SBS Business Report

For the year Ended December 31, 2014
（Security Code：2384）

BUSINESS HIGHLIGHTS 2014

SBS Group meets the various logistics needs withthe utmost quality.
Performance of the current term
■Net Sales¥ 141.5 billion■Operating Income■Ordinary Income■Net Income¥ 4.1 billion¥ 3.6 billion¥ 2.7 billion■Dividend per share ¥Logistics 91.8％

Other 4.6％

（Human resources,
environment-related,marketing and solar
power generation）

15

Property
Management
3.6％

Sales
Composition

Adding logistics
support business toour core logistics
business, providing
logistics services withhigh added value

An overview of businesses

Logistic
Business

General
Logistics●3PL ●International Logistics●Warehouse/Logistics Center Operation●Customs Clearance Handling ●Distributive Processing●Internal Logistics ●Office Relocation●Logistics Consulting Others

Food
Logistics●Three-Temperature Nationwide Logistics ●3PL
●Distributive Processing ●Home Delivery●Logistics Consulting●Delivery of Online Supermarket Orders
OthersSpecialized
Logistics

Logistics
SupportBusiness●Same-Day Delivery●Just-in-Time Delivery

Property●Development and sale of logistic facilities
Management
OthersOthersOthers●Human resources ●Environment-related ●Marketing●Solar power generation Others

Important aims and strategy
Expanding 3PL businessand ensuring stablefoundations (by working
with the food industry)Business strategy

Overseasdevelopment focusing
on the Asian markets

M&A anddevelopment oflogistics facilities

International
strategy

Investment
strategyStrengthening of the Group's management foundations
Establishment of a low-cost operation system :creation of an environment enabling synergetic effect

3PL Corporate Group
which has the logistic
Threefunctions in all
strategies
directions, aiming tobecome a top-level.

＊The statements made in connection with the forecasts present in these materials are based on assumptions, which include
information available at the present time and uncertain components, which may affect future business results.The actual
business results may differ from the forecasts due to various causes that may affect them in the future.

1 SBS Business Report 2014

MESSAGE FROM THE PRESIDENT

We made major investments,
conducting M&A activities

and developing logistics facilities
to achieve the objectives ofour medium-term management plan,“SBS Growth 2017.”

President: Masahiko Kamata

Business Climate in the Fiscal Year
Ended December 31, 2014
During the year, the logistics industry experienced a rush in demand ahead of the consumption tax hike. However, the protracted
slump in demand following that rise caused
logistical volumes to remain stagnant.
Furthermore, personnel shortages led toincreases in costs for vehicle hiring andpart-time and temporary workers, driving
up cost of sales. An increasingly severe
driver shortage contributed to these ongoingdifficulties in the operating environment.
Against this backdrop, the SBS Grouplaunched its medium-term managementp l a n ,“ S B S G r o w t h 2 0 1 7 . * ”T h e G r o u pworked together on business and investment strategies to meet the plan’s objective of becoming a leading group in thelogistics industry.

“* SBS Growth 2017”is a medium-term management plan that calls for net sales of ¥200.0 billion
and operating income of ¥8.0 billion in the fiscal
year ending December 31, 2017.

SBS Business Report 2014

2

MESSAGE FROM THE PRESIDENT

Expanding Operations by
Cultivating New Customers andBusinesses

shares in a forwarder, Transpole Logistics Pvt.

In the logistics business, we stepped up our

We expect the addition to our group of SBS

efforts to conduct proposal sales. As a result,

Transpole ̶ which is enjoying rapid growth

we gained new orders from supermarkets,

in Asia ̶ to play a major role in achieving the

drugstore chains and department stores, whichtargets of our medium-term management

will contribute to performance in future fiscal

plan.

