Management

Announcement on planned share transfer of equity method affiliate

January 29, 2021

Kobe Steel, Ltd.

Kobe Steel, Ltd. announces that it has decided to sell a part of shares that it holds in its equity-method affiliate OSAKA Titanium Technologies Co., Ltd. (OTC) (code number 5726: First section of the Tokyo Stock Exchange). The number of shares planned to be sold by Kobe Steel is 3,300, 000 shares. With this sale of shares, Kobe Steel’s ownership ratio of voting rights in OTC will decrease from 23.92% to 14.95%, and it is anticipated that the OTC will be excluded from the equity-method affiliates of Kobe Steel. However, in the event of a significant change in the conditions of the stock market or other unavoidable circumstances, the sale may be suspended, postponed, or canceled.

1. Reason for the sale

The Kobe Steel Group (also known as the KOBELCO Group), under the Rolling of the Medium-Term Management Plan announced on May 15, 2019, has set two key themes for fiscal 2019 and 2020, one of which is to make efficient use of management resources with a focus on capital costs, and is working to improve the efficiency of its capital and assets. As a result of the examination of its shares in OTC, Kobe Steel judged that it would be possible to improve the efficiency of management resources through the sale of a certain number of shares and to continue the business and cooperative relationship with OTC, and thus decided to execute the sale.

2. Number of shares to be sold, status of shares before/after the sale, and selling method

(1) Number of shares planned to be sold	3,300,000 shares (ownership ratio of voting rights: 8.97%), of which 1,650,000 shares will be sold in the market. The selling method for the remaining 1,650,000 shares has yet to be determined.
(2) Number of shares before the sale	8,800,000 shares (ownership ratio of voting rights: 23.92%)
(3) Number of shares after the sale	5,500,000 shares (ownership ratio of voting rights: 14.95%)

3. Outline of the equity-method affiliate to be transferred

(9) Financial status and operating results of the company concerned for the past 3 fiscal years
(1) Company name	OSAKA Titanium Technologies Co., Ltd.
(2) Domicile	1 Higashihama-cho, Amagasaki, Hyogo, Japan
(3) Name of representative & title	Yasuaki Sugizaki President & Representative Director
(4) Description of business	Manufacture and sale of titanium (titanium sponge, titanium ingot, etc.) Manufacture and sale of high-performance materials such as high-purity titanium, titanium powder, and SiO, which are products developed for new applications of titanium and silicon
(5) Capital	8,739,620,000 yen
(6) Date of establishment	November 26, 1952
(7) Major shareholders & ratio of shareholding	Kobe Steel, Ltd.: 23.91% Nippon Steel Corporation: 23.91% Sumitomo Corporation: 2.35%
(8) Relationship between the listed company and the company concerned	Capital relationship	Kobe Steel holds 23.91% of the shares of the company concerned.
	Personnel relationship	One auditor of the company concerned is concurrently an employee of Kobe Steel.
	Business relationship	Kobe Steel purchases titanium sponge and titanium ingot from the company concerned.
Accounting period	Year ended March 2018	Year ended March 2019	Year ended March 2020
Net assets	36,213 million yen	34,305 million yen	34,820 million yen
Total assets	92,662 million yen	80,928 million yen	76,417 million yen
Net assets per share	984.11 yen	932.23 yen	946.24 yen
Net sales	43,431 million yen	43,666 million yen	38,189 million yen
Operating income	3,322 million yen	2,308 million yen	1,142 million yen
Ordinary income	2,809 million yen	2,422 million yen	1,312 million yen
Net income	1,857 million yen	△1,322 million yen	726 million yen
Net income per share	50.47 yen	△35.95 yen	19.75 yen
Dividend per share	15 yen	5 yen	5 yen

4. Schedule for the sale

Kobe Steel concluded today a share transfer agreement with a securities company concerning the sale of 1,650,000 shares in the market. The sale is scheduled to begin on February 1, 2021. The date of the sale of the remaining 1,650,000 shares has not been determined yet, and the date of exclusion of the company concerned from our company's equity method affiliates has not been determined either.

5. Future outlook

The impact of the sale of shares that could have on Kobe Steel’s consolidated results is currently under review. Kobe Steel will make an announcement once the impact is clear.

Rolling of the Fiscal 2016–2020 Group Medium-Term Management Plan (May 15, 2019)

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