ITO EN, LTD.

ITO EN strives to enhance corporate value by pursuing a high level of management transparency and prudence, rigorous compliance, as well as timely and appropriate.

Overview of Corporate Governance Philosophy

To create a solid foundation for growth in corporate value, ITO EN recognizes the building of a robust corporate governance system as one of management's most important tasks. By reinforcing the Group's internal control system and developing an appropriate disclosure system, ITO EN aims to ensure a high level of management transparency. We believe that one of the main ways we can fulfill our corporate social responsibilities is by continuing our business operations based on sound management systems.

Overview of Corporate Governance System

ITO EN has adopted the corporate auditor system. Four outside corporate auditors attend each meeting of the Board of Directors, and provide objective and fair audit opinions on individual matters dealt with by the Board of Directors. In addition, based on the audit policies set by the Board of Corporate Auditors, the corporate auditors audit the directors' execution of duties.

Internal Control System

The four main objectives of the ITO EN Group's internal control system are:
1. Enhance the effectiveness and efficiency of the Group's business operations
2. Ensure the reliability of financial reporting
3. Ensure compliance with laws and regulations of the Group's business operations
4. Protect the Group's assets by ensuring proper procedures are followed and authorizations are received
To realize these objectives, and pursuant to the enactment of the Corporation Law of Japan on May 1, 2006, we have formulated basic policies covering the Group's internal control system. These include basic policies relating to information management, effective audits and the management of operations. The basic policy on the management of operations focuses on achieving sustainable growth and increases in corporate value. This is to be achieved through close cooperation with a wide range of stakeholders—local communities and wider society, consumers, shareholders, retailers, suppliers and financial institutions as we strive to fulfill our corporate social responsibilities.

Risk Management System

The ITO EN Group is working to reinforce its Group-wide capabilities for managing risk. This includes the appointment of a department to oversee risk management and the formulation of risk-related rules and guidelines. We recognize the following types of risk inherent in the execution of our business operations.

1. Compliance risk
   The Compliance Department is responsible for running Company-wide compliance training programs.
2. Information security risk
   The Company has formulated a Personal Information Protection Policy (privacy policy) to prevent leaks of personal information and has also strengthened computer security to prevent unauthorized access to information.
3. Product quality risk and environmental risk
   The Company has formulated Guidelines for Product Control Standards as part of a Company-wide system covering such matters as quality and product liability. Environmental risk is managed on a Group-wide basis through an environmental management system.
4. Receivables collection risk
   In accordance with credit management standards, the Company maintains stringent credit control and receivables management systems, and works to prevent losses owing to debtor bankruptcy.
5. Disaster and accident risk
   The Occupational Health and Safety Committee and the Disaster Management Committee have formulated procedures and manuals for dealing with emergency situations. The Company aims to maintain a system that will minimize any damages caused by disasters.

Disclosure

ITO EN discloses information in accordance with its disclosure policy, which includes the Company's basic stance on disclosure and complies with the Financial Instruments and Exchange Law of Japan and the Tokyo Stock Exchange's timely disclosure rules. The Company strives to conduct fair and timely disclosure to enhance wider understanding of the Company and its activities.