Corporate Report 2020

Financial Section
Consolidated Financial Summary

1Management’s Discussion and Analysis

3

Consolidated Balance Sheet

9

Consolidated Statement of Income

11

Consolidated Statement of Comprehensive Income 11
Consolidated Statement of Changes in Net Assets

12

Consolidated Statement of Cash Flows13

Notes to Consolidated Financial Statements

14

Independent Auditor’s Report34

Shareholder Information

36

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

2010

2011

2012

2013

2014

2015

2016

2017

2018

2020

2019

2020
（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¥384,528
4,090
7,365
5,827
8,794

451,033
23,36336,394
18,95017,873467,979
11,421
27,651(7,793)19,045452,217
9,083
26,116
12,327
20,532534,443
11,48830,804
14,921
20,466

593,502
34,01845,432
34,134
16,683

529,570
14,99642,00043,34627,895635,90962,74180,71160,531
18,277556,480
43,76262,43048,013
21,125613,344
34,26031,11621,158(1,282)648,986
41,386
69,19955,00028,408$ 5,635,799
314,803285,914
194,413(11,780)（Thousands of U.S. dollars) *2

Financial position (Millions of yen)

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

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

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

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

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

287,642
657,838
178,897
323,858
204,489

341,237
739,582
214,676
423,135
181,427

372,166
790,784
225,068
422,851
215,614384,249785,687
206,835
519,144
106,964

326,674
738,188
188,426
473,370
118,713358,669
771,733
163,574
548,141
74,713378,845804,038
188,420553,282
95,751$ 3,295,681
7,091,179
1,503,023
5,036,672
686,511（Thousands of U.S. dollars) *2

Cash flows (Millions of yen)

39,773(24,626)(1,849)46,768¥ 31,326(33,662)(15,354)
36,048Operating activity cash flow
Investing activity cash flow
Financing activity cash flow
Total cash and cash equivalents at end of year

31,169(30,818)(14,356)
26,90737,348(37,274)(9,876)35,701

27,182(29,883)
7,124
37,31084,671(31,922)(47,335)
75,82876,982(23,531)(25,005)
72,67890,720(33,614)(33,038)
90,30482,711(31,119)(60,217)67,177

74,234(33,922)(49,563)
70,04364,042(42,761)(31,396)
80,379$ 682,110(311,697)(455,417)
643,600

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

1¥ 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

100.502,368.11

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

5.6
4.3
3.9
63.8

$

（U.S. dollars) *2

0.92
21.76

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

5.6
4.3
3.9
63.8
（Thousands of U.S. dollars) *2

Others (Millions of yen)

35,40028,95016,3804,979¥ 27,567
29,535
16,1984,920

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

25,40923,52816,122
5,445

30,98223,096
15,332
5,323

42,423
27,763
17,4495,216

30,512
26,70518,936
8,176

22,226
23,77016,8738,254

30,95927,027
18,987
8,009

35,01025,631
19,267
8,034

42,38929,591
19,696
8,954

39,27927,451
18,6078,276$ 389,497
271,901
180,980
8,954*1 With an 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 FY2009.
*2 U.S. dollar amounts are translated from yen, for convenience only, at the approximate rate of ¥108.83= US$1 prevailing on March 31, 2020.

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

Net sales■(millions of yen)
100,000(millions of yen)
700,000

80,00060,000

0

2018

2019

2020

(millions of yen)
250,000

60,00050,00040,00025,00020,0000

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

0

2016

2017

2018

2019

2020

Interest-bearing debt / Net debt to equity ratio■

75,000100,000

2017■■Interest-bearing debt

(millions of yen)
100,000(millions of yen)
100,000
80,000200,0002016■Formerly Natural Gas Chemicals ■Formerly Aromatic Chemicals ■Formerly Specialty Chemicals■Formerly Information & Advanced Materials ■Others■■Operating activity cash flow■■Investing activity cash flow
Free cash flow

500,000

300,000

20,000Cash flows

600,000

400,000

40,000Ordinary income by business segment

2016

2017

2018

2019

2020

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

2016

2017

2018

2019

2020

0

This graph shows 2019 business segments (before organizational reform).

1

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20202

Management’s Discussion and Analysis
1. Results of Operations
1) Net Sales & Operating Income(1) In fiscal 2019, MGC Group posted consolidated net
sales of ¥613,344 million, a year-on-year decrease of
5.5%, and consolidated operating income of ¥34,260
million, a year-on-year decrease of 17.2%.
(2) Group operating income also fell year on year, despite
an increase in the sales volume of optical resin polymer
and that of BT materials for semiconductor packaging,
due to drops in market prices for such products aspolycarbonates, purified isophthalic acid and methanol.
2) Non-Operating Revenue
The Group posted non-operating revenue of ¥19,162
million, a year-on-year decrease of 48.4%. This was primarily
due to the decrease in equity in earnings of affiliates.
Non-operating expenses were ¥19,079 million, a
year-on-year increase of 101.1%. This was primarily due tothe increase in Loss on tax purpose reduction entry of
non-current assets.
As a result, net income attributable to owners of theparent was ¥21,158 million, a year-on-year decrease of
61.5%.
3) Dividend
The year-end dividend payout for FY2019 was ¥35 pershare. Since the interim dividend payout was ¥35, theannual dividend for FY2019 is ¥70 per share.

2. Segment Information
1) Natural Gas Chemicals(1) Net sales in the natural gas chemicals segment were¥157,158 million, a year-on-year decrease of 13.0%,
and segment loss was ¥5,711 million.
(2) The methanol business saw decreases in both net sales
and earnings due to a decrease in market prices
compared with the previous year.
Methanol and ammonia-based chemicals posted adecrease in earnings compared with the previous fiscal
year due to lower market prices of MMA and neopentyl
glycol.
Despite higher crude oil sales volume, results for
crude oil and other energy sources remained virtuallyunchanged from the previous fiscal year, reflecting suchfactors as plunges in crude oil prices.
2) Aromatics Chemicals(1) Net sales in the aromatics chemicals segment were¥200,174 million, a year-on-year decrease of 5.2%, andsegment income was ¥10,470 million, a year-on-year
decrease of 25.0%.

