ITOHAM YONEKYU HOLDINGS INC.

Itoham Yonekyu Group

2021 Integrated Report
Itoham Yonekyu Holdings Inc.
1-6-21 Mita, Meguro-ku, Tokyo
URL : https://www.itoham-yonekyu-holdings.com/english/

Group Philosophy

We will contribute to achieving
a sound and affluent society
through business.

Contents
12357Group Philosophy
Contents/Editorial Policy
The History of Itoham Yonekyu Holdings
Message from the President
The Itoham Yonekyu Group’s Value Creation Process
Special Feature:

9

The Start of the Medium-term Management Plan 2023

11
13
17

Financial and Non-Financial Highlights
Business Overview
Message from the Director in charge of Sustainability
Strong Organizational Foundation:

19
20
21
22

26
27
30
32
33
35

Environmental Management
Initiatives to Reduce Environmental Impact
Preserving Biodiversity
Water Resources
Safety and Reliability Initiatives
Aiming for Customer Satisfaction
Supply Chain Management
Becoming a Company that Continues to Grow with theCommunity
Human Resources Management
Corporate GovernanceCompliance
Risk Management
Officers
Editorial Policy
This integrated report was created to allow shareholders, investors, and all
Officer Skill Matrix

37
43

Financial and Corporate Data
Stock and Corporate Information

23
24

other stakeholders to get a better understanding of the history of both Itoham
and Yonekyu and the Itoham Yonekyu Group's medium- to long-term value
creation process.

Scope
Period Covered
This report covers initiatives from FY2020 (April 1, 2020 to March 31, 2021)
and includes some initiatives from outside this period, as well.
Entities Covered
Itoham Yonekyu Holdings Group* Scope of personnel and environmental data are listed separately.
Reference Guidelines
The International <IR> Framework from the IIRC (The International Integrated
Reporting Council)
The Environmental Reporting Guidelines 2018 from the Ministry of theEnvironment
Sustainability Reporting Standards from GRI

Disclaimer
The perspectives on future strategy and results listed in this integrated reportare based on currently available information and include some uncertain
factors. Please be aware that it is possible for actual results to greatly differ
due a variety of causes.

1

Itoham Yonekyu Group Integrated Report 2021

Itoham Yonekyu Group Integrated Report 2021

2

The History of Itoham Yonekyu Holdings
I

ItohamY Yonekyu

Start of Japanese-style
1920s- The
Western Food
Western technology and culture were incorporated into every field throughprosperity brought on by the effects of World War I. Curry, omuraisu, andother Japanese-style western foods gained in popularity, but they were still
only delicacies for some of the wealthy.

1928 Iof
1960s- Westernization
Eating Habits

1990s- Changes in Lifestyles

2020s- Increasein home Demand

Together with long-term economic growth, the environment aroundfood encountered great change. It became possible to consume fish,
meat, ham, sausage, dairy products, soft drinks, and more at any timethrough the introduction of super markets, the popularization of electric
refrigerators, and the development of cold chain low-temperaturetransportation, and eating habits were quickly Westernized.

Following the social progress of women and other changes in lifestyles,
the need for individual meals and small quantity products increased
and the market for cooking products and processed foods that also
met the needs of time reduction expanded. Interest in safety andsecurity and a trend towards health also grown.

There was a decrease in dining out and an increase ineating meals at home from the effects of stay-at-homemeasures due to the spread of COVID-19. Demand forcook-at-home food, including frozen cooked foods, bentos,
and prepared meals, increased.

1990 Y

1965 Y
Kiyokazu Shoji founds Yonekyu
Foods by himself to process
meat and be a wholesalerin Numazu, Shizuoka.

Entrepreneur Denzo Ito founds Ito Food Processing by himself.

1934 I

Birth of a best-selling product

The Cellophane Wiener (currently Pole Wiener) is
launched.
President Ito reuses cellophane scraps as casings with aunique rolled paste. The casings were stuffed with processedwith sausage made mainly from pork, and the Cellophane
Wiener was developed as stick-shaped products with each
one weighing 37.5g.

1972 Y

Birth of Yonekyu’s best-known product

Gotemba Kogen “Arabiki” is launched.
Gotemba Koben Arabiki Pork is launched with the aim ofdeveloping coarsely-ground wieners as a new representative
product for Yonekyu, as this type of sausage was recognized
for its flavor. This product was named for its high-class feel
and, more than anything else, for its associations with Mt. Fuji.

Birth of a best-selling product

Smoke Ham and Daruma Smoke Ham is launched.
Smoke ham was made by smoking
pork ham meat which is cut into threepieces. Daruma Smoke Ham, known
for its name due to a shape resembling
Japanese daruma dolls,
is a best-selling product.

2009 I2020
The Marude Oniku! series islaunched.
Soy-meat products, the Marude Oniku! that
reproduce the textures, flavors, and aromas ofmeat, was launched. A wide variety of products
have been developed, resembling deep-friedmeat cutlets, fried chicken, and more.

Y

Mitsubishi Corporation, Itoham Foods Inc., and Yonekyu Corporationentered into a comprehensive business contract.

2013 I
Kobe Series is certified as a Kobe Special PR
Partner.

2020
Participation in the TANPACT businesscollaboration.
Our company participated in the TANPACT
business collaboration, agreeing with the idea ofmaking Japan healthy through whey protein with
the TANPACT brand developed by Meiji Co., Ltd.
TANPACT Salad
Chicken stick1974 I
Skinless Wieners (currently Palky)is launched.

The Toride Plant is built in Toride,
Ibaraki, introducing cutting-edge
equipment for that time.

2014 I
Improvements in the Quality
s- of Eating Habits

1940

Food scarcity continued for a while after World War II, but eating habits
greatly improved through food supply aid from The United States andthe establishment of a school lunch system. Bread came to be an
important staple for Japanese people.

1946 I
Ito Foods is revived in Bingocho,
an area in the Nada Ward of
Kobe, Hyogo.

1958 I

1981 YThe industry’s first factory
dedicated to dry-cured ham isbuilt.

Mutton, which at the time had been criticized for being pungent and inedible,
is quickly imported from mutton-producing New Zealand. Inexpensive anddelicious pressed ham is developed thanks to deodorization through unique
technology and cleaning. With this development, ham becomes widespreadas something that anyone could easily eat.

1959 IThe Meguro Plant is built in Tokyo’s Meguro Wardand the company expands to Tokyo.
Itoham Yonekyu Group Integrated Report 2021

2016 I

Response to eco-friendly packaging.
Our company has started shifting towards environmentally-friendly
packaging materials both for new and existing products.
This is for reducing both CO2 emissions and the amount of plastic usedby switching to biomass plastics, making packaging film thinner, and more.
▶ For details, see page 21.

Y

Itoham Yonekyu Holdings Inc. is established.

2017
1985 I

Birth of Itoham’s best-known productHandmade Bayern Wieners is launched.

Unique technology

A technology to use mutton as an ingredient in ham sausage
is developed.

3

The GRAND Alt Bayern is launched whichis rebranded as Alt Bayern.

2021

1988 I

Development of the world’s smallest wiener

Pork Bits is launched.
As a result of marketing research, itbecame clear that there were many
consumers who desired ease of cooking.
Pork Bits, the world’s smallest wienerrs that
could be cooked easily and could be used
as ingredients in any food, were developed.

Additional shares of ANZCO FOODS JAPAN LTD are acquired
and it becomes a wholly-owned subsidiary.

2019

2021

Kyushu Extract Limited isfounded as a joint venturewith Mitsubishi Corporation
Life Sciences Limited,
producing meat extracts andseasoning products.

Onikuya-san no Daizu MEAT is launched.
Our company launched Onikuya-san no Daizu MEAT, a raw, high-protein soy
bean-based material with the same texture as meat, as a third source of protein
after meat and fish. This product can be flavored or cooked at home as desiredas the product is uncooked.

2019
Shares of MEIJI KENKO HAM
CO., LTD. are acquired and it
becomes a wholly-owned
subsidiary (business
transferred to Yonekyu
Corporation in FY2020).
Itoham Yonekyu Group Integrated Report 2021

4

Message from the President

We continue to be a corporation that quickly and accurately
responds to global changes, proves our trustworthinessto our customers, and meets their expectations.

Prologuewith our Group product and sales strategies. We also took on aeffect of the merger, but we did not meet our goals for net sales

sustainability, we will establish a Sustainability Committee thisstance with our corporate activities that put protecting the healthor ordinary income due to the effects of unexpected changes infiscal year, establish both a basic policy and various plans, and will

Itoham, founded in 1928 as Ito Food Processing, and Yonekyu,

and safety of our employees and their families first, and wethe external environmental, including a rise in the cost of main

continue to enhance our initiatives that consider the environment

founded in 1965 as Yonekyu Foods, merged in April 2016. Fivecreated an environment in which each employee can work safely,

ingredients and logistics.

and society, our social contribution activities, and ouryears have passed since we Itoham Yonekyu Holdings took off.

securely, and in diverse ways. This includes staggered work

Upon merging, we set our Group Philosophy as contributing tohours, remote working, and workplace vaccinations. We will

Management Plan 2023, we made achieving even more rapid

By steadily implementing the above four priorities, we have set

the realization of sound and affluent society through business andcontinue to focus on the stable supply of products with all of our

growth by defying stereotypes and reaffirming our strengths as

ordinary income at 30 billion yen once again as a numerical target

our Vision as being a leading food company that emphasizes theeffort as we continue our prevention measures against the spreadour basic policy, in response to the issue of unfulfilled goals in ourfor the FY2023, the final year of this plan. We also decided tospirit of fairness, rises to the challenge of transformation, andof infectious diseases.

previous plan as well as new needs and environmental changes.

implement ROIC as a management index, taking an effective

achieves sustainable growth with its employees. We haveundertaken our business activities with these in mind.

For the Pandemic

improvements to the working environment.

The world is always changing, and this is not limited to the

We also set as priorities strengthening our management base,increase return on invested capital into serious consideration. We

effects of COVID-19. We think that the ability to respond to thesestrengthening our earnings base, pursuing initiatives for new

will also enhance our shareholder return policy by stablychanges is directly linked to a corporation’s competitiveness. We

businesses and markets, and undertaking initiatives forincreasing dividends with a payout ratio ranging from 30% tohope that the Itoham Yonekyu Holdings Group will always be on

sustainability.

50%, aiming for a payout ratio of around 40%.

the lookout, accurately discovering the signs of change, andFirst, under the policy of strengthening our management base,Becoming a Leading Food Company

The spread of COVID-19 infections had a major impact on our

quickly and appropriately responding in turn. Food is an essential

we are working to enhance our digital strategies while also aiming

living environments, and led to a number of changes in consumer

part of people’s lives. As the change and intensification of focus on

to maximize the effects of the merger through restructuring frombehavior, including increases in the demand for cook-at-home

how food should be increases, we will come together and develop

the previous Itoham and Yonekyu units to the strategic units of theBased on the idea of fair and transparent actions that prioritize

meals and demand for long life goods.

an approach that meets the changes and demands of the social

meat business and the processed food business.

compliance, we will continue to be a corporation that proves our

We responded to these changes quickly and appropriately

environment that surrounds the Group.

Establishment and Announcementof the Medium-term Management Plan 2023
With our Medium-term Management Plan 2020 which wasestablished upon merging, we set expansion of business,

Itoham Yonekyu Group Integrated Report 2021

Under the policy of strengthening our earnings base, we willtrustworthiness to our customers and meets their expectations

enhance our marketing functions to allow us to respond toby continually taking on the challenge of transformation groundedchanges in the world and aim to improve the added value of ourin a spirit of fairness. We will also contribute towards the

products, in addition to reducing costs through optimizing therealization of an abundant diet for our customers, conveying the

production and logistics systems and using digital technology. We

joy, fun, and importance of eating while delivering safe, secure,will also expand the scope of our businesses through continuing

and high-quality products. We will come together and work to be

to supply products that correspond to market needs.

a leading food company. Thank you for your continued andUnder the policy of pursuing initiatives for new businesses

unwavering support and understanding.

streamlining and enhancement of competitiveness, andand markets, we will pursue further improvements with ourstrengthening our management base as basic strategies. We set

existing non-meat, frozen food, and extract businesses, further

net sales at 1 trillion yen, ordinary income at 30 billion yen, andimprovements with ANZCO and our other existing overseas

President and Chief Executive Officer

ROE at 8% as numerical targets and worked on specificbusiness, and a deeper penetration into markets.

Isao Miyashita

measures. We were able to create 5 billion yen as a synergistic

5

Understanding this situation, in our Medium-term

Finally, under the policy of undertaking initiatives for

Itoham Yonekyu Holdings Inc.

Itoham Yonekyu Group Integrated Report 2021

6

The Itoham Yonekyu Group’s Value Creation Process
Itoham and Yonekyu have grown by mutually contributing their respective strengths in technology and knowledge gained over the years and demonstrating their synergistic effects.
We will continue to meet our customers’ expectations by continuing to offer safe, secure, and high-quality products and services that will satisfy customers.

