For Investors

To Our Shareholders and Investors

Junichi Takahashi

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

I would like to express my deepest apologies for the fire incident that occurred at the Yokohama Works on Monday, February 12, 2018, which claimed the precious life of one person from our partner company. I would like to extend my profound condolences to the family of the deceased. Considering the seriousness of the incident, we have set up an accident investigation committee made up of externally invited persons of academic standing and experts to undertake a detailed factual investigation and a thorough investigation of the cause. By executing measures proposed by the committee to prevent a recurrence of such an accident, our Group will work to restore our operations with safety first as the main prerequisite.

Under the business environment surrounding the agrochemical industry, demand for farm products is growing in response to a worldwide population increase and economic growth in developing countries, as well as increased demand for biofuel, and the industry is expected to continue to grow in the medium to long term.
At SDS Biotech, we’re conducting business activities under a management philosophy of contribution to society through providing products that reflect our consideration to food safety and environmental protection, with our R&D serving as the foundation. As a company acting as the core of the agricultural chemical business of the Idemitsu Kosan Group, we serve to achieve the same goals in relation to the keywords of “food safety and security” and “expanding food demand”, and feel that it’s our mission to acknowledge our social responsibility and subsequently contribute to society.

We considered selling shares held in SDS Ramcides CropScience Private Limited (hereinafter “Ramcides”) to improve our earnings power and management efficiency in order to optimally allocate our limited management resources. As a result, we transitioned to non-consolidated accounting from the settlement of accounts for the fiscal year ended March 31, 2018. In addition, the Company recorded a loss on sales of stocks of subsidiaries of 1,068 million yen and a provision for loss on guarantees of 669 million yen.

During the fiscal year under review, the Company saw favorable shipments of paddy herbicide technical, mainly Benzobicyclon technical, for the Japanese market. On the other hand, while demand for Daconil has continued to grow globally, our shipments of Daconil-related products (technical and formulations), our mainstay products, declined due to the effects of the fire incident at Yokohama Works, which occurred in February this year. In addition, the Company recorded the above-described extraordinary loss, the extraordinary loss associated with the fire incident at Yokohama Works, and the extraordinary loss associated with the loss from revaluation of stocks of an affiliated company. As a result, consolidated net sales for the fiscal year under review were 12,928 million yen (an increase of 437 million yen or 3.5% year on year), with operating income of 1,410 million yen (an increase of 146 million yen or 11.6% year on year), ordinary income of 1,577 million yen (an increase of 260 million yen or 19.8% year on year), and net loss of 180 million yen (net loss of 768 million yen for the previous fiscal year).

As regards our Group’s efforts, we are fully committed to rebuilding the safety management system of the Yokohama Works and restarting its operations at an early stage in order to provide stable supplies of Daconil products. In the paddy herbicide field, our Group will continue to work toward increasing its sales volume in the domestic market by adopting an aggressive sales strategy for combination products and move forward with the overseas deployment of benzobicyclon. With the recent overseas registration of benzobicyclon in the US, Columbia, and China, we are endeavoring to expand sales areas. We will conduct overseas tests and undertake procedures for local registration in Europe and other areas in an effort to further expand sales areas and volumes. In the field of greening-related agents used for golf courses and greenery areas, our new products including PoaCure, as well as Falx, an amicar WDG launched this year, will contribute to our Group’s future sales. Our Group is committed to continuing the development of new products that meet our customers’ needs and grow those products a lot as the third pillar of our business.

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.

June 2018

Junichi Takahashi   President & Representative Director

Junichi Takahashi
President & Representative Director