Consolidated Financial Statements (consolidated2025)

For the year ended March 31, 2025 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 7

Consolidated Statement of Operations 9

Consolidated Statement of Comprehensive Income 11

Consolidated Statement of Changes in Net Assets 12

Consolidated Statement of Cash Flows 14

Notes to Consolidated Financial Statements 16

(This is an English translation of the Independent Auditor's Report for the financial statement in the Japanese Annual report)

Independent Auditor's Report

The Board of Directors Toho Zinc Co., Ltd.

We 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, 2025, 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 all material respects, the consolidated financial position of the Group as at March 31, 2025, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

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 independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, including those applicable to audits of financial statements of public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters are those matters that, in our professional judgment, were of most significance 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 a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters.

The other information comprises the information included in the Annual Report that contains audited consolidated financial statements, but does not include the consolidated financial statements and our auditor's report thereon. Management is responsible for preparation and disclosure of the other information. The Audit and Supervisory Committee is responsible for overseeing the Group's reporting process of the other information.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for 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 the Group'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.

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, and to 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 are appropriate 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 of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting 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 to continue 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 our auditor's report. However, future events or conditions may cause the Group to cease to continue 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 presentation in accordance with accounting principles generally accepted in Japan.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the 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 complied with the ethical requirements regarding independence that are relevant to our audit of the consolidated financial statements in Japan, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied to reduce threats to an acceptable level.

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 statements of 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 our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Fees payable to EY ShinNihon and members of its network for audit and non-audit services provided to the Company and its subsidiaries are as described in"(3) Status of Audits" under"Status of Corporate Governance,"which is included in"Status of the Submitting Company."

Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Ernst & Young ShinNihon LLC Tokyo, Japan

June 27, 2025

Shigehiro Koshihara Designated Engagement Partner Certified Public Accountant

Kenji Suda

Designated Engagement Partner Certified Public Accountant

Notes to the Readers of Independent Auditor's Report

・This is an English translation of the Independent Auditor's Report as required by the Financial Instruments and Exchange Act of Japan for the conveniences of the reader.

・Information referred to in"Other Information"and"Fee-related Information"relates to items in the Japanese securities report, and the English version of the audit report is merely a translation of the Japanese version of the audit report.

・A portion of the financial statements covered by the English version of the auditor's report are not included in the English version of the securities report.

・The translated amounts specified in the English version of the securities report are not subject to audit.

Toho Zinc Co., Ltd. and Consolidated Subsidiaries Consolidated Balance Sheet

Current assets:

(Millions of yen) (Thousands of U.S. dollars)

(Note 2)

Current liabilities:

(Millions of yen) (Thousands of U.S. dollars)

(Note 2)

Provision for loss on guarantees for subsidiaries and associates

(Notes 16 and 24)

Shareholders' equity:

Common shares:

Authorized - 70,000,000 shares

Total liabilities and net assets ¥ 99,299 ¥ 108,436 $ 664,118

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

Toho Zinc Co., Ltd. and Consolidated Subsidiaries

Consolidated Statement of Operations

(Millions of yen) (Thousands of U.S. dollars)

(Note 2)

Income taxes (Note 13):

Loss attributable to owners of the parent ¥ (1,458) ¥ (46,452) $ (9,751)

Per share:

(Yen)

(U.S. dollars) (Note 2)

Cash dividends (Note 12) ¥ - ¥ - $ -

Toho Zinc Co., Ltd. and Consolidated Subsidiaries Consolidated Statement of Comprehensive Income

(Millions of yen) (Thousands of U.S. dollars)

(Note 2)

Toho Zinc Co., Ltd. and Consolidated Subsidiaries Consolidated Statement of Changes in Net Assets

Number of shares of common shares issued

Common shares

Capital surplus

Shareholders' equity

Retained earnings

Treasury shares (*)

Total shareholders' equity

(Thousands) (Millions of yen)