3

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

(2) Specialty aromatic chemical products posted adecrease in earnings from the previous fiscal year as
demand for meta-xylenediamine became weaker in the
fourth quarter, despite growing sales volume ofaromatic aldehydes.
General-purpose aromatic chemical products
suffered decreases in net sales and earnings comparedwith the previous fiscal year. Negative factors included
lower sales prices of purified isophthalic acid andmeta-xylene.
Foamed plastics suffered a year-on-year decline inearnings, primarily due to weak demand and a rise in
fixed costs associated with the construction of
production systems to meet new demand.
3) Specialty Chemicals(1) Net sales in the specialty chemicals segment were¥200,396 million, a year-on-year decrease of 2.1%, andsegment income was ¥22,329 million, a year-on-year
decrease of 20.8%.
(2) Inorganic chemicals posted lower earnings comparedwith the previous year, despite growth in the sales
volume of chemicals for use in semiconductor
manufacturing. This was primarily due to higher fixed
costs in connection with the launch of a new production
facility for super-pure hydrogen peroxide in North
America, deterioration in the profitability of hydrogen
peroxide and a decline in the sales volume of chemicals
for use in liquid crystal display production.
Earnings from the engineering plastics businessstayed virtually unchanged from the previous fiscal year.
While market prices for polycarbonates declined
significantly from the previous year, optical polymer
sales volumes increased due to the growing use ofmultiple camera lenses in smartphones and theexecution of measures to enhance production capacity.
4) Information & Advanced Materials(1) Net sales in the information & advanced materials
segment were ¥54,716 million, a year-on-year increaseof 5.3%, and segment income was ¥5,846 million, a
year-on-year increase of 30.5%.
(2) Electronic materials saw increases in net sales andearnings. This was mainly attributable to overall
recovery of demand in contrast with stagnation in thelatter half of the previous fiscal year, the performanceof products used in smartphones and memory devices
that have been supported by growth in demand fromthe third quarter onward, and higher sales volumes of
BT materials for semiconductor packaging, the coreproduct category for electronic materials.
Oxygen absorbers such as AGELESSTM posted adecrease in earnings compared with the previous year.
This was due mainly to a downturn in showings ofthose sold in Japan for use in confectionary packages,
reflecting the impact of natural disasters and the novel
coronavirus pandemic.
5) Other
Net sales in the other business segment were ¥898 million,a year-on-year increase of 30.8%, and segment income
was ¥8 million, a year-on-year decrease of 98.1%.

3. Financial Position(1) As of March 31, 2020, total consolidated assets were¥771.7 billion, ¥32.3 billion lower than at the end of theprevious fiscal year.
(2) Current assets decreased by ¥20.1 billion to ¥358.6
billion. The main causes were decreases in cash anddeposits and trade notes and accounts receivable.
(3) Noncurrent assets decreased by ¥12.1 billion to ¥413.0
billion primarily due to a decrease in investment securities.
(4) Total liabilities decreased by ¥27.1billion to ¥223.5
billion. Current liabilities decreased by ¥24.8 billion
primarily due to decreases in short-term loans payable.
Noncurrent liabilities decreased by ¥2.3 billion primarily
as a result of decreases in bonds payable.
(5) Net assets decreased by ¥5.1 billion to ¥548.1 billion.
This was attributable primarily to a decrease in valuationdifference on available-for-sale securities.
(6) As a result, as of March 31, 2020, the shareholders’equity ratio was 63.8%, compared to 62.6% on March
31, 2019. Net assets per share at the end of the fiscal
year were ¥2,368.11, compared to ¥2,354.25 at theend of the previous fiscal year.

4. Cash Flow
As of March 31, 2020, total cash and cash equivalents
were ¥70.0 billion, ¥10.3 billion lower than at the end of theprevious fiscal year.
1) Operating Activity Cash Flow
Net cash provided by operating activities increased by¥10.1 billion from the previous year to ¥74.2 billion. Thiswas primarily due to progress in the collection of accounts
receivable.
2) Investing Activity Cash Flow
Net cash outflow from investing activities was ¥33.9 billion,a decrease of ¥8.8 billion from the previous year. This wasprimarily due to increases in proceeds from sale ofinvestments in securities.

3) Financing Activity Cash Flow
Net cash outflow from financing activity was ¥49.5 billion,
an increase of ¥18.1 billion from the previous year. This wasprimarily due to increases in purchase of treasury stock.

5. Capital Expenditure
MGC Group (including MGC and consolidated subsidiaries)
capital expenditures for the consolidated fiscal year were¥42,389million.
By segment, capital expenditure of ¥7,294 million,¥15,022 million, ¥14,677 million, ¥2,635 million, and ¥2,760
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 2019 was the second year of MGC Advance2020,
the new medium-term management plan positioned torealize the goals of “Vision 2021.” During the past year,
pursuing the guidepost of “Creating value to share withsociety,” research and development initiatives werevigorously advanced with the purpose of “Strengthening theearning power of existing businesses with a focus on thecore businesses” and “Creating and developing new
businesses.” Under a stance geared to manifest maximum
synergy between the various Company R&D departments,
the Advanced 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,
venture business cooperation and investment, joint
research with public research institutions and other researchand development endeavors channeled throughcollaboration outside the company to carry on initiatives innew business domains. Energetic steps were also taken to
promote commercialization of in-house developed medical
packaging materials, complex hydride solid electrolyte andother products, and we will work toward commercializationof allergy diagnostic agents and other products throughopen innovation. Shipment of factory-grown produce beganin Shirakawa City, Fukushima Prefecture, providing safe andreassuring produce to the public.
There are a total of 917 MGC Group research anddevelopment personnel, including those in affiliate researchand development divisions, making up around 10% of thetotal workforce. Expenditures on research totaled ¥19,696

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20204

Management’s Discussion and Analysis

million.
Research and development costs by segment were as
follows:
Natural Gas Chemicals Company: ¥3,621 million
Aromatic Chemicals Company:¥5,617 million
Specialty Chemicals Company:¥5,850 million
Information and Advanced Materials Company:¥4,606 million

