Annual Report 2012 - DOWAホールディングス

Annual Report 2012

Do

wa

Ho

lDin

gs C

o., ltD

.

Annual Report 2012

For the year ended March 31, 2012

DOWA HOLDINGS cO., LtD.

pages

01 Financial Highlights

02 Message from the Management

04 Corporate Structure and Strategy at Dowa05 The Dowa Resource Recycling Loop

06 Our 5 Core Business Segments

08 Medium-Term Plan V

10 Business Review

10 Environmental Management & Recycling

12 Nonferrous Metals

14 Electronic Materials

16 Metal Processing

18 Heat Treatment

20 Corporate Governance

22 Environmental Management and Social Contribution

Activities

23 Board of Directors and Officers

24 Consolidated 11-Year Summary

26 Financial Review

30 Consolidated Balance Sheets

32 Consolidated Statements of Operations

33 Consolidated Statement of Comprehensive Income

34 Consolidated Statements of Changes in Equity

35 Consolidated Statements of Cash Flows

36 Notes to Consolidated Financial Statements

57 Report of Independent Auditors

58 Global Network

59 Subsidiaries and Affiliates

60 Corporate History

61 Corporate Data

Contents

DOwA HOLDINGS CO., LTD. Annual Report 2012

Message from the Management

08

02

Medium-Term Plan V

Business Review10Environmental Management & Recycling

Nonferrous Metals

Electronic Materials

Metal Processing

Heat Treatment

Financial HighlightsYears ended March 31

*1 The years stated in the text are ended March 31 of the year. Thus “2012” refers to the fiscal year, which ran from April 1, 2011 through March 31, 2012.*2 ¥82.19=US$1, the rate of exchange on March 31, 2012, is used.*3 Interest-bearing debt does not include lease obligations.*4 ROA is Ordinary Income divided by the average of Total Assets at the start and end of the year.

Net Sales(Billions of Yen)

08 10 1109 120

500

400

300

200

100

Net Income (loss)(Billions of Yen)

08 10 1109 12–30

30

20

10

0

–10

–20

Operating Income (loss)(Billions of Yen)

08 10 1109 12–20

60

40

20

0

Total Assets(Billions of Yen)

08 10 1109 120

400

300

200

100

Ordinary Income (loss)(Billions of Yen)

08 10 1109 12–20

60

40

20

0

Capital Expenditures and R&D Expenses(Billions of Yen)

08 10 1109 120

40

30

20

10

Millions of YenThousands of U.S. Dollars*2

2012*1 2011 2012

For the Year:

Net Sales ¥392,468 ¥379,816 $4,775,138

Operating Income (loss) 22,009 22,924 267,793

Ordinary Income (loss) 20,918 23,371 254,508

Net Income (loss) 10,610 8,521 129,098

Cash Flows from Operating Activities 31,499 23,955 383,247

Capital Expenditures 15,910 17,820 193,576

R&D Expenses 4,367 3,962 53,138

At Year-end:

Equity 121,807 113,785 1,482,019

Total Assets 319,665 340,161 3,889,344

Interest-bearing Debt*3 117,670 138,119 1,431,686

Return on Assets (ROA*4) 6.3% 7.0% 6.3%

01Dowa HolDings Co., ltD. Annual Report 2012

The Dowa Group will build a sturdy corporate structure capable of generating profits even in a business environment with an unclear outlook by expanding operations in Asia and other emerging markets where growth is ongoing, continuing to invest in growth areas such as new energy and recycling, and steadily carrying out policies directed at improving productivity and increasing orders.

Message from the Management

02 Dowa HolDings Co., ltD. Annual Report 2012

Results for Fiscal 2011

The overall Japanese economy in fiscal 2011 enjoyed upward mo-

mentum from demand associated with the recovery of supply chains

impacted by the Great East Japan Earthquake. However, the econo-

my began losing steam due to fiscal problems in the U.S. and Eu-

rope, inflationary fears in China and other emerging economies, the

impact of flooding in Thailand and other factors, and challenging

conditions remained in place due in part to deteriorating export

conditions caused by the strength of the yen and contraction in

domestic markets.

Regarding the Group’s operating environment, demand for auto-

motive products quickly recovered from the earthquake-induced

slump and has since been relatively firm. Products for electronic mate-

rials were impacted by supply chain turmoil caused by the Great East

Japan Earthquake and flooding in Thailand as well as by production

adjustments for semiconductor products. Demand increased, however,

for smartphone applications and other products. The market environ-

ment was marked by generally high metal prices, but on currency

markets, the yen remained strong through the end of the term.

Amid such conditions, the Dowa Group worked to stabilize opera-

tions by quickly restoring production sites impacted by the earth-

quake and taking measures to deal with summer power shortages. We

also continued to accommodate changes in the business environment

by proactively conducting business development in Southeast Asia

and other locations in the Asian region such as China and India.

As a result, on a consolidated basis, net sales for the term in-

creased ¥12.6 billion compared to the previous year to ¥392.4 billion,

operating income declined ¥0.9 billion to ¥22.0 billion, and ordinary

income fell ¥2.4 billion to ¥20.9 billion. Consolidated net income

increased ¥2.0 billion year on year to ¥10.6 billion due to a decline in

extraordinary losses stated last year in connection with the Great East

Japan Earthquake.

Medium-Term Plan V and Fiscal 2012 Policies

Fiscal 2012 marks the first year of our three-year Medium-Term Plan V.

We intend to steadily carry out the following policies to achieve the

goals of the plan.

Expand overseas operations

In China, we will continue expanding household appliances recycling

operations and the industrial furnace and heat treatment business,

while also launching a new precious metal plating business. In the

Environmental Management & Recycling business, we intend to ex-

pand the operations of Modern Asia Environmental Holdings Inc. in

Southeast Asia and launch a new precious metals recycling business in

Singapore. Moreover, plans call for further expanding the Heat Treat-

ment business by augmenting Hightemp Furnaces Ltd. in India, a

company in which we acquired a controlling interest the previous

fiscal year, and for establishing business sites for the Metal Processing

segment in China and Singapore. Through such initiatives, the Group

will proactively work to develop business operations overseas, primar-

ily in the growing markets of Asia and emerging countries.

Initiatives in growth markets

We will boost production of sensor LEDs and silver powders in order

to accommodate demand for smartphones and solar cells. In addition,

we will promote sales of plating and circuit boards for lithium batteries

and for electric rail and wind power applications. In the area of power

semiconductors, we will ramp up to mass production for the full-

fledged launch of nitride semiconductors. These and other initiatives

will be conducted to expand operations in growth markets.

Bolster business competitiveness

Plans call for expanding the disposal business for waste material with

trace amounts of PCBs, which was started the previous fiscal year, and

for the full launch of Kosaka Smelting & Refining Co., Ltd.’s system for

recovering rare metals such as nickel, tin, and antimony. The competi-

tiveness of existing businesses will also be reinforced by further rais-

ing productivity at our various sites, an effort that will include

building an efficient domestic production system in the Heat Treat-

ment business and raising yields at plants that produce rolled copper

products and plating.

By steadily carrying out these policies aimed at continued growth,

we expect to achieve the goals of Medium-Term Plan V.

Masao YamadaPresident and Representative Director


In order to strengthen its corporate structure, the Dowa Group intends to implement a number of measures

such as business expansion overseas and in growth markets to achieve sustained growth, productivity

improvements, and cost-cutting, all designed to strengthen the competitive edge of businesses and allow

rapid response to changes in markets and the business climate.

Corporate Structure and Strategy at Dowa

1 The Dowa Resource Recycling Loop

2 Our 5 Core Business Segments

3 Medium-Term Plan V


1

Operations at the Dowa Group, established in 1884, are based on our

unique resource recycling loop. The loop begins with our production

of nonferrous metal materials and progresses through the manufac-

ture of a variety of value-added products to recycling.

In our Nonferrous Metals business, we extract useful metals from

a variety of recyclable raw materials in addition to natural resources.

These metals, after being processed by our Electronic Materials,

Metal Processing and Heat Treatment businesses, are incorporated in

The Dowa Resource Recycling Loop

our user end products after being given sophisticated functionality.

In our Environmental Management & Recycling business, we make

waste materials harmless and recover metals from products after

they have been used. These recovered metals are then refined again

for re-use.

In this manner, the Dowa Group will continue to develop its

business activities, contributing to the building of a society based on

the recycling of resources.

The technology of the Dowa Group contributes to

people’s lives and to the global environment.

Metal

Compound semiconductor wafers, etc.

Heat treatment of parts

Copper alloy

Recycling

Soil remediation

Waste treatment

Heat Treatment

Metal Processing


Nonferrous Metals

Environmental Management & Recycling


2 Environmental Management & Recycling Business

DOWA ECO-SYSTEM CO., LTD.

• Waste treatment business: Integrated and comprehensive services from collection and transport of general and industrial waste through intermediate waste treatment to controlled landfilling.• Soil remediation business: Provision of total support services ranging from soil survey and remediation to monitoring.• Recycling business: Recovery of a variety of valuable metals from scrap generated during production processes, consumer electronics, automobiles and

other discarded products.

• Precious metals and copper business: One of the few smelting operations worldwide that can recover a wide variety of metals including gold, silver, and copper from recyclable raw materials.• Rare metals business: Recovery of platinum group metals from used exhaust gas catalyst material from automobiles.• Zinc business: Integrated business structure that covers every phase from the mining of raw ore to bullion production and sales of finished goods centered

on Akita Zinc Co., Ltd., the largest zinc smelting plant in Japan, with an annual output of 200,000 tons.

• Semiconductors business: Leading manufacturer of semiconductor materials such as high-purity gallium and indium, compound semiconductor wafers, and high-intensity, high-output LEDs.• Electronic materials business: Largest producer of silver powder for solar cells and manufacturer of copper powders for electronics parts and zinc powder

and silver oxide for batteries.• Functional materials business: Dominant share in the world market for metal powders used in high-capacity data storage tape, and producer of a range of

products from carrier powder for copying machines to ferrite powder used in printers and copiers.

• Metal-processing business: Manufactures copper, brass, and copper alloy strips used in terminals and connectors for automobiles; brass rods; and forged brass products.• Plating business: Precious metal plating of connectors and switches for automobiles, mobile telephones and consumer electronics.• Substrates business: Manufactures metal-ceramic substrates employed in industrial machinery such as power management devices.

• Heat treatment processing business: Provides surface treatment for metal parts adapted for different applications and used in automobile engines and transmission parts to increase factors including abrasion resistance, fatigue resistance and seizure resistance.• Industrial furnace business: Employs expertise in heat treatment to offer complete services ranging from facilities design to startup and maintenance.

Sub-segments

Sub-segments

Sub-segments

Sub-segments

Sub-segments

Nonferrous Metals Business

DOWA METALS & MINING CO., LTD.

Electronic Materials Business

DOWA ELECTRONICS MATERIALS CO., LTD.

Metal Processing Business

DOWA METALTECH CO., LTD.

Heat Treatment Business

DOWA THERMOTECH CO., LTD.

Our 5 Core Business Seg ments

* The years stated in the text are ended March 31 of that year. Thus “2012” refers to the fiscal year from April 1, 2011 through March 31, 2012.* The percentage of total net sales has been calculated excluding sales of the “Others” business segment.


Percentage of Total Net Sales Segment PolicyNet Sales (Billions of Yen)

P. 10

P. 12

P. 14

P. 16

P. 18

300

200

100

008 09 10 11 12

90

60

0

30

08 09 10 11 12

100

0

80

60

40

20

08 09 10 11 12

30

20

0

10

08 09 10 11 12

20%

Dowa Eco-System Co., Ltd. is expanding operations in Japan and abroad by furnishing comprehensive and reliable waste management, soil remediation, and recycling services. As the leading environmental and recycling company in Asia, we are strengthening our business foundations and increasing operating bases overseas to help improve the environment in Asia.

40%

Dowa Metals & Mining Co., Ltd. is establishing distinctive recycling and smelting complexes using its engineering capabilities honed over many years in these two areas. We are helping to develop a resource recycling society by furnishing steady supplies of copper, zinc, precious metals, rare metals, and other metals recovered from the processing of raw materi-als as we work to further strengthen recycling and smelting operations.

19%

Dowa Electronics Materials Co., Ltd. is engaged in various businesses—semiconductor materials such as high-purity gallium, compound semiconductor wafers, and LEDs, electronic materials that use electrical conducting materials, and functional materials that use magnetic materials—and provides its characteristic products worldwide. In the rapidly changing market for electronic materials, we are always working to further bolster competitiveness in line with our policy of being a leading technological company.

17%

Dowa Metaltech Co., Ltd. supplies value-added products for in-vehicle installation, power steering, and information communication applications from its metal processing, plating, and substrate businesses. We are promoting operations at the global level, particularly at production bases in Asia for satisfying growing markets there.

4%

Dowa Thermotech Co., Ltd. is engaged in a heat treatment processing business for extending the life of metal materials and an industrial furnace business that applies our accumulated expertise. Backed by our technological prowess in carburiz-ing heat treatment and other areas, we aim to become a leading company in the heat treatment industry throughout Asia.

Our 5 Core Business Seg ments100

0

80

60

40

20

08 09 10 11 12 *


3Medium-Term Plan VSince 2000, the Dowa Group has improved its earnings and finan-cial profile through working on business structure reforms. The situation was extremely challenging last year due to the disruption in the supply chain caused by the Great East Japan Earthquake and deterioration in the export environment caused by the strong yen. However, companies in Japan made efforts to stabilize opera-tions and improve efficiency at production sites, and overseas Japanese companies vigorously developed business in the Asian region and other countries.

Overview of Medium-Term Plan V

Management Policies: Selection and concentration, become a technology-oriented companyBasic Policies: Further growth

0

10

20

30

40

50

0.1 1.33.85.3

1.8 2.4 4.0

7.0

13.0

9.0

12.0

45.0

FY

5.6

7.0

3.7

5.4

24.0

4.7

5.9

4.5

4.4

20.9

7.4

6.2

2.8

23.3

4.9

3.32.3

13.8

2009 2010 2011 2012 (Forecast) 2014 (Plan)

Ordinary income (Billions of Yen)


Nonferrous Metals


Metal Processing

Heat Treatment

Environmental Management & Recycling14%

NonferrousMetals 18%

Electronic Materials52%

Metal Processing9%

Heat Treatment 7%

¥17.0 billion

(Forecast cumulative �gures for years

2012-2014)

Environmental Management & Recycling31%

NonferrousMetals 22%

Electronic Materials12%

Metal Processing20%

Heat Treatment12%

Others3%

¥60.0 billion

(Forecast cumulative �gures for years

2012-2014)

InvestmentGrowth in Ordinary Income

R&D

Management Targets (FY2014) FY2011

Ordinary income ¥45.0 billion ¥20.9 billion

ROA Over 10% 6.3%

Operating CF (three years) ¥130.0 billion ¥80.4 billion*

Investment (three years) ¥60.0 billion ¥54.3 billion*

R&D (three years) ¥17.0 billion ¥12.8 billion*

* Results are cumulative figures for three years from FY2009 to FY2011

The economic situation, as regards the Dowa Group, continues to lack clarity, but aiming to achieve further growth we have for-mulated Medium-Term Plan V, a three-year management plan starting in April 2012. In order to achieve this plan’s goals, we will steadily implement a range of policies that include expanding overseas operations, investing in growing fields, and strengthening the competitive edge of our businesses.

1) Expand overseas operationsExpanding operations in Asia and emerging countries, which continue to grow

2) Invest in growing fieldsContinuing to invest in growing fields, including new energy and recycling

3) Strengthen the competitive edge of our businessesSteadily pursuing initiatives to enhance productivity and increase orders, in response to evolving markets and user trends


Major Policies for Each Business

Eco-System Sanyo Co., Ltd.

Kosaka Smelting & Refining Co., Ltd.

Nitride semiconductors for HEMT

Rolled copper products

Hightemp Furnaces Ltd.


Nonferrous Metals


Metal Processing

Heat Treatment

Vision

Vision

Vision

Vision

Vision

Major policies

Major policies

Major policies

Major policies

Major policies

Become No. 1 environment manage-ment and recycling company in Asia and contribute to environmental improvement in Asia

Establish the world’s best flexible recycling smelting complex

Expand revenue in existing business-es, start up new businesses, and search for new subjects

Accelerate business in Asia and shift to the growth fields

Become a global comprehensive heat treatment company

• Increasesalesofstrategicproducts(nitridesemiconduc-tors, sliver powders, carrier powders, etc.)

• Havenewproductscontributetoearningsasquicklyas possible (silver nano-powders, materials for fuel cells, etc.)

• Searchfornewopportunitiesforthefuture

• EstablishsitesinAsiaandpromotesales(Constructnew plants in China and overseas sales sites for the plating business)

• Increasesalesofcircuitboardsandestablishsystemfor increased production

• EnhanceoverseasoperationsinChina,IndiaandSoutheast Asia

• Furtherraisetheefficiencyofdomesticfacilities

• Increaseby-productrevenuebystrengtheningthefunctions of the Kosaka/Akita complex

• Expandtheplatinummetalsrecoverybusiness• Increasetheproprietaryoreratioandsecureraw

materials

• Expandtheincinerationbusinessforwastematerialswith trace amounts of PCBs

• Launchthesoilremediationbusinessoverseas• Expandcollectionandprocessingofrecyclableraw

materials through reinforcing preprocessing and other measures


Business ConditionsIn waste treatment, industrial waste emissions were virtually flat, as customer production

activities were curtailed by the earthquake and power restrictions, but a quick recovery by the

auto industry and other sectors subsequently led to firm trends. In soil remediation, the market

experienced a recovery thanks to gradual improvement in the real estate market. In recycling,

collection volume declined in the aftermath of waning heightened demand associated with

replacement purchases after the end of the Eco-point system and full switchover to digital

terrestrial broadcasting.

Results for Fiscal 2011The incineration business for waste material with trace amounts of polychlorinated biphenyls

(PCBs) was steadily launched beginning in the second half, and efforts were made to expand

customer acquisition overseas. As a result, segment consolidated sales rose 14% compared to

the previous year, to ¥91.0 billion. Increased treatment from operational improvements at our

plants and efforts to expand operations overseas resulted in the segment consolidated operat-

ing income rising 60% year on year to ¥4.4 billion.

Outlook for Fiscal 2012In the waste treatment business, we will steadily promote the incineration business for waste

material with trace amounts of PCBs and will work to bolster competitiveness by taking in

more difficult-to-process waste. In soil remediation, we will increase our market share by im-

proving on-site remediation technologies, and in recycling, we will strive to improve cost

responsiveness by reinforcing pre-processing functions and raise the added value of recovered

valuables. Overseas, we will promote expansion of the waste treatment business at sites in

Southeast Asia and begin involvement in soil remediation and metal recycling. In China, we

intend to develop the soil remediation business alongside our existing recycling business.

By executing these initiatives, in fiscal 2012 we expect to achieve consolidated sales of

¥97.0 billion and a consolidated operating income of ¥5.5 billion.

Dowa Eco-System Co., Ltd. offers integrated services from collection and transport of waste, contami-nated soil and recyclable raw mate-rial to intermediate waste treatment such as compacting/detoxification and conversion into raw material for smelting or controlled landfilling. By expanding into consultation busi-ness, such as environmental impact assessments, and responding to a wide range of environmental needs both in Japan and overseas, Dowa Eco-System Co., Ltd. aims to become the leading company in the environ-mental and recycling businesses.

Business Review

Kenichi SasakiPresident


DOWA ECO-SYSTEM CO., LTD.

Main Products and ServicesWaste treatment, landfill facilities, soil remediation, metal recycling, household appliances recycling, automobile recycling, consulting on environmental matters, logistics, etc.

Become No. 1 environmental management and recycling company in Asia and contribute to environmental improvement in Asia.


