 20,250 5.0% 7.1% Transactions -1,209 -1,215 － ※Tully's Coffee Japan Co., Ltd. changed fiscal year end from Mar. 31 to Apr. 30 Ordinary Income 17,985 4.9% 19,914 4.9% 10.7% （ ） is 13 months in FYE Apr. 30, 2012 Extraordinary Expenses -795 － -430 － － and Income ■Breakdown of Gross Profit Change(Non-Consolidated) Net Income 9,249 2.5% 11,244 2.8% 21.6% For the Year (¥ billion) Ended Major extraordinary losses Impairment loss; 662 Impairment loss; 463 Apr. 30, 2013

Net Sales 332,297 100.0% 351,807 100.0% 5.9% Sales Changes 7.7 Changes in Product 46.7% 46.0% 4.4% -3.3 Gross Profit 155,192 161,990 Mix Fluctuations in 4.9% 4.8% 4.4% -1.3 Operating Income 16,131 16,834 Sales Prices Fluctuations in Raw

Non-Consolidated 4.8% 4.9% 8.6% 3.6 Ordinary Income 15,784 17,138 Material Costs, etc. - 2 - 3. Annual Forecasts FYE April 2014

■Summary of Operations （Consolidated and Non-Consolidated） （\ million） ■Forecasts of Subsidiaries （\ million） For the Year Upper: Net Sales For the Year Ended For the Year Ended For the Year Ending Bottom: Operating Ending Apr. 30, 2013 対前期比 Apr. 30, 2013 Sales Apr. 30, 2014 Est. Sales YOY % Income Apr. 30, 2014 Est. 増減率 Composition Composition Change 6,487 7,734 19.2% ITO EN Net Sales 403,957 100.0% 440,000 100.0% 8.9% 471 703 49.3% (North America) 76,658$thousand 81,500$thousand 6.3% Gross Profit 192,088 47.6% 209,562 47.6% 9.1% INC. 5,705$thousand 7,400$thousand 29.7% Selling Commission 64,000 15.8% 69,450 15.8% 8.5% Tully's Coffee 21,071 22,700 7.7% Japan Co., Ltd 2,681 2,900 8.2% Advertising 10,369 2.6% 12,524 2.8% 20.8% 11,076 12,500 12.9% Chichiyasu Company -199 150 － Transportation 9,599 2.4% 10,540 2.4% 9.8% 56,315 72,982 29.6% Domestic Subsidiaries Depreciation and 12,246 3.0% 12,601 2.9% 2.9% 1,487 1,844 24.0% Amortization 3,000 4,418 47.2% Selling, General and Other Subsidiaries 171,837 42.5% 186,562 42.4% 8.6% 190 242 28.0% Administrative Expenses Consolidated Elimination of Internal -45,805 -49,214 － Operating Income 20,250 5.0% 23,000 5.2% 13.6% Transactions -1,215 -1,189 － Ordinary Income 19,914 4.9% 21,500 4.9% 8.0% Extraordinary Expenses ■Breakdown of Gross Profit Change -430 － -500 － － and Income (Non-Consolidated) (¥ billion) Net Income 11,244 2.8% 12,300 2.8% 9.4% For the Year For the Year Ended Ending Major extraordinary losses Impairment loss; 463 Apr. 30, 2013 Apr. 30, 2014 Est.

Net Sales 351,807 100.0% 368,880 100.0% 4.9% Sales Changes 7.7 7.6 Changes in Product 46.0% 46.0% 4.8% -3.3 0.7 Gross Profit 161,990 169,704 Mix Fluctuations in 4.8% 5.0% 9.0% -1.3 0.0 Operating Income 16,834 18,350 Sales Prices Fluctuations in Raw

Non-Consolidated 4.9% 4.8% 4.2% 3.6 -0.6 Ordinary Income 17,138 17,850 Material Costs, etc. - 3 - 4. Management

Management Strategies Difference in Consolidated Operating Income chart① ¥400 billion for consolidated net sales: Achieved a year ahead of schedule

¥23 billion for consolidated operating income:Target for this FYE - ¥5.7 billion + ¥0.2 billion + ¥7.8 billion 【Enhance Domestic Sales & Distribution】 - ¥0.5 billion + ¥0.9 billion *Acquire new customers *Expand distribution and strengthen ties with existing ↑ ↑ ↑ ↑ ↑ customers ITO EN ITO EN Effects of Increase in Increase in ¥23.0 billion (Non-consolidated) (Non-consolidated) increase in operating income amortization of ¥20.2 billion Increase in goodwill & FYE 2014/4 *Strengthen field-marketing strategies Increase in gross consumption of Tully's, profit Selling, General & Chichiyasu, increase/decrease *Strengthen vending machine-marketing strategies Administrative tax FYE 2013/4 & NEOS in operating income *Strengthen area-marketing strategies Expenses of other subsidiaries ＝＝＝＝＝＝＝＝＝ ＝＝＝＝＝＝＝＝＝ *Complete cost reduction *Improve productivity and cost competitiveness Consolidated Cash Flow and improve profitability on subsidiaries