7. Business Risks
MGC Group perceives “risk” as potential events or hazards
whose occurrence could cause harm to people andproperty, result in loss of opportunities, harm our reputation,and so on, ultimately leading to economic losses for thecompany, and we have established systems to manage risk
during normal and emergency times. Specifically, weestablished the Basic Rules on Internal Control & Risk
Management, formulated policies in risk management andresponses, and established the Internal Control & Risk
Management Committee as a decision-making body under
the direct authority of the president and chaired by theofficer responsible for internal control and risk management.
The committee makes decisions on policies,
implementation, and planning relating to risk management
systems and so on and risk management in business andoperations as well as guidance, instruction, and supervisionof related matters, and the formulation of business
continuity plans. The committee also reports periodically on
the status of risk management to the Board of Directors.
The main risks believed to present a possibility ofaffecting the Group’s business performance, share price, or
financial status are listed below. These are all risks determinedby the Group to be liable to occur, although degree andtiming of occurrence and the specific impacts and so on are
difficult to estimate as of the date of submission thissecurities report (June 25, 2020) (however, the stated risks
are not necessarily exhaustive of all possible risks).
Immediate concerns include impacts from the COVID-19
novel coronavirus. The major part of the Group’s business is
not directly affected by the spread of COVID-19 or themeasures to prevent its spread, but our products are usedby a wide range of customers as raw materials, material
products, and pharmaceuticals, and there are concernsthat the economic stagnation in Japan and overseas
caused by COVID-19 will have an adverse impact on theGroup’s operating results and financial condition.
Moreover, it is possible that the status of the spread of
COVID-19 will have an impact on procurement of raw
materials and the manufacture and distribution of products.
As discussed below, depending on the raw materials or
product, the Group procures goods from multiple suppliers
and performs manufacturing and other processing at multiple

5

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

sites including overseas sites, but the effects of COVID-19
are global, and there are concerns regarding an adverse
impact on the Group’s results and financial status according
to the circumstances regarding the spread of COVID-19.
MGC established a Crisis Response Headquarters toaddress COVID-19 at an early stage, recommended
working from home and took measures to maintainemployee motivation while placing the highest priority on
ensuring the safety of stakeholders including employees,
their families, and customers. MGC was able to maintainproduction and distribution and continued business in orderto fulfill our supply responsibilities.
In any case, it is not possible as of the day ofsubmission of this securities report to forecast the timing
when COVID-19 will be controlled or the extent of its
impact, and if it becomes necessary to revise our forecastsof results, we will promptly make an announcement.

suddenly, there could be an adverse impact on the Group’s
operating results and financial condition.

1) Risks Relating to Business Characteristics

Details of Risks
MGC Group engages in capital investment and invests in R&D
to achieve business growth and bolster competitivenessand focuses its efforts on reinforcing existing business andcreating new business closely aligned with future market
needs. Moreover, the Group undertake business investment
in Japan and overseas such as establishing new companies
including joint ventures and making equity investments aswell as acquiring existing companies, with these activities tobe continued going forward.
When these investments fail to yield earnings
commensurate with the amounts involved, losses are
incurred from revaluation of securities held, or othersetbacks occur, losses including impairment of fixed assets,
losses from securities revaluation, and equity method losses
may occur, which could have adverse effects on theGroup’s operating results and financial condition.

Details of Risks
MGC Group’s primary business is manufacturing, and manyof the Group’s products are raw materials, material products,
or pharmaceuticals used in customers’ business, andtherefore, our business is susceptible to impact from theeconomic conditions in the countries and regions where
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 and selling prices during
times of economic downturn, which adversely affects MGC
Group’s operating results and financial condition.
Competition among specialty products andhigh-value-added products is mainly on the basis ofcategories including price, quality, function, delivery time,and customer service, and a rise in the level of competitionin these areas due to the emergence of products withalterative functions or other reasons could have an adverse
impact on MGC Group’s operating results and financial
condition. For example, electronic material products, forwhich the electronics industry is the primary customer
segment, typically have a short product life and are
constantly exposed to competition in technologicalinnovation. Therefore, sales could decline if existingproducts become obsolete or if new product development
is delayed. In addition, some Group products are sold only
to specific customers, and the suspension of use of those
products by a customer could result in a decline in sales.
MGC Group purchases raw materials including mixed
xylene and electric power from outside suppliers. It is
possible that the inability to procure necessary raw
materials and so on could impede the Group’s
manufacturing activities. Also, if prices were to increase

Main Actions
MGC Group conducts basic and applied research todevelop new products and manufacturing processes and to
improve and enhance existing products and manufacturing
processes and works to develop new markets andbusiness fields. R&D and other divisions engage in close
exchanges in information with customers and take risk
mitigation measures such as entering into long-term supply
agreements. When purchasing raw materials and othercommodities, the Group enters into procurement andlong-term purchase agreements with multiple suppliers to
mitigate risks.

2) Risks Relating to Business and Other Investment

Main Actions
MGC Group established and operates an internal screening
system for investments. Depending on the content of thescreening, the Group also checks business conditions andother factors as necessary and makes efforts so that related
divisions adopt countermeasures.

3) Risks Relating to Natural Disaster and Accidents
Details of Risks
MGC Group has multiple manufacturing bases in Japanand other countries. 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, spread of
infectious diseases, problems with facilities, human error,

and other unforeseen circumstances, which may result insuspension of production activities. MGC Group routinely
handles hazardous chemical substances, and the possibilityof explosions, fires, toxic gas leaks or other accidents,
damage to production facilities or harm to employees,
damage to areas surrounding production facilities or harm
to customers, environmental pollution, and other damage
cannot be entirely excluded. Many of MGC Group’s
manufacturing bases have multiple production facilities thatshare electricity, water supply, steam, and other utilities.
Consequently, if such facilities are shut down, theproduction activities of an entire base could be suspended.
If these types of circumstances were to occur, there could
be adverse effects on the Group’s operating results andfinancial condition.
Main Actions
MGC Group makes ongoing improvements based on anenvironmental safety management system, reinforces risk
management, and conducts comprehensive safety
education to ensure maintenance and stable operation of
production facilities while doing everything possible toconstruct safety and disaster prevention systems as well as
formulating business continuity plans and establishing
redundancy in manufacturing bases including overseas
bases. In addition, the Group maintains various types of
insurance coverage including fire insurance, profit
insurance, oil pollution insurance, and liability insurance.

4) Risks Relating to Overseas Business
Details of Risks
MGC Group has established subsidiaries and conducts
manufacturing and sales in Asia, North America, SouthAmerica, the Middle East and other regions. Depending on
the circumstances in each country, the risks relating tonatural disaster, war, disabling of infrastructure, spread of
infectious disease, or other unforeseeable circumstances as
described above could lead to political instability or social or
economic turmoil, causing difficulties for business activities
as well as remittance of dividends and the like. 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 possibility ofrestrictions on investments and nationalization or
expropriation of assets by foreign governments, andpersonnel or labor issues.
Main Actions
MGC Group collects information for officers and employees
dispatched to local sites, joint venture partners, relevant
authorities, and other sources so that it can respond as
effectively and promptly as possible.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20206

Management’s Discussion and Analysis

5) Risks Relating to Joint Ventures
Details of Risks
MGC Group is involved in a number of manufacturing joint
ventures not only in Japan but also overseas including
Saudi Arabia, Venezuela, Thailand, China, South Korea, andTrinidad and Tobago to procure and sell methanol,
engineering plastics, and a variety of other products. These
joint ventures are not under the control of the Group, andconsequently, there is no guarantee that the joint venture
partners will make decisions that are best for MGC Groupor the joint ventures. In the event that circumstances
preventing the maintenance of a joint venture occur, there
could be an adverse effect on the Group’s operating results
and financial condition.
Main Actions
MGC Group maintains and reinforces good communications
with the joint venture partners developed until now, works
to establish shared targets and objectives and maintainrelationships, and strives to maintain Group profit throughjoint venture agreement and other business agreements.

