December 2013 9th Annual General Meeting of Shareholders

Investor Relations

General meeting of shareholders

December 2013 9th Annual General Meeting of Shareholders

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Opinions about the entry of major companies regarding Euglena production, opinions regarding open recruitment, and questions regarding the use of energy other than jet fuel produced by Euglena
<President Izumo>
First of all, regarding the entry of major companies, on December 16, 2005, we invented the world's first technology for culturing a large amount of Euglena outdoors. Nowadays, various major companies and universities, including those in Japan and abroad, are actively researching Euglena, but on the other hand, the technology to grow Euglena outdoors in large quantities outside the room is the world. However, it is the only technology that we only possess. I presume that various efforts are being made by major companies for this part, but it makes us think that it is better to ask us Euglena for Euglena rather than developing it in-house. It is most important for us to proceed with technological development, and it is better for other major companies to leave Euglena to Euglena rather than doing it in-house. I would like to concentrate on improving it.
Secondly, as one of the measures for shareholders, I would like to take seriously the opinion that the public offering was less than 1370 yen. After announcing this public offering, the stock price remained strong for some time. From this, I think that we have received a certain amount of understanding and evaluation regarding the strategy of allocating the public offering funds to our medium- to long-term growth funds. We will not forget that we have made a public offering in the future, and we will continue to steadily implement medium- to long-term strategies for improving shareholder value.
Regarding the third point, such as gasoline, it is possible to produce biofuels other than jet fuel, such as bioethanol and biodiesel, which is a substitute for light oil, from Midorimushi. However, biofuels for automobiles other than jet fuel are extremely competitive fields due to the existence of other technologies such as electric vehicles and hydrogen fuel. Instead of jumping into the highly competitive field with Euglena, we would like to apply Euglena to the highly promising field of euglena bio-jet fuel and aim to become a top company in this jet fuel field. I'm thinking. Instead of starting a lot of research at the same time, I would like to concentrate on this jet fuel so that we can steadily achieve the technological development of jet fuel in 2018 and the practical application in 2020.
Euglena 's position in energy production using algae, questions about subsidies
<President Izumo>
First of all, regarding the position among algae, these algae are basically roughly divided into two types. There are two types: large algae and small algae. Large algae include wakame seaweed, hijiki seaweed, and kelp. On the other hand, Euglena is a creature classified as a small algae, and chlorella is one of the same small algae. On top of that, not only our company but also the company you just pointed out is working on making biofuel from this algae, and there is a council to promote the efforts to make new energy from algae as Japan. We are also participating in this council, and we are aiming to produce new energy and put it to practical use by widely utilizing this algae, so rather than being a competitor, we will use this algae widely in Japan with new energy. We would like to be a company that contributes to
Secondly, we have recorded a subsidy of about 90 million yen as non-operating income. This is mainly a government grant program called CREST of NEDO and JST, which is largely incorporated into this grant. I can't say for sure what will happen in the future, but we would like to proceed with the application process for the acquisition of the subsidy program.
Questions about partial correction of disclosed information (land price), financing and collateral setting for borrowing
<President Izumo>
Regarding this question, Director Nagata of the Corporate Strategy Department will supplement and explain his opinions.