*Generate synergetic effects among the group CF from operating activities chart② CF from investing activities (¥ million) 26,100 Free CF 24,042 25,000 19,714 21,462 【Strengthen Branding】 17,191 *Strengthen distribution of Oi Ocha series 15,000 22,100 17,581 *Further brand-building of TEAS' TEA & TULLY'S COFFEE 13,394 14,769 5,000 10,621 *Brand-building of Ichinichibun-no-Yasai (a day's worth -5,000 of vegetables), Kenko Mineraru Mugicha (healthy mineral -2,133 -4,000 -6,569 barley tea), & etc. -15,000 -8,067 -9,272 '10/4 '11/4 '12/4 '13/4 '14/4 Est. Investment on 2,034 228 259 271 180 【Expand Overseas Businesses】 Software Capital *Expand ITO EN (North America) business and 1,868 1,852 5,377 6,368 3,600 Investments improve its profitability Depr. and 3,161 3,429 3,628 3,867 4,200 *Challenge to business in Asia Amort. Leased 3,872 5,582 7,263 9,851 10,600 *Effective use of free cash flow Assets Depr. Repayment of Lease obligations -3,975 -6,207 -8,467 -10,979 -12,200 (from investing activities) - 4 - 5. Category Results (Non-Consolidated)

（\ million） For the Year For the Year Ended For the Year Ended For the Year Ending Ended Apr. 30, 2012 Apr. 30, 2013 Apr. 30, 2014 Est. Apr. 30, 2011 YOY % Sales YOY % Sales YOY % Sales Change Composition Change Composition Change Composition Net Sales 329,631 332,297 0.8% 100.0% 351,807 5.9% 100.0% 368,880 4.9% 100.0%

Tea Leaves 30,962 29,123 -5.9% 8.8% 28,788 -1.2% 8.1% 31,257 8.6% 8.5%

Drinks 294,787 299,975 1.8% 90.3% 319,988 6.7% 91.0% 334,520 4.5% 90.7%

Others 3,882 3,198 -17.6% 0.9% 3,029 -5.3% 0.9% 3,101 2.4% 0.8% Japanese Tea 158,908 162,166 2.1% 48.8% 163,012 0.5% 46.3% 168,579 3.4% 45.7% /Healthy Tea Chinese Tea 16,327 15,607 -4.4% 4.7% 17,145 9.9% 4.9% 18,022 5.1% 4.9%

Vegetable 38,138 42,758 12.1% 12.9% 50,630 18.4% 14.4% 54,156 7.0% 14.7%

Fruit 14,902 12,874 -13.6% 3.9% 13,190 2.5% 3.7% 13,322 1.0% 3.6%

Coffee 24,530 22,923 -6.5% 6.9% 27,843 21.5% 7.9% 29,967 7.6% 8.1%

Black Tea 15,747 16,985 7.9% 5.1% 16,053 -5.5% 4.6% 16,592 3.4% 4.5%

Functional 5,058 5,887 16.4% 1.8% 6,100 3.6% 1.7% 6,587 8.0% 1.8%

Breakdown of Drinks Breakdown Mineral Water 11,346 8,595 -24.2% 2.6% 9,074 5.6% 2.6% 9,637 6.2% 2.6%

Carbonated 4,912 5,658 15.2% 1.7% 9,579 69.3% 2.7% 10,947 14.3% 3.0%

Others 4,915 6,517 32.6% 2.0% 7,358 12.9% 2.1% 6,708 -8.8% 1.8%

- 5 - 6. Category: RTD Japanese Tea "Oi Ocha"

RTD Green Tea Market Sales & ITO EN Share in RTD Green Tea chart① chart② (¥ billion) 500 50% 447.0 60% 421.0 2012 409.3 415.0 RTD Green 402.0 400.0 49% 48% 50% ITO EN 382.0 375.0 375.0 383.0 50% 46% 45% 45% 44% 44% 46% 400 40% 44% 44% 42% 44% 48% 2011 45% 45% 47% 45% 49% 309.4 40% 44% ITO EN 45% 43% 43% 43% 42% 42% 300 268.5 279.2 30% RTD 30% 217.1 20% 200 20% 21.3% 21.5% 22.0% 10% 20.5% 20.1% 20.4% 20.5% 20.7% 21.2% 8% 18.7% 10% 7% 6% 3% 4% 3% ITO EN 9.6% 2% 2% 4% 1% 2% 3% 14.8% 143.0 144.8 142.7 145.0 141.3 140.9 146.0 1% 3% 0% YOY % 1% 100 13.2% 130.3 135.8 10% 12.5% 119.3 0% 1% 101.8 ITO EN 0% 87.5 0% 0% -2% Market 66.3 75.8 -4% -10% -4% -4%-4% YOY % 0 0% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Forecast -20% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Total Share 31% 28% 31% 33% 29% 29% 32% 34% 36% 37% 39% 38% 37% 37%

Source: ITO EN, Calendar year Source: ITO EN, May 2012 to Apr 2013 RTD Green Tea Brand Strategy

■"Oi Ocha Ryokucha" (green tea) "Oi Ocha Koiaji " (dark) ■"Oi Ocha" series full line-up Renewed on May 27 Respond to product line for various tastes Comprehensive deliciousness Combine our works from farming Full line range from small to to manufacturing large bottle

Uses selected fine raw materials of tea leaves best suited for Oi Ocha

Reliable domestic materials supply

500ml 2L 1L 320ml 280ml ¥140 （tax excluded） ¥330 ¥230 ¥120 ¥115 (tax excluded） - 6 - 7. Category: RTD Tea "Barley Tea," "Jasmine Tea," & etc.