6) Risks Relating to Product Quality
Details of Risks
As stated earlier, many MGC Group products are used by awide range of customers as raw materials, material
products, and pharmaceuticals, and the Group ships
products that conform to specifications agreed upon withcustomers. However, in the event that a product with aquality defect is shipped, the need will emerge for MGC
Group to compensate customers who used the defective
product, users of final products, or others not only for direct
damages but also for opportunity loss, and MGC may losesocial credibility. MGC Group’s operating results andfinancial condition could be adversely affected.
Main Actions
Most MGC Group manufacturing bases perform
manufacturing in accordance with globally-recognized
quality control standards and maintain liability insurance
coverage including product liability insurance to address
any risks that should occur. In addition, the Group enters
into agreements with customers as necessary to clarify thescope of the Group’s liability.

7) Risks Relating to Exchange Rate Fluctuations
Details of Risks
Exports, imports, and other transactions conducted inforeign currencies, are subject to exchange rate changes,

7

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

which could have a negative impact on the Group’sbusiness results and financial situation such as decreased
sales or increased 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.
Main Actions
MGC Group engages in risk hedging to a certain degree byconducting foreign exchange futures transactions inaccordance with internal rules in order to mitigate the risk of
exchange rate fluctuations with respect to receivables andliabilities denominated in foreign currencies.

8) Risks Relating to Capital Procurement andInterest Rate Fluctuations

In addition to these environmental issues, the Group’s
operating results and financial condition could be adversely
affected by criminal, civil, and administrative liability,
remediation costs, social sanction, and loss of credibility
due to the failure of MGC Group to comply with legal
regulations and social norms.
Main Actions
MGC Group has positioned proactive and dynamic
responses to environmental problems and reinforcement ofcompliance as a top management priority (materiality). In
addition to the existing specialized divisions that respond toenvironmental regulations and issues, the Group created a
new task force team. The Group also takes various
measures to enhance compliance awareness by officers
and employees, created various systems including aninternal whistleblowing system, and strives to strictly
comply with laws and regulations.

10) Risks Relating to Litigation
Details of Risks
When procuring necessary funds, MGC Group securesloans and other financing from financial institutions to acertain degree, but if the financial environment suddenly
changes, it may be difficult to procure funds, and if interest
rates increase, the amount of interest payments also rises,
which may adversely affect MGC Group’s operating results
and financial condition.
Main Actions
MGC Group strives to maintain a certain level of financial
health based on indicators such as the debt/equity ratio
and shareholders’ equity ratio. The Group also maintains anappropriate balance of fixed and variable interest rates andwork to maintain sound and good relationships withfinancial institutions and others.

9) Risks Relating to Compliance and Environment
Issues
Details of Risks
MGC Group handles hazardous chemical substances
including toxic 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 regarding issues including climatechange and marine plastic, regulations as well as societal
demands concerning chemical substances and wastematerials including greenhouse gases are becoming
increasingly stringent.

Details of Risks
If lawsuits or other legal proceedings are filed against MGC
Group related to its domestic and overseas businesses andthe outcomes of such proceedings are unfavorable, theresult could be an adverse effect on the Group’s operating
results and financial condition. For example, the Groupapplies for and obtains patents to protect its intellectual
property rights and strives to prevent infringement of therights of third parties in Japan and other countries, but if
litigation were initiated with a third party in relation to
intellectual property rights and MGC’s assertions were notrecognized, there could be an adverse impact on theGroup’s operating results or growth.
Main Actions
MGC Group complies with laws and regulations applicable
to its business and cooperates with attorneys and otherprofessionals to clarify rights and duties by executing
appropriate agreements, investigate the rights of third
parties, and take other actions to prevent the occurrence ofdisputes.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 20208

Consolidated Balance Sheet
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
March 31, 2020
Thousands of
U.S. dollars(note 2)

AssetsMillions of yen
2019

2020

Thousands of
U.S. dollars(note 2)

Liabilities and Net Assets
Millions of yen

2020

2019

2020

2020

Current liabilities:

Current assets:¥ 70,776¥ 80,089

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

44,40958,846

408,058

Accrued expenses

18,00820,493

165,469

Accrued income taxes (note 9)

5,539

3,439

50,896201,920

Accrued bonuses

5,616

5,539

51,603

1,033

10,328Other current liabilities (note 9)

19,22520,011

176,652

358,669

378,845

3,295,681

Total current liabilities

163,574

188,420

1,503,023

Buildings and structures

220,252

207,9812,023,817

Long-term debt (note 6)30,30436,905

278,453

Machinery, equipment and vehicles

484,798

457,159

4,454,636

Net defined benefit liability (note 8)

9,333

5,247

85,758

Land

41,10939,826

377,736

Provision for directors’ retirement benefits (note 8)

433

337

3,979

Leased assets

2,611

750

23,992

Deferred income taxes (note 9)

9,200

9,521

84,536

Construction in progress

23,113

20,522

212,377

Other non-current liabilities (note 7)

10,745

10,32398,732

Other

51,26648,151

471,065

Total non-current liabilities

60,01662,336551,466

823,151

774,392

7,563,641

Total liabilities

223,591

250,756

2,054,498

583,313545,899

5,359,855

239,838

228,492

2,203,786

41,97041,970385,647¥ 78,227¥ 91,130

141,279

155,507

1,298,162

3,514

23

32,289Inventories

114,797

119,252

1,054,829

Other current assets

21,975

13,965Less allowance for doubtful receivables

1,124

Cash (note 3)
Trade notes and accounts receivable (note 18)
Short-term investments (note 4)

Total current assets$

718,800

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

Leased assets

5,293

3,841

48,6350

50Software

2,251

2,187

20,684

Other

3,052

2,579

28,044

10,597

8,614

97,372

Net intangible assets$

650,335

Non-current liabilities:

Intangible assets, net:
Goodwill

Trade notes and accounts payable

Stockholders’ equity:
Common stock (note 10):
Authorized 492,428,000 shares; issued 225,739,199
and 231,739,199 shares in 2020 and 2019
Additional paid-in capital (note 10)34,23434,298314,564Retained earnings (note 11)439,701

439,080

4,040,255

Treasury stock, at cost; 17,758,765 and 18,099,472
shares in 2020 and 2019(21,600)(19,930)(198,475)

494,306

495,418

4,542,001

Total stockholders’ equity
Accumulated other comprehensive income:Investments in securities (notes 4, 5 and 6)

149,158

177,0111,370,560

Long-term loans receivable

3,153

2,831

28,972

Deferred income taxes (note 9)

3,482

2,510

31,995Net defined benefit asset (note 8)

974

1,174

8,950

6,500

5,101

59,726

Other investments and other assets (note 5)Less allowance for doubtful receivables

640

543

5,881

Total investments and other assets

162,628

188,086

1,494,331¥ 771,733¥ 804,038$ 7,091,179

Total assets
See accompanying notes to consolidated financial statements.