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

Net

Accumulated other comprehensive income

Total

unrealized gains on other securities

Deferred losses on hedges

Revaluation reserve for land

Foreign currency translation adjustment

Remeasurements of defined benefit plans

accumulated other comprehensive income

Total net assets

Balance as of March 31, 2024 Issuance of new shares

Loss attributable to owners of the parent

Acquisition of treasury shares

Reversal of revaluation reserve for land Restricted share-based payments

Net changes in items other than those in shareholders' equity

Balance as of March 31, 2025

Net

Accumulated other comprehensive income

Total

unrealized gains on other securities

Deferred losses on hedges

Revaluation reserve for land

Foreign currency translation adjustment

Remeasurements of defined benefit plans

accumulated other comprehensive income

Total net assets

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

parent

Acquisition of treasury shares

Reversal of revaluation reserve for land Restricted share-based payments

Net changes in items other than those

in shareholders' equity Balance as of March 31, 2025

(*) There were 7,764 and 7,750 treasury shares as of March 31, 2025 and 2024, respectively. (Note 12)

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

Toho Zinc Co., Ltd. and Consolidated Subsidiaries Consolidated Statement of Cash Flows

Cash flows from operating activities:

(Millions of yen) (Thousands of U.S. dollars)

(Note 2)

Cash flows from financing activities:

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

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

March 31, 2025

Notes for Readers of Consolidated Financial Statements

・This is an English translation of the consolidated financial statements as required by the Companies Act of Japan prepared for the convenience of readers outside Japan.

・Certain information included in the Japanese Consolidated Financial Statements is not included in these translated consolidated financial statements.

1. Summary of Significant Accounting Policies

   1. Basis of presentation

      The Company and its domestic subsidiaries maintain their books of account in conformity with accounting principles generally accepted in Japan, and its foreign subsidiaries maintain their books of account in conformity with International Financial Reporting Standards ("IFRS") or those of their countries of domicile.

      The accompanying consolidated financial statements of the Group are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of IFRS, and are 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.

   2. 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, all significant majority-owned companies are to be consolidated. Additionally, companies in which share ownership 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 in consolidation.

   3. Foreign currency translation

      1. Foreign currency transactions

         All receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at the balance sheet date.

      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.

   4. 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 three months or less and minor risk for the fair value fluctuation.

   5. Inventories

      Merchandise, finished goods, semi-finished goods, work in process and raw materials are stated at the lower 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.

   6. Financial instruments

      1. Investment securities

         Marketable equity securities classified as other securities are carried at fair value with any changes in unrealized gains or losses, net of income taxes, included directly in net assets. Cost of securities sold is determined by the moving average method. Non-marketable equity securities classified as other securities are carried at cost determined by the moving average method.

      2. Derivatives

         The Company has entered into various derivative transactions, including forward foreign exchange 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 and commodity 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, and forward exchange contracts. The related hedged items are raw materials and finished

         goods exposed to commodity price fluctuation risk, interest payments on debt loan, and products exposed to foreign exchange fluctuation risk, respectively.

         The Company has a policy to utilize the above hedging instruments in order to reduce the Company's exposure to the risks of fluctuations in prices of raw materials and products, interest rates and cash flows.

         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 the commencement of the hedging transactions regarding metal forward contracts and forward exchange contracts. Hedge effectiveness is omitted for interest rate swaps which qualify for hedge accounting and meet specific criteria.

   7. Property, plant and equipment and depreciation

      Property, plant and equipment, except for leased assets, are stated at cost and mainly depreciated by the straight-line method over the estimated useful lives of the respective assets.

   8. 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).

   9. Leases

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

   10. Allowance for doubtful accounts

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

   11. 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 (10 years) which is within the average remaining years of service of the eligible employees when the gains 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 (10 years) which is within the average remaining years of service of the eligible employees when the gains 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 as remeasurements of defined benefit plans under accumulated other comprehensive income of net assets after tax effect adjustments.

       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, the benefits payable assuming the voluntary retirement of all eligible employees at the year-end are deemed as retirement benefit obligations.

   12. 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 and the land improvement business.