Ltd. (now SBS Transpole Logistics Pvt. Ltd.),
and converted that company to a subsidiary.

years. The Company also commenced operationsof 3PL and logistics centers for meat processors,

lackluster due to the ongoing sluggishness of

Making Large-Scale Investments
in M&A and Logistics Facilities
and Recovering Capital

personal consumption and profits in some areas

In addition to acquiring two overseas subsid-

worsened, the Company expanded operations

iaries, the Company invested around ¥15.0

by cultivating new customers and areas ofbillion to acquire a site for a logistics facility tobusiness.

fuel new 3PL business and augment solar-

department stores and manufacturers of eyeglass lenses. Although existing business was

power generation facilities. We recoveredaround ¥5.5 billion in cash through the sale

Building the Foundations of
Our Overseas Operationsof an office building and by transferring trust
beneficiary rights in a logistics facility to a private
placement fund, SBS Logifund No.1. By expanding

The Company took several steps to build theits unique“business model combining logistics

foundation for its overseas operations,and finance,”the Company seeks to expand its

restructuring its affiliates in Singapore andoperations while maintaining a judicious balance

entering the container shipping industry in

between investment and return.

that country by purchasing a local drayage
shipping firm. In India, the Group acquired

Nagatsuta Logistics Center(commencing operations in spring 2015)

3 SBS Business Report 2014

MESSAGE FROM THE PRESIDENT

Our Medium-Term Management Plan,<SBS Growth 2017>

Bolstering Sales Capabilities andthe SBS Brand in the Fiscal YearEnding December 31, 2015
The upcoming fiscal year marks the second■ The Group’s Corporate Vision
Forming a 3PL corporate group thathas logistics functions in all directions,and striving to become an industryleading logistics company represent-

year for our medium-term management plan. In
addition to ongoing policies 1 through 4 below,
we have defined“bolstering sales capabilities
and the SBS brand”as a new policy for expanding
new orders and enhancing awareness.

ing not only Japan but the entire Asian
region1 Further enhancing the 3PL business■ Medium-Term Management
Policy▪ Enhance on-site capabilities meetingcustomer needs▪Bring together the Group’s capabilities▪Continue to be a group with aventure spirit▪Stick with management focusing
on compliance and CSR■ Numerical Targets
Operating income

Operatingincome（Billions of yen）

Medium-termtargets
200

200

165.0
150

121.1

127.9 132.2

100

50

0

4.1
2.2

141.5

10

8

155.0
6

4.1

2012

We will develop high-quality 3PL business,
centered on the ASEAN region.

We will search out and acquire partners
to augment the Group’s scale and functions.

5 Bolstering sales capabilities andthe SBS brandIn the logistics business, we expect toinclusion of SBS Transpole Logistics Pvt. Ltd. ofIndia will contribute to Group performance. In
the property management business, we plan
to complete construction of a new logistics
center and liquidate logistics facilities.

4

2.9

2

2011

3 Promoting overseas development

launch new operations in Japan. Overseas, our

8.0

5.5

We will further and expand our unique business model fusing finance and logistics.

We will endeavor to be the corporate
Group of choice for customers and a place
where people want to work.

Net sales (M&A contribution)

Net sales（Billions of yen）

2 Moving forward with developmentsof real estate for logistics purposes

4 Being proactive in M&A▪Achieve sustainable growth

Net sales (Organic growth)

We will further enhance our proposal sales
capabilities to acquire new customers andcultivate existing customers.

2013

2014

2015

2017

0

The SBS Group will continue striving to
expand its business and enhance its corporate
value. We ask for the ongoing support of ourshareholders in these endeavors.

4

HIGHLIGHTS

Operation of Premium Dedicated Sites for Pet Dogs
and Cats

Marketing Partner, an SBS Group company, provides e-commerce support services and develops
online sales. The company operates two sites dedicated to offering premium pet food:“POCHI(Pochi’s Happiness)”and“Tama (Tama’s Wishes).”Themed around nature, health, security andsafety, more than 1,000 pet foods, therapeutic foods, supplements and sundry items have been
selected for this site, which is used by 100,000 members who pamper their pet dogs and cats liketheir own children. We also offer a free health consultation service with a pet dietician.