RTD Barley Tea Market RTD Jasmine Tea Market chart① chartグラフ②②

(¥ billion) (¥ billion)

50 20 45.5 46.0 17.0 ITO EN share 39.5 ITO EN share 40 15.0 34.5 60% 15 32.2 58% 58% 13.0 31.2 12.0 52% 58% 30 56% 10.5 47% 61% 10 45% 10.2 26.2 26.7 56% 55% 20 23.7 51% 9.8 9.1 ITO EN 18.0 5 6.7 7.1 15.1 ITO EN 10 13.9 5.7 5.4

0 0 '08 '09 '10 '11 '12 '13 '08 '09 '10 '11 '12 '13 Source: Market: Calendar year Forecast Source: Market: Calendar year Forecast ITO EN: May to Apr ITO EN: May to Apr

RTD Barley Tea Brand Strategy RTD Jasmine Tea Brand Strategy Proposal of RTD Health-related

■Healthy Mineral Barley Tea ■Relax Jasmine Tea ■Healthy Rooibos Tea New release on June 10 Supply water and moderate Jasmine's flower fragrance minerals such as potassium, Clear and mild taste Clean finish and goes with phosphorus, manganese, and （Non-fragrances） stronger taste meals sodium Uses 100 ％ rooibos tea leaves Less-caffeine Decocted savory aroma Food fiber: 7.5g and clear refreshing finish Vitamin C: 300mg （in a 500ml PET bottle） Non-caffeine Non-caffeine 630ml 500ml 500ml 15 tea bags ¥140 （tax excluded） ¥140 （tax excluded） ¥140 ¥350 (tax excluded） - 7 - 8. Category: RTD Black Tea and Coffee

RTD Black Tea Market RTD Coffee Market (¥ billion) chart① (¥ billion) chart② 969.1 1,000 966.2 949.5 948.0 952.0 950.0 250

Sugar-free 218.0 219.0 Black 210.0 200.0 194.5 195.1 800 200 Flavor Café au lait

150 600 Lemon Less

100 400 Long-term w/ Milk Target Blend Long-term ITO EN share 20％ Target 50 200 ITO EN share 7.8% 7.6% 8.3% 10％ 5.3% 7.2% Straight 2.0% 2.2% 2.6% 2.4% 2.8% 3.1% 2.9% 0 0 Source: Market:'08 Calendar '09 '10 '11 '12 '13 Source: Market: Calendar'08 '09 '10 '11 '12 '13 year Forecast year Est. Forecast ITO EN: May to Apr ITO EN: May to Apr RTD Black Tea Brand Strategy RTD Coffee Brand Strategy

■TEAS' TEA ■TULLY'S COFFEE Herb & Lemon Tea Lemon goes well with Canned bottle series black tea Fresh lemon aroma and Respond various tastes rich taste fit for adults for aiming to be No.1 in Black tea has canned bottle-coffee rich taste and aroma Mint made with cold water market helps after taste refreshed

Reduced caffeine by 90％ Herb mint goes well with lemon tea

285ml 500ml June 17 390ml 390ml July 1 ¥124 ¥133 ¥133 (tax excluded） ¥140 （tax excluded） - 8 - 9. Category: Vegetable and Dairy Products Beverage

Vegetable Beverage Market Dairy Products Beverage Market chart① chart②

(¥ billion) (¥ billion) 190.0 200 184.5 120 Market excluded diluted use 175.0 167.4 159.2 96.1 156.2 92.8 92.2 146.8 150.1 144.4 84.8 84.4 85.0 150 134.2 90 122.8 Fruit Mix

100 60 ITO EN share 30.9% 28.4% 30.2% 26.0% 23.7% 23.0% 23.8% 22.4% 20.6% 22.6% 50 19.3% 30 ITO EN share 80.8 87.8 65.5 69.5 60.0 60.9 56.1 59.2 61.7 5.1% 5.9% 37.3 43.3 3.6% Vegetable 0 0 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '08 '09 '10 '11 '12 '13 Source: Market: Calendar year Forecast Source: Market: Calendar year Est. Forecast ITO EN: May to Apr ITO EN: May to Apr

Vegetable Beverage Brand Strategy Dairy Products Beverage Strategy

■ITO EN recorded highest net sales by three consecutive terms ■Synergy with Chichiyasu Brand Available for long storage

Product line can be offered Propose new products and to various sales spaces its values continuously

Further expand product line, especially small packaged for individual and

canned products for long life Small ball-like lactic acid bacterium Enterococcus 200ml 190g 200ml 200ml 125ml faecalis ¥100 ¥115 (tax excluded） ¥115 ¥100 ¥100 (tax excluded） - 9 - 10. TULLY'S COFFEE Business