   13. Provision for loss on guarantees for subsidiaries and associates

       Provision for loss on guarantees for subsidiaries and associates is recorded based on the estimated loss burden amount.

   14. 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 and laws which will be in effect when the differences are expected to reverse.

   15. Recognition of revenues

       1. Smelting

          The Smelting business engages in sales of nonferrous metal products such as zinc, lead and silver. Revenue from this business is recognized at the time of delivery as the performance obligation is satisfied when control over the goods is transferred to the customer. Revenue from sales of these products is measured at the transaction price under contracts with customers. The consideration for the transaction is received primarily within six months after the performance obligation is satisfied and therefore does not include any significant financing component.

       2. Environment and Recycling

          The Environment and Recycling business engages in sales of zinc oxide and other products. Revenue from this business is recognized at the time of delivery as the performance obligation is satisfied when control over the goods is transferred to the customer. Revenue from sales of these products is measured at the transaction price under contracts with customers. The consideration for the transaction is received primarily within six months after the performance obligation is satisfied and therefore does not include any significant financing component.

       3. Mineral Resources

          The Mineral Resources business engages in sales of lead and silver concentrates as well as zinc concentrates. Revenue from this business is recognized at the time of delivery as the performance obligation is satisfied when control over the goods is transferred to the customer. Revenue from

          sales of these products is measured at the transaction price under contracts with customers. The consideration for the transaction is received primarily within six months after the performance obligation is satisfied and therefore does not include any significant financing component.

       4. Electronic Components and Advanced Materials

          The Electronic Components and Advanced Materials business engages in sales of electronic parts, plating products, electrolytic iron, and machine parts. Revenue from this business is recognized at the time of delivery as the performance obligation is satisfied when control over the goods is transferred to the customer. For certain products, the business applies the alternative treatment prescribed in Paragraph 98 of the "Implementation Guidance on Accounting Standard for Revenue Recognition" and recognizes revenue from sales of products in Japan at the time of shipment if the period from the time of shipment to the time when control of the product is transferred to the customer is within a normal period. Revenue from sales of these products is, in principle, measured at the transaction price under contracts with customers. For products which use parts supplied from customers for a fee, for which the Group does not obtain control, revenue from sales of such products is measured at the transaction price under contracts with customers, less the amount for the parts supplied from customers for a fee. The consideration for the transaction is received primarily within six months after the performance obligation is satisfied and therefore does not include any significant financing component.

       5. Other

          This segment mainly consists of the business engaging in sales of sound insulation building materials, and the civil engineering, construction and plant engineering business. Revenue from sales of sound insulation building materials is recognized at the time of delivery as the performance obligation is satisfied when control over the goods is transferred to the customer. Revenue from sales of these products is measured at transaction price under contracts with customers. The consideration for the transaction is received primarily within six months after the performance obligation is satisfied and therefore does not include any significant financing component. On the other hand, revenue from the civil engineering, construction and plant engineering business is recognized based on the degree of completion of the construction work as performance obligations of this business are satisfied over a certain period of time, or more specifically satisfied based on the progress of construction over the contract period. Therefore, revenue from this business is recognized according to the degree of completion of the construction work. The degree of completion is measured by the input method based on costs incurred because the costs incurred are considered to contribute to and be largely proportional to the entity's progress in satisfying its performance obligations. Revenue from these construction works is measured at the transaction price under construction contracts with customers. The consideration for the transaction is received in stages in accordance with the terms and conditions of the contract and largely in proportion to the progress of satisfaction of the performance obligation, and therefore does not include any significant financing component.

   16. 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.

   17. Profit (loss) per share

       Profit (loss) per share is computed based on the profit (loss) available to shareholders of common shares and the weighted average number of common shares outstanding during the year.

   18. Asset retirement obligations

       Asset retirement obligations are calculated based on the expected periods of use after acquisition of 5-33 years, using the discount rates of 0.3 to 2.1% for the years ended March 31, 2025 and 2024. The amount mainly represents the obligations incurred under real-estate lease agreements to restore offices to their original states.

