Showa Denko (SDK; TSE:4004) announces that, following the “Announcement regarding Company Split (Absorption-Type Company Split) and Transfer of Energy Storage Devices and Systems Business through Share Transfer by a Consolidated Subsidiary (Change of Second-Generation Subsidiary)” which was announced today, SDK will record extraordinary loss in its 2021 consolidated financial statements and revises its forecasts of consolidated business results for the first half of the year ending on December 31, 2021 and consolidated business results for the year ending on December 31, 2021, both of which were announced on May 10, 2021.
1. Recording of extraordinary loss
As stated in the “Announcement regarding Company Split (Absorption-Type Company Split) and Transfer of Energy Storage Devices and Systems Business through Share Transfer by a Consolidated Subsidiary (Change of Second-Generation Subsidiary)” which was announced today, Showa Denko Materials Co., Ltd. (SDMC), which is a consolidated subsidiary of SDK, has determined by its board of directors today that: (i) SDMC shall have a newly established, wholly owned subsidiary of it named Energy Storage Devices Spin-Off Preparation Co., Ltd. (hereinafter referred to as “NewCo”) succeed the energy storage devices and systems business in which SDMC is engaged at its Saitama Works and Nabari Works through an absorption-type company split (hereinafter referred to as the “Company Split”), thereafter, (ii) SDMC shall transfer all shares of NewCo and the directly or indirectly owned shares of Energy System Service Japan Co., Ltd., CSB Energy Technology Co., Ltd., Siam Magi Co., Ltd., Thai Energy Storage Technology Public Company Limited, Thai Nonferrous Metal Co., Ltd., 3K Products Company Limited, and Power Plas Company Limited to Sustainable Battery Solutions, Inc., operated by Sustainable Battery Holdings, Inc. whose largest shareholders are the funds served by Advantage Partners Inc. (such transfer hereinafter referred to as the “Share Transfer” and, collectively with the Company Split, the “Transaction”). Taking the Transaction into account, SDK will record an extraordinary loss of about 30 billion yen as expenditure to cover the cost of structural reform related to the Transaction in the Company’s financial statements for the first half of the year ending on December 31, 2021.
2. Revision of forecast of consolidated business results for January 1 – June 30, 2021
(1) Revised forecast of consolidated business results for January 1 – June 30, 2021
*Please see www.sdk.co.jp/assets/files/english/news/2021/20210708_sdknewsrelease2_e.pdf
(2) Reasons for the revision
Regarding the forecast of consolidated business performance announced on May 10, 2021, we plan to record onetime loss about our net income/loss attributable to owners of the parent because we will record extraordinary loss of about 30 billion yen as we explained in the item 1 of this announcement.
As we stated in “The Long-term Vision for the Newly Integrated Company (2021-2030)” which we announced in December 2020, we plan to sell off some of our businesses amounting to about 200 billion yen in business value as part of our medium- to long-term business plan. We have already decided to sell off several businesses and announced our decisions, and the Transaction we announced today made us confident that we can accomplish the plan about restructuring of our business portfolio. We will continue to conduct business portfolio management which will support our sustainable growth and help us to realize our Long-term Vision.
3. Revision of forecast of consolidated business results for January 1 – December 31, 2021
(1) Revised forecast of consolidated business results for January 1 – December 31, 2021
*Please see www.sdk.co.jp/assets/files/english/news/2021/20210708_sdknewsrelease2_e.pdf
(2) Reasons for the revision
Regarding consolidated performance forecast for full-year 2021, we revised the forecast to reflect only the changes in the performance forecast for the first half of 2021.
Regarding the dividend, we do not revise our forecast that the Company will pay 65 yen per share as year-end dividend.
About Showa Denko K.K.
Showa Denko K.K. (SDK; TSE:4004, ADR:SHWDY) is a major manufacturer of chemical products serving from heavy industry to computers and electronics. The Petrochemicals Sector provides cracker products such as ethylene and propylene, the Chemicals Sector provides industrial, high-performance and high-purity gases and chemicals for semicon and other industries, the Inorganics Sector provides ceramic products, such as alumina, abrasives, refractory/graphite electrodes and fine carbon products. The Aluminum Sector provides aluminum materials and high-value-added fabricated aluminum, the Electronics Sector provides HD media, compound semiconductors such as ultra high bright LEDs, and rare earth magnetic alloys, and the Advanced Battery Materials Department (ABM) provides lithium-ion battery components. For more information, please visit www.sdk.co.jp/english/.