■“Tama (Tama’s Wishes)”
http://www.tamaone.jp/■“POCHI (Pochi’s Happiness)”
http://www.pochi.co.jp/

Marketing Partner Co., Ltd.
http://www.marketing-partner.jp/

4F, Da Vinci Ogawamachi, 2-4 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054■Planning Department
Marketing planning, media planning, e-commerce support services, e-commerce outsourcing,
e-commerce fulﬁllment, call center operation■Mail-Order Department• Operation of“Pochi’s Happiness,”a site dedicated to premium dog food• Operation of“Tama’s Wishes,”a site dedicated to premium cat food

5 SBS Business Report 2014

TOPICS

Completion in Thailand of
our First Logistics Facilities
Overseas(SBS Group)

June

Capital and Operational
Alliance with MEGMILK SNOW
BRAND Co., Ltd.

October(SBS Flec)

Construction has been
completed on the SBS
G r o u p ’s f i r s t o v e r s e a slogistics facilities warehouse, located near Laem
Chabang Port, Thailand’s
largest international port.
A second warehouse and dormitory block werealso completed in August, and construction ofa third warehouse is in the planning stages.

To further strengthen trading relations with key business partner MEGMILKSNOW BRAND Co., Ltd., aswell as to continuously
expand business by leveraging mutual functions, weformed a capital and operational alliance underwhich MEGMILK SNOW BRAND acquired a stake ofaround 34% in SBS Flec.

Acquisition in India of Transpole
Logistics

Acquisition of Our First Logistics
Site in Osaka Nanko(SBS Group)

July

Our Asian regional headquarters, SBS Logistics
Holdings Singapore Pte. Ltd.,acquired the shares of Transpole Logistics Pvt. Ltd., aninternational logistics company demonstrating rapid
growth in India, and weconverted the company to a subsidiary. Throughthis move, we have acquired a solid partner tobolster the SBS Group’s overseas operations.

Shipping of E7 Series
Hokuriku Shinkansen Cars

October(SBS Logicom)

We were entrusted withtransporting E7-Series railcars for the Hokuriku Shinkansen, which is scheduled
to begin service in spring of
2015. Working from earlysummer through autumn
of 2014, we completed the project of transporting 42 railcars̶3.5 sets of 12-car train̶overlandfrom their assembly plant to the port.

November(SBS Logicom)

To bolster our base of operations in the Kansai region,
we acquired a site of approximately 24,800 square
meters in Suminoe-ku,
Osaka. We plan to build alogistics center with floor
space of around 49,600 square meters on thesite, which is our first large-scale logistics siteacquisition in the Kansai region.

Construction start on Sugita(Yokohama) Logistics Center

December(SBS Logicom)

We commenced construction of a logistics centerwith floor space of 41,700
square meters on a sitemeasuring approximately
17,200 square meters that
we acquired from the cityof Yokohama in 2013 through a public tender.
Construction is slated for completion in spring of
2016. SBS Logicom’s website contains a special
page dedicated to disseminating timely information about this project.

SBS Business Report 2014

6

CONSOLIDATED OPERATING PERFORMANCE

Despite ongoing uncertainty about future economic prospects, during the year we made anorganization-wide bid to increase 3PL orders by enhancing our proposal sales capabilities. As a result,
we succeeded in acquiring new customers and expanding new business operations, leading to a
year-on-year increase in net sales. Operating income and ordinary income declined, however, owing tohigher costs stemming from our M&A activities and worsening performance in the customs clearance
and CD/DVD logistics business. Net income was up, however, as we posted extraordinary income froma gain on sales of an oﬃce building and other noncurrent assets.

YOY
Change■ Net Sales

YOY
Change■ Operating Income

0.4％
DOWN

7.1％
UP

(Millions of yen)
150,000

120,000

119,824 121,148

127,935 132,205

141,535(Millions of yen)
5,000

4,262

90,0003,000

60,0002,000

30,000

1,000

0

2010

2011

4,141

4,123

2013

2014

4,000

2012

2013

2014

0

2,901
2,177

2010

2011

2012

■ Net Income■ Ordinary Income
YOY
Change

3.4 ％DOWN(Millions of yen)

