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Press Release
Structural Reform of the Water Infrastructure Business in China
Apr 15, 2016

SEKISUI CHEMICAL CO., LTD

Urban Infrastructure and Environmental Products Company (President: Hajime Kubo) of the SEKISUI CHEMICAL CO., Ltd. (President and Representative Director: Teiji Koge, hereinafter called "Sekisui Chemical") has signed a contract for the handover of shares in YONGCHANG-SEKISUI COMPOSITES CO., LTD. and has also completed the establishment of "Qingdao Sekisui Water Industry Technology Co., Ltd.", a joint venture with Qingdao Water Group Co., Ltd.


1. Background and History

Sekisui Chemical's Urban Infrastructure and Environmental Products Company has developed a business for large-bore reinforced plastic pipes used in drainage, etc., in the Chinese interior following the purchase of Xinjiang Yongchang Composites Co., Ltd. (now YONGCHANG-SEKISUI COMPOSITES CO ., LTD.) in April 2005. Nevertheless, Profits in recent years have continued to stagnate due to the impact of shrinking public works concomitant with the worsening Chinese economy.

Further, SEKISUI (QINGDAO) PLASTIC CO., LTD. (100% subsidiary since 2008) was established in Qingdao City, Shandong Province in July 2002, which has developed the water pipes materials business along the Chinese coast.


2. Summary and Purposes of Restructuring and Reforms

The water infrastructure business in China has been undergoing continuous restructuring and reforms, but to further improve profitability, it was thought that drastic measures were required, and so 1) and 2) below were implemented.

1) A contract was signed to hand Sekisui Chemical's shares in YONGCHANG-SEKISUI COMPOSITES CO ., LTD. to Zhenshi Holding Group (share retained by Sekisui Chemical: 62.43%). In releasing the shares on this occasion, Sekisui Chemical withdraws from the water infrastructure business on in the Chinese interior.


*Zhenshi Holding Group:A holdings company with multiple companies under its umbrella, such as logistics, steel, real estate, hotels, glass products, and composite materials, etc., with its head office in Jiaxing city, Zhejiang province

2) Qingdao Sekisui Water Industry Technology Co., Ltd was established as a joint venture with Qingdao Water Group Co., Ltd., which is a major user of water pipe materials. Further, SEKISUI (QINGDAO) PLASTIC CO., LTD. is scheduled to liquidate after the transfer of business to the new joint venture.


-Summary of Companies Handed Over (Before Handover)

    Name: YONGCHANG-SEKISUI COMPOSITES CO ., LTD.

    Address: Xinxing Road, High Technical Industrial Zone, Midong Area Urumqi Xinjiang, 831400, China

    Representative: Zhou Yong Qing

    Business Details: The manufacture, scale, and construction of reinforced plastic composite pipes

    Established: February 1993

    Sales Amount: 121 million RMB (period ending March 2015)

    Proportion of Shares Held by Sekisui: 62.43%


-Joint Venture Company Summary

    Name

 Qingdao Sekisui Water Industry Technology Co., Ltd

    Address

 54 Hua Yang Road, Shibei District, Qingdao City

    Representative

 Wei Cheng Ji

    Business Details

 The manufacture and sale of water pipe materials

    Capital

 100.1 million RMB (Sekisui Chemical: 50%, Qingdao Water: 50%)

    No. of Employees

 Approx. 80


-Summary of Companies Scheduled for Liquidation

    Name: SEKISUI (QINGDAO) PLASTIC CO., LTD.

    Address: 273 Yanhe Rd., Qingdao Economic & Technology Development Zone, Qingdao, 266500, China

    Representative: Kimiatsu Sato

    Business Details: The manufacture and sale of water pipe materials

    Established: July 2002

    Sales Amount: 16 million RMB (period ending March 2015)

    Proportion of Shares Held by Sekisui: 100%


3. Impact on Business Results

The impact of these events on the projections for the consolidated business results for the period ending March 2016 (announced October 29, 2015) is negligible.


Reference: Chinese subsidiary following the restructure and reforms (pertaining to water infrastructure)


Company Name

Business Details

SEKISUI (WUXI) PLASTICS TECHNOLOGY CO., LTD.

 Manufacture of polythene electrofusion joints


SEKISUI (SHANGHAI) ENVIRONMENTAL TECHNOLOGY CO., LTD.

 Manufacture and sale of FFU synthetic wood and other resin products


SEKISUI KNT (HEBEI) ENVIRONMENTAL TECHNOLOGY CO., LTD.

 Manufacture, sale, and after-service of all FRP products



Press Contact

SEKISUI CHEMICAL CO., LTD.
Public Relations Group, Business Strategy Department
Fax: +81-(0)3-5521-0510


Disclaimer

This press release may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.
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