Risks and Opportunities

Input

Business Model

OutputOutcomeSocial issues
and demands

The source of value creation

Business activities that support value creation

Safe, secure, and high-quality products

Offering value to society

Financial CapitalBusiness activities

394
62.7%

■

Total Assets■

Equity ratio

billion yen

Com

Manufactured Capital
Change in needsin the “new normal”

42 , Overseas14■

Production factories in Japan■

Factories with external certification
Food safety and quality control(ISO22000, FSSC22000, and others)
in Japan and overseas
in totalStrengthening
our earnings
base

Patents and trademarks

Passing on many years of skills
Qualified ham, sausage, and bacon manufacturing
technicians
Talent that is the source of our strength
Employees

8,313

Challenge ofTransformation

Group
Philosophy

VisionNumber of sales offices
in Japan, Overseas

165

17

Natural Capital

7■

Natural assets needed for sustainable Group growth
Ratio of farms owned by the Group Own farm ratio(including related farms)％

Itoham Yonekyu Group Integrated Report 2021

31.8

Offering quality
protein to meet
diverse lifestyles
and needs

Realizinga sustainableglobal environment

Processed foods

Realizinga society whereanyone can be activein their own way

Realizinga sound andaffluent society

Desired Corporate Image

Social and Relationship Capital■

Initiatives forsustainability

Ham sausage

Accumulation of expert knowledge

811■

Realizing healthy and affluent eating habits
Considering the environment● Creating a workplace where each
employee can actively participate● Promoting sustainable procurement andstable supply● Contributing to local communities● Strengthening corporate governance● Preference for uncompromising flavor andhigh quality●

See page 9 for details

very
Deli

■

■

Increase in riskof climate change
and natural disasters

Initiatives for
new businesses
and markets

Main themes

25

Human Capital

Reduction anddepletionof global resources

Materiality●

Environmental management (ISO14001, EcoAction 21)
in Japan

■

Id
ea
s

Business strategies

Medium-termManagement Plan 2023
Strengthening
our management
baseIntellectual Capital

Rapid technologicalinnovations
and shift to online

ion

56

Market expansion
for new protein source
following global increases
in meat consumption

Changesin social structure
in Japan due
to the declining birthrate
and aging population

m

t
ca
i
un

Group Philosophy

We will contribute to achieving a sound and affluent society
through business.
VisionA leading food company that emphasizes the spirit of fairness,rises to the challenge of transformation and achieves sustainablegrowth with its employees
Action guidelines

Action guidelines●

Pursue safety and reliability and quality and provide valuable products andservices.

●

Be sure to do what you say you are going to do and build and strengthen trust.

●Develop capacity and cultivate human resources through full participation,
open-minded communication and mutual understanding.

●Prioritize compliance. Fair and transparent action.

●

Promoting environmentally-friendly business activities.

Pr
oc
ure
men
t

Spread of
COVID-19

Sustainably stableshareholder return
Meat
Building relationships oftrust with all stakeholders

Processing

Itoham Yonekyu Group Integrated Report 2021

8

Special Feature

The Start of the Medium-Term
Management Plan 2023
The Itoham Yonekyu Group began the new Medium-termManagement Plan 2023 in 2021. We will aim

Major Themes and Initiative Policies

01
Numerical Targets

Achieve further
rapid growth

Operating income¥

by defying stereotypes
and reaffirming
our strengths.

for 30 billion yen in ordinary income by FY2023,
the final year of the plan, by steadily implementing
four strategic policies.

28 billion

Ordinary income¥

30 billion

02

Strengthening the Management BaseStrengthening the Earnings BaseOur Goal

Our Goal

Maximizing performance and potential

Maximizing Group value

We will build an efficient and competitive businessexecution system and organizational structure to
maximize the effects of the integration.

We will enhance cost competitiveness and the value of
products and services to increase the Group’s market
competitiveness.

Action •Integrating strategies in the Group throughreorganization•Integration of systems•Digital strategy

Action •Initiatives for cutting cost
•Enhancement of added value•Scale expansion

ROIC

6.8%

1 Review of Medium-Term Management Plan 2020

We did not achieve net sales or operating cash flow as set out in the Medium-Term Management Plan 2020, but we did steadily
implement overall organizational reform.
Theme

Net sales of processed foods(FY2020)

Results

03

Review

Ham & sausage:¥ 177.6 billion

Ham & sausage rose slightly
Processed food, particularly pizza, grew

Processed food: ¥148.0 billion(Plan: ¥200.0 billion in each)Group production business: 32%
Brand meat sales: 17%

Grew 10 pp from FY2015
Grew 9 pp from FY2015
Grew 2 pp from FY2015

Operational cash flow
(5 year total)¥114.5 billion (Plan: ¥123.0 billion)¥8.5 billion less than plan

Ratio of overseas operations inordinary income (FY2020)

16.8% (Plan: 13.5%)

Income grew at ITOHAM AMERICA andANZCODividend payout ratio(5 year average)

36% (Plan: Around 30%)

Paid stable dividends continuallyStrengthening of the domestic
meat production business(FY2020)

Group slaughtering and cut: 59%

2 Developing the Medium-Term Management Plan 2023

Initiatives for New Businesses and Markets

Our Goal

Establishing new core revenue sources

Fulfilling corporate social responsibility through businessWe will redistribute management resources, including
human resources and funds, to fields that are
expected to grow to increase the Group’s growth.

We will fulfill our responsibility as a member of society
through initiatives that meet social and environmental
values to enhance the Group’s value and achievesustainable growth.

Action •Expansion of business fields•Expansion of production areas and sales markets

Action •Strengthening the system to implement initiatives•Social contribution activity, improving the working
environment•Environmentally friendly initiatives(¥100 million)

Financial strategies and numerical targets
We will increase competitive and added
value in business to increase return on
invested capital (ROIC).

Group Philosophy and Vision

We will implement shareholder return
policies in consideration of financial
soundness and capital efficiency tomaximize shareholder value.

■

We will contribute to achieving a soundand affluent society through business.
Founding Spirit
VisionTo be a leading food company that emphasizes the spirit of fairness, rises tothe challenge of transformation, and achieves sustainable growth with its employees.

The spirit that underlies the Group Philosophy and Vision
ROIC = Income before interest expense and after tax(Interest-bearing debt + Equity capital)
Insurance claim income in extraordinary income is excluded.

*

Action guidelines• Pursue safety, reliability and quality and provide valuable products and services.
• Be sure to do what you say you are going to do and build and strengthen trust.
• Develop capacity and cultivate human resources through full participation, open-minded
communication and mutual understanding.
• Prioritize compliance. Fair and transparent action.
• Promote environmentally friendly business activities.

＋

Contribute tosociety throughbusiness

Createexcitement

Guideline to bear in mind during the period ofMedium-Term Management Plan 2023

Achieve further rapid growth by defying stereotypes and reaffirming our strengths.

9

Itoham Yonekyu Group Integrated Report 2021

Sustainability Initiatives

Our Goal■Group Philosophy

04

FY2020Results

FY2021Plan

Compared to FY2020

FY2023
Plan

CAGR

Difference

Operating
IncomeProcessed
food

240

230

280

5%

＋40

123

110

145

6%

＋22

Meat

134

135

155

5%

＋21

Other

-17

-15

-20

-

-3

Ordinary
Income

270

250

300

4%

＋30

ROIC

6.3%*

6.0%

6.8%

-

＋0.5

Total Assets

3,940

4,000

4,200

2%

＋260

Shareholder’sEquity

2,399

2,500

2,750

5%

＋351

D/E ratio

0.15

0.13

0.10

-

-0.05

Investment Plan: ¥ 60 to 80 billion in three years (Replacement (¥30 billion) + New (¥30 to 50 billion))
Strengthening theManagement Base• Integration of the Group’s systems(¥6 billion)

Strengthening the Earnings Base• Reorganization of processed food production bases(¥20 to 30 billion)• Acquisition of meat production bases (¥7 billion)• Strengthening the production of unheated meat (¥3 billion)

Initiatives for New
Businesses andMarkets

Sustainability
Initiatives

Itoham Yonekyu Group Integrated Report 2021

10

Financial Highlights

Non-Financial Highlights

Net Sales

Operating Income

Profit Attributable to Shareholders

¥

¥

¥

842.6 billion

24.0 billion

Ratio of Operating Income to Net Sales

20.2 billion

Ratio of Net Income to Net Sales

2.9%

2.4%

■ Operating Income
Ratio of Operating Income to Net Sales(¥ billion)(¥ billion)

1,000

30

800

792.5

850.7

831.8

852.4

(¥ billion)

15

2.4

2.3

10

2

0

14.4

2017

2018

2019

2020

2016

2017

2018

2019

2020

(Fiscal
year)

15.7

18.0

10.5

11.4

20.2
0

2016

*

Men

2.61%

100

(%)

3

80

4

3.5

3

0

0

(Fiscalyear)

100.0%■ Ratio of Returning to Work
Percentage of Women Taking Childcare Leave
Percentage of Men Taking Childcare Leave
100.0
100.0
100.0
100.0
100.0

（%）

5.2

4.9

2017

2018

2019

2020

(Fiscal
year)

2

40

1

20

0

0

95.7

96.4

2017

2018

2019

2020

2.50

2.51

2.48

2016

2017

2018

2019

2.61

100.0

100.0

100.0
1

5.2
2016

2.49
2

60

2.5

1
5

24.0

17.2

0
2016

1.3

1
21.5

5.2%
5

1.9
1.2

21.4

( see below for scope)

7.3%
Percentage of Employees Returningfrom Childcare Leave (Itoham + Yonekyu) 100.0%
Women

4.5

2

1.7

200

Employment Rate of People with Disabilities(Itoham + Yonekyu)

3

10
400

Percentage of Employees Taking Childcare Leave(Itoham + Yonekyu)

(%)

2.0

20

Ratio of Women in Management Positions

(%)

20

3

2.6

842.6

600

■ Net income Attributable to Owners of Parent
Ratio of Net Income to Net Sales

(%)

2.9

2.7

Personnel Data

(Fiscal
year)

2016

0.0

1.7

2017

2018

7.4

7.3

2019

2020

0
(Fiscal
year)

2020

(Fiscalyear)* Companies required to report this information based on laws related to the advancement of the employment of people with disabilities:

Itoham, Yonekyu, Itoham Daily, Itoham West Foods, Itoham Food Solutions, Itoham Sales, Tsukushi Factory, royal-delica, Itoham Business Support, Yonekyu Kagayaki, Yonekyu Delica Foods,
Itoham Meat Sales East, Itoham Meat Sales West, Sankyo Meat, IH Meat Solutions, IH Meat Packer, Yonekyu Oishiitori, Ai Pork, and the Eastern Hiroshima Prefecture Swinery Cooperative

Return on Equity (ROE)

Return on Assets (ROA)

8.5%

6.9%

Dividends Per Share

Consolidated Payout Ratio

21.0

¥

Environmental Data

30.6%

Return on Invested Capital (ROIC*)

CO2 Emissions (total)

6.3%

249,789 t-CO2

ROE

ROA

■ Dividends Per Share

ROIC

Consolidated Payout Ratio

(¥)

(%)

8.8
8

8.5
7.3

7.3

6

47.5

6.8

6.5
6.4

4

4.1
4.1

2

5.1

43.9

31.9

10

5.0
4.7

240,00030
180,000

28

20

17.0

5

17.0

17.0

17.0

21.0

0
2016

*

2017

2018

2019

2020

2016

2017

2018

2019

800

253,859607

250,472586

256,714

509

492

508

0

2020 (Fiscal year)

Income before interest expense and after tax (Interest-bearing debt + Equity capital)
Extraordinary income and loss exclude loss on disaster and insurance income.

(¥ billion)(¥ billion)

25

20

15

79

76

34,54334,56074
34,484

0

2016

2017

2018

2019

2020

(Fiscal year)

9.8

10

10

11.5

11

2017

2018

Itoham Yonekyu Group Integrated Report 2021

2019

2020

(Fiscal year)

5,300
11.3
11.1

11.0
4,928

4,700

11.0

11.0

10.3

11.6

11

4,723
10

0
2016

2017

59,092 t
30

5,106
10.9
4,960

4,661

2018

2019

2020

(Fiscal year)

Waste Emissions (per unit)

127kg/t■ Waste Emissions (total)

Service Water Use (per unit)

Waste Emissions (per unit)(t)(kg/t)

60,000

200

25
150
19.4

19.2

18.9

18.2

18.2

7,800

13.0

8,135

8,193

8,281

8,273

8,436

7,400

20

50,000114

113

47,63848,512

125

125

127

54,682

56,92759,092100

1040,000

50
5

0

0
2017

2018

2019

2020

(Fiscal year)

0

0
2016

2017

2018

2019

2020

(Fiscal year)* Scope

0
2016

18.2

m3/t
(m3/t)

2016

0

12

15
12.5

5

5

(GJ/t)

Waste Emissions (total)

Service Water Use (per unit)

8,600
8,200

12.6

m3

Energy Use (per unit)

5,500

400

94

11.0 GJ/t■ Energy Use (total)

5,100

39,988

9,000

15
13.1

463

(1,000m3)

20.5

20

537

40,844■ Service Water Use (total)

13.0 billion

¥

600

98

Depreciation and Amortization of Goodwill

11.5 billion

468

249,789200

8,436,000¥

544

Energy Use (per unit)(1,000GJ)

4,900

Service Water Use (total)

Capital Expenditures

247,802587

10
0(Fiscal year)(kg-CO2/t)

120,000
60,00005,106,000 GJ

300,000

30.6

6.3

537kg-CO2/t(t-CO2)

40

15

6.9
4.8

50

Energy Use (total)

Total: Both
■ Total: Scope 1 ■ Total: Scope 2
Per Unit: Scope 1
Per Unit: Scope 2
Per Unit: Both

(%)

20

10

CO2 Emissions (per unit)

2016

2017

2018

2019

2020

(Fiscal year)

Factories: Itoham, Itoham Daily, Itoham West Foods, Asakusa Ham, Tsukushi Factory, royal-delica, Kikusui, Sankyo Meat, IH Meat Packer, IH Meat Solutions, Yonekyu, Yonekyu Kagayaki, Yonekyu
Delica Foods, and Yonekyu Oishiitori
Offices: Itoham, Itoham Daily, Itoham West Foods, Itoham Sales, Itoham Food Solutions, Itoham Meat Sales East, Itoham Meat Sales West, and I.H. Logistics Service

Itoham Yonekyu Group Integrated Report 2021

12

Business Overview

Processed Food BusinessNet sales

We do what we need to do to respond quickly tochanges and work to strengthen our earnings baseand expand the scale, scope, and areas of our growthbusinesses.