<Director Nagata>
Thank you for your question. My name is Nagata and I am in charge of business finance. We are aware that the question you asked was a partial correction regarding the information disclosed on December 17, 2013. Regarding the revision of the numbers you pointed out, the amount of land that was originally announced is the amount of the book value. At the stage when we acquired Yaeyama Sangyo, we re-evaluated this land at the market price and replaced it with that price. Therefore, the reality is that the land price has not suddenly fluctuated, but has been corrected.
Regarding the second borrowing, whether it is large as collateral for the borrowing, the borrowing is a long-term borrowing that was executed before we made Yaeyama Sangyo a wholly owned subsidiary. This loan is collateralized as the land cost listed in the financial statements of Yaeyama Sangyo mentioned above, and then we rewashed it and evaluated it at market value this time. Rather than offering 600 million for 200 million loans, I think it is correct to recognize that the initial valuation is set. With the financing this time, the repayment of the borrowed money here is also being used, so we would like to implement it so that it can be used as growth funds without paying interest rates as much as possible in order to improve the efficiency of shareholders' equity. We are doing it. that's all.
Questions about increasing sales and decreasing profits this term
<President Izumo>
I would like to answer about the increase in sales and the decrease in profits.
This pillar, which will grow sales of 3 billion at a stretch this time, will make every effort to expand direct sales of Euglena farm centered on green juice. As a result, sales themselves will increase by about 1.5 times, but some customers still think that Euglena is a bug in terms of the profit from this increase, so please enjoy it with seaweeds such as wakame seaweed and kelp. However, we will actively invest in advertising that will make you understand that it is not unpleasant or that kind of thing, but that it is good for your health. In addition, the increase in customers through direct sales means that orders over the phone are also the same, and we are proactive in developing logistics as a company for delivery, product packaging, and the development of a distribution network that steadily delivers to customers. We will make a great investment, and we will land with an increase in sales and a decrease in profits for this term, but after that, we understand that it is a year of investment to increase sales and expand profit opportunities by letting many people know the goodness of Euglena. I would appreciate it if you could. That's all for my reply.
Questions about your thoughts on future growth strategies and efforts to solve nutritional problems
<President Izumo>
The first question is about our growth strategy. The second point is about efforts to solve nutritional problems, so I would like to answer.
First of all, the second point is that we are exchanging various information with various WFP, UNDP, JICA various organizations, and as I just told you, 900 million to 1 billion people. As for what the company can do for such people, such as lack of sufficient nutrients, we would like to work as a company with the opinions and guidance of various people.
Regarding the first point of growth strategy, we have set a move in society and shareholders now that the medium- to long-term goal is 2018 instead of 2020, so I asked you a question now. I would like to supplement and explain three of the growth strategies that we consider to be particularly important, the healthcare business. The first point is that Euglena is now eating about 7.6 billion yen in the stomach of everyone in Japan, but by 2018 we will make a market of 30 billion yen with Euglena, which is about four times as much. We have set that as a medium-term goal. There are two ways to achieve this, but we will expand the lineup of various Euglena products such as pet food and cosmetics, and build such new products and distribution networks that can deliver about 30 billion yen of Euglena-related products in 2018. I would like to go there. Thirdly, in Asia, the market for functional foods in China is a little larger than books today, and there is a market of about 1.7 trillion yen. It is thought that it is growing by about 15% annually, and we would like to firmly promote the healthcare business in Japan. Overseas, Euglena was registered as a "new food ingredient" by the Ministry of Health of China in November 2013, and it will grow by 2018 by aggressively introducing Euglena into this huge growth market from 2014. We would like to realize our strategy and meet the high expectations of our shareholders. That's all for my reply.
Question whether employees have acquired their own shares
<President Izumo>
We received a question about our approach to employees. I will answer.
As you have just asked, it is very important for a venture company like ours to work as one to liven up the company, so everyone as a company can work together to liven up the company. I think that creating an environment and measures that can be tackled is an issue that should be tackled with great effort. In that sense, thank you very much for your point. On the other hand, the acquisition of executives and employees naturally has problems with insiders and other individuals, so while carefully considering the measures for this point, it is still an employee as a question beyond having no shares. It is the most important translation to achieve the purpose of enlivening as a whole, and it is necessary for the company to thoroughly consider the measures necessary to achieve this purpose. It's up to you to think. That's all for my reply.
Questions about expanding the product lineup
<President Izumo>
Thank you for your feedback. As you pointed out, we would like to firmly expand the product lineup and release such Euglena products that customers will like so that they can purchase Euglena products more easily. Recently, yogurt with euglena and hamburger with euglena have been released, but we will continue to expand our product lineup so that we can deliver euglena products to everyone's eyes. Thank you for your opinion.
Questions about considering TV advertising
<President Izumo>
Thank you for your question on TVCM. Regarding TVCM, there is no fact that we have decided at this time (December 20, 2013) including implementation. In order to get a firm understanding of Euglena, we will put more effort into advertising this term so that many people will know about Euglena, so not only TV but also radio and newspapers. , While comprehensively considering advertisements in magazines and other media, if you do it in this way, you can tell about Euglena, and we also learn through learning, how to put out better Euglena and how to appeal. First of all, I would like to firmly grasp and then consider it at an appropriate time. Thank you for your feedback and questions. That's all for my reply.
The year 2018 often appears in the growth strategy, but what is the basis for it, and questions about the progress of biojet fuel research
<President Izumo>
The first point is the significance of the year 2018, and the second point is the progress of research on bio-jet fuel. I will answer.
2018 We are proceeding with 2018 in mind, both in our healthcare business and in establishing biojet fuel technology. In the healthcare business, led by Fukumoto, the director in charge, we will continue to accumulate efforts to increase the number of customers from the current approximately 7.6 billion yen to four times over the next five years over the next five years. We announced in the medium-term management plan as a goal to be achieved in 2018 by taking measures in various years.
Regarding the establishment of technology, there is 2018 due to the accumulation of our research and development, but on the other hand, it is recognized that 2018 is one important year due to the circumstances of the airlines that use it. .. From 2018, for example, in the EU etc., it has been decided to some extent that self-regulation of the aviation industry will proceed with research and development efforts for CO2 reduction by 2018, and biojet fuel is the progress of our research and We have just set the technology and goals in 2018, taking into account the requests of airlines comprehensively.
Regarding the progress of bio-jet fuel, there were two important progresses in basic research this year. One is a technology to reduce the cost of culturing Euglena, and we have developed a culture technology that produces 38 grams of Euglena per square meter per day. And another one is announced under the name of Super Euglena, but regarding bio jet fuel, we are trying to power up Euglena by utilizing genetic recombination technology. Super Euglena is fast in production and can recover a lot of fuel. From next year onward, we will expand the culture scale and work with the joint research partners to establish the technology in 2018.