   19. Significant accounting estimates

       1. Recoverability of deferred tax assets

          The amounts recorded in the consolidated financial statements for the years ended March 31, 2025 and 2024

          March 31, 2025 2024 2025

          (Thousands of

          (Millions of yen) U.S. dollars)

          Deferred tax assets (before offset against deferred tax liabilities)

          ¥ 1,095 ¥ 1,055 $ 7,323

          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 the taxable income before adjustment of the temporary differences, etc. under tax planning, and the sufficiency 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 the temporary differences are expected to be resolved and the taxable income during the carry-back or 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 the market conditions such as metal market prices or foreign exchange rates, the sales volume and others.

          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 years ended March 31, 2025 and 2024

          March 31, 2025 2024 2025

          (Thousands of

          (Millions of yen) U.S. dollars)

          Net defined benefit asset (Toho Zinc) ¥ 1,982 ¥ 1,843 $ 13,255

          Information about significant accounting estimates for the identified item

          In the Group, some companies adopt defined benefit plans. Retirement benefit obligations and related 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 determined based 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.

          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 of zinc smelting business

          The amounts recorded in the consolidated financial statements for the years ended March 31, 2025 and 2024

          March 31, 2025 2024 2025

          (Thousands of

          Property, plant and equipment and intangible

          (Millions of yen)

          U.S. dollars)

          assets ¥ 4,596 ¥ 13,965 $ 30,738

          Impairment loss 7,383 - 49,378

          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 be recognized, the Company writes down the book value to its recoverable amount and recognizes an impairment loss. The recoverable amount is measured at the higher of value in use or net selling value.

          The Group recorded impairment loss on fixed assets of zinc smelting business of ¥7,383 million ($49,378 thousand) for the year ended March 31, 2025 as described in Note 6. Impairment Loss on Fixed Assets. The recoverable amount is calculated based on the net selling value, and the major assumptions used in the calculation are based on the appraisal value of real estate by a licensed real estate appraiser, including the land price comparison, the replacement cost of buildings, and the depreciation rate of land and buildings as a whole. In addition, the value of movable assets is based on valuations by outside experts and is the estimated sales price of the said assets.

          If a reassessment of such estimates and assumptions is required due to changes in market 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.

   20. Changes in accounting policies

       Application of Accounting Standard for Current Income Taxes, etc.

       The Company applies the Accounting Standard for Current Income Taxes (ASBJ Statement No. 27, October 28, 2022; hereinafter referred to as the "Revised Accounting Standard 2022"), etc. from the beginning of the year ended March 31, 2025.

       The amendment of classification of income taxes (taxation on other comprehensive income) follows the transitional treatment prescribed in the proviso to paragraph 20-3 of Revised Accounting Standard 2022 and the proviso to paragraph 65-2 (2) of the Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022; hereinafter referred to as "Revised Guidance 2022"). This change has no impact on the consolidated financial statements.

       Regarding the amendment related to the revision of the treatment on the consolidated financial statements for gains or losses on the sales of shares of subsidiaries and affiliates between consolidated companies that are deferred for tax purposes, the Company has applied Revised Guidance 2022 from the beginning of the year ended March 31, 2025. This change has been applied retrospectively and the consolidated financial statements for the year ended Mach 31, 2024 are after the retrospective application. This change has no impact on the consolidated financial statements for the year ended March 31, 2024.

   21. Accounting standards and guidance issued but not yet adopted

       • "Accounting Standard for Leases" (ASBJ Statement No. 34, issued on September 13, 2024, Accounting Standards Board of Japan);

       • "Implementation Guidance on Accounting Standard for Leases" (ASBJ Guidance No. 33, issued on September 13, 2024, Accounting Standards Board of Japan); and other changes to relevant business accounting standards, implementation guidance for business accounting standards, practical solutions, and transferred guidance

       1. Overview

          At the Accounting Standards Board of Japan (ASBJ), as part of efforts to align Japanese standards with international standards, deliberations were conducted with reference to international accounting standards, toward the development of an accounting standard for the recognition of all leases of lessees as assets and liabilities. These deliberations have resulted in the establishment of a basic policy that is based on the single accounting model of IFRS 16 but does not incorporate every aspect of IFRS 16, with only the main principles adopted. The aim was to make the accounting process straightforward and convenient, and to make alterations basically unnecessary even when applying the IFRS 16 provisions to non-consolidated financial statements, and it led to the announcement by the ASBJ of a revised accounting standard for leases and related guidance.

