Consolidated Financial Statements
Toho Zinc Co., Ltd.
and Consolidated Subsidiaries
For the year ended March 31, 2021
with Independent Auditor’s ReportToho Zinc Co., Ltd. and Consolidated Subsidiaries
Contents to Consolidated Financial Statements

Independent Auditor’s Report-------------------------------------------------------------

1

Consolidated Balance Sheet ---------------------------------------------------------------

6

Consolidated Statement of Operations---------------------------------------------------

8

Consolidated Statement of Comprehensive Income -------------------------------------

9

Consolidated Statement of Changes in Net Assets-------------------------------------

10--------------------------------------------------

12

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements--------------------------------------------

14

Independent Auditor’s Report

The Board of Directors
Toho Zinc Co., Ltd.

OpinionWe have audited the accompanying consolidated financial statements of Toho Zinc Co., Ltd.
and its consolidated subsidiaries (the Group), which comprise the consolidated balance sheet
as at March 31, 2021, and the consolidated statements of income, comprehensive income,changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in allmaterial respects, the consolidated financial position of the Group as at March 31, 2021, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independentof the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of the audit of the consolidated financial statements as awhole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion
on these matters.

1

Recoverability of deferred tax assets
Description of Key Audit Matter

Auditor’s Response

The Company has recorded deferred tax
assets before offsetting against deferred tax
liabilities of ¥2,364 million, as of March 31,
2021, described in Note 1(s)(1)
Recoverability of Deferred Tax Assets. Of
these, deferred tax assets before offsetting
against deferred tax liabilities recorded by
Toho Zinc Co., Ltd. (“Toho Zinc”) amounted
to ¥704 million. The recoverability ofdeferred tax assets is assessed for future
temporary differences and tax loss
carryforwards, through estimating taxable
income before temporary differences basedon future earning power, etc. Estimates of
future taxable income are based on futurebusiness plans, and important assumptions
are market conditions such as metal prices
and foreign exchange rates, and purchasing
conditions.

In considering the recoverability of Toho
Zinc’s deferred tax assets, we conducted our
audit procedures mainly as follows:・Regarding the balance of future deductible
temporary differences and tax loss
carryforwards, we examined the schedulingof the timing when they are expected to be
utilized.
・In order to assess estimates of futuretaxable income, we considered theunderlying future business plan. In
considering the future business plan, we
considered its consistency with the latest
budget approved by the Board of Directors.

・To assess the effectiveness of the
management’s estimation process indeveloping business plans, we comparedbusiness plans for previous years and actual
results.
The determination of the recoverability of
Toho Zinc’s deferred tax assets involves ・We made inquiries of management about
uncertainty as to future business plans andmarket conditions such as metal prices andrequires management judgment. We therefore
foreign exchange rates, which are important
have determined this to be a key audit matterassumptions included in future businessfor the year ended March 31, 2021.
plans, and purchasing conditions madecomparisons with the results of past trend
analysis.
・We examined management’s evaluation of
uncertainty reflecting a certain level of riskin the business plan.

2

Impairment loss on fixed assets in Mineral Resource business
Description of key audit matter

Auditor’s Response

As described in Note 1(s). Significant
Accounting Estimates, (3). Impairment loss on
fixed assets in Mineral Resource business, theCompany recorded an impairment loss of¥1,491 million on fixed assets in the Mineral
Resource business during the fiscal year ended
March 31, 2021.
In considering impairment loss on fixed
assets in the Mineral Resource business, theCompany measures the recoverable amount of
the asset group based on value in use. The
future cash flows used to calculate value in use
are based on the business plan for thefollowing fiscal year. Important assumptions
used in formulating the business plan include
information on external factors such as thebusiness environment (market conditions suchas metal prices, foreign exchange rates, andpurchasing conditions, etc.), production
volume, growth rate and discount rate.

For auditing the impairment of fixed assets
in the Mineral Resources Business, we haveengaged our constituent unit team andconducted our audit procedures mainly as
follows:
・We have engaged valuation specialists fromour network firm to review the productproduction and growth rate assumptions
used in the calculation of future cash flows,which are assumptions for the value in use
calculated by the Company.
・We made inquiries to management aboutmarket conditions such as metal prices andforeign exchange rates, which are important
assumptions included in future businessplans, and purchasing conditions and madecomparisons with the results of past trend
analysis.
・We performed a sensitivity analysis on the
discount rate adopted by the Company.

The above significant assumptions involve
uncertainties and require management
judgment. We therefore have determined thisto be a key audit matter for the year ended
March 31, 2021.

Responsibilities of Management, the Audit and Supervisory Committee for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, andfor such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting
principles generally accepted in Japan, matters related to going concern.
The Audit and Supervisory Committee is responsible for overseeing the Group’s financial
reporting process.

3

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, andto issue an auditor’s report that includes our opinion. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of
the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentationin accordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of thefinancial statements in Japan, and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

4

From the matters communicated with the Audit and Supervisory Committee, we determine
those matters that were of most significance in the audit of the consolidated financial statementsof the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when,in extremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected to outweighthe public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group whichis required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2021 are presented solely for convenience. Our audit also included
the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 2 to the consolidated financial
statements.

Ernst & Young ShinNihon LLC
Tokyo, Japan
June 29, 2021

Akira Sato
Designated Engagement Partner
Certified Public Accountant

Yasuhito Tateishi
Designated Engagement Partner
Certified Public Accountant

5

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31,2021
2020
(Millions of yen)

AssetsCurrent assets:
Cash and time deposits (Notes 14 and 16)
Notes and accounts receivable, trade (Note 14)
Electronically recorded monetary claims (Note 14)
Inventories (Note 3)
Other current assets
Less: Allowance for doubtful accounts
Total current assets¥

Property, plant and equipment:
Buildings and structures (Notes 5 and 7)
Machinery and equipment (Notes 5 and 7)
Land (Notes 4 and 7)
Leased assets
Construction in progress
Less: Accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Investment securities (Notes 14 and 15)
Investments in unconsolidated subsidiaries and associates(Note 6)
Net defined benefit asset (Note 8)
Deferred tax assets (Note 11)
Mining rights (Note 5)
Other assets
Less: Allowance for doubtful accounts
Total investments and other assets

Total assets¥

2021(Thousands of
U.S. dollars)(Note 2)

5,934 ¥
14,061
1,412
33,1002,471(0)56,9798,207 $
10,655231
35,0065,201(0)59,301

24,20377,625
16,615211
627
119,283(83,304)
35,97825,581
81,736
17,188762
494
125,764(86,725)
39,038

218,616
701,156
150,076
1,905
5,663
1,077,436(752,452)
324,975

1,973

2,165

17,821

6,037
723
393
10,1172,319(888)
20,676

3,807
1,293
10,9571,657(887)
18,99354,5296,530
3,549
91,382
20,946(8,020)186,758

117,333$ 1,026,420

113,635¥

53,599127,007
12,754
298,979
22,319(0)514,668

6

March 31,
2021
2020
(Millions of yen)

Liabilities and net assets
Current liabilities:
Notes and accounts payable, trade (Note 14)
Short-term borrowings (Notes 7 and 14)
Current portion of long-term debt (Notes 7 and 14)
Commercial papers (Notes 7 and 14)
Lease obligations (Note 7)
Accrued income taxes
Accrued expenses
Other current liabilities
Total current liabilities¥

Long-term liabilities:
Long-term debt (Notes 7 and 14)
Lease obligations (Note 7)
Deferred tax liabilities (Note 11)
Deferred tax liabilities related to land revaluation (Notes 4
and 11)
Net defined benefit liability (Note 8)
Provision for environmental measures
Provision for loss on business of subsidiaries and associates
Asset retirement obligations (Note 9)
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets (Note 10):
Shareholders’ equity:
Common shares:
Authorized – 26,400,000 shares
Issued– 13,585,521 shares
Capital surplus
Retained earnings
Less: Treasury shares, at cost – 7,346 shares in 2021 and
7,162 shares in 2020
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on other securities
Deferred (losses) gains on hedges
Revaluation reserve for land (Note 4)
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

¥

6,217
23,883
7,586
2,000
25
591
3,687
2,597
46,589¥6,890
24,101
7,848
4,000
24
172
4,698
2,953
50,6902021(Thousands of
U.S. dollars)(Note 2)$56,155
215,725
68,521
18,065225
5,338
33,30323,457
420,820

16,43149
196

20,486624
219

148,414
442
1,770

4,173
141
201
102
3,871
411
25,581
72,171

4,345
206
223
102
3,726
399
30,33481,024

37,693
1,273
1,815
921
34,965
3,712
231,063
651,892

14,6309,876
7,546

14,6309,876
1,648

132,147
89,206
68,160(30)
32,022(30)
26,125(270)
289,242

423
(120)
8,608
56
473
9,441
41,464
113,635 ¥

207
3,820
1,036
(1,083)
8,997
77,752
58
505
(116)
4,272
10,18385,27636,309374,528
117,333 $ 1,026,420

The accompanying notes are an integral part of these financial statements.

7

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Operations
Year ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Net sales
Cost of sales
Gross profit (loss)¥ 103,469
90,03013,439Selling, general and administrative expenses:
Transportation expense
Salaries and wages
Retirement benefit expenses
Provision of allowance for doubtful accounts
Depreciation
Research and development costs
Provision for environmental measures
Other
Operating income (loss)
Other income (expenses):
Interest and dividend income
Interest expenses
Share of gain (loss) of entities accounted for using equity method
Foreign exchange gains (losses)
Commission fee
Environmental expenses
Gain on sales of property, plant and equipment
Loss on retirement of property, plant and equipment
Impairment loss on fixed assets (Note 5)
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Loss on valuation of investment securities
Gain on valuation of derivatives
Gain on settlement of accounts payable
Royalty income
Subsidy for employment adjustment
Other, net
Profit (loss) before income taxes
Income taxes (Note 11):
Current
DeferredProfit (loss)
Profit (loss) attributable to owners of the parent¥¥

97,445103,073(5,628)$934,594813,205
121,389

3,398
1,477
53
0
184
146
2,282
7,544
5,894

3,823
1,898
46
236
208
162
187
2,024
8,588
(14,217)30,692
13,341
478
0
1,661
1,318
20,612
68,141
53,238

98
(558)
1
563
(183)
(701)
888
(179)
(2,024)
281
2,671
128
171
5
1,162
7,057

115
(449)
(44)
(468)
(391)
(39)
36
(273)
(3,172)
11
(55)
334
177
537
(3,682)(17,900)

885(5,040)9
5,085(1,652)(6,331)8,020(1,616)(18,281)
2,538
24,126
1,156
1,544
45
10,49563,743

710
838
1,549
5,508
5,508

184
279
464
(18,364)¥ (18,364)

6,413
7,569
13,99149,751$49,751(U.S. dollars)(Note 2)(Yen)
Per share:
Profit (loss) – basic¥

405.67¥50.00
Cash dividends (Note 10)
The accompanying notes are an integral part of these financial statements.

