Asahi Holdings Group
Business Overview

These forecast performance figures are based on the information currently available to the company’s management and certain
assumptions judged rational. Accordingly, these might be cases in which actual results materially differ from forecasts of this report.
Copyright © Asahi Holdings, Inc. All rights reserved.

Company Overview

Copyright © Asahi Holdings, Inc. All rights reserved.

Company Overview
FoundedJuly 1952

Number of
Offices

Total of 81 sites (69 inside Japan/ 12 outside Japan)

Employees

1,597 (excluding Fuji Medical) *as of December 31, 2019

Revenue

JPY 128.7 billion*for the year ended March 2019

Capital

JPY 7.8 billion*as of December 31, 2019*as of March 31, 2019

(Business Segment)
Precious Metals
Business➢ Japan/Asia: Recycling of gold, silver, palladium, platinum and othermetals from the scraps containing precious metals collected fromvarious industries➢ North America: Mainly the refining of gold and silver from mines,
and other additional services

Environmental
Preservation
Business➢ Japan: Detoxification and other proper disposal, as well as recyclingof wastes that are difficult to handle from the various fields ofindustrial waste
2

Copyright © Asahi Holdings, Inc. All rights reserved.

• In 1952, we started a business recycling silver from photosensitive
material in a company named "Asahi Chemical Laboratory". Our
fields for collecting precious metals for recycling then expanded into
dental, jewelry, and electronics.
• Our Environmental Preservation Business started from collection ofphotographic effluents, and we have continued to expanded theitems and service areas through M&A.

Consolidated Financial Forecast(JPY in billion)

Previous Forecast

Revised Forecast(2019/10/29)(2020/1/31)

ChangeRevenue

135.0

135.0

-

Operating Income

19.0

19.0

-

Operating Income Ratio

14.1%

14.1%

-

Profit Before Tax

16.8

16.7

(0)

Profit Attributable to Ownersof Parent

10.2

9.4

(0.8)

Employees

1,647

1,597

(50)

Operating Income per Head

\11.5M\11.9M\+0.4M

EPS\259.22¥238.89(¥20.33)

Dividend Payout Ratio

46.3%

54.4%

+8.1%

ROE

14.6%

13.5%

(1.1%)

3

Copyright © Asahi Holdings, Inc. All rights reserved.

• This is a full-year earnings forecast for this year released on
January 31, 2020.
• All the estimates for operating income, earnings before tax, andincome for the current year are expected to be the best ever.
• The decrease in the number of employees is caused by thedeconsolidation of Fuji Medical Instruments Mfg. Co., Ltd., as
described later on. The operating income per employee, which is
our major internal guide, is expected to be 11.9 million yen/person.

Long-term Growth and Profit(JPY in billion)

Market Capital
110.0
100.0
90.0
80.0
70.0
60.0
50.0
40.0
2009/4

2010/4

2011/4

2012/42013/4

2014/4

2015/4

2016/42017/42018/4

Operating Income

2019/4(JPY in billion)

20.0
18.0

16.0
14.0

12.0
10.0

8.0
6.0
2009

2010

2011

2012

2013

※Excluding impact on impairment in FY2015 and FY2016
Latest forecast in FY2019

2014

4

2015

2016

2017

2018

2019

Copyright © Asahi Holdings, Inc. All rights reserved.

• This shows the transition of aggregate market value and operating
income.
• During the past ten years, the aggregate market value has
increased from 50 billion yen to more than 100 billion yen, and theoperating income is expected to grow from 8 billion yen to 19 billion
yen.
• The situation in recent years fulfills all elements that lead to sustain
future growth in profit, such as the thoroughness in price hedging
of precious metal recycling business, stable performance inenvironmental preservation business and establishment of a surplus
trend in North American business.

Business Restructuring with an Emphasis on Speed(Portfolio Innovation)
Business Creation
Cleaning

HD

PDP

2011

Taiwan2003

E-scrap

2013

Magnetic bodyShanghai

Malaysia
Photosensitive
material

Minting/carbon
in NA
2019

2018

2014

2011

Korea

1999

Liquid crystal
indiumL&H※

Refining
in NA

2006

2003

2000

1994

1952

Liquid crystal
indiumPDPHD
Magnetic body
2011

Business Withdrawal
5

2013

2017

Photosensitive
material

L&H※
2019

2018

Taiwan2018

Shanghai2018※ Life & HealthBusiness Segment
Copyright © Asahi Holdings, Inc. All rights reserved.

• To keep income stable and to sustain growth, we have withdrawn
from and restructured our businesses many times in the past, up
until today.
• We make decisions with an emphasis on speed, with profitability
and growth as the most important references, focusing on the life
cycle and market environment for each business.
• We did not exclude our original business of photographic materials,
Shanghai Asahi, and other businesses like indium used in LCDs thatlargely contributed to our performance. Without exception, for thebusinesses that we have decided to withdraw from, we have started
when the business was still making a profit.

Selection and Concentration”Life & Health Segment” has been discontinued in December 2019 in
response to the conclusion of an agreement on the equity transfer of Fuji
Medical Instruments, which constituted a core section of the Segment.

Up to FY2019 Q2

From FY2019 Q3

Precious Metals
Precious Metals

Asahi

Environmental
Preservation

Asahi
Environmental
Preservation

Life & Health

Concentrate management resources in the Precious Metals Businessand Environmental Preservation Business in order to further enhance
corporate value.
6

Copyright © Asahi Holdings, Inc. All rights reserved.

• Conventionally, the stock of Fuji Medical Instruments Mfg. Co., Ltd.,
which had been the core company in the "Life & Health" segment,
was transferred to a Taiwanese company expecting growth inoverseas markets. Consequently, the "Life & Health" segment was
abolished from the third quarter.
• From this point on, we will be focusing our management resourcesin the "Precious Metals Business" and the "Environmental
Preservation Business" segments to aim for improvement inenterprise value.

“The Asahi Way” - Both in Name and Reality

7

Copyright © Asahi Holdings, Inc. All rights reserved.