9

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

7,789

13,023

71,570

Deferred gains on hedges

4

1

37

Surplus on revaluation of land

—

222

—

Foreign currency translation adjustments(6,701)(6,327)(61,573)

Remeasurements of defined benefit plans (note 8)(2,877)623(26,436)(1,785)

7,542(16,402)

Non-controlling interests

55,61950,321

511,063

Total net assets

548,141

553,282

5,036,672¥ 771,733¥ 804,038$ 7,091,179

Net unrealized gain on other securities (note 4)

Investments and other assets:

Total accumulated other comprehensive income

Commitments and contingencies (note 19)
Total liabilities and net assets

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202010

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, 2020

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2020
Thousands of
U.S. dollars(note 2)Millions of yen

Net sales (note 18)
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
Share of profit (loss) of entities accounted for using equity method
Gain on sale of investments in securities (note 4)
Rent expenses
Loss on valuation of investments in securities
Provision for loss on guarantees
Provision for loss on liquidation of subsidiaries and associates
Personnel expenses for seconded employees
Loss on tax purpose reduction entry of non-current assets
Loss on sale/disposal of property, plant and equipment
Impairment loss (note 14)
Other, net

2020

2019

2020

¥ 613,344
481,950
131,394
97,13334,260¥ 648,986
512,857
136,129
94,742
41,386$ 5,635,799
4,428,466
1,207,333
892,520314,803

Balance as of April 1, 2018

642
2,200
(1,018)28,408989(1,634)(690)(1,267)—(1,430)
—
(920)

565
2,226
(968)
(1,282)
2,676(1,628)(939)—(1,098)(1,512)(5,652)
(943)
(381)
9,022
82
34,343

5,192
20,454(8,895)(11,780)
24,589(14,959)(8,628)—(10,089)(13,893)(51,934)(8,665)(3,501)
82,900753
315,566—
2,400
27,67969,066

Treasurystock¥ 41,970¥ 34,578¥ 399,033¥ (19,966)

8,373
1,482
9,855

8,333
753
9,087

¥ 24,487
3,329¥ 21,158¥ 59,979
4,979¥ 55,000

76,937
13,61890,554$$¥ 455,616¥ 17,261

¥ (0)

¥ 222

RemeasureForeign
ments ofcurrency
definedtranslation
benefit plansadjustments(note 8)
¥ (7,614)¥ 1,878

Total

Noncontrollinginterests

Total net
assets¥ 11,747¥ 51,780¥ 519,144(14,953)(14,953)(14,953)

55,00055,00055,000

Disposition of treasury stock

53

Change in treasury stockof parent arising fromtransactions with noncontrolling interests

(6)

(6)

(6)

42

95

95

(333)

(333)

(333)

Net changes other thanstockholders’ equity
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

Changes arising during year:
Cash dividends(14,861)(14,861)(14,861)

Profit attributable to ownersof parent

21,15821,15821,158(8,733)(8,733)(8,733)Purchase of treasury stock
Disposition of treasury stock

11

40

51

51

Retirement of treasury stock(7,023)

7,023

—

—

Transfer to additional paid-in
capital from retained earnings

6,959(6,959)

—

—

1,246

1,246

1,246

(10)

(10)

Change in scopeof consolidation
Change in treasury stockof parent arising fromtransactions with noncontrolling interests

(10)

37

37

Net changes other thanstockholders’ equity
Total changes during
the year
Balance as of March 31, 202037
(5,233)

3

(222)

(374)

(3,500)(9,327)

5,298(4,029)

—

(63)

621

(1,669)(1,111)(5,233)

3

(222)

(374)

(3,500)(9,327)

5,298(5,141)¥ 41,970¥ 34,234¥ 439,701¥ (21,600)¥ 494,306¥ 7,789¥4¥—¥ (6,701)¥ (2,877)¥ (1,785)¥ 55,619¥ 548,141

Total

Noncontrollinginterests

Total net
assets$ 69,301$ 462,382$ 5,083,911

Thousands of U.S. dollars (note 2)
Stockholders’ equity

Accumulated other comprehensive incomeNet
unrealized
gain on othersecurities

Deferred
gains onhedgesSurplus onrevaluationof land

Foreign
Remeasurecurrency
ments ofdefinedtranslation
adjustments benefit plans$9$ 2,040$ (58,137)

Commonstock

Additional
paid-in
capitalRetainedearnings$ 385,647$ 315,152$ 4,034,549$ (183,130) $ 4,552,219

Cash dividends(136,552)(136,552)(136,552)

Profit attributable to ownersof parent

194,413

194,413

194,413(80,244)(80,244)(80,244)

Purchase of treasury stockThousands of
U.S. dollars(note 2)
2019

Surplus onrevaluationof landTreasury
stock

Total

$ 119,664$ 5,725

Changes arising during year:

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2020

2020

Deferred
gains onhedgesCash dividends

225,00230,589194,413

Consolidated Statement of Comprehensive Income

Millions of yen

Total

Profit attributable to ownersof parent

Balance as of March 31, 2019

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

Retainedearnings(note 11)Net
unrealized
gain on othersecurities(note 4)

Changes arising during year:

See accompanying notes to consolidated financial statements.