Questions and opinions about the fact that the ratio of cash deposits to total assets in the consolidated financial statements is very large at just under 60%. Opinions on speeding up the development of bio-jet fuel and opinions on promotion strategies
<President Izumo>
We received two questions and one valuable opinion. The first point is about our financial efficiency, and the second point is to speed up the progress of research and development of bio-jet fuel. Not only will you solve the third misunderstanding of Euglena, but you will also convey the wonderfulness of Euglena and the goodness of Euglena. After accepting it, we would like to make efforts so that we can appropriately explain Euglena and Euglena to our customers so that they can easily convey and understand them. I would like to ask you about the first and second questions.
Regarding the first point, the cash and deposit ratio, we will actively make capital investment in the future. Then, we will use this money for advertising, but in order to use the funds promised to our shareholders as efficiently as possible, we will use them carefully so as not to use them loosely, and then the funds will be used in cash and deposits. It is also an important point of view to improve the efficiency of funds so that they will not stay, so I would like to work with a sense of speed. The second opinion is that we invented the mass culture technology for the first time in the world on December 16, 2005, and it is a technology that no one but us can reproduce for eight years until today. We are deeply aware that we have received the support and evaluation of all of you. Therefore, as you have just asked and commented, we would like to put the Euglena bio-jet fuel into practical use as soon as possible and work hard to make our customers and shareholders happy. Also, the goal is 2018, but this is not the attitude that we should do it in 2018, but I and Suzuki of R & D are working hard toward the goal of putting it into practical use for the first time in the world, so even one day We will continue to focus on research and development so that we can meet your expectations and deliver results as soon as possible, so we hope that you will continue to provide guidance.
Question about concrete results of efforts with other organizations to eradicate hunger and poverty
<President Izumo>
We received a question about specific results for solving hunger. I will answer.
As the shareholders have pointed out, we have just opened a base for producing concrete results on October 1, this year in the Gulshan district of Dhaka, the capital of Bangladesh. Prior to this establishment, the Ministry of Foreign Affairs ODA conducted a survey to improve the nutritional status of mothers and children in 2012, and after conducting such preliminary research, we have recently established an office in Dhaka. .. Naturally, we are currently preparing with various stakeholders such as local NGOs, schools and doctors with a sense of speed, and we will improve the malnutrition of mothers and children so that the results of the preliminary research can be utilized. We would like to implement the program as soon as we are ready and start to steadily promote efforts to solve nutritional problems so that we can promptly report concrete results to everyone. .. That's all for my reply.
Opinions on public offering prices and on package design of various products
<President Izumo>
We received one opinion and two questions. The first point is that we would like to hear about the feelings and thoughts of our shareholders. We will continue to work hard to improve shareholder value through medium- to long-term growth, and we would be grateful if you could continue to provide us with your continued support and guidance. The second point was an advertisement on Nikkei CNBC, etc., and the third point was questions and opinions about yogurt packaging. The second point, Perfect Green, our OEM product, and the third point, Yogurt, have the same answer, so I would like to answer them all at once.
Product promotion, product packaging, and design What to describe as raw materials is stipulated in various related laws and regulations such as the Pharmaceutical Affairs Law and the Landscape Law, and the law is based on the thorough compliance of the related laws and regulations. We are aware that the most important thing is to convey to our customers the content that can be described in accordance with the provisions of the above through products and commercials. All advertisements and products are communicated to customers in a manner that complies with laws and regulations, so please understand that point. That is more than the answer from me.
Euglena Farm products to shareholders as a special treatment
<President Izumo>
We would be very grateful to our shareholders for proactively communicating the benefits of Euglena so that they can resolve the misunderstandings about Euglena. On the other hand, regarding the special treatment, as we announced the other day, we delivered green juice, green juice equivalent to about 1000 yen for our products, to shareholders in January, and we will offer euglena green juice. We hope that you will actually drink it and confirm that it tastes like this, and that you will continue to actively love the products of Euglena Farm and Euglena. Thank you. That's all for my reply.
Opinions on the naming of green juice
<President Izumo>
We have taken a lot of time to tackle the current question, and we have received your opinions and questions regarding naming. As you have just pointed out, we are fully aware of the impression that the word Euglena gives. Also, how do you tell female customers how they like it? I wonder if I can avoid being mistaken for an insect. This is a theme that we are studying and working on by conducting regular questionnaires and surveys on these matters as well. As a result, female customers are the main customers who purchase cosmetics, etc. that will be released in the future, so we can convey the goodness of Euglena without strongly reminiscent of Euglena. We are developing from the concept stage while giving due consideration to various naming, design, packaging, etc. And although the name is green juice, I think it has both sides. Some customers may appreciate it because it is easy to understand that euglena is contained in something like green juice, but on the other hand, it is associated with insects as you pointed out. I am aware that there are some. What we think is most important is the real name Euglena, the scientific name Euglena, rather than lying or telling the wrong facts. And the fact that there are both Japanese nicknames called Midorimushi means that they are both the same thing and that they are not insects, and that they are a kind of wakame seaweed and such seaweeds that are unpleasant to fly or bounce. We will make steady efforts so that we can carefully convey the fact that there is no such thing and then make our customers aware of it.
Regarding bio-facility Questions about possible risks and countermeasures as a facility against natural disasters such as recent abnormal weather and earthquakes
<President Izumo>
We received a question about the risks and countermeasures for the culture facilities we own. I would like to answer.
First of all, due to the geographical characteristics of Ishigaki Island, I understand that the most important thing to pay attention to is typhoons and the risks associated with typhoons, such as power outages and flooding, which we should deal with most. We are doing it. As a countermeasure, we are working on it because the typhoon is a path, so it can not be produced during the typhoon period, and there is a shortage of euglena to deliver to customers, and the euglena will be delivered using the typhoon as an excuse. In order to deal with this typhoon risk so that such a situation does not occur, we are dealing with this typhoon risk in mind regarding the stock amount and storage method of Euglena. Therefore, in order to deal with the shortage of euglena as a raw material stored not only in Ishigaki Island but also in several places, such a situation where euglena cannot be produced for a certain period of time due to a typhoon or it is not possible to leave Ishigaki Island by sea. We store a certain amount of raw materials in several warehouses and work to prevent the Euglena that we deliver to our customers from running out. In the future, we would like to continue expanding the facilities in consideration of the risk of natural disasters such as typhoons, and working on other expansions. That's all for my reply.
Questions about DeuSEL and pilot plants
<President Izumo>
Thank you very much for the feedback from our truly valuable customers. We are very honored to have you take a break from the company. thanks you.
I received two questions. The first point is about DeuSEL and the second point is about the pilot plant. Nagata, who is in charge of the Corporate Strategy Department, will answer the first question. Director Nagata, please.