¥ (1,352.50)

$

3.66

¥

$

0.45

0.00

8

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Profit (loss)

¥

5,508

Comprehensive income (loss)¥

215(1,156)
(2)
590
(352)
5,155

Comprehensive income (loss) attributable to:
Owners of the parent
Non-controlling interests¥

Other comprehensive income (Note 18):
Net unrealized gains (losses) on other securities
Deferred (losses) gains on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive (loss) income

5,155
–

¥

(18,364) $49,751

¥

(449)
925
(122)
(230)
122
(18,241) $1,942(10,441)(18)
5,329(3,179)46,563(18,241) $–46,563–¥

The accompanying notes are an integral part of these financial statements.

9

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Shareholders’ equity
Number ofshares ofcommonshares issued(Thousands)

Commonshares

–

–

–

–

–

–

Balance as of March 31, 2020
Dividends of surplus
Profit attributable to owners of the parent
Acquisition of treasury shares
Reversal of revaluation reserve for land
Net changes in items other than those inshareholders’ equity

13,585––––

14,630
–
–
–
–

9,876
–
–
–
–

1,648
–
5,508
–
389

(30)
–
–
(0)
–

26,125
–
5,508
(0)
389

¥

–
14,630

¥

¥

9,876
–
–
–
–

–
9,876

¥

¥

20,963(950)(18,364)
–
(0)

–
7,546

¥

¥

(30)
–
–
(0)
–

Total
shareholders’equity13,585–––––
13,585

14,630––––Retained
Treasury
earnings
shares (*)(Millions of yen)

Balance as of April 1, 2019
Dividends of surplus
Loss attributable to owners of the parent
Acquisition of treasury shares
Reversal of revaluation reserve for land
Net changes in items other than those inshareholders’ equity

Balance as of March 31, 2021¥

Capitalsurplus

–
(30)

¥

¥

45,440(950)(18,364)(0)(0)–
32,022

Shareholders’ equity
CommonsharesBalance as of March 31, 2020
Dividends of surplus
Profit attributable to owners of the parent
Acquisition of treasury shares
Reversal of revaluation reserve for land
Net changes in items other than those inshareholders’ equity
Balance as of March 31, 2021

$ 132,147–––––$ 132,147

CapitalRetained
Treasury
surplusearnings
shares (*)(Thousands of U.S. dollars)(Note 2)$$

89,206–––––89,206$$

14,885–49,751–
3,513–
68,160$$Total
shareholders’equity

(270)
–
–
(0)
–

$ 235,976–
49,751
(0)
3,513

–
(270)

–
$ 289,242

10

Accumulated other comprehensive incomeNet
unrealized
gains onothersecurities
Balance as of April 1, 2019
Dividends of surplus
Loss attributable to owners of theparentAcquisition of treasury shares
Reversal of revaluation reserve for land
Net changes in items other than thosein shareholders’ equity¥

Balance as of March 31, 2020
Dividends of surplus
Profit attributable to owners of theparentAcquisition of treasury shares
Reversal of revaluation reserve for land
Net changes in items other than thosein shareholders’ equity
Balance as of March 31, 2021

¥

657
–

Deferred(losses)
gains onhedges¥110–

Foreign
RemeasureRevaluation
currency
ments ofreserve fortranslation
definedland
adjustment benefit plans(Millions of yen)
¥
8,997
¥
180 ¥
113
–
–
–

Total
accumulated
othercomprehensive
income¥10,060–Total
net assets¥

55,501
(950)

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

(18,364)
(0)
(0)

(449)

925

0

(122)

(230)

122

122

207
–

1,036
–

8,997
–

58
–

(116)
–

10,183–36,309
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

5,508
(0)
389

(741)
9,441

(741)
¥ 41,464

215
423

¥

(1,156)
(120)

¥

(389)
8,608

¥

(2)
56

590
473

¥

¥

Accumulated other comprehensive incomeNet
unrealized
gains onothersecurities

Deferred(losses)
gains onhedgesBalance as of March 31, 2020
Dividends of surplus
Profit attributable to owners of theparentAcquisition of treasury shares
Reversal of revaluation reserve for land
Net changes in items other than thosein shareholders’ equity$$

Balance as of March 31, 2021

$

1,869
–
–
–
–
1,942
3,820

$

Total
Foreign
Remeasureaccumulated
Revaluation
currency
ments ofother
reserve fortranslation
definedcomprehensive
land
adjustment benefit plansincome(Thousands of U.S. dollars)(Note 2)Total
net assets

9,357
–

$ 81,266–

91,979–$ 327,964
–

–
–
–

–
–
–

–
–
–

49,751(0)
3,513(10,441)(1,083)(3,513)$ 77,752(6,693)85,276(6,693)$ 374,528

$

523
–

$

–
–
–
$

(18)
505

(1,047)
–

$

–
–
–
$

5,329
4,272

$

(*) There were 7,346 and 7,162 treasury shares as of March 31, 2021 and 2020, respectively. (Note 10)

The accompanying notes are an integral part of these financial statements.

11

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Cash flows from operating activities:
Profit (loss) before income taxes
Depreciation
Impairment loss on fixed assets
Increase in allowance for doubtful accounts(Increase) decrease in net defined benefit asset
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Foreign exchange (gains) losses
Share of (profit) loss of entities accounted for using equity method
Net (profit) loss on sales and retirement of property,
plant and equipment
Gain on sales of intangible assets(Increase) decrease in notes and accounts receivable, trade
Decrease in inventories(Decrease) increase in notes and accounts payable, trade
Loss on valuation of investment securities
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates (Note 16)
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refunded
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of intangible assets
Proceeds from sales of intangible assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for loans receivable
Proceeds from collection of loans receivable
Purchases of shares of subsidiaries and associates
Payments for investments in capital of subsidiaries and associates
Proceeds from sales of shares of subsidiaries resulting in change inscope of consolidation (Note 16)
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net (decrease) increase in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Decrease in commercial papers
Cash dividends paid
Other, net

¥

7,057
4,594
2,024
0
(723)
735
(98)
558
(489)
(1)

¥ (17,900)
5,002
3,172
237
203
(222)
(115)
449
276
44

(450)
(259)
(4,486)
1,910(1,486)(281)(2,671)
(852)
5,079
115
(555)
(327)
4,313

244
4,906
7,284
651
55
(11)
1,991
6,270
92
(461)
821
6,723

(4,064)(2,339)(40,520)
17,252(13,422)(2,538)(24,126)(7,695)45,876
1,038(5,013)(2,953)
38,957(2,732)
1,254(2,099)
1,248
(3)
787
739
(2,005)-(3,086)93(3,236)(3)
57(1,618)(2,714)(663)(24,677)
11,326(18,959)
11,272
(27)
7,108
6,675
(18,110)
-

3,011
(155)
45

(247)
(11,418)

27,197(1,400)
406

(199)
3,527
(7,859)(2,000)(81)

12,251
9,510(11,130)(7,000)(950)(21)(1,797)31,858(70,987)(18,065)
(731)

–

$

63,74341,49518,281
0(6,530)
6,638
(885)
5,040
(4,416)(9)

12

Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 16)(6,613)

2,660(59,732)(17)(2,273)8,207¥ 5,934(5)(2,041)
10,248¥ 8,207(153)(20,531)
74,13053,599$The accompanying notes are an integral part of these financial statements.

13

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2021

1.

Summary of Significant Accounting Policies(a) Basis of presentation
Toho Zinc Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account inconformity with accounting principles generally accepted in Japan, and its foreign subsidiaries maintaintheir books of account in conformity with International Financial Reporting Standards (“IFRS”) or thoseof their countries of domicile.
The accompanying consolidated financial statements of the Company and its consolidated subsidiaries(collectively, the “Companies”) are prepared on the basis of accounting principles generally accepted inJapan, which are different in certain respects as to application and disclosure requirements of IFRS, andare compiled from the consolidated financial statements prepared by the Company as required by the
Financial Instruments and Exchange Act of Japan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current
year’s presentation.
As permitted under the Financial Instruments and Exchange Act, amounts of less than one million yen
have been omitted. As a result, the totals shown in the accompanying consolidated financial statements(both in yen and in U.S. dollars) do not necessarily agree with the sums of the individual amounts.
Certain items presented in the consolidated financial statements submitted to the Director of Kanto Local
Finance Bureau in Japan have been reclassified in the accompanying consolidated financial statements
for the convenience of readers outside Japan.
(b) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries that are controlled by the Company. Under the effective control approach, allsignificant majority-owned companies are to be consolidated. Additionally, companies in which shareownership equals 50% or less may be required to be consolidated in cases where such companies are
effectively controlled by other companies through the interests held by a party who has a close
relationship with the parent. All significant intercompany transactions and accounts are eliminated inconsolidation.
(c) Foreign currency translation(1) Foreign currency transactions
All receivables and payables denominated in foreign currencies are translated into Japanese yenat the exchange rate prevailing at the balance sheet date.

14

(2) Foreign currency financial statements
Assets and liabilities of the foreign consolidated subsidiaries are translated into Japanese yen at
the current exchange rate prevailing at the balance sheet date. Revenue and expense accounts
are translated at the average exchange rate in effect during the year. Foreign currency translation
adjustments are included in net assets.
(d) Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of cash flows are composed of cash on hands,bank deposits withdrawable on demand and short-term investments with original maturities of threemonths or less and minor risk for the fair value fluctuation.
(e) Inventories
Merchandise, finished goods, semi-finished goods, work in process and raw materials are stated at thelower of cost or net selling value, for which cost is primarily determined by the first-in first-out method.
Supplies are stated at the lower of cost or net selling value, for which cost is determined by the moving
average method.
(f) Financial instruments(1) Investment securities
Marketable securities classified as other securities are carried at fair value based on the average ofmarket price during the last month of the fiscal year with any changes in unrealized gains or losses,
net of income taxes, included directly in net assets. Cost of securities sold is determined by themoving average method. Non-marketable securities classified as other securities are carried atcost determined by the moving average method.
(2) Derivatives
The Company has entered into various derivative transactions, including forward foreignexchange contracts, interest rate swaps and metal forward contracts, in order to manage certain
risks arising from adverse fluctuations in foreign currency exchange rates, interest rates andcommodity prices, respectively.
All derivatives are recognized in the balance sheet at fair value, with changes in fair value included
in profit or loss for the period in which they arise, except for derivatives that are designated as“hedging instruments” (see Note 1. (f) (3) Hedge accounting below).
(3) Hedge accounting
Gains or losses arising from changes in fair value of the derivatives designated as “hedging
instruments” are deferred as an asset or liability and included in profit or loss in the period during
which the gains and losses on the hedged items or transactions are recognized.
Hedging instruments are derivative transactions including metal forward contracts, interest rate
swaps. The related hedged items are raw materials and finished goods exposed to commodity
price fluctuation risk and interest payments on debt loan, respectively.
The Company has a policy to utilize the above hedging instruments in order to reduce theCompany’s exposure to the risks of fluctuations in prices, interest rates and cash flows.

15

The Company evaluates the effectiveness of its hedging activities by reference to the accumulated
gains or losses on the hedging instruments and the underlying hedged items from thecommencement of the hedging transactions regarding metal forward contracts and foreign
currency deposits. Hedge effectiveness is omitted for interest rate swaps which qualify for hedge
accounting and meet specific criteria.
(g) Property, plant and equipment and depreciation
Property, plant and equipment, except for leased assets, are stated at cost and mainly depreciated by thestraight-line method over the estimated useful lives of the respective assets.
(h) Intangible assets and amortization
Mining rights are mainly amortized by using the unit-of-production method. Other intangible assets
are mainly amortized by using the straight-line method. Software for internal use is amortized by using
the straight-line method over the estimated useful life (5 years).
(i)

LeasesLeased assets which are under finance leases and capitalized are primarily the storage equipment(structures) in the Smelting business and logistics facilities (buildings and structures) in the Mineral
Resource business and depreciated over the lease terms of the respective assets by the straight-line
method with no residual value.

(j)

Allowance for doubtful accounts
Allowance for doubtful accounts is provided at an amount sufficient to cover possible losses oncollection. The allowance consists of the estimated uncollectible amounts with respect to specificreceivables plus an amount based on historical experience of bad debt with respect to other receivables.

(k) Retirement benefits(1) Method for attribution of expected retirement benefits to periods
In the calculation of retirement benefit obligations, the expected retirement benefits are attributed
to the period up to the end of the current fiscal year based on the benefit formula method.
(2) Accounting method for actuarial gains and losses and past service costs
Actuarial gains and losses are amortized by the straight-line method over a certain period (10years) which is within the average remaining years of service of the eligible employees when thegains or losses arise, from the year following the year in which the gains and losses arise.
Past service costs are amortized as incurred by the straight-line method over a certain period (10years) which is within the average remaining years of service of the eligible employees when thegains or losses arise.
(3) Accounting method for unrecognized actuarial gains and losses and unrecognized past service
costs
Unrecognized actuarial gains and losses and unrecognized past service costs are recorded asremeasurements of defined benefit plans under accumulated other comprehensive income of net
assets after tax effect adjustments.

16

(4) Application of the simplified method for small enterprises, etc.
Some of its consolidated subsidiaries apply the simplified method in the calculation of their net
defined benefit liability and retirement benefit expenses. Under the simplified method, thebenefits payable assuming the voluntary retirement of all eligible employees at the year-end are
deemed as retirement benefit obligations.
(l)Provision for environmental measures
Provision for environmental measures is estimated and recorded to provide for future potential costs
related to disposal of polychlorinated biphenyl waste.

(m) Provision for loss on business of subsidiaries and associates
Provision for loss on business of subsidiaries and associates is recorded based on the estimated loss
burden amount corresponding to financial situation of those companies.
(n) Income taxes
Deferred tax assets and liabilities are determined based on the differences between the financial
reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates andlaws which will be in effect when the differences are expected to reverse.
(o) Recognition of revenues
Revenues and costs of construction contracts of which the percentage of completion can be reliably
estimated are recognized by the percentage-of-completion method. The percentage of completion is
calculated as the cost incurred to the estimated total cost. The completed-contract method continues tobe applied to contracts for which the percentage of completion cannot be reliably estimated.
(p) Appropriation of retained earnings
Cash dividends and transfers to legal reserve are recorded in the fiscal year in which the proposed
appropriation of retained earnings is approved at the shareholders’ meeting.
(q) Profit per share
Profit per share is computed based on the profit available for distribution to shareholders of commonshares and the weighted average number of common shares outstanding during the year.
(r) Asset retirement obligations
Asset retirement obligations are calculated based on the estimated life of mine from commencement ofoperations, which is deemed as the estimated usable period, using the discount rates of 0.0～2.1% and0.7% for the years ended March 31, 2021 and 2020, respectively. The amount mainly represents theobligations of CBH Resources Ltd. (“CBH”) to restore its mine sites at Endeavor Mine and Rasp Mineto their original states upon closure.
(s) Significant accounting estimates(1) Recoverability of deferred tax assets

17

The amounts recorded in the consolidated financial statements for the fiscal year ended March
31, 2021
March 31,2021
(Millions of yen)
Deferred tax assets
Deferred tax liabilities

¥

2,364
2,166

2021
(Thousands of
U.S. dollars)$

21,353
19,564

Information about significant accounting estimates for the identified item
The recoverability of deferred tax assets is assessed based on the expected reduction in the tax
burden in the future. Such assessment is based on the sufficiency of the taxable income before
adjustment of the temporary differences, etc. considering profitability, the sufficiency of thetaxable income before adjustment of the temporary differences, etc. under tax planning, and thesufficiency of future taxable temporary differences.
For the assessment for the sufficiency of taxable income before adjustment of temporary
differences, etc. considering profitability, the taxable income for the fiscal year when thetemporary differences are expected to be resolved and the taxable income during the carry-backor carry-forward period is estimated.
The main assumption for the future business plan used for the estimate of future taxable income
is based on the information about external factors including the business environment (the market
conditions such as metal market prices or foreign exchange rates and the condition to buy metals).
If a reassessment of such estimates and assumptions is required due to changes in uncertain
economic conditions in the future, etc., it may have a significant impact on the amounts of deferred
tax assets and deferred income taxes recognized in the consolidated financial statements for the
next fiscal year.
(2) Calculation of retirement benefit obligations

The amounts recorded in the consolidated financial statements for the fiscal year ended March
31, 2021
March 31,2021
(Millions of yen)
Net defined benefit asset (Toho Zinc)

¥

723

2021
(Thousands of
U.S. dollars)
$

6,530

Information about significant accounting estimates for the identified item
In the Group, some companies adopt defined benefit plans. Retirement benefit obligations andrelated service costs for the defined benefit plans are calculated by estimating and discounting the
expected retirement benefits based on actuarial assumptions. The main actuarial assumptions are
the discount rate and expected rate of return of plan assets, and the discount rate is determinedbased on the yield of long-term government bonds at the fiscal year end. The expected rate of
return of plan assets is determined based on the portfolio of the holding plan assets, operational
performance in the past, operational policies and market trends, etc.

18

If a reassessment of the discount rate and long-term expected rate of return, which are main
assumptions, is required due to changes in uncertain economic conditions in the future, etc., it may
have a significant impact on the amounts of net defined benefit asset, net defined benefit liability
and retirement benefit expenses recognized in the consolidated financial statements for the next
fiscal year.
(3) Impairment loss on fixed assets in Mineral Resource business

The amounts recorded in the consolidated financial statements for the fiscal year ended March
31, 2021
March 31,2021
(Millions of yen)Fixed assets (Mineral Resource business)
Intangible assets (Mineral Resource business)
Impairment loss (Mineral Resource business)

¥

6,475
10,101
1,491

2021(Thousands of
U.S. dollars)$

58,486
91,23813,467

Information about significant accounting estimates for the identified item
Business assets of the Company are grouped based on the categories used for its managerial
accounting. The asset group with an indication of impairment is assessed to determine if
impairment loss should be recognized, and if it is determined that impairment loss should berecognized, the Company writes down the book value to its recoverable amount and recognizes
an impairment loss. The recoverable amount is measured at net sales amount or value in use, andfuture cash flows for which value in use is used as a recoverable amount is calculated based on
the business plan for the next fiscal year.
The Company recorded impairment loss of ¥2,024 million ($18,281 thousand) as described in
Note 5. Impairment Loss on Fixed Assets, of which ¥1,491 million ($13,467 thousand) is recorded
for the Mineral Resource business of the Group, and the recoverable amount is calculated using
value in use. The main assumptions used to formulate the business plan for the next fiscal year
and onwards, which form the basis for future cash flows, are information about external factors
including business environment (the market conditions such as metal market prices or foreignexchange rates and the condition to buy metals), production volume and growth rate. In addition,
the discount rate before tax, which is used in the assumption, reflects both the time value of money
and the risk that future cash flows deviate from the original estimate, and is calculated based on
the weighted average cost of capital of debt capital and equity capital.
If a reassessment of such estimates and assumptions is required due to changes in uncertain
economic conditions in the future, etc., it may result in additional impairment loss (extraordinary
losses) recognized in the consolidated financial statements for the next fiscal year.
(t)

Accounting standards and guidance issued but not yet adopted“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, issued on March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.
30, issued on March 26, 2021)(1) Overview

19This is a comprehensive accounting standard for revenue recognition. Revenue is recognizedbased on the following 5 steps.
Step 1: Identify contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligation in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Date of application
The Company plans to apply the accounting standard and guidance effective from the beginningof the fiscal year ending March 31, 2022.
(3) Effect of applying the standard and guidance
The Company is currently evaluating the effect of applying the “Accounting Standard for Revenue
Recognition” and the “Implementation Guidance on Accounting Standard for Revenue
Recognition” on its consolidated financial statements.
“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019)“Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ GuidanceNo. 19, March 31, 2020)(1) Overview
In order to improve the comparability with international accounting standards, “AccountingStandard for Fair Value Measurement” and “Implementation Guidance on Accounting Standard
for Fair Value Measurement” (hereafter, “Fair Value Measurement Standards, etc.”) have beendeveloped, and guidance and others in relation to fair value measurement were determined. The
Fair Value Measurement Standards, etc. are applied to the fair value of the following items:- Financial instruments defined in “Accounting Standard for Financial Instruments”- Inventories held for trading purposes defined in “Accounting Standard for Measurement of
Inventories”
In addition, “Implementation Guidance on Disclosures about Fair Value of Financial Instruments”
was revised to disclose the notes on the breakdown of financial instruments under the fair value
hierarchy and others.
(2) Date of application
The Company plans to apply the accounting standard and guidance effective from the beginningof the fiscal year ending March 31, 2022.
(3) Effect of applying the standards and guidance
The Company is currently evaluating the effect of applying the Fair Value Measurement Standards,

20

etc. on its consolidated financial statements.

(Adoption of “Accounting Standard for Disclosure of Accounting Estimates”)
The Company has applied the “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020) in preparing the consolidated financial statements forthe fiscal year ended March 31, 2021, and therefore significant accounting estimates are describedin the notes to the consolidated financial statements. However, comparative information for theprevious fiscal year is not disclosed in accordance with transitional treatments stipulated in theproviso of Paragraph 11 of the Accounting Standard.
(u) Reclassifications
Certain reclassifications have been made to the prior year amounts to conform to the current year
presentation.
(v) Additional Information
Impact of Coronavirus Disease (COVID-19) Pandemic
The Company has determined that the effects of the COVID-19 pandemic are limited based on thefollowing.
In terms of sales, demand for base metals including zinc and lead, which are the mainstay products in
Smelting business, is influenced by many industries such as automobile and construction. The Company
estimates that there is no particular decrease in sales as the Company can take actions such as increasing
export to supplement any decrease in domestic demand. The Company assumes similar sales trends for
the Environment and Recycling business. In the Electronic Components business, the Company
estimates a decrease in sales for a part of the business largely dependent on the aviation industry.
However, the impact on the whole Group is limited.
In terms of prices, it is difficult to estimate future trends in metal market prices, which impact the
Smelting business and the Mineral Resource business. Therefore, the Company assumes that the current
market price will continue throughout the year. The Company has made similar assumptions regarding
the foreign exchange market.
In terms of production, the Company estimates that procurement will not be affected, and there will be
no critical impact on the production of the whole Group despite tight supply and demand conditions forzinc and lead, which are the main materials for the Smelting business.

21

2.

U.S. Dollar Amounts

U.S. dollar amounts presented in the accompanying consolidated financial statements and notes are included
solely for the convenience of readers outside Japan, at the prevailing exchange rate of ¥110.71 to U.S. $1 on
March 31, 2021. These translations should not be construed as representations that the yen amounts actually
represent, or have been or could be converted into U.S. dollars at that or any other rate.

3.

Inventories

Inventories as of March 31, 2021 and 2020 consisted of the following:
March 31,2020
2021
(Millions of yen)
Merchandise and finished goods
Work in process
Raw materials and supplies
Total

4.

¥

¥

7,582
10,91014,607
33,100

¥

¥

9,157
9,841
16,00635,006

2021(Thousands of
U.S. dollars)$$

68,48598,545
131,939
298,979

Land Revaluation

In accordance with the Act on Revaluation of Land, the Company’s land used for its business operations wasrevalued as follows:
Date of revaluation: March 31, 2000
The differences between total fair value of land and the total book value after revaluation of land as ofMarch 31, 2021 and 2020 were ¥7,675 million ($69,325 thousand) and ¥7,974 million, respectively.
The tax effect of the excess on revaluation is recorded as deferred tax liabilities related to land revaluation
which is included in liabilities, and the remainder, net of income taxes portion of the excess on revaluation,is presented as revaluation reserve for land which is included in net assets.

22

5.

Impairment Loss on Fixed Assets

The Companies recognized impairment losses on certain asset groups for the years ended March 31, 2021
and 2020 as follows:Year ended March 31, 2021
Location
Use
Category
Annaka City, Gunma Idle assets
Buildings and structures
Machinery and equipment
The State of New
Assets included inSouth Wales,
Mineral Resource
Australia and others business segment(Assets at Rasp
Mine)

Mining rights

Year ended March 31, 2020
Location
Use
Category
The State of New
Assets included in Machinery and equipment
South Wales,
Mineral Resource
Mining rights
Australia and others business segment(Assets at Endeavor
Mine)
The State of New
Assets included inSouth Wales,
Mineral Resource
Australia and others business segment(Assets at Rasp
Mine)
Mining rights
The State of New
Assets included inSouth Wales,
Mineral Resource
Australia and others business segment(Exploration rights) Mining rights(Millions ofyen)(Thousands of
U.S. dollars)

¥

$

¥

72
460
532

$

650
4,154
4,805

¥

1,486

$

13,422(Millions of
yen)
¥
353
613
¥
967

¥

1,895

¥

309

Business assets of the Company are grouped based on the categories used for its managerial accounting.
With respect to idle assets, each asset is treated as an individual unit to apply the accounting for the
impairment.
For the year ended March 31, 2021, the Company recognized impairment losses for the entire book valueof idle assets on the grounds that they were not projected to generate any future cash inflows nor readilysalable.
For the year ended March 31, 2021, regarding the Rasp Mine in the State of New South Wales, Australia andother locations, CBH Resources Ltd. (“CBH”) wrote down the book value of the asset group included in the
Mineral Resource business segment to its recoverable amount and recognized the reduction as impairment
losses, since CBH could not expect to generate cash inflows sufficient to recover the invested capital in future
due to a revision in the production plan for the mine. The recoverable amount of the asset group is measured
at value in use, and calculated by discounting future cash flows at a rate of 7%.
For the year ended March 31, 2020, regarding the Endeavor Mine in the State of New South Wales, Australia
and other locations, CBH wrote down the book value of the asset group included in the Mineral Resource
business segment to its recoverable amount and recognized the reduction as impairment losses, since CBH23

could not expect to generate cash inflows sufficient to recover the invested capital in future due to a revisionin the production plan for the mine. The recoverable amount of the asset group is measured at value in use,and valued at zero since the estimated amount of future cash flow is negative.
For the year ended March 31, 2020, regarding the Rasp Mine in the State of New South Wales, Australia andother locations, CBH wrote down the book value of the asset group included in the Mineral Resource businesssegment to its recoverable amount and recognized the reduction as impairment losses, since CBH could not
expect to generate cash inflows sufficient to recover the invested capital in future due to a revision in the
production plan for the mine. The recoverable amount of the asset group is measured at value in use, andcalculated by discounting future cash flows at a rate of 7%.
For a part of exploration rights at the mines in the State of New South Wales, Australia and other locations,the Company determined that there would be no additional exploration in the future, and recognizedimpairment losses for the book value of the exploration rights recorded as assets.

6.

Investments in Unconsolidated Subsidiaries and Associates

Investments in unconsolidated subsidiaries and associates as of March 31, 2021 and 2020 are summarized asfollows:
March 31,2020
2021
(Millions of yen)
Unconsolidated subsidiaries
Associates

¥
¥

9
6,028
6,037

¥
¥

9
3,798
3,807

2021
(Thousands of
U.S. dollars)$$

81
54,44854,52924

7. Short-Term Borrowings and Long-Term Debt
Short-term borrowings and long-term debt as of March 31, 2021 and 2020 consisted of the following:
March 31,

Amount(Millions ofyen)
Short-term borrowings
Commercial papers
Current portion of longterm debt
Current portion of leaseobligations
Long-term debt¥

2021
Weighted
averageinterest rate

¥

2021

Amount(Millions ofyen)Amount(Thousands of
U.S. dollars)¥$

24,101
4,000

23,883
2,000

0.7%
0.1

7,586

0.7

7,848

68,521

25

–

24

225

16,431

0.6

20,486

148,41449
49,977–624
57,085442
451,422

Lease obligations
Total

Due in2020

October 2022 –March 2034
April 2022 –December 2025¥$

215,725
18,065

Average interest rates are calculated by using weighted-average interest rates as of March 31, 2021.
Average interest rates on lease obligations are not provided because interest equivalents included in the totallease payments are allocated to each applicable fiscal year on a straight-line basis.
The maturities of long-term debt and lease obligations outstanding as of March 31, 2021 were as follows:
Long-term
LeaseLong-term
Lease
debt
obligations
debt
obligations
Year ending March 31,(Millions of yen)(Thousands of U.S. dollars)
2022¥
7,586 ¥
25 $
68,521 $225
2023
10,135
19
91,545
171
2024
3,548
16
32,047
144
2025
853
11
7,704
99
2026
430
2
3,884
18
Thereafter
1,464
13,223
Total¥
24,018 ¥75 $216,945 $677
Assets pledged as collateral for the long-term debt, including the current portion, as of March 31, 2021 and2020 were as follows:25

March 31,
2020
2021
(Millions of yen)

Pledged assets

Land (*)
Buildings and structures (*)
Machinery and equipment (*)
Total
(*)

¥

¥

11,9284,285
4,709
20,923¥¥

11,888
4,576
5,863
22,328

2021(Thousands of
U.S. dollars)$$

107,740
38,70442,534
188,989

For the above assets, a revolving mortgage is set at the maximum amount of ¥1 million ($9thousand) with bank as of March 31, 2021 and 2020.

Liabilities secured by collateral for the long-term debt as of March 31, 2021 and 2020 were as follows:
March 31,2020
2021
(Millions of yen)

Pledged liabilities

Current portion of long-term debt
Long-term debt
Total

¥
¥

123
1,476
1,600

¥
¥

-

2021
(Thousands of
U.S. dollars)
$
$

1,111
13,332
14,45226

8.