¥

Net sales

307 billion

Processed Food Business
Segment Income(¥ billion)

350

13.5

277.2

287.5

291.9

300.2

307.0

12.0
10.5

250

Director
Executive Vice President
COO Group Processed Foods Division

Ikurou Shibayama

Within Japan, a higher level of safety and reliability and an even greater product and service level are in demand. (Rising awarenessof safety and reliability)■ The domestic market has already peaked due to a declining population, low birth rate, and aging population, and there has been
an increase in single household and dual income household.
■ Buying behaviors have changed following the outbreak of COVID-19. (Changes in consumption and communication centeredaround the home)■ Acceleration in social digitalization, including digital transformations and AI■ We are seeing an increase in social demands such as ESG, SDGs, and more, as well as new motivations for buying based onthese demands.
■

MarketEnvironment

Strengths

Opportunities
and Risks■Long-standing ham and sausage brand strength and product development abilities based on a great skill■

Full product lineup, a wide range of categories, and business areas that include products that are chilled, frozen, and at room
temperature■

Marketing ability that responds to changes in the market, with consumers, and with logistics■

The ability to provide safe and reliable products and a sales and logistics network that reaches every area and sales channel in
Japan

■

Improvements in corporate, product, and service reliability■

Improvements in affinity with products and categories and growth in overseas markets■

Shift to simple meals, meals for consumption by individuals, and an expansion in the need for readymade meals■

Increased preference for consumption and storage at home, as well as delivery and ordering■

Spread of robotic process automation (RPA) and an increase in online sales■

Increasing demand for new protein sources

FY2020 Reviews and FY2021 Initiatives

200

7.5

150

6.0

13

FY2021 Initiatives

While the cost environment withlogistics and labor costs wasstrained, we increased our sales ofhome products and steadily
increased our overall sales andmarket share based on our reliablebrand strength. We also launchedhighly profitable goods, including
updated products, and greatly
increased our income by modifying
our product portfolio.

Enhancing our Brand Strength to Enable Sustainable Growth

Itoham Yonekyu Group Integrated Report 2021

11.1

4.0

10.7
4.0

7.9
6.7

3.7
2.7

3.0

50

(%)

6.0

12.3

4.5

100

4.0
2.0

2.2

1.5

0

0

0
2017

2018

2019

2016

2020 (Fiscal year)

2017

2018

2019

2020

(Fiscal year)

Future Strategies for Sustainable Growth
We aim to become a leading food company by strengthening ourbusiness expansion and overseas businesses and by creating abusiness structure that will allow for sustainable growth.
• In addition to further bolstering our prepared foods, we will uncover
new demand and will make inroads into products and categories.
• We will strengthen our marketing and develop our product planningabilities that are close to consumers.
• We will promote passing on and developing technical abilities thatenhance product development.
• We will increase our overseas business portfolio and our growthability by redistributing management resources to overseas
businesses in growing markets.

• We will promote the optimization of our business portfolio that takes
profitability, reliability, sustainability, and future prospects into
consideration, based on the key phrase, “selection and cultivation.”

Improving Profitability and Reducing Manufacturing Costs• We will modify our product portfolio and continue to respond tomarket and customer changes.
• We will strengthen our cost reduction initiatives involved with capital
investments, including increasing cost competitiveness andmeasures against deterioration in factories.
• We will effectively control production bases and number of items
and optimize our production system.

Developing Human Resources• We will develop human resources that create a corporate culture of
growth, foster a sense of mission, and manage overseas businesses
by creating personnel policies and a systematic training program.

Brand Enhancement• We will create positioning for the manufacturer brands of Itoham and
Yonekyu, aiming for overall optimization.
Strengthening of Sustainability Initiatives• We will promote social contribution activities, improvements to theworking environment, and environmentally-conscious initiatives, andwe will work to meet our social obligations through business.

Results and Issues
Results

Issues• Increase in sales of household products/expanded market share in ashrinking gift market

The key is to be able to quickly respond to various prominentenvironmental changes and create and modify new business portfolios
and expand business areas, including products and categories. On
top of this, our issue is in how to have this lead to an increase inprofitability and profit margin.

• Steadily increased market share for household ham and sausage
Looking back on FY2020

IncomeProfit Margin

9.0

2016

Market Environment, Strengths, Opportunities, and Risks

12.3 billion

Segment income and profit margin trends

Net sales(¥ billion)300¥• Achieved an operational profit of 12.3 billion yen, the highest since
the merger• We will focus on enhancing the brand strengths of Itoham and Yonekyu and gaining a wide customer base.
• We will further expand our prepared food by pursuing flavor, developing our brands, and strengthening
our development aimed at expanding business fields.
• We will improve our ability to breakthrough and be thorough in our operations by promoting
developmental and organizational operations.
• We will be thorough with the management of all costs by working to reduce manufacturing costs andimprove cost effectiveness for various costs.
• We will enhance our lineup of prepared foods for all trading channels and departments.
• We will increase the rate of operation for reduced personnel assembly lines at Group factories,
promote optimal production, and strengthen market competitiveness.

Initiatives
Duringthe COVID-19
Pandemic• We will enhance the convenience, specialty, authenticity, and usability of cooking at home as consumption situations change.
• Use of our online shop is increasing, and we will strengthen the online shop as both a sales channel and promotional
activity.
• As the demand for stocking up on products is increasing, we will enhance our products with long shelf lives and products
stored at room temperature.
• As the desire for low price strengthens due to a sense of an economic recession, we will develop products for discountdrug store channels.
• As health awareness increases and awareness of social contribution, including ethical consumption, also increases, we will
strengthen our initiatives for SDGs and social contribution activities.

Itoham Yonekyu Group Integrated Report 2021

14

Business Overview

Meat BusinessNet sales

We aim for sustainable growth by seriously facing ourchallenges, determining the true causes behind thesechallenges, and working to improve based on thecreation and expansion of the meat value chain.

¥

531.5 billion

Net sales

Meat Business Segment
Income

511.0

540.1

554.5

548.1

13.5

531.5

12.0
10.5

Market Environment, Strengths, Opportunities, and Risks
There is a heightened sense of crisis with the stable supply of meat based on the increase in the global population, climate changerisks, the spread of animal diseases, the effects of COVID-19 on production and logistics, and more.
■ There is also an increased need for product development that matches the response to the aging population and labor shortages,
as well as small and dual income households.
■

MarketEnvironment■

Our wide sales network that includes operating bases that engage in route sales nationwide and specialized sales teams for sales
channels for cook-at-home and in-restaurant food.

■

Imported meat: trustworthy relationships with overseas meat packers, which have been strengthened through our own imports
and the ability for stable procurement through original brand products.

■

Domestic meat: expansion of our own farms and processing centers, as well as our ability to collect meat from cooperating farms
and the leading livestock farmers through long-term trustworthy relationships.

■

Our ability to offer and propose information that utilizes the domestic and international networks of the Mitsubishi Corporation Group.

■

The range of fluctuations in the market environment and market conditions for both supply and demand are expanding due to theeffects of the spread of COVID-19.

■

The risks of disease are increasing, as it has not been possible to stop the spread of ASF (African swine fever) in EU and China or
CSF (classical swine fever) within Japan.

■

As free trade agreements are expanding through the TPP, the Japanese-European EPA and TAG, and more, it will becomefavorable to import pork and beef in the medium- to long-term.

Strengths

Opportunities
and Risks■

The market for new protein sources will expand as non-meat (vegetable-derived meat) spreads globally.

■

Costs for personnel and logistics will tend to increase through labor shortages due to the aging society and work style reforms.

■

The need for time reduction and the demand for convenient products is expanding due to the aging society, reduction inhousehold size, and lifestyle changes.

FY2020 Reviews and FY2021 Initiatives

15

Looking back on FY2020

FY2021 Initiatives

While the procurement of meat in Japan andabroad is unstable due to animal diseases
and COVID-19, we were able to achieve
stable procurement with our wide
procurement network and resourcefulresponse. We also strengthened our
response capabilities for each sales channeland strengthened our income throughdevelopment of convenient, time-saving
products, as there was a drop in therestaurant industry and an increase in
ready-made meal demand. We also
developed operational activity support andonline video training through IT investments.

Creating a Change- and Risk-resistant Business Structure

Itoham Yonekyu Group Integrated Report 2021

• We merged the product procurement divisions and strategy divisions from Itoham and Yonekyu.
We will create a synergetic effect by combining the personnel and products from each company.
These divisions were divided into three groups, adding a Meat Production Headquarters to theprevious Domestic Meat Headquarters and Overseas Meat Headquarters.
• IH MEAT PACKER took over the assets of the Towada Meat Center from Towada City and thesurrounding towns and villages, and they are expanding the livestock business with pork andbeef in the surrounding area.
• IH MEAT SOLUTION started operations at the Ishikari Packing Center in addition to the existing
Sapporo Packing Center in Hokkaido, and they are strengthening their product supply system.
• We are developing digital transformation tools for standard management of domestic pork andbeef with many items and complex standards. An update is planned for the central system
during FY2024, as well.

(%)

6.0

11.2
4.0

7.3

7.5

300

Takamasa Wakaki

10.8

11.4

9.0

400

Director
Senior Executive Officer
COO Group Meat Division

IncomeProfit Margin
13.4(¥ billion)

600

13.4 billion

Segment income and profit margin trends

Net sales(¥ billion)

500

¥

6.0
4.5

200

3.0

100

2.1

2.5

2.0

2020

(Fiscal year)

1.3

1.5

0

2.1

2.1

0

0
2016

2017

2018

2019

2016

2020 (Fiscal year)

2017

2018

2019

Future Strategies for Sustainable Growth
Sustainability Initiatives• We will work to solve business challenges and seriously consider
materiality as established by the Sustainability Committee.
Continuous Building-up of Sales and Procurement Abilities• We advocated for the creation and expansion of the meat value
chain through policies and will work on expanding the production
business and strengthening the final range of demand as specificpolicies.
• In addition to expanding and increasing output with the upstream
production business, we will promote an increase in sales volume
and an improvement in profit margins by strengthening our sales
strength towards final demand downstream.
Building-up Profit Earning Capacity• We will increase our income by expanding our original brands toinclude more high value-added products.
• We aim to improve our profit margins by developing products thatmeet consumer needs, including convenience, based on theincrease in cook-at-home demand.

Improving Productivity and Efficiency• We will increase productivity and efficiency in office work throughpromoting digital transformations and utilizing AI and othertechnologies.
• In the corporate division, we will make use of remote work andstaggered hours, and will promote environmental improvements andchanges to our systems to promote work style reform.
Developing Human Resources• We will promote the development and training of the next generationof human resources by implementing personnel policies and asystematic training program.
• We will promote mid-career employment by division and subsidiaryin addition to the hiring of new recruits.
Business Activities that Prioritize Compliance• We will continue with our business activities that prioritize
compliance.

Results and Issues
Results

Issues• We expanded our sales to volume retailers and earned more income
than in the previous year, even with a reduction in sales for readymade meals and in-restaurant food due to the effects of COVID-19.

Our issue is in how much of a synergetic effect we can produce bytransitioning from an organization system centered around both
Itoham and Yonekyu to a strategic segment organizational system forthe meat business in October and then implementing the Groupstrategy in a unified way.

• We also earned more income than in the previous year with ouroverseas business, striving for profitable sales and a reduction in costs.
• Achieved an income of 13.4 billion yen, the highest since the merger

Initiatives
Duringthe COVID-19
Pandemic• Business operations: in addition to managing the health of employees, we carry out thorough infection prevention measuresin all of our offices.
• Staff division: We are promoting remote work and carrying out initiatives to become paperless and to digitize personal seals.
• Production/Sales offices: We are thorough in our infection prevention measures and are working to reduce the risks ofoutbreaks. We are implementing appropriate responses at farms, disposal facilities, processing centers, and offices.
• Sales: As the demand for in-restaurant sales channels decrease and cook-at-home consumption increases, we aredeveloping sales activities that match the trends in the market conditions. Aiming to revitalize the selling areas ofsupermarkets, we are enhancing our product and menu proposals. We are also advancing our cooperation with suppliers toensure a stable supply as supply instability continues due to the effects of animal diseases and COVID-19.
Itoham Yonekyu Group Integrated Report 2021

16

Message from the Director in charge of Sustainability
Materiality (Important Issues) Matrix
Realizing healthy and affluent eating habits
Very highThe Itoham Yonekyu Group will contribute towards
the realization of a sustainable, sound,and affluent society through business.

Safe and reliable supply of foodDirector
Managing Executive Officer
CFO,CAO,CCO
Chairperson of Sustainability Committee

Contributions to eliminating
poverty

Katsuhiro Ito

Supply of quality protein

Promoting sustainable procurement
and stable supply

Product development and supply of healthvalue in response to diverse lifestyles

Contributing towards a sustainable
livestock industry

Product expansion leading to reduction infood loss

Promoting procurement that respects
human rights

Considering the environment

Animal welfare considerations

Reducing greenhouse gas emissions
Reducing of the consumption of energy and water

Significance for Stakeholders

The Group will contribute towards achieving SDGs.