Number of TULLY'S COFFEE Shops TULLY'S COFFEE Business Overview chart① chart②

(Shops) ■Contributed largely to consolidated business results 600 (¥ billion) (¥ billion) 25 4 22.7 500 540 Net Sales Consolidated Subsidiary 21.0 513 (left) in Oct. 2006 19.3 2.9 461 20 400 Consolidated 2.6 3 410 Subsidiary 15.3 375 13.9 13.9 357 15 2.1 12.5 300 328 299 2 282 10 200 245 1.2 Operating 186 5.4 0.7 Income (right) 0.6 1 0.5 100 5 110 23 8 2 50 -0 0 0 0 '99/3 '00/3 '01/3 '02/3 '03/3 '04/3 '05/3 '06/3 '07/3 '08/3 '09/3 '10/3 '11/3 '12/4 '13/4 '14/4 '07/3 '08/3 '09/3 '10/3 '11/3 '12/4 '13/4 '14/4 Source: ITO EN ※ Including Koots Green Tea shops Est. Est.

TULLY'S COFFEE Growth Strategy

■Master specialty cafe ■Promote community based cafe ■Actively opening new shops on good locations ■Aired TV commercial in a limited area Provide "coffee workshops" and "picture book story-telling sessions" regularly

Conduct "Barista Contest" to enhance skills of "fellow" each other

a 500th aniversary shop in Kabukiza (Chuo-ku, Tokyo) ～ Opened in basement of GINZA KABUKIZA on March ～ - 10 - 11. Chichiyasu and Vending Machine Business

Chichiyasu Business Overview NEOS Company and Business Overview chart①

■Build more strong relationship with a focus on local Hiroshima ■NEOS Corporation has strong vending machine distribution networks (Ratio of number of sales offices: western Japan to eastern Japan is 7 to 3) Business Networks

Hokkaido area Head 1 office Office Tohoku area

Operation Center 6 offices

Sanin area 5 offices Sanyo area Chichiyasu has been loved for 127 years in Hiroshima Head 7 offices Office Koto-ku, Tokyo

Kanto area Shared office with ITO EN Chubu area 9 offices 7 offices Shikoku area Kansai area 8 offices Kyusyu area 3 offices Eastern Japan map includes Hiroshima prefecture 10 offices

For taking advantage of both ITO EN and Chichiyasu About a vending machine business operated by ITO EN and NEOS ■Acquire new customers ■Product developments with both strength ■Efficiency in operation ■Expand dry-products distribution in nationwide ■Joint-procurement by ITO EN ■Shared use of both infrastructures etc. ■Conduct business negotiations for chilled products make... by both ITO EN and Chichiyasu ■Share both sales offices and information about shops Realization of efficiency or sales places, and efficiency in production and logistics system, etc. and cost reductions make...

Realization of advancement for synergetic effects - 11 - 12. Overseas Businesses

China・Zhejiang ($ million) The ITO EN Group New York moved into Ningbo Shunyi Tea Products Co., Ltd. 90.0 the black 81.4 -Manufacture, export & sales of tea leaves ITO EN (North America) INC. 76.7 80.0 -Sales of beverages & tea leaves 69.4 63.6 70.0 58.9 Hawaii 60.0 47.9 49.7 50.0 China・Fujian ITO EN (USA) INC. 40.3 -Manufacture & sales of beverages 40.0 Fujian New Oolong Drink Co., Ltd. Sales of ITO EN (North America) INC. -Manufacture, export & sales of beverages 30.0

20.0 11.8 6.8 10.0 2.6 3.9 0.5 0.0 '02/4 '03/4 '04/4 '05/4 '06/4 '07/4 '08/4 '09/4 '10/4 '11/4 '12/4 '13/4 '14/4 Australia Singapore Est. ITO EN AUSTRALIA PTY.LIMITED ITO EN Asia Pacific Holdings Pte. Ltd. Florida -Manufacture & sales of tea leaves and sales of beverages -Promote business in Southeast Asia Mason Distributors, Inc. -Manufacture & sales of

China・Shanghai

ITO EN BEVERAGE (SHANGHAI), LTD Steadily advance development in Asia -Sales of beverages products in China Develop actively into Japanese supermarkets Myanmar & convenience stores （Dec. 2012） ITO EN Yangon Representative Office（tentative） South Korea -Plan to establish for researching investing environment and market in Myanmar Started sales of beverages through an local agent in Mar. 2013

Viet Nam 【Keys of Overseas Business】 Expanding "Oi Ocha" around IT companies ITO EN Hanoi Representative Office Taiwan in Silicon Valley, USA -Established for researching investing environment and OKINAWA ITO EN Taiwan branch market in Viet Nam (Oct. 2012) ■Expand business scale in U.S. -Sales of tea leaves and beverages in Taiwan Active sales of ITO EN products （Sep. 2012） ■Boost distribution in China （Shanghai) & Taiwan Singapore ■New challenge to Southeast Asia countries ■Buildup producing functions in Australia and etc. ITO EN Singapore Pte. Ltd. -Sales of beverages and tea leaves Joint venture, established with local company （Oct. 2012） For aiming to become a "Global Tea Company", Establishing management foundation - 12 - 13. Medium and Long-Term Management Plan