2008.3 (FY2007)

2009.3 (FY2008)

2010.3 (FY2009)

2011.3 (FY2010)

2012.3 (FY2011)

Net Sales 84.5 69.7 64.8 79.6 91.0Operating Income 8.0 4.9 2.1 2.8 4.4Investment* 5.2 17.6 4.1 7.0 5.8* The total of investments in property, plant and equipment, and R&D expenses


100

0

80

60

40

20

08 09 10 11 12

Operating Income(Billions of Yen)

9

6

3

008 09 10 11 12

Investment*(Billions of Yen)

20

0

15

10

5

08 09 10 11 12

(Billions of Yen)

Waste TreatmentWe will work to further improve utilization at our intermediate treatment plant for waste

products and will continue strengthening our sales and collection network. In the incin-

eration business for waste material with trace amounts of PCBs, we will maintain utilization

rates at Eco-System Sanyo Co., Ltd.’s dedicated treatment facility and strengthen related

services, including dismantling and sorting equipment into insulating oil and housing.

Soil RemediationIn Japan, we will work to increase our market share through involvement in in situ remedia-

tion technologies, which make remediation possible even while the plant is in operation.

We also intend to continue developing operations in China and Southeast Asia as soil

remediation issues associated with ongoing land development come to the fore, and

environmental regulations are established.

RecyclingWe will increase earnings by expanding the scope of items collected, which will be ac-

complished by reinforcing pre-processing functions for recyclable metal materials.

In addition, in April 2012, operations were launched at a precious metal refining plant

in Singapore. Going forward, we will expand the precious metal recycling business

throughout Asia on the three-country axis of Japan, China, and Singapore.

Eco-System Sanyo Co., Ltd.

On-site remediation

DOWA ECO-SYSTEM SINGAPORE PTE. LTD.


Business ConditionsIn the first half, prices for gold, silver and copper rose to record high levels while prices for zinc,

indium and the platinum group also increased year on year. Prices for all the metals however

began declining at the end of the first half, and, on currency markets, yen appreciation contin-

ued unabated. On the demand side, domestic metal demand slumped due in part to the

impact of the Great East Japan Earthquake, but demand associated with emerging countries

was firm.

Results for Fiscal 2011Segment consolidated sales declined 6% compared to the previous year, to ¥177.6 billion, due

in part to operations being temporarily suspended because of the earthquake. Operations

were quickly recommenced at our smelters and efforts were made to stabilize operations and

reduce costs. However, in addition to reduced production, ore purchasing terms worsened and

the strong yen persisted, and these and other factors caused the segment consolidated oper-

ating income to decline 18% year on year to ¥4.2 billion.

Outlook for Fiscal 2012In the precious metals and copper business, we will further enhance the handling capabilities

of Kosaka Smelting & Refining Co., Ltd. for impurities and work to bolster processing capacity

for recyclable materials. In rare metals, we will increase collection volume for raw materials in

Japan and overseas by reinforcing sales systems in Europe, North America and Asia in an effort

to further expand the business. In the zinc business, our efforts will be directed at further

raising the productivity and cost competitiveness of Akita Zinc Co., Ltd., Akita Zinc Recycling

Co., Ltd., and other affiliates to strengthen the business base. And, for both copper and zinc, we

will work to raise the ratio of concentrate from our own mines and continue to stably secure

raw materials.


¥201 billion and a consolidated operating income of ¥1.6 billion.

Dowa Metals & Mining Co., Ltd. is responsible for the Dowa Group’s nonferrous metal operations, the foundation of the Group. With a high level of technological capability in the precious metals and copper business, zinc business, rare metals business, and recycling business, Dowa Metals & Mining Co., Ltd. is steadily expanding its operations. Looking ahead, we will bolster our business base through expanding metal recovery and promoting over-seas collection, and build a world-class recycling and smelting complex.

Business Review

Nobuo YamazakiPresident

Nonferrous Metals

DOWA METALS & MINING CO., LTD.

Main Products and ServicesGold, silver, copper, zinc, lead, platinum, palladium, indium, nickel, tin, antimony, gallium, germanium, bismuth, tellurium, sulfuric acid, and other metals

Establish the world’s best flexible recycling smelting complex





2008.3 (FY2007)

2009.3 (FY2008)

2010.3 (FY2009)

2011.3 (FY2010)

2012.3 (FY2011)

Net Sales 272.2 173.6 155.5 188.8 177.6Operating Income 22.4 (14.1) 3.0 5.1 4.2Investment* 17.3 10.3 8.3 5.9 5.9* The total of investments in property, plant and equipment, and R&D expenses

300

200

100

008 09 10 11 12

30

15

0

–1508 09 10 11 12

20

0

15

10

5

08 09 10 11 12

(Billions of Yen)

Precious Metals and CopperAt Kosaka Smelting & Refining Co., Ltd., our newly constructed process for recovering tin,

nickel and other metals is being put into full-fledged operation, strengthening the

smelters’ ability to recover rare metals from concentrates and recyclable raw materials.

We continue to diversify metal recovery practices, strengthen recycling and smelting,

and raise profitability.

ZincWe continue to raise the productivity and cost competitiveness of Akita Zinc Co., Ltd.

while also strengthening the business base by securing raw materials through promoting

secondary raw material processing at Akita Zinc Recycling Co., Ltd., and expansion of the

Tizapa zinc mine.

Rare MetalsAlong with fully launching the sampling facility established in the Czech Republic, we are

constructing a global raw material collection network that utilizes sampling facilities in the

U.S. and the Dowa Group’s sites in Asia. Volumes are expected to continue increasing on a

global basis, so we plan to expand operations for recovering platinum group metals from

used automobile exhaust catalysts.

Tin metal

Akita Zinc Recycling Co., Ltd.

Automobile exhaust purification catalyst


Business ConditionsIn the market for electronic components for computers and other applications, sales were solid

in the first half, but semiconductor demand slumped in the second half, and sales declined on

a volume basis for gallium and indium materials and compound semiconductors. In electronic

materials, sliver powders sales volume declined as customers made full-fledged inventory

adjustments in both the plasma display and solar cell sectors. However, demand increased for

sensor LEDs for smartphones and medical applications.

Results for Fiscal 2011Sales of products for smartphones increased on a volume basis thanks to market growth.

Higher prices for silver and other metals were also a factor, as segment consolidated sales

increased 17% compared to the previous year, to ¥82.7 billion. In growth areas as well, we

worked to launch newly developed products and build production systems tailored to

market characteristics, but demand in the electronic component and semiconductor sec-

tors stagnated in the second half. As a result, the segment consolidated operating income

decreased 23% year on year to ¥5.4 billion.

Outlook for Fiscal 2012In the semiconductor business, we will further increase sales by adequately identifying market

trends and capturing new customers for sensor LEDs. In nitride semiconductors for high electron

mobility transistors (HEMT), we intend to improve features in line with customer needs and

construct a system for increased production. In electronic materials, we will work to expand our

market share for silver powders in the solar cell market and to increase sales for new applica-

tions. In the functional materials business, we will implement initiatives for the volume produc-

tion of next-generation materials for data tapes and for increasing sales of carrier powders for

copier machines. We will also promote development and expedited commercialization of new

products like silver nano-powders and catalysts for auto applications as we work to strengthen

and expand operations with a view to future growth.


¥73.0 billion and a consolidated operating income of ¥6.4 billion.

Dowa Electronics Materials Co., Ltd. supplies products that have come to represent their respective markets in our semiconductor, electronic mate-rials, and functional materials busi-nesses, and continues to maintain a high market share by striving to meet ever changing market needs. Based on this high level of techno-logical capability, we are currently focusing management resources on priority products. While at the same time, we are forging ahead with plans to further differentiate our products and expediting the start up of new businesses.

Business Review

Akira OtsukaPresident


DOWA ELECTRONICS MATERIALS CO., LTD.

Main Products and ServicesHigh-purity gallium, indium, compound semiconductor wafers, light-emitting diodes (LEDs), silver powders, copper powders, silver oxide powders, metal powders, carrier powders, ferrite powders

Expand revenue in existing businesses, start up new businesses, and search for new subjects



DOWA ELECTRONICS MATERIALS CO., LTD.Net Sales(Billions of Yen)



2008.3 (FY2007)

2009.3 (FY2008)

2010.3 (FY2009)

2011.3 (FY2010)

2012.3 (FY2011)


90

60

0

30

08 09 10 11 12

8

0

6

4

2

08 09 10 11 12

8

0

6

4

2

08 09 10 11 12

(Billions of Yen)

SemiconductorsWe will increase sales by capturing new customers for LEDs used in a variety of sensors,

including proximity sensors found in smartphones and medical sensors. In the area of

nitride semiconductors for HEMT, development and prototyping by customers is accelerat-

ing for application to next-generation power semiconductors, which will enable energy

savings and device miniaturization. We will correspondingly work to increase sales of

HEMT for energy-efficient appliances such as air conditioners.

Electronic MaterialsFor silver powders, which are used in the electrode materials of solar cells and other appli-

cations, we strengthened the business base through the establishment of a production

system with a monthly capacity of 100 tons. In fiscal 2012, we will work to establish a

system for increasing production in line with demand trends, focus on expanding our

market share in the market for solar cells, and increase sales for new applications of silver

powders and flakes.

Functional MaterialsIn carrier powders, we focused on increasing sales in the expanding market for copier

machines, and enhanced our production capabilities. In fiscal 2012, we will increase our

market share through new adoption. In nano-inks, we will actively improve features for IC

tag applications and develop new applications. With automotive exhaust catalysts, focus

will be on developing low cost products and on commercializing new-development

products as quickly as possible as we work to strengthen and expand the business for

future growth.

HEMT semiconductor plant

Silver powder in granules and flakes

New plant for carrier powders


Business ConditionsSales of rolled copper products and plated products used in automotive terminals and connec-

tors were impacted by reductions in automobile production after the earthquake, but steadily

recovered starting in the second quarter. At the same time, products for semiconductors saw

demand stagnate in the second half and then begin to recover at the end of the fiscal year.

Results for Fiscal 2011Demand for rolled copper products and plated products recovered from the second quarter,

and sales of metal-ceramic substrates for industrial applications increased on a volume basis

over the previous year. Prices for copper and other metals also increased, and these factors

resulted in segment consolidated sales increasing by 2% year on year to ¥77.1 billion. Although

efforts were made to shift to high value-added products such as next-generation high-strength

copper alloys and to reduce costs by improving yields, the segment income was impacted by

lower demand for semiconductor applications due to the impact of the earthquake and other

factors. As a result, the segment consolidated operating income declined by 16% year on year

to ¥4.5 billion.

Outlook for Fiscal 2012In the metal processing business, we will continue bolstering the competitiveness of connector

materials for automotive applications and developing next-generation products. Focus will also

be on further increasing sales to the Asian region by enhancing overseas manufacturing and

sales sites. In the plating business, we will work to expand operations in overseas markets

through establishment of a new plant in China, which will join the facility in Thailand, and will

promote sales of products for new applications like lithium batteries. In the substrates business,

efforts will be made to increase sales in the clean energy and energy efficiency sectors, which

are growth markets, and to further boost earnings by upping productivity and reducing costs.

Through executing these initiatives, we will target ¥80.0 billion in consolidated sales and

¥5.7 billion in a consolidated operating income in fiscal 2012.

Dowa Metaltech Co., Ltd.’s mainstay product is high-value-added copper alloys. In the metal processing busi-ness, the company will strengthen its global supply and sales systems as well as developing and improving the characteristics of next-generation automotive materials, maintaining the top market share in automotive connector materials. In the plating business, we will provide high-quality products, mainly precious metal plating, globally. In the substrate business, we will work to expand sales mainly in the power module market, where growth is expected in electronic rail and new energy appli-cations.

Business Review

Haruo NishizawaPresident

Metal Processing

DOWA METALTECH CO., LTD.

Main Products and ServicesCopper, brass, copper alloy strips, nickel alloy strips, reflow tin plated strips, brass rods, forged brass products, electroplated products, metal-ceramic substrates

Accelerate business in Asia and shift to the growth fields





2008.3 (FY2007)

2009.3 (FY2008)

2010.3 (FY2009)

2011.3 (FY2010)

2012.3 (FY2011)

Net Sales 91.7 71.2 60.4 75.8 77.1Operating Income 3.0 (5.7) 3.2 5.4 4.5Investment* 8.4 3.2 1.0 1.5 1.9* The total of investments in property, plant and equipment, and R&D expenses

100

0

80

60

40

20

08 09 10 11 12

6

–6

3

0

–3

08 09 10 11 12

10

0

8

6

4

2

08 09 10 11 12

(Billions of Yen)

Metal ProcessingWe will work to increase sales of products for promising growth sectors such as copper

alloys and copper-titanium alloys for automotive applications. In Southeast Asia, with

customers accelerating the localization of overseas production, development, and design

in step with economic growth, we intend to establish sales offices in Singapore and

Shenzhen in Guangdong Province, China to strengthen our sales network in Asia and

thereby actively capture growing demand.

PlatingA precious metal plating facility is being constructed in Nantong in China’s Jiangsu Prov-

ince to accommodate demand from Japan-affiliated manufacturers as well as foreign and

local Chinese firms. Adding this facility in China to our existing sites in Japan and Thailand

will create a three-region supply system based in Japan, Southeast Asia, and China. We

intend to continue strengthening overseas development going forward.

SubstratesWe continue to promote sales of products for industrial machinery as well as for rail and

wind power applications, where growth is anticipated in various countries in the future.

With wind power applications in particular, demand for wind power as a renewable en-

ergy is mounting, so we will expand sales of base-integrated substrates, a development

product, and work to increase earnings. At the same time, efforts will be made to bolster

cost competitiveness by reducing costs and improving yields.

Rolled copper products

Plating products

Dowa Power Device Co., Ltd.


Business ConditionsIn heat treatment processing, orders temporarily lagged due to the fall off in domestic auto

production caused by the Great East Japan Earthquake, but treatment volume recovered in

the summer as auto production returned. For industrial furnaces, we worked to increase

sales of new furnaces and capture maintenance orders in step with expanded automobile

production overseas.

Results for Fiscal 2011As a result of efforts to increase treatment volumes and expand sales of new furnaces overseas,

segment consolidated sales rose 10% year on year to ¥18.6 billion. We bolstered our produc-

tion framework by shifting production to more efficient plants, and worked on reducing parts

procurement costs. As a result, the segment consolidated operating income increased 39%

year on year to ¥1.9 billion.

Outlook for Fiscal 2012In the heat treatment processing business, we will work to expand operations overseas in

China, Southeast Asia, India, and other countries, and to improve productivity by reorganizing

domestic sites in line with market trends. In the industrial furnace business, we will promote

the overseas development of design and manufacturing, while also enhancing after-sale ser-

vices to further establish the business base and bolster profitability.

Through executing these initiatives, we are targeting consolidated sales of ¥24.0 billion

and a consolidated operating income of ¥2.8 billion.

As a pioneer in heat treatment tech-nology, Dowa Thermotech Co., Ltd. provides top-class services in Japan in terms of both scale and quality. In the heat treatment business, we will strengthen our business structure through productivity improvements and streamlining of processes, en-hance profitability, and strive to expand our domestic market share while accelerating expansion espe-cially in Asia and emerging nations. In the research and development field, we will develop continuous furnaces, which are both competitive and low-cost, and new surface treatment technology. We will work to develop overseas more aggressively than hitherto, in order to become a global integrated heat treatment maker.

Business Review

Toshiro SumidaPresident

Heat Treatment

DOWA THERMOTECH CO., LTD.

Main Products and ServicesVarious types of heat treatment, various types of surface treatment, design, manufacture, marketing, and maintenance of various types of industrial furnaces and ancillary equipment

Become a global comprehensive heat treatment company





2008.3 (FY2007)

2009.3 (FY2008)

2010.3 (FY2009)

2011.3 (FY2010)

2012.3 (FY2011)


30

20

0

10

08 09 10 11 12

4

0

3

2

1

08 09 10 11 12

5

0

4

3

2

1

08 09 10 11 12

(Billions of Yen)

Heat Treatment ProcessingDomestic auto production temporarily declined in the aftermath of the Great East Japan

Earthquake, but has steadily recovered since. In heat treatment processing, we will

integrate production lineups into the Ota plant in Gunma Prefecture and the Handa

plant in Aichi Prefecture, which boast high productivity, and will further reduce costs by

procuring overseas parts and standardizing materials in an effort to bolster the profit-

ability of the domestic business.

Industrial FurnacesKunshan Dowa Thermo Furnace Co., Ltd., an affiliate in Kunshan, Jiangsu Province, China,

commenced operations in November 2011. The Chinese auto industry continues to ex-

pand with the market entrance of Japan-, Europe-, and U.S.-affiliated automakers and the

growth of local manufacturers. We will further strengthen activities in the Chinese market

by launching industrial furnace manufacturing on a full-fledged basis and proactively

capturing maintenance demand.

Business Development Overseas (India)In September 2011, we fully entered the heat treatment market in India by acquiring a

controlling interest (80%) in Hightemp Furnaces Ltd., India’s largest heat treatment com-

pany. With the Indian auto industry projecting 10% annual growth, we will strengthen

initiatives for Japan-affiliated manufacturers in addition to local and foreign-affiliated firms,

the company’s customers, in order to further expand the heat treatment business.

Ota Plant

Kunshan Dowa Thermo Furnace Co., Ltd.

Hightemp Furnaces Ltd.


Corporate Governance

The Dowa Group has made strengthening of corporate governance (corporate control) one of its most important management priorities, and the entire Group is engaged in developing and operating effective and efficient internal controls based on the Dowa Group’s Values and Standards of Conduct.

Status of Internal Audits and Auditor AuditsInternal audits based on internal audit regulations stipulated by the

Dowa Group cover all corporate activities, including accounting, legal,

safety, and environmental audits. The Company’s CSR Department,

relevant divisions, and Group companies conduct internal audits in

coordination with one another, with findings reported to directors,

auditors, and relevant departments.

Auditors audit the execution of director duties in accordance with

the audit policies and audit plans for the term stipulated by the Board

of Auditors. They also monitor the independence of the independent

auditors, and coordinate with them by explaining audit plans and

reporting audit findings.

Auditors, independent auditors, and the CSR Department regularly

set up discussion forums and work closely with one another in order

to further improve internal audits.

Outline of Corporate Governance SystemThe Dowa Group uses a system of executive officers and a holding

company structure that separates business divisions as subsidiaries in

order to expedite decision making and improve management effi-

ciency. In addition, the maximum number of directors has been set at

13 to further improve the supervisory function of the Board of Direc-

tors. Managerial responsibilities are clearly maintained by keeping the

term of office at one year.

As of June 30, 2012, there were six directors (including one outside

director). The Board of Directors meeting is held once every month, in

principle. There are also five executive officers as of June 30, 2012

(none that are also directors) with a Committee of the Operating Of-

ficers held once every month in principle, for executive officers to share

information regarding the status of business execution. We also have a

Board of Auditors, comprising four auditors as of June 30, 2012 (includ-

ing two outside auditors) who conduct audits of business execution by

directors, reporting to the Board of Auditors meeting, held once every

month in principle, ensuring audit effectiveness and efficiency.

The DOWA Group Corporate Governance Structure (As of June 30, 2012)

Elect/dismiss

｜DOWA Holdings｜

｜Operating companies group｜

Management

Instruct/supervise

Report

Advise

Report

Business execution

Audit

Audit

Audit Audit

Board of Directors6 Directors

(including 1 outside director)

Board of Auditors4 Auditors

(including 2 outside auditors)

Strategic Planning & Public Relations Dept., Human Resources Dept., General A�airs & Legal Dept., Accounting & Finance Dept., CSR Dept., Technologies Dept., Information System Dept.

President

Notice

ReportInstruct/supervise

Support

｜Support companies｜Dowa Eco-System Co., Ltd.Dowa Metals & Mining Co., Ltd.Dowa Electronics Materials Co., Ltd.

Meeting of ShareholdersElect/dismiss Elect/dismiss

Independent auditors

Committee of the Board Directors

Committee of the Operating O�cers Directors, O�cers* Dow

a Consultation Desk (outside law

yers)Law

yer

Operating com

panies *

Operating subsidiaries

Business support companies

Technical support companies

Dowa Metaltech Co., Ltd.Dowa Thermotech Co., Ltd.

* President of each operating company serves concurrently as an o�cer of DOWA Holdings.


Development and Overview of Internal Control SystemsApproach Regarding Internal Control Systems

In accordance with the Dowa Group’s Values and Standards of Con-

duct, the Company and Group companies have made a collective

effort to design and operate effective and efficient internal controls to

contribute to society, maximize corporate value, and fulfill manage-

ment responsibilities conferred by shareholders. At the same time,

laws are being revised and the public’s general stance toward compli-

ance is hardening, so we expect even stronger demands to be placed

on the Group going forward.

Given these trends, the Company converted to a holding com-

pany structure on October 1, 2006.

The holding company structure raises the level of specialization of

each business group and the speed at which policies can be executed.

However, it also carries the risk that control systems will become

localized and overall governance will suffer.

As a result, at the Dowa Group, basic policies and systems for

internal control are shared among Group companies. Additionally,

individual companies can utilize their own unique characteristics for

specific activities, in order to develop an effective and efficient internal

control system suited to our holding company structure.

Moreover, the internal control system must continually be revised

in line with changes in business activities and the social environment,

so the Company and Group companies intend to promote the system

even more robustly.

Overview of Internal Control Systems

The Company will work to strengthen oversight of the Board of Direc-

tors by appointing executive officers and separating the execution

function from the board.

We will clarify the authority and responsibilities of personnel for

each rank based on company rules such as board regulations and ad-

ministrative authority regulations and will rigorously ensure compliance

with the law, articles of incorporation, and social norms through inde-

pendent study and educational programs for directors and employees.

We will continue to design and operate systems for ensuring the

reliability of financial reporting.

We established the Dowa Consultation Desk, and have put in place

the necessary mechanisms to use internal audits, to prevent any impro-

prieties or misconduct and to quickly discover any such incidents.

In order to identify and avoid risk, the Company will have the

Board of Directors and other bodies conduct stringent reviews when

decisions are made on important matters. We will also work to build a

communication system to facilitate coordination among Group com-

panies and improve our emergency response capabilities.

Remuneration for Directors and AuditorsRemuneration for directors and auditors is determined by resolution of

the general meeting of shareholders. Specific amounts and payment

dates for directors are determined by the resolution of the Board of

Directors based on the recommendations of the Remuneration

Committee, which includes outside members. Specific amounts and

payment dates for auditors are decided through auditor deliberations.

Corporate Governance System (As of June 30, 2012)

Organization Form Company with Auditors

Number of Directors 6 (Number of the Company’s Articles of Incorporation: 13)

Among these, Outside Directors 1 Designated Independent Director

Articles of Incorporation 1 year

Chairman of the Board of Directors President

Number of Auditors 4 (Number of the Company’s Articles of Incorporation: 5)

Among these, Outside Auditors 2

Position Number Remuneration Amounts

Directors 9 ¥301 million

Auditors 6 ¥67 million

(Among These, Outside Directors and Auditors) (4) (¥24 million)

Total Remuneration Amount of Individual Directors or Auditors for Fiscal 2011


Environmental Management and Social Contribution Activities

Aspiring to be a trusted presence as a global enterprise, the Dowa Group works to provide value to all stakeholders through its business activities.

For details, refer to the CSR Report at http://www.dowa-csr.jp/en/csr/index.html

[Environmental Management]The Dowa Group’s environmental initiatives aim to both reduce the

environmental impact of the Group’s own business activities and

contribute to the environment and society in general through the

Group’s primary operations. In other words, we strive to conduct

environmental protection activities while simultaneously creating

economic value.

Environmental Management SystemThe environmental management activities of the Dowa Group are

conducted through coordination between Dowa Holdings Co., Ltd.’s

CSR Department and the planning offices of operating companies

that conduct environmental protection activities. Dowa Holdings Co.,

Ltd. organizes and coordinates between operating companies and

also handles environmental management and compliance manage-

ment for the Group as a whole.

Environmental AuditsInternal and external audits are conducted regularly to ensure environ-

mental management is being implemented appropriately. We are also

working to train internal auditors and increase their number by hold-

ing training seminars.

Environmental EducationWe proactively conduct training on environmental management

systems (EMS) to raise the environmental awareness of employees and

improve their capacity for reducing environmental impact. Environ-

mental training is also actively conducted at business sites, including

training for ISO 14001 auditors.

[Social Contribution Activities]The Dowa Group actively conducts locally rooted CSR activities at

each business site. These activities include participation in local land-

scaping and cleanup campaigns and holding sports tournaments.

(Example from Okayama)Lake Kojima Flower Corridor Project in Okayama CityLake Kojima is Japan’s largest man-made freshwater lake, and Dowa

founder Denzaburo Fujita was involved in the reclamation project that

produced it, which is one of the reasons why the Dowa Group is

actively involved in maintaining the surrounding environment. The

Lake Kojima Flower Corridor Project completed its fifth year in March

2012, and with the help of the local community, 4,343 Kawazu cherry

trees have been planted. On Sunday, March 11, 2012, the first anniver-

sary of the Great East Japan Earthquake, the third Flower Corridor

Sakura Festival was held to offer encouragement and support to Japan

and the Tohoku region in particular. A monument inscribed with the

hopes of the Lake Kojima Flower Corridor was erected and an unveil-

ing ceremony was held. The experience of the earthquake has reawak-

ened all of Japan to the importance of human bonds. The Lake Kojima

Flower Corridor Project is steadily moving toward the region’s future

with the compassion of the community and its families.


Board of Directors and OfficersAs of June 30, 2012

DIRECTORS

AUDITORS

OFFICERS

Masao YamadaPresident & Representative Director

Yoji MizumaCorporate Auditor

Kenichi SasakiOfficerPresident, Dowa Eco-System Co., Ltd.

Akira SegawaDirector

Fumitoshi SugiyamaRepresentative Director

Susumu YoshidaCorporate Auditor

Nobuo YamazakiOfficerPresident, Dowa Metals & Mining Co., Ltd.

Hiroshi NakashioDirector

Osamu HamamatsuOutside Auditor

Akira OtsukaOfficerPresident, Dowa Electronics Materials Co., Ltd.

Hiroyuki Kai Director

Jin TakedaOutside Auditor

Haruo NishizawaOfficerPresident, Dowa Metaltech Co., Ltd.

Eiji HosodaOutside Director

Toshiro SumidaOfficerPresident, Dowa Thermotech Co., Ltd.


Consolidated 11-Year SummaryDowa Holdings Co., Ltd. and Consolidated Subsidiaries

Millions of Yen

For the years ended March 31 2012*1 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

For the year:Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥392,468 ¥379,816 ¥307,462 ¥346,885 ¥475,826 ¥458,701 ¥316,388 ¥254,192 ¥234,675 ¥221,051 ¥222,175Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343,015 330,380 268,738 329,340 399,901 383,136 253,389 202,447 192,843 181,142 182,689Selling, General and Administrative Expenses . . . . . . . . . . . . . . . . . . . . 27,443 26,511 25,022 26,042 31,605 26,830 26,101 24,102 24,192 25,159 26,875Operating Income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,009 22,924 13,701 (8,497) 44,319 48,733 36,897 27,642 17,640 14,749 12,609Operating Income by Segment (%)

Environmental Management & Recycling (2000~) . . . . . . . . . . . . . 20.34% 12.22% 15.35% –% 18.11% 16.31% 16.32% 17.02% 25.77% 22.09% 18.94%Nonferrous Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.25 22.56 21.95 – 50.74 51.55 45.58 41.31 13.99 11.30 24.32Electronic Materials (2007~) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.95 31.16 35.12 – 14.23 14.31 – – – – –Metal Processing (2007~) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.59 23.66 24.00 – 6.86 9.37 – – – – –Electronic Materials (2000~2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – – – – – – – 22.20Metal Processing and Chemical Products (~2003) . . . . . . . . . . . . . – – – – – – – – – 7.95 5.31Electronic Materials & Metal Processing (2003~2006) . . . . . . . . . . – – – – – – 28.15 32.04 40.47 27.27 –Heat Treatment (2000~) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.95 6.18 1.07 – 8.11 7.37 8.90 10.86 16.76 20.30 14.19Others and Elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.92 4.21 2.51 – 1.93 1.08 1.04 (1.23) 3.01 11.10 15.03

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 40,354 ¥ 41,410 ¥ 32,978 ¥ 10,114 ¥ 58,293 ¥ 58,631 ¥ 46,213 ¥ 36,885 ¥ 28,248 ¥ 25,272 ¥ 23,712Net Income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,610 8,521 4,359 (28,138) 24,520 26,337 14,532 10,609 8,683 (2,619) 282Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,910 17,820 10,763 24,213 26,324 21,821 12,497 11,551 9,419 9,814 10,244Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,344 18,486 19,276 18,612 13,974 9,897 9,316 9,242 10,608 10,522 11,102R&D Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,367 3,962 3,829 4,421 7,309 4,384 3,739 2,993 2,690 2,195 2,454Copper (Price quoted, Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥717,816 ¥738,200 ¥609,483 ¥657,408 ¥915,950 ¥867,400 ¥517,308 ¥371,141 ¥270,283 ¥234,425 ¥232,658Zinc (Price quoted, Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211,683 231,858 222,575 202,725 388,183 461,633 228,191 162,408 143,916 138,200 147,008US Dollar (Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79.58 86.22 93.35 101.03 114.78 117.52 113.81 108.05 113.57 122.45 125.64

At Year-end:Equity *6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥121,807 ¥113,785 ¥111,667 ¥103,830 ¥150,281 ¥141,276 ¥114,869 ¥ 94,670 ¥ 84,673 ¥ 70,931 ¥ 76,125Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,999 6,942 5,663 5,263 6,078 4,491 3,833 – – – –Total Assets *6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319,665 340,161 330,720 343,208 367,931 352,299 303,029 261,461 246,275 248,689 284,552Interest-bearing Debt *8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,670 138,119 149,371 180,496 120,953 114,757 99,653 97,709 104,375 132,179 158,440

Per Share (Yen):Basic Net Income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 35.86 ¥ 28.80 ¥ 14.96 ¥ (94.36) ¥ 81.86 ¥ 87.82 ¥ 48.12 ¥ 35.14 ¥ 28.79 ¥ (8.85) ¥ 0.93Fully Diluted Net Income *7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – 77.91 83.59 – – – – –Fully Diluted Equity *5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384.55 361.18 358.33 339.93 481.85 456.10 382.69 315.46 282.15 236.29 250.59Cash Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.00 10.00 10.00 10.00 20.00 20.00 14.00 10.00 7.00 7.00 5.00

Cash Flows:Cash Flows from Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 31,499 ¥ 23,955 ¥ 25,011 ¥ 33,593 ¥ 40,398 ¥ 13,700 ¥ 17,783 ¥ 17,432 ¥ 29,725 ¥ 23,134 ¥ 23,503Cash Flows from Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,491) (19,257) (14,602) (36,477) (39,138) (24,387) (15,616) (7,636) (1,290) (1,520) (7,708)Cash Flows from Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,134) (15,070) (33,888) 49,303 (1,820) 9,634 (1,758) (8,917) (30,072) (26,882) (26,127)Free Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,589 6,135 14,248 9,380 12,565 (6,504) 6,050 5,162 21,393 12,566 14,256Cash and Cash Equivalents at End of Year . . . . . . . . . . . . . . . . . . . . . . . . 4,788 16,741 27,115 50,681 4,294 4,792 5,813 5,286 4,414 5,624 10,429

Ratios:Return on Assets *2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.67% 6.83% 4.07% –% 12.31% 14.87% 13.07% 10.89% 7.13% 5.53% 4.22%Return on Equity *3*4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.62 8.01 4.26 (23.18) 17.45 20.93 13.87 11.83 11.16 (3.56) 0.39Operating Income (loss) to Net Sales (%) . . . . . . . . . . . . . . . . . . . . . . . . 5.61 6.04 4.46 (2.45) 9.31 10.62 11.66 10.88 7.52 6.67 5.68Equity Ratio *4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.60 31.41 32.05 28.72 39.19 38.83 37.91 36.21 34.38 28.52 26.75Operating Income Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.99) 67.31 – – (9.06) 32.08 33.48 56.70 19.60 16.97 (18.42)Interest Coverage (times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.52 10.55 5.12 (2.79) 21.10 30.18 29.23 20.30 12.04 8.38 5.59Debt/Equity Ratio (times) *5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03 1.29 1.41 1.83 0.84 0.84 0.87 1.03 1.23 1.86 2.08Debt/Capacity Ratio (times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.83 1.90 1.91 2.11 1.48 1.42 1.91 1.87 2.22 2.85 2.86Return on Invested Capital *5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.58 3.48 1.71 (10.08) 9.25 10.47 6.77 5.52 4.59 (1.29) 0.12

*1 The years stated in the text are ended March 31 of the year. Thus “2012” refers to the fiscal year, which ran from April 1, 2011 through March 31, 2012.*2 Operating Income divided by average of Total Assets at the start and end of the year.*3 Net income divided by average of Equity at the start and end of the year.*4 From 2007, the ratios have been calculated using shareholders’ equity (the amounts after deducting minority interest amounts from equity amounts).*5 From 2007, the ratios have been calculated after deducting minority interest amounts from equity amounts.

*6 The Equity and Total Assets for 2006 have been reclassified to reflect the “Accounting standards for presentation of net assets in the balance sheet.”*7 Fully diluted net income is not stated from 2002 to 2006 and from 2009 to 2012 because no diluted shares existed. From 2002, fully diluted net income is calculated after deducting the average number of shares

of treasury stock during the term. Fully diluted net income is not stated for 2009 although diluted shares existed because a net loss per share was incurred.*8 From 2008, in the balance sheets, long-term loans payable and current portion of long-term loans payable were stated including lease obligations. However, interest-bearing debt amounts stated in the Consoli-

dated 11-Year Summary do not include lease obligations.


Millions of Yen

For the years ended March 31 2012*1 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

For the year:Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥392,468 ¥379,816 ¥307,462 ¥346,885 ¥475,826 ¥458,701 ¥316,388 ¥254,192 ¥234,675 ¥221,051 ¥222,175Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343,015 330,380 268,738 329,340 399,901 383,136 253,389 202,447 192,843 181,142 182,689Selling, General and Administrative Expenses . . . . . . . . . . . . . . . . . . . . 27,443 26,511 25,022 26,042 31,605 26,830 26,101 24,102 24,192 25,159 26,875Operating Income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,009 22,924 13,701 (8,497) 44,319 48,733 36,897 27,642 17,640 14,749 12,609Operating Income by Segment (%)

Environmental Management & Recycling (2000~) . . . . . . . . . . . . . 20.34% 12.22% 15.35% –% 18.11% 16.31% 16.32% 17.02% 25.77% 22.09% 18.94%Nonferrous Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.25 22.56 21.95 – 50.74 51.55 45.58 41.31 13.99 11.30 24.32Electronic Materials (2007~) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.95 31.16 35.12 – 14.23 14.31 – – – – –Metal Processing (2007~) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.59 23.66 24.00 – 6.86 9.37 – – – – –Electronic Materials (2000~2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – – – – – – – 22.20Metal Processing and Chemical Products (~2003) . . . . . . . . . . . . . – – – – – – – – – 7.95 5.31Electronic Materials & Metal Processing (2003~2006) . . . . . . . . . . – – – – – – 28.15 32.04 40.47 27.27 –Heat Treatment (2000~) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.95 6.18 1.07 – 8.11 7.37 8.90 10.86 16.76 20.30 14.19Others and Elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.92 4.21 2.51 – 1.93 1.08 1.04 (1.23) 3.01 11.10 15.03

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 40,354 ¥ 41,410 ¥ 32,978 ¥ 10,114 ¥ 58,293 ¥ 58,631 ¥ 46,213 ¥ 36,885 ¥ 28,248 ¥ 25,272 ¥ 23,712Net Income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,610 8,521 4,359 (28,138) 24,520 26,337 14,532 10,609 8,683 (2,619) 282Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,910 17,820 10,763 24,213 26,324 21,821 12,497 11,551 9,419 9,814 10,244Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,344 18,486 19,276 18,612 13,974 9,897 9,316 9,242 10,608 10,522 11,102R&D Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,367 3,962 3,829 4,421 7,309 4,384 3,739 2,993 2,690 2,195 2,454Copper (Price quoted, Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥717,816 ¥738,200 ¥609,483 ¥657,408 ¥915,950 ¥867,400 ¥517,308 ¥371,141 ¥270,283 ¥234,425 ¥232,658Zinc (Price quoted, Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211,683 231,858 222,575 202,725 388,183 461,633 228,191 162,408 143,916 138,200 147,008US Dollar (Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79.58 86.22 93.35 101.03 114.78 117.52 113.81 108.05 113.57 122.45 125.64

At Year-end:Equity *6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥121,807 ¥113,785 ¥111,667 ¥103,830 ¥150,281 ¥141,276 ¥114,869 ¥ 94,670 ¥ 84,673 ¥ 70,931 ¥ 76,125Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,999 6,942 5,663 5,263 6,078 4,491 3,833 – – – –Total Assets *6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319,665 340,161 330,720 343,208 367,931 352,299 303,029 261,461 246,275 248,689 284,552Interest-bearing Debt *8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,670 138,119 149,371 180,496 120,953 114,757 99,653 97,709 104,375 132,179 158,440

Per Share (Yen):Basic Net Income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 35.86 ¥ 28.80 ¥ 14.96 ¥ (94.36) ¥ 81.86 ¥ 87.82 ¥ 48.12 ¥ 35.14 ¥ 28.79 ¥ (8.85) ¥ 0.93Fully Diluted Net Income *7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – 77.91 83.59 – – – – –Fully Diluted Equity *5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384.55 361.18 358.33 339.93 481.85 456.10 382.69 315.46 282.15 236.29 250.59Cash Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.00 10.00 10.00 10.00 20.00 20.00 14.00 10.00 7.00 7.00 5.00

Cash Flows:Cash Flows from Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 31,499 ¥ 23,955 ¥ 25,011 ¥ 33,593 ¥ 40,398 ¥ 13,700 ¥ 17,783 ¥ 17,432 ¥ 29,725 ¥ 23,134 ¥ 23,503Cash Flows from Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,491) (19,257) (14,602) (36,477) (39,138) (24,387) (15,616) (7,636) (1,290) (1,520) (7,708)Cash Flows from Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,134) (15,070) (33,888) 49,303 (1,820) 9,634 (1,758) (8,917) (30,072) (26,882) (26,127)Free Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,589 6,135 14,248 9,380 12,565 (6,504) 6,050 5,162 21,393 12,566 14,256Cash and Cash Equivalents at End of Year . . . . . . . . . . . . . . . . . . . . . . . . 4,788 16,741 27,115 50,681 4,294 4,792 5,813 5,286 4,414 5,624 10,429

Ratios:Return on Assets *2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.67% 6.83% 4.07% –% 12.31% 14.87% 13.07% 10.89% 7.13% 5.53% 4.22%Return on Equity *3*4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.62 8.01 4.26 (23.18) 17.45 20.93 13.87 11.83 11.16 (3.56) 0.39Operating Income (loss) to Net Sales (%) . . . . . . . . . . . . . . . . . . . . . . . . 5.61 6.04 4.46 (2.45) 9.31 10.62 11.66 10.88 7.52 6.67 5.68Equity Ratio *4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.60 31.41 32.05 28.72 39.19 38.83 37.91 36.21 34.38 28.52 26.75Operating Income Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.99) 67.31 – – (9.06) 32.08 33.48 56.70 19.60 16.97 (18.42)Interest Coverage (times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.52 10.55 5.12 (2.79) 21.10 30.18 29.23 20.30 12.04 8.38 5.59Debt/Equity Ratio (times) *5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03 1.29 1.41 1.83 0.84 0.84 0.87 1.03 1.23 1.86 2.08Debt/Capacity Ratio (times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.83 1.90 1.91 2.11 1.48 1.42 1.91 1.87 2.22 2.85 2.86Return on Invested Capital *5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.58 3.48 1.71 (10.08) 9.25 10.47 6.77 5.52 4.59 (1.29) 0.12

*1 The years stated in the text are ended March 31 of the year. Thus “2012” refers to the fiscal year, which ran from April 1, 2011 through March 31, 2012.*2 Operating Income divided by average of Total Assets at the start and end of the year.*3 Net income divided by average of Equity at the start and end of the year.*4 From 2007, the ratios have been calculated using shareholders’ equity (the amounts after deducting minority interest amounts from equity amounts).*5 From 2007, the ratios have been calculated after deducting minority interest amounts from equity amounts.

*6 The Equity and Total Assets for 2006 have been reclassified to reflect the “Accounting standards for presentation of net assets in the balance sheet.”*7 Fully diluted net income is not stated from 2002 to 2006 and from 2009 to 2012 because no diluted shares existed. From 2002, fully diluted net income is calculated after deducting the average number of shares

of treasury stock during the term. Fully diluted net income is not stated for 2009 although diluted shares existed because a net loss per share was incurred.*8 From 2008, in the balance sheets, long-term loans payable and current portion of long-term loans payable were stated including lease obligations. However, interest-bearing debt amounts stated in the Consoli-

dated 11-Year Summary do not include lease obligations.


–4

–2

0 0

2

4

6

400 8

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08 09 10 11 12–200

–100

100

200

300

600

500

20

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10

30

08 09 10 11 12

Net Sales and Operating Income to Net Sales(Billions of Yen) (%)

Net Income(Billions of Yen)

Net Sales (left scale)

Operating Income to Net Sales (right scale)

Results of OperationsDuring the fiscal year ended March 31, 2012, the Japanese economy was overall on a recovery trajec-

tory due to the restoration of the supply chain that had been negatively impacted by the Great East

Japan Earthquake and reconstruction demand. However, harsh conditions continued with strong

indications of a slowdown mainly due to financial problems in the U.S. and Europe, concerns about

inflation in China and other emerging countries, and the flooding in Thailand. Moreover, the export

environment worsened because of the yen appreciation and the domestic market contracted.

Looking at the business environment of the Dowa Group, demand for products related to automo-

biles was comparatively strong after having recovered very rapidly from the fall caused by the Great

East Japan Earthquake. The supply chain for products for electronic materials was disturbed by the

Great East Japan Earthquake and the Thai flooding, and semiconductor-related products were

impacted by production adjustments for semiconductor-related products, but demand expanded

especially for products for multifunctional mobile terminals. Market prices for metals remained overall

at high levels, and in currency markets the yen continued to be high until the end of the fiscal year

under review.

Under these circumstances, the Group responded to changes in the business environment by

working to stabilize operations by implementing early restorations of production bases that had been

affected by the earthquake and by coping with electricity shortages last summer, and by aggressively

developing business in China, India, and the Asian region centered on Southeast Asia.

As a result of the above, on a consolidated basis, sales in the fiscal year under review amounted to

¥392,468 million, up 3% year on year. Operating income decreased 4% to ¥22,009 million and ordinary

income declined 10% to ¥20,918 million. The Group posted a net income of ¥10,610 million, up 25%.

Forecast for the next fiscal yearManagement expects growth in China, India, and other emerging economies to fuel the expansion of

external demand over the medium and long term. This said, the economic situation is expected to

continue to be unpredictable due to the instability of the global economy primarily because of the

resurgence of the European debt crises and to such concerns as the uncertain power supply in Japan

and high crude oil prices.

Facing such conditions, the Dowa Group intends to identify future trends in the global market, and

armed with these insights, implement its policies and forge ahead with the strengthening of its businesses.

For the fiscal year ending March 31, 2013, the Group forecasts net sales of ¥430 billion, an operat-

ing income of ¥23 billion, an ordinary income of ¥24 billion and a net income of ¥12 billion. These

figures assume average U.S. dollar exchange rates of ¥80 and metal prices for copper and zinc of

$8,000/ton and $2,000/ton, respectively.

Financial ReviewYears ended March 31


0

100

200

300

400

08 09 10 11 12

08 09 10 11 12

150

0

30

60

90

120

180

Total Assets(Billions of Yen)

Interest-bearing Debt(Billions of Yen)

Analysis of Financial PositionAssetsTotal assets at the end of the fiscal year under review decreased ¥20,496 million from the end of the

previous fiscal year to ¥319,665 million. Current assets decreased ¥16,636 million, and fixed assets

declined ¥3,859 million. The decrease in current assets reflected the repayment of interest-bearing

debt using cash and deposits, and a drop of ¥11,576 million in raw materials and supplies due to

inventory reductions.

LiabilitiesLiabilities decreased ¥28,518 million, due to decreases of ¥20,449 million in interest-bearing debt and

of ¥5,808 million in ingot leasing liabilities.

EquityEquity increased ¥8,021 million from the end of the previous fiscal year. Net income was ¥10,610

million, despite certain factors reducing shareholders’ equity, mainly cash dividends paid. Due to the

net income, shareholders’ equity actually increased ¥7,662 million. As a result, the equity ratio was

35.6% at the end of the fiscal year under review.


40

0

10

20

30

50

08 09 10 11 12

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0

08 09 10 11 12

Cash Flows from Operating Activities(Billions of Yen)

Cash Flows from Investing Activities(Billions of Yen)

Analysis of cash flowsConsolidated cash and cash equivalents (“cash”) declined ¥11,953 million from the end of the previous

fiscal year to ¥4,788 million at the end of the fiscal year under review.

Net cash provided by operating activities was ¥31,499 million (up ¥7,543 million year on year) with

an income before income taxes and minority interests of ¥18,952 million (up ¥1,732 million from the

previous year) and the non-financial expenses of depreciation and amortization at ¥18,344 million

offset by an increase in trade receivables of ¥4,295 million and a decrease in inventories of ¥7,289

million, among other factors.

Net cash used in investing activities was ¥19,491 million (up ¥234 million), primarily reflecting

capital expenditures of ¥16,172 million, mainly in the Environmental Management & Recycling and

Electronic Materials businesses, and purchases of shares of ¥5,472 million for expanding operations.

Net cash used in financial activities was ¥24,134 million (up ¥9,063 million) with a repayment of

interest-bearing debt of ¥20,480 million, and cash dividends paid of ¥3,177 million.

(For reference) Cash flow-related indicator trends2008.3 2009.3 2010.3 2011.3 2012.3

Equity ratio 39.2 28.7 32.1 31.4 35.6Market price-based equity ratio 48.1 31.0 50.4 45.0 50.9Interest-bearing debt-to-cash flow ratio 3.0 5.4 6.0 5.8 3.7Interest coverage ratio 19.5 14.0 8.5 10.7 15.7

(Notes) 1. Equity ratio: shareholders’ equity / total assets

Market price-based equity ratio: market capitalization / total assets

Interest-bearing debt-to-cash flow ratio: interest-bearing debt / cash flows

Interest coverage ratio: cash flows / total interest paid

2. Each ratio is calculated on a consolidated basis.

3. Market capitalization is calculated based on the number of outstanding shares excluding treasury stock.

4. Cash flows are the cash flows from operating activities on the consolidated statements of cash flows.

5. Interest-bearing debt includes all liabilities (except lease obligations) bearing interest posted on the consolidated balance sheets.

6. The total interest paid is the (Decrease) increase in interest payable on the consolidated statements of cash flows.

Basic Dividend Policy and Dividends for the Fiscal Year Under Review and the Next Fiscal YearThe Company views the payment of dividends to shareholders as one of the most important manage-

ment issues. The Company’s policy is to pay a dividend commensurate with performance, having

appropriated sufficient retained earnings to bolster the Group’s business position and support future

business development.

After comprehensive consideration of its performance in the fiscal year under review, business

development in the future and strengthening the financial structure, the Company intends to pay an

annual dividend of ¥10 per share, the same level as in the previous year. At present, the Company also

plans to pay the same dividend of ¥10 per share in the fiscal year ending March 31, 2013.


Business RisksThe Group faces a variety of risks such as those described below that could potentially and adversely

impact its operating results, stock price and financial position.

Forward-looking statements among the risk items that follow reflect the opinion of the Group as of

March 31, 2012.

Economic conditionsThe Group’s business performance and financial condition may be negatively affected by economic

recessions in its principal markets, which include Japan, North America, Asia, and Europe, or by shrink-

ing demand accompanying such changes.

Metal and currency marketsAmong its products, the Group handles gold, silver, copper, and zinc, the prices for which are set by

international markets. The unprocessed ore for these metals is also procured from overseas. For these

reasons, the Group is confronted with risks due to changes in international market conditions and

fluctuations in currency exchange rates. The Group employs a variety of hedging measures, including

nonferrous metal commodity forward contracts and forward exchange contracts, in an attempt to

mitigate these risks.

Public regulationsThe Group is subject to a variety of legal regulations. In Japan, these include laws pertaining to the

environment and recycling, as well as anti-trust laws. Overseas, the Group must comply with legal

regulations present in the countries where it operates, for example regulations regarding customs,

imports and exports, and laws concerning the control of foreign currency. The Group, for its part, takes

every legal precaution to protect its rights with respect to these laws. Nevertheless, business perfor-

mance may be adversely affected if Group business operations are restricted as a result of mandates

stipulated by the establishment of presently unforeseen regulations.

Stock price fluctuationsThe Group is subject to risks due to fluctuations in stock prices stemming from the approximately

¥20.2 billion in marketable securities it held as of March 31, 2012. These securities primarily represent

stock held in Group business partners.

Interest rate fluctuationsAs of March 31, 2012, the Group’s balance of interest-bearing debt was ¥117.6 billion, with external

fund procurement accounting for 37% of total assets. Consequently, a sharp rise in interest rates could

adversely affect business performance.

Disasters and power outagesThe Group conducts disaster prevention and equipment inspections at all of its facilities in an attempt

to minimize any possible negative effects that could result from sudden production line stoppages.

Nevertheless, the Group may experience a dramatic decline in production capacity should a disaster,

power outage, or other type of interruption occur at its production facilities.


Consolidated Balance SheetsDowa Holdings Co., Ltd. and Consolidated SubsidiariesAs of March 31, 2012 and 2011

Thousands ofU.S. Dollars

(Note 1)Assets 2012 2011 2012Current Assets:

Cash and time deposits (Note 3) ........................................................... ¥4,824 ¥17,231 $58,703Notes and accounts receivable:

Trade ................................................................................................. 56,769 52,101 690,714Nonconsolidated subsidiaries and affiliates ...................................... 3,665 5,076 44,600Others ............................................................................................... 3,306 3,382 40,227Subtotal ............................................................................................. 63,741 60,560 775,542

Inventories:Merchandise and finished products .................................................. 20,275 16,021 246,688Work in process ................................................................................ 4,291 3,980 52,213Raw materials and supplies .............................................................. 48,213 59,790 586,609Subtotal ............................................................................................. 72,780 79,791 885,510

Deferred tax assets (Note 9) ................................................................. 4,170 6,605 50,744Other current assets .............................................................................. 5,530 3,680 67,289Allowance for doubtful accounts ............................................................ (231) (416) (2,813)

Total current assets .......................................................................... 150,816 167,453 1,834,976

Property, Plant, and Equipment (Notes 5 and 6):Land ....................................................................................................... 22,064 22,275 268,454Buildings and structures ........................................................................ 91,754 88,581 1,116,374Machinery and equipment ..................................................................... 193,572 184,381 2,355,181Construction in progress ........................................................................ 2,645 5,052 32,185Others .................................................................................................... 12,516 11,756 152,287

Subtotal ............................................................................................. 322,553 312,047 3,924,483Accumulated depreciation ..................................................................... (221,777) (207,945) (2,698,350)

Net property, plant, and equipment ................................................... 100,775 104,101 1,226,132

Investments and Other Assets:Investments in securities (Notes 4 and 6) ............................................. 22,170 24,410 269,745Investments in and advances to nonconsolidated subsidiaries and affiliates (Notes 4 and 6) ............................................................... 30,421 28,120 370,134Long-term loans ..................................................................................... 5 8 71Deferred tax assets (Note 9) ................................................................. 4,682 5,542 56,966Goodwill ................................................................................................. 6,003 6,506 73,045Other assets .......................................................................................... 4,923 4,222 59,900Allowance for doubtful accounts ............................................................ (133) (204) (1,627)

Total investments and other assets .................................................. 68,072 68,606 828,235Total assets ..................................................................................... ¥319,665 ¥340,161 $3,889,344

*1. The accompanying notes are an integral part of these consolidated financial statements.*2. The years stated in the text are for fiscal years, which run from April 1 of the previous year through March 31. Thus, 2012 refers to the year ended March 31, 2012.*3. ¥82.19 = U.S. $1, the rate of exchange on March 31, 2012 is used.

Millions of Yen

Consolidated Balance SheetsDowa Holdings Co., Ltd. and Consolidated SubsidiariesAs of March 31, 2012 and 2011



(Note 1)Liabilities and Equity 2012 2011 2012Current Liabilities:

Short-term borrowings (Note 6) ............................................................ ¥18,709 ¥31,304 $227,638Current maturities of long-term debt (Note 6) ....................................... 28,493 23,439 346,684Notes and accounts payable:

Trade ................................................................................................ 34,323 32,768 417,612Nonconsolidated subsidiaries and affiliates ..................................... 567 609 6,907Others ............................................................................................... 5,012 5,007 60,990Subtotal ............................................................................................ 39,904 38,385 485,510

Accrued expenses ................................................................................ 7,352 6,317 89,460Accrued income taxes ........................................................................... 2,159 2,732 26,273Accrued bonuses .................................................................................. 2,924 2,831 35,577Accrued directors’ bonuses ................................................................... 154 158 1,882Other current liabilities .......................................................................... 9,572 19,062 116,473

Total current liabilities ....................................................................... 109,271 124,232 1,329,500

Long-term Liabilities:Long-term debt (Note 6) ........................................................................ 71,803 85,077 873,622Reserve for employees’ retirement benefits (Note 12) ......................... 10,519 10,637 127,995Reserve for directors’ and corporate auditors’ retirement benefits ....... 541 517 6,590Deferred tax liabilities (Note 9) .............................................................. 1,743 1,888 21,212Other long-term liabilities ...................................................................... 3,978 4,023 48,404

Total long-term liabilities ................................................................... 88,586 102,143 1,077,825Total liabilities ................................................................................... 197,858 226,376 2,407,325

Contingent Liabilities (Note 7)

Equity (Note 8):Common stock:

Authorized: 1,000,000 thousand shares in 2012 and 2011 Issued: 309,946 thousand shares in 2012 and 2011 ……................ 36,437 36,437 443,330

Capital surplus ...................................................................................... 26,362 26,362 320,748Retained earnings ................................................................................. 55,737 48,152 678,152Treasury stock, at cost ( 2011).......................................................................................................... (5,686) (5,763) (69,189)

Accumulated Other Comprehensive Income:Unrealized gains on available-for-sale securities .................................. 4,390 5,024 53,417Deferred losses on derivatives under hedge accounting ...................... (179) (865) (2,187)Foreign currency translation adjustments ............................................. (3,252) (2,504) (39,577)

Total ................................................................................................. 113,807 106,842 1,384,693 Minority Interests .................................................................................... 7,999 6,942 97,325

Total equity ....................................................................................... 121,807 113,785 1,482,019Total liabilities and equity ............................................................. ¥319,665 ¥340,161 $3,889,344

Millions of Yen


Consolidated Statements of IncomeDowa Holdings Co., Ltd. and Consolidated SubsidiariesFor the years ended March 31, 2012 and 2011


(Note 1)2012 2011 2012

Net Sales ................................................................................................... ¥392,468 ¥379,816 $4,775,138Cost of Sales (Note 13) ............................................................................ 343,015 330,380 4,173,441

Gross profit ....................................................................................... 49,453 49,436 601,696Selling, General, and Administrative Expenses (Notes 10 and 11) ...... 27,443 26,511 333,903

Operating income ............................................................................. 22,009 22,924 267,793Other Income (Expenses):

Interest and dividend income ................................................................ 671 739 8,166Interest expense ................................................................................... (1,968) (2,242) (23,948)Loss on sales of property, plant, and equipment and loss on disposals of property, plant, and equipment, net ............. (246) (870) (3,002)Foreign exchange (loss) gain ................................................................ (406) 312 (4,944)Equity in (losses) earnings of affiliates .................................................. (186) 1,228 (2,272)Gain on sales of investments in securities ............................................ 344 45 4,189Loss on valuation of investments in securities ...................................... (352) (2,007) (4,285)Loss on impairments (Note 5) ............................................................... (102) (118) (1,244)Provision of allowance for doubtful accounts ........................................ – (168) –Losses from natural disaster ................................................................. (915) (1,714) (11,144)Loss on revision of retirement benefit plan ........................................... (27) (981) (338)Environmental expenses........................................................................ (1,186) (750) (14,441)Other, net .............................................................................................. 1,320 823 16,063

Subtotal ............................................................................................ (3,057) (5,704) (37,205)Income before income taxes and minority interests ......................... 18,952 17,219 230,587

Income Taxes (Note 9): Current .................................................................................................. 3,544 3,968 43,123Deferred ................................................................................................ 3,887 3,349 47,297

Total income taxes ........................................................................... 7,431 7,318 90,421Net income before minority interests ................................................ 11,520 9,900 140,166

Minority Interests ..................................................................................... (909) (1,379) (11,068)Net income ...................................................................................... ¥10,610 ¥8,521 $129,098

Per Share (Note 17):U.S. Dollars

(Note 1)Basic net income ................................................................................... ¥35.86 ¥28.80 $0.44Cash dividends ..................................................................................... 10.00 10.00 0.12

*1. The accompanying notes are an integral part of these consolidated financial statements.*2. The years stated in the text are for fiscal years, which run from April 1 through March 31 of the following year. Thus, 2012 refers to the year ended March 31, 2012.*3. ¥82.19 = U.S. $1, the rate of exchange on March 31, 2012 is used.

Millions of Yen

Yen

Consolidated Statements of IncomeDowa Holdings Co., Ltd. and Consolidated SubsidiariesFor the years ended March 31, 2012 and 2011


Consolidated Statement of Comprehensive IncomeDowa Holdings Co., Ltd. and Consolidated SubsidiariesFor the year ended March 31, 2012

Consolidated Statements of Comprehensive IncomeDowa Holdings Co., Ltd. and Consolidated SubsidiariesFor the years ended March 31, 2012 and 2011


(Note 1)2012 2011 2012

Net income before minority interests ......................................................... ¥11,520 ¥9,900 $140,166Other comprehensive income:

Unrealized losses on available-for-sale securities ................................ (774) (2,255) (9,421)Deferred gains (losses) on derivatives under hedge accounting .......... 682 (1,026) 8,301Foreign currency translation adjustments ............................................. (324) (596) (3,949)Share of other comprehensive loss in affiliates .................................... (327) (653) (3,990)Total other comprehensive loss (Note 16)............................................. (744) (4,532) (9,058)

Comprehensive income ............................................................................. ¥10,775 ¥5,368 $131,107Comprehensive income attributable to:

Owners of the parent ............................................................................ ¥9,914 ¥4,002 $120,623Minority interests ................................................................................... 861 1,366 10,484

*1. The accompanying notes are an integral part of these consolidated financial statements.*2. The years stated in the text are for fiscal years, which run from April 1 through March 31 of the following year. Thus, 2012 refers to the year ended March 31, 2012.*3. ¥82.19 = U.S. $1, the rate of exchange on March 31, 2012 is used.

Millions of Yen


Consolidated Statements of Changes in EquityDowa Holdings Co., Ltd. and Consolidated SubsidiariesFor the years ended March 31, 2012 and 2011

2012 2011Number of Shares of Common Stock

Balance at beginning of year ................................................................. 309,946 309,946Issuance of new shares-exercise of subscription rights to shares .... – –

Balance at end of year ........................................................................... 309,946 309,946Number of Shares of Treasury Stock

Balance at beginning of year ................................................................. 14,127 14,120Net change in treasury stock held by affiliates during year ............... (138) 0Purchases of treasury stock .............................................................. 3 8Sales of treasury stock ...................................................................... – (1)

Balance at end of year ........................................................................... 13,993 14,127


(Note 1)2012 2011 2012

Equity　Common Stock

Balance at beginning of year ................................................................. ¥36,437 ¥36,437 $443,330Net change during year ..................................................................... – – –

Balance at end of year ........................................................................... ¥36,437 ¥36,437 $443,330　Capital Surplus

Balance at beginning of year ................................................................. ¥26,362 ¥26,362 $320,748Net change due to sales of treasury stock ........................................ – 0 –

Balance at end of year ........................................................................... ¥26,362 ¥26,362 $320,748　Retained Earnings

Balance at beginning of year ................................................................. ¥48,152 ¥42,791 $585,864Net income ........................................................................................ 10,610 8,521 129,098Cash dividends paid .......................................................................... (3,005) (3,005) (36,566)Increase due to sales of treasury stock of affiliates .......................... 0 0 0Increase in retained earnings due to decrease in number of consolidated subsidiaries................................................................... (20) (155) (245)

Balance at end of year ........................................................................... ¥55,737 ¥48,152 $678,152　Treasury Stock, at Cost

Balance at beginning of year ................................................................. ¥(5,763) ¥(5,759) $(70,127)Purchases of treasury stock .............................................................. (1) (4) (23)Sales of treasury stock ...................................................................... – 0 –Change in treasury stock due to change in equity in affiliates accounted for by equity method ....................... 79 – 961

Balance at end of year ........................................................................... ¥(5,686) ¥(5,763) $(69,189)Accumulated Other Comprehensive Income　Unrealized Gains on Available-for-sale Securities

Balance at beginning of year ................................................................. ¥5,024 ¥7,533 $61,136Net change during year ..................................................................... (634) (2,509) (7,719)

Balance at end of year ........................................................................... ¥4,390 ¥5,024 $53,417　Deferred Gains (Losses) on Derivatives Under Hedge Accounting

Balance at beginning of year ................................................................. ¥(865) ¥160 $(10,533)Net change during year ..................................................................... 685 (1,026) 8,346

Balance at end of year ........................................................................... ¥(179) ¥(865) $(2,187)　Foreign Currency Translation Adjustments

Balance at beginning of year ................................................................. ¥(2,504) ¥(1,521) $(30,474)Net change during year ..................................................................... (748) (983) (9,102)

Balance at end of year ........................................................................... ¥(3,252) ¥(2,504) $(39,577)Minority Interests 　Minority Interests

Balance at beginning of year ................................................................. ¥6,942 ¥5,663 $84,474Net change during year ..................................................................... 1,056 1,279 12,850

Balance at end of year ........................................................................... ¥7,999 ¥6,942 $97,325*1. The accompanying notes are an integral part of these consolidated financial statements.*2. The years stated in the text are for fiscal years, which run from April 1 through March 31 of the following year. Thus, 2012 refers to the year ended March 31, 2012.*3. ¥82.19 = U.S. $1, the rate of exchange on March 31, 2012 is used.

Millions of Yen

Thousands of shares




2012 2011Number of Shares of Common Stock

Balance at beginning of year ................................................................. 309,946 309,946Issuance of new shares-exercise of subscription rights to shares .... – –

Balance at end of year ........................................................................... 309,946 309,946Number of Shares of Treasury Stock

Balance at beginning of year ................................................................. 14,127 14,120Net change in treasury stock held by affiliates during year ............... (138) 0Purchases of treasury stock .............................................................. 3 8Sales of treasury stock ...................................................................... – (1)

Balance at end of year ........................................................................... 13,993 14,127


(Note 1)2012 2011 2012

Equity　Common Stock

Balance at beginning of year ................................................................. ¥36,437 ¥36,437 $443,330Net change during year ..................................................................... – – –

Balance at end of year ........................................................................... ¥36,437 ¥36,437 $443,330　Capital Surplus

Balance at beginning of year ................................................................. ¥26,362 ¥26,362 $320,748Net change due to sales of treasury stock ........................................ – 0 –

Balance at end of year ........................................................................... ¥26,362 ¥26,362 $320,748　Retained Earnings

Balance at beginning of year ................................................................. ¥48,152 ¥42,791 $585,864Net income ........................................................................................ 10,610 8,521 129,098Cash dividends paid .......................................................................... (3,005) (3,005) (36,566)Increase due to sales of treasury stock of affiliates .......................... 0 0 0Increase in retained earnings due to decrease in number of consolidated subsidiaries................................................................... (20) (155) (245)

Balance at end of year ........................................................................... ¥55,737 ¥48,152 $678,152　Treasury Stock, at Cost

Balance at beginning of year ................................................................. ¥(5,763) ¥(5,759) $(70,127)Purchases of treasury stock .............................................................. (1) (4) (23)Sales of treasury stock ...................................................................... – 0 –Change in treasury stock due to change in equity in affiliates accounted for by equity method ....................... 79 – 961

Balance at end of year ........................................................................... ¥(5,686) ¥(5,763) $(69,189)Accumulated Other Comprehensive Income　Unrealized Gains on Available-for-sale Securities

Balance at beginning of year ................................................................. ¥5,024 ¥7,533 $61,136Net change during year ..................................................................... (634) (2,509) (7,719)

Balance at end of year ........................................................................... ¥4,390 ¥5,024 $53,417　Deferred Gains (Losses) on Derivatives Under Hedge Accounting

Balance at beginning of year ................................................................. ¥(865) ¥160 $(10,533)Net change during year ..................................................................... 685 (1,026) 8,346

Balance at end of year ........................................................................... ¥(179) ¥(865) $(2,187)　Foreign Currency Translation Adjustments

Balance at beginning of year ................................................................. ¥(2,504) ¥(1,521) $(30,474)Net change during year ..................................................................... (748) (983) (9,102)

Balance at end of year ........................................................................... ¥(3,252) ¥(2,504) $(39,577)Minority Interests 　Minority Interests

Balance at beginning of year ................................................................. ¥6,942 ¥5,663 $84,474Net change during year ..................................................................... 1,056 1,279 12,850

Balance at end of year ........................................................................... ¥7,999 ¥6,942 $97,325*1. The accompanying notes are an integral part of these consolidated financial statements.*2. The years stated in the text are for fiscal years, which run from April 1 through March 31 of the following year. Thus, 2012 refers to the year ended March 31, 2012.*3. ¥82.19 = U.S. $1, the rate of exchange on March 31, 2012 is used.

Millions of Yen

Thousands of shares

Consolidated Statements of Cash FlowsDowa Holdings Co., Ltd. and Consolidated SubsidiariesFor the years ended March 31, 2012 and 2011


(Note 1)2012 2011 2012

Cash Flows from Operating Activities:Income before income taxes and minority interests .............................. ¥18,952 ¥17,219 $230,587Adjustments for:

Income taxes paid ............................................................................. (4,589) (2,750) (55,845)Depreciation and amortization .......................................................... 18,344 18,486 223,198Loss on sales of property, plant, and equipment and loss on disposals of property, plant, and equipment, net ............................. 246 870 3,002Increase in allowance for doubtful accounts ..................................... 18 97 223Equity in losses (earnings) of affiliates .............................................. 186 (1,228) 2,272Gain on sales of investments in securities, net ................................. (344) (45) (4,189)Loss on valuation of investments in securities .................................. 352 2,007 4,285Loss on impairments (Note 5) ........................................................... 102 118 1,244Loss on change in accounting standard for asset retirement obligations ....................................................... – 80 –

Changes in assets and liabilitiesIncrease in trade receivables ............................................................ (4,295) (4,569) (52,261)Decrease (Increase) in inventories ................................................... 7,289 (23,054) 88,694Increase in trade payables ................................................................ 1,558 4,670 18,963Decrease in interest and dividend receivables .................................. 1,883 302 22,920(Decrease) increase in interest payable ............................................ (32) 7 (397)

Other, net ............................................................................................... (8,174) 11,744 (99,454)Net cash provided by operating activities .......................................... 31,499 23,955 383,247

Cash Flows from Investing Activities:Acquisition of property, plant, and equipment ........................................ (16,172) (17,307) (196,765)Proceeds from sales of property, plant, and equipment ........................ 487 86 5,933Acquisition of investments in securities ................................................. (6) (6) (84)Proceeds from sales of investments in securities .................................. 488 55 5,943Acquisition of investments in subsidiaries and affiliates ........................ (5,465) (1,625) (66,495)Payments for loans ................................................................................ (1,260) (1,172) (15,330)Proceeds from collection of loans .......................................................... 905 983 11,014Proceeds from subsidy........................................................................... 1,428 - 17,379Other, net ............................................................................................... 103 (272) 1,256

Net cash used in investing activities ................................................. (19,491) (19,257) (237,148)Cash Flows from Financing Activities:

Net decrease in short-term bank loans .................................................. (12,703) (9,162) (154,562)Proceeds from long-term debt ............................................................... 15,160 23,220 184,450Repayment of long-term debt ................................................................ (22,937) (25,582) (279,076)Payments for redemption of bonds ........................................................ – (7) –Cash dividends paid .............................................................................. (3,177) (3,157) (38,663)Proceeds from stock issuance to minority shareholders........................ – 62 –Increase in lease obligations by sale and leaseback ............................. – 4 –Repayment of lease obligations ............................................................. (474) (444) (5,769)Proceeds from sales of treasury stock ................................................... – 0 –Purchases of treasury stock ................................................................... (1) (4) (23)

Net cash used in financing activities ................................................. (24,134) (15,070) (293,645)Foreign Currency Translation Adjustment on Cash andCashEquivalents..................................................................................... (66) (165) (806)Net decrease in Cash and Cash Equivalents ......................................... (12,193) (10,537) (148,353)Cash and Cash Equivalents of Newly Consolidated Subsidiaries ...... 239 164 2,919Cash and Cash Equivalents at Beginning of Year ................................ 16,741 27,115 203,697Cash and Cash Equivalents at End of Year (Note 3) ............................. ¥4,788 ¥16,741 $58,263*1. The accompanying notes are an integral part of these consolidated financial statements.*2. The years stated in the text are for fiscal years, which run from April 1 through March 31 of the following year. Thus, 2012 refers to the year ended March 31, 2012.*3. ¥82.19 = U.S. $1, the rate of exchange on March 31, 2012 is used.

Millions of Yen

Consolidated Statements of Cash FlowsDowa Holdings Co., Ltd. and Consolidated SubsidiariesFor the years ended March 31, 2012 and 2011


1

1. Basis of Presentation of the Consolidated Financial Statements

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting standards and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.

Japanese yen figures less than ¥1 million (U.S. $1 thousand) are rounded down to the nearest ¥1 million (U.S. $1 thousand), except for per-share data.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2011 consolidated financial statements to conform to the classifications used in 2012.

The consolidated financial statements are stated in Japanese yen, the currency of the country in which Dowa Holdings Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥82.19 to U.S. $1, the approximate rate of exchange at March 31, 2012. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. Summary of Significant Accounting Policies (1) Principles of Consolidation

The consolidated financial statements as of March 31, 2012 include the accounts of the Company and its 63 significant (61 in 2011) subsidiaries (together, the “Group”).

Under the control or influence concept, those significant companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those 12 significant affiliate companies are accounted for by the equity method.

Investments in nonconsolidated subsidiaries have not been accounted for by the equity method, but are carried at cost, since the Company’s equity in their combined earnings, in the aggregate, does not have a material effect on the consolidated financial statements.

The net difference between the purchase price and the underlying equity in the equity of an acquired business is amortized on a straight-line basis within 20 years.

(a) Note Regarding Scope of Consolidation

(2012) The consolidated financial statements for the year ended March 31, 2012 include Tianjin Dowa Green Angel Summit Recycling Co., Ltd. and Dowa Metaltech (Thailand) Co., Ltd., which were unconsolidated subsidiaries in the consolidated financial statements for the year ended March 31, 2011 from the viewpoint of materiality. (2011) The consolidated financial statements for the year ended March 31, 2011 include Tonetsu Kosan Co., Ltd. and Dowa Thermotech (Thailand) Co., Ltd., which were unconsolidated subsidiaries in the consolidated financial statements for the year ended March 31, 2010 from the viewpoint of materiality.

(b) Accounting Period of Foreign Subsidiaries

In preparing the consolidated financial statements for the year ended March 31, 2012, the Company used the financial statements with an account closing date of December 31, 2011 in the cases of 13 foreign subsidiaries including Modern Asia Environmental Holdings Inc.; Dowa Environmental Management Co., Ltd.; and Dowa Advanced Materials (Shanghai) Co., Ltd.; and other companies. For material transactions that occurred between January 1, 2012 and March 31, 2012, adjustments were made in the consolidated financial statements, as necessary.

Notes to Consolidated Financial Statements Dowa Holdings Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2012 and 2011

Notes to Consolidated Financial StatementsDowa Holdings Co., Ltd. and Consolidated SubsidiariesYears ended March 31, 2012 and 2011


2

(2) Cash and Cash Equivalents Cash and cash equivalents in the consolidated statements of cash flows are composed of cash on hand, bank deposits able to be withdrawn on demand and short-term investments with an original maturity of three months or less and which represent a minor risk of fluctuation in value.

(3) Securities Securities held by the Group are classified into three categories.

Investments in equity securities issued by nonconsolidated subsidiaries and affiliates are accounted for by the equity method. In certain cases, investments in nonconsolidated subsidiaries and affiliates are stated at cost by using the moving-average method because the effect of application of the equity method would be immaterial.

Available-for-sale securities with market quotations are stated at fair value. Unrealized gains on these securities are stated, net of tax and minority interests, as “unrealized gains on available-for-sale securities” on the consolidated statements of changes in equity.

Available-for-sale securities without market quotations are stated at cost by using the moving-average method, except as stated in the paragraph below.

In cases where the fair value of equity securities issued by nonconsolidated subsidiaries and affiliates or available-for-sale securities has declined significantly and such impairment of the value is deemed other than temporary, those securities are written down to the fair value and the resulting losses are included in net profit or loss for the period.

(4) Inventories

Inventories are stated at the lower of cost or market value. The costs of the primary finished products and imported raw materials are determined by the first-in, first-out method. The costs of other finished products and other raw materials are determined by the moving-average method.

(5) Property, Plant, and Equipment

Property, plant, and equipment, including significant renewals and additions, are stated at cost. Repairs and maintenance expenses are charged to current income. Depreciation is computed by the declining-balance method based on the estimated useful lives of the respective assets. Depreciation of the landfill is computed using the production method.

The Company and domestic consolidated subsidiaries have computed the depreciation for buildings (excluding leasehold improvements and auxiliary facilities attached to buildings) that were acquired on or after April 1, 1998, by the straight-line method.

(6) Long-lived Assets

The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group.

The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

(7) Research and Development and Intangible Assets

Research and development expenses are charged to the consolidated statements of income as incurred. Expenses relating to the development of internal use computer software are charged to the consolidated statements of

income when incurred, except when it is determined the software contributes to the future generation of income or cost savings. Such expenses are capitalized as an asset and are amortized using the straight-line method over their estimated useful life, which is five years.

Intangible assets other than software are amortized using the straight-line method, in accordance with the Japanese Corporate Tax Law.


3

(8) Leases (a) Lease Assets Pertaining to Finance Leases That are Deemed to Transfer Ownership of the Leased Property to the Lessee

These are calculated using the same method as the depreciation method that applies to noncurrent assets owned by the Group.

(b) Lease Assets Pertaining to Finance Leases That are not Deemed to Transfer Ownership of the Leased Property to the Lessee

These use a method of calculation that takes the lease period to be the useful life and the salvage value to be zero. Note, however, that when the lease start date of a finance lease that is not deemed to transfer ownership of the leased property to the lessee is before April 1, 2008, which is the date of the adoption of this accounting method, such finance leases shall be accounted for by the method pertaining to ordinary operating lease transactions.

(9) Allowance for Doubtful Accounts The Group has recorded an allowance for doubtful accounts based on the percentage of its own historical bad debt losses against the balance of total receivables, plus the amount deemed necessary to cover individual accounts estimated to be uncollectible.

(10) Accrued Bonuses

Accrued bonuses to employees are provided for at the estimated amounts, which the Group is obliged to pay to employees after year end.

(11) Accrued Directors’ Bonuses

Accrued bonuses to directors, including bonuses for the portion corresponding to the corporate performance-based remuneration system, are provided for at the estimated amounts, which the Group is obliged to pay to directors after year end.

(12) Reserve for Employees’ Retirement Benefits

Employees of the Group are entitled to severance indemnities, which are generally determined based on the length of service, current rates of pay, and certain other factors at the time of retirement. The Company records a reserve for employees’ retirement benefits in an amount determined based on the retirement benefit obligation and fair value of retirement assets at fiscal year end. Actuarial differences are amortized as an operating expense on a straight-line basis over five years, usually beginning the year following the year in which the difference arises. The Group has adopted the simplified method of accounting for severance indemnities at certain consolidated subsidiaries.

(13) Reserve for Directors’ and Corporate Auditors’ Retirement Benefits

Some of the Company’s subsidiaries also provide for the liability for directors’ and corporate auditors’ severance indemnities in an amount determined by the Company’s internal regulations for such severance indemnities.

(14) Allowance for Environmental Measures

The Group adopted the Act Concerning Special Measures against PCB Waste (Act No. 65 of June 22, 2001) and recorded the estimated cost for the disposal of polychlorinated biphenyl waste.

(15) Construction Contracts

The construction revenue and construction costs are recognized by the percentage-of-completion method, if the outcome of a construction contract can be estimated reliably. When total construction revenue, total construction costs and the stage of completion of the contract at the balance sheet date can be reliably measured, the outcome of a construction contract can be estimated reliably. If the outcome of a construction contract cannot be reliably estimated, the completed-contract method should be applied.

(16) Foreign Currency Translations

All monetary assets and liabilities denominated in foreign currencies, whether long-term or short-term, are translated into Japanese yen at the exchange rates prevailing at the balance sheet date. Resulting gains and losses are included in net profit or loss for the period. The assets and liabilities of the Company’s consolidated subsidiaries are valued using the fair value method. Assets and liabilities, and revenues and expenses of foreign subsidiaries are converted into Japanese yen at the spot exchange rates prevailing on the balance sheet date of the foreign subsidiaries in question, and translation differences are included as minority interests and foreign currency translation adjustments in equity.


4

(17) Derivatives and Hedging Activities The Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange, interest, and nonferrous metal rates.

Foreign exchange forward contracts, interest rate swaps, and nonferrous metal forward contracts are utilized by the Group to reduce foreign currency exchange, interest, and nonferrous metal rate risks. The Group does not enter into derivatives for trading or speculative purposes.

Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: a) All derivatives are recognized as either assets or liabilities and measured at fair value and gains or losses on

derivative transactions are recognized in the consolidated statements of income; and b) For derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation

and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.

The foreign exchange forward contracts employed to hedge foreign exchange exposures for export sales and import purchases are measured at fair value and the unrealized gains or losses are mainly recognized in income.

Forward contracts applied for forecasted (or committed) transactions are also measured at fair value, but the unrealized gains or losses are deferred until the underlying transactions are completed.

The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market value, but the differential paid or received under the swap agreements is recognized and included in interest expense or income.

(18) Accounting Treatment for Consumption Tax

All transactions are recorded net of consumption tax.

(19) Application of the Consolidated Taxation System The Group applies the Consolidated Taxation System.

(20) Net Income per Share Basic net income per share is based on the weighted-average number of shares of common stock of the Company issued and outstanding during the respective year.

(21) Application of “Accounting Changes and Error Corrections”(2012) In December 2009, the ASBJ issued ASBJ Statement No. 24, "Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24, "Guidance on Accounting Standard for Accounting Changes and Error Corrections". Accounting treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies—When a new accounting policy is applied with revision of accounting standards, the new policy is applied retrospectively unless the revised accounting standards include specific transitional provisions. When the revised accounting standards include specific transitional provisions, an entity shall comply with the specific transitional provisions. (2) Changes in Presentations—When the presentation of financial statements is changed, prior-period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior-Period Errors—When an error in prior-period financial statements is discovered, those statements are restated. This accounting standard and the guidance are applicable to accounting changes and corrections of prior-period errors which are made from the beginning of the fiscal year that begins on or after April 1, 2011.

3. Cash and Cash Equivalents Cash and cash equivalents at March 31, 2012 and 2011 consisted of:

Millions of Yen

Thousands of U.S. Dollars

(Note 1)

2012 2011 2012

Cash and time deposits ······························································· ¥4,824 ¥17,231 $58,703

Time deposits with deposit terms of over three months ······················ (36) (489) (439)

Cash and cash equivalents ······················································· ¥4,788 ¥16,741 $58,263


5

4. Investments Investments at March 31, 2012 and 2011 consisted of:

Millions of Yen


(Note 1)

2012 2011 2012

Investments in and advances to nonconsolidated subsidiaries and affiliates ············································································ ¥30,421 ¥28,120 $370,134

Available-for-sale securities with market quotations ··························· 20,293 22,371 246,910

Unlisted securities ······································································ 1,876 2,038 22,834

Total ····················································································· ¥52,591 ¥52,530 $638,879

The net unrealized gains on the available-for-sale securities with market quotations as of March 31, 2012 and 2011 were ¥6,505 million (U.S. $79,154 thousand) and ¥8,015 million, respectively.

Available-for-sale securities that the Group sold during the years ended March 31, 2012 and 2011:

Millions of Yen


(Note 1)

2012 2011 2012

Proceeds from sales ··································································· ¥488 ¥55 $5,943

Gain on sales ············································································ 344 38 4,191

Loss on sales ············································································ – (0) –

5. Long-lived Assets The Group reviewed its long-lived assets for impairment as of the years ended March 31, 2012 and 2011 and, as a result, recognized a loss on impairment of ¥102 million (U.S. $1,244 thousand) and ¥118 million, respectively, as other expenses for idle assets, due to a decline of market value.

6. Short-term Borrowings and Long-term Debt Short-term borrowings from banks and other financial institutions were represented by short-term borrowings bearing interest at 0.56% to 5.70% (an approximate average rate of 0.75%) per annum at March 31, 2012 and 0.46% to 1.99% (an approximate average rate of 0.74%) per annum at March 31, 2011, respectively.

It is normal business custom in Japan for short-term borrowings to be rolled over each year. At March 31, 2012 and 2011, long-term debt consisted of the following:

Millions of Yen


(Note 1)

2012 2011 2012

0.81% to 2.70% loans, principally from banks and due between 2012 and 2027: Collateralized ········································································· ¥33,102 ¥36,918 $402,755

Unsecured ············································································· 55,858 59,897 679,623

1.01% straight bonds due 2014 ····················································· 10,000 10,000 121,669

Lease obligations ······································································· 1,336 1,701 16,258

100,297 108,517 1,220,307

Long-term debt, bonds, and lease obligations (due within one year) ·· 28,493 23,439 346,684

Long-term debt, bonds, and lease obligations (due after one year) ···· ¥71,803 ¥85,077 $873,622


6

At March 31, 2012 and 2011, the following assets were pledged as collateral for short-term borrowings and the long-term debt of the Group:

Millions of Yen


(Note 1)

2012 2011 2012

Property, plant, and equipment, less accumulated depreciation ··········· ¥239 ¥966 $2,919

Investments in and advances to affiliates ········································ 5,033 5,456 61,240

Investments in securities ······························································ 3,385 3,196 41,189

Total ····················································································· ¥8,658 ¥9,620 $105,349

Annual maturities of long-term debt as of March 31, 2012 for the next five years and thereafter were as follows:

Millions of Yen


(Note 1)

2013 ············································································································ ¥28,493 $346,684

2014 ············································································································ 24,539 298,568

2015 ············································································································ 24,229 294,795

2016 ············································································································ 12,348 150,241

2017 and thereafter ························································································ 10,686 130,017

Total ········································································································· ¥100,297 $1,220,307

7. Contingent Liabilities At March 31, 2012, the Group guaranteed loans incurred by nonconsolidated subsidiaries and affiliates in the amount of ¥6,536 million (U.S. $79,524 thousand).

The Company sold notes and accounts receivable amounts to a finance company. As part of the finance agreement, under certain circumstances, the Company has the obligation to repurchase these amounts. At March 31, 2012, in connection with this structured finance agreement and the maximum repurchase commitment, the Company’s exposure was ¥530 million (U.S. $6,458 thousand).

8. Equity Since May 1, 2006, Japanese companies have been subject to the Corporate Law of Japan (the “Companies Act”), which reformed and replaced the Commercial Code of Japan. The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

(a) Dividends

Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria, such as:

(1) having a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate Auditors, and (4) having the term of service of the directors prescribed as one year rather than the two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.

The Company meets all the above criteria. Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles

of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of equity after dividends must be maintained at no less than ¥3 million.


7

(b) Increases/decreases and transfer of common stock, reserve, and surplus The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of the aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock.

Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

(c) Treasury stock and treasury stock acquisition rights

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders, which is determined by a specific formula. Under the Companies Act, stock acquisition rights, which were previously presented as a liability, are now presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.


8

9. Income Taxes Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporation tax, inhabitants’ tax, and enterprise tax, which in the aggregate resulted in normal statutory tax rates of approximately 40.0% for 2012 and 2011, respectively.

The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

At March 31, 2012 and 2011, the significant components of deferred tax assets and liabilities were as follows:

Millions of Yen


(Note 1)

2012 2011 2012

Deferred tax assets

Consolidated subsidiaries’ deficit ··················································· ¥8,478 ¥12,448 $103,156

Reserve for employees’ retirement benefits ····································· 3,657 4,227 44,496

Unrealized earnings ···································································· 2,429 2,444 29,562

Loss on impairments of property, plant, and equipment ····················· 1,345 1,662 16,375

Loss on valuation of inventories ···················································· 1,221 904 14,863

Loss on valuation of investment securities ······································· 1,160 1,381 14,119

Accrued bonus ·········································································· 1,070 1,117 13,026

Loss on disposals of property, plant, and equipment ························· 652 691 7,943

Accrued enterprise tax ································································ 321 440 3,911

Excess depreciation ···································································· 261 380 3,182

Reserve for directors’ and corporate auditors’ retirement benefits ········ 196 260 2,390

Allowance for doubtful accounts ···················································· 111 227 1,358

Deferred losses on derivatives under hedge accounting ····················· 92 488 1,119

Others ······················································································ 2,827 3,243 34,395

Total ····················································································· 23,827 29,919 289,903

Valuation allowance ···································································· (13,179) (14,891) (160,350)

Deferred tax assets ································································· 10,647 15,028 129,552

Deferred tax liabilities

Unrealized gains on available-for-sale securities ······························ (2,183) (3,219) (26,566)

Unrealized gains on land ····························································· (818) (924) (9,960)

Special depreciation reserve ························································ (0) (4) (0)

Deferred gains on derivatives under hedge accounting ······················ – (3) –

Provision for loss on foreign investments ········································ (0) (0) (0)

Others ······················································································ (536) (617) (6,526)

Total deferred tax liabilities ························································ (3,538) (4,769) (43,054)

Net deferred tax assets ···························································· ¥7,109 ¥10,259 $86,498

The components of net deferred tax assets (liabilities) for the years ended March 31, 2012 and 2011 were as follows:

Millions of Yen


(Note 1)

2012 2011 2012

Deferred tax assets, current ···························································· ¥4,170 ¥6,605 $50,744Deferred tax assets, noncurrent ······················································· 4,682 5,542 56,966Deferred tax liabilities, noncurrent ····················································· (1,743) (1,888) (21,212)


9

For the year ended March 31, 2011, the reconciliation of the statutory tax rate to the effective income tax rate was as follows:

2011

Statutory tax rate ···························································································· 40.0%

Equity in earnings of affiliates ··········································································· (2.2)

Nontaxable items, including dividend income ······················································· (0.8)

Tax credits ···································································································· (0.1)

Valuation allowance ························································································ 2.6

Nondeductible items, including entertainment expenses ········································ 1.6

Inhabitants’ tax ······························································································ 0.6

Others ·········································································································· 0.8

Effective income tax rate ··············································································· 42.5%

(Note) For the year ended March 31, 2012, the difference between the statutory tax rate and the effective income tax rate after the application of deferred tax accounting was less than 5% of the statutory tax rate. Accordingly, disclosure of the reconciliation has been omitted. On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective statutory tax rate from approximately 40.0% to 37.0% effective for the fiscal years beginning on or after April 1, 2012 through March 31, 2015, and to 35.0% afterwards.

10. Research and Development Expenses Research and development expenses for the years ended March 31, 2012 and 2011 were ¥4,367 million (U.S. $53,138 thousand) and ¥3,962 million, respectively.

11. Leases As discussed in Note 2. (8), the Company accounts for leases, which existed at March 31, 2008 and do not transfer ownership of the leased property to the lessee as operating lease transactions.

Pro forma information of such leases existing at March 31, 2008, such as acquisition cost, accumulated depreciation, obligations under finance leases, depreciation expense, on an “as if capitalized” basis for the years ended March 31, 2012 and 2011 is as follows:

Acquisition cost, accumulated depreciation, and net book value at March 31, 2012 and 2011, if capitalized, are summarized as follows:

Millions of Yen Thousands of U.S. Dollars (Note 1)

2012 2011 2012

Machinery and

equipment Others Total

Machinery and


Machinery and


Acquisition cost ·················· ¥1,005 ¥306 ¥1,312 ¥1,330 ¥380 ¥1,710 $12,239 $3,732 $15,972

Accumulated depreciation ···· 916 241 1,157 1,089 259 1,348 11,147 2,933 14,080

Net book value ·················· ¥89 ¥64 ¥154 ¥241 ¥120 ¥361 $1,092 $786 $1,878

Millions of Yen


(Note 1)

2012 2011 2012

Lease rental expenses for the year ················································· ¥204 ¥302 $2,492

Depreciation expense ·································································· 204 302 2,492


10

The amounts of outstanding future lease payments under finance leases due at March 31, 2012 and 2011, including the portion of interest thereon, are summarized as follows:

Millions of Yen


(Note 1)

2012 2011 2012

Future lease payments

Within one year ········································································ ¥115 ¥209 $1,402

Over one year ········································································· 39 152 476

Total ··················································································· ¥154 ¥361 $1,878

The amounts of outstanding future lease receivable payments under noncancelable operating leases due at March

31, 2012 and 2011 are summarized as follows:

Millions of Yen


(Note 1)

2012 2011 2012

Operating leases (lessee)

Within one year ········································································ ¥94 ¥94 $1,151

Over one year ········································································· 213 209 2,599

Total ··················································································· ¥308 ¥303 $3,751

Millions of Yen


(Note 1)

2012 2011 2012

Operating leases (lessor)

Within one year ········································································ ¥35 ¥35 $426

Over one year ········································································· 110 139 1,342

Total ··················································································· ¥145 ¥174 $1,769

12. Employees’ Retirement Benefit Plan The Group has a defined retirement benefit plan covering substantially all employees.

The reserves for employees’ retirement benefits for the years ended March 31, 2012 and 2011 are analyzed as follows:

Millions of Yen


(Note 1)

2012 2011 2012

Projected benefit obligations ························································· ¥(11,760) ¥(11,340) $(143,088)

Plan assets ··············································································· 308 514 3,751

Unfunded retirement obligations ···················································· (11,452) (10,826) (139,337)

Unrecognized actuarial differences ················································ 932 188 11,341

Reserves for employees’ retirement benefits ···································· ¥(10,519) ¥(10,637) $(127,995)


11

Net pension expenses related to retirement benefits for the years ended March 31, 2012 and 2011 are as follows:

Millions of Yen


(Note 1)

2012 2011 2012

Service cost ··············································································· ¥915 ¥924 $11,133

Interest cost ··············································································· 131 187 1,600

Expected return on plan assets ······················································ – (8) –

Amortization of actuarial differences ················································ 27 (25) 335

Contributions to defined contribution pension plans ···························· 367 296 4,473

Other pension expenses ······························································· 33 53 407

Net pension expenses ·································································· 1,475 1,428 17,949

Loss on revision of retirement benefit plan ·············································· 27 981 338

Total ··················································································· ¥1,503 ¥2,409 $18,288

Assumptions used in the calculation of the above information were as follows: 2012 2011

Discount rate ····················································································· Principally 1.54% Principally 2.50%

Expected rate of return on plan assets ···················································· – Principally 1.25%

Method of attributing the projected benefits to periods of service ················· Straight-line basis Straight-line basis

Recognition period of actuarial differences ·············································· Five years Five years

13. Loss on Valuation of Inventories The Group recorded the following loss on valuation of inventories held for ordinary sales purposes due to impairments reflecting a drop in profitability for the years ended March 31, 2012 and 2011:

Millions of Yen


(Note 1)

2012 2011 2012

Cost of sales ················································································ ¥820 ¥1,073 $9,985

14. Financial Instruments (1) Status of Financial Instruments

(a) Policy on financial instruments The Group manages its funds using short-term deposits and bond repurchase agreements.

Financial instruments used for financing are mainly bank loans and other instruments, including corporate bonds and Electronic Commercial Paper, based on the Group’s policy of diversifying the financing methods, sources, and maturities, etc.

Derivatives are used to avoid the market fluctuation risks of interest on borrowings and the sale and purchase prices of inventories, etc., only within the range of the hedged items, and the Group’s policy is not to use derivatives for speculative purposes.

(b) Nature, extent of risks, and risk management for financial instruments

Notes and accounts receivable, which are operating receivables, are exposed to customer credit risk. The Group manages the credit risk of receivables by monitoring the payment terms and balances for each customer.

Listed securities, which are among the equity instruments in investments in securities, are exposed to the risks of market price fluctuations. The Group has a system to periodically monitor and assess the fair values of listed securities, although the securities are held neither for pure investment purposes nor short-term trading purposes.

Payment terms of notes and accounts payable, which are operating debt, are mostly less than one year. Borrowings are exposed to liquidity risk and interest rate risk. In order to mitigate these risks, the Group uses

multiple financial institutions and staggers the redemption dates of loans. With regard to a portion of long-term debt, the Group uses interest rate swaps as hedging instruments to avoid fluctuation risks of interest rates. The Group periodically compiles cash flow plans and its performance, and the status of financing is reported at the management meeting monthly.


12

In addition to interest rate swaps, the Group enters into derivative financial instruments, namely, foreign exchange forward contracts and nonferrous metal forward contracts. The former are used to avoid risks of foreign exchange fluctuations associated with the sale of finished products and purchases of inventories (mainly imported raw materials), which are denominated in foreign currencies. The latter are used to avoid fluctuation risks in market prices for raw materials and finished goods that are influenced by nonferrous metal rates.

Monthly meetings are held regarding derivative transactions, with attendance of directors who are in charge of hedge transactions and the head of each business division. At the meetings, the implementation policies for hedge transactions are determined, the execution of derivative transactions is managed and reported, and hedge effectiveness is evaluated. In accordance with the policies, each derivative transaction is executed based on internal guidelines, which regulate the credit limit amount and procedures of transactions and reporting. The evaluation of hedge effectiveness is omitted for interest rate swaps as the swaps qualify for hedge accounting and meet specific matching criteria for interest rate swaps. The Group has a policy to diversify transactions through multiple counterparties with high credit standings in order to mitigate credit risk.

(c) Supplementary explanation to fair values of financial instruments

Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, other rational valuation techniques are used instead. Such techniques include variable factors and the results of valuation may differ depending on prerequisites. The contracted amounts related to derivatives, mentioned in “16, Derivatives,” in and of themselves should not be considered indicative of the market risks associated with the derivatives.

(2) Fair Value of Financial Instruments

The table below shows the amounts of financial instruments recorded in the consolidated balance sheets and their fair values as of March 31, 2012 and 2011, as well as their differences between the balance sheet amounts and the fair values. Financial instruments whose fair value is deemed extremely difficult to assess are not included. (Please refer to (b) below.)

Millions of Yen Thousands of U.S. Dollars (Note 1)

As of March 31, 2012 Carrying amount Fair value

Unrealized gains/losses

Carrying amount Fair value


(1) Cash and time deposits ············ ¥4,824 ¥4,824 ¥ – $58,703 $58,703 $ –

(2) Notes and accounts receivable (*1) ·· 59,394 59,394 – 722,644 722,644 –

(3) Investments in securities (*2) ····· 34,862 31,471 (3,391) 424,172 382,912 (41,259)

Total assets ····························· 99,081 95,690 (3,391) 1,205,519 1,164,260 (41,259)

(1) Notes and accounts payable (*3) ··· 34,886 34,886 – 424,463 424,463 –

(2) Short-term borrowings ·············· 18,709 18,709 – 227,638 227,638 –

(3) Long-term debt (including repayments due within one year) (*4) ························ 88,960 89,926 965 1,082,379 1,094,130 11,751

Total liabilities ·························· 142,557 143,522 965 1,734,481 1,746,233 11,751

Derivatives (*5) ····························· (956) (956) – (11,640) (11,640) –

Millions of Yen

As of March 31, 2011 Carrying amount Fair value


(1) Cash and time deposits ············ ¥17,231 ¥17,231 ¥ –

(2) Notes and accounts receivable (*1) ·· 55,484 55,484 –

(3) Investments in securities (*2) ······ 37,992 34,829 (3,162)

Total assets ····························· 110,708 107,545 (3,162)

(1) Notes and accounts payable (*3) ··· 33,367 33,367 –

(2) Short-term borrowings ·············· 31,304 31,304 –

(3) Long-term debt (including repayments due within one year) (*4) ························ 96,815 97,993 1,177

Total liabilities ·························· 161,487 162,664 1,177

Derivatives (*5) ····························· (2,155) (2,155) –


13

(*1) Assets (2): Notes and accounts receivable as of March 31, 2012 and 2011 stated above are obtained by subtracting advances paid of ¥269 million (U.S. $3,283 thousand) and ¥208 million, accounts receivable—other of ¥3,176 million (U.S. $38,646 thousand) and ¥3,215 million, and loans of ¥901 million (U.S. $10,968 thousand) and ¥1,651 million from the amount of notes and accounts receivable of ¥63,741 million (U.S. $775,542 thousand) and ¥60,560 million presented in the consolidated balance sheets.

