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To Our Shareholders and Investors (2015)

Junichi Takahashi, President & Representative Director

  I would like to take this opportunity to thank you sincerely for your continued patronage.

  As the core of the agrichemical business of the Idemitsu Kosan Group, SDS Biotech K.K. engages in business activities that focus on the protection of useful plants and animals and prevention of epidemics through research and development in the area of life science. Ever since the company’s founding in 1968, we have consistently continued to deliver safe and effective products in our aim of contributing to "increasing food demand" and ensuring "food safety and security."

  Looking at the environment surrounding the agrichemical industry on a global basis, demand for agricultural products is expanding on the back of changes in people’s eating habits associated with population growth and economic developments in emerging markets, development of biofuel, and other factors. Meanwhile, in Japan, there are concerns about a weakening agricultural structure caused primarily by the aging of farmers and increasing pieces of farmland that have been abandoned.
  Under such circumstances, at the SDS Biotech Group we have been making efforts to not only strengthen the domestic earnings base but also move forward with our earnings structure reforms in anticipation of global business expansion. In March 2014, we invested in two Chinese firms to reinforce the supply system for distributing the active substance of fungicide Daconil, our core product. We also newly opened an office in Shanghai as part of our initiative to construct a manufacturing and sales platform for servicing Asian markets.

  As a result, for the fiscal year ended December 2014, the Group’s consolidated net sales amounted to 15,740 million yen, up 20.8% from a year earlier. Operating income totaled 1,565 million yen (up 38.7% year on year), ordinary income was 1,386 million yen (up 37.2% year on year) and net income came to 813 million yen (up 26.6% year on year.) These results were mainly attributable to the favorable sales of fungicide products in overseas locations and paddy herbicides in Japan. Earnings improved also thanks to the positive effects of the further weakening of the yen. In addition, SDS Ramcides CropScience Private Limited (Ramcides), our Indian subsidiary, has been contributing to the achievement of greater income for the Group.

  Going forward, we will push our growth strategy centered on taking active steps to distribute our paddy herbicides to overseas markets, while exploring ways to globally introduce our microbial germicides that we developed jointly with our parent company, Idemitsu Kosan. In Japan, we will enhance our product lineups mainly in the field of turf and grassland management to effectively meet the needs of customers and thereby increase our market share. Furthermore, we will help our Indian subsidiary Ramcides to reinforce its R&D function and put in place a financing support structure to heighten our presence in India.

  Our dividend policy is to continue returning profits, if not greater than at a constant level, to our shareholders. Based on this principle, we will strive to stably distribute dividends in consideration of mid- and long-term earnings, etc. At the same time, we are committed to ensuring fair disclosure and strengthening corporate governance to further enhance our corporate value.
  We would greatly appreciate your continued guidance and support in our endeavors.

   March 2015
   Junichi Takahashi
   President & Representative Director