Retirement Benefit Plans

The Company and its domestic consolidated subsidiaries have funded and unfunded defined benefit plans
and lump-sum payment plans. The defined benefit corporate pension plans, all of which are funded, provide
lump-sum or pension benefits based on salaries and the length of service. The lump-sum payment plans,
which are unfunded, provide lump-sum benefits based on salaries and the length of service. In addition,certain consolidated subsidiaries apply the simplified method to calculate retirement benefit liabilities andretirement benefit expenses, where the required contributions to the pension fund are accounted for as
retirement benefit expenses.
Information regarding the Company’s defined benefit plans for the years ended March 31, 2021 and 2020
was as follows:(a) The changes in the retirement benefit obligations for the years ended March 31, 2021 and 2020 are as
follows:
Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Retirement benefit obligation at beginning of year
Service costs
Interest costs
Actuarial gains and losses arising during year
Retirement benefits paid¥

Retirement benefit obligation at end of year

¥

3,824
290
0
(32)
(103)
3,979

¥

¥

3,748 $
285
(4)
(39)
(166)
3,824 $

34,540
2,619
0
(289)
(930)
35,940(b) The changes in plan assets for the years ended March 31, 2021 and 2020 are as follows:Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses arising during year
Contributions from employer
Retirement benefits paid¥

Plan assets at end of year

¥

3,770
75
750
210
(103)
4,702

¥

¥

3,952 $
79
(296)
202
(166)
3,770 $

34,052
677
6,774
1,896
(930)
42,47127

(c) The changes in net defined benefit liability accounted for using the simplified method for the years
ended March 31, 2021 and 2020 are as follows:Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Net defined benefit liability at beginning of year¥

Retirement benefit expenses
Retirement benefits paid
Net defined benefit liability at end of year

¥

152
10
(21)
141

¥

¥

148 $
10
(6)
152 $

1,372
90
(189)
1,273

(d) The following table sets forth the funded status of the plans and the amounts recognized in the
consolidated balance sheets as of March 31, 2021 and 2020.
March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Retirement benefit obligation for funded plans
Plan assets¥

Retirement benefit obligation for unfunded plans
Net balance of liability and asset recognized on the
consolidated balance sheet
Net defined benefit liability
Net defined benefit asset
Net balance of liability and asset recognized on the
consolidated balance sheet¥

3,824 $
(3,770)53

35,940(42,471)(6,530)

141

152

1,273

(581)

206

(5,247)

141
(723)

206
-

1,273
(6,530)3,979(4,702)
(723)

(581)

¥

¥

206

$

(5,247)(e) The components of retirement benefit expenses for the years ended March 31, 2021 and 2020 are as
follows:
Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)Service costs (excluding employee contributions)Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service costs
Retirement benefit expenses calculated using thesimplified method
Retirement benefit expenses under defined benefit
plans

¥

287
0
(75)
16
–

¥

10
¥

239

¥

282 $
(4)
(79)
(23)
–

2,592
0
(677)
144
–

10

90

186

$

2,158

28

(f) Remeasurements of defined benefit plans
The components of remeasurements of defined benefit plans included in other comprehensive income(before tax effect) for the years ended March 31, 2021 and 2020 are as follows:Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Actuarial gains and losses
Past service costs

¥

799
–

¥

(280) $
–

7,217
–

Total

¥

799

¥

(280) $

7,217(g) The components of remeasurements of defined benefit plans included in accumulated othercomprehensive income (before tax effect) as of March 31, 2021 and 2020 are as follows:
March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Unrecognized actuarial gains and losses
Unrecognized past service costs

¥

Total

¥

682
–
682

¥
¥

(116) $–(116) $

6,160
–
6,160

(h) Plan assets(1) Breakdown of plan assets
Percentage of each main category to total plan assets is as follows:Year ended March 31,
2020
2021
Debt securities
Equity securities
Life insurance general account
Other
Total

39%
48
11
2
100%

39%
45
13
3
100%

(2) Determination of expected long-term rate of return on plan assets
In determining the expected long-term rate of return on plan assets, the Company takes into
consideration the current and future plan asset allocation as well as the current and expected longterm rate of return on various asset categories comprising plan assets.

29

(i)

Actuarial assumptions
Year ended March 31,
2020
2021
Weighted-average actuarial assumptions at end of year:
Discount rate
Expected long-term rate of returnLump-sum election rate

9.

0.0 %
2.0
100.0

0.1 %
2.0
100.0

Asset Retirement Obligations

The changes in asset retirement obligations for the years ended March 31, 2021 and 2020 were as follows:Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Balance at beginning of year
Increase associated with the change in estimate
Adjustment due to passage of time
Other

¥

3,726
30
0
114

¥

2,436
1,322
6
(39)

$

33,655270
01,029

Balance at end of year

¥

3,871

¥

3,726

$

34,965

Change in estimate for asset retirement obligations
In line with reviews of the future operating plan, the Company has changed the estimates of restoration costand useful life for asset retirement obligations recorded as obligations to restore overseas mine sites to their
original states in the year ending March 31, 2021, and increased the balance of asset retirement obligationsby ¥30 million ($270 thousand) due to this change in estimate.

30

10. Net Assets
Information regarding changes in net assets for the years ended March 31, 2021 and 2020 is as follows:(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2021

Types of shares

Number ofshares as ofApril 1, 2020

Increase
Decrease(Thousands of shares)

Number ofshares as ofMarch 31, 2021

Shares issued and outstanding:Common shares
13,585––
13,585
Treasury shares:
Common shares (Note)70–7
Note: The increase of 0 thousand shares was due to purchase of shares of less than standard unit.
For the year ended March 31, 2020

Types of shares

Number ofshares as ofApril 1, 2019

Increase
Decrease(Thousands of shares)

Number ofshares as ofMarch 31, 2020

Shares issued and outstanding:Common shares
13,585––
13,585
Treasury shares:
Common shares (Note)70–7
Note: The increase of 0 thousand shares was due to purchase of shares of less than standard unit.
(b) Dividends(1) Dividends paid
For the year ended March 31, 2021
Not applicable.
For the year ended March 31, 2020
Resolution

Type ofsharesAnnual general meeting of theshareholders on June 27, 2019

CommonsharesTotal dividends(Millions of yen)

Dividends per
share
(Yen)

¥

¥

950

70

Cut-off
date

Effective
date

March 31,2019

June 28,201931

(2) Dividends with the cut-off date in the year ended March 31, 2021 and the effective date in the year
ending March 31, 2022

Resolution

Type ofsharesAnnual general meeting of theshareholders on June 29, 2021

CommonsharesResolution

Type ofsharesAnnual general meeting of theshareholders on June 29, 2021

Total
dividends(Millions ofyen)

Cut-off
date

Effective
date

March
31, 2021

June 30,
2021

Total
Source of Dividends
Cut-off
dividends
dividends
per share
date(Thousands of(U.S. dollars)
U.S. dollars)CommonRetainedMarchshares31, 2021$ 6,124 earnings$ 451

Effective
date

¥

678

Source ofdividends

Retainedearnings

Dividends
per share
(Yen)

¥

50

June 30,
2021

The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as
distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the common shares. Such distributions can be made at any timeby resolution of the shareholders, or by the board of directors if certain conditions are met.

32

11.

Income Taxes

As of March 31, 2021 and 2020, significant components of deferred tax assets and liabilities were as follows:
March 31,2020
2021
(Millions of yen)
Deferred tax assets:
Net operating loss carry forwards (Note 2)
Loss on valuation of inventories¥

Asset retirement obligations
Depreciation in excess of tax limit
Foreign exchange losses
Other
Gross deferred tax assets
Valuation allowance on net operating loss
carryforwards (Note 2)
Valuation allowance on deductible temporary
differences
Less: Valuation allowance (Note 1)
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on other securities
Depreciation in foreign subsidiary
Inventories
Royalty gains
Reserve for overseas exploration
Deferred gains on hedges

2,716
113
1,161
4,177
7
2,094

3,239
1,112
1,118
3,814
537
2,341

$

24,532
1,020
10,48637,72963
18,914

10,271

12,162

92,773(2,684)(3,161)(24,243)(5,223)(7,907)2,364(5,523)(8,684)
3,478(47,177)(71,420)
21,353

(184)
(893)
(305)
(81)

(89)
(983)
(309)
(155)

(1,661)(8,066)(2,754)
(731)

(136)

(136)

(1,228)

¥

(457)
(271)
(2,403)
1,074$(5,103)(19,564)
1,779¥(4,345)$(37,693)

Net deferred tax assets (liabilities)

¥

(565)
(2,166)
197

Deferred tax liabilities:
Deferred tax liabilities related to land revaluation¥(4,173)

Other
Total deferred tax liabilities¥

2021(Thousands of
U.S. dollars)33

Notes 1. The decrease of ¥777 million ($7,018 thousand) in valuation allowance was due to the decrease of¥536 million ($4,841 thousand) as valuation allowance for net operating loss carry forwards in Toho
Zinc Co., Ltd., the parent company and the decrease of ¥529 million ($4,778 thousand) as valuation
allowance for unrealized foreign exchange gains and losses in CBH, a consolidated subsidiary.
2. The expiry schedule of net operating loss carryforwards and the related amount of deferred tax assets
is as follows:
As of March 31, 2021

Due in1 yearDue after
1 yearthrough
2 years

Due after Due after Due after
2 years
3 years
4 years
throughthroughthrough
3 years
4 years
5 years(Millions of yen)

Net operating loss
carryforwards (a)
¥
– ¥
– ¥
– ¥
– ¥
Valuation allowance––––
Deferred tax assets
–
–
–
–
(a)
Net operating loss carryforwards are multiplied by the statutory tax rate.

–––

Due after
5 years¥ 2,716(2,684)
33

Total

¥

2,716
(2,684)33

As of March 31, 2020

Due in1 yearDue after
1 yearthrough
2 years

Due after Due after Due after
2 years
3 years
4 years
throughthroughthrough
3 years
4 years
5 years(Millions of yen)

Net operating loss
carryforwards (b)
¥
– ¥
– ¥
– ¥
– ¥
Valuation allowance––––
Deferred tax assets
–
–
–
–
(b)
Net operating loss carryforwards are multiplied by the statutory tax rate.

–––

Due after
5 years¥ 3,239(3,161)
78

Total

¥

3,239
(3,161)
78

34

As of March 31, 2021

Due in1 yearDue after
1 yearthrough
2 years

Due after Due after Due after
2 years
3 years
4 years
throughthroughthrough
3 years
4 years
5 years(Thousands of U.S. dollars)

Net operating loss
carryforwards (a)
$
– $
– $
– $
– $
Valuation allowance––––
Deferred tax assets
–
–
–
–
(a)
Net operating loss carryforwards are multiplied by the statutory tax rate.

–––

Due after
5 years

Total$ 24,532(24,243)298$ 24,532(24,243)
298

The reconciliation between the statutory tax rate and the effective tax rate for the year ended March 31, 2021,
when there is a significant difference was as follows .
Year ended March 31,
2021
Statutory tax rate
Increase (decrease) due to:Tax loss carryforwards of foreign consolidated subsidiaries
Elimination of intercompany profits
Change in valuation allowance
Other
Effective tax rate

30.62%
3.18(5.02)(6.40)(0.44)
21.94%For the fiscal year ended March 31, 2020, the reconciliation between the statutory tax rate and the effective
tax rate is not shown as a loss before income taxes was recorded.

12.

LeasesAs lessee:
There were no impairment losses allocated to leased assets for the years ended March 31, 2021 and 2020.

35

13.

Commitments and Contingent Liabilities(a) Guarantees
The Company guarantees bank loans of TIANJIN TOHO LEAD RECYCLING CO., LTD., an associate of
the Company, in the amount of ¥1,031 million ($9,312 thousand) and ¥781 million as of March 31, 2021 and2020, respectively.
(b) Loan commitments
In addition, the Company has entered into loan commitments amounting to ¥16,000 million ($144,521
thousand) and ¥16,000 million with 10 financial institutions as of March 31, 2021 and 2020, respectively.
There were no related loans payable outstanding, and therefore, the unused balance was ¥16,000 million($144,521 thousand) and ¥16,000 million under the credit facilities as of March 31, 2021 and 2020,
respectively.
As financial covenants are attached to these loan commitment agreements, any infringements of the following
clauses may result in forfeiture of the benefit of time for all the debts under the loan commitment agreements.
(1) Maintaining consolidated shareholders’ equity as of March 31, 2021 at no less than ¥25.0 billion($225,815 thousand).
(2) Maintaining consolidated shareholders’ equity as of September 30, 2021 at no less than 75% of theconsolidated shareholders’ equity as of March 31, 2021.
(3) Maintaining the consolidated capital adequacy ratio as of March 31, 2021 and September 30, 2021 noless than 20%.
(c) Contingent liabilities
As a result of an investigation, it was discovered that some of the nonferrous slag products shipped from theCompany’s Annaka Smelter and Refinery in the past included those with features not meeting environmental
quality standards for soil under the Soil Contamination Countermeasures Act and that there is a possibilityof inappropriate usage or contamination due to insufficient management by the Company. Going forward,
the Company may incur expenses to collect and remove such products. However, it is difficult to reasonably
estimate the impact on the consolidated financial statements at this point in time.
(d) Notes receivable discounted and others
The Company had repurchase obligations of ¥292 million ($2,637 thousand) and ¥323 million in connection
with the securitization of receivables as of March 31, 2021 and 2020, respectively.
The Company had notes receivable discounted of nil and ¥244 million as of March 31, 2021 and 2020,
respectively.
The Company had electronically recorded monetary claims discounted of nil and ¥165 million as of March
31, 2021 and 2020, respectively.

36

14.

Financial Instruments(a) Overview(1) Policy for financial instruments
The Companies raise funds mainly through bank borrowings in consideration of their business plans.
The Companies invest their temporary surplus funds in highly liquid financial assets and raise shortterm operating capital through bank borrowings and issuances of commercial papers. The Companies
use derivatives to avoid after-mentioned risks and do not enter into derivatives for speculative or trading
purposes.
(2) Descriptions of financial instruments and related risks
Trade receivables––notes and accounts receivable, trade and electronically recorded monetary claims –are exposed to customer credit risk. Trade receivables denominated in foreign currencies, which arederived from foreign operations, are exposed to foreign currency risk, and such risk is hedged by forward
foreign exchange contracts.
Investment securities are mainly composed of equity securities of companies with business relationships
and exposed to market risk.
Trade payables––notes and accounts payable, trade––are mostly due within two months or less.
Certain trade payables denominated in foreign currencies are exposed to foreign currency risk, and suchrisk is hedged by forward foreign exchange contracts.
Trade receivables and payables in connection with the Smelting business are exposed to commodity
price fluctuation risk of London Metal Exchange (“LME”), and such risk is hedged by metal forward
contracts.
Borrowings are principally for the purpose of working capital (mainly short-term), and capital
investments (long-term). Certain long-term debt is exposed to interest rate fluctuation risk, and such risk
is hedged by derivatives (interest rate swaps). The due date is 14 years from the balance sheet date at
maximum.
As for derivatives, the Companies have entered into the forward foreign exchange contracts and others
to hedge the foreign currency risk arising from the trade receivables and payables denominated inforeign currencies, metal forward contracts to hedge the commodity price fluctuation risk of LME
arising from the trade receivables and payables on the Smelting business and interest rate swaps to hedge
the fluctuation risk deriving from interest payment of long-term debt. See Note 1. (f) (3) Hedge
accounting for information about the method of hedge accounting, hedging instruments and hedged
items, hedging policy, and assessment of hedge effectiveness.
(3) Risk management for financial instruments(i)Management of credit risk (risk of default by customers or counterparties)
For trade receivables, sales departments of each division of the Companies periodically monitor
creditworthiness of their main customers and manage due dates and outstanding balances bycustomer in accordance with the internal rules of the Company. In addition, the Companies aremaking efforts to identify uncollectibility in the earlier stage and mitigate risks of bad debts, due
to customers with financial difficulties.

37

The Companies believe that the credit risk of derivatives is insignificant as they enter into
derivative transactions only with financial institutions with high credit ratings.
(ii)Management of market risks (risks of fluctuations in foreign exchange rates, commodity prices,interest rates and others)
For trade receivables and payables denominated in foreign currencies, the foreign currency risk of
the Company identified by currency on a monthly basis is hedged by forward foreign exchange
contracts and others. In order to mitigate the commodity price fluctuation risks of LME for tradereceivables and payables on the Smelting business, the Company has entered into the metal
forward contracts. In addition, the Company has entered into interest rate swap transactions to
mitigate the interest rate fluctuation risk for interest payment of long-term debt.
For investment securities, the Companies periodically monitor the fair values and financial
position of the issuers and continuously review the holding status taking into account market
conditions and relationships with the issuers.
Derivative transactions are conducted and managed by treasury personnel including directors andeach division, and risk management is sufficiently conducted by making reports to management
every time transactions are executed as well as on a periodical basis.

(iii) Management of liquidity risk on funding (risk of default at due dates)
Based on the report from each department, subsidiaries and associates, the department in chargeof the Company prepares and updates its cash flow plan on a timely basis and manages liquidity
risk by maintaining liquid funds.
(4) Supplementary explanation of the fair value of financial instruments
Fair values of financial instruments are based on their respective market prices if available. When
there is no market price available, fair value is reasonably calculated. Since various assumptions andfactors are reflected in the calculation of the fair value, different assumptions and factors could result indifferent fair value. In addition, the notional amounts of derivatives in Note 17. Derivative
Transactions are not indicative of the market risk involved in derivative transactions.
(b) Fair values of financial instruments
Carrying values of financial instruments on the consolidated balance sheets as of March 31, 2020 and 2019
and their fair values are shown in the following table. Financial instruments whose fair value is extremely
difficult to determine are not included in the following table (Please refer to Note 2 below).

38

Carrying value

March 31, 2021
Fair value(Millions of yen)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Electronically recorded monetary claims(4) Investment securities
Total assets¥¥(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Commercial papers(4) Long-term debt (*1)
Total liabilities¥

Derivatives (*2)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Electronically recorded monetary claims(4) Investment securities
Total assets(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Commercial papers(4) Long-term debt (*1)
Total liabilities
Derivatives (*2)

¥

5,934
14,061
1,412
1,363
22,771¥¥

5,934
14,061
1,421
1,363
22,771

¥

¥

¥

–
–
–
(53)
(53)

¥

–

¥

6,217
23,8832,000
24,01856,119¥6,217
23,8832,000
23,96456,066

¥

(187)

¥

(187)

Carrying value

March 31, 2020
Fair value(Millions of yen)

¥

8,207
10,655231
1,555
20,649

¥

¥

¥

6,890
24,101
4,000
28,334
63,327

¥

1,596

¥
¥

¥

Difference

8,207
10,655231
1,555
20,649

¥

–
–
–
–
–

Difference
¥

¥

–
–
–
–
–

¥

¥

6,890
24,101
4,000
28,34063,333

¥

–
–
–
6
6

¥

1,596

¥

–

March 31, 2021
Carrying value
Fair value
Difference(Thousands of U.S. dollars)(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Electronically recorded monetary claims(4) Investment securities
Total assets$(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Commercial papers(4) Long-term debt (*1)
Total liabilities$

Derivatives (*2)$

53,599127,007
12,754
12,311
205,681$$$

53,599127,007
12,754
12,311
205,681

$

$

$

–
–
–
(478)
(478)

$

–

$

56,155
215,725
18,065
216,945506,900$

56,155
215,725
18,065
216,457
506,422$(1,689)$(1,689)

$

–
–
–
–
–

(*1) Current portion of long-term debt is included in long-term debt as of March 31, 2021 and 2020.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, and the net liability
position is shown in parentheses.

39Notes:1.

Methods to calculate the fair value of financial instruments and other matters related to securities andderivative transactions
Assets(1) Cash and time deposits, (2) Notes and accounts receivable, trade and (3) Electronically recordedmonetary claims
Since these items are settled in a short period of time, their carrying value approximates fair value.
(4) Investment securities
The fair value of equity securities is based on a quoted market price. For information on securities
classified by holding purpose, please refer to Note 15. Investment Securities.
Liabilities(1) Notes and accounts payable, trade, (2) Short-term borrowings and (3) Commercial papers
Since these items are settled in a short period of time, their carrying value approximates fair value.
(4) Long-term debt
For long-term debt with floating interest rates, its carrying value approximates fair value since the debt
reflects the market interest rates in a short period of time and the credit condition of the Company has
not changed significantly since the debt was executed. For long-term debt with fixed interest rates,
the fair value is based upon the present value of the total of principal and interest discounted by theinterest rate to be applied if similar new borrowings were entered into.
Derivative transactions
Please refer to Note 17. Derivative Transactions.

2. Financial instruments whose fair value is extremely difficult to determine
March 31,2021
2020
(Millions of yen)

Unlisted equity securities

¥

5,618

¥

3,388

2021
(Thousands of
U.S. dollars)$

50,745

These are not included in (4) Investment securities in the above table because there were no market
prices available and it was extremely difficult to determine the fair value.
3.

Redemption schedule for monetary receivables as of March 31, 2021

Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade
Electronically recorded monetary claims
Total

¥

¥

5,926
14,061
1,412
21,400March 31, 2021
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Millions of yen)
¥

¥

–
–
–
–

¥

¥

–
–
–
–

Due after
ten years

¥

¥

–
–
–
–

40

Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade
Electronically recorded monetary claims
Total
4.

$

53,527127,007
12,754$ 193,297

March 31, 2021
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Thousands of U.S. dollars)
$

$

–
–
–
–

$

$

–
–
–
–

Due after
ten years

$

$

–
–
–
–

The redemption schedule for long-term debt is disclosed in Note 7. Short-Term Borrowings and LongTerm Debt.

41

15.

Investment Securities

Investment securities held by the Companies are all classified as other securities.
The aggregate cost and fair value (carrying value) of marketable securities classified as other securities as ofMarch 31, 2021 and 2020 were as follows:

Cost

March 31, 2021
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

Securities whose fair value exceeds theircost:
Equity securities

¥

529

¥

1,146

¥

616

Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

227
757

¥

217
1,363

¥

(10)
606

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

733

¥

526
1,259

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

$

4,778

$

2,050
6,837

March 31, 2020
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

1,183

¥

450

¥

371
1,555

¥

(154)
295

March 31, 2021
Fair value
Unrealized gains(carrying value)(losses)(Thousands of U.S. dollars)$

10,351$

1,960
12,311

$

5,564

$

(90)
5,473

As of March 31, 2021 and 2020, unlisted equity securities amounting to ¥5,618 million ($50,745 thousand)and ¥3,388 million, respectively, were not included in the above table because there were no market prices
available and it was extremely difficult to determine the fair value.

42

Information about sales of securities classified as other securities for the years ended March 31, 2021 and2020 was as follows:Year ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Sales proceeds
Aggregate gains
Aggregate losses

¥

787
281
-

¥

57
11
-

$

7,108
2,538
-

The Company recognized an impairment loss of nil and ¥55 million for the years ended March 31, 2021 and2020, respectively.
If the fair value declines by 50% or more compared to the acquisition cost, the acquisition cost will be written
down to the fair value. If the fair value declines between 30% and 50% compared to the acquisition cost, theacquisition cost will be written down to the amount deemed appropriate taking into consideration monetarysignificance, recoverability and other factors.

43

16. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2021 and 2020 were composed of the following:
March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Cash and time deposits
Cash and cash equivalents

¥
¥

5,934
5,934

¥
¥

8,207
8,207

$
$

53,59953,599The details of significant non-cash transactions were as follows:Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Asset retirement obligations stated on the
consolidated balance sheet

¥

30

¥

1,328

$

270

The details of assets and liabilities of a subsidiary excluded from the scope of consolidated subsidiary due
to the sales of its shares
The details of assets and liabilities, selling price of shares and proceeds from sales of shares which wererecognized when ConPorts Pty Limited was excluded from the scope of consolidated subsidiary due to thesales of its shares were as follows:

Current assets
Fixed assets
Current liabilities
Non-current liabilities
Gain on sales of shares of subsidiaries and associates
Selling price of shares
Cash and cash equivalents
Less: Proceeds from sales of shares of subsidiaries resulting inchange in scope of consolidation(Millions of
yen)
¥
140
796
(37)
(513)
2,671
3,057
(46)
3,011

(Thousands of
U.S. dollars)
$
1,264
7,189
(334)
(4,633)24,126
27,612(415)
27,19744

17.

Derivative Transactions(a) Summarized below are the notional amounts and the fair value of derivative instruments outstanding asof March 31, 2021 and 2020, for which hedge accounting has not been applied.
(1) Currency-related transactions
For the year ended March 31, 2021
Not applicable.
March 31, 2020
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
Australian Dollar
Total

¥
¥

2,070
2,070

¥
¥

–
–

¥
¥

(94)
(94)

¥
¥

(94)
(94)

Note: The calculation of fair value is based on prices obtained from counterparty financial institutions
and others.
(2) Commodity-related transactions
March 31, 2021
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Metal forward contracts
Sell:
Metals
Buy:

¥

2,756

¥

–

¥

0

¥

0

Metals
Total

¥
¥

606
3,362

¥
¥

–
–

¥
¥

16
16

¥
¥

16
16

45

March 31, 2020
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Metal forward contracts
Sell:
Metals

¥

1,522

¥

–

¥

207

¥

207

¥
¥

123
1,645

¥
¥

–
–

¥
¥

(10)
197

¥
¥

(10)
197

Buy:
MetalsTotal

March 31, 2021
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)

Unrealized
gains (losses)

OTC transactions:
Metal forward contracts
Sell:
MetalsBuy:$

24,893

$

–

$

0

$

0

Metals$$

5,437
30,367

$
$

–
–

$
$

144
144

$
$

144
144

Total

Notes: The calculation of fair value is based on prices obtained from counterparties and others.

46

(b) Summarized below are the notional amounts and the fair value of derivative instruments outstanding asof March 31, 2021 and 2020, for which hedge accounting has been applied.
(1) Interest-related transactions
March 31, 2021
Notional amountContract
Maturing after
amountone year(Millions of yen)Interest rate swaps hedging long-term debt,
accounted for by exceptional treatment:
Receive/floating and pay/fixed
Total

¥
¥

3,622
3,622

¥
¥

Fair value

2,401
2,401

(Note)March 31, 2020
Notional amountContract
Maturing after
amountone year(Millions of yen)Interest rate swaps hedging long-term debt,
accounted for by exceptional treatment:
Receive/floating and pay/fixed
Total

¥
¥

7,761
7,761

¥
¥

Fair value

3,622
3,622

(Note)March 31, 2021
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)Interest rate swaps hedging long-term debt,
accounted for by exceptional treatment:
Receive/floating and pay/fixed
Total

$
$

32,71632,716$$

21,687
21,687(Note)

Note: Interest rate swaps to which exceptional treatment is applied are accounted for together with thelong-term debt designated as a hedged item. Therefore, their fair values are included in thefair value of long-term debt.
(2) Commodity-related transactions
March 31, 2021
Notional amountContract
Maturing after
amountone year(Millions of yen)
Metal forward contracts, accounted for as part of
raw materials and finished goods:
Sell: Metals
Buy: Metals
Total

¥
¥

12,008
7,839
19,848¥¥-Fair value

¥
¥

(162)
(10)
(173)

47

March 31, 2020
Notional amountContract
Maturing after
amountone year(Millions of yen)
Metal forward contracts, accounted for as part of
raw materials and finished goods:
Sell: Metals
Buy: Metals
Total

¥
¥

10,734
6,012
16,747¥¥-

Fair value

¥
¥

1,990
(496)
1,493

March 31, 2021
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)
Metal forward contracts, accounted for as part of
raw materials and finished goods:
Sell: Metals
Buy: Metals
Total

$
$

108,463
70,806179,279

$
$

-

$
$

(1,463)(90)(1,562)

Note: The calculation of fair value is based on prices obtained from counterparties and others.

48

18.

Other Comprehensive Income

Reclassification adjustments and tax effects allocated to each component of other comprehensive (loss)
income for the years ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Net unrealized gains (losses) on other securities:
Gains (losses) arising during the year
Reclassification adjustments
Amount before tax effectTax effect¥

Deferred (losses) gains on hedges:(Losses) gains arising during the year
Reclassification adjustments
Amount before tax effectTax effectForeign currency translation adjustment:
Adjustments arising during the year
Remeasurements of defined benefit plans:
Gains (losses) arising during the year
Reclassification adjustments
Amount before tax effectTax effectTotal other comprehensive (loss) income

¥

592
(281)
310
(94)
215

¥

(637)
(11)
(648)
198
(449)

$

5,347
(2,538)
2,800
(849)
1,942

(5,734)
4,067(1,666)510(1,156)

1,546
(212)
1,334
(408)
925

(51,792)
36,735(15,048)
4,606(10,441)

(2)
(2)

(122)
(122)

(18)
(18)

782
16
799
(209)
590
(352)

(257)
(23)
(280)
50
(230)
122

7,063
144
7,217
(1,887)
5,329(3,179)

¥

$

49

19.

Business Combinations

Transfer of subsidiary’s shares(a) Overview of share transfer(1) Name of the company to which the shares were transferred
Aurizon Operations Limited(2) Name of the transferred subsidiary and business description
Name of the subsidiary: ConPorts Pty Limited
Business description: Port cargo-handling business for non-ferrous metals concentrate(3) Reason for the share transfer
The Group sold all the shares of ConPorts Pty Limited that is engaged in the port cargo-handlingbusiness, which is a non-core business, in order to allocate business resources to growth strategies
such as capital investment in the existing Mineral Resource business and promotion of new
projects.
(4) Date of the share transfer
December 31, 2020
(5) Other matters related to the transaction including the legal form
Share transfer in exchange for cash(b) Overview of accounting policies(1) Amount of transfer gains and losses
Gain on sales of shares of subsidiaries and associates¥2,671 million ($24,126 thousand)(2) Appropriate book value and details of assets and liabilities of transferred subsidiary

Current assets
Fixed assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities(Millions of yen)
¥
140
796
937
37
513
550

(Thousands of U.S.
dollars)$ 1,264
7,189
8,463
334
4,633
4,967

(3) Accounting treatment
The Company recorded the difference between the book value of the subsidiary in the consolidated
financial statements and the selling price as gain on sales of shares of subsidiaries and associates.

50

(c)

Reportable segment in which the transferred subsidiary was included
Mineral Resource segment(d) Estimated financial results of the transferred subsidiary recorded in the consolidated statement ofoperations for the fiscal year ended March 31, 2021.

Net sales
Operating income(Millions of yen)
¥
594
284

(Thousands of U.S.
dollars)$ 5,365
2,565

51

20.

Segment Information(a) Overview of reportable segments(1) Definition of reportable segments
The Company defines reportable segments as components of the Company for which separate financial
information is available and whose operating results are regularly evaluated by the board of directors tomake decisions about how resources are allocated and assess its performance.
Operating departments of the Company are organized according to products and services, and eachdepartment plans comprehensive domestic and overseas strategies for its products and services anddevelops business activities through the Company and its consolidated subsidiaries. Thus, reportablesegments of the Company are determined based on such operating departments; namely, “Smelting,”“Mineral Resource” (organized based on CBH, a consolidated subsidiary), “Electronic Components andMaterials,” “Environment and Recycling” and “Civil Engineering, Construction and Plant Engineering”(organized based on TOHO DEVELOPMENT ENGINEERING CO., LTD., a consolidated subsidiary).
(2) Products and services of each reportable segment
 The Smelting segment engages in sales and production of zinc and lead products, electric silver andsulfuric acid.
 The Mineral Resource segment engages in exploration, development and production of non-ferrous
metal resources and sales of their output.
 The Electronic Components and Materials segment engages in sales and production of electronicparts, electrolytic iron, plating and machine parts.
 The Environment and Recycling segment engages in sales and production of zinc oxide andrecycling of waste materials.
 The Civil Engineering, Construction and Plant Engineering segment engages in design, construction,
manufacturing and sales of facilities.
(b) Basis of measurement for the amounts of net sales, profit or loss, assets and other items for eachreportable segment
The accounting policies of each reportable segment are consistent to those described in Note 1. Summaryof Significant Accounting Policies. The segment profit is based on operating income, and intersegment
sales and transfers are based on actual market prices.

52

(c) Information about net sales, profit or loss, assets and other items
Year ended March 31, 2021
Reportable segment
Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)¥¥¥¥

103,469–
103,469
5,894
113,635

¥

4,594

Civil

Smelting

MineralResource

Electronic
Engineering,
CompoEnviron- Construction
nents and ment andand Plant
Materials Recycling Engineering

Total

Other
(Note 1)

Total

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Investments inentities
accounted forusing equity
methodIncrease inproperty, plantand equipment
and intangible
assetsImpairment losses
on fixed assets¥ 84,364
564¥ 84,928¥ 5,791¥ 62,239¥ 6,426
1,131¥ 7,557¥ (1,436)¥ 23,593¥ 4,133¥ 4,133¥266¥ 9,143¥ 3,7110¥ 3,711¥917¥ 5,179¥ 1,670¥ 2,183

¥

¥

-

4,924

1,369
532

241

¥ 1,924192¥ 2,116
¥
214
¥
656

¥100,560
1,888¥ 102,448¥ 5,753¥100,811¥¥ 103,469
6,276¥ 109,745¥ 6,336¥ 103,761

¥

¥
¥
¥

2,908
4,388
7,296
583
2,949

¥
¥
¥

–
(6,276)(6,276)
(442)
9,874

¥

171

¥

¥

69

252 ¥

5

¥ 4,353

4,525

-

-

-

4,924

-

4,924

-

4,924

2,838

75

126

3

4,412

213

4,625

37

4,663

1,491

–

–

–

2,024

–

2,024

–

2,024

Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)

Year ended March 31, 2020
Reportable segment
Civil

Smelting

MineralResource

Electronic
Engineering,
CompoEnviron- Construction
nents and ment andand Plant
Materials Recycling Engineering

Total

Other
(Note 1)

Total

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Investments inentities accounted
for using equity
methodIncrease in property,
plant andequipment andintangible assets
Impairment losses
on fixed assets¥ 73,639
375¥ 74,015¥ (10,067)¥ 62,633¥ 9,647
1,799¥ 11,446¥ (5,444)¥ 23,581¥ 4,9280¥ 4,928¥434¥ 9,613¥ 4,181–¥ 4,181¥762¥ 5,141¥ 1,702¥ 2,604

¥

¥

–

2,694

1,599
–

211

¥ 2,213274¥ 2,487
¥
151
¥
656

¥ 94,611
2,449¥ 97,060¥ (14,162)¥101,626¥¥ 97,445
6,450¥ 103,895¥ (13,746)¥ 104,530¥–(6,450)¥ (6,450)¥(471)¥ 12,802

¥

¥
¥
¥

2,834
4,000
6,835
416
2,903

¥
¥
¥

97,445–97,445(14,217)
117,333

¥

158

¥

¥

¥

5,002

253 ¥

3

¥ 4,775

4,934

67

–

–

–

2,694

–

2,694

–

2,694

4,993

242

259

14

7,110

111

7,222

31

7,253

3,172

–

–

–

3,172

–

3,172

–

3,172

53

Year ended March 31, 2021
Reportable segment
Civil

Smelting

MineralResource

Electronic
Engineering,
CompoEnviron- Construction
nents and ment andand Plant
Materials Recycling Engineering

Other(Note 1)

Total

Reconciliation(Note 2)

Total

Amounts on
consolidated
financialstatements(Note 3)(Thousands of U.S. dollars)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Investments inentities accounted
for using equity
methodIncrease in property,
plant andequipment andintangible assets
Impairment losses on
fixed assets$ 762,026
5,094$ 767,121$ 52,307$ 562,180$ 58,043
10,215$ 68,259$ (12,970)$ 213,106$ 15,084 $ 19,718$ 37,331$ 37,331$ 2,402$ 82,585$ 33,520
0$ 33,520$ 8,282$ 46,779$$$

17,378
1,734
19,112
1,932
5,925

$

$ 2,276 $

45

2,176

$

$ 908,319
17,053$ 925,372$ 51,964$ 910,586$ 26,266 $ 934,594 $—
39,63556,688(56,688)$ 65,901 $ 991,283 $ (56,688)$ 5,266 $57,230 $ (3,992)$ 26,637 $ 937,232 $ 89,187

$

$

$

$

39,3181,544$

40,872 $623

934,594—$ 934,594$
53,238$ 1,026,420
41,495–44,476–––44,476–44,476–44,476

12,36525,634

677

1,138

27

39,851

1,923

41,775334

42,1194,805

13,467–––18,281–

18,281–

18,281

Notes 1. “Other” represents business segments not belonging to reportable segments and includes soundinsulation building materials, transportation, environmental analysis and others.
2. “Reconciliation” included the followings:
Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)

Segment profit (loss):
Intersegment elimination
Corporate expenses (*)

¥

Total

¥

25
(467)
(442)

¥
¥

(5)
(465)
(471)

$
$

225
(4,218)(3,992)(*) “Corporate expenses” represents mainly general and administrative expenses that are notallocated to reportable segments.
Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)

Segment assets:
Corporate assets (*)

¥

9,874

¥

12,802$

89,187(*) “Corporate assets” represents mainly the Company’s investments of surplus funds
including cash, time deposits and investment securities and assets relating to administrative
divisions.

54

Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)

Other items:
Depreciation
Increase in property, plant and equipment
and intangible assets (*)

¥

69

¥

67

$

31

37

623
334

(*) “Increase in property, plant and equipment and intangible assets” represents mainly capital
expenditures that do not belong to reportable segments.
3. Segment profit (loss) is reconciled to operating income (loss) on the consolidated statement ofoperations.
(d) Related information(1) Information by product and service
Information by product and service has been omitted since similar information is disclosed insegment information described above.
(2) Information by geographical area
Net sales information by geographical area for the years ended March 31, 2021 and 2020 was asfollows:
Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Japan
Asia
Oceania

¥

Total

¥

90,5308,678
4,260
103,469¥¥

86,3909,607
1,447
97,445$$

817,72178,38438,478934,594

Property, plant and equipment information by geographical area as of March 31, 2021 and 2020
was as follows:Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Japan
Australia¥

29,503
6,475¥

31,251
7,786$

266,489
58,486

Total¥

35,978¥39,038$324,975(3) Information by major customer
Information by major customer has been omitted since there were no sales to a single externalcustomer accounting for 10% or more of consolidated net sales.

55

21.

Related Party Information(a) The Company had related party transactions with its unconsolidated subsidiary/associate as follows.
For the year ended March 31, 2021

CompanyType

name

Associate

Owner
ship [owned] Relation-ship
ratio of voting with the related

CommonAddress

sharesBusiness

TIANJIN
Tianjin
Production
TOHO Developme
RMB of lead alloy
LEAD
nt Area,
151
for
RECYCLI People's
million automobile
NG CO., Republic ofbatteries
LTD.
China

Notes

rightsparty

Transaction amountTransactions

Interest income(Note 1)
Direct46.5%

Lending ofPayment of funds
funds
Concurrency
of officer
Guarantee of
liabilities(Note 2)

(Millions of yen)40($361 thousand)

Balance at year end
Account

Other (accrued
receivable)(Millions of yen)

7($63 thousand)738
Other (short-term($6,666
loans receivable tothousand)associate)66($596 thousand)

1,031
Other (long-term($9,312loans receivable tothousand)associate)819($7,397 thousand)Terms and conditions of transactions and policies to determine them
1. The Company determined the interest rate for the lending of funds to TIANJIN TOHO LEAD
RECYCLING CO., LTD reasonably based on market interest rates, and has not received
collateral for them.
2. The Company provides guarantees for the entity’s borrowings and receives guarantee fees
based on general guarantee fee rates.

For the year ended March 31, 2020

Company
Type

name

Owner
ship [owned] Relation-ship
ratio ofwith the related

CommonAddress

sharesBusinessvoting rights

party

Transaction amountTransactions

Undertaking of
capital increase

Associate

TIANJIN
Tianjin
Production
TOHO Developme
RMB of lead alloy
LEAD
nt Area,
151
for
RECYCLI People's
million automobile
NG CO., Republic ofbatteries
LTD.
China

Direct46.5%

Lending offunds

Lending of funds(Note 1)
Interest income(Note 1)
Guarantee of
liabilities(Note 2)

Notes

(Millions of yen)

Balance at year end
Account(Millions of yen)

663
1,618

Other (accrued
receivable)

23 Other (short-termloans receivable toassociate)
781

24

1,632

Terms and conditions of transactions and policies to determine them
1. The Company determined the interest rate for the lending of funds to TIANJIN TOHO LEAD
RECYCLING CO., LTD reasonably based on market interest rates, and has not received
collateral for them.
2. The Company provides guarantees for the entity’s borrowings and receives guarantee fees
based on general guarantee fee rates.

56

(b) A consolidated subsidiary of the Company had related party transactions with its unconsolidated
subsidiary/associate as follows.
For the year ended March 31, 2021

CompanyType

Affiliatedcompany
accounted
for by theequitymethodnameOwnership [owned]
Relationshipratio of voting with the related

CommonAddress

sharesAbra The State of
AUD
MiningWest
119
Pty
Australia,
million
Limited Australia

Transaction amount

Businessrightsparty

Transactions

MiningDirect22.7%

Undertakingof capitalincrease
Concurrency
of officer

Undertaking of
capital increase(Millions of yen)

2,229($20,133
thousand)

Balance at year end
Account(Millions of yen)––

22. Subsequent Events
Not applicable.

57