ProfitOther comprehensive income arising during the year (note 15) :Net unrealized loss on other securities
Deferred gains 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

Commonstock(note 10)

Reversal of revaluation
reserve for land

Income taxes (note 9):
Current
Deferred

Accumulated other comprehensive income

Additional
paid-in
capital(note 10)Purchase of treasury stock

Profit before income taxes

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

Millions of yen
Stockholders’ equity

2020¥ 24,487¥ 59,979$ 225,002(5,172)
3(3,431)(3,386)(4,212)
1(2,232)(1,812)(47,524)
28(31,526)(31,113)

1,488

2,594

13,673(10,498)¥ 13,988(5,661)¥ 54,318(96,462)$ 128,531¥ 11,884
2,104¥ 50,795
3,522$ 109,198
19,333

Disposition of treasury stock

101

368

469

469

Retirement of treasury stock(64,532)

64,532——

Transfer to additional paid-in
capital from retained earnings

63,944(63,944)——

11,44911,44911,449

(92)

(92)

340

340

Change in scopeof consolidation
Change in treasury stockof parent arising fromtransactions with noncontrolling interests(92)

Reversal of revaluation
reserve for land340

Net changes other thanstockholders’ equity
Total changes during
the year
Balance as of March 31, 2020

(48,084)
—

(579)

5,706

$ 385,647$ 314,564$ 4,040,255(15,336)28(2,040)(3,437)(32,160)(85,702)

48,681(37,021)(10,209)(48,084)28(2,040)(3,437)(32,160)(85,702)

48,681(47,239)$ (198,475) $ 4,542,001$ 71,570$ 37$—$ (61,573)$ (26,436)$ (16,402)$ 511,063$ 5,036,672

See accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

11

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202012

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2020

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2020

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
Impairment loss
Loss on tax purpose reduction entry of non-current assets
Equity in losses (earnings) of affiliates
Increase (decrease) in allowance for doubtful receivables
Decrease in net defined benefit liability(Decrease) increase in provision for directors’ retirement benefits
Decrease in provision for loss on business withdrawal
Increase (decrease) in provision for loss on liquidation of subsidiaries and associates(Decrease) 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 in trade notes and accounts receivable
Decrease (increase) in inventories
Decrease 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 in long-term loans receivable
Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation
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
Purchase of treasury stock
Dividends paid to stockholders
Dividends paid to non-controlling interests

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

2020

2019

2020

¥ 34,343¥ 69,066$ 315,566

29,591
778
381
5,652
1,282
187
(48)
(245)
(11)
592
(2,358)(2,791)968(2,682)762
19,048
5,694(13,799)(8,929)68,416
2,755
10,693(1,030)(7,173)572
74,23427,451
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
64,042271,901
7,149
3,501
51,934
11,7801,718(441)(2,251)(101)
5,440(21,667)(25,646)
8,895(24,644)
7,002
175,025
52,320(126,794)(82,045)628,650
25,31598,254(9,464)(65,910)5,256
682,110(43,453)
1,144(1,544)
(333)
5,810
—
4,454
(33,922)(37,409)891(5,039)(48)—
939(2,094)(42,761)(399,274)
10,512(14,187)(3,060)53,386—40,926(311,697)(14,927)
8,697(15,768)(8,733)(14,861)(1,890)(10,599)
16,773(17,893)(6)(14,953)(1,751)(137,159)
79,914(144,887)(80,244)(136,552)(17,367)(1,208)(2,859)(11,100)(870)(49,563)(105)(31,396)(7,994)(455,417)

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
Increase in cash and cash equivalents resulting
from inclusion of subsidiaries in consolidation(1,342)(10,594)
80,379190(9,925)90,304(12,331)(97,344)738,574

258

—

2,371

Cash and cash equivalents at end of year (note 3)¥ 70,043¥ 80,379$ 643,600

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

See accompanying notes to consolidated financial statements.

13

Thousands of
U.S. dollars(note 2)

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

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 72 subsidiaries (71 in 2019).
The Company and its consolidated subsidiaries are collectively
referred to as “MGC.”
All significant intercompany accounts and transactions
have been eliminated in consolidation.
TOHO EARTHTECH,INC. and Japan U-PiCA Company,
Ltd. were included in scope of consolidation due to additional
acquisition of shares during the year ended March 31, 2020.
Kaiyo Unyu Co., Ltd. was excluded from the scope of
consolidation due to its merger with Kinoe Terminal Company,
Inc. as the surviving company, during the year ended March 31,

2020. Upon the merger, the company name of Kinoe Terminal
Company, Inc. was changed to MGC Terminal Company, Inc.
Korea Special Products Co., Ltd. was excluded from thescope of consolidation due to its merger with KOSPA
corporation as the surviving company, during the year ended
March 31, 2020.
Investments in an unconsolidated subsidiary and 13
affiliates (15 in 2019) 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 33 consolidated subsidiaries (31 in2019) 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 in affiliates” and“other securities.” Securities classified as “trading securities”
are stated at fair value and unrealized gains or losses arerecorded in the consolidated statement of income. Securities
classified as “held-to-maturity securities” are stated atamortized cost. Securities classified as “other securities” withfair 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 “othersecurities” for which fair value is not available are stated at theamortized 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 other securities.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202014

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

15

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

such 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 associates.

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(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 andAssociates(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, 2020.
(s) Changes in Accounting Policies
Some overseas consolidated subsidiaries have applied IFRS
16 “Leases” effective from the year ended March 31, 2020. The
impact of the application of this standard on the consolidated
financial statements is immaterial.
(t) 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)- “Implementation Guidance on Disclosures about Fair Valueof Financial Instruments” (ASBJ Guidance No. 19, March
31, 2020)”
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 on revenue

recognition by following the basic policies in developing it. The
basic policies were: firstly, incorporating the core principle of
IFRS 15 as the starting point from the perspective offacilitating comparability among financial statements, which isone of the benefits of ensuring consistency 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.
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.
- “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, July 4, 2019)- “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9, July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10, July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair
Value Measurement” (ASBJ Guidance No. 31, July 4, 2019)- “Implementation Guidance on Disclosures about Fair Valueof Financial Instruments (ASBJ Guidance No. 19, March 31,2020)”The IASB and the FASB have provided detailed guidance ofalmost the same contents for fair value measurement (IFRS
13 Fair Value Measurement by IFRS, and ASU 2018-13 Fair
Value Measurement (Topic 820) by U.S.GAAP). Based onsuch a situation, the ASBJ issued “Accounting Standard for
Fair Value Measurement,” etc., as a result of initiatives mainly
concerning promoting the consistency between Japaneseand international accounting standards regarding guidance forfair value measurement and required disclosures.
The basic objective of the ASBJ in developing theaccounting standard for fair value measurement was toenhance comparability between financial statements ofdomestic and foreign entities, through a unified measuringmethod. Accordingly, the accounting standard fundamentally
incorporates the basic policies of IFRS 13. Also, where there
are items that should be considered to reflect the businesspractices in Japan, exceptional treatments have been
established for certain items to the extent that comparability is
not lost significantly.
These ASBJ statement and implementation guidance will
be applied from the fiscal year beginning on April 1, 2022.
The impact of the application of the AccountingStandards for Fair Value Measurement on the consolidated
financial statements is currently under consideration.
- “Accounting Standard for Disclosure of Accounting
Estimates” (ASBJ Statement No.31, March 31, 2020)
Paragraph 125 of International Accounting Standards (“IAS”)
1 “Presentation of Financial Statements” issued by IASB in2003 requires disclosure of “Sources of estimation
uncertainty.” As this information was considered highly useful

