The Sumitomo Forestry Group is dedicated to the corporate philosophy, "Sumitomo Forestry Group utilizes timber as a renewable, healthy and environmentally friendly natural resource, and contributes to a prosperous society through all types of housing-related services." Guided by this philosophy, the Group conducts operations with the aim of maximizing shareholder value.

To accomplish this goal, the Group adheres to four action guidelines with an emphasis on improving management efficiency and boosting profitability. The first is the Sumitomo spirit, conducting business based on principles of integrity and sound management. The second is respect for Humanity, creation an open and inclusive corporate culture that instills a strong sense of pride and motivation in employees. The third is environmental responsibility. The Group contributes to the protection of the environment and our fellow beings through responsible business practices. The fourth element is putting customers first, which means that we act with customer satisfaction first and foremost in mind.

In addition, the Group is committed to improving the quality of its management by enhancing management transparency through an extensive information disclosure.

Sales and recurring income are regarded as indicators of the Group's ability to grow. In addition, to measure operating efficiency, the Group places importance on the return on capital employed (ROCE).

Returning earnings to shareholders is one of the Group's highest priorities. The fundamental policy concerning earnings allocations is to distribute earnings in a consistent and continuous manner. The Group plans to maintain and increase earnings distributions to shareholders by setting distributions at a proper level in relation to earnings. Distributions will also reflect funding requirements concerning the Group's operating framework, financial soundness, plans for investments and other items.

Retained earnings will be used in accordance with a long-term plan. The goal is to raise corporate value by using these funds for productive investments, R&D programs and other activities.

The goal of the Sumitomo Forestry Group is to become a comprehensive housing business corporate group on a global scale through the utilization of wood. The core businesses are the construction of design-built houses and the distribution and manufacture of wood and building materials. In addition, the Group has several businesses targeted for development by leveraging expertise in the core businesses. One such business is overseas operations. The Group plans to increase the manufacture and sale of wood building materials along with the sale of detached-houses in growing overseas markets. The real estate business, mainly the sale of built-for-sale houses, real estate developments and brokerage services, is also targeted for development. In addition, the Group is developing a remodeling business, which involves the remodeling of houses constructed by the Group and other companies. The medium and long-term goal is to quickly develop these three businesses into major sources of earnings. The Group plans to make steady progress in executing the strategies needed to accomplish this goal.

In the housing and housing-related business, the Group remains our social mission that dates back to the start of Housing business, committed to creating pleasant and fulfilling housing for its customers. The Group is taking many actions to accomplish this mission. Major initiatives include always putting the customer first; sales activities deeply rooted in local markets; increasing new product development activities; upgrading employee training; and improvements in house construction and production through the use of IT. Plans also include expanding businesses associated with housing, such as remodeling services and real estate developments. Through this approach, the Group will conduct its business operations with the goal of supplying an even broader lineup of comprehensive housing-related services.

In the timber and building materials business, the goal is to firmly establish a position of leadership in Japan in terms of overall capabilities and profitability. In addition, the Group is increasing the overseas production of timber and building materials and strengthening its presence in markets outside Japan.

The Sumitomo Forestry Group has more than 300 years of experience in coexisting with nature as an organization that grows trees and forests. Operating in harmony with the environment is vital to the Group's business activities. To conduct environmental management in an organizational and well-planned manner, all Sumitomo Forestry business sites in Japan have received ISO 14001 certification. The certification process will be extended in stages to all group members, including subsidiaries in other countries.

The Group has much experience in forestry through operations in Japan and the forestry activities of a group company in Indonesia. The Group plans to use this knowledge to start environmental businesses, such as business for growing forests from seeds and seedlings and a consulting business for growing forests.