To be a "Global Tea Company" - Long-term management vision Strengthen domestic management bases and accelerate overseas development Global Mid-Term The Pass Point Tea Company Management Plan for Long-Term ※Handle whole tea business Drastic buildup including leaves and beverages Started Mid-Term Plan from tea farms to recycling of existing fields Establish used tea leaves Changed in managerial environment new management Create a new food culture ・Consumption trend Challenge towards foundations ・Low birthrate and longevity the new growth around the world and propose ・Economic climate, etc. a new lifestyle

Changed in business Innovative changes to environment high profits company Net Sales: ¥500 billion ・Tough competition OP margin: 8% in the industry FYE April 2014 Payout ratio: more than 40% ・Accelerated competitors' (Consolidated) Establish the status Net Sales: more than Achieved as a Overall Beverage FYE April 2011 ¥400 billion Company in Japan Net Sales: ¥351.6 billion Operating Income: ¥23 billion Operating Income: ¥17.6 billion (Consolidated) (Consolidated)

- 13 - Appendix 1. Consumption Valuable Drinks per Capita

Source: Production volume: Japan Soft Drink Association 1995 2000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year Total population: Ministry of Internal Affairs and Communications Bureau of Statistics（ National Institute of Population and Social Security Research） RTD Beverege 1,273 1,549 1,721 1,785 1,793 1,853 1,831 1,796 1,867 1,907 1,977 1,996 2,129 （10,000 kiloliters ） production volume The Data from U.S.: Euromonitor International

Total population 125.6 126.9 127.8 127.8 127.9 128.0 128.1 128.0 128.1 127.8 127.5 127.2 126.9 126.6 126.2 125.7 125.2 124.7 124.1 （million）

Annual consumption （ℓ） per capita 101.4 122.1 134.8 139.7 140.3 145.0 143.4 140.9 145.8 149.3 155.1 156.9 Increase total average difference 171.5 Average annual expenditure per household 〃 （YOY change） - +2.4 +8.1 +4.9 +0.7 +4.7 ▲1.6 ▲2.5 +4.9 +3.6 +5.7 +1.9 from a previous year estimated to （ℓ） （Generation/Year) 〃 （total average） - +2.4 +3.0 +3.3 +2.9 +3.2 +2.6 +2.1 +2.4 +2.5 +2.7 +2.7 2.5L each year +2.5 （ℓ） （¥ thousand） Annual consumption 【 Alcoholic Bevarages 】 2000 70.0 per capita in U.S. 218.6 234.0 258.0 258.0 262.1 265.9 259.5 253.7 253.0 254.1 254.8 254.8 （ℓ） 2006 Source: The Data from U.S. 60.0 Avoidance of 2011 171.5 Annual consumption per capita alcohol from Forecast 50.0 （ℓ／year） young 9.8 （ℓ） 40.0 155.0 156.9 30.0 149.3 13.1 145.8 8.2 9.8 Others/Functional 150 145.0 143.4 20.0 139.7 140.3 140.9 9.1 9.2 12.6 10.0 134.8 11.7 9.6 12.7 Sports Drink 8.8 24.8 11.0 11.8 12.9 0.0 29 or less 30s 40s 50s 60s 70 or more 13.0 14.3 age 122.1 12.1 13.6 12.8 Mineral Water 12.9 12.3 21.9 21.7 7.2 （¥ thousand） Consuming 10.8 20.2 12.7 【 RTD Tea 】 15.1 16.4 8.0 increase in 15.8 16.4 Fruit 10.9 11.2 14.1 5.2 senior-citizen 101.4 10.2 12.6 12.6 7.0 6.0 100 7.0 14.0 11.9 12.7 8.3 14.3 12.4 11.4 4.4 4.8 Vegetable 13.8 13.6 23.3 5.0 4.0 4.0 7.9 3.5 3.8 3.6 4.0 18.4 3.5 3.6 23.1 22.8 Coffee 3.0 22.5 22.7 22.7 22.8 22.8 22.8 2.0 15.8 21.3 22.9 1.0 20.6 32.0 0.0 Carbonated age 29 or less 30s 40s 50s 60s 70 or more 29.4 29.2 19.7 21.4 22.6 23.7 26.9 27.9 50 21.6 20.6 25.5 Alternative demand for 2005 22.1 （¥ thousand） 【 Mineral Water 】 (50.6) 4.0 tap water 2008 (42.9) (43.3) 25.5 3.5 (42.0) (41.5) (41.8) (39.6) (40.5) (39.9) (42.7) (43.4) (Tea total) 2011 23.6 22.1 24.0 24.9 Other Tea 3.0 23.4 22.4 23.3 22.0 23.1 22.4 24.6 (33.8) 2.5 25.9 2.0 (20.8) 1.5 17.3 Green Tea 25.1 1.0 18.5 20.7 19.1 19.3 18.5 18.1 18.5 17.6 17.5 17.4 0.5 8.0 3.5 0.0 0 29 or less 30s 40s 50s 60s 70 or more 1995 2000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2020 age Source: ITO EN, Calendar year Source: Household - Appendix expenditure 1 survey- Appendix 2. Market behind Green Tea