Use of IT strategies and digitaltransformation

Reducing waste emissions

Preservation of the ocean andocean resources

Contributing to local communities

Promotion of ethicalconsumption

Preserving biodiversity
Reducing the amount of plastic used

Creating a workplace where each employee
can actively participate
Personnel development and training
Respecting diversity
Strengthening of engagement with shareholders
and investors

Promoting a healthy work-life balance
Occupational health and safety, healthmanagement, and the respect of human rights

Cooperation with internationalsociety
Educating the next generationand supporting culture

Strengthening information
securityStrengthening corporate governanceObserving and promoting compliance

Passing on and sharing foodcultureRisk management

Basic Stance on Sustainability
Enhancing support of developing
country

Itoham Yonekyu Group
Philosophy

We established the Sustainability Committee in
April 2021 and are promoting policies on ourbasic stance and materiality, as well as specificinitiatives.

Materiality

Recommendations
and Proposals
Sustainability Committee
Sustainability Promotion Officer
Cooperation
Business Divisions• Safe and reliable supply of food• Supply of quality protein• Product development and supply of health value in response to diverse lifestyles• Product expansion leading to reduction in food loss
• Reducing greenhouse gas emissions• Reducing of the consumption of energy and water• Reducing waste emissions• Preserving biodiversity• Reducing the amount of plastic used

3. Creating a workplace where each employee can actively participate• Personnel development and training• Respecting diversity• Promoting a healthy work-life balance• Occupational health and safety, health management, and the respect of human rights

4. Promoting sustainable procurement and stable supply• Contributing towards a sustainable livestock industry• Promoting procurement that respects human rights• Animal welfare considerations

5. Contributing to local communities
6. Strengthening corporate governance• Observing and promoting compliance• Risk management

7. Preference for uncompromising flavor and high quality

Itoham Yonekyu Group Integrated Report 2021

Very highSignificance for the Itoham Yonekyu GroupAs shown above, the Sustainability Committee discovers important social issues from the viewpoint of priority for stakeholders andfor the Itoham Yonekyu Group. From these issues, the Committee selects the seven most pressing issues as materiality, and theseare decided on by the Board of Directors.
We will continue to pursue appropriate responses for issues that are not included in materiality as important issues.

1. Realizing healthy and affluent eating habits

2. Considering the environment

Board of Directors

17

High

We will contribute to achieving a sound and affluent society through business.

Sustainability Promotion System

Related Divisions

Promotion of dietary educational
activitiesHigh

The Itoham Yonekyu Group will contribute towards the realization ofa sustainable future based on the Group Philosophy.

Preference for uncompromising flavor and highquality

About Sustainability
We have set contributing to the realization of a sustainable society
through business based on our Group Philosophy as our basic
sustainability policy. That is to say that we consider enhancing
the sustainability of society while enhancing the sustainability ofour business to be important. Issues related to the sustainabilityof society are accurately perceived as risks and opportunities
that have an impact on the Group’s business, and I believe it isimportant to have this reflected in our business strategies.
Up until now, we have also worked to reduce our energyuse, water use, amount of waste, and amount of plastic usedas environmental issues, and we have promoted these initiatives
specifically by introducing waste cooking oil boilers and solar
panels, improving energy efficiency by introducing the latest
equipment, thinning the film used in packaging, using leftover foodas feed, and streamlining logistics. We have also worked from avariety of angles to enhance the sustainability of society and ourbusiness, including with personnel training, contributions to local

communities, and strengthening of our corporate governance.
In our Medium-term Management Plan 2023 which began
this year, we established the Sustainability Committee under the
Board of Directors in April of this year and have created a system
to have representatives from each division comprehensively grasp
and undertake issues while cooperating across the board. We havedone so to further develop our initiatives and to contribute towards
improvements in the sustainability of society through business.
After analyzing and examining the risks and opportunities fromissues of social sustainability that will affect our own sustainability,
the Committee has established a basic stance on sustainability andmateriality as the Board of Directors, and they will work to establish
specific response measures and numerical targets for each issue.
I want to put our Group Philosophy of realizing a sound andaffluent society through business into practice by operating ourbusiness in a way that allows for both the sustainability of society
and our business to be achieved.

Itoham Yonekyu Group Integrated Report 2021

18

Strong Organizational Foundation
Environmental Management

Environment

To increase the effects of our environmental preservation activities and to contribute to the formation of a sustainable society,
we have created and operate an environmental management system at our main production bases and promote environmental
preservation activities.

Itoham Yonekyu Group Environmental Philosophy and Code of Conduct

Environmental Philosophy
We are aware that protecting our planet’s environment is one of the most important global issues and we are taking
action to realize a sustainable society by considering the environment in our business activities.

Initiatives to Reduce Environmental Impact

Environment

Food Waste Recycling
At the Yonekyu Eco ProjectCenter, we recycle foodwaste produced at our own
factories and by our partners,
producing about 500 tons ofquality fertilizer annually.
This fertilizer is used for avariety of purposes and helps
to reduce our environmental
impact.

■Yonekyu Eco Project Center Fertilization Process

Food waste, etc.

Primary Treatment

Biomass

Pile compostin rows
and agitate

Eco Project Center

Partner
Facilities•Cattle manure•Beer sediment•Coffee sediment

2. Reducing environmental impact
Promote the resource recycling of waste and work to respondto the formation of a cyclical society and to reduce theenvironmental impact, while also saving energy, conserving
resources, and reducing the release of waste, materials that leadto global warming, and ozone-depleting substances.

3. Preserving biodiversity
Promote activities to preserve forests, rivers, and the naturalenvironment and work to preserve biodiversity.

4. Continually improving environmental preservation activities

5. Thorough self-management
Hold regular internal and external audits and work to bethorough with self-management.

6. Environmental training and raising awarenessImprove understanding and awareness among employees of
the Itoham Yonekyu Group Environmental Philosophy throughinternal and external environmental training and workplacecommunication activities.

7. Coexistence with society
Coexist with society through conversations with society andparticipation in environmental preservation activities.

8. Disclosure of environmental information
Disclose Itoham Yonekyu Group information related to theenvironment in an appropriate manner.

Define environmental targets in consideration of effects on
the environment and continue to improve environmental
preservation through regular review.

Shipment and reduction

We are moving forward with a modal shift (seelower right diagram) from conventional truck
transport to rail and sea transport for retort,
refrigerated, and frozen foods, aiming to reduce
CO2 emissions from shipping and to respond to
the worsening labor shortages and aging of thelogistics industry.
We began joint shipping with Kewpie in
FY2018, shipping products from Kyushu to the
Kanto region by rail. In addition to eliminating longdistance truck operations and reducing driver
hours, we have also cut CO2 by 45 tons per year.
We have also begun considering shipments
via the newly established Yokosuka-Shinmoji ferry
between Kyushu and the Kanto region.

Loading goods at the delivery center■

Use atcontract
farms

Loaded goods are shipped via trailers and railways

Modal Shift
Shifting shipping done by trucks and other automobiles to environmentallyfriendly railways and boats

Beforethe shift
Factories,
etc.

Factories,
etc.

Intermodal baseAfter
the shift

Destination,
etc.

Modal shift

Intermodal baseEnvironmental audits are carried out at each office to prevent environmental contamination and accidents and to further
increase the level of our environmental preservation activities. We are also thorough in our compliance with laws and regulations
by quickly responding to and modifying indicated issues while also complying with regulation values defined in laws related tothe environment and set by environmental preservation associations.
We also hold regular training at each office as an emergency response measure to reduce contamination and prevent the
spread of effects by assuming sudden accidents that cause the leakage of wastewater, heavy oil, or chemicals, or that resultin other environmental contamination. This training is also designed to enable a quick recovery in the event of an accident.
We have defined and use regulations to allow for smooth internal communication as well as communication withgovernmental organizations and local residents in the unlikely event of an accident.

Itoham Yonekyu Group Integrated Report 2021

Removal offoreign substances
through screening

Shift Towards Rail and Sea Shipping—Decarbonization Initiatives

Environmental Audit and Training

19

Piled
fermentation

Sports facilities
and facilities withnatural grass

The Itoham Yonekyu Group operates in compliance with the following Environmental Code of Conduct to put the
Itoham Yonekyu Group Philosophy and Environmental Philosophy into practice.

Comply with Japanese and international laws, regulations,decrees, and agreements related to the environment, define
self-management standards, and commit to environmental
preservation activities.

Commercialization

Our plants

Environmental Code of Conduct

1. Compliance with laws and regulations

Secondary
Treatment

Destination,
etc.

Lowering CO2 Emissions with Hybrid Vehicles
We are moving forward with switching our gas-powered company vehicles to hybrid vehicles, aiming to reduce CO2 emissions.
As of February 2021, we have switched about 42% of our company vehicles, and we will continue our efforts while also
considering a switch to electric vehicles that release no CO2 or other pollutants.

Itoham Yonekyu Group Integrated Report 2021

20

Strong Organizational Foundation
Water Resources

Environmentally Friendly Products (Product Packaging, etc.)
We are working to reduce CO2 emissions, reduce food waste, and develop environmentally friendly

111

products by improving our packaging containers.

(As of August 2021)

Specific initiatives

Reduction Reduction of Reductionof CO2emissions plastic used of food loss

Eco Mark*〇ーImproving and Optimizing Water UsageANZCO puts an emphasis on improving water use and optimization at its factories.
The Rangitikei factory has reduced its water use by 40% compared to the previous year with a site-wide focus on identifying
where it could change practices and processes.
This significant water reduction has had many benefits across the entire site, but specifically decreased pressure on thewastewater processing system.

Example of products• Use of biomass plastic(PE/PET)• Use of biomass ink(some colors)

Environment

Applicable Productsー• Switch from oil-based ink towater-based ink

Safety and Reliability Initiatives• Thinning of film
• Reduction in product packaging〇〇

Customerー

Quality Assurance System• Use of recycled paper in paper
trays

〇

ー

The Itoham Yonekyu Group carries out
inspections and audits to see if products
and services meet the Group’s own
standards based on laws and regulationsat points along the way, from raw materials
to production, processing, logistics, sales,
and with outside suppliers, to offer safeand reliable products and services to ourcustomers. We strive to enhance our levelof quality control at each of our facilities
by offering suggestions and information
through these actions and throughcommunication daily.

ー• Use of film with high barrier
properties(extend expiration dates)• Small, single-serve packs

ー

ー

〇

• Packaging with sealable zipper,
allowing for storage in a sealed
state (can use entire product)*

An original mark is displayed on our environmentally friendly products.

Preserving Biodiversity■

Quality Assurance System Diagram
Itoham/Yonekyu

Itoham Yonekyu Holdings

President

President

Business Division Managers
Quality Control Division

Quality Assurance
Division

CustomerFeedback

Customer
Support Center

Hygiene Management
Specification andLabel Checks

Auditing
OutsidePartner
Factories

Logistics
and Sales

Our Plants

Environment

Initiatives for Easy-to-understand Labels
Biodiversity Restoration Project

Food labels contain extremely important information for customers. We are working to create easy-to-understand labelingfor our customers by establishing our own labeling standards in addition to following related laws and regulations so that ourcustomers can select products with peace of mind. We also hold internal training sessions on the Food Labeling Act and the
Act against Unjustifiable Premiums and Misleading Representations, working to improve employees’ knowledge.

Biological diversity is an important factor in the prosperity of an ecosystem.
There are many rare plants facing extinction in the FIVE STAR farm area owned
by ANZCO. We have teamed up with Forest and Bird and the QEII Trust to
protect these rare plants on 20 acres* of land. A cluster of kowhai trees (trees
in the Fabaceae family native to New Zealand) remains in the Ashburton area

Initiatives to Enhance Qualityof this land, and the trees are estimated to be 100 years old. We will continue
to work with local conservation groups to preserve existing ecosystems andCluster of plants on the FIVE STAR farm area

promote tree planting activities.

* An acre is 4,046.9 m

The Production Division, Sales and Product Planning Division, Quality Assurance Division, and Customer Support hold regularmeetings and work to improve products so that valuable customer opinions can be reflected in our products.
We also hold training sessions on quality, work to improve employees’ knowledge and awareness, and strive for a stablesupply of quality products.

2

Seeds of rare varieties are gathered and protectedwith the goal of propagation21

Itoham Yonekyu Group Integrated Report 2021

Itoham Yonekyu Group Integrated Report 2021

22

Strong Organizational Foundation
Supply Chain Management

Expansion of Health Products
We are working to expand our health-conscious products, including products that are meat-free (vegetable-derived meat),have lower sodium, and have fewer carbs, in response to food shortages due to a global population increase and an increasein health awareness.
Meat-free (vegetable-derived) products have gained attention as a third source of protein after meat and fish, and we havecreated a lineup of products that reproduce the texture, flavor, and aromas of meat as much as possible by utilizing our many
years of knowledge of meat processing technology.
We also developed low sodium and low carb products that offer the same delicious flavor to customers who are concerned
about health and nutrition.
We will continue to work to expand our health-conscious products that are both healthy and offer satisfaction and flavor.

Health-Conscious
Products

48

Asano Fresh®
0 carbs and 25%
less sodium series(As of July 2021)

TANPACT
Salad Chicken Stick(Plain)Soy Meat
Keema CurryBusiness Partners

Japanese Partner Farms
Our trusted partner farms in Japan are particular about breed, feed, and methods for fattening livestock, and they raise cattle,
swine, and poultry in a hygienic environment and in a healthy way. Washout periods are followed as defined for each of the
medications used at farms, and records of this are managed.

Overseas
We visit production facilities outside Japan as necessary to check to see that product standards, production systems, andother local laws and regulations are being followed and that matters are managed in a way that agrees with our Group.
We also visit production facilities in countries where we have employees stationed, as well as production facilities in major
producing countries, and we are building relationships of trust by deepening communication that allows for speedy responses.
When there is criticism about a defect in a product in Japan, we quickly offer feedback to the production site, request
improvements, and check to ensure it has been improved. Inspections for residual medications, etc. are carried out on our own
within Japan, in addition to the government-run monitoring inspections when passing through customs.

Outside Partner Factories

Aiming for Customer Satisfaction

Customer

Listening, Sharing, and Improving Products
We receive a variety of questions from customers each day regarding product characteristics, how to eat or cook certain products,
and product storage, as well as questions regarding product nutritional information and allergens. We accept these questions andopinions as valuable assets, listen to them in a serious manner, and aim to provide information that is easy to understand.
We strive to improve our services so that customers always feel a sense of safety, focusing on honest and speedy
responses, while also sharing information internally about the kinds of things we hear from customers and what kinds of
responses will lead to satisfaction.
We take and examine customer comments about improvement requests for our products, and this leads to the creation ofeven better products.
■

Logistics
The job of storing and shipping products that have left the factory plays an important role in making secure deliveries tocustomers with the product quality maintained as is.
This is managed based on Itoham Yonekyu Group’s own standards and delicious products are delivered to customers at
the appropriate temperatures.

Examples of Product Improvement

Customer Feedback

Meatballs

Customer Feedback

I ate these meatballs after adding them tosoup. I want to use the accompanying saucewith other food, so I wish the expiration date
for the sauce was listed.
Yonekyu

Expiration date
for sauce was added.

La Pizza

With only one place to open the package on
the left, it is difficult for me to open with mydominant hand. I wish you could open the
package from either the left or right side.
ItohamPackaging can now be
opened from either side.

Improvements in Response Quality
We regularly check how customers evaluate the responses of Customer Support and the Customer Response Division throughsurveys. We work to discover and improve issues, and we also work to improve the quality of our intimate responses tocustomers.
23

We procure meat products, dairy products, noodles, dressing, and other products from domestic and overseas partner
factories to respond to the various product needs of our customers. We work with our partner factories to ensure quality control
that is the same as the products that we produce on our own, and we offer customers safe and reliable products.
The Quality Control Division, which oversees products from partner factories, follows internal standards and rigorously
checks products to see if the product design is free from production issues and free from issues with product labeling or the
manufacturing process. We also regularly carry out factory audits and inspections at partner factories based on the Itoham
Yonekyu Group’s quality control standards. Quality control is handled thoroughly by posting stationed employees at ordispatching advisors to overseas factories. The Quality Assurance Division performs regular checks, as well.

Itoham Yonekyu Group Integrated Report 2021

Becoming a Company that Continues to Grow with the Community

Local Communities

Food and Menu Planning Workshop
Itoham held a food and menu planning workshop as
an outside course for fourth year students at Kagawa
Nutrition University with the goal of having participants
master the knowledge related to menu proposals and fooddevelopment through a workshop to plan menus while
also considering manufacturing sites for food.
In addition to explaining ham and sausage
manufacturing methods and information about
manufacturing sites, we hosted lectures on fooddevelopment and marketing and students suggested
recipes based on a theme and gave presentations.

Recipes are suggested
based on a theme andpresentations are offered

Product development lecture

Itoham Yonekyu Group Integrated Report 2021

24

Strong Organizational Foundation
Human Resources Management

Occupational Lectures
Yonekyu offers an opportunity for learning every year for children andstudents in elementary and junior high schools in Numazu City so thatthe students can enhance their personalities and skills, regardless ofgender, and select from a wider range of future dreams or paths, while
also learning about the importance of being aware of gender equality andrespecting human rights.
These lectures are held to spread a sense of inclusion among men andwomen from childhood and every year, Yonekyu participates as a genderinclusion business in Numazu City.

Employees

Personnel Training (Group Training System, etc.)

Occupational lectures

The Itoham Yonekyu Group develops people who can think on their own and take action with anattitude of taking on challenges, aiming to realize both the development of a corporate culture thatpraises taking on challenges to expand corporate value and personal growth through work.
We are also creating a training system through cooperation with on and off the job training,
online knowledge acquisition, public offerings, and self-development.
■

Frequency of training organizedby human resources department
in FY2020

86 times(Excluding self-development
and division-specific training)

FY2020 Itoham Yonekyu Group Training System Diagram
Off-JT
Job-class-specific training

Regular Dietary Educational Activities in Major Chinese Cities

Dietary educational activities
Young
employees

The National Council on Fujisan World
Heritage works to pass on Mt. Fuji, a world
heritage site, to the future in its beautiful
state.
This fund is used to preserve and protect
Mt. Fuji’s environment and for guidance andeducational activities for visitors.
Keeping Mt. Fuji as a World Heritage Site
Yonekyu supports the preservation of Mt. Fuji
through donations to the FUJISAN Fund.

Mt. Rokko Natural Environmental Preservation Activities
Mt. Rokko Future Century Forest Creation is promoted by Kobe with thegoal of preserving and developing the forests of the Rokko mountain
range for the next century as 2002 marked the 100 year anniversary of Mt.
Rokko’s greenification. We donate part of our profits with the Kobe series
to the locally-run Kobe Forest School which handles this forest creation and
we also offer support by dispatching employee volunteers.

FY2020 training was changed from an in-person gathering to an online program due to measures against COVID-19 risks.
Our Group training aims to modify and establish behaviors in the workplace, and we are focused on designing training thataims for on and off the job training. When switching to an online format for FY2020, we set up one camera-equipped computer
per person and utilized online functions allowing personal understanding to be promoted through conversations through computer
screens so that each person could be engaged in mutual communication (functions to split into small groups, chat functions,screen and video sharing, etc.) We were able to achieve the same effects as in-person training. Participants commented on the
online training, with employees that live far away saying that participation was easy without the burden of commuting and othersaying it was easy to concentrate on the training. Looking to the next fiscal year, we will continue our personnel training to realize
our management philosophy by using in-person and online programs based on training goals and target participants.
From a participant in
the training for newly
appointed managers

While I felt like it was more difficult toengage in open-hearted discussions
compared to in-person training, it
was training to adapt to somethingthat is becoming a part of business.

From a participant in
the follow-up training
for young employees

While I’m not used to the online format, it was a very
good training session as I was able to see and speak withcolleagues I hadn’t seen in a while. It is more difficult to convey
your thoughts to someone compared to in-person, but I think
my logical side, which needs to grow, was developed a little.

Establishment of a Remote Working System
KOBE Special PR Partner and Information Sharing

Disaster Prevention
We have established a system to quickly offer 100,000 packs
of packaged food products (10,000 packs per day for 10 days)
based on a request from the city of Kobe to supply support
products when disaster strikes.

Itoham Yonekyu Group Integrated Report 2021

New employee training

Online training

FUJISAN Fund

Having been rated highly as mid-year gifts and year’s end gifts, the Kobe
series of products received recognition as a KOBE Special PR Partner. We
are spreading information nationwide about initiatives to protect the naturalenvironment of Mt. Rokko and the charm of Mt. Rokko and Mt. Maya on
bookmarks included with mid-year and year’s end gifts.

25

Follow-up training for young
employees

For mentors:
training toenhanceeducational
guidanceabilities

OJT

Workplace training

Training for newly appointed
directors
Mid-career
employees Training for newly appointed senior
staff

For managers:
remote work
management
workshopObtaining qualifications

Itoham entered into a comprehensive
partnership agreement with Kobe, Hyogo
Prefecture in 2013. In addition to the factthat Itoham’s headquarters is in Nada Ward,
Kobe, this partnership began from a desire
to contribute to the citizens of Kobe.

Basic management training

Distance learning

Comprehensive Partnership
Agreement with the City of Kobe

Training for newly appointed
managers

Outside schools

As a company with its headquarters in Numazu City, Shizuoka
Prefecture at the base of Mt. Fuji, Yonekyu has donated to the
FUJISAN Fund since 2009 which aims to support the listing of
Mt. Fuji as a world cultural heritage site.
We continue to work to preserve Mt. Fuji through ourdonations even after Mt. Fuji was registered as a world heritagesite in 2013.

Sectionmanagerlevel

Division-specific training
Job-specific training(various skills in production, operations,planning, sales, etc.)

Divisionlevel

Itoham Foods Trading (Shanghai) Co., Ltd. is hosting regular dietaryeducational activities at nursery schools, cram schools, and special
booths in retail shops while also taking ample measures against
COVID-19.
Parents and children experience the joy of eating while cooking food
together using ham or sausage, and we are contributing to the local
community as an activity that promotes an increase in recognition of flavor
and health value.

Support of Mt. Fuji Preservation Activities

Theme- and issue-specific training Self-development/public offering

Last year, we established a remote working environment and operating rules to allow remote work in divisions where it waspossible as part of our measures against COVID-19.
We also eliminated some of the common space in the office and created a remote workspace where online negotiations
and discussions can occur, and we are moving forward with theestablishment of a work environment to match new working styles.
At the Itoham Yonekyu Group, we are working to create anenvironment where each employee can have flexible working styles,
including making work and childcare or care for older parents
compatible, while also working to improve work efficiency andproductivity through the establishment of a remote work system.
Remote office space
An online meeting
Itoham Yonekyu Group Integrated Report 2021

26

Strong Organizational Foundation
Board of Directors

Corporate Governance
Basic Policy on Corporate GovernanceOur corporate governance is based on our Group Philosophy, Vision, and Code of Conduct. We have set up a system ofmanagement organization that enhances overall Group monitoring, supervising, and other internal control functions to accomplish
adequate corporate social responsibility (CSR), and we have placed corporate governance alongside making accurate businessdecisions and taking fast action.
We established the Basic Policy on Corporate Governance based on this basic view and ensure corporate governance isrealized and aim for highly transparent management to improve our medium- to long-term corporate value.
■

Establishment of Compliance Committee

Establishment of Group Philosophy, Vision,and Code of Conduct

Establishment of a Sustainability Committee

Establishment of Governance Committee

FY2016FY2018

Female directors (1)Establishment of Nomination Advisory
Committee

1. Matters related to the appointment and dismissal of directors, auditors, and executive officers for Itoham Foods Inc. and Yonekyu
Corporation (“Itoham Yonekyu Group”)

Ratio of independent outside directors on the

2. Matters related to basic policies on the appointment and dismissal of Itoham Yonekyu Group directors, auditors, and executive
officers, and the establishment, revision, and abolishment of regulations and procedures

Basic Policy on Sustainability

3. Other matters deemed necessary by the committee related to the appointment of director and auditor candidates and the dismissal of
directors and auditors

FY2021 Board of Directors is 1/3

Female directors (2)System of having two independent outside
directors

Establishment of Managerial Personnel
Development Policy
Evaluations on the effectiveness of the Boardof Directors begins

Establishment of Compensation Advisory
Committee

Remuneration Consultation Committee

Revision of Basic Policy on Corporate
GovernanceIntroduction of performance-based
compensation

FY2017

Establishment of Basic Policy on Officer

FY2020 Compensation

Introduction of executive officer system

Nomination Advisory Committee
Established to ensure transparency and objectivity in the election process for director, auditor, and executive officer candidates.
As an advisory body to the Board of Directors, this committee reviews, recommends, and proposes the following mattersto the Board of Directors.

Initiatives to Strengthen the Corporate Governance System
Holding company system
Establishment of our holding company throughthe merger of Itoham Foods Inc. and Yonekyu
Corporation.

Aiming for sustainable growth and medium- to long-term improvements to our corporate value, we reduced the numberof directors from 9 to 6 on June 23, 2021 to strengthen our governance through the promotion of separation between
management and execution, to promote lively discussion through increasing the ratio of independent and neutral outside
directors, and to make further use of outside knowledge and experience.
In addition to regular monthly Board of Directors meetings, we also hold extraordinary board meetings as necessary.
The Board oversees decisions and policy judgements on important managerial matters and monitors the status of businessexecution.

Established to ensure transparency and objectivity in the decision process for compensation for directors and executive
officers.
As an advisory body to the Board of Directors, this committee reviews, recommends, and proposes the following mattersto the Board of Directors.

Revision of Cross-shareholding Policy
Management Guidelines

Establishment of Basic Policy on Corporate
Governance
Establishment of Cross-shareholding Policy
Management Guidelines

1. Matters related to the Officer Compensation System (basic compensation, performance-based compensation, shares with restrictions
on transfer, etc.) for directors and executive officers of Itoham Foods Inc. and Yonekyu Corporation. (“Itoham Yonekyu Group”)
2. Matters related to performance (managerial indicators, target values, fluctuation range, etc.) of Itoham Yonekyu Group directors andexecutive officers■

3. Matters related to compensation standards (compared to competitors) for Itoham Yonekyu Group directors and executive officers

Corporate Governance Diagram (As of September 30, 2021)
General Shareholders Meeting
Appointment/dismissal

Appointment/dismissal

Appointment/dismissal

Nomination Advisory Committee

Governance Committee

Reporting

Auditing

Internal Directors (4)Reporting
ReportingBusiness
Execution

Appointment,
Dismissal,
Supervision
Reporting

Guidance

Internal Auditors (2)Outside Auditors (2)Outside Directors (2)Sustainability Committee
Compliance Committee

Audit & Supervisory Board(4 members)

Board of Directors(6 members)Group
Executive
Committee

President
Executive Officers

Reporting

Cooperation
Decision on appointment/
reappointment policy
Decision on accounting
audit equivalency

Cooperation

Accounting
AuditsLegal and Compliance Divisions
Quality Assurance Division

Reporting

Supervision, instruction

Subsidiaries and Affiliates

Internal Auditing Office

Monitoring

Auditing and Monitoring

Recommendations
and Proposals

Accounting Auditor

Supervision

Compensation Advisory Committee

Governance Committee

Reporting

Established to aid in the strengthening of the corporate governance system and its operation through increasing theeffectiveness of the Board of Directors.
As an advisory body to the Board of Directors, this committee reviews the effectiveness of the Board of Directors and makes
recommendations and proposals to the Board of Directors.

Composition of the Nomination Advisory Committee, the Compensation Advisory Committee
and the Governance Committee(As of August 31, 2021)

Attendance (FY2020)

Cooperation

Nomination Advisory
Committee

Remuneration Consultation
Committee

Governance Committee

Chairperson

Katsuhiro Ito

D i re c t o r, M a n a g i n g
Executive Officer

―

―

―

Committee
MemberAya ItoIndependent outside
director

2 out of 2 times (100%)

3 out of 3 times (100%)

2 out of 2 times (100%)

Committee
MemberYukie Osaka

Independent outside
director―――

Ito was appointed Chairman of each committee on June 23, 2021. Yukie Osaka was appointed as a member in each committee on June 23, 2021.
* Katsuhiro
Attendance for members of each committee in FY2020 was 100%.

27

Itoham Yonekyu Group Integrated Report 2021

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28

Strong Organizational Foundation
Sustainability Committee

Overview of Compensation System

The Sustainability Committee was established to propose indicators and plans and to monitor their progress as sustainability
projects advance. As an advisory body to the Board of Directors, the Sustainability Committee discusses the following matters.

Compensation for full-time directors and officers is made up of basic compensation, performance-based compensation as ashort-term incentive, and share-based compensation (shares with restrictions on transfer) as a medium- to long-term incentive.
The ratio of basic compensation to performance-based compensation to share-based compensation is set at roughly
60:25:15. We established this ratio based on an understanding of our financial situation and after comparing and investigatingcompensation ratios and standards for each role at many other companies in the same industry and with the same scale so as
to ensure objectivity and validity in compensation ratios and in standard general compensation for each role.
Compensation for outside directors consists of basic compensation only, as their main roles of supervising and making
recommendations on management from an independent and objective position are not connected to business performance.
Compensation for auditors also consists of basic compensation only, as there is no connection to business performance
as auditors make decisions through discussion and from the viewpoint of ensuring a high degree of independence.

1. Proposal of basic plans and strategies for the Basic Policy on Sustainability and promotional efforts
2. Establishment of materiality (priority issues) for the promotion of sustainability management
3. Establishment of KPIs (Key Performance Indicators) for materiality and monitoring of their progress

Audit & Supervisory Board
Meets regularly once per month, and in addition to making decisions on important matters related to audits, this Board reportson the status of audit implementation and exchanges opinions.
In addition to attending Board of Directors meetings and important internal discussions, auditors carry out ample
supervision including directly hearing about the execution of business from the Board of Directors and employees.
They also receive appropriate reports about audit plans and results from accounting auditors and promote audits based on theexchange of opinions and close cooperation.

Independent Outside Director Meetings
Made up of four independent directors and auditors, these meetings are held regularly.
Opinions are exchanged on a variety of matters, including managerial strategy, managerial issues, and Board of Directors topics.

Group Executive Committee
Group Executive Committee is established to decide important issues at executive level and to discuss the issues which aredecided by the Board.
It is made up of directors (excluding outside directors), auditors, and others designated by the chairperson of the Group
Executive Committee and meets twice per month. They also hold special meetings as necessary, and decide, report, anddiscuss Itoham Yonekyu Group managerial strategies and important matters.

Evaluations on the Effectiveness of the Board of Directors
In October 2020, we held a self-evaluation survey targeting all directors and auditors to have the Board of Directors evaluate
for themselves whether or not they were functioning normally in the way that was originally established, to increase theireffectiveness, and to create an appropriate governance system for the Itoham Yonekyu Group. The results of this survey werediscussed by the Itoham Yonekyu Group Governance Committee and the Board of Directors and the effectiveness of the Boardof Directors was evaluated.
The survey consisted of thirteen questions on the following seven topics: 1) Structure of the Board of Directors, 2) the
administration of the Board of Directors, 3) discussions of the Board of Directors, 4) supervision by the Board of Directors, 5)appointment/dismissal of managers, 6) discussions with stockholders, and 7) comments. Improvements have progressed since theevaluations on effectiveness held in 2019, and it was determined that the effectiveness of the Board of Directors was generally secured.
We will continue to work towards improving the effectiveness of the Board of Directors based on the results of this evaluation.

Cross-shareholdingStandards and Policies for the Classification of Investment Stock
We consider stocks owned for net investments to be investment stocks for the purpose of gaining profit through dividends
exclusively via stocks or changes in stock price, and all other stocks are considers stocks owned for other reasons (“crossshareholding”).
All stocks owned by the Itoham Yonekyu Group are those of subsidiaries or affiliate companies, and we do not own any
stocks for net investments or cross-shareholding.
Basic Policy on Cross-shareholding
Our subsidiaries do own cross-shareholdings, however, our basic policy does not allow the ownership of cross-shareholdings
except for cases where it meets certain standards and is determined to assist in the maintenance and development of business
transactions.
At the end of each fiscal year, we quickly check to see if each individual brand meets standards, the results of which
are investigated by the Itoham Yonekyu Group Executive Committee and reported to the Itoham Yonekyu Group Board of
Directors.

ComplianceCorporate Code of Ethics
The Itoham Yonekyu Group sets fair and transparent conduct that puts compliance first as acompliance policy.
The code of compliance behaviors, which show the evaluation standards that employees should
follow, was complied into a booklet as the Corporate Code of Ethics and distributed to every
employee, and we are working to spread information through training, etc. We also posted theCompliance Q&A Examples on the internal portal site to explain the content of this code of ethics so
as to be easily understood, working to develop an awareness of compliance among employees.

Conpensation for Directors and Officers
The basic policy on the conpensation system for Directors and Officers was determined as follows.
1. It will function as a good incentive towards sustainable business expansion and corporate value improvement by sharing value withshareholders, employees, and other stakeholders.
2. It will be a compensation system that responds to a suitable compensation standard based on field and scale of business,
responsibility for each role, and role and results in order to employ and keep superior personnel.
3. It will be determined through a process that ensures objectivity and rationality to maintain accountability with stakeholders.
29

Itoham Yonekyu Group Integrated Report 2021

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30

Strong Organizational Foundation
Compliance Management System

Risk Management

Compliance Committee
The Compliance Committee meets once per month with the director overseeing compliance as the chairperson.
This committee is made up of the director supervising compliance, auditors, people responsible for quality and compliancerisks, and outside experts, and they check the state of management of food safety and compliance and independently evaluate
the status of operations of this management.

Risk Management System

Compliance Supervisor Meeting
The Compliance Supervisor Meeting is held twice per year
to promote Group compliance, with the presidents of eachcompany as chairpersons. At these meetings, policies andplans for compliance promotion action are decided uponand matters requiring improvement from the Compliance
Committee and compliance-related cases are monitored.
Based on this, discussions are then had to move to highly
effective measures.

Itoham Yonekyu Holdings Inc.
ReportingOperations
Reporting
Sharing

Compliance Committee
Reporting

Evaluation

Secretariat

Operations
Reporting
Sharing

Legal and Compliance Department
Itoham Foods Inc.

Yonekyu Corporation

General Compliance
Supervisor Meeting

General Compliance
Supervisor Meeting

Compliance Promotion Committee System
A Compliance Promotion Committee is set up at each workplace and holds meetings three times a year to spread informationand promote compliance measures for employees in each company and division. These meetings are operated as part of ourtraining program to enable employees to understand their own problems easily and to carry out compliance promotion action
on their own by having employees gain knowledge about compliance and issues they are actually facing in the workplace andtaking up examples of compliance violations as case studies.

The Corporate Strategy Planning Office, corporate and other divisions grasp and analyze the risks assumed for Group business
operations and offer necessary reporting to the Board of Directors.
The Corporate Strategy Planning Office, Audit Office, and Crisis Management Office work closely together to prevent
risks from appearing, respond quickly when they occur, minimize damage, and handle the accumulation of risk management
knowledge.
In the event of large-scale accidents or natural disasters that may cause serious issues with the continuity of business or
threaten the lives of employees, a Crisis Management Committee will be set up and will take suitable and necessary action tocollect and analyze information and prevent damage from occurring or expanding.
A Crisis Management Committee was set up in FY2020 as a measure against COVID-19. The Crisis Management
Committee established and implemented Group response policies and guidelines in a timely and appropriately manner basedon national and local government response policies in order to prevent infections among employees, prevent the spread of
infections, and safely and reliably supply products.

Business and Other Risks
As shown below, we are aware of risks that may impact business results, stock price, or our financial status and we are creating
systems to minimize their effects, considering the possibility of occurrence and level of impact.
This does not, however, include all risks, and there is a possibility that we may be affected by a risk in the future that we areunable to predict now or do not consider important and there is also a possibility that damage may occur due to insufficientmeasures against these risks.
See the Annual Securities Report for more details.
https://www.itoham-yonekyu-holdings.com/english/ir/finance.html

Risk Category

Training
A compliance seminar is held once a year to increase all Group employees’ awareness of compliance and have employees
understand the importance of compliance. We also offer compliance seminars by outside experts as necessary depending on
the role for internal directors on industry law and harassment prevention.

Internal Reporting System

コンプライアンスカード 表

コンプライアンス カード
胸に手を当てて考えよう 企業人として、社会人として行動のセルフチェック

あなたのその行動は、職場のメンバーの行動は、法律に触れていませんか？
胸を張って話せますか？

• Health hazards to consumers

Infectious Diseases, Epidemics, etc.

• Spread of infectious diseases• Increase in labor costs• Increased cost in auxiliary materials and packaging materials• Increase in electricity costs or logistics fees
• Major increase in price of feed

• Spread of epidemics among livestockBusiness Continuity due to Disasters, War, etc.

• Earthquakes and other natural disasters, war, conflict, terrorism, etc.

Changes to Local and International Public orLegal Regulations and Infringement of Rights• Unanticipated legal regulations• Infringement of rights and delay or inability to prevent infringement• Exchange rate fluctuations• Rise in interest rates「会社のため」「忙しさ」
を言い訳にしていませんか？
コンプライアンス違反に目をつぶっていませんか？
良心に従った行動ですか？
伊藤ハム米久ホールディングス

Changes to the Financial Market
Business and Facilities Investments

COMPLIANCE

コンプライアンス相談窓口（コンプライアンス統括室）
A Compliance Awareness Survey is conducted for all employees once per year to understand the level社内相談窓口
of awarenessof
03-5723-8662
soudan@itoham.co.jp
compliance in each workplace and to hear employees’ honest opinions on compliance.
yonekyuhotline@yonekyu.co.jp
社外相談窓口
（今村弁護士）Survey results and employee opinions lead to improvements in the workplace, as they are offered as feedback
03-3470-0271 to all
ih-hotline@greenhill-law.jp
employees including management, improvements are made if problems are found, and they are used in compliance action for
the next fiscal year.

• Impairment of non-current assets and goodwill

Distribution• Inadequate creation of a proper supply chain due to increase in distribution, driver shortages, and insufficient
infrastructure, etc.

Recruiting• Insecurity with young workers

Compliance• Serious compliance issues, including legal violations

コンプライアンスカード 裏

Compliance Awareness Survey• Changes in livestock market price that exceed
expectations• Triggering of safeguards• Strained food supply• Major increase in procurement costs

Food Safety

Livestock Epidemics

COMPLIANCE

Based on Group internal reporting regulations, we have set up the Internal Consultation
Hotline (Legal and Compliance Department) and the Outside Consultation Hotline (withoutside lawyers) to receive consultations and internal reporting on compliance.
Each hotline distributes compliance cards and lists their contact information on the internal
portal site, making everyone aware. In addition to confidentiality with details of consultations,adverse handling towards the consulter regarding reported or consulted content has beenprohibited, aiming to protect the consulter.

B

Market Changes

Subcategory• Unanticipated personnel departure• Delayed personnel training

T E L

メール

Development and Operation of Internal Control
SystemT E L

Environmental Action• Environmental regulations

Information Security• Leaking or loss of information and system failures due to earthquakes and other natural disasters, cyber terrorism,
system flaws and issues, new computer virus infections, unlawful access, etc.

メール

・困ったり、疑問に思ったりしたときは上司に相談しましょう
・誰にも相談できないときは相談窓口へ
・プライバシーは厳重に取り扱い、保護します• Poor functioning of the internal control system

Reputational Damage on Social Media

31

Itoham Yonekyu Group Integrated Report 2021

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32

Strong Organizational Foundation
Both attendances at Board Directors Meetings and Audit & Supervisory Board Meetings are for the fiscal year 2020.

Officers (As of October 31, 2021)
Directors

Isao
Miyashita

President and Chief Executive Officer
Chairperson of the Board
Director, Itoham Foods Inc.
Director, Yonekyu Corporation

With experience in the meat business, he worked as thepresident of Yonekyu Corporation and was appointed
President and Chief Executive Officer in April 2016.
He possess a wide range of knowledge and ample
experience as a corporate manager, and has carried theentire Group by working to build a system for businessexecution and an organizational system and by promoting
effective and flexible management.

YoshiroMatsuzaki

Auditors

Director
Executive Vice President
COO Group Processed Foods Division
Head of Qualiy Assurance Department
Chief Executive Officer, Itoham Foods Inc.
Director, Yonekyu Corporation

Shin
TakahashiWith experience in the processed food business andProduction Division at Itoham Foods, he was appointed
Executive Vice President in April 2016.
He is responsible for overseeing the Group’s processedfood business and the quality management system, andhas promoted the Group’s business operations aspresident of Itoham Foods Inc.

Attendance at Audit &Supervisory Board Meetings:— (—%)

Director
Managing Executive Officer
CFO,CAO,CCO
Chairperson of Nomination Advisory Committee
Chairperson of Compensation Advisory Committee
Chairperson of Governance Committee
Chairperson of Sustainability Committee
Senior Managing Director and Chief Financial Officer,
Itoham Foods Inc.

IchiroIchikawa
Attendance at Board of
Directors Meetings:

With experience in financial affairs, accounting,and corporate planning, and as president ofinternational businesses, he was appointed
Director in June 2019.
He is responsible for overseeing the Corporate
Division and Group compliance promotion.

13 out of 13 times (100%)
Attendance at Audit &Supervisory Board Meetings:

11 out of 11 times (100%)

Kei
Umebayashi
Attendance at Board of
Directors Meetings:

13 out of 13 times (100%)

10 out of 10 times (100%)
Attendance at Audit &Supervisory Board Meetings:

Director
Senior Executive Officer
COO Group Meat Division
Executive Director, Itoham Foods Inc.
Senior General Manager of Meat Division

With experience in the meat business and international
businesses, he was appointed Executive Director onJune 23, 2021.
He is responsible for overseeing the Group’s meatbusiness.

Significant concurrent holding of
positionsChief Executive Officer, SWEAT CAPITAL
Inc.
Outside Auditor, Unimedia Inc.
Outside Auditor, INFOBAHN Group Inc.

Outside Auditor
Independent Director
Significant concurrent holding of
positions
Partner of Nishimura & Asahi
Part-time Graduate School Lecturer at
Keio University Law School

9 out of 9 times (100%)

He has worked as an Outside Auditor since June 2020.
He has expert knowledge in corporate legal affairs as alawyer, as well as expert knowledge and experience incrisis management.
He offers necessary and appropriate remarks with theBoard of Directors to ensure compliance and validity indecision making.
He audits the execution of Directors’ duties with the Audit& Supervisory Board based on auditing policies and plans.

Kazuhiko Misonou

Managing Executive
Officer

Senior Managing Director, Itoham Foods Inc. Executive Chairman, ANZCO FOODS LTD.

Akihisa Horiuchi

Managing Executive
Officer

Chief Executive Officer, Yonekyu Corporation

Masayuki Yoneda

Senior Executive
Officer

Executive Director and Senior General Manager of Processed Foods Division, Itoham Foods Inc.

Attendance at Board of
Directors Meetings:

Takeshi Koyama

Senior Executive
Officer

General Manager of CEO Office, General Manager of Corporate Strategy Planning Office, in charge of Group Logistics, andGeneral Manager of ABC Business Promotion Office— (—%)

Koichi Ito

Senior Executive
Officer

Director, Acting Senior General Manager of Processed Foods Division, and Senior General Manager of Business Strategy
Division, Itoham Foods Inc.

Tsuyoshi Fukunishi

Senior Executive
Officer

Executive Director and Senior General Manager of Production Division, Yonekyu Corporation

Masaaki Sone

Senior Executive
Officer

Chief Group R&D Officer and Central Research Institute

Aya
Ito

Attendance at Board of
Directors Meetings:

Outside Director
Independent Director
Member of Nomination Advisory Committee
Member of Compensation Advisory Committee
Member of Governance Committee
Member of Sustainability Committee
Significant Concurrent Positions
Sustainability Transformation Department Partner,
Recruit Holdings Co., Ltd.
Outside Director, eole, Inc.
Outside Director, ewoman, Inc.

She has worked as an Outside Director sinceJune 2018.
She offers objective, expert opinions andsuggestions with the Board of Directors with her
expert knowledge of sustainability promotion
and her knowledge and experience as an
Outside Director with listed companies.

Executive
Officer

Senior Executive
Yoshiyuki Ishimatsu Officer

Yukie
Osaka

Outside Director
Independent Director
Member of Nomination Advisory Committee
Member of Compensation Advisory Committee
Member of Governance Committee
Significant concurrent holding of positions
Outside Director, SAKURA internet Inc.

Attendance at Board of
Directors Meetings:— (—%)She has worked as an Outside Director sinceJune 23, 2021.
She offers objective, expert opinions andsuggestions with the Board of Directors with her
expert knowledge as a marketing consultant,her career as a Managing Director with listedcompanies, and her knowledge and experience
as an Outside Director.

Chief Group Production Officer and Purchasing Department and Senior General Manager of Production Division, Processed
Foods Division, Itoham Foods Inc.

Tomoyuki Ushimaru Officer

Senior Executive

Chief Executive Officer, Itoham Sales Inc., and Senior General Manager of Sales Division, the Processed Foods Division,
Itoham Foods Inc.

Ryuji Otsuki

Executive Officer

Senior General Manager of Imported Meat Division.

Sadaki Iwama

Executive Officer

General Manager of Quality Assurance Department

Kouki Haruna

Executive Officer

Acting Senior General Manager of Business Strategy Division, Processed Foods Division, and General Manager of Marketing
Division, Itoham Foods Inc.

Shinyo Tou

Executive Officer

Senior General Manager of Domestic Meat Division.

Fumihiro Kanamori

Executive Officer

Senior General Manager of Meat Production Division.

Katsumi Nozawa

Executive Officer

General Manager of PMI Office, Exective Director and Chief Financial Officer, Yonekyu Corporation

Shinji Horiuchi

Executive Officer

Chief Executive Officer, Yonekyu Kagayaki Co., Ltd.

Hidetoshi Noguchi

Executive Officer

Chief Executive Officer, Yonekyu Delica Foods Corporation

Hiroyuki Tamai

Executive Officer

General Manager of Processed Food Business Department and Marketing Unit, Yonekyu Corporation

Hirohiko Yoshino

Executive Officer

Acting Senior General Manager of Imported Meat Division, General Manager of Meat Business Department, Yonekyu Corporation

Takuya Hashimoto

Executive Officer

General Manager of IT Management Office and Manager of MIRAIKIBAN Section.

13 out of 13 times (100%)

Itoham Yonekyu Group Integrated Report 2021

He has worked as an Outside Auditor since June 2019.
He has expert knowledge and experience in financial
affairs and accounting as a certified public accountant.
He offers necessary and appropriate remarks with theBoard of Directors to ensure compliance and validity indecision making.
He audits the execution of Directors’ duties with the
Audit & Supervisory Board based on auditing policies
and plans.

— (—%)

Attendance at Board of
Directors Meetings:

33

Outside Auditor
Independent Director

Attendance at Board of
Directors Meetings:

Auditors(Outside)

12 out of 13 times (92.3%)

Directors(Outside)

He has worked as a Full-time Auditor since June 23, 2021.
He has knowledge and experience in financial affairs andaccounting, developed through his career as the person in
charge of the Group Accounting and Finance Department.
He offers necessary and appropriate remarks with theBoard of Directors to ensure compliance and validity indecision making.
He audits the execution of Directors’ duties with the Audit& Supervisory Board based on auditing policies and plans.

Attendance at Audit &Supervisory Board Meetings:

11 out of 11 times (100%)

Attendance at Board of
Directors Meetings:

Takamasa
WakakiStanding Auditor
Auditor, Itoham Foods Inc.
Auditor, Yonekyu Corporation

13 out of 13 times (100%)

13 out of 13 times (100%)

Katsuhiro
Ito

He has worked as a Full-time Auditor since June 2020.
He has knowledge and experience through his career as a
Yonekyu Executive Officer and as the person in charge ofthe Group Human Resources Department.
He offers necessary and appropriate remarks with theBoard of Directors to ensure compliance and validity indecision making.
He audits the execution of Directors’ duties with the Audit& Supervisory Board based on auditing policies and plans.

Attendance at Board of
Directors Meetings:

Attendance at Board of
Directors Meetings:

IkurouShibayamaStanding Auditor
Auditor, Itoham Foods Inc.
Auditor, Yonekyu Corporation

Itoham Yonekyu Group Integrated Report 2021

34

Strong Organizational Foundation
Officers’ Skill Matrix (As of October 31, 2021)
The Board of Directors is diverse, with directors from differing backgrounds of expert knowledge and experience.
The diverse experience and knowledge of each Director complements the performance of the overall Board of Directors, and the Board is set up in such a way as to fulfill its fiduciary responsibility.
● Chairperson

Skill Matrix
GeneralPosition, Supervisor

Isao Miyashita

Independent
Raw Material
Management
Director
Procurement

Meat
Production

Manufacturing
andProcessing

Sales

●

●

●

●

●

●

President and Chief Executive officer
Director, Itoham Foods Inc.
Director, Yonekyu Corporation

Director
Executive Vice President
COO Group Processed Foods Division
Ikurou Shibayama Head of Qualiy Assurance Department
Chief Executive Officer, Itoham Foods Inc.
Director, Yonekyu Corporation●

Katsuhiro Ito

Director
Managing Executive Officer
CFO,CAO,CCO
Senior Managing Director and Chief Financial
Officer, Itoham Foods Inc.

●

Takamasa Wakaki

Director
Senior Executive Officer
COO Group Meat Division
Executive Director, Itoham Foods Inc.
Senior General Manager of Meat Division●

Aya ItoOutside Director●

Yukie Osaka

Outside Director●

Standing Auditor●

Product
Development

Legal Affairs●

Financial
Accounting●

ESG
IT/Digital
International
Sustainability Transformation Experience

●

●

●

●

●

Standing Auditor
Auditor, Itoham Foods Inc.
Auditor, Yonekyu Corporation●●

Ichiro Ichikawa

Outside Auditor

●

●

●

Kei Umebayashi

Outside Auditor

●

〇

●

〇

●

●

●

Audit &
Supervisory
Board

Nomination
Advisory
Committee

Compensation
Governance
Advisory
Committee
Committee

Sustainability
Committee

Compliance
Committee

●

●

●

●

●

●

Shin Takahashi

Board ofDirectors〇●●

Itoham Yonekyu Group Integrated Report 2021

Marketing●●●Make Up of Board of Directors, Audit and Supervisory Board, and Each Committee(As of October 31, 2021)

Attributes, Experience, Etc.

Yoshiro Matsuzaki Auditor, Itoham Foods Inc.

Auditor, Yonekyu Corporation

35

Expertise in the Food Industry〇 Member

●

●

●

●

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

●

〇

〇

●

〇

〇

●

〇

〇

〇

〇

Itoham Yonekyu Group Integrated Report 2021

36

Financial and Corporate Data
Major Financial Trends

Consolidated statement of income(Unit: 1 million yen)

FY2017

Net Sales
Gross profit
Selling, general and administrative expenses
Operating income
Ordinary income
Net Income attributable to owners of parent
Earnings per share (EPS) (yen)Return on equity (ROE) (%)
Return on assets (ROA) (%)
Return on invested capital (ROIC) (%)
Ratio of operating income to net sales (%)
Ratio of ordinary income to net sales (%)
Ratio of net income to net sales (%)

FY2018831,865
130,649
109,087
21,562
24,423
15,784
53.22
7.3
6.5
6.4
2.6
2.9
1.9

FY2019850,721
126,821112,326
14,494
15,67910,588
35.82
4.8
4.1
4.1
1.7
1.8
1.2

(Unit: 1 million yen)

FY2020852,450
133,548
116,281
17,266
19,534
11,439
38.72
5.1
5.0
4.7
2.0
2.3
1.3

FY2019842,675
139,979
115,961
24,01827,00020,204
68.61
8.5
6.9
6.3
2.9
3.2
2.4

842,675
702,695
139,979
115,961
24,018

118
342
425
428
598
942
498
3,355

56
328
423
214
1,244
1,040
573
3,882

711
139
236
1,087

360
143
395
900

19,53427,000

54
83
331
13
483

476
10
3,003
3,490

Total extra-ordinary expenses

469
7
17
1,493
719
29
2,738

587
475
165
139
8
1,377

Net income before taxes
Income taxes-deferred
Income taxes-current
Total income taxes
Net income
Income attributable to non-controlling interests
Income attributable to owners of parent

17,280
5,491
213
5,704
11,575135
11,43929,113
8,367
451
8,819
20,29489
20,204

11,575

20,294

–324
573
–694
–70
–401
–916

2,449
26
441
1,651
346
4,915

10,65810,506
151

25,20925,14168

Non-operating income
Interest income
Dividend income
Rent income
Insurance income
Subsidy income
Equity in income of affiliates
Other

Total non-operating expenses
Non-operating expenses
Interest expenses

Total assets
Net assets
Capital to asset ratio (%)
Current assets
Current liabilities
Book value per share (BPS) (yen)D/E ratios (times)
Interest coverage ratio (times)

376,204
219,86158.1
213,465
127,765739.770.22
6.2

393,392
224,074
56.6
229,580
139,456
754.140.28
19.2

389,426
229,17858.5
226,498
138,106
773.260.23
44.7

394,086
247,64862.7
226,384
123,041843.520.16
113.3

Rent on real estate
Other

Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of non-current assets
Gain on sales of investment securities
Insurance income
Other

Total extra-ordinary income
Cash flow from operating activities
Cash flow from investing activities
Free cash flow
Cash flow from financing activities
Cash and cash equivalents at end of period
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Capital Expenditures
Depreciation and amortization of goodwill
Dividends per share (yen)Consolidated payout ratio (%)

5,521–8,183–2,661–20,004
29,284–23,501
52,785
12,674
10,304

15,114–19,879–4,765
10,08434,643
5,358
29,284
20,56011,666

31,847–7,85523,991–16,390
41,771
7,128
34,643
9,838
12,52440,862–10,837
30,025–21,097
50,651
8,879
41,771
11,58013,003

17.0
31.9

17.0
47.5

17.0
43.9

21.0
30.6

Processed food segment
Sales ratio
Operating income

Extraordinary loss
Loss on retirement of non-current assets
Loss on sale of investment securities
Impairment loss
Loss on disaster
Loss on liquidation of subsidiaries
Loss on liquidation of business
Other

Consolidated statement of comprehensive income

Segment information
Net Sales(Unit: 1 million yen)

287,502
34.6
10,764

291,93934.3
7,914

300,20935.2
6,730

307,041
36.4
12,397

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plan
Share of other comprehensive income of entities accounted for using equity method

Meat segment
Net Sales
Sales ratio
Operating income

37

Itoham Yonekyu Group Integrated Report 2021

FY2020852,450
718,902
133,548
116,281
17,266Net Sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Operating income

540,10764.9
11,432554,576
65.2
7,364

548,184
64.3
11,284

531,58163.1
13,443

Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Itoham Yonekyu Group Integrated Report 2021

38

Financial and Corporate Data
Consolidated Balance Sheets(Unit: 1 million yen)

FY2019(Unit: 1 million yen)

FY2020FY2019AssetsLiabilities

Current assets

Current liabilities

Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets

42,07287,90270,648
1,757
17,8376,293–14226,498

50,95286,591
63,313
1,745
17,1746,617–10
226,384

61,574
1,748
28,88010,179794
21,111
1,707
1,418
5,280
120
544
4,745
138,106

56,615
1,660
25,704
155
813
21,768
4,149
508
6,397
147
467
4,653
123,041

Total non-current liabilities

10,872
2,228
2,179
2,208
1,461
3,190
22,14010,717
2,193
4,253
1,725
1,475
3,031
23,396

Total liabilities

160,247

146,438

30,003
96,267
101,792–2,293
225,770

30,00396,624
116,989–3,624
239,992

4,823–355–3,767
1,301
2,002

7,298
–329
–3,073
3,042
6,939

131
1,275

131
585

Total net assets

229,178

247,648

Total liabilities and net assets

389,426

394,086

Notes and accounts payable – trade
Electronically recorded obligations —Short-term loans payable
Current portion of Long-term loans payable
Lease obligations
Accounts payable — other
Income taxes payable
Accrued consumption taxes
Provision for bonuses

Non-current assets

Provision for directors’ bonuses

Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net

Machinery, equipment, and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net

Tools, furniture & fixtures
Accumulated depreciation
Tools, furniture & fixtures, net

Land
Leased assets
Accumulated depreciation
Leased assets, net

Construction in progress
Other
Accumulated depreciation
Others, net

Total property, plant and equipment

Provision for loss on disaster

101,777–64,601
37,175
126,499–96,194
30,305
6,873–5,365
1,508
25,830
5,932–3,132
2,799
1,017
172
–48
124
98,760102,615–66,181
36,433
125,742–96,823
28,9196,903–5,435
1,468
25,7456,214–3,455
2,758
2,176
145
–52
92
97,595Intangible assets
Goodwill
Other
Total intangible assets

21,057
1,626
22,684

19,5732,150
21,724

Total non-current assets

25,822
1,518
1,067
9,378
3,822
–126
41,482
162,927

29,331
1,520
734
12,162
4,738–105
48,382
167,702

Total Assets

389,426

394,086

Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit assets
Other
Allowance for doubtful receivables
Total investments and other assets

Itoham Yonekyu Group Integrated Report 2021

Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Net defined benefit liability
Asset retirement obligation
Other

Net assets

Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Other accumulated comprehensive income
Valuation difference on available-for-sale securities

Investments and other assets

39

FY2020

Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plan
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests

Itoham Yonekyu Group Integrated Report 2021

40

Financial and Corporate Data
Consolidated statement of Cash Flows

Consolidated statements of changes in shareholders’ equity(Unit: 1 million yen)

FY2019(Unit: 1 million yen)

FY2020

FY2020Cash flow from operating activities
Net income before taxes
Depreciation
Impairment loss
Increase (decrease) in provision for bonuses
Amortization of goodwill
Interest and dividend income
Interest expenses
Insurance income
Loss on disaster
Loss on liquidation of business
Loss on liquidation of subsidiaries
Subsidy income
Equity in earnings of affiliates
Loss (gain) on sale of investment securities
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in notes and accounts payable
Increase (decrease) in net defined benefit liability
Decrease (increase) in net defined benefit asset
Other
SubtotalInterest and dividend income received
Proceeds from insurance income
Proceeds from subsidy income
Interest expenses paid
Payments for loss on disaster
Income taxes paid
Net cash provided by (used in) operating activities

17,28010,933
17
525
1,591
–460
711
–760
1,493
719
–598
–942
–76
12,216–548–2,995
–336
–43
–207
–102
38,414
561
747
522
–712
–355
–7,33031,847

29,113
11,519
165
1,116
1,483
–385
360
–3,218139–1,244–1,040
464
1,293
8,043
–4,821
709
–132
–708
–1,754
41,103
625
3,227
1,033
–360
–77
–4,68840,862–8,995–571–1,109233–1,271
2,969
–265
1,012
143
–7,855–9,685–1,226
–73
714
–237
235
–564
–10,837

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchases of Investments in Securities
Proceeds from Sale of Investments in Securities
Purchase of investments in subsidiaries resulting in change in scope of consolidation
Proceeds from capital reduction with compensation
Payments of loans receivable
Proceeds from loans receivable
Other
Net cash provided by (used in) investing activities

Cash flows from financing activities
Increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Purchase of treasury shares
Purchase of treasury shares of subsidiaries
Cash dividends paid
Purchase of investments in subsidiaries resulting in no change in scope of consolidation
Repayments of lease obligations
Other
Net cash provided by (used in) financing activities

Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

41

Itoham Yonekyu Group Integrated Report 2021

–4,740–5,209–606–5,018–770–45–16,390–3,192–10,179–1,478–321–5,009–6–866–44–21,097–472
7,128
34,643
41,771–48
8,879
41,77150,651

Shareholders’ equity
Capital stock

Balance at beginning of period

Capital surplus

30,003Retained earnings

96,267

Treasury shares

101,792

Total shareholders’ equity–2,293

225,770–1,478147–5,007
20,204–1,478117

Changes during period–5,007
20,204

Dividends of surplus
Profit attributable toowners of parent
Acquisition of treasury shares–29

Disposal of treasury shares
Change in ownership interest of parent due totransactions with non-controlling interests
Net changes of items other than shareholders’ equity (net)Total changes during period
Balance at end of period

386

386

-

357

15,196–1,331

14,22230,00396,624

116,989–3,624

239,992

Other accumulated comprehensive income
Valuation difference on
available-for-salesecurities

Deferred gains orlosses on hedges

Foreign currencytranslation adjustment

Remeasurements ofdefined benefit plan

Total accumulated
other comprehensive
income

4,823

–355

–3,767

1,301

2,002

2,475

26

694

1,741

4,936

Total changes during period

2,475

26

694

1,741

4,936

Balance at end of period

7,298

–329

–3,073

3,042

6,939

Balance at beginning of period
Changes during period
Dividends of surplus
Income attributable to owners of parent
Acquisition of treasury shares
Disposal of treasury shares
Change in ownership interest of parent due totransactions with non-controlling interests
Net changes of items other than shareholders’equity (net)

Subscription rights to shares
Balance at beginning of period

131

Non-controlling interests

Total net assets

1,275

229,178

Changes during period–5,007

Dividends of surplus
Income attributable to owners of parent company
stock
Purchase of treasury shares

20,204–1,478117

Disposal of treasury shares
Change in ownership interest of parent due totransactions with non-controlling interests
Net changes of items other than shareholders’equity (net)Total changes during period
Balance at end of period

–714

–327

24

4,961

-

–689

18,469131585

247,648

Itoham Yonekyu Group Integrated Report 2021

42

Stock Information (As of March 31, 2021)
Stock Conditions

Distribution of shares by shareholder type
Tokyo Stock Exchange (1st Section)

Listed stock exchange

Foreigninvestors

Stock ticker code

2296

Number of authorized shares

1,000,000,000

Securities
companies

0.48%

8.59%

Number of issued shares

297,355,059

Number of shares per unit

100

Organizational Chart (As of April 1, 2021)

1.55%

Audit & Supervisory Board
Board of Directors

Individuals
and others

21.62%

Financial
institutions

Nomination Advisory
Committee

General Shareholders
Meeting

Treasury stock

Investment and Lending
Committee
Crisis Management
Committee

16.15%

Compensation Advisory
Committee

Corporate Strategy
Planning Office

Governance Committee

Audit OfficeCompliance Committee

Crisis Management OfficeSustainability Committee

IT Management Office

President’s Office

PMI Office

PresidentGroup Executive Committee

Number of shareholders

52,793

Shareholder registry administrator

Sumitomo Mitsui Trust Bank, Limited

Other Japanese
corporations

Group Distribution

51.60%The Master Trust Bank of Japan, Ltd. (Trust account)

13,921

4.75

The Ito Foundation

12,000

4.09

S Planning Inc.

10,2793.51

Ito Bunka Foundation

6,200

2.11

Sumitomo Mitsui Banking Corporation

4,803

1.64

Mizuho Bank, Ltd

3,152

1.07

MUFG Bank, Ltd.

3,151

1.07

Nippon Life Insurance Company

2,749

0.93

Group
Companies* Itoham Yonekyu Holdings is excluded from the above list of major shareholders even though it owns 4,616,000 treasury stocks.
* Ownership ratio is calculated by deducting treasury stocks.
* All shares held by the Custody Bank of Japan, Ltd. and The Master Trust Bank of Japan, Ltd. pertain to fiduciary services.
* Shares owned by Mizuho Bank, Ltd. include 1,260,000 shares pertaining to an employee pension trust.

Representative

Isao Miyashita, President and Chief Executive officer

Location of head office

1-6-21 Mita, Meguro-ku, Tokyo

Established

April 1, 2016

Capital30 billion JPY (anything less than 100 million is rounded down)

Business description

Business management and all other accompanying duties for Group subsidiaries that handle
sales and manufacturing of processed meat products, processing and sales of meat, processed
foods, manufacturing and sales of ready-made meals

Number of employees

8,313(Consolidated)

Fiscal year

From April 1 to March 31

Accounting auditor

KPMG AZSA LLC

Processed Food Business

Meat Business

Sales and Manufacturing of Processed Meat Products

Production, Fattening, Processing,and Sales of Meat and Processed Meat Products

Domestic subsidiaries
ITOHAM DAILY Inc.
ITOHAM WEST FOODS Inc.
Itoham Sales Inc.
ITOHAM FOOD SOLUTIONS Inc.
KIKUSUI Inc.
Asakusa Ham Inc., and three other companies
Overseas subsidiaries
Itoham Foods Trading (Shanghai) Co., Ltd.
ITOHAM BETAGRO FOODS CO.,LTD.
Affiliates: 1

Domestic subsidiaries
ITOHAM MEAT SALES EAST Inc.
ITOHAM MEAT SALES WEST Inc.
SANKYOMEAT Inc.
IH MEAT PACKER Inc.
IH MEAT SOLUTION Inc.
Overseas subsidiaries
ITOHAM AMERICA, INC.
ANZCO FOODS LTD.
CMP Rangitikei LTD., and eighteen other companies
Affiliates: 8

Other Business Services

Domestic subsidiaries
Itoham Business Support Inc.
Other Business Investments
Production, Fattening, and Processing of Meat
and Processed Meat Products

Affiliates: 1

YonekyuCorporation

Trade name

ITOHAM YONEKYU HOLDINGS INC.

Itoham Yonekyu Holdings Inc.

Corporate Information (As of March 31, 2021)

Group Production
Purchasing Department

5.94

Group R&D

Central ResearchInstitute

17,396ABC Business
Promotion Office

Custody Bank of Japan, Ltd.

Logistics Department

39.55

Accounting and Finance
Department

115,779

Itoham Foods Inc.

Mitsubishi Corporation

Human Resources
Department

Ownership ratio (%)

Legal and ComplianceDepartment

Owned shares (in thousands)

Quality Assurance
Department

Name

General Affairs Department

Status of Major Shareholders

Group Processed Foods
Business

Group Meat Business

Manufacturing of Processed Meat Products

Domestic subsidiaries
Yonekyu Kagayaki Corporation
Yonekyu Delica Foods Corporation

Domestic subsidiaries
Yonekyu Oishiitori Corp.
Ai Pork Inc.
MARUFUJI Co., Ltd.
Taiyo Pork Corp.
Eastern Hiroshima Prefecture Swinery Cooperative

Sales and Manufacturing of Processed Meat Products

Affiliates: 1

Distribution Services

Domestic subsidiaries
IH LOGISTICS SERVICE Co., Ltd.

Business Services

Domestic subsidiaries
Itoham Yonekyu Human Services Inc.
Itoham Yonekyu Systems Inc.

Other Businesses
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Itoham Yonekyu Group Integrated Report 2021

Itoham Yonekyu Group Integrated Report 2021

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