5,000

YOY
Change75.0 ％(Millions of yen)
4,000

UP

4,291
3,801

4,000

3,000

3,672

3,000

2,140

2,767
2,000

2,000

1,647

1,571

2012

2013

1,653
1,000

1,000

0

2,750

2,522

2010

7 SBS Business Report 2014

2011

2012

2013

2014

0

2010

2011

2014

CONSOLIDATED OPERATING PERFORMANCE■ Performance by Segment(Millions of yen)

Year Ended December 31, 2014

Year Ended December 31, 2013

Net Sales

Operating Income

Net Sales

Operating Income

Logistics

129,884

1,624

120,786

1,219

Property Management

5,103

2,359

5,554

2,550

Other

6,548

344

5,865

202

̶

（204）

̶

169

Adjustment
Total

141,535

132,205

4,123

4,141

● Logistics Business :Logistical volumes swelled significantly up to March, due to rush demand ahead of the consumption tax
hike. From April onward, performance in existing areas of business was sluggish due to a drop in reaction
to the tax hike, as well as to yen depreciation. However, thanks to the launch of new projects, sales grewsteadily for the year. The operating margin remained essentially unchanged, with positive factors
including a decline in fuel costs and some success in our efforts to adjust freight rates. These were offset
by ongoing negative factors, such as a rise in vehicle hiring and labor costs.
● Logistics Support Business :In the property management business, sales and operating income were both down due to the loss inrental revenues from logistics facilities transferred to a private placement fund, SBS Logifund No. 1. The
personnel business benefited from rising demand for personnel dispatch and introductions caused by staff
shortages, enabling the Group to open new sales offices and refurbish existing ones and bolstering
segment sales and operating income.

■ Net Debt, Total Shareholders' Equity（left）,
Net Debt-to-Equity Ratio（right）
Net Debt

Total Shareholders' Equity■ Net Assets, Equity Ratio

Net Debt-to-Equity Ratio(Millions of yen)
60,000（Times）
3.0

Net Assets

Equity Ratio(Millions of yen)
40,000（％）

35,24551,22045,00037,28730,00015,00022,587
1.65

39,09038,12824,82827,372

10/12

28,677

11/12

30,932

1.66

1.57
1.39

0

2.5

39,21512/12

30,00022,6162.0

25,06527,75029,26545

20,000

1.5

10,000

1.0

0

30

23.2％

24.5％

10/12

11/12

26.2％

26.7％

24.4％

15

1.37
13/12

14/12

12/12

13/12

14/12

0

Notes:Net debt = long-term loans + short-term loans + bond - cash and deposits
Net debt-to-equity ratio = net debt/total shareholders’equity

SBS Business Report 2014

8

DIVIDEND■ Dividends per Share

Basic Policy on Distribution of Profits
The SBS Group considers the return of proﬁts toshareholders an important management objective.
Accordingly, our basic policy on proﬁt distribution calls

（yen）
40

30

40.0

for the maintenance of stable dividends and eﬀorts to

40.0

increase dividend levels in line with operating

Commemorative Commemorative
dividend
dividend

¥10.0

30.0

performance, balanced against augmenting internal¥10.0

reserves to ensure a stronger management base.
For the ﬁscal year ended December 31, 2014, the

20

15.0

Group declared a dividend of ¥15 per share, ¥1 higher

16.0

than the previously forecast ﬁgure of ¥14 per share.
This ﬁgure amounted to a real increase of ¥5 per share

10

0

from the preceding year’s level. We forecast a dividendof ¥16 per share for the ﬁscal year ending December
2011

2012

2013

2014

2015
（Forecast）

31, 2015.

Notes:The Group conducted a three-for-one split of common shares on June 1, 2014.
The commemorative dividend distributed in 2012 commemorates the Group’s listing on the Second Section of the Tokyo Stock Exchange.
The commemorative dividend distributed in 2013 commemorates the Group’s listing on the First Section of the Tokyo Stock Exchange.

PERFORMANCE FORECASTS (For the Year Ending December 31, 2015)

Net Sales¥ 165,000 million¥ 5,500 million

Operating
IncomeYOYchange16.6％UP
YOY
change33.4％UP

Ordinary
IncomeNet Income¥ 4,900 million¥ 3,800 million■ By Segment

YOYchange33.4％UP
YOY
change38.2％UP(Millions of yen)

Logistics

Property
Management

Other

Consolidation/
Corporate

Total

Net Sales

150,000

8,300

6,700

-

165,000

YOY Change+15.5％+62.6％+2.3％-+16.6％

Operating Income

2,100

3,000

400

0

5,500

YOY Change+29.3％+27.2％+16.3％-+33.4％

Operating Margin

1.4％

36.1％

6.0％

-

3.3％

9 SBS Business Report 2014

CORPORATE PROFILE & STOCK INFORMATION■Corporate Proﬁle (As of December 31, 2014)■ Stock Information (As of December 31, 2014)

Company nameSBS Holdings, Inc.

Shares authorized

154,705,200

President

Masahiko Kamata

Shares issued

39,703,200

FoundedDecember 16, 1987

Paid-in Capital¥3,918.21 million

Net sales¥141.5 billion (consolidated)

Head oﬃce

4-1-3 Taihei, Sumida-ku, Tokyo 130-0012, Japan
Tel: +81-3-3829-2222(main)(including 1,200 shares of less than one trading unit)
Trading unit stock system

Yes (100 shares)

Shareholders

3,990■Major Shareholders (As of December 31, 2014)

Fax: +81-3-3829-2822

Major
consolidated
subsidiaries

Ratio of
Shares Held(%)

Shareholder

SharesHeld

Masahiko Kamata

17,888,400

45.05

SBS Holdings Employee ShareOwnership Association

1,710,700

4.30

Japan Trustee Services Bank, Ltd.
(trust account)

1,598,200

4.02

SMBC Trust Bank Ltd.

1,200,000

3.02

Junichi Ouchi

928,200

2.33

The Chase Manhattan Bank, N. A.
London Secs Lending Omnibus Account926,400

2.33

TOBU Properties Co., Ltd.

826,800

2.08

SBS Transpole Logistics Pvt. Ltd. *State Street Bank and Trust
Company 505224

750,000

1.88

Atlas Logistics Pvt. Ltd.*

3E Corporation

468,000

1.17

SBS Finance Co., Ltd.

Trust & Custody Services Bank, Ltd.
(securities investment trust account)452,500

1.13

Lines of Business Logistics, property management,
marketing, human resources, etc.
SBS Logicom Co., Ltd.
SBS Flec Co., Ltd.
SBS Zentsu Co., Ltd.
SBS Sokuhai Co., Ltd.
SBS Freight Service Co., Ltd.*
Nippon Record Center Co., Ltd.*SBS Staff Co., Ltd.
SBS Support Logi Co., Ltd.
SBS Logistics Holdings Singapore Pte. Ltd.

A-MAX Co., Ltd.
Marketing Partner Co., Ltd.
*Indirectly held subsidiaries

Note: Japan Trustee Services Bank, Ltd. (trust account) is are-trusted employee share ownership association, and thenumber of shares its trust account holds includes
481,600 of our shares.
The ratio of shares held against number of shares issued
is truncated after the second decimal place.

■ Directors and Auditors(As of March 25, 2015)

President

Masahiko Kamata

Senior Director

Kenichi Iriyama

Directors

Taiji Sugino
Makoto Watanabe
Jiro Iwasaki
Tetsuya Sekimoto

Audit & Supervisory Board
Member (full-time)

Yasuhiro Yamashita

Audit & Supervisory Board
Member (outside)

Shigetaka Shomatsumoto
Masahito Takeda

Notes:Jiro Iwasaki and Tetsuya Sekimoto are outside directors.

■Distribution of Shares by Shareholder Type(As of December 31, 2014)(Shares issued: 39,703,200)
Japanese Corporations

Securities firms

Non-Japanese Corporation

Treasury stock

817,734 shares（2.06％）

1,836,810 shares（4.63％）

385 shares（0.00％）

4,965,900 shares（12.51％）

Financial institutions

5,592,500 shares（14.09％）Individuals
and others

26,489,871 shares（66.72％）

Shigetaka Shomatsumoto and Masahito Takeda are outside
auditors.

SBS Business Report 201410