          Regarding the accounting treatment for lessees, the method of cost allocation for leases of lessees is similar to that of IFRS 16. Regardless of whether the lease is a finance lease or operating lease, a single accounting model, whereby depreciation expense on right-of-use assets and interest expense (interest equivalent amount) on lease liabilities are recorded, is applied for all leases.

       2. Date of application

          The Company plans to apply the accounting standard and guidance effective from the beginning of the fiscal year ending March 31, 2028.

       3. Effect of applying the standard and guidance

          The Company is currently evaluating the effect of applying the "Accounting Standard for Leases," etc. on its consolidated financial statements.

   22. Reclassifications

       Certain reclassifications have been made to the prior year amounts to conform to the current year presentation.

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 ¥149.52 to U.S. $1 on March 31, 2025. 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. Notes Receivable Maturing at Fiscal Year-End

   Although March 31, 2024 was a bank holiday, notes maturing on that date were accounted for as if they were settled on their maturity date. The corresponding amount of notes receivable maturing on March 31, 2024 was as follows:

   March 31, 2025 2024 2025

   (Millions of yen) (Thousands of U.S. dollars)

   Notes receivable ¥ - ¥ 54 $ -

4. Inventories

   Inventories as of March 31, 2025 and 2024 consisted of the following:

   March 31, 2025 2024 2025

   (Millions of yen) (Thousands of U.S. dollars)

   Merchandise and finished goods	¥	11,719		¥	10,322		$ 78,377
   Work in process		14,676			10,011		98,154
   Raw materials and supplies		11,507			18,375		76,959
   Total	¥	37,902		¥	38,709		$ 253,491

5. Land Revaluation

   In accordance with the Act on Revaluation of Land, the Company's land used for its business operations was revalued 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 of March 31, 2025 and 2024 were ¥1,502 million ($10,045 thousand) and ¥7,480 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.

6. Impairment Loss on Fixed Assets

   The Group recognized impairment losses on certain asset groups for the years ended March 31, 2025 and 2024 as follows:

   For the year ended March 31, 2025

   							(Thousands of
   Location	Use		Category		(Millions of yen)		U.S. dollars)
   Annaka City,	Assets included in Zinc		Buildings and structures
   Gunma	Smelting business		Machinery and equipment
   			Land Other		¥ 7,383		$ 49,378
   Fujioka City,	Assets included in		Machinery and equipment
   Gunma	Electronic Components business		Construction in progress Other		¥ 295		$ 1,972

   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.

   In the Smelting segment, as part of its Business Revitalization Plan, the Company has decided, at the meeting of the Board of Directors held on December 18, 2024, to shut down the main facilities of the Zinc Smelting business, which has a high-cost business structure, and reorganize it into a metal recycling business centered on product processing of various metals and zinc dust processing. Accordingly, the book value of the asset group related to the Zinc Smelting business was reduced to the recoverable amount, and the amount of the reduction of ¥7,383 million ($49,378 thousand) was recorded as impairment losses, which comprised buildings and structures of ¥1,827 million ($12,219 thousand), machinery and equipment of ¥2,120 million ($14,178 thousand), land of ¥3,273 million ($21,890 thousand), and other of ¥161 million ($1,076 thousand). The recoverable amount is calculated based on the net selling value, and in the case of real estate, this is the appraisal value determined by a licensed real estate appraiser, while in the case of movable assets, it is the estimated sales price of the assets based on valuations by outside experts.