Market Volume & Annual Consumption per Capita Ready-to-Drink Beverage Ratio chart① chart② Market size Market size Annual consumption RTD bevarage (¥ billion) ratio (¥ billion) ■The potential to expand in RTD Green Tea market per capita (ℓ) ■Formed market steadily and slowly 1,200 35% 1,467.3 1,500 Leaf / Beans 100 Forecast Consumption 1,000 30% Cans / Plastic 92ℓ 80 25% 800 1,000 80ℓ Coffee RTD Ratio 60 20% 684.0 600 Green Tea RTD 40 15% 500 952.4 400 272.5 10% 159.0 20 RTD Coffee Market 375.0 19ℓ 200 218.0 131.0 12ℓ RTD Green Tea 5% 0 0 0 0% RTD ratio 21.2% 40.1% 49.5% 35.7% '64 '67 '70 '73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06 '09

Source: ITO EN Green Tea Black Tea Oolong Tea Coffee Source: ITO EN 2010

Expenditures of Green Tea per Person by Household Type Household Composition Statistics：Prevalence of Raised Blood chart③ chart④ chart⑤ (Thousand (¥) ■One-person household ■Health-conscious to be a global problem 9,000 20,000 7,758 ⇒ Simplified 8,000 One-person Male 29.2% 30% 26.4% 7,000 households Female 24.8% Green Tea （Leaf） 16,000 25% 6,000 単独世帯の増加 RTD Tea （Drink） 予測 Parent(s) & 16.7% 5,000 4,129 ■Easy-to-use ratio has 20% 4,000 3,456 Child 12,000 the potential to become big 15% 3,000 10% 1,867 Couple 2,000 1,373 1,483 5% 1,000 8,000 0% 0 Other Japan World Single Single More than two- （Male） （Female） person household 4,000 Source: WHO2012 (statistics of 2008) Source: Household expenditure survey 2011 by the Census and '80 '85 '90 '95 '00 '05 '10 '15 '20 '25 '30 Percentage of population aged 20 years old, Statistics Department in Ministry of Public Management Source: Population Statistics of Japan 2008 by National Institute of Population and Social Security Research raised blood pressure≧140 or diastolic- blood Appendix pressure≧ 290 -） Appendix 3. Developing Tea Farms Business

グラフ① Domestic Supply and Demand of Project of the Developing Green Tea (crude tea leaves basis) Green Tea-Producing Regions chart①

（ton） （ha） Production volume 3,000 2,690 2,780 2010 2011 2012 Area of green tea farms 2,600 1,500 2,360 Tons YOY% Tons YOY% Tons YOY% 2,120 Domestic Tea 85,000 -9.9% 84,100 -1.1% 87,900 4.5% 1,910 Leaf Production 2,000 1,000 Import 5,906 -19.9% 5,393 -8.7% 5,473 1.5% 860 880 1,210 850 Export 2,232 15.1% 2,387 6.9% 2,351 -1.5% 790 810 690 Domestic 1,000 800 ■Long-term target 2,000ha 98,090 -3.7% 95,100 -3.0% 97,000 2.0% 500 Consumption 470 ITO EN 22,761 3.3% 21,258 -6.6% 20,355 -4.2% 380 Utilize abandoned arable farms Utilization and activate agriculture (Ratio of Production of (26.8%) (25.3%) (23.2%) Tea Leaf) 0 0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Source: ITO EN, Period: ITO EN (May to April), Others (Calender year) Plan Plan Plan ※ Including contract cultivation farms ■In Oita prefecture, Project of the Developing Green Key Points of Project of the Developing Tea-Producing Regions Green Tea-Producing Regions Number of Agricultural Workforce Promoting development farms from 2007 In March 2013, started operation on crude tea leaves (thousands Agricultural workforce cooperative （age） processing plant of people) Average age Agricultural Holdings relationship 3,890 local communities, 4,000 70 municipality & etc. 3,350 ■Stabilize procurement of ■Utilize abandoned arable farms 3,000 2,600 Long-term raw materials ■Stabilize farm management contract ■Improve quality of raw materials 2,000 65 Win-Win 65.8 ■Profitability ・Mechanization ■Reduce cost of raw = decrease production materials significantly ■Reinforce traceability of 1,000 63.2 costs Technical Supports ■Fostering of Labor products 61.1 saving Bulk Purchasing 0 60 '00 '05 '10 Source: The Ministry of Agriculture, Forestry and Fisheries, Japan - Appendix 3 - Appendix 4. Sales Results by Packaging (Non-Consolidated)

（Thousands cases） Total (May to April) For the Year Ended Apr. 30, 2012 For the Year Ended Apr. 30, 2013 For the Year Ending Apr. 30, 2014 Est. YOY % Sales YOY % Sales YOY % Sales Change Composition Change Composition Change Composition Total Volume 199,885 3.5% 100.0% 216,948 8.5% 100.0% 224,959 3.7% 100.0% Cans 23,213 5.9% 11.6% 26,137 12.6% 12.0% 27,047 3.5% 12.0% Total PET (plastic) bottles 154,039 0.7% 77.1% 164,767 7.0% 75.9% 169,449 2.8% 75.3% 2L PET 52,819 5.2% 26.4% 56,003 6.0% 25.8% 57,074 1.9% 25.4% 500ml PET 60,403 -1.2% 30.2% 62,508 3.5% 28.8% 64,361 3.0% 28.6% 350ml & smaller PET 27,222 -0.6% 13.6% 30,385 11.6% 14.0% 31,090 2.3% 13.8%