• Our group philosophy, "Asahi Way", is not just a phrase with no real
meaning.
• We have withdrawn from and restructured our businesses to keepon growing and to sustain profitability, and built proactive andconservative corporate governance, based on the principles statedin Asahi Way.
• We will remain faithful to stakeholder value, and continue ourefforts to improve enterprise value and promote SDGs.

Characteristics of Financial Position - Low-risk◆Consolidated Statement of Financial Position (as of December 31, 2019)(JPY in billion)

Debit
Operating Receivables
North Americanbusiness related

Credit126.2 Loans

127.0
North Americanbusiness related

105.3

107.9

20.9
OthersInventories
29.1 Other Liabilities
Precious Metals
28.3
Others0.8
Cash14.1 Equity
Property, plant and equipment, etc. 57.2

19.1
30.8

Total Assets

226.6

Others226.6 Total Liabilities and Equity8

68.8

Copyright © Asahi Holdings, Inc. All rights reserved.

• One of our financial characteristics is that the risk is low even if it isbased on assets.
• Loans are increasing greatly, and the same amount of operatingreceivables is included in the calculation. However, this does notmean the business is failing. Loans are the funds for a financial
service called "advanced trading" for the North American businessclients, and the corresponding operating receivables have practicallyno risk of bad debt, since the raw materials for precious metals arereceived from the client prior to the "advanced delivery".
• Inventories are mainly the stocks of precious metals and the
products in progress purchased in the precious metal recycling
business. Financially, they are considered as cash equivalents, so
our finance is practically in positive net cash.

◆Consolidated Statements of Cash Flows
Category

OperatingCF

Investment
CF

Financing
CF

Items
Profit before tax
Depreciation and amortization
OperatingNorth American
receivables
business
OthersOthers, net
Subtotal
North Americanbusiness
OthersPurchase of property, plant andequipment
Others, net
Subtotal
North American
Loans payables
business
OthersOthers, net
Subtotal
North Americanbusiness
OthersCash and cash equivalents
9(JPY in billion)

March 2019
13.4
2.3

December 2019
12.1
2.2

(25.8)(63.6)

3.7(29.5)(6.9)(20.6)

3.0(60.5)(9.6)(55.9)(25.8)(63.6)

5.2

7.7

(5.6)

(2.1)

0.1
(5.6)

0.1
(2.0)

22.9

63.7

(0.3)
22.6
(4.4)
18.3

(2.7)
61.0
(5.1)
56.0

22.9

63.7

(4.6)
16.3

(7.8)
14.1

Copyright © Asahi Holdings, Inc. All rights reserved.

• In the cash flow statement, our operating cash flow is negative justas with the statement of financial position, due to the expansion offinancial services in North America and a change in means of raisingfunds.

Non-financial Property (1) –Corporate Governance with Protective and Proactive Measures
Board of Directors
Comprises of 4 Executive Directors and 4 Audit
and Supervisory Committee Directors that
includes 3 Independent Outside Directors withexpertise. Evaluates the effectiveness every year
and the results are available on our website.

Asahi Holdings

Executive
Directors(4)

Comprises of 4 Directors,
including 3 Independent
Outside Directors
Audit/Supervise

Group
Executive
Committee
Internal
Control
Promotion
Meeting
Each industrial
company

Audit andSupervisory
Committee
Directors(4)

Audit Corporation

Board of Directors

Audit
Department

Joined by Audit
and Supervisory
Committee
members

Audit and Supervisory Committee
Aims to strengthen the supervisory function forbusiness execution by attending the executive
and management committee meetings of Group
companies and sharing their opinions from an
independent point of view.
* Introduced in the first year the Audit andSupervisory Committee members system that ispermitted by Japan’s Companies Act.
Training for Directors
Performs training for the Directors of Asahi
Holdings and each industrial company every year.
The topics are corporate governance, BCM,
SDGs, and so on.

SafetyManagement
Meeting

Management
meetings of eachcompany

Establishment of governance thatallows the Board of Directors totake risks properly

10

Copyright © Asahi Holdings, Inc. All rights reserved.

• As for corporate governance, we will build and maintain the current
system, especially focusing on "the ability for the Board of Directors toquickly correspond to changes and to take appropriate risks."

Non-financial Property (2) – Driving SDGs
“Totally Committed to Protecting the Natural Environment andPreserving Resources”

ESG

Environment

Precious Metals

Priority SDG - Related
Goals

Contents

Key Indicator (Target)

Expand precious metal
recycling

We will expand and promote precious metal
recycling globally in order to make more effective
use of limited global resources.

①Recycling Volume (410t by FY2030)②External contribution amount of CO2 reduction(1,465t by FY2030)

Supply precious metals inways that are friendly
to people, society, and theenvironment

We will promote responsible precious metals
management by expanding the supply of precious
metal products while protecting the environmentand human rights.

Conduct activities as acquiring certificate of various
industry organizations, etc.
(No numerical target)

Expand proper disposal ofwaste

We will strive to expand proper disposal of waste
as a waste disposal expert and work to help
realize a sustainable recycling society.

Volume of proper disposal of waste(500,000t by FY2030)

Reduce CO2 emissions

We will work to reduce CO2 emissions
group-wide.

CO2 Emissions(26% reduction compared to FY2015 by FY2030)

Enhance the system forwork-life balance anddiversity

We will strive to enhance job satisfaction by
improving the system to help diverse humanresources to succeed within the Group byreforming working styles, etc.

①Thorough implementation of the rest interval
system, at least 11 hours rest
(100％ in FY2020)②Usage rate of Holidays for Refreshment, at least
3 days consecutive leave(100％ in FY2020)③Percentage of women in managerial positions(Equal to male employees by FY2030)④Employment of people with disabilities(2.5% by FY2030)

Encourage and support
SDG-related activities

We will encourage and support employee activities
outside the Group's main business areas that
contribute to SDG achievement, including
individual and group volunteer activities.

Give an in-house award to excellent activities(No numerical target)

11

Copyright © Asahi Holdings, Inc. All rights reserved.

• "Totally Committed to Protecting the Natural Environment andPreserving Resources" has been our motto since before “Asahi Way”
was adopted.
• Our business itself contributes directly to global "sustainability"
through recycling of resources. In addition, we work with the Asahi
Way spirit of “Innovation and Challenge" in order to achieve thegoals set in each area of E/S/G.

◆High Recycling Rate in Environmental Preservation Business

RecyclingFire-proof bricks
Paving materials

Recycling

Landfill

76.2%

Fermentationand composting※FY2018 Actual
Glass cullet

Wood
chip

12

Copyright © Asahi Holdings, Inc. All rights reserved.

• The precious metal recycling business is completely a resource
recycling business, and the environmental preservation business isalso working to recycle resources under high standards.

×(Issuance of Green Bonds)
Issuance of green bonds is scheduled in March 2020 for capital investment (green project)effective for improving environment
A third-party evaluation is executed by a rating agency for green Bond qualification
Expected to acquire the highest evaluation of "GA1"
Accepting bank

MUFG Bank, Ltd.

Issued amount

JPY 5 billion

Period of term

5 years

Redemption method

Lump-sum repayment atmaturity

Interest rate of bonds

Annual rate of 0.110%

Rating classification

GA1 (Preliminary evaluation)

Use of fund

Capital investment for industrial waste incinerator at Kitakyushu/Hibiki Plantsof Asahi Pretec and Taniyama Rinkai Plant of Taiyo Chemical(Includes refinancing)Mar. 10: Submission of report for completion of third-party assessment operation
Mar. 25: Conditions determined
Mar. 31: Due date of payment
13

Copyright © Asahi Holdings, Inc. All rights reserved.

• In association with the introduction of global environment-friendly
equipment and facilities, we are planning to obtain necessary funds by
issuing green bonds in March 2020, and are expecting to get a highrating for the green bond qualification.
• The estimated green bond issuance amount is 5 billion yen, and theperiod is 5 years.

Precious Metals BusinessFY2019 Financial Forecast (announced on January 31, 2020)(JPY in billion)

Full year

FY2018Actual

FY2019Forecast

Revenue

87.8

113.0

Operating Income

12.0

17.1

Operating Income
Ratio

13.7％

15.1%

15
Copyright © Asahi Holdings, Inc. All rights reserved.

• In the full-year earnings forecast for this year released on January
31, 2020, both revenue and operating income for the Precious
Metals Business segment are expected to increase compared to lastyear.

Strategies in Precious Metals Business Segment
1) Further promotion of
globalization
2) Expansion of financial
services business3) Development ofdownstream business16

Copyright © Asahi Holdings, Inc. All rights reserved.

• The strategy for the Precious Metals Business segment may besummarized into three points:
1) Further promotion of globalization
2) Expansion of financial services business3) Development of downstream businessPrecious Metal Recycling Business in Asia
Asahi Pretec Korea► Business line: Precious metal recycling from dental and electric waste► Location: HQ and plant: Chungju, South Korea
Sales office: South Seoul, West Seoul, Busan, Gwangju► Topic: Hold 35％ of market share in dental materials

ASAHI G&S
► Business line: Precious metal recycling from electric materials and jewelry► Location: HQ and plant: Penang, Malaysia► Topic: Plant renovation and capacity strengthening in March 2020
Business Model

Clients(Electronic industry, jewelry,dental)Collection

Assay, refining,
finishing

payment

Sale

Market, etc.

Gold, silver, palladium,
platinum17

Copyright © Asahi Holdings, Inc. All rights reserved.

• As a part of globalization, the strategy in Asia is to deploy theprecious metal recycling business to other countries.
• We promote the precious metal recycling business by setting up theheadquarters/plants in Korea and Malaysia, and by having clientsfrom the fields of dental materials, electronic materials, and jewelry.
• We have achieved a share of 35% in the dental materials field in
Korea. This share did not decrease with the deterioration of JapanKorea relations, since the customer-based sales style has spread in
Korea just like in Japan.
• In Malaysia, the reconstruction of the plant aiming to enhance
production capacity is scheduled to be completed in March 2020,
and the Southeast Asia business will further expand centered on the
Malaysian site.

North America’s Refining BusinessAsahi Refining (Canada and USA)
► Business line: Precious metal refining and processing► Refining volume: Gold: 550t Silver: 2,200t► Location: USA - Salt Lake City, Suburb of Miami
Canada - Brampton► Highlights: • Refining company with world’s leading handling volume ofgold and silver, top market share in North America.
• Holding mint facility for product fabrication of coins, small
bars, etc.
• Long and strong relationship with major business partners.
Business Model

Clients(Mining companies, jewelry)Intake of raw
materials

Assay, fabrication,finishing

Product return andbilling of refining fee

18Gold, silver

Copyright © Asahi Holdings, Inc. All rights reserved.

• Asahi Refining, established through an M&A in March 2015, isrunning a refining business in the U.S. and Canada.
• 90% of the raw materials are from mines and are called Primarymaterials. The remaining 10% comes from jewelry scraps. It is oneof the world's top five refineries, and its production scale is the top
level in the world.
• Asahi Refining Florida Inc. was established through an asset
acquisition of Republic Metals in February 2019. This company has
a mint facility for manufacturing coins and small bars.

North American Refining Market Trends and Industry
Unit processing fee in down trend for both gold and silver,with its peak in 2011-12
Transition of processing fee
revenue for gold

March 2015
Asahi HD acquires gold and silver
subsidiaries from JM  Asahi Refining
USA Inc. and Asahi Refining CanadaLtd. established
July 2016
Tanaka HD acquires Metalor

2011年度FY2011

2012年度FY2012

2013年度FY20132014年度FY20142015年度FY20152016年度FY20162017年度FY20172018年度FY2018Transition of processing fee
revenue for silver

May 2017
Ohio Precious Metals closes
July 2017
Heraeus acquires Argor-Heraeus
November 2018
Republic Metals (Chapter 11) goesbankrupt
February 2019
Asahi HD acquires assets of Republic
Metals  Asahi Refining Florida Inc.
established

2011年度 FY2012
2012年度FY2011

2013年度FY20132014年度FY20142015年度
2016年度FY2015 FY201619

2017年度FY20172018年度FY2018

Copyright © Asahi Holdings, Inc. All rights reserved.