   Furthermore, as some of the manufacturing facilities in the Electronic Components and Advanced Materials segment are idle or dormant assets and are not expected to be in operation in the future, the book value of such fixed assets was reduced to the recoverable amount, and the amount of reduction of ¥295 million ($1,972 thousand) was recorded as impairment losses, which comprised machinery and equipment of ¥68 million ($454 thousand), construction in progress of ¥224 million ($1,498 thousand), and other of ¥1 million ($6 thousand). The recoverable amount was calculated based on the net selling value, which was evaluated at memorandum value.

   For the year ended March 31, 2024

   Location Use Category (Millions of yen)

   The State of New South Wales, Australia

   The State of New South Wales, Australia

   Assets included in Mineral Resources business (Assets at Rasp Mine)

   Assets included in Mineral Resources business (Exploration

   Buildings and structures Machinery and equipment Mining rights

   Other ¥ 21,763

   rights) Mining rights ¥ 127

   Annaka City, Gunma

   Fujioka City, Gunma

   Fujioka City, Gunma

   Assets included in Machine parts business

   Assets included in Electroplating business

   Assets included in SOFT CALM business

   Buildings and structures Machinery and equipment Other

   Buildings and structures Machinery and equipment Other

   Buildings and structures Machinery and equipment Other

   ¥ 205

   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.

   In the Mineral Resources segment, the Group has decided to close the Rasp Mine by the end of 2024, since it reached to a conclusion after closely examining the medium- to long-term business plan of the Rasp Mine that is operated by CBH Resources Ltd. in Australia that the economic potential of the mine for developing a next core ore body is low and the mine's medium- to long-term business plan based on the premise of the development of ore bodies is not feasible. Consequently, after implementing the impairment test required by IAS 36 "Impairment of Assets," the Group wrote down the book value of the asset group included in the Mineral Resources business (Rasp Mine) to its recoverable amount and recognized the reduction of ¥21,763 million as impairment losses, which comprised buildings and structures of ¥1,056 million, machinery and equipment of ¥4,144 million, mining rights of ¥14,906 million, and other of ¥1,656 million. The recoverable amount was calculated based on the fair value less costs of disposal, and the primary assumption used in the calculation was the estimated sales price.

   In addition, the Group recognized in this segment the entire amount of the book value of ¥127 million of the exploration rights to the projects with completed exploration activities as impairment losses, which comprise mining rights of ¥127 million. The recoverable amount was calculated based on the fair value less costs of disposal, and was evaluated at memorandum value.

   Furthermore, in some businesses of the Electronic Components and Advanced Materials as well as Other segments, the Group wrote down the book value of the fixed assets, which are no longer expected to be used following the Group's decision to withdraw its businesses, to the recoverable amount, and recognized the reduction of ¥205 million as impairment losses, which comprised buildings and structures of ¥22 million, machinery and equipment of ¥171 million, and other of ¥11 million. The recoverable amount was calculated based on the net selling value, which was evaluated at memorandum value.

7. Loss on Business Restructuring

   The loss on business restructuring was due to the recording of losses such as extra severance pay and reemployment support costs associated with the implementation of a voluntary retirement system in conjunction with the reorganization of the Company's Zinc Smelting business.

8. Investments in Unconsolidated Subsidiaries and Associates

   Investments in unconsolidated subsidiaries and associates as of March 31, 2025 and 2024 are summarized as follows:

   March 31, 2025 2024 2025

   (Millions of yen) (Thousands of U.S. dollars)

   Unconsolidated subsidiaries	¥	4		¥	9		$ 26
   Associates		-			82		-
   	¥	4		¥	91		$ 26

9. Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt as of March 31, 2025 and 2024 consisted of the following:

Amount

Weighted average

interest rate Due in Amount Amount

(Millions of yen)

(Millions of yen)

(Thousands of U.S. dollars)

Average interest rates are calculated by using weighted-average interest rates as of March 31, 2025. Average interest rates on lease obligations are not provided because interest equivalents included in the total lease 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, 2025 were as follows: