Corporate Report 2019

Financial Section
Consolidated Financial Summary

1Management’s Discussion and Analysis

3

Consolidated Balance Sheet

7

Consolidated Statement of Income

9

Consolidated Statement of Comprehensive Income

9

Consolidated Statement of Changes in Net Assets

10Consolidated Statement of Cash Flows11

Notes to Consolidated Financial Statements

12

Independent Auditor’s Report32

Shareholder Information

33

Consolidated Financial Summary
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the years ended March 31

2009

2010

2011

2012

2013

2014

2015

2016

2017

2019

2018

2019
（Thousands of U.S. dollars) *2

Operating results (Millions of yen)
Net sales
Operating income
Ordinary income
Net income attributable to owners of the parent
Equity in earnings of affiliates¥447,647(3,103)
6,975
7,014
14,706

384,528
4,090
7,365
5,827
8,794

452,217
9,083
26,116
12,327
20,532451,033
23,36336,394
18,95017,873467,979
11,421
27,651(7,793)19,045529,570
14,99642,00043,34627,895534,443
11,48830,804
14,921
20,466556,480
43,76262,43048,013
21,125593,502
34,01845,432
34,134
16,683648,986
41,386
69,19955,00028,408635,90962,74180,71160,531
18,277$ 5,847,247
372,880
623,471495,540
255,951（Thousands of U.S. dollars) *2

Financial position (Millions of yen)

¥215,298
530,592
161,088
272,083
174,934

Current assets
Total assets
Current liabilities
Net assets
Interest-bearing debt

218,082
539,431
160,297
278,094
165,848

254,037
595,250
193,464
292,111
185,185

244,522577,045
182,527
288,257
182,679

261,397
613,908
195,438
294,895
182,644

372,166
790,784
225,068
422,851
215,614287,642
657,838
178,897
323,858
204,489

326,674
738,188
188,426
473,370
118,713341,237
739,582
214,676
423,135
181,427

378,845804,038
188,420553,282
95,751

384,249785,687
206,835
519,144
106,964$ 3,413,326
7,244,238
1,697,630
4,984,972
862,699（Thousands of U.S. dollars) *2

Cash flows (Millions of yen)

31,326(33,662)(15,354)
36,048¥ 49,027(41,253)
11,54153,065

Operating activity cash flow
Investing activity cash flow
Financing activity cash flow
Total cash and cash equivalents at end of year

37,348(37,274)(9,876)35,701

39,773(24,626)(1,849)46,76831,169(30,818)(14,356)
26,90776,982(23,531)(25,005)
72,67827,182(29,883)
7,124
37,31082,711(31,119)(60,217)67,177

84,671(31,922)(47,335)
75,82864,042(42,761)(31,396)
80,37990,720(33,614)(33,038)
90,304$ 577,007(385,269)(282,872)
724,200

Per share data (Yen)
Earnings per share (EPS)*
Net assets per share *1

1¥ 30.61
1,171.80

25.78
1,191.13

83.85
1,230.50

54.56
1,246.92(34.50)1,256.81

66.07
1,382.52

191.94
1,672.25

153.85
1,707.01

221.83
1,967.94

281.392,187.99

257.462,354.25

(0.7)
2.5
1.2
49.9

1.1
2.2
1.4
49.9

5.2
6.9
6.5
48.2

2.0
4.4
4.5
47.3

2.4
(2.8)
4.6
46.2

2.1
5.0
4.8
47.5

2.8
12.6
5.8
47.8

5.7
9.0
5.9
51.0

7.9
12.0
8.4
57.5

9.9
13.6
10.6
59.5

6.4
11.3
8.7
62.6

$
$

（U.S. dollars) *2

2.32
21.21

Rations (%)
Operating income margin
Return on equity (ROE)
Return on assets (ROA)
Equity ratio

6.4
11.3
8.7
62.6
（Thousands of U.S. dollars) *2

Others (Millions of yen)

27,56729,535
16,1984,920¥ 35,119
28,934
14,707
4,902

Capital expenditure
Depreciation and amortization
Research and Development cost
Number of employees

30,98223,096
15,332
5,323

42,423
27,763
17,4495,216

35,40028,95016,3804,979

22,226
23,77016,873
8,254

25,40923,52816,122
5,445

35,01025,631
19,267
8,034

30,512
26,70518,936
8,176

39,27927,451
18,607
8,276

30,95927,027
18,9878,009$ 353,897
247,329
167,646
8,276*1 With and effective date of October 1, 2016, MGC conducted a reverse stock split for MGC's ordinary shares on a 2:1 basis.
As a result, each amounts per share in the above table are calculated assuming that the reverse stock split had been conducted at the beginning of FY2008.
*2 U.S. dollar amounts are translated from yen, for convenience only, at the approximate rate of ¥110.99= US$1 prevailing on March 31, 2019.

Net sales / Operating income / Ordinary income■■Operating income■■Ordinary income

Net sales■(millions of yen)
100,000(millions of yen)
600,000

80,000400,000

60,00040,000200,000

20,000
0

1

2015

2016

2017

2018

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

2019

0

Ordinary income by business segment

Cash flows■Natural Gas Chemicals ■Aromatic Chemicals ■Specialty Chemicals■Information & Advanced Materials ■Others■■Operating activity cash flow■■Investing activity cash flow
Free cash flow■■Interest-bearing debt

(millions of yen)
100,000(millions of yen)
250,000■(millions of yen)
100,000
80,00075,00060,00050,00040,00025,00020,0000

0(25,000)(20,000)(50,000)

2015

2016

2017

2018

Interest-bearing debt / Net debt to equity ratio

2019

2015

2016

2017

2018

2019

Net debt to equity ratio■(Times)0.5

200,000

0.4

150,000

0.3

100,000

0.2

50,000

0.1

0

2015

2016

2017

2018

2019

0

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20192

Management’s Discussion and Analysis
1. Results of Operations
1) Net Sales & Operating Income(1) In fiscal 2018, MGC Group posted consolidated net
sales of ¥648,986 million, a year-on-year increase of
2.1%, and consolidated operating income of ¥41,386
million, a year-on-year decrease of 34.0%.
(2) Operating income fell compared with results for theprevious fiscal year.
While sales volumes of special polycarbonates
increased, the market prices of purified isophthalic acidand polycarbonates fell significantly. Furthermore, theprofitability of foamed plastics has deteriorated due tohikes in raw material and fuel prices.
2) Non-operating Revenue
The Group posted non-operating revenue of ¥37,166
million, a year-on-year increase of 36.2%. This was primarily
due to the increase in equity in earnings of affiliates.
Non-operating expenses were ¥9,486 million, a
year-on-year decrease of 42.9%. This was primarily due tothe decrease in loss on valuation of investment securities.
As a result, net income attributable to owners of theparent was ¥55,000 million, a year-on-year decrease of 9.1%.
3) Dividend
The year-end dividend payout for FY2018 was ¥35 pershare. Since the interim dividend payout was ¥35, theannual dividend for FY2018 is ¥70 per share.

2. Segment Information
1) Natural Gas Chemicals(1) Net sales in the natural gas chemicals segment were¥180,554 million, a year-on-year increase of 8.1%, andsegment income was ¥22,665 million, a year-on-yearincrease of 58.7%.
(2) The methanol business grew in revenue due to anincrease in methanol market prices compared with theprevious year. Methanol and ammonia-based chemicals
had higher revenue due mainly to an overall increase insales volumes. Earnings from these chemicals,
however, decreased year on year, due to higher raw
material prices and a drop in neopentyl glycol market
price as well as rises in repair expenses and other fixed
costs. Crude oil and other energy sources achievedprior-year-level earnings. Despite a crude oil priceincrease, crude oil sales volume dropped.
2) Aromatics Chemicals(1) Net sales in the aromatics chemicals segment were¥211,123 million, a year-on-year decrease of 0.4%, andsegment income was ¥13,961 million, a year-on-year
decrease of 43.2%.
(2) Specialty aromatic chemical products posted growth inboth revenue and earnings compared with the same
period of the previous fiscal year. The negative impactof higher raw material and fuel prices was more thanoffset by solid sales of meta-xylenediamine andaromatic aldehydes. General-purpose aromatic
chemical products suffered significantly lower earnings.
Negative influences included lower market prices andhigher raw material and fuel prices, which together

3

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

caused the profitability of purified isophthalic acid todeteriorate.
Foamed plastics saw a decline in earnings primarily
due to higher raw material and fuel prices.
3) Specialty Chemicals(1) Net sales in the specialty chemicals segment were
¥204,634 million, a year-on-year increase of 0.5%, andsegment income was ¥28,206 million, a year-on-year
decrease of 25.7%.
(2) Although higher sales volumes helped drive up sales ofinorganic chemicals, lower earnings were posted due toincreasing competition in liquid chemicals used forsemiconductor and LCD displays, as well as higher
fixed costs in connection with the launch of a new
production facility in North America.
The engineering plastics business saw a sales
volume increase for special polycarbonates used insmartphone camera lenses. However, earnings
decreased due to the deteriorating profitability ofpolycarbonates as well as a lower sales volume for films
used in flat panel displays.
4) Information & Advanced Materials(1) Net sales in the information & advanced materials
segment were ¥51,986 million, a year-on-year decreaseof 1.4%, and segment income was ¥4,480 million, a
year-on-year decrease of 19.5%.
(2) Electronic materials recorded earnings that are virtuallyon par with the previous fiscal year. Despite firm sales
volume in the first half, this result was mainly attributable
to the lower sales volume of mainstay BT materials forsemiconductor packaging due to declining demand formaterials for smartphones and those used in memory
devices in the second half. Oxygen absorbers such as
AGELESSTM saw a drop in earnings, primarily due toincreasing competition in Japan.
5) Other
Net sales in the other business segment were ¥686 million,a year-on-year increase of 30.4%, and segment income
was ¥480 million, a year-on-year increase of 84.0%.

3. Financial Position(1) As of March 31, 2019, total consolidated assets were¥804.0 billion, ¥18.3 billion higher than at the end of theprevious fiscal year.
(2) Current assets decreased by ¥5.4 billion to ¥378.8
billion. The main causes were decreases in cash anddeposits and trade notes and accounts receivable.
(3) Noncurrent assets increased by ¥23.7 billion to ¥425.1
billion primarily due to an increase in investment securities.
(4) Total liabilities decreased by ¥15.7 billion to ¥250.7
billion. Current liabilities decreased by ¥18.4 billion
primarily due to decreases in short-term loans payable.
Noncurrent liabilities increased by ¥2.6 billion primarily
as a result of increases in long-term loans payable.
(5) Net assets increased by ¥34.1 billion to ¥553.2 billion.
This was attributable primarily to an increase in retained
earnings resulting from the reporting of net income
attributable to owners of the parent company.
(6) As a result, as of March 31, 2019, the shareholders’equity ratio was 62.6%, compared to 59.5% on March
31, 2018. Net assets per share at the end of the fiscal
year were ¥2,354.25, compared to ¥2,187.99 at theend of the previous fiscal year.

4. Cash Flow
As of March 31, 2019, total cash and cash equivalents
were ¥80.3 billion, ¥9.9 billion lower than at the end of theprevious fiscal year.
1) Operating Activity Cash Flow
Net cash provided by operating activities decreased by¥26.6 billion from the previous year to ¥64.0 billion. Thiswas primarily due to decreases in income before income
taxes and dividends received from affiliates accounted forby the equity method.
2) Investing Activity Cash Flow
Net cash outflow from investing activities was ¥42.7 billion,
an increase of ¥9.1 billion from the previous year. This wasprimarily due to decreases in proceeds from sale ofinvestments in securities.
3) Financing Activity Cash Flow
Net cash outflow from financing activity was ¥31.3 billion, adecrease of ¥1.6 billion from the previous year. This wasprimarily due to decreases in purchase of treasury stock.

5. Capital Expenditure
MGC Group (including MGC and consolidated subsidiaries)
capital expenditures for the consolidated fiscal year were¥39,279 million.
By segment, capital expenditure of ¥5,792 million,¥14,630 million, ¥14,406 million, ¥2,303 million, and ¥2,146
million were made in natural gas chemicals, aromatic
chemicals, specialty chemicals, information and advanced
materials, and other business segments and company-wide
assets, respectively.

6. Research and Development
Fiscal 2018 was the first year of MGC Advance2020, the
new medium-term management plan positioned to realize
the goals of “Vision 2021.” During the past year, pursuing
the guidepost of “Creating values to share with society,”
research and development initiatives were vigorously
advanced with the purpose of “Strengthening the earning
power of existing businesses with a focus on the corebusinesses” and “Creating and developing new
businesses.”
Under a stance geared to manifest maximum synergy
between the various Company R&D departments, theAdvanced Business Development Division positioned as the
Corporate R&D sector and the Research & Development
Division comprising the Corporate support sector, steadyprogress was made in cultivating strengthened earning
power for existing business and the forging of new
business.
The Advanced Business Development Division moved
through participation in investment partnerships, venturebusiness cooperation and investment, joint research withpublic research institutions and other research anddevelopment endeavors channeled through collaboration
outside the company to carry on initiatives in new businessdomains. Energetic steps were also taken to promotecommercialization of in-house developed medical
packaging materials, complex hydride solid electrolyte andother products, along with redoubled efforts to bringshort-distance active optical cable and factory-grownvegetables to market through open innovation.
There are a total of 891 MGC Group research anddevelopment personnel, including those in affiliate researchand development divisions, making up around 11% of thetotal workforce. Expenditures on research totaled ¥18,607
million.
Research and development costs by segment were as
follows:
Natural Gas Chemicals Company: ¥3,503 million
Aromatic Chemicals Company:¥5,249 million
Specialty Chemicals Company:¥5,068 million
Information and Advanced Materials Company:¥4,786 million

7. Risk Factors
The following are the main foreseeable risks that have thepotential to affect MGC Group’s operating results, stock
price and financial condition. Please note that the following
does not represent an exhaustive list of risks. All
forward-looking statements in the text are based on the
judgment of MGC Group as of the date of submission offinancial statements (June 25, 2019).
1) Economic Conditions
The business revenues of MGC Group are affected byeconomic conditions in the countries and regions where theGroup’s products are sold. In particular, market-sensitive
commodities such as methanol, methanol derivatives,
general-purpose aromatic chemicals, and polycarbonate
resin are generally prone to declines in sales volume andselling prices during times of economic downturn, which
adversely affects MGC Group’s operating results andfinancial condition. In addition, rapid increases in raw
material prices could also have an adverse effect on MGC
Group’s operating results and financial condition.
2) Overseas Business
MGC Group has established subsidiaries and conducts
manufacturing and sales in Asia, North America, SouthAmerica, the Middle East and other regions. MGC Groupmakes large investments in plant and equipment atoverseas subsidiaries. The Group takes various measures
to mitigate risks, but the situation in each country, such aspolitical instability including war, terrorist attacks, and riots,
or social or economic turmoil, can cause difficulties for local
manufacturing activities, remittance of dividends, andrecovery of investment.
Other risks that could have an adverse effect on MGC
Group’s operating results and financial condition include
problems due to differences in legal systems, the possibilityof restrictions on investments or nationalization or
expropriation of assets by foreign governments, andpersonnel or labor issues.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20194

Management’s Discussion and Analysis

3) Business Characteristics
MGC Group manufactures and sells a variety of products
ranging from chemical and material products to functional
products including those in the information communicationand medical- and food-related fields, and conducts its
business in a competitive environment. Competition isbased mainly on the prices of commodity products, and on
the basis of categories including price, market trends,
quality, function, delivery time and customer service in
specialty products and high-value-added products. A rise in
the level of competition in these areas could lead to lower
selling prices or a decrease in sales volume.
In addition, because of their characteristics, thebusinesses of MGC Group have risks such as thosedescribed below.
For example, MGC Group purchases raw materials
including mixed xylene and electric power from outside
suppliers. The Group takes measures such as purchasingfrom various suppliers to reduce the risk that procurement
will become impossible. However, the inability to procurenecessary raw materials or other items could be detrimental
to the Group’s production activities.
Many of MGC Group’s manufacturing bases havemultiple production facilities that share electricity, watersupply, steam, and other utilities. Consequently, if a sharedutility at any base shuts down due to an accident or othertrouble, the production activities of the entire base could besuspended.
The products manufactured and sold by MGC Group
include some products that are sold only to specificcustomers. MGC Group reduces risks with measures suchas entering into long-term supply contracts with thesecustomers; however, sales could decline if customers
discontinue using these products.
Electronic material products, for which the electronics
industry is the primary customer segment, typically have ashort product life and are constantly exposed tocompetition in technological innovation. Therefore, sales
could decline if existing products become obsolete or if new
product development is delayed.
For products other than commodity and basic
chemicals, including engineering plastics and electronicmaterials, selling prices could drop and sales volume could
decline due to the emergence of alternative products
offering the same functions.
MGC Group takes all possible measures to mitigate
these risks, but they could have an adverse effect on theGroup’s operating results and financial condition.
4) Product Defects
As stated earlier, MGC Group is engaged in a wide range ofbusinesses and nearly all of its manufacturing bases
conduct production activities in accordance with globally
recognized quality management standards and ship
products that conform to specifications agreed upon withcustomers. However, the possibility exists that defective
products could be manufactured or shipped. In the eventthat a product with a quality defect is shipped, the need will
emerge for MGC Group to compensate customers who
used the defective product, users of final products, orothers not only for direct damages but also for opportunity
loss. In addition, MGC may lose social credibility.
To deal with this type of risk, MGC Group has obtained

5

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

product liability insurance and other liability insurance.
However, the full amount of the damages for which
MGC Group is ultimately liable may not be covered by thisinsurance, and therefore MGC Group’s operating results
and financial condition could be adversely affected.
5) Exchange Rate Fluctuations
With MGC Group’s business results and its financial
situation affected by exchange rate fluctuations, to deal with
the impact of such fluctuations on exports, imports andother transactions conducted in foreign currencies, theGroup has, to a degree, hedged risk through forward
exchange transactions. However, it is impossible tocompletely hedge the risk of exchange rate changes.
Depending on the trend of exchange rates, there is thepossibility of a negative impact on the Group’s businessresults and financial situation such as decreased sales orincreased losses.
Financial balance data that is valued in local currencies
for MGC Group overseas subsidiaries are translated into
yen when creating the Group’s consolidated balance sheet.
Depending on the exchange rate at the time, MGC Group’sbusiness results and financial situation could be adversely
affected.
6) Interest Rate Fluctuations
When procuring essential funds, MGC Group considers
their terms, financial situation, and financial environment,
and determines factors such as the amounts to procure
and the period and method of procurement. The Group
combines fixed and variable interest rates when procuring
funds in order to hedge against future interest rate changes.
However, if interest rates rise, the amount of interest
payments also rises, which may adversely affect MGC
Group’s operating results and financial condition.
7) Marketable Security Market Price Fluctuations
MGC Group’s assets include market priced marketablesecurities. If the market prices of these marketablesecurities holdings were to fall sharply, appraisal losses
might occur, adversely affecting the Group’s operating
results and financial condition.
8) Legal Restrictions
MGC Group handles hazardous chemical substances
including poisonous and deleterious substances, hazardous
materials and high-pressure gas as part of its business, andis subject to various legal restrictions, both in Japan andoverseas, at each stage, including manufacturing, storage,
distribution and sale. In addition, with rising environmental
awareness worldwide, regulations on chemical substances
are becoming increasingly stringent.
Accordingly, the Group’s operating results and financial
condition could be adversely affected by penalties, social
sanctions, remediation costs and other consequences ofthe failure of MGC Group to comply with legal regulations
as well as restrictions on business that may result in theevent of changes in laws and regulations or theirinterpretation or operation, or the tightening of regulations,and increase in costs to address these changes.
9) Risks Related to Other Legal Violations
MGC Group has created a compliance system, throughwhich it strives to comply with laws, ordinances and otherrequirements. Notwithstanding, upon violations of legal
restrictions or occurrence of situations generating
suspicions of such events, there is the possibility that theGroup could incur criminal, civil or administrative liability.
Such developments could likewise result in the loss ofsocial credibility, negatively impacting the Group’s operating
results and financial condition.
10) Accidents and Disasters
MGC Group routinely handles hazardous chemical
substances including poisonous and deleterious
substances, hazardous materials and high-pressure gas aspart of its business.
This stance naturally encompasses efforts to ensure
maintenance and stable operation of production facilities,
while doing everything possible to construct a security anddisaster prevention system, with initiatives also extending tocoverage under fire insurance, profit insurance, oil pollution
insurance, liability insurance and other safeguards.
Notwithstanding, upon occurrence of explosions, fires, toxic
gas leaks or other accidents resulting from equipment
malfunction or human error, damage to production facilities
or harm to employees, damage to areas surrounding
production facilities or harm to customers, environmental
pollution and other damage, the Group’s operating results
and financial conditions could be adversely affected if theaforementioned insurance fails to cover the full amount ofdamages for which the Group is ultimately liable.
11) Natural Disasters
MGC Group has manufacturing bases not only in Japan but
also in the rest of Asia, North America, South America, theMiddle East and other regions. The facilities at these bases
are subject to damage from the impact of earthquakes,
windstorms, floods or other natural disasters, war,
terrorism, riots, strikes, disabling of communication
infrastructure, infectious diseases and other unforeseen
circumstances. Trouble may also occur related to Group
employees, workplaces, equipment systems and otherfactors leading to suspension of production activities andother developments. In such cases, judgements thathuman losses, material losses, opportunity losses or otherresults of these natural disasters and other occurrences are
excluded from coverage under casualty insurance, there
could be adverse effects on the Group’s operating results
and financial condition.
12) Research and Development
MGC Group conducts basic and applied research todevelop new products and processes and improve existingproducts and processes. Research and development iscomplex and long-term, and results are uncertain. If MGC
Group does not continue to develop new products that are
accepted in the market, or if the markets for products newly
developed by MGC Group do not grow as much as
anticipated, the Group’s future operating results andfinancial condition could be adversely affected.

and selling methanol, engineering plastics and a variety ofother products. Although the Group strives to maintain its
profit through joint venture agreements and otherbusiness-related agreements, there is no guarantee that thejoint venture partners will make decisions that are best for
MGC Group or the joint ventures as the Group does notcontrol its joint venture partners. In the event that these
agreements are not renewed or other circumstances occur,
the outcome could have an adverse effect on the Group’s
operating results and financial condition.
14) Business Investment
MGC Group channels keen efforts into regular investment
aimed at creation of new businesses closely aligned with
future market needs. Moreover, in the quest to realize
business growth, strengthen competitiveness and makeother progress, establishment of new companies,
purchases of existing companies, equity investment andother business investment is conducted both in Japan andoverseas, with these activities to be continued going
forward. When these investments fail to yield earnings
commensurate with the amounts involved, impairment,
losses from securities revaluation or other setbacks occur,
there may be adverse effects on the Group’s operating
results and financial condition.
15) Fixed-Asset Impairment
MGC Group adopts accounting standards pertaining to
fixed-asset impairment. With regard to fixed-asset holdings,
in the event of decreased profitability, declines in market
price or other situations triggered by conspicuous
worsening of the business environment, there is thepossibility that impairment losses will occur and adversely
impact the Group’s operating results and financial condition.
16) Intellectual Property
MGC Group files and obtains patents in Japan andoverseas to protect the research findings used in its
businesses and licenses. The Group also imposes
confidentiality obligations on the parties of numerous patent
licensing agreements and technology agreements in aneffort to protect intellectual property while striving not toinfringe on the rights of others. However, if MGC Groupfails to protect its own rights or becomes involved in a
dispute with a third party, such circumstances could
adversely affect the Group’s operating results and financial
condition.
17) Lawsuits
Upon filing of future lawsuits or other legal proceedings
against MGC Group related to its domestic and overseas
businesses, and the verdicts of such procedures areunfavorable, the result could be an adverse effect on theGroup’s operating results and financial condition.

13) Joint Ventures
MGC Group owns a number of production joint ventures
not only in Japan but also overseas, including Saudi Arabia,
Venezuela, Thailand, China, and South Korea, procuring

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20196

Consolidated Balance Sheet
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
March 31, 2019
Thousands of
U.S. dollars(note 2)

AssetsMillions of yen
2018

2019

¥ 88,720

Short-term debt and current installments of long-term debt (note 6)

58,846

71,256

530,192

Accrued expenses

20,493

16,591

184,638

Accrued income taxes (note 9)

3,439

4,133

30,985

Accrued bonuses

5,539

5,422

49,905

Other current liabilities (note 9)

20,011

20,711

180,296

Total current liabilities

188,420

206,835

1,697,630

Long-term debt (note 6)

36,90535,707

332,507

Net defined benefit liability (note 8)

5,247

4,592

47,275

337

339

3,036

Deferred income taxes (note 9)

9,521

10,08085,783

184,900

Other non-current liabilities (note 7)

10,323

8,986

93,008433,832

Total non-current liabilities

62,33659,707

561,636

Total liabilities

250,756

266,543

2,259,267

41,97041,970378,142¥ 101,090

Trade notes and accounts receivable (note 19)

155,507

165,606

1,401,090

23

121

207

Inventories

119,252

103,753

1,074,439

Other current assets

13,965

14,847

125,822

Less allowance for doubtful receivables

1,033

1,170

9,307

378,845384,249

3,413,326

Buildings and structures

207,981203,544

1,873,872

Machinery, equipment and vehicles

457,159

450,543

4,118,921

Land

39,82638,458358,825

750

760

6,757

Construction in progress

20,522

12,347

Other

48,151

46,923774,392

752,577

6,977,133

545,899

531,859

4,918,452

228,492

220,717

2,058,672$

821,065

Property, plant and equipment (note 6):Less accumulated depreciation
Net property, plant and equipment

Leased assets

3,841

3,911

34,6075

14

45

Software

2,187

2,141

19,704

Other

2,579

2,343

23,236

8,614

8,411

77,611

Net intangible assets

Trade notes and accounts payable$

721,588

Non-current liabilities:

Intangible assets, net:
Goodwill

2019¥ 80,089¥ 91,130

Leased assets

2018

Current liabilities:

Cash (note 3)

Total current assets

Millions of yen
2019

2019

Current assets:

Short-term investments (note 4)

Thousands of
U.S. dollars(note 2)

Liabilities and Net Assets

Provision for directors’ retirement benefits (note 8)

Stockholders’ equity:
Common stock (note 10):
Authorized 492,428,000 shares; issued 231,739,199
shares in 2019 and 2018
Additional paid-in capital (note 10)34,29834,578309,019

Retained earnings (note 11)439,080

399,033

3,956,032

Treasury stock, at cost; 18,099,472, and 18,135,027
shares in 2019 and 2018(19,930)(19,966)(179,566)

495,418

455,616

4,463,627

13,023

17,261

117,335

1

(0)

9

222

222

2,000

(6,327)(7,614)(57,005)

623

1,878

5,613

7,542

11,747

67,952

Non-controlling interests

50,321

51,780453,383

Total net assets

553,282

519,1444,984,972¥ 804,038¥ 785,687$ 7,244,238

Total stockholders’ equity
Accumulated other comprehensive income:Net unrealized gain on other securities (note 4)

Investments and other assets:
Investments in securities (notes 4, 5 and 6)

177,011

161,391

1,594,837

Long-term loans receivable

2,831

2,632

25,507

Deferred income taxes (note 9)

2,510

2,094

22,615Net defined benefit asset (note 8)

1,174

1,221

10,578Other investments and other assets (note 5)

45,959

5,101

5,522

Less allowance for doubtful receivables

543

555

4,892

Total investments and other assets

188,086

172,308

1,694,621¥ 804,038¥ 785,687$ 7,244,238

Total assets
See accompanying notes to consolidated financial statements.

7

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

Deferred gains (losses) on hedges
Surplus on revaluation of land
Foreign currency translation adjustments
Remeasurements of defined benefit plans (note 8)
Total accumulated other comprehensive income

Commitments and contingencies (note 20)
Total liabilities and net assets

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20198

Consolidated Statement of Income

Consolidated Statement of Changes in Net Assets

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2019

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2019
Thousands of
U.S. dollars(note 2)Millions of yen

Net sales (note 19)
Cost of sales (note 13)
Gross profit
Selling, general and administrative expenses (notes 12 and 13)
Operating income
Other income (expenses):
Interest income
Dividend income
Interest expenses
Equity in earnings of affiliates
Gain on sale of investments in securities (note 4)
Rent expenses
Loss on valuation of investments in securities
Provision for loss on guarantees
Loss on liquidation of subsidiaries and affiliates (note 15)
Personnel expenses for seconded employees
Loss on sale/disposal of property, plant and equipment
Impairment loss (note 14)
Other, net

2019

2018

2019

¥ 648,986
512,857
136,129
94,742
41,386¥ 635,909
481,326
154,583
91,84162,741$ 5,847,247
4,620,750
1,226,498
853,608
372,880642
2,200(1,018)28,408989(1,634)(690)(1,267)—(1,430)
(920)
—
2,400
27,67969,066485
2,096(1,069)18,277
1,926(1,264)(8,297)(1,088)(162)(1,449)(1,115)(11)
2,352
10,6805,784
19,822(9,172)
255,951
8,911(14,722)(6,217)(11,415)—(12,884)(8,289)—21,624249,383
622,272

Millions of yen
Stockholders’ equity

Balance as of April 1, 2017

Commonstock(note 10)Retainedearnings(note 11)

Treasurystock¥ 41,970¥ 35,602¥ 357,245¥ (21,829)

73,421

Total

Net
unrealized
gain on othersecurities(note 4)

Deferred
losses onhedgesSurplus onrevaluationof land¥ 412,989¥ 18,101

¥ (0)

¥ 222

8,333
753
9,087

9,330
(1,842)
7,487¥ 59,979
4,979¥ 55,000¥ 65,933
5,402¥ 60,531

75,0796,784
81,872¥ (6,249)¥ (351)

Total

Noncontrollinginterests

Total net
assets¥ 11,722¥ 48,658¥ 473,370

Cash dividends(9,927)(9,927)(9,927)

Profit attributable to ownersof parent

60,53160,53160,531(7,010)(7,010)(7,010)

Disposition of treasury stock

0

0

0

0

Retirement of treasury stock(8,873)

8,873

—

—

Transfer to additional
paid-in capital fromretained earnings

8,816

—

—

Change in treasury stockof parent arising fromtransactions with noncontrolling shareholders

(966)

(966)

(966)

(8,816)

Net changes other thanstockholders’ equity
Total changes during
the year
Balance as of March 31, 2018

(839)

(0)

—

(1,365)

2,229

24

3,122

3,146

—

(1,024)

41,787

1,863

42,626

(839)

(0)

—

(1,365)

2,229

24

3,122

45,773¥ 41,970¥ 34,578¥ 399,033¥ (19,966)¥ 455,616¥ 17,261

¥ (0)

¥222

¥ (7,614)¥ 1,878¥ 11,747¥ 51,780¥ 519,144

Changes arising during year:
Cash dividends(14,953)

Profit attributable to ownersof parent

55,000Purchase of treasury stock
Disposition of treasury stock

53

Change in treasury stockof parent arising fromtransactions with noncontrolling shareholders(14,953)(14,953)

55,00055,000

(6)

(6)

(6)

42

95

95

(333)

(333)

(333)

Net changes other thanstockholders’ equity

Income taxes (note 9):
Current
DeferredRemeasureForeign
ments ofcurrency
definedtranslation
benefit plansadjustments(note 8)Changes arising during year:

Purchase of treasury stock

Profit before income taxes

Accumulated other comprehensive income

Additional
paid-in
capital(note 10)

Total changes during
the year
Balance as of March 31, 2019

(4,238)

1

—

1,287

(1,254)(4,204)(1,459)(5,664)—(280)

40,04635

39,802(4,238)

1

—

1,287

(1,254)(4,204)(1,459)34,138¥ 41,970¥ 34,298¥ 439,080¥ (19,930)¥ 495,418¥ 13,023¥1¥222¥ (6,327)¥ 623¥ 7,542¥ 50,321¥ 553,282

Total

Noncontrollinginterests

Total net
assets$ 105,838$ 466,529$ 4,677,394

Thousands of U.S. dollars (note 2)

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent$$

540,400
44,860495,540

See accompanying notes to consolidated financial statements.

Stockholders’ equity

Accumulated other comprehensive incomeNet
unrealized
gain on othersecurities

Deferred
losses onhedgesSurplus onrevaluationof land

RemeasureForeign
ments ofcurrencytranslation
definedadjustments benefit plans$ (0)$ 2,000$ (68,601)

Commonstock

Additional
paid-in
capitalRetainedearnings$ 378,142$ 311,542$ 3,595,216$ (179,890) $ 4,105,018

Cash dividends(134,724)(134,724)(134,724)

Profit attributable to ownersof parent

495,540

495,540

495,540

Balance as of March 31, 2018

Treasury
stock

Total

$ 155,519$ 16,920

Changes arising during year:

Consolidated Statement of Comprehensive Income

Purchase of treasury stock
Disposition of treasury stock
Change in treasury stockof parent arising fromtransactions with noncontrolling shareholders

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2019
Thousands of
U.S. dollars(note 2)Millions of yen

ProfitOther comprehensive income arising during the year (note 16) :Net unrealized loss on other securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Shares of other comprehensive income of affiliates accounted forby the equity method
Total other comprehensive income arising during the year
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

478

2019

2018

2019

¥ 59,979¥ 65,933$ 540,400(4,212)
1(2,232)(1,812)

(827)
(0)
2,102
2,204

(37,949)
9(20,110)(16,326)

2,594(1,775)23,371(5,661)¥ 54,318

1,702¥ 67,636(51,005)$ 489,395¥ 50,795
3,522¥ 60,555
7,080$ 457,654
31,733

(54)

(54)

(54)

378

856

856

(3,000)(3,000)(3,000)Net changes other thanstockholders’ equity
Total changes during
the year
Balance as of March 31, 2019

(38,184)—(2,523)360,807$ 378,142$ 309,019$ 3,956,032

315

9

—

11,596(11,298)(37,877)(13,145)(51,032)

358,609(38,184)

9—11,596(11,298)(37,877)(13,145)

307,577$ (179,566) $ 4,463,627$ 117,335$9$ 2,000$ (57,005)$ 5,613$ 67,952$ 453,383$ 4,984,972

See accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

9

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201910

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2019

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2019

Millions of yen

Cash flows from operating activities:
Profit before income taxes
Adjustments to reconcile profit before income taxes to net cash
provided by operating activities:
Depreciation and amortization
Loss on sale/disposal of property, plant and equipment
Equity in earnings of affiliates(Decrease) increase in allowance for doubtful receivables(Decrease) increase in net defined benefit liability
Increase in provision for directors’ retirement benefits(Decrease) increase in provision for loss on business withdrawal(Decrease) increase in provision for loss on liquidation of subsidiaries and affiliates
Increase in provision for loss on guarantees
Interest and dividend income
Interest expenses
Gain on sale of short-term investments and investments in securities
Loss on devaluation of short-term investments and investments in securities
Decrease (increase) in trade notes and accounts receivable
Increase in inventories(Decrease) increase in trade notes and accounts payable
Other, net
Sub totalInterest and dividend received
Dividend received from affiliates accounted for by the equity method
Interest paid
Income taxes paid
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from sale of property, plant and equipment
Purchase of investments in securities and subsidiaries(Increase) decrease in long-term loans receivable
Proceeds from sales of shares of subsidiaries resulting in change in scope of consolidation
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Decrease in short-term debt
Proceeds from long-term debt
Payments on long-term debt
Dividends paid to stockholders
Dividends paid to non-controlling stockholders of subsidiaries
Payments from changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (note 3)
See accompanying notes to consolidated financial statements.

11

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

Thousands of
U.S. dollars(note 2)

1. Summary of Significant Accounting Policies(a) Basis of Presenting Consolidated Financial Statements

2019

2018

2019

¥ 69,066¥ 73,421$ 622,272

27,451
870(28,408)
(137)
(682)
68
(107)
(144)
1,270
(2,842)
1,018(1,041)
837
8,059(15,750)(7,290)4,074
56,313
2,804
12,323(1,020)(6,552)
173
64,042

27,027
1,094(18,277)
4
43
33
236
162
1,088
(2,581)
1,069(2,146)
8,327(28,607)(9,759)21,357
2,455
74,9482,545
20,008(974)(5,838)29
90,720247,329
7,839(255,951)(1,234)(6,145)613(964)(1,297)
11,442(25,606)
9,172(9,379)7,541
72,610(141,905)(65,682)
36,706507,370
25,264
111,028(9,190)(59,032)
1,559
577,007(37,409)891(5,039)(48)
939(2,094)(42,761)(36,546)2,141(1,548)
(642)
804
2,175
(33,614)(337,048)
8,028(45,400)
(432)
8,460
(18,867)(385,269)(7,300)10,359(14,143)(9,927)(2,024)(95,495)
151,122(161,213)(134,724)(15,776)(2,859)(2,883)(25,759)(112)(31,396)(7,119)(33,038)(1,009)(282,872)

190(9,925)90,304¥ 80,379(939)
23,127
67,177¥ 90,304

1,712(89,422)813,623$ 724,200(10,599)
16,773(17,893)(14,953)(1,751)

Mitsubishi Gas Chemical Company, Inc. (the Company) and its
domestic subsidiaries maintain their books of account andprepare their financial statements in conformity with financial
accounting standards of Japan, and its foreign subsidiaries inconformity with those of the countries of their domicile.
“Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial
Statements” (ASBJ Practical Issues Task Force (PITF) No. 18,
May 17, 2006) and “Practical Solution on Unification of
Accounting Policies Applied to Associates Accounted for by
the Equity Method” (ASBJ Practical Issues Task Force (PITF)
No. 24, March 10, 2008) require that for the preparation of
consolidated financial statements, the accounting policies andprocedures applied to a parent company and its subsidiaries
for similar transactions and events under similar
circumstances should be unified, in principle, and financial
statements prepared by foreign subsidiaries in accordancewith IFRSs or the generally accepted accounting principles in
the United States (U.S. GAAP) tentatively may be used for the
consolidation process, however, the items listed in the PITF
should be adjusted in the consolidation process so that profit(loss) is accounted for in accordance with Japan GAAP unlessthey are not material. The Company made necessary
modification to the consolidated financial statements
according to the PITF.
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 regulations, and in conformity withaccounting principles and practices generally accepted inJapan, which may differ in certain respects from accounting
principles and practices generally accepted in countries andjurisdictions other than Japan.
In preparing the accompanying consolidated financial
statements, certain reclassifications have been made in thefinancial statements issued domestically in Japan in order topresent them in a form which is more familiar to readers
outside Japan. In addition, the notes to the consolidated
financial statements include information which is not required
under accounting principles generally accepted in Japan but
is presented herein as additional information.
(b) Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and 71 subsidiaries (70 in 2018).
The Company and its consolidated subsidiaries are collectively
referred to as “MGC.”
All significant intercompany accounts and transactions
have been eliminated in consolidation.
MGC Trading CO., LTD. and Taixing MGC Suhua
Specialty Materials Co., Ltd were included in scope of
consolidation due to their establishment during the year
ended March 31, 2019.

TAIYO Industry Co., Ltd. was excluded from the scope of
consolidation due to the sale of the entirety of shares during
the year ended March 31, 2019.
Investments in an unconsolidated subsidiary and 15
affiliates (15 in 2018) are accounted for by the equity method.
The Accounting Standards for Consolidation require thecontrol or influence concept for the consolidation scope ofsubsidiaries and affiliates. Under the control or influence
concept, a company in which the parent company or its
consolidated subsidiaries, directly or indirectly, are able toexercise control over operations is fully consolidated, and acompany over which the parent company and/or its
consolidated subsidiaries have the ability to exercise
significant influence is accounted for by the equity method.
The difference between the cost and the underlying net
assets at the date of investments in subsidiaries or affiliates isallocated to identifiable assets and liabilities based on fairmarket value at the date of investments.
The unallocated portion of the difference, which isrecognized as goodwill, is being amortized using thestraight-line method over an expected benefit period by each
investment within 20 years.
The fiscal year-ends of 31 consolidated subsidiaries (31 in2018) are December 31. For consolidation purposes, theCompany uses their financial statements as of December 31
with necessary consolidation adjustments made to reflect any
significant transactions which occurred between January 1
and March 31.
(c) Cash and Cash Equivalents
For the purpose of the statement of cash flows, MGC
considers all highly liquid investments with insignificant risk ofchanges in value, which have maturities of generally threemonths or less when purchased, to be cash equivalents.
(d) Short-term Investments and Investments in Securities
Under the Accounting Standards for Financial Instruments,
securities are classified into four categories – “trading
securities,” “held-to-maturity securities,” “investments inaffiliates” and “other securities.” Securities classified as“trading securities” are stated at fair value and unrealized gains
or losses are recorded in the consolidated statement ofincome. Securities classified as “held-to-maturity securities”
are stated at amortized cost. Securities classified as “othersecurities” with fair value are stated at fair value and unrealized
gains or losses, net of related taxes, are excluded from
earnings and reported as accumulated other comprehensive
income in the consolidated balance sheet. Debt classified as“other securities” for which fair value is not available are statedat the amortized cost. Equity securities classified as “othersecurities” for which fair value is not available are stated at themoving-average cost. Realized gains and losses on the othersecurities are computed using the moving-average cost.
Securities held by the Company are classified as
held-to-maturity securities, investments in affiliates and othersecurities.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201912

Notes to Consolidated Financial Statements(e) Inventories
Inventories held for sale in the ordinary course of business aremeasured at the lower of cost or net selling value, which isdefined as the selling price less additional estimatedmanufacturing costs and estimated direct selling expenses,
determined principally by the average method.
( f ) Property, Plant and Equipment
Property, plant and equipment are carried substantially at cost.
Depreciation of the property, plant and equipment is provided
principally by the straight-line method based on the estimateduseful lives.
The estimated useful lives are as follows:
Buildings and structures
7-50 years
Machinery, equipment and vehicles 8-15 years(g) Intangible Assets
Intangible assets are carried at cost less accumulated
amortization. The expenses for internal use computer
software are deferred and amortized by the straight-line
method over the estimated useful lives (5 years). Intangible
assets other than software are deferred and amortized by thestraight-line method at rates based on the estimated useful
lives of the respective assets.
(h) Impairment of Long-lived Assets
The standard for the impairment of long-lived assets requiresthat fixed assets be reviewed for impairment whenever eventsor changes in circumstances indicate that 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 theundiscounted future cash flows expected to result from thecontinued use and eventual disposition of the asset or asset
group. The impairment loss would be measured as theamount 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.
Recognized impairment losses, except for those to be
deducted directly from acquisition costs of corresponding
fixed assets, are included in accumulated depreciation on the
consolidated balance sheet.
( i ) Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided at an
amount of uncollectible receivables based on historical loss
ratios and an amount that takes into consideration thepossibility of specific liabilities.
( j ) Retirement Benefits
In calculating retirement benefit obligation, the benefit formulabasis is used for the method of attributing expected
retirement benefits to the periods up to the end of the current
fiscal year.
Past service costs are amortized by the straight-line
method over a certain period within the average remaining
years of service of the eligible employees (10 years) when

13

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019such past service costs occur.
Actuarial gains and losses are amortized by the
declining-balance method over a certain period within the
average remaining years of service of the eligible employees(10 years) from the year following the year in which the gains
or losses occur.
The Company and certain subsidiaries have unfunded
defined benefit pension plans for directors, corporate
auditors and executive officers. The provision for the plans
has been made in the accompanying consolidated financial
statements for the vested benefits to which directors,
corporate auditors and executive officers are entitled if they
were to retire or sever immediately at the balance sheet
dates (See note 8).

publicized by Japan Environmental Storage & Safety
Corporation. The Act of Special Measures for Proper
Handling of Polychlorinated Biphenyl Waste requires proper
handling of polychlorinated biphenyl waste.

(k) Leases(p) Accrued Business Structure Improvement Expenses

All finance lease transactions are capitalized. Leased assets
related to finance lease transactions without title transfer are
depreciated on a straight-line method, with the lease periods
as their useful lives and no residual value.

The Company provides a reasonably estimated amount ofstructural reform costs for unprofitable business.

( l ) Foreign Currency Translation

The Company provides a reasonably estimated amount for
loss to be incurred in association with liquidation ofsubsidiaries and affiliates.

Under the Accounting Standards for Foreign Currency
Transactions, foreign currency transactions are translated into
yen on the basis of the rates in effect at the transaction dates,
receivables and payables denominated in foreign currencies
are translated into yen at the rate of exchange as of thebalance sheet dates, and gains or losses resulting from thetranslation of foreign currencies are credited or charged toincome. Assets and liabilities of overseas subsidiaries aretranslated into yen at the rate of exchange as of the balance
sheet date, and revenues and expenses of them aretranslated into yen using the average rate in the year, and acomprehensive adjustment resulting from translation ispresented as “Foreign currency translation adjustments” and“Non-controlling interests” in a component of net assets.
(m) Income Taxes
Income taxes in Japan applicable to the Company and its
domestic consolidated subsidiaries consist of corporate tax,
inhabitant tax and business tax.
The Accounting Standards for Income Taxes require thatdeferred income taxes be accounted for under the asset andliability method. Deferred tax assets and liabilities arerecognized for the expected future tax consequences of
events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets andliabilities are measured using enacted tax rates expected toapply to taxable income in the years in which those
temporary differences are expected to be recovered or
settled, and the effect on deferred tax assets and liabilities ofa change in tax rates is recognized in income in the periodthat includes the enactment date.
(n) Accrual for Environmental Measures
An accrual for environmental measures is provided at an
estimated amount of disposal and transport costs ofpolychlorinated biphenyl waste based on the handling cost

These ASBJ statement and implementation guidance will
be applied from the fiscal year beginning on April 1, 2021.
The impact of the application of the Accounting Standard
for Revenue Recognition on the consolidated financial
statements is currently under evaluation.

(o) Asset Retirement Obligations
The Company recognized an asset retirement obligation
which is statutory or similar obligation with regard to theremoval of assets as a liability. An asset retirement obligationis recognized as a liability at the time that the asset is incurredby its acquisition, construction, development or ordinary use.
When an asset retirement obligation is recognized as a liability,
the asset retirement cost corresponding to it is included in thecost of the relevant asset by the same amount.

(q) Provision for Loss on Liquidation of Subsidiaries andAffiliates(r) Reclassifications
Certain reclassifications have been made to the prior years’
consolidated financial statements to conform to thepresentation used for the year ended March 31, 2019.
(s) Accounting Pronouncements Not Yet Adopted- “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 30, 2018)- “Implementation Guidance on Accounting Standard for
Revenue Recognition” (ASBJ Guidance No. 30, March 30,
2018)
The International Accounting Standards Board (IASB) and US
Financial Accounting Standards Board (FASB) jointly
developed comprehensive revenue recognition standards andissued “Revenue from Contracts with Customers” in May
2014 (IASB’s IFRS 15 and FASB’s Topic 606). Consideringthat IFRS 15 shall apply to fiscal years beginning on or afterJanuary 1, 2018, and Topic 606 shall apply to fiscal years
beginning after December 15, 2017, the ASBJ developed acomprehensive accounting standard on revenue recognition
and thus issued the accounting standard together with theimplementation guidance.
The ASBJ established the accounting standard onrevenue recognition by following the basic policies indeveloping it. The basic policies were: firstly, incorporating thecore principle of IFRS 15 as the starting point from theperspective of facilitating comparability among financial
statements, which is one of the benefits of ensuringconsistency with IFRS 15; secondly, adding alternative
treatments, but to the extent not impairing comparability,
where consideration should be given to the practice having
been used in Japan.

(t ) Changes due to Application of “Partial Amendments to
Accounting Standard for Tax Effect Accounting”
The Company has applied the “Partial Amendments to
Accounting Standard for Tax Effect Accounting”(ASBJ
Statement No. 28, February 16, 2018) effective from the
beginning of the year ended March 31, 2019. Accordingly,
deferred tax assets were presented under “Investments andother assets” and deferred tax liabilities were presented under“Non-current liabilities.”
As a result, in the consolidated balance sheet as of March
31, 2018, deferred tax assets in current assets decreased by¥6,759 million and those in investments and other assets
decreased by ¥42 million. Deferred tax liabilities in current
liabilities decreased by ¥242 million and those in non-current
liabilities decreased by ¥6,559 million.
Deferred tax assets and deferred tax liabilities were offset
if they relate to the same taxable entity so that total assets
decreased by ¥6,802 million.
In addition, the contents of note 8 (excluding the total
amount of valuation allowance) and note 9 of explanatory
notes to the “Accounting Standard for Tax Effect Accounting”
set forth in Paragraphs 3 through 5 of the “Partial
Amendments to Tax Effect Accounting” were added to「9.
Income taxes」. The respective contents related to the year
ended March 31, 2018, however, were not disclosed inaccordance with the transitional treatments prescribed in
Paragraph 7 of the “Partial Amendments to Tax EffectAccounting.”

2. Financial Statement Translation
The translations of the yen amounts into U.S. dollars areincluded solely for the convenience of the readers, using theprevailing exchange rate as of March 31, 2019, which was¥110.99 to U.S. $1. This translation should not be construed
as a representation that the amounts shown could be
converted into U.S. dollars at such rate.

3. Cash and Cash Equivalents(a) Reconciliation between “Cash” in the consolidated balance
sheet and “Cash and cash equivalents” in the consolidated
statement of cash flows as of March 31, 2019 and 2018 is
as follows:
Millions of yen

CashTime deposits with maturities of over three months
Short-term investments
Cash and cash equivalents

Thousands of
U.S. dollars

2019

2018

2019

¥ 91,130¥ 101,090$ 821,065(10,774)(10,907)(97,072)

23¥ 80,379

121¥ 90,304

207$ 724,200

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201914

Notes to Consolidated Financial Statements(b) Details of the assets and liabilities of subsidiaries that havebeen excluded from the scope of consolidation due tosales of share
As of March 31, 2019TAIYO Industry Co., Ltd. has been excluded from thescope of consolidation due to the sale of the entirety ofshares. The components of assets and liabilities at the timeof the sale, the selling price and net proceeds from sales ofshares of TAIYO Industry Co., Ltd. are as follows:

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Gain on sales of shares
Selling price of shares
Cash and cash equivalents
Proceeds from sales of shares ofsubsidiaries resulting in change inscope of consolidation

Millions of yen
2019

Thousands of
U.S. dollars
2019¥ 2,846501(2,101)(351)
759¥ 1,655(715)$ 25,642
4,514(18,930)(3,162)
6,838$ 14,911(6,442)¥$ 8,460939

As of March 31, 2018
JAPAN PIONICS CO., LTD. has been excluded from thescope of consolidation due to the sale of the entirety ofshares. The components of assets and liabilities at the timeof the sale, the selling price and net proceeds from sales ofshares of JAPAN PIONICS CO., LTD. are as follows:
Millions of yen
2018

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Loss on sales of shares
Selling price of shares
Cash and cash equivalents
Proceeds from sales of shares ofsubsidiaries resulting in change inscope of consolidation¥ 2,100
1,049(1,091)(3)(1,245)
¥
808
(4)
¥

804

4. Short-term Investments and Investments in
Securities
Balance sheet amount, fair value and gross unrealized gain
and loss of held-to-maturity securities with fair value as ofMarch 31, 2019 and 2018 are summarized as follows:

15

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

Millions of yen
Gross
Gross
unrealized
unrealized
gain
loss

Balancesheet
amountMarch 31, 2019
Government
bond securities

March 31, 2018
Government
bond securities

¥

0 ¥

0

¥

— ¥

0

¥

0 ¥

0

¥

— ¥

0

¥

0 ¥

0

¥

— ¥

0

¥

0 ¥

0

¥

— ¥

0

Thousands of U.S. dollars
Gross
Gross
unrealized
unrealized
gain
loss

Balancesheet
amountMarch 31, 2019
Government
bond securities

Fair value

considering the possibility of recovery. The Company
recognizes impairment losses on securities without market
value when the value declines significantly due to an issuer’s
financial condition.

5. Investments in Affiliates
The aggregate carrying amounts of investments in affiliates asof March 31, 2019 and 2018 are ¥131,409 million($1,183,972 thousand) and ¥108,900 million, respectively.

6. Short-term and Long-term Debt
Fair value

$

0 $

0

$

— $

0

$

0 $

0

$

— $

0

Short-term debt is represented by bank loans which are due
within one year. The weighted average interest rate ofshort-term debt is 0.9% and 0.7% as of March 31, 2019 and2018, respectively.
Long-term debt as of March 31, 2019 and 2018 issummarized as follows:

Balance sheet amount, acquisition cost, and grossunrealized gain and loss of other securities with fair value as ofMarch 31, 2019 and 2018 are summarized as follows:
Balancesheet
amountMillions of yen
Gross
Gross
unrealized
unrealized
gain
loss

Acquisition
cost

March 31, 2019
Equity securities ¥ 41,668
Other securities
9¥ 41,679¥ 19,747 ¥ (1,223)—(0)¥ 19,747 ¥ (1,223)¥ 23,14410¥ 23,155

March 31, 2018
Equity securities ¥ 48,573
Other securities
9¥ 48,584¥ 25,512—¥ 25,512¥ (589)(0)¥ (589)¥ 23,65010¥ 23,661

Balancesheet
amountThousands of U.S. dollars
Gross
Gross
unrealized
unrealized
gain
loss

Acquisition
cost

March 31, 2019
Equity securities $ 375,421
Other securities
81$ 375,520$ 177,917 $ (11,019)—(0)$ 177,917 $ (11,019)$ 208,523
90$ 208,622

Securities classified as other securities for which fair value
is not available are unlisted equity securities amounting to¥4,185 million ($37,706 thousand) and ¥4,267 million as ofMarch 31, 2019 and 2018, respectively.
For the years ended March 31, 2019 and 2018, proceedsfrom the sale of other securities are ¥2,113 million ($19,038
thousand) and ¥4,716 million, respectively. Gross realized
gains are ¥941 million ($8,478 thousand) and ¥2,066 million
for the years ended March 31, 2019 and 2018, respectively.
The Company recognized impairment losses on securitiesof ¥837 million ($7,541 thousand) and ¥8,327 million for theyears ended March 31, 2019 and 2018, respectively.
The Company recognizes impairment losses on securities
with market value when the market value declines by morethan 50 percent. When the market value declines by morethan 30 percent but less than 50 percent, the Company
recognizes necessary impairment losses as a result ofMillions of yen
2019
2018

Loans, principally frombanks, maturing ininstallments through 2036
with weighted averageinterest of 1.15% as of March ¥ 44,786
31, 2019, partially secured by
mortgage of property, plantand equipment and securities¥—

Thousands of
U.S. dollars
2019$ 403,514¥

Thousands of
U.S. dollars

4,700
7,829
3,257
2,334

$ 42,346
70,53829,34521,029The aggregate annual maturities of bonds after March 31,
2020, are as follows:Year ending March 31,
2021
2022
2023
2024

¥

Millions of yen

Thousands of
U.S. dollars

10,000———$ 90,098———

Property, plant and equipment and securities with a bookvalue as of March 31, 2019 of ¥22,307 million ($200,982
thousand) were mortgaged to secure certain debts.
As is customary in Japan, both short-term and long-termbank loans are under general agreements which provide that
security and guarantees for present and future indebtedness
will be given upon request of the bank, and that the bank shallhave the right, as the obligations become due or in the eventof default, to offset cash deposits against obligations due thebanks.

7. Asset Retirement Obligations

Loans, principally frombanks, maturing ininstallments through 2026
with weighted averageinterest of 1.37% as of March
31, 2018, partially secured by
mortgage of property, plantand equipment and securities—

42,752—

Lease liabilities maturing ininstallments through 2027 asof March 31, 2019

387

—

3,487

Lease liabilities maturing ininstallments through 2025 asof March 31, 2018

—

478

—

Unsecured bonds, due 2021
with interest of 0.572%

10,00010,00090,09855,17353,230497,099

15,511
17,42397
100¥ 39,565 ¥ 35,707

139,751874$ 356,474

Less current installments:
Loans
Lease liabilities

Year ending March 31,
2021
2022
2023
2024

Millions of yen

Note : The weighted average interest rates on lease liabilities
as of March 31, 2019 and 2018 are omitted because
lease liabilities were recorded in the consolidatedbalance sheet based on the total lease payment which
includes assumed interests portion.

(a) Asset retirement obligations recognized on the
consolidated balance sheet
The Company is obliged to restore its natural gas mining
facilities except for mentioned below (b) according to law andland lease contracts. The asset retirement obligations are
based on estimated future cash flows for the restorations.
The obligations are calculated by using the estimated mine
lives of 18 to 76 years and discounted rate of 0.828% to2.385%.
Asbestos are used in part of fixed assets held by theCompany and certain consolidated subsidiaries. The
Company is obliged to conduct a special treatment whenasbestos are removed. The asset retirement obligations are
based on estimated future cash flows for the treatment. The
obligations are calculated by using the estimated useful livesof the fixed assets mainly of 8 years and discounted rate
mainly of 1.035%.
The following table provides a total asset retirement
obligation for the years ended March 31, 2019 and 2018:

The aggregate annual maturities of loans after March 31,
2020, are as follows:

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201916

Notes to Consolidated Financial Statements

Millions of yen
2019
2018

Balance at beginning ofyear
Liabilities incurred due tothe acquisition
Accretion expenses
Liabilities settled
Other
Balance at end of year

Thousands of
U.S. dollars
2019¥ 3,943¥ 3,930$ 35,526

15

17

135

72
(57)
(1,536)¥ 2,43775(80)—¥ 3,943649(514)(13,839)$ 21,957

Note : Decrease in other for the year ended March 31, 2019is due to cancellation of leasehold contracts resulting
from the purchase of land the Company had rent.
(b) Asset retirement obligations not recognized on the
consolidated balance sheet
The Company is obliged to restore its natural gas mining
facilities according to law and land lease contracts, and theCompany plans to use part of the facilities as storage facilities
after mining continuingly. The Company and certain
consolidated subsidiaries are obliged to restore their piers andpipelines according to law and lease contracts, and the piersand pipelines can be used for a substantial long-term withappropriate repair. Asset retirement obligations relating tothese assets are not recognized because it is extremely difficult
to estimate the time of fulfilling the obligations reasonably.

8. Retirement Benefits
MGC has defined retirement benefit plans such as lump-sum
retirement benefit plans and defined benefit corporate pension
plans, besides defined contribution pension plans.
In addition, the Company has also set up retirement
benefit trusts.
Certain consolidated subsidiaries apply the simplified
method in computing net defined benefit liability andretirement benefit expenses for their defined benefit corporate
pension plans and lump-sum retirement benefit plans.
Defined benefit plans(a) Reconciliation between retirement benefit obligations
at beginning of year and end of year (excluding plans
applying the simplified method):
Millions of yen
2019
2018

Retirement benefit obligation¥ 41,246 ¥ 40,775
at beginning of year
Service costs
2,145
2,164
Interest costs
372
370
Actuarial gains and losses
(91)
(121)
arising during year
Retirement benefits paid
(2,013)(1,965)Decrease due to change(258)—
of scope of consolidation
Other
(69)
23
Retirement benefit obligation¥ 41,332 ¥ 41,246
at end of year

17

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

Thousands of
U.S. dollars
2019$ 371,619
19,326
3,352(820)(18,137)(2,325)(622)(b) Reconciliation between plan assets at beginning ofyear and end of year (excluding plans applying thesimplified method):
Millions of yen
2019
2018

Plan assets at beginning of¥ 39,438 ¥ 36,289
year
Expected return on plan496
407
assetsActuarial gains and losses(1,214)
2,497
arising during year
Contribution from employer
1,612
1,577
Retirement benefits paid
(1,388)(1,366)
Other
(35)
33
Plan assets at end of year
¥ 38,909 ¥ 39,438

Thousands of
U.S. dollars
2019$ 355,329
4,469(10,938)
14,524(12,506)(315)$ 350,563(c) Reconciliation between net defined benefit liabilities ofplans applying the simplified method at beginning ofyear and end of year:
Millions of yen
2019
2018

Net defined benefit liability at¥ 1,563
beginning of year
Retirement benefit
269
expenses
Retirement benefits paid
(118)
Contribution to plans
(66)
Other
2
Net defined benefit liability at¥ 1,651
end of year

¥ 1,438

Thousands of
U.S. dollars
2019$ 14,082

257

2,424

(73)
(81)
22

(1,063)(595)
18¥ 1,563$ 14,875(d) Reconciliation between retirement benefit obligations
and plan assets at end of year and net defined benefit
asset and defined benefit liability on the consolidatedbalance sheet:
Millions of yen
2019
2018

Funded retirement benefit
obligation
Plan assets

Thousands of
U.S. dollars
2019¥ 41,230$ 376,007(40,627)(41,015)¥ 1,105 ¥215(366,042)$ 9,956¥ 41,733

Unfunded retirement benefit
obligation
Net balance of liability andasset recorded on the¥
consolidated balance sheet

2,967
4,073

¥

3,155

26,732

3,371$ 36,697

Net defined benefit asset¥ (1,174) ¥ (1,221)
Net defined benefit liability
5,247
4,592
Net balance of liability andasset recorded on the¥ 4,073 ¥ 3,371
consolidated balance sheet$ (10,578)
47,275$ 36,697(e) Retirement benefit expenses and components thereof:
Millions of yen
2019
2018

Service costs¥ 2,145
Interest costs
372
Expected return on plan(496)
assetsAmortization of actuarial(510)
gains and losses
Amortization of past service
(19)
costs
Retirement benefit expenses
applying the simplified
269
method(6)
Other
Retirement benefit expenses¥ 1,754
under defined benefit plans

Thousands of
U.S. dollars
2019¥ 2,164370$ 19,326
3,352

(407)

(4,469)(99)(4,595)

81

(171)

257

2,424

(41)

(54)

¥ 2,324$ 15,803(f ) Components of items recorded in remeasurements ofdefined benefit plans in other comprehensive income,before tax, are as follows:
Millions of yen
2019
2018

Past service costs
Actuarial gains and losses
Total

¥

(19)
(1,887)¥ (1,907)

¥

81
2,367
¥ 2,449

Thousands of
U.S. dollars
2019

$

(171)
(17,002)$ (17,182)(g) Components of items recorded in remeasurements ofdefined benefit plans in accumulated othercomprehensive income, before tax, are as follows:
Millions of yen
2019
2018

Unrecognized past service
(56)
¥
costs
Unrecognized actuarial gains(1,627)and losses
Total¥ (1,684)¥(76)

Thousands of
U.S. dollars
2019

$

(505)

(3,513)(14,659)¥ (3,590)$ (15,173)(h) Plan assets( i ) Components of plan assets
Percentages to total plan assets by major category are as
follows:
Debt securities
Equity securities
Cash
Other
Total

2019

2018

42%
32
9
17
100%

36%
42
3
19
100%

( i i ) Determination of expected long-term rate of return on plan
assets
The expected long-term rate of return on plan assets isdetermined considering current and expected allocation ofplan assets and current and expected long-term rate of return
derived from various components of plan assets.

(i ) Actuarial assumptions
Discount rate
Expected long-term rate of return onplan assets

2019

2018

Mainly0.8%
Mainly2.0%

Mainly0.8%
Mainly2.0%

Defined contribution plans
The required contribution of MGC to the defined contributionplans amounted to ¥513 million ($4,622 thousand) and ¥493
million as of March 31, 2019 and 2018, respectively.
Directors, corporate auditors and executive officers are
not covered by the plans described above. For such
persons, the Company and certain subsidiaries had unfunded
defined benefit pension plans. Under the plans, directors,
corporate auditors and executive officers are entitled to
lump-sum payments based on the current rate of pay andlength of service when they leave the companies. MGC
provides for the amount of the vested benefits to which
directors, corporate auditors and executive officers areentitled if they were to retire or sever immediately at thebalance sheet dates. As of March 31, 2019 and 2018, theliabilities for retirement and severance benefits related to theplans were ¥337 million ($3,036 thousand) and ¥339 million,
respectively.

9. Income Taxes
The Company and its domestic subsidiaries are subject toJapanese corporate, inhabitant and business taxes based on
income which, in the aggregate, result in a statutory tax rateof approximately 30.6% in 2019 and 30.9% in 2018.
A reconciliation of the statutory tax rate and the effective
tax rate as a percentage of profit before income taxes for theyears ended March 31, 2019 and 2018 is as follows:
Statutory tax rate
Equity in earnings of affiliates
Dividend income eliminated inconsolidation
Valuation allowance
Income not credited for tax purposes
Succession of operating loss carryforward associated with liquidation ofsubsidiaries
Foreign taxes
Adjustments of loss on valuation ofshares of subsidiaries and associates
Other
Effective tax rate

2019

2018

30.6%
(12.6)

30.9%
(7.7)

8.5

10.4

(2.5)
(8.4)

(4.7)
(10.6)

—

(0.0)

1.0

0.6

—

(3.9)

(3.4)
13.2%

(4.9)
10.2%

Significant components of deferred tax assets andliabilities as of March 31, 2019 and 2018 are as follows:$ 372,394

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201918

Notes to Consolidated Financial Statements

Deferred tax assets:¥
Tax loss carryforward
Net defined benefit liability
Devaluation loss on investments in securities
Accrued bonuses
Intercompany profits
Depreciation
Impairment loss
Asset retirement obligations
Other
Valuation allowance for tax
loss carryforward
Valuation allowance for the
total amount of deductible
temporary differences
Valuation allowance
Deferred tax liabilities:
Net unrealized gain onother securities
Gain by contributing theassets to the trust
Tax purpose reserves etc.
regulated by Japanese
tax law
Asset retirement cost
Retained earnings ofoverseas consolidated
subsidiaries and others
Other
Net deferred tax liabilities

Millions of yen
2019
2018

Thousands of
U.S. dollars
2019

6,719 ¥
5,998

8,749
6,291

$ 60,537
54,041

3,207

3,273

28,894

1,604
1,823
458
2,301
787
4,125
27,026

1,559
1,520
605
3,165
1,247
4,001
30,413

14,452
16,425
4,126
20,732
7,091
37,166
243,499(6,046)—(54,473)(13,410)—(120,822)(19,457)
7,569(20,401)
10,011(175,304)
68,195(5,656)(7,444)(50,960)(1,356)(1,356)(12,217)(1,917)(1,982)(17,272)

(46)

(330)

(414)

(3,566)(4,898)(32,129)

price of shares is required to be designated as statedcommon stock account although a company in Japan may,by resolution of its Board of Directors, account for an amountnot exceeding 50% of the issue price of new shares asadditional paid-in capital.

11. Retained Earnings and Dividends
The Companies Act provides that an amount equal to 10% of
distributions from retained earnings paid by the Company andits Japanese subsidiaries be appropriated as a legal reserve.
No further appropriations are required when the total amountof the additional paid-in capital and the legal reserve equals
25% of their respective stated capital. The Companies Act
also provides that additional paid-in capital and legal reserve
are available for appropriations by the resolution of thestockholders. Balances of the legal reserve are included inretained earnings in the accompanying consolidated balance
sheet.
Cash dividends charged to retained earnings for the years
ended March 31, 2019 and 2018 represent dividends paidout during those years. The amount available for dividends isbased on the amount recorded in the Company’s
non-consolidated books of account in accordance with theCompanies Act.
(a) Dividends paid during the year ended March 31, 2018
The following was approved by the Board of Directors held on
May 26, 2017.

(2,038)(1,984)(18,362)(14,580)(17,997) (131,363)¥ (7,011) ¥ (7,985) $ (63,168)( i) Total dividends(ii) Cash dividends per common share(iii) Record date(iv) Effective dateNotes:
1. The change in valuation allowance is mainly due to adecrease of valuation allowance for tax loss carryforward.
2. The expiration of tax loss carryforward and the resulting net
deferred tax assets as of March 31, 2019 was as follows:( i) Total dividends(ii) Cash dividends per common share(iii) Record date(iv) Effective date

Under the Companies Act, the entire amount of the issue

Tax loss carryforward*
Valuation allowance
Deferred tax assets

¥

1,332
(983)
348

Due within
one yearTax loss carryforward*
Valuation allowance
Deferred tax assets$

12,001(8,857)3,135

Due after
one year throughtwo years

Millions of yen
Due after
Due after
Due after
two years through three years through four years throughfive years
four years
three years

¥

¥

1,231
(1,228)
2

662
(662)
—

¥

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

¥

512
(512)
—

Thousands of U.S. dollars
Due after
Due after
Due after
two years through three years through four years throughfive years
four years
three years

$

$

5,965
(5,965)—$*Tax loss carryforward was calculated by multiplying the statutory tax rate.

19

825
(815)
10

Due after
one year throughtwo years

11,091(11,064)
18

The following was approved by the Board of Directors held on
May 25, 2018.
¥7,476 million($67,357 thousand)(ii) Cash dividends per common share ¥35 ($0.32)(iii) Record date
March 31, 2018(iv) Effective dateJune 7, 2018

7,433
(7,343)
90

$

4,613
(4,613)—¥5,179 million¥24
September 30, 2017
December 6, 2017

The following was approved by the Board of Directors
held on November 1, 2018.
¥7,477 million($67,366 thousand)(ii) Cash dividends per common share ¥35 ($0.32)(iii) Record date
September 30, 2018(iv) Effective date
December 6, 2018(i) Total dividends(c) Dividends to be paid after the balance sheet date but
the record date for the payment belongs to the year
ended March 31, 2019
The following was approved by the Board of Directors held on
May 24, 2019.
¥7,477 million($67,366 thousand)(ii) Dividend source
Retained earnings(iii) Cash dividends per common share ¥35 ($0.32)(iv) Record date
March 31, 2019(v) Effective dateJune 6, 2019(i) Total dividends

12. Selling, General and Administrative Expenses
Significant components of selling, general and administrative
expenses are as follows:

¥

2,154
(1,843)
311

Total

¥

19,407(16,605)
2,802

Freight
Stevedoring and warehouse
fee
Salaries
Employees’ bonuses
Pension cost
WelfareTransportation
Depreciation

Thousands of
U.S. dollars
2019¥ 21,947¥ 21,047$ 197,739

4,015

4,076

36,174

17,828
5,669
833
3,880
2,969
5,356

17,574
5,599
1,168
3,532
2,828
5,084

160,627
51,077
7,505
34,95826,75048,257

6,719(6,046)
673

Thousands of
U.S. dollars
2019

Millions of yen
2019
2018

Provision for loss on
liquidation of subsidiaries
and affiliates

¥

—

¥ 162

$

—

15. Other Comprehensive Income
The reclassification adjustment and the related income tax
effects allocated to each component of other comprehensive
income for the years ended March 31, 2019 and 2018 are as
follows:

Thousands of
U.S. dollars
2019

Millions of yen
2019
2018

Net unrealized (loss) gain onother securities:
Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amountDeferred (losses) gains onhedges:Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amountForeign currency translation
adjustments:
Arising during the year
Reclassification adjustment
Net-of-tax amountRemeasurements of defined
benefit plans:Arising during the year
Reclassification adjustment
Before tax amountTax expense
Net-of-tax amount
Share of other comprehensive income of affiliates
accounted for by equity
method:Arising during the year
Reclassification adjustment
Net-of-tax amount
Total other comprehensive
income¥ (6,508) ¥782 $(58,636)(1,714)
507
4,568
(932)
(6,000)(54,059)
104
1,787
16,101(827)(37,949)(4,212)

1
0
2
(0)
1

(0)
0
(0)
0
(0)

9
0
18
0
9

(2,232)—(2,232)

2,081
20
2,102

(20,110)—(20,110)(1,120)(787)(1,907)94(1,812)

2,615
(166)
2,449
(244)
2,204

(10,091)(7,091)(17,182)847(16,326)

2,594
—
2,594

(1,775)—(1,775)23,371—
23,371¥ (5,661) ¥1,702$(51,005)

Research and development costs charged to income for theyears ended March 31, 2019 and 2018 are ¥18,607 million($167,646 thousand) and ¥18,987 million, respectively.

14. Loss on Liquidation of Subsidiaries andAffiliates

Due after
five years$

Millions of yen
2019
2018

13. Research and Development Costs

Due after
five years

Components of loss on liquidation of subsidiaries andaffiliates for the years ended March 31, 2019 and 2018 are as
follows:(i) Total dividends

The following was approved by the Board of Directors
held on November 1, 2017.

10. Common Stock

Due within
one year¥4,747 million¥22
March 31, 2017
June 8, 2017(b) Dividends paid during the year ended March 31, 2019

Total

$

60,537(54,473)
6,064

MGC recorded a loss on liquidation of subsidiaries andaffiliates in the amount of none and ¥162 million associatedwith the liquidation of a consolidated subsidiary for the years
ended March 31, 2019 and 2018, respectively.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201920

Notes to Consolidated Financial Statements

16. Per Share Information

Millions of yen
2019
2018

(a) Earnings per share
Earnings per share, and reconciliation of the numbers and theamounts used in the earnings per share computations for theyears ended March 31, 2019 and 2018 are as follows:
Yen

Earnings per share

U.S. dollars
2019

2019

2018

¥ 257.46¥ 281.39

2.32

Thousands of
U.S. dollars
2019

Millions of yen
2019
2018

Profit attributable to owners¥ 55,000of parent
Profit not applicable to—common stockholders
Profit attributable to com¥ 55,000
mon stockholders of parent$¥ 60,531$ 495,540——¥ 60,531$ 495,540

Number of shares
2019
2018

Weighted average number ofshares outstanding on which
earnings per share is
calculated

213,630,153

215,117,047

The diluted earnings per share for the years ended March
31, 2019 and 2018 are not presented because there are no
dilutive potential shares as of March 31, 2019 and 2018.

Net assets per share as of March 31, 2019 and 2018 are as
follows:
Yen
2018

2019

¥ 2,354.25 ¥ 2,187.99

U.S. dollars
2019$ 21.21

17. Leases
Operating lease
Future minimum lease payments required under
non-cancellable operating leases as of March 31, 2019 and2018 are as follows:
Millions of yen
2019
2018

Within one year
Over one year

¥ 1,839
2,273¥ 4,112

¥
¥

1,238
2,846
4,084

Thousands of
U.S. dollars
2019$ 16,569
20,479$ 37,048

18. Balances and Transactions with Related Party
The Company has a 50% equity ownership in Mitsubishi
Engineering-Plastics Corporation as of March 31, 2019 and2018.
Balances with the company as of March 31, 2019 and2018 and related transactions for the years then ended aresummarized as follows:21¥ 10,789¥ 13,089$ 97,207

38,25137,670344,635

The Company has a 50% equity ownership in BRUNEIMETHANOL COMPANY SDN. BHD. as of March 31, 2019and 2018.
As of March 31, 2019 and 2018, the Company has
guaranteed ¥5,629 million ($50,716 thousand) and ¥7,001
million of the company’s loans to financial institutions,
respectively.
The affiliated company of the Company has a 35% and26.25% equity ownership in CARIBBEAN GAS CHEMICAL
LTD. as of March 31, 2019 and 2018, respectively.
As of March 31, 2019 and 2018, the Company has
guaranteed ¥25,991 million ($234,174 thousand) and¥17,682 million of the company’s loans to financial
institutions.
The condensed financial information of all of 16 affiliates(16 in 2018) accounted for by the equity method, including
the significant affiliates, Japan Saudi Arabia Methanol
Company, Inc. and METANOL DE ORIENTE, METOR, S.A.,
are as follows:
Millions of yen
2019
2018

(b) Net assets per share

Net assets per share

Balances:
Trade accounts receivable
Transactions:
Sales

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

Thousands of
U.S. dollars
2019

Total current assets
Total non-current assets

Thousands of
U.S. dollars
2019¥ 260,013 ¥ 205,101 $ 2,342,671
196,780
216,184 1,772,953

Total current liabilities
Total non-current liabilities

123,252
69,524125,081
68,886

1,110,478
626,399

Total net assets

264,016

227,318

2,378,737

Sales
Profit before income taxes
Profit367,395
114,530
72,945361,599
73,56943,652

3,310,163
1,031,895
657,221

19. Commitments and Contingencies
The Company guarantees certain obligations of its associatedcompanies and employees, etc. As of March 31, 2019 and2018, guarantees for affiliates and employees, etc. loans
amounted to ¥35,111 million ($316,344 thousand) and¥25,160 million, respectively.

20. Financial Instruments
Conditions of financial instruments(a) Management policy
MGC raises necessary funds through bank borrowings andissue of bonds in accordance with a funds management plan.
Surplus funds are invested in highly safe financial instruments.
MGC raises funds through bank borrowings for short-term
operating fund. MGC uses derivatives to avoid risks
mentioned below and does not enter into derivatives for
speculative purposes.
(b) Financial instruments and risks
Trade notes and accounts receivable are exposed tocustomer’s credit risk. Maturities of trade notes and accounts
payable are mostly within one year. Part of trade receivables
and payables is denominated in foreign currency and is
exposed to fluctuation risk of foreign exchange rates. MGC
uses foreign exchange contracts to hedge the net position.
Short-term investments and investments in securities aremainly held-to-maturity bonds and equity securities held forbusiness relations and are exposed to market fluctuation risk.
Borrowings, bonds and lease obligations for financeleases are mainly for financing of funds for capital expenditureand operating. Part of the liabilities is with variable interest
rate and thus is exposed to interest rate fluctuation risk. MGC
uses interest rate swaps to hedge the risk.
MGC uses foreign exchange contracts to hedge futurefluctuation of foreign exchange rates of operating receivables
and payables and forecasted transactions denominated inforeign currencies, interest rate swaps and currency swaps tohedge future fluctuation of interest rates and foreign exchange
rates of borrowings.
Hedge accounting is applied for certain derivativetransactions. MGC applies the deferral hedge accounting
method for hedge accounting. MGC has entered into forward
exchange contracts for receivables and payables andforecasted transactions denominated in foreign currencies,
and interest rate swap agreements to manage interest rate
exposures on certain borrowings. Hedges for fluctuation riskof foreign exchange rates that meet certain criteria areaccounted for using the allocation method. If interest rate
swap agreements are used as hedges and meet certain
hedging criteria, the difference in amounts to be paid or
received on the interest rate swap agreements is recognizedover the life of the agreements as an adjustment to interest
expense. MGC employs derivative transactions within actual
demand and does not hold or issue derivative financial
instruments for speculative purposes. The hedge
effectiveness is assessed based on the fluctuation ratio ofhedged items and hedging instruments by comparing the
cumulative market fluctuations or cash flow fluctuations ofhedged items and those of related hedging instruments. The
Company omits to assess hedge effectiveness of interest rate
swaps which qualify for hedge accounting and meet certain
criteria.

(c) Financial instruments risk management( i ) Credit risk
To mitigate and quickly capture the collectability issues, sales
administration divisions regularly monitor major customers’
credit status, and perform due date controls and balance
controls for each customer in accordance with tradereceivables and credit control rules. Held-to-maturity
securities are debt securities readily convertible into cash
which are invested in accordance with investment of surplus
funds rules.
Maximum risk as of March 31, 2019 and 2018 isrepresented by the carrying amount of financial assets
exposed to credit risk.
(ii) Market risk
The finance departments have executed the transactions withmarket risk with the director’s approval in accordance with thefinance rules and the derivatives control rules.
To mitigate the foreign currency fluctuation risk
recognized by currency and month, MGC enters into aforward exchange contract for hedging the cash flow
fluctuation risk associated with operating receivables andpayables and forecasted transactions denominated in foreign
currencies and surplus funds. To mitigate the foreign
currency and interest rate fluctuation risk, MGC enters into aninterest rate swap and a currency swap for hedging the cash
flow fluctuation risk associated with borrowings.
MGC regularly monitors a price and an issuer’s financial
condition, and continuously considers whether MGC holds
the short-term investments or the investments in securities
except for held-to-maturity bond.
(iii) Liquidity risk
To mitigate the liquidity risk, a finance department preparesand updates a funds management plan as necessary, andmaintains an appropriate level of liquidity.
(d) Supplemental explanation regarding fair value offinancial instruments
Fair value of financial instruments is measured based on thequoted market price, if available, or reasonably assessedvalue if a quoted market price is not available. Fair value offinancial instruments for which a quoted market price is notavailable is calculated based on certain assumptions, and thefair value might differ if different assumptions are used. In
addition, the contract amount of the derivative transactions
described below in Fair value of financial instruments does
not represent the market risk of the derivative transactions.
Fair value of financial instruments
Balance sheet amount, fair value, and differences as of March
31, 2019 and 2018 are as follows.
Financial instruments, of which it is extremely difficult tomeasure the fair value, are not included in the table below.
(Please see “<2> Financial instruments of which the fair value
is extremely difficult to measure.”)MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201922

Notes to Consolidated Financial Statements

Millions of yen

March 31, 2019
Assets:(1) Cash(2) Trade notes and accounts receivable(3) Short-term investments and investments insecurities
Total assets
Liabilities:(1) Trade notes and accounts payable(2) Short-term borrowings(3) Accrued expenses(4) Bonds(5) Long-term borrowings
Total liabilities
Derivative transactions (*):
Hedge accounting not applied
Hedge accounting applied
Total derivative transactions

Balance sheet
amount¥91,130155,507

Fair value¥

91,130155,507

Differences¥

Thousands of U.S. dollars
Balance sheet
amountFair value
Differences——$ 821,065
1,401,090$ 821,065
1,401,090(716)

411,677405,226$——

45,692

44,976¥ 292,330¥ 291,614

¥

(716)

$ 2,633,841$ 2,627,390$(6,451)

¥

¥

—
—
—
58
898
956

$ 721,588
529,318
184,638
90,098
239,796$ 1,765,447$ 721,588
529,318
184,638
90,621
247,887$ 1,774,070

$

—
—
—
523
8,091
8,613

—
(4)
(4)

$

$

$

80,08958,74920,493
10,00026,615¥ 195,947

80,08958,74920,493
10,05827,513¥ 196,904

¥

¥

¥

¥

¥

(19)
1
(17)

¥

(19)
(3)
(22)

¥

¥

$

(171)
9
(153)

$

(171)
(27)
(198)

(6,451)

$

$

—
(36)
(36)

Millions of yen

March 31, 2018
Assets:(1) Cash(2) Trade notes and accounts receivable(3) Short-term investments and investments insecurities
Total assets
Liabilities:(1) Trade notes and accounts payable(2) Short-term borrowings(3) Accrued expenses(4) Bonds(5) Long-term borrowings
Total liabilities
Derivative transactions (*):
Hedge accounting not applied
Hedge accounting applied
Total derivative transactions

Balance sheet
amountFair value¥ 101,090
165,606¥ 101,090
165,606

51,96853,638¥ 318,665¥ 320,335¥¥

88,72071,155
16,591
10,07425,965¥ 212,507

¥

¥

¥

¥

¥

¥

(124)
(9)
(134)

Derivative Transactions:
Please see note 21 Derivative Financial Instruments.

Liabilities:
・ Trade notes and accounts payable, Short-term borrowings,
and Accrued expenses<2> Financial instruments of which the fair value is extremely difficult to measure
Millions of yen
2019
2018

Thousands of
U.S. dollars
2019¥ 131,342 ¥ 109,545$ 1,183,368* It is extremely difficult to measure the fair value, and thus
above are not included in “Assets (3) Short-term
investments and investments in securities.”<3> Projected future redemption of monetary claim and securities with maturities as of March 31, 2019

—
—
1,670

88,72071,155
16,591
10,00025,328¥ 211,795

(124)
(0)
(124)

¥

The carrying amount approximates fair value because of theshort maturity of these instruments.
・ Bonds
The fair value of bonds issued by the Company is calculated
by market price.
・ Long-term borrowings
Fair value of long-term borrowings is based on the present
value of future cash flows discounted using the current
borrowing rate for similar debt of a comparable maturity.

Assets:・ Cash and Trade notes and accounts receivable
The carrying amount approximates fair value because of theshort maturity of these instruments.
・ Short-term investments and Investments in securities
The fair value of equity securities is calculated by quoted
market price and the fair value of bond securities is
estimated based on quotes from counterparties. Please see
note 4 Short-term Investments and Investments in
Securities for information by category.

Unlisted equity securities

Differences¥<1> Fair value measurement of financial instruments¥¥

Due within
one year

1,670(1) Cash(2) Trade notes and accounts receivable(3) Short-term investments and investments in securities:
Held-to-maturity securities:
Government bonds
Total

—
—
—
74
636
711

—
(9)
(9)

*Derivative receivables and payables
are on net basis. Items that are net
payables are shown in parenthesis.

¥¥

91,130155,5070
246,637

Due within
one year(1) Cash(2) Trade notes and accounts receivable(3) Short-term investments and investments in securities:
Held-to-maturity securities:
Government bonds
Total

$

821,065
1,401,090

Millions of yen
Due after
Due after
one year throughfive years throughfive years
ten years

¥

—
—

0
0

¥

¥

¥

—
—

—
—

Due after
ten years¥0$ 2,222,155

—
—

0
0

$

$

$

—
—

—
—

—
—

¥

Thousands of U.S. dollars
Due after
Due after
one year throughfive years throughfive years
ten years$——

Due after
ten years

$

—
—

—
—

$

<4> The annual maturities of the bonds and long-term borrowings as of March 31, 2019

Due within
one year

Bonds
Long-term borrowings¥—
15,511

Due within
one year

Bonds
Long-term borrowings

23

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019$—
139,751

Due after
one year throughtwo years¥

10,0004,700

Due after
one year throughtwo years$

90,09842,346

Millions of yen
Due after
Due after
two years throughthree years throughthree years
four years

¥

—
7,829

¥

—
3,257

Thousands of U.S. dollars
Due after
Due after
two years throughthree years throughthree years
four years$—
70,538$—29,345Due after
four years throughfive years

¥

—
2,334

Due after
five years¥

Due after
four years throughfive years$—
21,029—8,493

Due after
five years$—
76,520

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201924

Notes to Consolidated Financial Statements

21. Derivative Financial Instruments
The contract or notional amounts and fair value of derivative
financial instruments held as of March 31, 2019 and 2018 aresummarized as follows:
Derivative financial instruments to which hedge
accounting is not applied are summarized as follows:(a) Forward exchange contracts and currency swap
agreements
Millions of yen
Contract
or notionalamounts

Fair value

March 31, 2019
Forward exchange contracts:
To sell foreign currency:¥ 14,668 ¥U.S. dollar
Euro
2,068
Thai Baht
93
New Taiwan dollar
533
To buy foreign currency:
529
U.S. dollar
986
Canadian dollar
New Taiwan dollar
0Currency swap agreements:
Receive/U.S. dollar,
545
Pay/Japanese Yen
Receive/U.S. dollar,
554
Pay/Thai Baht
¥ 19,981 ¥March 31, 2018
Forward exchange contracts:
To sell foreign currency:¥ 17,305 ¥U.S. dollar
Euro
2,289
New Taiwan dollar
554
To buy foreign currency:
654
U.S. dollar
1,008
Canadian dollar
5
New Taiwan dollar
Currency swap agreements:
Receive/U.S. dollar,
547
Pay/Japanese Yen
Receive/U.S. dollar,
582
Pay/Thai Baht
¥ 22,946 ¥Valuation
gain(loss)(29) ¥
2
(0)
4

(29)
2
(0)
4

(3)
(18)
(0)

(3)
(18)
(0)

Thousands of U.S. dollars
Contract
Valuationor notionalgain
amounts
Fair value(loss)March 31, 2019
Forward exchange contracts:
To sell foreign currency:$ 132,156 $U.S. dollar
Euro
18,632
Thai Baht
838
New Taiwan dollar
4,802
To buy foreign currency:
4,766
U.S. dollar
8,884
Canadian dollar
New Taiwan dollar
0Currency swap agreements:
Receive/U.S. dollar,
4,910
Pay/Japanese Yen
Receive/U.S. dollar,
4,991
Pay/Thai Baht
$ 180,025 $(261) $
18
(0)
36

(261)
18
(0)
36

(27)
(162)
(0)

(27)
(162)
(0)

72

72

8

(7)

(7)

(63)

(63)

(387) $

(387)(43) ¥

(43)

(0) ¥
17
(7)

(0)
17
(7)

3
(40)
(0)

3
(40)
(0)

(18)

(18)

(20)

(20)

(67) ¥(67)

March 31, 2018
Interest rate swap agreements:
Receive/floating and¥ 5,979
pay/fixed

Millions of yen
Contract
or notionalamounts
Fair value

March 31, 2019
Forward exchange contracts:
Accounts
receivable

To sell foreign currency:
U.S. dollar¥

Fair value

¥

24

(57)

¥

¥

24

(57)

To sell foreign currency:
U.S. dollar

216

$

20

0

5

0

1,038
2,583 ¥

1(18)

Forecasted
transactions

To buy foreign currency:
U.S. dollar¥
March 31, 2018
Forward exchange contracts:¥

1,495 ¥

45

7

(0)

23
1,526 ¥

(0)44

Forecasted
transactions

To sell foreign currency:
U.S. dollar

Forecasted
transactions

U.S. dollar¥

Hedgeditems

Thousands of U.S. dollars
Contract
or notionalamounts
Fair value

March 31, 2019
Forward exchange contracts:
To sell foreign currency:

Accounts
receivable

U.S. dollar
To buy foreign currency:

216

To sell foreign currency:*The fair value of interest rate swap agreements is estimatedbased on quotes from counterparties.

To buy foreign currency:$ 13,686 $(180)

Accounts
payable180

Hedged
items

¥

(5)

2,535 ¥

(9)

Thousands of U.S. dollars
Contract
or notionalamounts
Fair value

March 31, 2019
Interest rate swap agreements:
Receive/floating andLong-term$
borrowings
pay/fixed

8,830 $

(45)

The Company and certain consolidated subsidiaries own landand buildings for rent in Tokyo and other areas (hereafter“rental property”).
The amounts recognized in the consolidated balance
sheet and fair values related to the rental property for theyears ended March 31, 2019 and 2018 are as follows:
Millions of yen
2019
2018

Thousands of
U.S. dollars
2019

Consolidated balance sheet
amount:Balance at beginning of¥
the year
Increase/(decrease)
Balance at end of the year ¥11,642 ¥10,828 $ 104,892

3,507
15,150 ¥814
31,597
11,642 $ 136,499

Fair value

18,096 ¥14,410 $ 163,042

¥

0

45
Forecasted
transactions

9,352$ 23,272 $22. Investment and Rental Property0

Forecasted
transactions

U.S. dollar
U.S. dollar

March 31, 2018
Interest rate swap agreements:
Receive/floating andLong-term
borrowings
pay/fixed

980 ¥* The fair value of interest rate swap agreements is estimatedbased on quotes from counterparties.

Accounts
receivable

U.S. dollar$(20)

Millions of yen
Contract
or notionalamounts
Fair value

March 31, 2019
Interest rate swap agreements:
Receive/floating andLong-term¥
borrowings
pay/fixed

Forecasted
transactions

To buy foreign currency:¥

1,519 ¥

Accounts
payableTo buy foreign currency:

U.S. dollar
Valuation
gain(loss)

Thousands of U.S. dollars
Contract
Valuationor notionalgain
amounts
Fair value(loss)March 31, 2019
Interest rate swap agreements:
Receive/floating and$ 41,337
pay/fixed

Hedgeditems

To sell foreign currency:(b) Interest rate swap agreements

March 31, 2019
Interest rate swap agreements:
Receive/floating and¥ 4,588
pay/fixed

Hedgeditems

U.S. dollar

Millions of yen

8(b) Interest rate swap agreements(a) Forward exchange contracts* The fair value of forward exchange contracts and currency
swap agreements is estimated based on quotes fromcounterparties.

Contract
or notionalamounts

Derivative financial instruments to which hedge accounting isapplied are summarized as follows:

9
(162)

*The fair value of forward exchange contracts is estimatedbased on quotes from counterparties.

Notes:
1. Consolidated balance sheet amount is its cost minus
accumulated depreciation and accumulated impairment
loss.
2. Increase for the years ended March 31, 2019 and 2018
were mainly due to new rents executed by the Company of¥3,778 million ($34,039 thousand) and ¥1,093 million,
respectively.
3. Fair value is based on roadside value, etc.
Rent income from the rental property is ¥400 million($3,604 thousand) and ¥334 million for the years ended
March 31, 2019 and 2018, respectively.
Gain on sales from the rental property is none and ¥144
million for the years ended March 31, 2019 and 2018,
respectively.

25

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201926

Notes to Consolidated Financial Statements

23. Subsequent Events(a) Purchase and retirement of treasury stock
At the Board of Directors on May 13, 2019, the Company
resolved to purchase its treasury stock in accordance with
provisions of the Articles of Incorporation of the Company
under the Article 459, Paragraph 1 of the Companies Act andto retire its treasury stock in accordance with provisions of the
Article 178 of the Companies Act.
( i ) Reason for the purchase and retirement of treasury stock
In order to enhance shareholder returns, improve capitalefficiency and execute flexible capital policy that adopt tochanges in business environment.
(ii) Detail of shares to be purchased
1) Type of shares to be purchased
Common stock2) Number of shares to be purchased
Up to 2,700,000 shares
3) Aggregate purchase amountUp to ¥4,000 million ($36,039 thousand)4) Purchase period
From May 14, 2019 to July 29, 20195) Purchase method
Market purchases(iii) Detail of shares to be retired1) Type of shares to be retired
Common stock2) Number of shares to be retired
2,700,000 shares
3) Number of issued shares after the retirement
229,039,199 shares
4) Retirement date
May 27, 2019(b) Changes in scheme of the joint venture business of
the Company’s affiliates accounted for by the equity
methodThe Company’s affiliates accounted for by the equity method,
Japan Saudi Arabia Methanol Company, Inc. (JSMC) and
Saudi Basic Industries Corp. (SABIC), reached an agreement
regarding the Saudi Methanol Company (AR-RAZI), whose
joint venture agreement was set to expire. Based on thisagreement, JSMC will sell 50% of its shares in AR-RAZI (25%of all AR-RAZI shares) to SABIC for US$150 million to makethe shareholding ratio to 25:75. In addition, JSMC and SABIC
concluded an agreement to extend the term of the newscheme joint venture including the following conditions by 20
years.
( i ) Payment of consideration for the extension of the term of
the joint venture ($1,350 million) by JSMC to SABIC.
(ii) With an eye to promoting energy conservation, theCompany will discuss undertaking the commercialization of
new methanol technology with SABIC while considering
utilizing such technology to renew its AR-RAZI methanol
plants.
Decreasing in JSMC’s equity ownership in AR-RAZI, andthe amount equivalent to amortization cost on consideration

27

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

for the extension of the term of the joint venture will bereflected ton equity in earnings of affiliates in the consolidated
financial statements from the year ending March 31, 2020. In
addition, equity in earnings of affiliates will decrease by ¥6.7
billion due to a loss on sales of these shares.
1. Reason of the agreement
Having performed a comprehensive examination of theagreed new scheme joint venture’s economic rationality,
including profitability, the various risk factors it faces andother considerations, it was determined to continue theagreed new scheme joint venture business for 20 years,
and the Company agreed on this determination as ashareholder.
2. Name of contract parties
Japan Saudi Arabia Methanol Company, Inc. (TheCompany’s affiliate accounted for by the equity method)
Saudi Basic Industries Corp.
3. Date of this agreement
June 24, 2019
4. Outline of joint venture subjected to agreement
Name: Saudi Methanol Company
Business activities: Manufacturing and sales of Methanol

Japan (See note 25). Intersegment revenue and transfer are
based on arm’s-length transactions.
(Changes in the calculation method of profit or loss inreportable segments)
The Company reviewed the methods to adjust
intersegment transactions and allocate company-wide
expenses in order to evaluate and manage each reportablesegment’s performance more appropriately. From the year
ended March 31, 2019, the method to calculate profit or lossof business segments has been changed. Segment
information in the year ended March 31, 2018 has been
prepared by using the revised calculation method.
(Changes due to application of “Partial Amendments to
Accounting Standard for Tax Effect Accounting”)
As described in 1. Summary of Significant Accounting
Policies, the Company has applied the “Partial Amendments
to Accounting Standard for Tax Effect Accounting”(ASBJ
Statement No. 28, February 16, 2018) effective from the
beginning of the year ended March 31, 2019. Accordingly,
segments assets as of March 31, 2018 are those after
retrospective application of this standard.

24. Segment Information
The Company introduced company-based organization forclarifying management’s responsibility in operation and for
managing efficiently. Each company develops a businessstrategy for their products and services and conducts
business.
The reported segments of the Company are the business
units for which the Company is able to obtain respective
financial information separately in order for the Board of
Directors to conduct periodic investigation to determine
distribution of management resources and evaluate theirbusiness results. “Natural gas chemicals business,”“Aromatic chemicals business,” “Specialty chemicals
business” and “Information and advanced materials business”
are the Company’s reported segments.
Natural gas chemicals business mainly produces andsells methanol, ammonia, amines, methacrylates, polyols,
functional food materials and crude oil.
Aromatic chemicals business mainly produces and sells
meta-xylenediamine, MX-Nylon, meta-xylene, purified
isophthalic acid and foaming plastics.
Specialty chemicals business mainly produces and sells
inorganic chemicals and engineering plastics.
Information and advanced materials business mainly
produces and sells printed circuit board materials and oxygen
absorber (AGELESS®).
Segment sales, profit, assets, liabilities and others arecalculated by accounting methods similar to those employed
to prepare the accompanying consolidated financial
statements. Segment profit are calculated based on“Keijo-rieki” disclosed in the consolidated statement ofincome under accounting principles generally accepted in

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201928

Notes to Consolidated Financial Statements

The reported segment information for the Company and its consolidated subsidiaries for the years ended
March 31, 2019 and 2018 is summarized as follows:

Natural gas
chemicals

Sales:
Sales to third parties
Inter-segment sales¥

180,554
7,770
188,325
22,665204,278¥¥¥

Segment profit
Segment assets
Others:¥Depreciation and amortization
Amortization of goodwill
Interest income
Interest expenses
Equity in earnings (losses) of affiliates
Investments in affiliates accounted forby the equity method
Capital expenditures

Aromatic
chemicals

¥
¥
¥
¥

¥

Sales:
Sales to third parties
Inter-segment sales

29

¥
¥
¥

51,986 ¥951,996 ¥4,480 ¥
72,484 ¥

686 ¥
127
814 ¥
480 ¥
30,606 ¥— ¥(9,601)(9,601) ¥(594) ¥
46,326 ¥648,986—
648,986
69,199804,038

8,710 ¥
—
265
633
7,875

3,616 ¥
—
38
109
783

19 ¥
—
0
7
340

858 ¥
—
36
(582)
—

27,451
260
642
1,018
28,408464

22,23010,5204,178

800

112,417

5,792

14,63014,406

2,303

0

2,146

39,279

Aromatic
chemicals¥¥¥¥

212,050
1,102
213,152
24,570214,587

Specialty
chemicals¥¥¥¥

8,527 ¥
241
190
644
(121)

203,561
1,534
205,096
37,988232,967

Millions of yen
2018
Information
and advanced
materials

¥

Other

Adjustments

Consolidated¥¥¥

52,735 ¥39
52,774 ¥5,566 ¥
76,921 ¥

526 ¥
79
606 ¥
261 ¥
31,174 ¥— ¥(10,454)(10,454) ¥(1,952) ¥47,075 ¥635,909—
635,90980,711
785,687

9,170 ¥
0
212
650
7,930

3,595 ¥
—
27
107
899

19 ¥
129
0
7
177

568 ¥
—
(17)
(429)
—

27,027
370
485
1,069
18,277457

22,344

10,318

3,548

(88)

93,496

6,076

11,301

11,004

1,937

0

640

30,959

Aromatic
chemicals$ 1,626,759
70,006$ 1,696,774$ 204,208$ 1,840,508$ 1,902,180
5,343$ 1,907,532$ 125,786$ 1,908,235

49,662 $—730
685
174,809

Thousands of U.S. dollars
2019
Information
Specialty
and advanced
chemicals
materials
Other$ 1,843,716
9,902$ 1,853,626$ 254,131$ 2,149,257

78,692 $
2,343
1,964
6,956
63

$

1. Other includes listed affiliates and real estate business
which are not included in reported segments.
2. Adjustments in the above tables are made for thefollowings:

1. Information by products and services
Disclosures are omitted because the classification of
products and services are same as the classification of thereported segments.

(1) Adjustments in segment profit
Thousands of
U.S. dollars
2019

Millions of yen
2019
2018

Elimination of intersegment transactions
Unallocated companywide expenses

¥

¥

95 ¥

99 $
(2,052)(6,208)(594) ¥

(1,952) $(5,352)* Company-wide expenses are administrative expenses,
financial income and expenses and other income andexpenses which are not allocated to reported segments.
(2) Adjustments in segment assets

Adjustments$$$

468,385 $81
468,475 $
40,364 $653,068 $6,181 $
1,144
7,334 $
4,325 $
275,755 $

78,476 $
—
2,388
5,703
70,95232,580 $
—
342
982
7,055

171 $
—
0
63
3,063

Consolidated— $ 5,847,247(86,503)—(86,503) $ 5,847,247(5,352) $ 623,471
417,389 $ 7,244,238
7,730 $—
324
(5,244)—

247,329
2,343
5,784
9,172
255,951

668,727

4,181

200,288

94,78337,6437,208

1,012,857

52,185

131,814

129,795

20,750019,335353,897

Elimination of intersegment balances
Unallocated companywide assets

2. Geographical information(1) Sales
Millions of yen
2019
2018

856

(689)

Millions of yen
2019
2018

56,916Natural gas
chemicals

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019¥

Related information

Consolidated

74,222

5,145 ¥
—
70
89
9,391

Segment profit
Segment assets
Others:$Depreciation and amortization
Amortization of goodwill
Interest income
Interest expenses
Equity in earnings (losses) of affiliates
Investments in affiliates accounted forby the equity method
Capital expenditures¥¥¥

204,634
1,099
205,734
28,206
238,546

Adjustments

8,734 ¥
260
218
772
7

167,035
7,697
174,733
14,277
182,960¥
Segment profit¥
Segment assets¥
Others:¥Depreciation and amortization
Amortization of goodwill
Interest income
Interest expenses
Equity in earnings (losses) of affiliates
Investments in affiliates accounted forby the equity method
Capital expenditures

¥

Other

5,512 ¥—
8176
19,402Natural gas
chemicals

Sales:
Sales to third parties
Inter-segment sales

211,123593
211,717
13,961
211,795

Specialty
chemicalsMillions of yen
2019
Information
and advanced
materials

Notes:

Thousands of
U.S. dollars
2019

Japan
Asia:
China
Other
U.S.A.
Other
Total

¥

298,538¥

79,518
171,965
51,08647,876
648,986¥

282,671 $ 2,689,774¥

95,707
716,443
149,533
1,549,374
51,367460,276
56,630431,354
635,909 $ 5,847,247

Note: Geographical sales are classified by customer’s
location.
(2) Property, plant and equipment¥ (39,154) ¥ (43,009) $ (352,771)¥

85,48090,084

46,326 ¥47,075 $ 417,389

Millions of yen
2019
2018

770,159*Company-wide assets are cash, investments in securities,
and deferred taxes assets which are not allocated toreported segments.
(3) “Adjustments in depreciation and amortization” of ¥858
million ($7,730 thousand) and ¥568 million are
depreciation and amortization of company-wide assets
which are not allocated to reported segments for theyears ended March 31, 2019 and 2018, respectively.
(4) “Adjustments in interest income” of ¥36 million ($324
thousand) and ¥(17) million are mainly elimination ofintersegment transactions for the years ended March 31,
2019 and 2018, respectively.
(5) “Adjustments in interest expenses” of ¥(582) million ($(5,244) thousand) and ¥(429) million are mainly
elimination of intersegment transactions for the years
ended March 31, 2019 and 2018, respectively.
(6) “Adjustments in investments in affiliates accounted forby the equity method” of ¥800 million ($7,208 thousand)and ¥(88) million are mainly investments which are notallocated to reported segments for the years ended
March 31, 2019 and 2018, respectively.
(7) “Adjustments in capital expenditures” of ¥2,146 million($19,335 thousand) and ¥640 million are related tocompany-wide assets which are not allocated toreported segments for the years ended March 31, 2019and 2018, respectively.
3. Segment profit is adjusted with “Keijo-rieki” disclosed in the
consolidated statement of income under accounting
principles generally accepted in Japan (See note 25).

Thousands of
U.S. dollars
2019

Japan
Asia
U.S.A.
Other
Total

¥

¥

167,089
35,08622,9303,385
228,492¥¥

Thousands of
U.S. dollars
2019

162,150 $ 1,505,442
36,732
316,119
18,206
206,595
3,628
30,498220,717 $ 2,058,672

Note: Property, plant and equipment located in the U.S.A has
been separately presented from the year ended March
31, 2019 since the amount has exceeded 10% of
property, plant and equipment in the consolidatedbalance sheet. Figures as of March 31, 2018 havebeen reclassified to conform to the presentation used
for the year ended March 31, 2019.
3. Information by major customers
Disclosures are omitted because no particular customer
whose sales are over 10% of sales in the consolidated
statement of income exists.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201930

Notes to Consolidated Financial Statements

Independent Auditor’s Report

Information of impairment loss on fixed assets by reported segments
There was no impairment loss on fixed assets for the year ended March 31, 2019.

Natural gas
chemicals

Impairment loss¥—

Aromatic
chemicals¥— ¥Millions of yen
2018
Information
and advanced
materials

Specialty
chemicals

11

¥

—

Other

¥

Adjustments

—

¥

—

¥

—

¥

—

$

—

Consolidated¥

11

Information of balance of goodwill by reported segments

Natural gas
chemicals

Goodwill¥—

Aromatic
chemicals¥

Natural gas
chemicals

Goodwill¥—

Aromatic
chemicals¥

Natural gas
chemicals

Goodwill$—

3,841 ¥

3,911 ¥

Aromatic
chemicals$

34,607 $Millions of yen
2019
Information
and advanced
materials

Specialty
chemicals

—

¥

—

Other

¥

Millions of yen
2018
Information
and advanced
materials

Specialty
chemicals

0¥—

Adjustments

Other

¥

Adjustments

Thousands of U.S. dollars
2019
Information
Specialty
and advanced
chemicals
materials
Other

—

$

—

$

—

—

Adjustments—

Consolidated

¥

3,841

Consolidated

¥

3,911

Consolidated$

34,607

Information of negative goodwill incurred by reported segments
No negative goodwill was incurred for the years ended March 31, 2019 and 2018.

25. The Statement of Income Disclosure under Accounting Principles Generally Accepted in Japan
Under accounting principles generally accepted in Japan, an
ordinary income, “Keijo-rieki” should be disclosed in thestatement of income. The ordinary income is an income figure
with certain adjustments made to profit before income taxes.
Followings are the summary information of the statementof income under accounting principles generally accepted inJapan.

31

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2019

Millions of yen
2019
2018

Sales
Gross profit
Operating income
Ordinary income
Profit before income
taxes
Profit¥Thousands of
U.S. dollars
2019648,986 ¥
136,129
41,386
69,199635,909 $ 5,847,247
154,583
1,226,498
62,741
372,880
80,711
623,471

69,06673,421

622,272

59,97965,933

540,400

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201932

Shareholder Information
Information for Shareholders (As of March 31, 2019)
Composition of shareholders

ListingFirst Section of the Tokyo Stock Exchange
Ticker symbol
4182
Total number of authorized shares
492,428,000
Number of outstanding shares
231,739,199
Stock transaction units
100 - shares
Number of shareholders
23,235

Individuals and others

15.9％

Financial institutions

39.5％

Foreign investors

30.2％
Securities companies

4.2％
Other companies in Japan

10.2％

Major shareholders
Number of shares held
(thousands)

Percentage of total
outstanding shares

The Master Trust Bank of Japan, Ltd. (Trust Account)

12,6395.9%Japan Trustee Services Bank, Ltd. (Trust Account)

11,793

5.5%

Meiji Yasuda Life Insurance Company

8,797

4.1%

Nippon Life Insurance Company

8,795

4.1%

The Norinchukin Bank

5,026

2.4%

AGC Inc.

4,835

2.3%

SSBTC CLIENT OMNIBUS ACCOUNT

4,577

2.1%

Japan Trustee Services Bank, Ltd. (Trust Account 5)

3,950

1.8%

JPMorgan Securities Japan Co., Ltd.

3,380

1.6%

The Bank of Yokohama,Ltd.

3,085

1.4%

Name of shareholder

1. MGC holds 18,099 thousand shares of treasury stock, which is not included in the above list of major shareholders.
2. Percentage to Total Shares Outstanding does not include treasury stock.

Monthly stock price range and trading volume■■Trading volum(yen)(Thousand of stocks)

4,000

40,0003,000

30,0002,000

20,0001,000

10,000Stock price range (based on closing price at end of month)00

2016.42017.42018.4

Dividend per share■Interim ■Fiscal year-end
(yen)
60

59
35

40
20
0

33

32
16

38
22

70
35

35
24

16

16

2016.32017.32018.3

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20192019.3

Notes: With and effective date of October 1, 2016, MGC conducted a reverse stock split
for MGC’s ordinary shares on a 2:1 basis. As a result, the share price, market
trading volume and dividend per share in the graph are calculated assuming thatthe reverse stock split had been conducted at the beginning of April, 2015.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 201934