<Director Nagata>
My name is Nagata and I am in charge of business strategy. First of all, the content of your question is Isuzu's DeuSEL, which was seen at IR in October, but there is no fact that we announced IR. As a matter of fact, the fact that our company and Isuzu have applied for a trademark under DeuSEL has been announced. There are no other facts announced by us. As the name of Isuzu Motors Ltd. is mentioned in this matter, it is not permissible for us to speak at our own discretion, so we will report on this matter as soon as it is decided and we can disclose it. I hope you understand that.

<President Izumo>
As I just said, it is not a fact or public announcement that we have decided, so we hope that you will understand that point.
I would like to answer about the second pilot plant. Demonstration of the pilot plant integrated production system will be the core research theme of our energy environment business until the next 2018 technology demonstration. We have just recently implemented a public offering for this pilot plant, and we plan to allocate approximately 4.3 billion yen to this capital investment. This pilot plant or equipment equivalent to this plant, which is the most important goal that we promise to demonstrate as a technology in cooperation with the company with which we collaborate, will be demonstrated. We have not yet decided on the location of the plant for this purpose, but we would like to operate it at the demonstration plant at the appropriate place and proceed with the development of the technology.
Opinion that we want you to save the human race on the earth by the Musi road that follows Bushido
Regarding the opinion that we would like you to save the human race on the earth by the Musi-do that follows Bushido, I would like to devote myself to the Musi-do.
Questions about future dividend forecasts
We received a question about dividends. I will answer.
There is no fact that the future dividend policy has been decided at this stage. In addition, we will aggressively invest in research and development toward the practical application of Euglena biojet fuel in 2020. At the same time, as I explained to you at today's general meeting, in line with the medium-term goals of 2018, we will actively invest in advertising to improve the name recognition of Euglena and to let you know more about Euglena. We would like to improve shareholder value to meet the expectations of our shareholders. Until we reach this medium-term goal, we will focus on steadily advancing this medium-term goal, which will grow the company firmly through this aggressive investment, rather than paying dividends. I hope you understand.

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