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202016

Notes to Consolidated Financial Statements

to users of financial statements, there were requests fordiscussion on implementation of such disclosure requirementin Japanese GAAP. Accordingly, ASBJ developed and issued
the “Accounting Standard for Disclosure of Accounting
Estimates.”
ASBJ’s basic policy in developing this accounting
standard was to refer to requirements of Paragraph 125 of
IAS 1. The standard was intended not to enhance existingnote disclosure requirements, but to require enterprises tospecify the purposes of disclosure and to determine what todisclose according to such purposes.
The ASBJ statement will be applied from the fiscal year
ending on March 31, 2021.
- “Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections” (ASBJ
Statement No.24, March 31, 2020)
In response to suggestions to discuss improving the note
disclosure of “principle and procedure applied to accounting
treatments when related accounting standards are
undefined”, ASBJ accordingly revised the “AccountingStandard for Accounting Policy Disclosures, Accounting
Changes and Error Corrections.”
To avoid conflict with the current practices of disclosure
when related accounting standards are defined, in adopting
this standard, it should be noted that Paragraph 1-2 ofannotations on the accounting principles is still effective.
The ASBJ statement will be applied from the fiscal year
ending on March 31, 2021.

As of March 31, 2020
TOHO EARTHTECH,INC. has been included in the scopeof consolidation due to acquisition of its shares. Assets,
liabilities and stock acquisition cost at the time ofacquisition are not disclosed due to confidentiality with theseller. The acquisition cost was determined by taking into
consideration the results of stock value evaluation by athird-party organization to secure fairness and validity.
Japan U-PiCA Company, Ltd. has been included in thescope of consolidation due to acquisition of its shares.
The components of assets and liabilities at the time ofacquisition, the acquisitions cost and net expenditure forthis acquisition are as follows:

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Loss on revaluation of acquisitionNon-controlling interests
Negative Goodwill
Stock acquisition cost
Investment value accounted
for by the equity methodprior to obtaining control
Loss on step acquisitions
Cash and cash equivalents of
the new consolidated subsidiary
Expenditure for acquisition

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, 2020, which was¥108.83 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.

(3,947)(36,268)

197

1,810

(4,922)(45,227)¥ (3,251)$ (29,872)

Millions of yen
2019(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, 2020 and 2019 is
as follows:
Millions of yen

Thousands of
U.S. dollars

2020

2019

2020

¥ 78,227¥ 91,130$ 718,800(11,698)(10,774)(107,489)

3,514¥ 70,043

23¥ 80,379

32,289$ 643,600(b) Details of the assets and liabilities of subsidiaries that havebeen included in the scope of consolidation due toacquisition of shares

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

$ 84,784
32,022(23,514)(9,731)(1,746)(27,483)(4,521)$ 49,793

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 thetime of the sale, the selling price and net proceeds fromsales of shares of TAIYO Industry Co., Ltd. are as follows:

3. Cash and Cash Equivalents

17¥ 9,227
3,485(2,559)(1,059)(190)(2,991)(492)¥ 5,419(c) Details of the assets and liabilities of subsidiaries that havebeen excluded from the scope of consolidation due tosales of shares

2. Financial Statement Translation

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

Millions of yen
2020

Thousands of
U.S. dollars
2020

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¥ 2,846501(2,101)(351)
759¥ 1,655
(715)
¥

939

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, 2020 and 2019 are summarized as follows:

Millions of yen
Gross
Gross
unrealized
unrealized
gain
loss

Balancesheet
amountMarch 31, 2020
Government
bond securities
Certificatesof deposit¥¥
March 31, 2019
Government
bond securities

0 ¥
3,000

—

3,000 ¥

0

¥

¥

— ¥

0

—

3,000

— ¥

3,000

5. Investments in Affiliates
¥

0 ¥

0

¥

— ¥

0

¥

0 ¥

0

¥

— ¥

0

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

Balancesheet
amountMarch 31, 2020
Government
bond securities
Certificatesof deposit0

Fair value

than 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 ofconsidering 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.

$

0 $

0

27,566—$ 27,566 $

0

$

$

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

— $
—

0
27,566

Balancesheet
amountMillions of yen
Gross
Gross
unrealized
unrealized
gain
loss

Acquisition
cost

March 31, 2020
Equity securities ¥ 32,365
Other securities578¥ 32,943¥ 14,367 ¥ (2,283)—(31)¥ 14,367 ¥ (2,315)¥ 20,281
610¥ 20,891¥ 19,747—¥ 19,747

Short-term debt is represented by bank loans which are due
within one year. The weighted average interest rate ofshort-term debt is 1.3% and 0.9% as of March 31, 2020 and
2019, respectively.

— $ 27,566

Balance sheet amount, acquisition cost, and grossunrealized gain and loss of other securities with fair value as ofMarch 31, 2020 and 2019 are summarized as follows:

March 31, 2019
Equity securities ¥ 41,668
Other securities
9¥ 41,679

The aggregate carrying amounts of investments in affiliates asof March 31, 2020 and 2019 are ¥112,946 million($1,037,820 thousand) and ¥131,409 million, respectively.

