Itochu Enex : Integrated Report2021(ENEX REPORT 2021)

https://www.itcenex.com/en/

E NEX R E PO R T 2 0 2 1

Itochu Enex Group Integrated Report

Published September 2021

E N E X VA L U E

The Best Partner for Life and Society

̶with Energy, with the Car, with the Home̶

The Itochu Enex Group will look toward the future to create new value that will be needed in life and society, and endeavor to contribute broadly to society as an essential presence, hand-in- hand with customers. For many years, we have operated mainly in wholesale businesses, but we are now shifting the focus of our various businesses to the people living in each community -the end consumers. Together with sales outlets and business partners, we will meet the needs of customers and move forward as a consumer-oriented energy trading company.

Contents

Total

energy

services

Biomass

power

generation

Overseas expansion

	Disaster
	preparedness
					Car-Life
					support
Renewable
energy	District heat		Car rental
	supply
			Power
	Electricity	Electric	generation,	Mobility	Card
	supply and
	sales	Power	demand	Car	services
			balancing
				dealerships
	Creating a sustainable	Building a society where
	society with new energy	people can live in comfort with cars

Introduction

1. The Itochu Enex Group in Figures

1. Corporate Vision

Value Creation at the Itochu Enex Group

6 Message from the President

1. Roundtable Discussion with Outside Directors

1. Our History of Value Creation

20 Overview of the Business Environment and New Medium-Term Business Plan

22 Value Creation Process

24 Growth Strategies Leveraging Our Customer Base

26 Toward Further Enhancement of Our Corporate Value

1. Key Themes of Our Growth Strategies

1. Message from the CFO

Strategy by Business

1. Overview of Businesses

1. Home-LifeDivision

1. Car-LifeDivision

1. Industrial Business Division

1. Power & Utility Division

ESG Initiatives

1. Promotion of Sustainability Management

1. E Reducing Environmental Impact

1. S Creating Diverse Value Human Resource Strategy
   58 Social Contribution Activities

1. G Sound Business Activities 62 Corporate Governance
   67 Fair and Proactive Disclosure
   68 Business Execution and Internal Control

Financial Data and Company Information

1. Consolidated Financial Statements

1. Company Information

Editorial Policy

Enex Report 2021 is an integrated report covering financial and non-financial information, including corporate social responsibility (CSR) activities, prepared with reference to various guidelines. Its purpose is to communicate the Itochu Enex Group's business activities and strategies implemented in pursuit of sustained growth.

Period Covered

April 1, 2020-March 31, 2021

Note: Includes certain activities that fall outside this period.

Organizations Covered	Publication Date
Itochu Enex Co., Ltd. and	September 2021
Itochu Enex Group companies

GTL fuel1

Ammonia

marine fuel

Industrial

Marine fuel

gas

Energy for

Auto gas

Asphalt

Energy for

Petroleum

industry

LP gas

Gas

and

automobiles

city gas

Supporting people's lives with

Supporting

more prosperous

AdBlue®2

a stable supply of energy

lifestyles full of happiness

Gas

container

Terminal

pressure

tank rental

Slop recovery

inspection

and recycling

LPWA3

Hydrogen

Note on Forward-Looking Statements

Forward-looking statements in this report, including outlooks for future Group business performance, are based on the information available at the time of publication. Actual results may differ considerably from projections for various reasons, including fluctuating exchange rates, market trends, and economic conditions.

1. Gas-to-liquid (GTL) fuels are derived from natural gas and are a cleaner alternative to diesel fuel in having a reduced impact on the environment.
2. AdBlue® is a high-grade urea solution used in selective catalytic reduction systems, which are used for detoxifying nitrogen oxides (NOX) in diesel vehicle exhaust. (® Registered trademark of Verband der Automobilindustrie e.V. (VDA))
3. Low-power,wide-area (LPWA) networks employ telecommunications technologies that enable long-range communications with reduced electricity consumption.

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THE ITOCHU ENEX GROUP IN FIGURES

Net profit attributable to	Dividend policy		ROE
Itochu Enex's shareholders

¥12.2 billion	Dividend payout ratio	9.2
40
% or more	%
(Record high for	(40% or more for	(9% or more
sixth consecutive year)	fourth consecutive year)	since FY2016)

Market capitalization

Group companies

Employees

Approx.¥120.0	Subsidiaries:	45	Non-consolidated:	663
Equity-method	21		5,558
billion	affiliates:	Consolidated:

Renewable energy generation capacity

51,306 kW

Work-life balance

Percentage of paid
vacation days taken:
Approx. 83%
Number of employees	34
who took
childcare leave:

(Cumulative total number of employees who took childcare leave during FY2015 through FY2020)

Domestic market share of AdBlue®

(Used to detoxify nitrogen oxides (NOX) in diesel vehicle exhaust)

25%

Employment of diverse human resources: female representation

20.2%

Disaster response bases

Car-Life141

Stations:locations

Filling 14

stations:locations

(Number of Car-Life Stations and core LP gas filling stations in Japan that are equipped with emergency power generators and can provide a stable supply even in times of emergency)

Percentage of outside officers

41.7%

GasPetroleum

Electric Power

Note: All figures current as of March 31, 2021, unless otherwise noted.

Mobility

LP gas and city gas supply contracts

1.5million households

Automotive gas stations that supply LP gas to

LP40gas vehicles (buses, taxis)

locations

Affiliated Car-Life Stations*

1,687locations

Industrial energy contracts for business sites

Approx.3,000locations

• Car-LifeStations are service stations that offer multiple services, as proposed by the Itochu Enex Group.

Electric power supply contracts for households and commercial facilities

Approx.190,000

Heat supply19districts in the Kanto region

districts

Dealership network of

Nissan Osaka Sales Co., Ltd.

117dealerships

Car430rental outlets

Approx. outlets

2

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Our Vision

Corporate Vision

1

Corporate Philosophy

The Best Partner for Life and Society

- with Energy, with the Car, with the Home -

For more than half a century, the Itochu Enex Group has delivered energy to customers across Japan, chiefly in the form of petroleum products and LP gas. Regardless of the changes to life and society, we continue to deliver the value needed by our customers as their stalwart partner. Moreover, we will contribute to the realization of a prosperous society and life, and hope to be a company that regional customers choose. The Group's Corporate Philosophy embodies these ideas.

The fundamental stance, morals, and values that the Itochu Enex Group adheres to when carrying out business activities are defined as follows.

These concepts form the basis for business-related decision making,

2

Be Ethical

(Reliability and sincerity, creativity and ingenuity, transparency and integrity)

and are the basic policies for the execution of the Group's business activities and

what direction the Group will move in.

1

Code of Conduct

In 1962, soon after its founding, the Company established its Guiding Precepts. The spirit of those precepts is perpetuated in the Group's Code of Conduct, "Be Ethical," announced in 2001. The Itochu Enex Group is committed to acting with reliability and sincerity in its dealings with all stakeholders. Furthermore, the Group works to generate new value through the exercise of creativity and ingenuity, and maintains transparency and integrity in its business activities while making meaningful contributions to society.

Guiding Precepts

(established in 1962)

1. Strive to incorporate the principles of reliability and sincerity in your daily duties.
2. Streamline business through creativity and ingenuity, and always keep moving forward.
3. With transparency and integrity as your creed, be cordial and work to improve the well-being and prosperity of everyone affiliated with the Company.

Corporate

Philosophy

2

Code of Conduct

3

3

Action

Guidelines

Declaration of the Group Code of Conduct

The Company declares that all officers and employees of the Company and its Group companies (including employees on temporary assignments to and from the Company, contract-based employees, temporary staff, and part-time employees) will always be conscious of the Code of Conduct's requirement to

"Be Ethical" while engaging in their day-to-day duties as responsible corporate citizens and members of society. Each individual officer and employee signs a "personal declaration" as a promise to stakeholders, comprising their own guidelines for conduct in performing their day-to-day duties.

(For the full Group Code of Conduct, please visit: https://www.itcenex.com/en/corporate/mission/)

Action Guidelines

4

Fields of Business

Origin of the Company Name

In July 2001, as it marked its 40th anniversary, Itochu Fuel Corporation changed its name to Itochu Enex Co., Ltd.

The first "E" in "ENEX" represents the "E" in "energy," "end-consumers" (customers) and "ecology" (the environment), while "NEX" alludes to "next," symbolizing the next generation and the future.

Declaration of the Group Code of Conduct (Summary)

1. Relationship with Customers: 1) Safety: Safe and secure transactions / Quality management of products and merchandise; 2) Sincere response: Improvement of service quality / Management of customer information / Handling of accidents and complaints
2. Relationship with Business Partners: Fair transactions / Management of corporate information
3. Relationship with Suppliers: Fair purchasing / Compliance with anti-monopoly law / Procurement standards
4. Relationship with Employees: Respect for human rights / Respect for health and safety / Comfortable workplace environments / Fair personnel assignments and employment / Appropriate personnel evaluation and treatment / Use of dedicated consulting channels / Prohibition of sexual and power harassment
5. Relationship with Corporate Properties: Protection of properties and assets / Appropriate accounting procedures / Management of confidential information
6. Relationship with Local Communities: Social contribution activities / Dialogue with citizens / Relationship with national and other public authorities
7. Environmental Activities: Ongoing environmental activities / Environmentally conscious business / Environmental management / Green procurement
8. Relationship with Shareholders and Investors: Accurate information disclosure / Stable distribution of profits / Active investor relations activities
9. Moderation in Corporate Behavior: Compliance / Prohibition of insider trading / Giving and receiving gifts / Compliance with the Political Funds Control Act / Prohibition of relationships with antisocial forces / Health management

Meaning of the Enex Mark

The Enex Mark was introduced in October 2005 as the new corporate logo. The red background symbolizes the sun and the blue circle, the Earth. The letter "e" overlaps both to connect them, and it stands for "energy" and "eco," as well as the importance of the "end-consumer." In this way, the logo design expresses people-to-people communication and communication between people and society.

4

Fields of Business

Energy for all applications, whether as a key component of social infrastructure or as a means of nurturing people and enriching their lives

To successfully be "the best partner for life and society," as outlined in our Corporate Philosophy, it will be necessary to further spread the prosperity and convenience that energy provides throughout society and people's lives. The Group wants to not only provide energy that is a key component of social infrastructure, but also hopes to be a source of inspiration for our customers. To that end, the Group intends to continue providing a variety of products and services suited to the times.

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What does the goal of carbon neutrality mean for Japan?

Reduce greenhouse gas emissions to

net zero

Value Creation at the Itochu Enex Group

Message from the President

Future growth will not be achieved

by simply attempting to repeat past successes.

Message from the President

Theme

How will the world be

different in 2050?

We celebrated our 60th anniversary in January 2021. Looking back, the domestic supply system of the energy industry has been relatively stable with the strong backing of national policies. As a company, we have achieved solid results. Of course, we have not just stood by idly as the waves of change washed over us. Since I became president, we have been implementing management innovations based on a series of medium-term business plans, most notably with the aim of further stepping up the profitability of existing businesses, cultivating new business fields through aggressive efforts in the launch of an infrastructure fund and overseas businesses, and entering environmental businesses and next-generation energy with an eye toward a decarbonized future.

 In recent years, ESG issues and the United Nations Sustainable Development Goals (SDGs)

have become hot topics. With	by the
Japanese government in October	greenhouse

gas emissions by 2050, ESG issues and the SDGs have rapidly become the focus of attention in Japan as well. Based on this declaration, Japanese industries have been asked to accelerate their moves toward decarbonization, and change is likely to be rapid. The challenges posed by decarbonization and climate change must be overcome in order to realize a sustainable society, and I believe that the true purpose of the relevant initiatives is to ensure that future generations can enjoy a more prosperous life.

 In April 2021, at the online Leaders Summit on Climate hosted by the United States, developed economies seeking to take the lead in creating rules and regulations announced reduction targets to be achieved by 2030, while

emerging economies took a wait-and-see attitude toward committing to targets.

We will gear up, implement a decisive shift in

our business structure, and accelerate our growth with

a stance that is unrelentingly aggressive.

Kenji Okada

Representative Director,

President and Chief Executive Officer

Although nations may have difficulty in seeing

eye-to-eye, as in this case, I believe it is important to maintain a broad perspective when

considering what can be done for society in line

with the goal of pursuing sustainability.

Emission ＝ Amount

amount absorbed or removed

↓

Key premise: Amount of greenhouse gas emissions must be reduced

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