• The situation remains harsh for the North American refining market.
With its nearest peak at 2011-2012, the unit processing fee has
dropped for both gold and silver.
• As the level of profit is declining for mining companies (our main client
for refining), the demand to lower refining charges is becomingstronger, and combined with intensified competition with competingcompanies, it was inevitable to lower the refining charges.

Multiple Utilization of Refining Platform

Upstream

CarbonProcess

Jewelry
Separation

Advanced
Trading

Refining
Platform

Consignment Sales

Finance Service

Downstream

Green
Gold

Mint

Further expanding surplus (FY2017～) by diversifying source of profits
20

Copyright © Asahi Holdings, Inc. All rights reserved.

• We had a hard time making a profit in 2015 and 2016 with the decliningrefining charges. The entire industry was unstable.
• Under these circumstances, we made clear goals to "diversify source ofprofits in North America" in the 8th medium-term business plan, and madeefforts to develop new services with the refining business as its platform.
• One of those new services is the financial service. In "Advanced Trading," aplan is developed to eliminate the risk of bad debt along with the reduction offunding cost, and this became one of the major sources of business income
for Asahi Refining.
• In the downstream business field, we are focusing on the business to obtain
added value by providing green gold to luxury jewelry brands and thebusiness to manufacture coins and small bars to enhance added value using
metals as the material. We are blessed with business chances to provide
coins and small bars, since we have many clients dealing with mines andjewelry scraps, and we also have business with financial institutions.

• In the upstream business field, we are developing services to help refining
clients who need support. One is the service that enables the mine to processactivated carbon by itself. This carbon is used as an absorbent in crude
collection of gold ore after mining. The activated carbon absorbs mercury andother toxic elements along with gold, silver, and other valuables at the sametime, so it is valuable but difficult to handle. We are entrusted by the mining
companies to remove mercury from the used activated carbon and to collectprecious metals.

Representative Downstream Example: "Green Gold"
Acquisition and Renewal ofInternational Certification
Acquired LBMA (Au/Ag) and LPPM
(Pt/Pd) certificates in Japan, U.S.,
and Canada
Maintains high scores in annually
held analysis precision check(Proactive Monitoring)
Advanced Technology toPrevent Forgery

Provided regularly
to super-luxury
brands

ERP-based Traceability of Recycling
Scheduled to be provided from North American sites (Canada) in addition to
Asahi Pretec (Saitama)
21

Copyright © Asahi Holdings, Inc. All rights reserved.

• This is a representative example of downstream business, the "GreenGold".
• Green gold is a bullion created from raw materials with guaranteed
traceability, which ensures that there is no problem regarding antisocial/anti-human rights, such as money laundering, financing ofconflicts, illegal mining, environmental contamination and child labor.
• We are expanding the procurement of green gold as one of thematerials for the super-luxury jewelry brand to appeal to wealthypeople.
• The bullion of Asahi Pretec in Japan follows compliance, maintains
traceability, and with the approval of RJC (Responsible Jewellery
Council) as high-quality green gold, provides the bullion for luxury
jewelry brands. We are planning to newly start providing bullion from
North American sites, using this know-how and credibility.

Representative Example of Financial Services: "Advanced Trading"
1) For refining transaction, the contract delivery date is approximately 1 week from the arrival of raw
materials to return the refined metals
2) Depending on the financial circumstances of the client, it may be requested to return the metal before
the contract delivery date3) By meeting this request, "interest for the number of days delivered in advance" will be paid by the client

Asahi HD
(1) Arrival of raw materials
Clients(miningcompanies)(3) Advanced delivery(4) Finishing(2) Loan(5) Repayment

Financial
institutions(1): Arrival of raw materials“(1) Arrival of raw materials"
for metals from our clients(mining companies)(2)/(3): Loan/Advanced
deliveryWe get “(2) loans" fromfinancial institutions, thenmake “(3) advanced
delivery" to our clients(mining companies)(4)/(5):
Finishing/Repayment
Apply the metal that we “(4)finished" to “(5) repay" the“(2) loan" from the financial
institutions

4) The risk is contained since the advanced delivery is performed after the reception of raw materials
from the client
The financial service in North American is a safe model based on the refining businessto realize profits
22

Copyright © Asahi Holdings, Inc. All rights reserved.

• A representative example of financial services, "Advanced Trading", isdescribed here.
• In the refining business in North America, we will keep the deposits of
raw materials for precious metals from the clients. After performing
the refining operation in the plant, we will return the product metal tothe clients in approximately one week. However, there are aconsiderable number of clients who cannot wait for the delivery periodof approximately one week for the return of the product, and desire
an early return of the product metal for financing reasons.
• With this request from the clients, we will respond to the early returns
with interest paid, and gain interest income. There is no risk of bad
debt, since the raw materials for precious metals are deposited prior
to the advanced Trading.

(Select How to Get Loans for "Advanced Trading")
Two methods to get loans- Traditional "Metal lease" option- Our unique "Purchasing of metal with U.S. dollar loans from Japanese banks"
Preference of loan methods- Higher rate of selecting the traditional "Metal lease" option in the past
- Now, the "Purchasing of metal with U.S. dollar loans from Japanese banks"
option is mostly selected due to its cost advantage.
- This is assumed to be the same in the future as well.
Cost advantage of the "Purchasing of metal with U.S. dollar loans from Japanesebanks" option- The futures price for metal is almost always higher than the current pricesince it has more volume and weight (unlike stocks), and costs more, such as
for storage.
- For Advanced Trading, the metal is "purchased at the current price" by us.
At the same time, the arrived raw materials, a mortgage for advanced delivery,
which is sent from the client, are reserved to be "sold at futures price".
This makes marginal profits, which reduces the borrowing rate from Japanesebanks.
Our unique scheme to maximize the difference between the "lending rate" and the"borrowing rate".
23

Copyright © Asahi Holdings, Inc. All rights reserved.

• If we need to deliver product metals to clients before refining the raw
materials for precious metals into the product metals, then we needto procure product metals from elsewhere, using one of the following
methods.
• One method is to borrow the metal itself from the bullion bank. This iscalled "Metal lease". Another method is to purchase metal on themarket using the "U.S. dollar loan from Japanese banks" as the seedmoney.

