September 5, 2016 DOWA HOLDINGS CO., LTD. DOWA builds a new heat treatment factory inside the Hamamatsu‐kita plant to strengthen outsourced processing services DOWA THERMOTECH CO., LTD. (14‐1, Sotokanda 4‐chome, Chiyoda‐ku, Tokyo; Capital: ¥1,000 million; President: Toshiro Sumida), a subsidiary of DOWA HOLDINGS CO., LTD. (Capital: ¥36,400 million; President: Masao Yamada), built a new heat treatment factory inside the Hamamatsu‐kita plant of DOWA THERMOENGINEERING CO., LTD. (Capital: ¥1,000 million; President: Haruki Yamada) to strengthen the domestic heat treatment business. Heat treatment to increase the strength and fatigue resistance of metal is widely used for the parts for automobiles and construction machinery that require durability. DOWA THERMOTECH CO., LTD. engages in the manufacturing, sale, and maintenance of heat treatment furnaces and provides outsourced heat treatment services domestically and internationally. Currently DOWA THERMOTECH CO., LTD. provides services focusing on automobile parts at seven domestic bases and eight overseas bases for outsourced heat treatment services. In accordance with market trends, the Company actively constructs new factories and also expands existing factories abroad, while concentrating its production capabilities on highly competitive factories in Japan. The Hamamatsu‐kita plant is located in Hamamatsu City, an important center for the automobile industry. It began operations in 2013 as a manufacturing base for heat treatment furnaces and now has a comprehensive structure encompassing the development, design, and manufacturing as a main factory. It was decided that the factory will start to provide new outsourced heat treatment services using vacuum heat treatment*1 and carburization processing*2. For vacuum heat treatment, DOWA THERMOTECH CO., LTD. will start the transfer of facilities from the existing Toyota plant to new facilities in September of this year, with full‐scale operations slated to commence from May 2017. For carburization processing, where orders for automobile parts are expected to increase, DOWA THERMOTECH CO., LTD. will introduce new facilities for the operational launch from September 2017. The Toyota plant will be used as a logistical hub after the transfer of facilities to the Hamamatsu‐kita plant is completed. As a comprehensive heat treatment company, DOWA THERMOTECH CO., LTD. will continue to make an effort to concentrate domestic bases and strengthen competitiveness as well as to expand overseas businesses to respond to a broad range of customer needs. [Outline of Hamamatsu‐kita plant] 1. Name: Hamamatsu‐kita plant of DOWA THERMOENGINEERING CO., LTD. 2. Location: Hamakita‐ku, Hamamatsu City 3. History: 2013: Begins operations by integrating domestic heat treatment furnaces, design, and manufacturing bases 2016: Transfers the control of the development division and constructs a comprehensive structure for developing, designing, and manufacturing heat treatment furnaces Second half of 2016: Launches a new heat treatment factory 4. Area: 20,849.19 m2 5. Types of heat treatment: vacuum heat treatment and carburization processing *1: Processing is the improvement of metal features and brazing by applying heat to precision machinery parts using vacuum furnaces *2: Processing to increase strength and fatigue resistance by applying heat to automobile gears, for example, using an atmospheric gas furnace and to make the carbon penetrate the metal surface.