(*2) Assets (3): Investments in securities as of March 31, 2012 and 2011 stated above are obtained by subtracting financial instruments whose fair values are deemed extremely difficult to assess of ¥17,566 million (U.S. $213,735 thousand) and ¥14,323 million and long-term loans of ¥162 million (U.S. $1,972 thousand) and ¥214 million from the sum of investments in securities of ¥22,170 million (U.S. $269,745 thousand) and ¥24,410 million and investments in and advances to nonconsolidated subsidiaries and affiliates of ¥30,421 million (U.S. $370,134 thousand) and ¥28,120 million presented in the consolidated balance sheets.

(*3) Liabilities (1): Notes and accounts payable as of March 31, 2012 and 2011 stated above are obtained by subtracting accounts payable—other of ¥4,551 million (U.S. $55,374 thousand) and ¥4,554 million and deposits received of ¥466 million (U.S. $5,672 thousand) and ¥464 million from notes and accounts payable of ¥39,904 million (U.S. $485,510 thousand) and ¥38,385 million presented in the consolidated balance sheets.

(*4) Liabilities (3): Long-term debt as of March 31, 2012 and 2011 stated above is obtained by subtracting bonds payable of ¥10,000 million (U.S. $121,669 thousand) and ¥10,000 million and lease obligations of ¥1,336 million (U.S. $16,258 thousand) and ¥1,701 million from the sum of current maturities of long-term debt of ¥28,493 million (U.S. $346,684 thousand) and ¥23,439 million and long-term debt of ¥71,803 million (U.S. $873,622 thousand) and ¥85,077 million presented in the consolidated balance sheets.

(*5) Derivative transactions stated above are stated net of assets and liabilities.

(a) Fair value measurement of fair value of financial instruments and matters regarding securities and derivatives

Assets (1) Cash and time deposits and (2) Notes and accounts receivable The fair value of these accounts approximates their book value because of their short maturities. Thus, the book value is used as fair value. (3) Investments in securities The fair value of equity instruments is measured by market prices from stock exchanges.

Liabilities (1) Notes and accounts payable and (2) Short-term borrowings The fair value of these accounts approximates their book value because of their short maturities. Thus, the book value is used as fair value. (3) Long-term debt (including repayment due within one year) The fair value of these accounts is calculated by discounting the total of interest and principal by an interest rate assuming new borrowings of similar amounts are taken out. Long-term debt with variable interest rates qualifies for special treatment under hedge accounting (Please refer to Note “15. Derivatives”). The fair value of these accounts is calculated by discounting the total of interest and principal, including the relevant interest rate swap, by an interest rate reasonably estimated assuming similar borrowings are taken out. Derivatives Please refer to Note “15. Derivatives.”

(b) Financial instruments whose fair value is deemed extremely difficult to measure

Millions of Yen


(Note 1)

Classification 2012 2011 2012

Unlisted securities and others (carrying amount) ······························ ¥17,566 ¥14,323 $213,735

These financial instruments are not included in “Assets (3) Investments in securities,” as they have no quoted market prices and it is deemed extremely difficult to measure their fair values.

(c) Maturity analysis for financial assets with contractual maturities

Millions of Yen

As of March 31, 2012 Due in one year or less

Due after one year through

five years

Due after five years through

ten years Due after ten years

Cash and time deposits ······························································ ¥117 ¥ – ¥ – ¥ –

Notes and accounts receivable ···················································· 59,394 – – –

Total ···················································································· ¥59,511 ¥ – ¥ – ¥ –

Thousands of U.S. dollars(Note 1)



five years



Cash and time deposits ······························································ $1,428 $ – $ – $ –


Total ···················································································· $724,073 $ – $ – $ –


14

Millions of Yen



five years



Cash and time deposits ······························································ ¥573 ¥ – ¥ – ¥ –


Total ···················································································· ¥56,058 ¥ – ¥ – ¥ –

(d) Maturity analysis for long-term debt

See Note 6.

15. Derivatives The Group had the following derivative contracts outstanding at March 31, 2012 and 2011:

(1) Derivative Transactions to Which Hedge Accounting is Not Applied

Currency-related transactions (2012) Transactions not conducted on the open market

Millions of Yen Thousands of U.S. Dollars (*1)

Type Contract Amount

Over One Year

Fair Value

Unrealized Gains/Losses

Contract Amount

Over One Year

Fair Value


Forward Exchange Contract Transactions

Selling

U.S.$ ················· ¥17,715 – ¥(576) ¥(576) $215,544 – $(7,017) $(7,017)

Buying

U.S.$ ················· 136 – 6 6 1,663 – 76 76

Total ··············· ¥ – – ¥ – ¥(570) $ – – $ – $(6,941)

Commodity-related transactions (2012) Transactions not conducted on the open market



Over One Year

Fair Value


Contract Amount

Over One Year

Fair Value


Nonferrous Metal Forward Contracts

Selling

Gold ·················· ¥1,388 – ¥9 ¥9 $16,897 – $118 $118

Silver ················· 4,182 – (131) (131) 50,882 – (1,603) (1,603)

Zinc ··················· 527 – 2 2 6,419 – 35 35

Copper ··············· 2,147 – (81) (81) 26,123 – (993) (993)

Lead ·················· 4 – 0 0 53 – 1 1

Nickel ················ 29 – 3 3 355 – 41 41

Buying

Silver ················· 10 – (0) (0) 128 – (1) (1)

Total ··············· ¥ – – ¥ – ¥(197) $ – – $ – $(2,400)


15


Millions of Yen


Over One Year

Fair Value


Forward Exchange Contract Transactions

Selling

U.S.$ ···················································································· ¥16,642 – ¥(122) ¥(122)

Thai Baht ··············································································· 1,032 – (23) (23)

Buying

U.S.$ ···················································································· 62 – 1 1

Total ·················································································· ¥ – – ¥ – ¥(145)


Millions of Yen


Over One Year

Fair Value



Selling

Gold ····················································································· ¥1,063 – ¥(38) ¥(38)

Silver ···················································································· 4,536 – (915) (915)

Zinc ······················································································ 359 – 7 7

Copper ·················································································· 2,060 – 14 14

Lead ····················································································· 171 – (11) (11)

Nickel ··················································································· 13 – 0 0

Buying

Silver ···················································································· 233 – 12 12

Nickel ····················································································· 13 – (0) (0)

Total ·················································································· ¥ – – ¥ – ¥(930)

(2) Derivative Transactions to Which Hedge Accounting is Applied



Treatment Type Hedged item Contract Amount

Over One Year Fair Value

Contract Amount


Standard treatment

Forward exchange contract transactions

Accounts receivable

Selling

U.S.$ ·························· ¥704 – ¥(12) $8,570 – $(149)Currency swaps under designated hedge accounting


Accounts receivable

Selling

U.S.$ ·························· ¥1,723 – (*2) $20,973 – (*2)

Thai Baht ····················· 889 – (*2) 10,819 – (*2)

Total ·············································· ¥ – – ¥ – $ – – $ –


16

Interest-related transactions (2012) Millions of Yen Thousands of U.S. Dollars (*1)

Treatment Type Hedged item Contract Amount Over One Year Fair Value

Contract Amount


Interest rate swaps under special accounting treatment

Interest rate swaps

Long-term debt

Fixed rate payment, Floating rate receipt ·········· ¥40,375 ¥38,609 (*3) $491,245 $469,759 (*3)

Total ················································· ¥ – – ¥ – $ – – $ –




Over One Year

Fair Value

Contract Amount

Over One Year

Fair Value

Standard treatment


Inventory

Selling

Gold ··································· ¥5,194 – ¥2 $63,196 – $29

Silver ·································· 5,132 – (209) 62,442 – (2,552)

Zinc ···································· 1,975 – 41 24,040 – 508

Copper ······························· 8,624 – (425) 104,935 – (5,180)

Lead ··································· 38 – 1 470 – 16

Buying

Gold ··································· 80 – 6 983 – 80

Silver ·································· 634 – 40 7,722 – 489

Zinc ···································· 855 – (10) 10,404 – (129)

Copper ······························· 8,400 – 377 102,206 – 4,588

Total ······················································ ¥ – – ¥ – $ – – $ –

Currency-related transactions (2011)

Millions of Yen



Standard treatment Forward exchange contract transactions

Accounts receivable

Selling

U.S.$ ··························································· ¥47 – ¥(0)Currency swaps under designated hedge accounting


Accounts receivable

Selling

U.S.$ ··························································· ¥401 – (*2)Total ····································································································· ¥ – – ¥ –

Interest-related transactions (2011)

Millions of Yen



Interest rate swaps under special accounting treatment

Interest rate swaps Long-term debt Fixed rate payment, Floating rate receipt ··············· ¥43,243 ¥42,120 (*3)

Total ····································································································· ¥ – – ¥ –


17


Millions of Yen


Over One Year

Fair Value

Standard treatment Nonferrous Metal Forward Contracts Inventory

Selling

Gold ····························································· ¥7,829 – ¥(397)

Silver ···························································· 4,948 – (1,092)

Zinc ····························································· 4,234 – 90

Copper ························································· 8,673 – 88

Lead ···························································· 298 – (21)

Buying

Gold ····························································· 217 – 13

Silver ···························································· 670 – 224

Zinc ····························································· 509 – 8

Copper ························································· 6,375 – 7

Total ··································································································· ¥ – – ¥ –(*1) Fair value was calculated by quotations obtained from the commodity futures market and the exchange futures market as of March 31, 2012 and 2011. (*2) The fair values of currency swaps under designated hedge accounting are included in the fair values of accounts receivable because they are accounted for

as an integral part of accounts receivable, which are hedged items. (*3) The fair values of interest rate swaps under special accounting treatment are included in the fair values of long-term debt because they are accounted for as

an integral part of long-term debt, which are hedged items.

16. Comprehensive Income The components of other comprehensive income for the year ended March 31, 2012 were as follows:

Millions of Yen


(Note 1)

Unrealized (losses) gains on available-for-sale securities: Loss arising during the year ········································································· ¥(1,735) $(21,112)Reclassification adjustments to profit or loss ··················································· (75) (913)Amount before income tax effect ·································································· (1,810) (22,025)Income tax effect ······················································································· 1,035 12,604Total ······································································································· ¥(774) $(9,421)

Deferred gains (losses) on derivatives under hedge accounting:

Gains arising during the year ······································································· ¥3,806 $46,307Reclassification adjustments to profit or loss ··················································· (2,929) (35,644)Adjustment for cost of asset acquisition ························································· 79 969Amount before income tax effect ·································································· 956 11,631Income tax effect ······················································································· (273) (3,330)Total ······································································································· ¥682 $8,301

Foreign currency translation adjustments:

Adjustments arising during the year ······························································ ¥(324) $(3,949)Reclassification adjustments to profit or loss ··················································· －－

Amount before income tax effect ·································································· (324) (3,949)Income tax effect ······················································································· －－

Total ······································································································· ¥(324) $(3,949) Share of other comprehensive income in associates:

Loss arising during the year ········································································· ¥(604) $(7,354)Reclassification adjustments to profit or loss ··················································· 276 3,363Total ······································································································· ¥(327) $(3,990)

Total other comprehensive income ···································································· ¥(744) $(9,058)


18

The corresponding information for the year ended March 31, 2011 was not required under the accounting standard

for presentation of comprehensive income as an exemption for the first year of adopting that standard and not disclosed herein.

17. Subsequent Event The following appropriation of retained earnings at March 31, 2012 was approved at the Board of Directors’ meeting held on May 18, 2012:

Millions of Yen


(Note 1)

Year-end cash dividends, ¥10 (U.S.$0.1) per share ·················································· ¥3,005 $36,565

18. Segment Information 1. Outline of reporting segments

The Company’s reporting segments are the components of the Company about which separate financial information is available. These segments are subject to periodic examinations to enable the Company’s Board of Directors to decide how to allocate resources and assess performance.

The Company’s operations are classified into five product and service segments based on its operating companies. Each segment’s businesses are as follows.

In the Environmental Management & Recycling segment, the Company conducts waste treatment, resource recycling, soil remediation, logistics, and other operations.

In Nonferrous Metals, the Company conducts the production and sale of copper, zinc, lead, gold, silver, zinc alloys, platinum, palladium, rhodium, cadmium, bismuth, sulfuric acid, and other materials.

In the Electronic Materials segment, the Company conducts the production and sale of high-purity rare metals, various compound semiconductor wafers, light-emitting diodes, conductive materials for electronic components, battery materials, metal powders, ferrite powders, and other materials.

In the Metal Processing segment, the Company conducts the production and sale of copper, brass and copper alloy strips, electroplated products, brass rods, metal-ceramic substrates, and other materials.

In the Heat Treatment segment, the Company provides heat and surface treatment of metallic materials, such as automobile components, and conducts the manufacture, sale and maintenance of industrial furnaces and ancillary equipment.

2. Method for calculating sales, income and loss, assets and liabilities, and other amounts by reporting segment

The accounting treatment and methods for the reporting segments are largely consistent with the Basis of Preparation of the consolidated financial statements.

Segment income for each reporting segment is presented on an operating income basis. Intersegment sales and transfers are measured based on prices that reflect actual market conditions.

3. Information on sales, income and loss, assets and liabilities, and other amounts by reporting segment Segment information as of March 31, 2012 and 2011 is summarized as follows:

Millions of Yen

Reporting segment

Others

(*1) Total

Reconcili-ations (*2) Consolidated2012

Environmen- tal

Management & Recycling

Nonferrous Metals


Metal Processing

Heat Treatment Total

Net sales

Outside customers ··········· ¥56,211 ¥158,915 ¥79,404 ¥77,146 ¥18,614 ¥390,292 ¥2,176 ¥392,468 ¥ – ¥392,468

Intersegment ··················· 34,798 18,743 3,362 35 0 56,940 8,416 65,357 (65,357) –

Total ································ 91,010 177,659 82,767 77,181 18,614 447,233 10,592 457,826 (65,357) 392,468

Segment income (*3) ··········· 4,477 4,237 5,490 4,531 1,969 20,707 342 21,049 960 22,009

Segment assets ··················· 65,272 121,305 41,626 49,739 25,433 303,378 6,039 309,418 10,246 319,665

Other items

Depreciation ···················· 5,072 6,068 2,728 2,378 1,637 17,885 151 18,036 308 18,344

Amortization of goodwill ··· 502 – – – – 502 – 502 – 502

Investment in equity-method affiliates ···· 1,983 7,447 190 844 – 10,466 – 10,466 14,688 25,154

Increase in property, plant, and equipment and intangible fixed assets ······ 4,921 2,986 4,101 1,618 1,681 15,309 180 15,489 420 15,910


19

Thousands of U.S. Dollars (Note1)

Reporting segment

Others

(*１) Total

Reconcili-ations （* 2） Consolidated2012

Environ- mental

Manage- ment &

Recycling Nonferrous

Metals Electronic Materials

Metal Processing


Net sales

Outside customers ········· $683,916 $1,933,518 $966,108 $938,630 $226,484 $4,748,659 $26,479 $4,775,138 $ – $4,775,138

Intersegment ················· 423,396 228,056 40,915 425 2 692,796 102,403 795,200 (795,200) –Total ······························ 1,107,313 2,161,575 1,007,024 939,056 226,486 5,441,455 128,882 5,570,338 (795,200) 4,775,138

Segment income (*3) ········· 54,479 51,560 66,805 55,134 23,963 251,943 4,161 256,104 11,689 267,793

Segment assets ················· 794,170 1,475,916 506,471 605,177 309,447 3,691,184 73,486 3,764,670 124,673 3,889,344

Other items

Depreciation ·················· 61,718 73,831 33,197 28,940 19,921 217,610 1,838 219,449 3,749 223,198

Amortization of goodwill · 6,109 – – – – 6,109 – 6,109 – 6,109

Investment in equity-method affiliates ··

24,137 90,608 2,315 10,280 – 127,342 – 127,342 178,714 306,057

Increase in property, plant, and equipment and intangible fixed assets ····························

59,878 36,334 49,896 19,691 20,462 186,264 2,192 188,456 5,119 193,576

Millions of Yen

Reporting segment

Others ( *１) Total

Reconcili-ations （* 2） Consolidated2011

Environmen- tal


Nonferrous Metals


Metal Processing


Net sales Outside customers ··········· ¥49,678 ¥166,922 ¥68,254 ¥75,793 ¥16,919 ¥377,568 ¥2,248 ¥379,816 ¥ – ¥379,816

Intersegment ··················· 30,020 21,887 2,272 37 0 54,218 9,171 63,390 (63,390) –Total ································ 79,699 188,809 70,526 75,830 16,919 431,786 11,420 443,206 (63,390) 379,816

Segment income (*3) ··········· 2,802 5,170 7,144 5,424 1,417 21,959 317 22,276 647 22,924

Segment assets ··················· 62,978 123,699 47,985 50,323 21,683 306,671 5,669 312,340 27,820 340,161

Other items

Depreciation ···················· 5,179 6,590 2,028 2,628 1,573 18,000 136 18,137 349 18,486

Amortization of goodwill ··· 531 – – – – 531 – 531 – 531

Investment in equity-method affiliates ····

2,165 6,414 216 892 – 9,689 – 9,689 15,739 25,429

Increase in property, plant, and equipment and intangible fixed assets ······

6,301 5,110 3,515 1,190 1,505 17,623 146 17,769 51 17,820

(*1) The Others segment comprises business operations that are not included in the reporting segments. These operations primarily comprise intergroup

transactions, including real estate leasing, plant construction, civil engineering, construction and engineering, office administration services, technological development support, and other operations.

(*2) Reconciliations for the fiscal years ended March 31, 2012 and 2011 were as follows: (1) The reconciliations of ¥960 million (U.S. $11,689 thousand) and ¥647 million to segment income include intersegment eliminations of ¥763

million (U.S. $9,288 thousand) and ¥618 million, respectively, and reconciliations for intersegment unrealized earnings of ¥197 million (U.S. $2,400 thousand) and unrealized losses of ¥28 million, respectively.

(2) The reconciliations to segment assets of ¥10,246 million (U.S. $124,673 thousand) and ¥27,820 million include corporate assets of ¥48,998 million (U.S. $596,160 thousand) and ¥59,674 million that are not allocated to any reporting segment, respectively, and intersegment eliminations of ¥38,751 million (U.S. $471,487 thousand) and ¥31,854 million, respectively. The main components of corporate assets are surplus working capital (cash and deposits), long-term investments (investments in securities), and assets of administrative departments.

(*3) Segment income is reconciled with operating income on the consolidated statements of income.

Related Information

For the year ended March 31, 2012 1. Information by product and service

The Company has omitted disclosure here because equivalent information appears in the segment information.


20

2. Information by geographic region (1) Net sales

Millions of Yen

Japan North America Europe China Asia (excluding

Japan and China) Other Total

¥344,869 ¥3,542 ¥1,134 ¥10,321 ¥32,009 ¥590 ¥392,468

Thousands of U.S. Dollars (Note1)

Japan North America Europe China Asia (excluding

Japan and China) Other Total

$4,196,003 $43,100 $13,805 $125,586 $389,453 $7,189 $4,775,138

(2) Total property, plant, and equipment The Company has omitted disclosure here because property, plant, and equipment in Japan account for more than 90% of the amount of property, plant, and equipment reported on the consolidated balance sheets.

3. Information by major customer

Name of corporate customer or full name of individual customer Net sales Name of involved segment

TANAKA KIKINZOKU KOGYO K.K. ¥58,182 million (U.S. $707,897 thousand) Mainly the Nonferrous Metals segment

For the year ended March 31, 2011 1. Information by product and service

The Company has omitted disclosure here because equivalent information appears in the segment information.

2. Information by geographic region (1) Net sales The Company has omitted disclosure here because sales to external customers in Japan account for more than 90% of net sales reported on the consolidated statements of income. (2) Total property, plant, and equipment The Company has omitted disclosure here because property, plant, and equipment in Japan account for more than 90% of the amount of property, plant, and equipment reported on the consolidated balance sheets.

3. Information by major customer

Name of corporate customer or full name of individual customer Net sales Name of involved segment

TANAKA KIKINZOKU KOGYO K.K. ¥43,788 million Mainly the Nonferrous Metals segment

Information on impairment losses on fixed assets by reporting segment

Millions of Yen

Reporting segment

Others Total Eliminations Consolidated2012

Environmen- tal


Nonferrous Metals


Metal Processing


Impairment losses on fixed assets················· ¥ – ¥ – ¥2 ¥55 ¥20 ¥78 ¥ – ¥78 ¥23 ¥102

Thousands of U.S. Dollars (Note 1)

Reporting segment


Environmen- tal


Nonferrous Metals


Metal Processing


Impairment losses on fixed assets················· $ – $ – $32 $677 $250 $959 $ – $959 $285 $1,244

Millions of Yen

Reporting segment


Environmen- tal


Nonferrous Metals


Metal Processing


Impairment losses on fixed assets················· ¥ – ¥ – ¥3 ¥33 ¥51 ¥89 ¥ – ¥89 ¥29 ¥118


21

Amortization of goodwill and unamortized balance of goodwill by reporting segment

Millions of Yen

Reporting segment


Environmen- tal


(＊1) Nonferrous


Metal Processing


Unamortized balance at fiscal year end ·········· ¥6,003 ¥ – ¥ – ¥ – ¥ – ¥6,003 ¥ – ¥6,003 ¥ – ¥6,003

Thousands of U.S. Dollars ( Note1)

Reporting segment


Environmen- tal


(＊1) Nonferrous


Metal Processing


Unamortized balance at fiscal year-end ·········· $73,045 $ – $ – $ – $ – $73,045 $ – $73,045 $ – $73,045

Millions of Yen

Reporting segment


Environmen- tal


(＊1) Nonferrous


Metal Processing


Unamortized balance at fiscal year end ·········· ¥6,506 ¥ – ¥ – ¥ – ¥ – ¥6,506 ¥ – ¥6,506 ¥ – ¥6,506

(*1) The Company has omitted disclosure of amortization of goodwill because equivalent information appears in the segment information.


Report of Independent Auditors


Global NetworkAs of March 31, 2012

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Overseas Subsidiaries and Offices

Taiwan12 Dowa Eco-System Co., Ltd. Taiwan Office

India13 Hightemp Furnaces Ltd.

China14 Dowa Holdings (Shanghai) Co., Ltd.15 Dowa Advanced Materials (Shanghai) Co., Ltd.16 Dowa Environmental Management Co., Ltd.17 Tianjin Dowa Green Angel Summit Recycling Co., Ltd. 18 Kunshan Dowa Thermo Furnace Co., Ltd.19 Suzhou Dowa Environmental Engineering Co., Ltd.20 Jiangxi Dowa Environmental Management Co., Ltd.

Thailand21 Dowa Metaltech (Thailand) Co., Ltd.22 Dowa Thermotech (Thailand) Co., Ltd.23 Waste Management Siam Ltd. (WMS)

24 Bangpoo Environmental Complex Ltd. (BPEC)

25 Eastern Seaboard Environmental Complex Co., Ltd. (ESBEC)

U.S.A.1 Dowa International Corporation2 Dowa THT America Inc.3 Nippon PGM America Inc.

Canada4 Dowa Metals & Mining Co., Ltd. Vancouver Office

Mexico5 Dowa Metals & Mining Co., Ltd. Mexico Office6 Minera Tizapa, S.A. de C.V.

Germany7 Dowa HD Europe GmbH

Czech Republic8 Nippon PGM Europe s.r.o.

Singapore9 Technochem Environmental Complex Pte. Ltd. (TEC)

10 DOWA ECO-SYSTEM SINGAPORE PTE. LTD

Indonesia11 PT. Prasadha Pamunah Limbah Industri (PPLi)

For details, refer to the list of Group Companies at http://www.dowa.co.jp/en/about_dowa/group.html.


Subsidiaries and AffiliatesAs of March 31, 2012

Name 63 Consolidated Subsidiaries and 12 affiliates

accounted for by the equity method

Issued Share Capital

(Millions of Yen)

Percentage Owned Directly or Indirectly by the Company (%)*1 Principal Business

Environmental Management & RecyclingDowa Eco-System Co., Ltd. 1,000 100 Waste treatment, soil remediation and recyclingEco-System Hanaoka Co., Ltd. 300 100 Soil remediation and waste treatmentEco-System Recycling Co., Ltd. 300 100 Recovery of precious and nonferrous metalsAct-B Recycling Co., Ltd. 200 60 Recovery of discarded household appliances, personal computers and other itemsEco-Recycle Co., Ltd. 150 67 Recovery of discarded household appliances, personal computers and other itemsGreen Fill Kosaka Co., Ltd. 100 100 Waste treatmentEco-System Okayama Co., Ltd. 100 100 Industrial waste treatment, recovery of ferrous and nonferrous metalsEco-System Sanyo Co., Ltd. 100 100 Waste treatment and resource recyclingE&E Solutions Inc. 100 100 Comprehensive technological consulting in environmental management and energyGeotechnos Co., Ltd. 100 100 Soil surveys and remediation projects, environmental consulting, etc.Eco-System Chiba Co., Ltd. 90 100 Industrial waste treatmentMeltec Co., Ltd. 90 100 Treatment and resource recycling of wasteEco-System Akita Co., Ltd. 50 100 Waste treatment and resource recyclingEco-System Kosaka Co., Ltd. 50 100 Industrial waste treatment, recovery of ferrous and nonferrous metalsEco-System Japan Co., Ltd. 30 100 Operation of waste and resource recycling, collection and transportation of industrial wasteDowa-Tsuun Co., Ltd. 20 100 Vehicle transportation, forwarding and warehousingDowa Environmental Management Co., Ltd. USD 13.2 *4 90 Recovery of precious and nonferrous metals, recycling of discarded household appliances and electronic

devicesTianjin Dowa Green Angel Summit Recycling Co., Ltd. CNY 78.5 *5 50 Recycling of discarded household appliances and electronic devicesModern Asia Environmental Holdings Inc. USD 16.4 *4 100 Holdings companyEastern Seaboard Environmental Complex Co., Ltd. THB 100.0 *6 100 Final treatment of harmless wastesBangpoo Environmental Complex Ltd. THB 80.0 *6 100 Incineration of harmless wastesTechnochem Environmental Complex Pte. Ltd. SGD 3.5 *7 100 Incineration of harmful wastesPT. Prasadha Pamunah Limbah Industri IDR 49,578.2 *8 95 Final treatment of harmful and harmless wastesNonferrous MetalsDowa Metals & Mining Co., Ltd. 1,000 100 Manufacturing and sales of nonferrous, precious and rare metalsAkita Zinc Co., Ltd. 5,000 81 Refining of zinc, manufacturing of sulfuric acidKosaka Smelting & Refining Co., Ltd. 4,700 100 Smelting and refining of copper and lead, recovery of precious metalsAkita Zinc Solutions Co., Ltd. 375 85 Processing of zinc alloy, zinc wire and other productsNippon PGM Co., Ltd. 300 60 Recovery of platinum group metals from disposable catalystsAkita Zinc Recycling Co., Ltd. 100 100 Recovery of zinc from iron and steel dust, and other by-products, outsourcing of zinc secondaries

processingZinc Excel Co., Ltd. 200 85 Sales of zinc, cadmium, zinc alloy, zinc wire and other productsAkita Rare Metals Co., Ltd. 20 100 Recovery of indium and other productsElectronic MaterialsDowa Electronics Materials Co., Ltd. 1,000 100 Manufacturing and sales of semiconductors and functional and magnetic materialsDowa Hightech Co., Ltd. (Chemical) 450 100 Manufacturing of metal compounds, chemicals and other productsDowa Semiconductor Akita Co., Ltd. 300 100 Manufacturing of high-purity metal materials, compound semiconductor wafers and light-emitting

diodesDowa IP Creation Co., Ltd. 300 70 Manufacturing of iron and carrier powdersDowa F-Tec Co., Ltd. 300 100 Manufacturing of ferrite powdersDowa Electronics Materials Okayama Co., Ltd. 100 100 Manufacturing of metal powders, copper powders and other materialsMetal ProcessingDowa Metaltech Co., Ltd. 1,000 100 Metal processing and metal platingDowa Hightech Co., Ltd. (Electroplating) 450 100 Metal platingDowa Metanix Co., Ltd. 400 90 Manufacturing and sales of mainly nickel alloys, copper alloys, and electronic partsDowa Metal Co., Ltd. 400 100 Manufacturing of copper strip and other productsHoei Shoji Co., Ltd. 110 100 Processing and sales of copper strip, aluminum and other productsDowa Power Device Co., Ltd. 100 100 Metal-ceramic substrates manufacturingNew Nippon Brass Co., Ltd. 100 100 Manufacturing and sales of brass bars and forged productsDowa Advanced Materials (Shanghai) Co., Ltd. USD 2.5 *4 100 Processing and sales of copper strip productsDowa Metaltech (Thailand) Co., Ltd. THB 475 *6 100 Processing and sales of copper strip productsHeat TreatmentDowa Thermotech Co., Ltd. 1,000 100 Heat treatment processingDowa Thermoengineering Co., Ltd. 100 100 Design, manufacturing, maintenance of heat treatment equipment, heat treatment processing, surface

processing, surface improvementCEMM Co., Ltd. 55 100 Heat treatment processing and surface processingTonetsu Kosan Co., Ltd. 30 100 Heat treatment processing, maintenance of heat treatment equipmentDowa THT America, Inc. USD 5.0 *4 100 Heat treatment processing, surface treatment, and maintenance of heat treatment equipmentDowa Thermotech (Thailand) Co., Ltd THB 270 *6 100 Heat treatment processing, surface treatment, and maintenance of heat treatment equipmentOthersDowa Techno Engineering Co., Ltd. 400 100 Plant constructionDowa Kohsan Co., Ltd. 305 100 Outsourcing and management of golf courses and real estate, brokerageDowa Management Service Co., Ltd. 100 100 Outsourcing of general indirect business servicesAkita Kouei Co., Ltd. 95 100 Construction of machinery and electronics, maintenance of plantsYowa Kouei Co., Ltd. 20 100 Civil engineering and construction projectsDowa Technology Co., Ltd. 10 100 Technological development support, outsourcing of analysis and evaluation servicesDowa Techno-Research Co., Ltd. 10 100 Environmental measurementFive other companies – – –Affiliates Accounted for by the Equity MethodKowa Seiko Co., Ltd. 1,000 50 Industrial waste treatment, recovery of ferrous and nonferrous materialsOkayama Rinko Co., Ltd. 98 33 Warehousing, other business activitiesAkagi Kouyu Co., Ltd. 99 20 Waste treatmentCariboo Copper Corp. CAD 91.0 *9 25 Mining and sales of products from minesOnahama Smelting and Refining Co., Ltd. 7,000 32 Copper smelting and refining, general and industrial waste treatmentAcids Co., Ltd. 150 50 Sale of sulfuric acid and othersMinera Tizapa, S.A. de C.V. *3 MXN 21.1 *10 39 Prospecting, development, mining and ore preparationKyoto Elex Co., Ltd. 80 50 Manufacturing and sales of pastesDowa Olin Metal Corporation 480 50 Manufacturing, marketing and sales of special copper alloy stripsJapan Copper Casting Co., Ltd. 200 30 Various types of copper productionFujita Kanko Inc. *2 12,081 32 Lodging and hotel management, real estate agentNippon AN-FO Manufacturing Co., Ltd. 91 29 Production and marketing of industrial explosives

*1. The figures for the percentage owned by the Company include indirect ownership by the Company.

*2. The shares of this company are listed on the Tokyo Stock Exchange and the Osaka Securities Exchange.

*3. Common stock includes revaluation adjustments under inflation accounting. *4. USD: Millions of U.S. Dollars *5. CNY: Millions of Chinese Yuan

*6. THB: Millions of Thai Baht *7. SGD: Millions of Singapore Dollars *8. IDR: Millions of Indonesian Rupiah *9. CAD: Millions of Canadian Dollars *10. MXN: Millions of Mexican pesos


Corporate HistoryAs of March 31, 2012

1884 The Japanese government sells the Kosaka mine to Fujita Gumi, which was established by Dowa’s founder, Denzaburo Fujita.

1898 Fujita Gumi begins using a dry-refining method for refining kuroko (complex sulfide ores) at the Kosaka mine.

1899 Fujita Gumi begins land drainage and reclamation work in Kojima Bay, Okayama Prefecture.

1902 Fujita Gumi begins using a revolutionary method for process-ing kuroko, thereby restoring the commercial viability of the Kosaka mine.

1912 Production of electrolytic zinc is begun at the Kosaka mine.

1915 Fujita Gumi acquires the Hanaoka mine.

1916 Fujita Gumi acquires the Yanahara mine.

1919 Fujita Gumi establishes the Toyosaki Plant (currently Dowa Metal Co., Ltd.)

1937 Fujita Gumi and Fujita Mining Co., Ltd. merge to create Fujita Gumi Co., Ltd.

1945 Corporate name is changed to Dowa Mining Co., Ltd.

1953 Okayama Works is established.

1957 Dowa Mining absorbs Fujita Kogyo Co., Ltd.

1967 Kosaka Plant is completely equipped with flash furnaces.

1971 Akita Zinc Co., Ltd. is established.

1976 Kosaka Plant begins producing indium.

1983 Okayama Works completes and begins operating a facility for manufacturing metal powders used in 8mm videotape.

1986 Hanaoka and Kosaka mining operations are transferred from the parent company to two newly established subsidiaries—Hanaoka Mining Co., Ltd. and Uchinotai Mining Co., Ltd., respectively.

1989 New York-based Dowa International Corporation is established.Kosaka Plant is separated from the parent company in the form of a subsidiary—Kosaka Smelting & Refining Co., Ltd.

1990 Dowa Mining absorbs Dowa Kosan Co., Ltd.

1991 Dowa Mining absorbs Tokyo Heat Treating Co., Ltd.

1992 Mexico-based Minera Tizapa, S.A. de C.V. is established.Shiojiri Works (currently Dowa Power Device Co., Ltd.) is completed.

1994 Kyushu Branch is established.Minera Tizapa, S.A. de C.V. starts operations.

1997 Dowa THT America, Inc. is established.

1998 Okayama Clean Works (currently Eco-System Sanyo Co., Ltd.) starts operation of new incinerator for industrial waste.

1999 Eco-Recycle Co., Ltd. is established.

2000 Dowa acquires Nippon Purle Limited (currently Eco-System Chiba Co., Ltd.).

2001 Dowa acquires E&E Solutions Inc.Recycle Systems Japan Co., Ltd. (currently Eco-System Recycling Co., Ltd.) is made a subsidiary.

2002 Shanghai office in China is established.Akita Zinc Solutions Co., Ltd. is established.Dowa Advanced Materials (Shanghai) Co., Ltd. is established in China.

2003 Zinc Excel Co., Ltd. and Acids Co., Ltd. are established.Dowa Environmental Management Co., Ltd. is established in China.

2004 Dowa Techno-Research Co., Ltd. is established.Landfill site “Green Fill Kosaka” starts operations.

2006 Dowa acquires Act-B Recycling Co., Ltd.Dowa relocates Head Office to Akihabara, Tokyo.Dowa acquires CEMM Co., Ltd. Dowa adopts a holding company system.

Dowa Mining changes its name to Dowa Holdings Co., Ltd.Dowa Mining’s five business divisions are spun off to become core operating companies.

Dowa Metaltech (Thailand) Co., Ltd. is established in Thailand.

2007 Tokuyama-Dowa Power Materials Co., Ltd. is established. Dowa Thermotech (Thailand) Co., Ltd. is established in Thailand.Dowa Eco-System Co., Ltd. Taiwan office is established.Auto Recycle Akita Co., Ltd. is established. Dowa acquires Yamaha Metanix Corporation (now Dowa Metanix Co., Ltd.) and Yamaha-Olin Metal Corporation (now Dowa Olin Metal Corporation). Dowa HD Europe GmbH is established in Germany.

2008 Akita Zinc Recycling Co., Ltd. is established.Commercial operations start at new smelting facility of Kosaka Smelting & Refining Co., Ltd.

2009 Dowa acquires Modern Asia Environmental Holdings Inc. (MAEH)Construction completed of new incinerator at Eco-System Chiba Co., Ltd.Dowa acquires Meltec Co., Ltd.

2010 Tianjin Dowa Green Angel Summit Recycling Co., Ltd. is established in China.Kunshan Dowa Thermo Furnace Co., Ltd. is established in China.Nippon PGM Europe s.r.o. is established in the Czech Republic.Suzhou Dowa Environmental Engineering Co., Ltd. is established in China.

2011 Jiangxi Dowa Environmental Management Co., Ltd. is established in China.Dowa Holdings (Shanghai) Co., Ltd. is established in China.Dowa acquires controlling interest in Hightemp Furnaces Ltd.


Corporate DataAs of March 31, 2012

The data indicated below is for Dowa Holdings Co., Ltd.

Founded:September 18, 1884

Incorporated:March 11, 1937

Authorized Shares:1,000,000,000 shares

Shares Issued:309,946,031 shares

Common Stock:¥36,437 million

Stock Listing:Common stock is listed on the Tokyo, Nagoya and Fukuoka stock exchanges and the Osaka and Sapporo securities exchanges.

Number of Shareholders:17,315

Principal Shareholders:Percentage of

Outstanding Shares

(%)

Japan Trustee Services Bank, Ltd. (Trust Account) 9.66The Master Trust Bank of Japan, Ltd. (Trust Account) 8.21Fujita Kanko Inc. 4.79Japan Trustee Services Bank, Ltd. (Trust Account 9) 4.51JFE Steel Corporation 3.74National Mutual Insurance Federation of Agricultural Cooperatives

3.06

Mizuho Corporate Bank, Ltd. 2.46Resona Bank, Ltd. 2.43JUNIPER 1.76The Nomura Trust & Banking Co., Ltd. (Trust Account) 1.72

Notes: 1. The Company holds 9,413,000 shares of treasury stock.2. Shareholding ratios are calculated after deducting treasury stock from outstanding

shares.

The data indicated below is for Dowa Holdings Co., Ltd. and consoli-dated subsidiaries.

Main Businesses:Environmental Management & Recycling, Nonferrous Metals, Electronic Materials, Metal Processing and Heat Treatment

Employees:Approximately 4,700 people

Major Domestic Operations:

Domestic WorksAkita, Iwate, Tochigi, Gunma, Saitama, Chiba, Tokyo, Nagano, Shizuoka, Aichi, Shiga, Okayama, Kumamoto

Domestic BranchesTokyo, Chiba, Shizuoka, Aichi, Osaka, Okayama, Fukuoka

Laboratories & Development GroupsEnvironmental Protection Laboratory (Akita, Tokyo), Dowa Eco-System Co., Ltd.Metallurgical Laboratory (Akita), Dowa Metals & Mining Co., Ltd.Semiconductor Materials Laboratory (Akita), Electronics Materials Laboratory (Saitama), Advanced Fine Materials Laboratory (Okayama), Dowa Electronics Materials Co., Ltd.Technology Center (Saitama, Shizuoka), Dowa Metaltech Co., Ltd.GRD Center (Aichi), Technical Solution & Research Center (Aichi), Dowa Thermotech Co., Ltd.

61DOwA HOLDINGS CO., LTD. Annual Report 2012

Do

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Annual Report 2012

Printed in Japan

14-1, Sotokanda 4-chome, Chiyoda-ku, Tokyo 101-0021, Japan

URL http://www.dowa.co.jp/

Dowa HolDings Co., ltD.

Documents

Annual Report 2012 - DOWAホールディングス