• The latter method is developed by us, and there are no other refining
companies that use this method. The "Purchasing of metal with U.S.
dollar loans from Japanese banks" method has become more popularsince its funding cost is lower than the "Metal lease" method.

(Effect of Loan Methods on Financial Statements)
B/S

P/L

Metal lease

Loan is off-balance

Lease cost of metal is"operating expense"

Purchasing of metal
with U.S. dollar loans
from Japanese banks

Loan is on-balance(short-term loans payable/
operating receivables, etc.)

Marginal profit from sales of futuredelivery is "revenue"
Borrowing rate from Japanese banksis "financial expense"(Enlargement of B/S)
The change from "Metal lease" to "Purchasing of metal with U.S. dollar loans
from Japanese banks" may enlarge the balance sheet but not the risk
(Risk prevention)

No risk of loan loss for “advanced delivery", since it is performed after the receptionof precious metals from the client
24

Copyright © Asahi Holdings, Inc. All rights reserved.

• The effect is apparent on the financial statements after the "U.S.
dollar loan" method gained popularity over the "Metal lease" method
for the expansion of profits in financial services.
• On the profit and loss statement, the lease cost for the "Metal lease"method is included as an operating expense, and reduces theoperating income. On the other hand, the borrowing rate for the "U.S.
dollar loan" method is included as a financial expense, and will notaffect the operating income.

• Since the "U.S. dollar loan" method was used more than the "Metal
lease" method in the first half of 2019 in comparison with the first halfof 2018, the financial expenses increased and the difference between
the operating income and earnings before tax expanded.
• The statement of financial position shows great growth in"borrowings" and "operating receivables", but this does not mean thatthe financial condition has substantially deteriorated. The safety of"Advanced Delivery" does not change even if the loan method ischanged.

◆Reason of Increase in Current Assets and Current Liabilities(JPY in billion)

Category

Ended
March 31,
2019

Ended
December31, 2019

ChangeTotal Assets

160.3

226.6

+66.3

Current
Assets

113.8

188.5

+74.7

Non-current
Assets

46.5

38.1

(8.4)

Total Liabilities

92.5

157.7

+65.3

Current
Liabilities

89.7

153.2

+63.5

Non-current
Liabilities

2.8

4.6

+1.8

Total Equity

67.8

68.8

+1.0

Main reasons of the change

Trade and otherreceivables +59.7

Impact of the financial
services in NA, and changeof financing instrument

Short-term loans
payable ＋63.2

Impact of the financial
services in NA, and changeof financing instrument※Long-term loans payable included in non-current liabilities as of the end of March 2019 is transferred to current liabilities for a comparison purpose.

25

Copyright © Asahi Holdings, Inc. All rights reserved.

• This shows the effect of changing the loan method on thestatement of financial position.
• By comparing the statement of financial position at the end of
December 2019 with that at the end of March 2019, you can seethat "Trade and other receivables" for current assets increased by
59.7 billion yen, and "Borrowings" for current liabilities increased by
63.2 billion yen accordingly. These are both outcomes of "the effectof expanding financial services in North America and changing themeans of raising funds for metals".

◆Reason of Expansion of Negative Operating CF(JPY in billion)

Items

FY20193Q

Profit before tax

12.1

9.2

Depreciation andamortization

2.2

1.7

Category

Operating CF

Decrease (increase) intrade and other receivables

Impact of the financial services in NA
and change of financing instrument(cf.)
FY2018 3Q(26.7)

(9.6)

(6.4)

(55.9)(22.1)

(2.1)

(1.7)

Other, net

0.1

(0.0)

Subtotal(2.0)

Other, net
subtotal

Purchase of property,
plant and equipment

Investment CF(60.5)

Main reasons of the change(1.7)

Net increase (decrease) inshort-term loans payable

61.0

Other, net

(5.1)

(5.3)

Subtotal

56.0

19.4

Cash and Cash Equivalents

14.1

19.8

Financing CF

26

Impact of the financial services in NA
and change of financing instrument

24.7

Copyright © Asahi Holdings, Inc. All rights reserved.

• This shows the effect of changing the loan method on the cash flow
statement.
• "Trade and other receivables" for the operating cash flow in the ninemonths ended December 31, 2019 has decreased to 60.5 billion
yen. "Short-term loans payable" for the cash flows from financing
activities has increased to 61.0 billion yen accordingly. This is also"the effect of expanding financial services in North America andchanging the means of raising funds".

(Ref: Revenue Structure of Automobile Company A - FY2018)

Four wheel

Financial service

Two wheel

Power productIn terms of profit structure, the ratio of four wheel andfinancial service is the same27

Copyright © Asahi Holdings, Inc. All rights reserved.

• This shows the composition of sales for an automobile
manufacturer illustrated in a recently released finance magazine.
Note that the composition rate for financial services is the second
largest after the sales of four-wheel vehicles. The weight of financial
services is larger in the composition for profits. Although theinterest rate for four-wheel vehicles is in the range of 1%, it will bein the range of 3% combined with the financial services attached tothe sales of four-wheel vehicles.
• The car loan, which is a financial service deployed by automobile
manufacturers may appear to have a lower risk of bad debt, but it
can be said that the risk of bad debt is lower for the financial
service that we provide in North America, since we have raw
materials for precious metals kept in our plant. In addition, thedifference between the interest for loans and procurements is larger
for financial services that we provide in North America.

Enhancement of Added Value in Downstream[Increase the transaction with global companies
issuing mint and precious metal product brand]

28

Copyright © Asahi Holdings, Inc. All rights reserved.

• To increase added value to the downstream business, we areworking to strengthen our relationship with the issuers calledsovereign mints that issue coins not only in North Americancountries, but also in South Africa, Australia, New Zealand, andother States of the Commonwealth, where many people lovecollecting coins.
• We are also working to expand business with a precious metal
product brand that buys green gold at a high price.

Expansion of Global Platform[Enhance market control of refining businessin the oligopoly situation in the world](Penetration into Europe and India)

Be the No.1 Precious Metal
Refining Company in the world
29

Copyright © Asahi Holdings, Inc. All rights reserved.

• With the bankruptcy of Republic Metals in November 2018, ourlargest rival in North, Central, and South America, we were able toincrease the efficiency of the refining business with its costs fixed,by taking in the majority of the Republic Metals clients throughbusiness efforts. Also, with our increased market power, we wereable to gradually make the terms and conditions stricter for clientsor limit the transaction of impurities that increases the refining cost.
These also lead to improved profitability.
• We aim to increase value added to the downstream and upstream
business based on the gold and silver refining business in a larger
scale, with an increased number of refining clients for the growth offinancial services with high profit margins.
• Our goal is to increase the market share at a global level, andbecome the number one refining company in the world. We arepresently focusing on expanding to Europe and India.

(Supplement)
Precious Metal Recycling
Business

Copyright © Asahi Holdings, Inc. All rights reserved.

Strength of Precious Metal Recycling Business
1) Diverse and widely ranging field of transactions
inside Japan and in Asia
2) High market share in each field
3) Customer-based sales styleDentalJewelry

Catalyst

Collect alloys used at dental
clinics and dental laboratories
and recycle precious metals.

Recycle precious metals fromjewelry products in distribution
and manufacturing processes.

Recycle precious metals fromautomotive catalysts, chemical
catalysts, etc.

E-scrap

Precision Cleaning

Plating Treatment

Recycle precious metals fromelectronic components andprinted circuit board used inelectronic devices.

Recycle precious metals
through our precision cleaning
service of the manufacturing
equipment for Semiconductors
and Electronic components.

Recycle precious metals fromplating solutions withenvironment-friendly technology.

Electronics
Copyright © Asahi Holdings, Inc. All rights reserved.

• There are three strong points of our precious metal recycling
business:
1) Diverse and widely ranging field of transactions inside Japanand in Asia
2) High market share in each field
3) Customer-based sales style• Currently, our precious metal recycling business collects raw
materials from six main fields. In each field, we have a high market
share, due to our customer-based sales style.

Transaction Flow and Realization of Profits【E-scrap】(Manufacturer)
E-scrap (plate)Finishing

Refining

Assay(Purchasers/manufacturer)
Jewelry/processing waste/
personal property

Assay report(precious metal content analysis)【Precision Cleaning】

Return(Manufacturer)
Wastewater/listing〔Fee-based processing business〕【Plating Treatment】(Manufacturer)
Plaiting solutions

Precious and Rare Metal Market(Contract yield)

××

Precious
metal
Price

(Sale)
Charges－ (variable/fixed)

Qty. of
Preciousmetalanalyzed×(Actual yield)

Non-ferrous refining(Manufacturer/dismantler)
Unused and waste catalysts

Qty. of
Preciousmetalanalyzed

Sale

Trading companies/Manufacturers/【Catalyst】(Purchase)〔Collect and Purchase〕

Customers【Jewelry】

treatmentCollection(Clinic/laboratory)
Removed crowns and processing
waste

Inspection/Pre-【Dental】

×

Precious
metal
Price

Risk hedge by forward transactions based on the periods of work-in process (1 to 3 months) by products
collected (Purchase price per unit ≒ Sales price per unit)
32

Copyright © Asahi Holdings, Inc. All rights reserved.

• This is a diagram that shows the flow of precious metal recyclingtransactions, and how to achieve profits.
• There is no risk of bad debt caused by the fluctuation of quotations,since the forward sale corresponding to the refining period isreserved at the time the raw materials are collected, to make astable profit.
• There are two sources of profits for precious metal recycling: 1)"Various charges" that exceed the costs for operations and plants,
and 2) "actual yield" that exceed the "contract yield". The profit
from various charges will not be affected by the quotations. The
profit from actual yield will be affected by the quotations, but it will
not lead to loss as far as it exceeds the contract yield.

Straight from Technological Development to Commercialization

Technical Research Center➢ Assembly of Research & Development
Department, Industrial Technology
Department, and technical assistanceorganizations managing quality at each plantor intellectual properties company-wide➢ An Annual Achievement Presentation is heldwith the participation of business units inaddition to the management, to holddiscussions with commercialization in mind
Research & Development
Department (30 staff)

Research Team for New Technologies

Industrial Technology Department(20 staff)

Asahi Holdings
Technology Management
Department

Intellectual
properties
Qualityassurance

Research Team for New
Technologies➢ To stick to the long-term, exploratory research& development point of view, a special
research organization with direct connection
to Asahi Holdings is established33

Copyright © Asahi Holdings, Inc. All rights reserved.

• Our thorough technology development system supports "businessreforms emphasizing speed" and "withdrawing from and restructuringof business" explained at the beginning (this is not only limited to theprecious metal recycling business).
• We have our high-level technology departments assembled at theTechnical Research Center in Kobe City. The technical ideas born here
are always assessed from the point of view of commercialization andcontribution to profit. Those ideas that received a high rating will besent to launch or improve business where the parties concerned in thedevelopment of technology play the main role.

(Automobile Catalyst Business and E-scrap Business)
From 2003, Automobile Catalyst
Business

Automobile catalyst
sampling facility

By setting up a technical license from Johnson
Matthey, a technology to perform high-precision
analysis of palladium, platinum, and rhodium,
which are used, for instance, to purify exhaustgas from automobiles, is established andcommercialized.
The application is also expanded to a chemical
catalyst.

From 2011, E-scrap Business
The Research & Development Department ofTechnical Research Center itself created apilot machine, established the recycling flow,
and also introduced a new technology forsampling/analysis.
This is currently one of the importantbusinesses of Asahi Pretec, and deals withvarious materials received from inside andoutside of Japan.
34

E-scrap sampling facility
Copyright © Asahi Holdings, Inc. All rights reserved.

• The automobile catalyst business and E-scrap business are examples.
The technology department played the main role from planning tocommercialization.

(Precision Cleaning Business and U.S. and Canadian Gold and Silver
Refining Business)
From 2011, Precision Cleaning
Business
The cleaning business is established mainlyby the Research & Development Department,
aiming to collect precious metals from jigs
used in sputtering and deposition, and torecycle those jigs speedily.
This also provides services to meet the needsof client by using wet and dry methods fordifferent purposes.

Cleaning facility

From 2015, the U.S. and Canadian Gold andSilver Refining Business

Au melting facility

After the acquisition of two refining sites in North
America, this business contributed in improving theaccuracy of collection and product quality throughmajor refinement of silver electrolyzers in North
America, by merging the technology to clean raw
materials from mines owned by the local office in North
America and the technology to clean secondary raw
materials owned by Asahi Pretec.
35

Copyright © Asahi Holdings, Inc. All rights reserved.

• The start of the precision cleaning business was through theacquisition of a precision cleaning company for jigs used in thesemiconductor industries. We were able to reconstruct the businessand make it a highly profitable business, by adding technologies andfacilities that allow our technology department to strip off the precious
metals adhered to the jigs.
• Also, in North American precious metal refining business, we werealso able to improve business through major improvements of silver
electrolyzers in North America, by merging the technology to clean
raw materials from mines held by the local office in North America
and the technology to clean secondary raw materials owned by Asahi
Pretec.

Participation in Planning of National Projects
2011-122013-15

NEDO "Rare-Metal Substitute Materials and Usage Reduction
Development Project"
NEDO "Development of Technology to Recycle Rare-Earth Magnets from
Used Motors"
Awarded "Rare-Metal Recycle Award" from Japan Environmental
Management Association for Industry
Disassembly process and instrumentof motor used to drive HEV(1) Remove the rotor
from the motor

Used HEV
motor(2) Remove therotor core fromthe rotor(3) Apply heat todemagnetize(4) Remove theneodymium magnet
from the rotor core
Neodymiummagnet2016-17

JOGMEC "Project for Rationalization of Energy Usage and Establishmentof Infrastructure for Development and Promotion of Mineral Resources(FY2016)"59 industrial property rights obtained up to this point since 1991. There are many moreundisclosed inventions and designs, or know-how
36

Copyright © Asahi Holdings, Inc. All rights reserved.

• Although our technological activities are based on a thorough systemof "straight from technological development to commercialization", weestablished in 2018 a research team for new technologies in Asahi
Holdings to support long-term, exploratory research and development.
• We were awarded the "Rare-Metal Recycle Award" in 2015 for thedevelopment of rare earth collection technology and for participationin the national project.
• We have obtained 59 industrial property rights up to this point since1991. There are many more undisclosed inventions and designs, or
know-how.

Retention of Blue-chip Clients<Ex. Dental Business>

DentalHygienist
AgencyBusiness

Infectious
Medical
Waste
Collection(in progress)

DentalPrecious
Metal
Recycling

Metal
Account
SystemPoint
Return by
Loyalty

Linked to the same system(available on PC or smartphone)

DentalAlloy
Sales ※

Electrolysis
Water
Sales ※

37

※Withdrawn
Copyright © Asahi Holdings, Inc. All rights reserved.

• The "customer-based sales style" is our strong point, and it is
supported indirectly with weapons that use IT.
• In the example for dental business, a system called Asahi Metal
Account was built in 2012, using Amazon's cloud computing
services (AWS).

Asahi Metal Account System
Asahi Metal Account System[Guidance materials for clients]- Stores the amount of bullion in the precious metal scrap
deposited by the client on our Web passbook- Allows on-demand conversion at any timing of the client- Allows to select between cash payment or returning ofreal precious metal

Asahi Pretec[At any time by the client]
Metal Account System(Realmetal)or(Cash)[Precious metal
scrap deposit](Assay in theplant)

Dental office38

Copyright © Asahi Holdings, Inc. All rights reserved.

• The Asahi Metal Account System keeps the precious metals producedin the dental offices and dental laboratories in deposit, based on theanalysis results. This allows you to settle accounts whenever you want
to sell, by checking the account book for the amount of precious
metals deposited by the client on your PC or smartphone. In addition,
you can also select from either "settlement in cash" or "return in real
precious metal".
• This is popular among the clients who sell with a quotation for
precious metals in mind. We can deploy our collection activities
regardless of the conditions in quotations for precious metals. Also, inthe same system, the frequency of using our collection for each client
is recorded, and various customer return services appropriate for thecustomer loyalty are performed. This is a service based on the sameidea as the frequent flyer services of airlines.
• The Asahi Metal Account System and the customer loyalty programs
are both the industry's first systems, and there are no othercompanies that have systems like these.

Environmental Preservation
Business

Copyright © Asahi Holdings, Inc. All rights reserved.

FY2019 Financial Forecast (announced on January 31, 2020)(JPY in billion)

Full year

FY2018Actual

FY2019Forecast

Revenue

19.4

21.0

Operating Income

3.9

4.1

Operating Income
Ratio

19.8％

19.5%

40

Copyright © Asahi Holdings, Inc. All rights reserved.

• In the full-year earnings forecast for this year released on January
31, 2020, both the revenue and operating income for theEnvironmental Preservation Business segment are expected toincrease compared to last year.
• As “Life & Health Business” has been classified as discontinued
operation from FY2019 Q3, the figures of FY2018 Actual arerestated accordingly.

Strategies in Environmental Preservation Business Segment
1) Finding high added value in niche fields
2) Improvement of business efficiency by newly setting
up/renewing the incinerator
3) Sales and development based on accumulated know-how<Main handling method><Main solution line>

Wastereagents

Waste oiland sludge

Glass

Wood waste

Fire-proof
bricksOrganic
liquid waste
and sludge

・Large-scale incineration
・Neutralization
・Condensation and precipitation
・Cyanide decomposition
・Oil-water separation
・Sorting, compressing, crushing・Kneading・Concreting

41
Copyright © Asahi Holdings, Inc. All rights reserved.

• The strategy for the environmental preservation business segment
may be summarized into three points:
1) Finding high added value in niche fields
2) Improvement of business efficiency by newly setting
up/renewing the incinerator
3) Sales and development based on accumulated know-how

Realization of High Added Value in Niche Fields

Category

No.

Total

520

Employees

Sites

Sales

151

Logistics

72

Total
Plant
Total

Vehicles

42

37
16
336

Big size

62

Trailer8

Copyright © Asahi Holdings, Inc. All rights reserved.

• Shown here are our Group's sites for environmental business.
Licenses are acquired for collection, transportation, andintermediate treatment of most types of industrial waste andspecially controlled industrial waste. Many businesses with highadded value are deployed here, including the detoxification of waste
reagents and the recycling of refractory lining.

×

高い再資源化率(M&A Results and High Return)(JPY in million)

Company

When
Acquired

InitialInvestment

Cumulative
FCF

Sansho (JW Yokohama)

2001

180

1,700

Nihon Chemitec (JW Saitama)

2004

1,030

7,700

Iyotec (JW Kobe-nishi Center)

2006

450

550

Taiyo Chemical

2007

1,190

2,480

Fuji Rozai

2008

1,410

1,650

JW Glass Recycling

2009

1,370

1,380

Ecomax (JW Shonan)

2010

900

1,480

Inter Central

2012

2,080

1,150

※As of March 201943

Copyright © Asahi Holdings, Inc. All rights reserved.

• The business properties for environmental preservation are a mix ofa businesses that derive from the business of photographic
materials and have grown organically, and a business acquired
through M&A. In the organization, the environmental businessdepartment of Asahi Pretec is mainly organic, and Japan Waste ismainly made from M&A.
• The "initial investment" in this table includes intangible assets at thetime of acquisition. Many M&A businesses have supported thegrowth of environmental preservation business while providing highreturns.

Efficiency Increase by New construction/Renewal of Incinerator

2007 Acquired incinerator businessin Kagoshima (Ijuin) andKitakyushu (Moji) through M&A2018 Installation of new incinerator
in Kagoshima (Taniyama)2020 Renewal and capacity improvement of
incinerator in Kitakyushu (Moji)
2021 Installation of new incinerator in
Kitakyushu (Hibiki)
Aim to secure further incinerators in the 2020s
44

Copyright © Asahi Holdings, Inc. All rights reserved.

• The incinerator in the Kyushu district contributed particularly in thesize and efficiency of the environmental preservation business.
• They are all acquired through M&A, and through the accumulationof business know-how, we are standing at a new stage to set up a
new incinerator, to perform a major update, and to promote
addition of functions such as heat recovery and power generation.
• We aim to secure further incineration facilities in the 2020s.

Sales & Development Based on Accumulated Know-How
Unique Network Type with
Material and Immaterial Assets Mixed

General Standalone Type with
Facility and its Permission

Largest sales force in industry➢ 150 sales representatives nation-wide➢ Approximately 80 staff in Asahi Pretec and 70 staff inJapan Waste

x Details of business determined bypermissions and authorizations
x Facility depending on the plant
manufacturer
x Standby type of sales

Advanced mobility➢ Acquired licenses for the collection andtransportation of industrial waste, including speciallycontrolled industrial waste, for all 47 prefectures andordinance-designated cities➢ 40 sites of group companies in Japan and 300
transport vehicles
High reliability and customer focus➢ A rare listed company in the field of industrial waste➢ Acquired certificate of "superior industrial waste disposal contractor" from the Ministry of
the Environment in all 47 prefectures and ordinance-designated cities➢ Recommends client-oriented alliance with other non-group companies nationwide

The sales representative with consulting ability further evolves
the system to provide one-stop solution to various waste needs
45

Copyright © Asahi Holdings, Inc. All rights reserved.

• Objectively, there are no other industrial waste companies like us that
allocate 150 permanent employees throughout the country for thesale of industrial waste business (excluding sales assistants anddistribution specialists), or have licenses for collection andtransportation all over the country, and also have over 300 vehicles
for road transportation.
• However, what makes us truly unique (one and only) in this industry
is that we provide one-stop solutions to a variety of waste needs, bydeploying industrial waste business independent of our own licenses
and facilities.

Providing One-stop Solution
Provide broad solution sales through ①Our own plant, ②Group companies’ plants,
and ③Business partners’ plants

Emission
CompanySales

Our Plants

①

Group
Companies’
Plants②Company
X

Multi vender

Asahi Holdings GroupOne stop③
CompanyY

46

Copyright © Asahi Holdings, Inc. All rights reserved.

• The main point of the mechanism for providing one-stop solutions isthat the salesperson with know-how as a consultant can not only
fully utilize various licenses and facilities owned by Asahi Pretec andJapan Waste, but can also make sales proposals without being
restricted by our own licenses and facilities.
• Because we are able to create a flexible sales front like this, we canmake greater use of this potential, even when any type ofstandalone facility is acquired in future M&A, based on the knowhow and affluent customer assets. As a result, it leads toguaranteeing a high return for our M&A.

Expansion of Market Presence(JPY in billion, FY2018)

Company

Revenue

Profit※Ratio

Company A

72.2

14.7

20.4％

Company B

51.3

9.1

17.7％

949 Earnings summary (listed)

Company C

32.7

1.8

5.5％

1,009 Sanpai net (non-consolidated)

Company D

32.3

2.1

6.5％

1,277 Earnings summary (listed)

Company E

28.0

2.4

8.6％

609 Sanpai net (total of three companies)

JW＋Asahi Pretec

16.9

2.9

17.2％

Revenue: JPY 17.2 billion
527 Operating income: JPY 3.5 billion
Group of listed company

Company F

15.0

2.5

16.7％

540 Sanpai net (non-consolidated)

Company G

13.8

2.3

16.7％

582 Sanpai net (non-consolidated)

Company H

10.6

1.4

13.2％

361 Sanpai net (non-consolidated)

JW Group

10.5

1.6

15.2％

352

Company I

7.1

0.4

5.6％

Asahi Pretec
Environmental
Preservation Division

6.4

1.2

18.8％

Company J

4.1

0.1

2.4％

Employees

Information Sources

1,999 Website

150 Sanpai net (non-consolidated)
175
262 Sanpai net (non-consolidated)※Operating income or ordinary income

47

Copyright © Asahi Holdings, Inc. All rights reserved.

• We will integrate the environmental preservation businesses thatare currently divided into Asahi Pretec and Japan Waste in the
future, and we are confident that we will continue to grow as apromising brand in the industrial waste industry, by clearly settingout the corporate identity that promotes proposal capabilities andreliabilities.