May 8, 2014
To Whom It May Concern:
Company
Representative::

CodeContact::Phone:

Sumitomo Heavy Industries, Ltd.
Shunsuke Betsukawa
President and Chief Executive
Officer6302
Tsuneyoshi Sato
General Manager, Corporate
Communications Department+81-3-6737-2333

Notice Regarding the Succession of Business by a Subsidiary after a Company Split
On May 8, 2014, the Board of Directors of Sumitomo Heavy Industries, Ltd. (hereinafter referred to as“SHI” or the “Company”) passed a resolution to carry out an absorption-type company split (hereinafterreferred to as the “Company Split”) of the service-related business associated with the Company’s power
generation plant business, the ash treatment facility business, and the dry desulfurization/denitration
facility business. At the same time, it was also agreed that Sumiju Plant Engineering Co., Ltd. (hereinafterreferred to as “Sumiju Plant Engineering”), a wholly-owned subsidiary of SHI, will absorb the businessareas that have been split, with the effective date of such absorption being July 1, 2014.
As this move is considered to be a simplified Company Split whereby SHI’s wholly-owned subsidiarysucceeds parts of the Company’s business operations, certain matters and content are omitted from thisdisclosure.
Further details regarding the absorption-type company split are provided below:
1.

Purpose of the Company Split
SHI’s Energy and Environment Group (hereinafter referred to as “SHI E&E”) has worked to expand its
scale through the development, manufacturing, sale and service of products such as circulating
fluidized bed (CFB) boiler power generation equipment, dry desulfurization/denitration facilities,
resource recovery facilities, and ash treatment facilities. In recent years, order figures for CFB boilers
have grown significantly as the feed-in tariff (FIT) system has boosted demand. This trend of strong
demand from the domestic power generation plant sector is projected to continue into the future.
In addition, the market for CFB boilers in emerging overseas markets is active, meaning thatstrengthening the Company’s plant engineering capabilities and after-sale service offerings is apressing issue that needs to be resolved in order to expand the business even further.
Sumiju Plant Engineering, on the other hand, has responded to the needs of customers in theelectrical dust collection and evaporator market through its comprehensive engineering capabilities
that encompass all aspects of the product life-cycle from initial design to delivery and after-sales
service. Unfortunately, new orders for the construction of whole units have been subdued in recentyears, and as such, Sumiju Plant Engineering has mainly focused on providing repair andmaintenance services for existing units in operation. In order for Sumiju Plant Engineering to receive
orders for new, large-scale construction projects for whole units in the future, it will need tostrengthen its service offerings and also actively pursue synergies with SHI E&E, particularly in thearea of sales activities associated with their products.
After taking the above into consideration, SHI and Sumiju Plant Engineering deliberated on
strategies to grow the number of orders for the various products offered by SHI E&E and Sumiju

Plant Engineering, which are both actively targeting the plant-related chemical machinery market.
As a result, it was decided that the existing functions of each entity will be split, and a management
structure that is optimal for the operation of the respective business areas will be established. Morespecifically, it was determined that SHI E&E will mainly focus on the CFB-related power generation
facilities business on a go-forward basis, whereas Sumiju Plant Engineering will look to strengthen
its service capabilities through the integration of service business split from SHI E&E and take over
the responsibilities associated with the dry desulfurization/denitration facility and ash treatment
facility products.
2.

Outline of Company Split(1) Schedule for the Company Split
Date of Board of Directors Meeting to Approve the CompanySplit Agreement
Date of Finalizing Company Split Agreement
Date of General Shareholders’ Meeting to Approve theCompany Split Agreement (for Sumiju Plant Engineering)
Effective Date of Company Split

May 8, 2014
May 8, 2014
June 19, 2014 (Anticipated)
July 1, 2014 (Anticipated)(2) Method of Company Split
The separation of the business will be carried out through an absorption-type company split inwhich SHI will be the “splitting company” and Sumiju Plant Engineering will be the “successorcompany”. The Company Split falls under the category of a simplified absorption-type company
split under Article 784, paragraph 3 of the Companies Act. Accordingly, the Company Split will
be carried out without obtaining the prior approval of SHI’s shareholders.
(3) Share Allotments Associated with the Company Split
The number of new shares issued by Sumiju Plant Engineering for the Company Split is one (1).
This ordinary share will be allotted in its entirety to the Company.
(4) Increase or Decrease in Capital due to the Company Split
No increase or decrease in capital is anticipated as result of the Company Split.
(5) Handling of Warrants as well as Bonds with Warrants associated with the Company Split
SHI does not issue warrants or bonds with warrants.
(6) Rights and Obligations to be Assumed by the Successor Company in Association with theCompany Split
Sumiju Plant Engineering will assume the assets that are deemed necessary to perform theduties of the business areas that are being split from SHI.
(7) Prospects for Fulfilling Debt Obligations
SHI has concluded that debt obligations to be borne by the Company and Sumiju Plant
Engineering after the effective date of the Company Split can be satisfied in its entirety.
3.

Profiles of the Companies Involved in the Company Split(1) Trade Name
Sumitomo Heavy Industries, Ltd.
(Splitting Company) – As ofMarch 31, 2014
(2) Description
OperationsofBusiness

Manufacturing and sale ofvarious industrial machinery
ranging from general machinery
to precision control machinery

Sumiju Plant EngineeringCo.,
Ltd.
(SuccessorCompany) – As of March 31,
2014
Design, manufacturing, andsales, as well as refurbishing,repairing, inspecting andmaintaining general industry

(3) Date of Establishment(4) Address of Head Office(5) Name and Position ofRepresentative(6) Capital(7) NumberofShares
Outstanding(8) Fiscal Year End(9) Major Shareholders andShareholding Ratios

November 1, 1934
1-1
Osaki
2-Chome,Shinagawa-ku, Tokyo, Japan
Shunsuke Betsukawa, President
and Chief Executive Officer
JPY30,872 million
614,527,405 sharesmachinery and chemicalequipment
andenvironmental equipment
includingevaporators/crystallizers,distillers/extractors,andcollectors.
October 1, 1986
1-1 Yato-Cho 2-Chome, Nishi
Tokyo-shi, Tokyo, Japan
Ikuro Seino, President andChief Executive Officer
JPY50 million
1,000 shares

March 31
March 31
Japan Trustee Services Bank, Ltd. Sumitomo Heavy Industries,(Trust Account) – 6.9%
Ltd. – 100%
The Master Trust Bank of Japan,
Ltd. (Trust Account) – 6.4%
SumitomoLifeInsurance
Company – 3.5%
State Street Bank and Trust
Company 505224 – 3.2%
SumitomoMitsuiBanking
Corporation – 2.5%
(10) Operating Results and Financial Condition
Sumitomo Heavy Industries, Sumiju Plant Engineering Co.,
Ltd. (Consolidated Basis)Ltd.
Net Assets
JPY331,059 million
JPY3,031 million
Total Assets
JPY724,182 million
JPY3,658 million
Net Assets per Share
JPY532.28
JPY3,031,247.70
Sales
JPY615,271 million
JPY2,130 million
Operating Income (or Loss)
JPY34,329 million
JPY138 million
Ordinary Income (or Loss)
JPY33,000 million
JPY148 million
Net Income for the Fiscal Year JPY17,891 million
JPY84 million
Under Review
Net Income per Share for the JPY29.17
JPY83,951.28
Fiscal Year Under Review* Please note that the data for operating results and financial condition in the above table are as ofMarch 31, 2014.
4.

Details of Business Areas to be Split(1) Details of Business Areas to be Split
SHI will split the service-related business associated with the Company’s power generation
plant business, the ash treatment facility business, and the dry desulfurization/denitration
facility business.
(2) Sales Associated with Business Areas to be Split for the Period Ended March 31, 2014
Business Areas to beOverall SHI Results (b)Ratio (a/b)
Split (a)Sales (in millions of JPY)
JPY4,114
JPY160,337
2.6%

(3) Asset and Liability Amounts to be Transferred (Projected at the Time of the Company Split)
Assets to be transferred:
Approximately JPY11 million
Liabilities to be transferred:
JPY05.

Condition of the Listed Company after the Company Split
There will be no change to the name of the listed company, location of the head office, name andposition of the representative, capital, and fiscal year arising from the Company Split.

6.

Future Outlook Regarding the Impact to Operating Results arising from the Company Split
As outlined in Paragraph 4.(2) above, the sales associated with the business areas that are thesubject of the Company Split account for less than 3% of SHI’s overall sales. As such, there will only
be a de minimis impact on the Company’s non-consolidated operating results. In addition, given that
Sumiju Plant Engineering is a wholly-owned subsidiary of SHI, the Company Split is anticipated tohave only a slight impact (de minimis) on the consolidated financial performance of the Company.
END