Containers Other PET 13,593 -4.5% 6.8% 15,869 16.7% 7.3% 16,922 6.6% 7.5% Cartons 20,518 23.6% 10.3% 24,000 17.0% 11.1% 26,935 12.2% 12.0% Others 2,114 27.7% 1.1% 2,041 -3.4% 0.9% 1,527 -25.2% 0.7%

Sales Volume Composition by Packaging Eco-Friendly PET Bottles

Market ITO EN Cans 2L PET ■Expanding lightening of different size bottles gradually Cans Large-sized PET Smaller-sized PET Others 500ml PET 350ml & smaller PET Other PET Others Eco-friendly PET bottle 100% "NS system" 9% 9% 9% 10% 11% 12% NS = Non-Sterilant 7% 7% 7% 80% 30% 30% 31% 14% 14% 14% Label thickness:

60% 45μm ⇒ 20μm 32% 30% 29% Bottle about 30 % lighter 28% 29% 29% 40% Reduce the cost of 26% 26% 26% 20% energy by distribution and 33% 32% 31% materials 11% 12% 12% 0% Source: ITO EN '10 '11 '12 '11/4 '12/4 '13/4 Market (Calendar year) - Appendix 4 - Appendix 5. Summary of Consolidated Balance Sheet & Other Data

Balance Sheet Change as of April 30, 2012 and 2013 Numbers of Customers chart①

Items 2012/4 2013/4 Change Description of cｈange （Numbers of customers & vending machines) Current assets 121,549 129,025 7,475 (Major contents） 250,000

Cash and deposits 43,872 44,856 983 Number of Customers Notes and accounts receivable 37,181 40,750 3,568 ← Due to increase in sales 200,000 Inventories 26,817 28,928 2,110 ← NEOS on Balance Sheet Fixed assets 66,468 75,885 9,416 150,000 (Major contents） Land 17,359 17,978 619 100,000 Number of Vending Building and structure 15,395 17,297 1,902 ← Related on subsidiaries Machines 50,000 Lease assets 27,929 33,561 5,631 ← Mainly increase in lease on vending machines Intangible fixed assets 22,501 24,803 2,302 (including NEOS) 0 (Major contents） '10/4 '11/4 '12/4 '13/4 '14/4 Goodwill 14,432 17,258 2,826 ← Aquisition of NEOS shares Plan Software 6,171 5,705 -465 Investments and other assets 14,324 15,256 931 Sales composition by Channels chart② Total assets 224,843 244,970 20,126 ← Aquisition of NEOS shares グラフ Current liabilities 64,258 70,880 6,621 ITO EN ■Bond Rating (Major contents） A+ Others Notea and accounts payable 25,984 29,474 3,490 ← Due to increase in sales 19% Lease obligations 9,653 11,778 2,124 ← Lease on vending machines ■Corporate bond (including NEOS) registration Accrued expenses 17,779 18,023 244 11% Supermarkets Straight bond 4,882 4,521 -361 38% Income taxes payable 50 billion yen 37% (unissued 30 billion yen） Vending 32% Non-current liabilities 54,575 60,147 5,572 Machines (Major contents） 17% ■Equity ratio 20% Long-term loans payable 5,577 6,602 1,025 ← Bank loans of subsidiaries '13/4 46.3％ Corporate bond 20,000 20,000 0 '12/4 47.1％ ← Straight bond Convenience Lease obligations 19,564 22,214 2,650 ← Lease on vending machines (including NEOS) Stores Tatal non-current liabilities 118,833 131,028 12,194 ← Aquisition of NEOS shares 26% ※ Acquisition of own shares and etc. Source: ITO EN Market Inner circle (Market): Jan to Dec 2012 - Appendix 5 - Total liabilities and net assets 106,010 113,942 7,931 Outer circle (ITO EN): May 2012 to Apr 2013 Appendix 6. ITO EN’s Business Structure

The Company Mission Statement ITO EN's business model allows the risk management & prompt actions Our mission is to always put the customer first and spare no effort in carrying out our business activities, as we strive to earn the confidence and Customers trust of society.

Retailers/stores Route Sales System Contact customers directly with employees Field Marketing Delegation of authority Sales Visit stores, ensure selling spaces, and strengthen Share success cases sales promotions Corporate-wide Regional Block Production proposal system and Distribution System Hokkaido/Tohoku Area by employees & customers 5 blocks 26 offices "VOICE" System Management Fabricationless

Production to reduce capital expenditures and transportation cost Quality Control System R & D Production Chubu Area 19 offices Confirm the safety during each phase of products, raw materials, & materials Northern/Eastern Kanto Area 44 offices Sales = (existing customer+new customer) × × Southern Kanto Area frequency of purchase unit price of purchase 27 offices Sales force = Sojourn time in store×Frequency of visits ２ Tokyo Area 26 offices Kansai Area Chugoku Shikoku 25 offices /Kyushu Area 34 offices 5 production & distribution regional blocks As of May 2013 - Appendix 6 - Appendix 7. Other Topics

Approach for supporting the Great East Used Tea Leaves Recycling System Japan Earthquake

■Holding "Ochakko-kai" tea events ■Effective utilization of large amounts of used tea leaves Samples of used tea leaves recycling goods With introducing "how to prepare delicious (Received The Grand Prize for the Global Environment Award) tea" and "healthiness of green tea," having tea gatherings in the temporary shelters on a regular basis in Miyagi, Iwate, and Fukushima prefecture

【Application of used tea leaves recycling system】

Gradual introduction of paper napkin contains "Silver Skin" of coffee beans' peel in TULLY'S COFFEE shops

Lake Biwa Conservation Activities "Green Tea for a Beautiful Japan"

Promoted since 2008 in the Kansai region Donated some proceeds from sales of for 5 years in 2012 "Oi Ocha" to environmental conservations and maintenance activities in every region of the country, such as Mt. Fuji and ITO EN employees and residents of local Itsukushima Shrine communities work together to conduct reed cutting and other environmental preservation activities ITO EN employees for Lake Biwa's water quality participate in such volunteer activities Donated a portion of sales from "Oi Ocha"as proceeds to support Lake Biwa conservation activities - Appendix 7 - Appendix 8. Key Management Indexes & Cash Flows (Consolidated)

Net Sales & % Cost of Sales Operating Income Net Income chart① chart② chart③

Net income (¥ billion) Net Sales （％） (¥ billion) Operating Income 440.0 （％） (¥ billion) （％） % Operating Income % Net Income % Cost of Sales 65 25 12 403.9 22.7 23.0 12.2 12.3 400 369.2 21.0 11.6 8 351.6 20.2 11.2 19.7 19.2 328.0 332.8 332.9 20 18.9 10 10.4 310.2 17.6 10.0 288.0 17.5 10 9.2 300 263.7 55 8.7 6 239.2 15 8 7.6 12.4 52.1 52.4 52.4 10.6 5.9 50.8 50.9 7.3 7.5 7.3 7.3 200 49.7 49.4 50.6 4 49.3 10 6 4.7 48.5 48.9 4.0 4.1 4.0 45 5 5.9 3.6 3.1 100 5.1 5.2 2.8 2.8 2 5 5.0 5.0 4 2.5 2.2 1.8 3.7 1.4 3.2 0 35 0 2 0 0

'04/4 '06/4 '08/4 '10/4 '12/4 '14/4 '04/4 '06/4 '08/4 '10/4 '12/4 '14/4 '04/4 '06/4 '08/4 '10/4 '12/4 '14/4 Est. Est. Est.

Cash Flow Capital investments & Depr. & Amort. ROE & ROA chart④ chart⑤ chart⑥ Software Capital Investments (％) ＣＦ from Operating Actitivities (¥ billion) (¥ billion) Leased Assets Depr. ROE ＣＦ from Investing Activities Depr. & Amort. 30 26.1 12 10.6 ROA Free ＣＦ 24.0 9.8 20 21.4 19.7 10 15.9 15.9 20 17.1 14.7 15.0 13.0 7.2 11.1 8 15 22.1 10.6 10 5.5 10.3 10.5 4.9 5.3 10.6 17.5 8.9 8.3 13.3 14.7 6 7.0 6.3 10 7.6 3.8 5.3 9.9 10.1 6.0 0 -3.4 -1.8 4 9.5 4.5 8.7 4.7 -9.2 4.3 2.6 4.2 -2.1 3.8 5 6.9 -4.0 3.1 3.4 3.6 3.6 -4.7 2 2.8 -10 -7.2 -6.5 4.4 4.8 4.9 -8.0 -9.2 2.3 4.1 1.8 1.6 1.8 1.8 3.0 3.5 1.2 0 -14.5 -14.1 0 -20 '06/4 '08/4 '10/4 '12/4 '14/4 '06/4 '08/4 '10/4 '12/4 '14/4 '04/4 '06/4 '08/4 '10/4 '12/4 '14/4 Est. Est. - AppendixEst. 8 - Advisory Note about the Materials

The current plans, forecasts, strategy, etc. outlined in these materials have not yet been realized and are based upon ITO EN management's best judgement given current obtainable information. Therefore, given only this forecasted information, please refrain from interpreting these materials as grounds for general conclusion. Please acknowledge that, depending on various important factors, actual operationg results can be quite different from what has been projected. The following are some principal factors that affect actual operating results: 1) Weather, especially summer temperatures; 2) Product mishaps or accidents, such as products being found containing foreign substances or impurities; 3) The economic conditions, particularly shifting consumer trends, surrounding ITO EN's operating environment; 4) In the midst an intensely competitive market characterized by things such as easily changing consumer tastes and preferences, the ability of ITO EN to continue the planning and development of products and services that meet customers' expectations. However, it should be noted that factors influencing operating results are not limited to these alone. 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.