¥ (1,223)(0)¥ (1,223)¥ 23,14410¥ 23,155

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

Acquisition
cost

March 31, 2020
Equity securities $ 297,390
Other securities
5,311$ 302,701$ 132,013 $ (20,978)—(285)$ 132,013 $ (21,272)$ 186,355
5,605$ 191,960

Securities classified as other securities for which fair value
is not available are unlisted equity securities amounting to¥3,822 million ($35,119 thousand) and ¥4,185 million as ofMarch 31, 2020 and 2019, respectively.
For the years ended March 31, 2020 and 2019, proceedsfrom the sale of other securities are ¥4,702 million ($43,205
thousand) and ¥2,113 million, respectively. Gross realized
gains are ¥2,681 million ($24,635 thousand) and ¥941 million
for the years ended March 31, 2020 and 2019, respectively.
The Company recognized impairment losses on securitiesof ¥762 million ($7,002 thousand) and ¥837 million for theyears ended March 31, 2020 and 2019, respectively.
The Company recognizes impairment losses on securities
with market value when the market value declines by more

Long-term debt as of March 31, 2020 and 2019 issummarized as follows:
Millions of yen
2020
2019

Loans, principally frombanks, maturing ininstallments through 2035
with weighted averageinterest of 0.87% as of March ¥ 38,042
31, 2020, partially secured by
mortgage of property, plantand equipment and securities¥

Thousands of
U.S. dollars
2020—$ 349,554

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

44,786—

Lease liabilities maturing ininstallments through 2056 asof March 31, 2020

1,689

—

15,520

Lease liabilities maturing ininstallments through 2027 asof March 31, 2019

—

387

—

Unsecured bonds, due 2021
with interest of 0.572%

10,00010,00091,88649,731

55,173456,960

5,853
15,511429
97
10,000—¥ 33,449 ¥ 39,565

53,781
3,942
91,886$ 307,351

Less current installments:
Loans
Lease liabilities
Unsecured bonds

Note : The weighted average interest rates on lease liabilities
as of March 31, 2020 and 2019 are omitted because
lease liabilities were recorded in the consolidatedbalance sheet based on the total lease payment which
includes assumed interests portion.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202018

Notes to Consolidated Financial Statements

The aggregate annual maturities of loans after March 31,
2021, are as follows:
Thousands of
U.S. dollars

Millions of yen

Year ending March 31,
2022
2023
2024
2025

¥

9,733
4,190
3,744
11,375$ 89,433
38,50034,402
104,521

Property, plant and equipment and securities with a bookvalue as of March 31, 2020 of ¥22,896 million ($210,383
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(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% to 2.385%.
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, 2020 and 2019:
Millions of yen
2020
2019

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

Thousands of
U.S. dollars
2020¥ 2,437¥ 3,943$ 22,393

5

15

46

42
(125)
1,201
¥ 3,560

72(57)(1,536)¥ 2,437386(1,149)11,036$ 32,712

Note : The increase in other for the year ended March 31,
2020 is due to change in scope of consolidation. The
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.

19

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020(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
2020
2019

Retirement benefit obligation¥ 41,332 ¥ 41,246
at beginning of year
Service costs
2,105
2,145
Interest costs
367
372
Actuarial gains and losses
(43)
(91)
arising during year
Retirement benefits paid
(1,953)(2,013)
Decrease due to change—(258)
in scope of consolidation
Other
(13)
(69)
Retirement benefit obligation¥ 41,794 ¥ 41,332
at end of year

Thousands of
U.S. dollars
2020$ 379,785
19,342
3,372

Plan assets at beginning of¥ 38,909 ¥ 39,438
year
Expected return on plan571
496
assetsActuarial gains and losses(3,277)(1,214)
arising during year
Contribution from employer
1,615
1,612
Retirement benefits paid
(1,550)(1,388)
Other
(19)
(35)
Plan assets at end of year
¥ 36,248 ¥ 38,909

Net defined benefit liability at¥ 1,651
beginning of year
Retirement benefit
294
expenses
Retirement benefits paid
(67)
Contribution to plans(43)
Increase due to change984
in scope of consolidation
Other
(4)
Net defined benefit liability at¥ 2,813end of year

¥ 1,563$ 15,170

269

2,701

(118)
(66)

(616)
(395)

—

9,042

2

(37)

¥ 1,651$ 25,848(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
2020
2019

Funded retirement benefit
obligation
Plan assets¥
Unfunded retirement benefit
obligation
Net balance of liability andasset recorded on the¥
consolidated balance sheet
Net defined benefit asset¥
Net defined benefit liability
Net balance of liability andasset recorded on the¥
consolidated balance sheet

Thousands of
U.S. dollars
2020¥ 41,733$ 387,209(38,058)(40,627)
4,081 ¥ 1,105(349,701)$ 37,499

2,967

39,291

4,073$ 76,799¥ 42,140

4,276
8,358

¥

(974) ¥ (1,174)
9,333
5,247
8,358

¥

(17,945)—(119)$ 384,030

Thousands of
U.S. dollars
2020$ 357,521
5,247(30,111)
14,840(14,242)(175)$ 333,070(f ) Components of items recorded in remeasurements ofdefined benefit plans in other comprehensive income,before tax, are as follows:

Thousands of
U.S. dollars
2020

Millions of yen
2020
2019

4,073

$

(8,950)85,758$ 76,799(395)(b) Reconciliation between plan assets at beginning ofyear and end of year (excluding plans applying thesimplified method):
Millions of yen
2020
2019

(c) Reconciliation between net defined benefit liabilities ofplans applying the simplified method at beginning ofyear and end of year:

Millions of yen
2020
2019

Past service costs
Actuarial gains and losses
Total

¥

(19)
(3,608)¥ (3,627)¥(19)(1,887)¥ (1,907)

Thousands of
U.S. dollars
2020

$

(175)
(33,153)$ (33,327)(g) Components of items recorded in remeasurements ofdefined benefit plans in accumulated othercomprehensive income, before tax, are as follows:
Millions of yen
2020
2019

Unrecognized past service
¥
(37)
costs
Unrecognized actuarial gains
1,973
and losses¥ 1,935
Total

¥

(56)

Thousands of
U.S. dollars
2020

$

(340)

(1,627)

18,129¥ (1,684)$ 17,780(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

2020

2019

36%
26
14
24
100%

42%
32
9
17
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.

(e) Retirement benefit expenses and components thereof:
Millions of yen
2020
2019

Service costs¥ 2,105
Interest costs
367
Expected return on plan(571)
assetsAmortization of actuarial(230)
gains and losses
Amortization of past service
(19)
costs
Retirement benefit expenses
applying the simplified
294
method(7)
Other
Retirement benefit expenses¥ 1,938
under defined benefit plans

Thousands of
U.S. dollars
2020(i ) Actuarial assumptions¥ 2,145372$ 19,342
3,372

(496)

(5,247)

Expected long-term rate of return onplan assets(510)(2,113)

Defined contribution plans

(19)

(175)

269

2,701

(6)

(64)

¥ 1,754$ 17,808

Discount rate

2020

2019

Mainly0.8%
Mainly2.0%

Mainly0.8%
Mainly2.0%

The required contribution of MGC to the defined contributionplans amounted to ¥521 million ($4,787 thousand) and ¥513
million as of March 31, 2020 and 2019, 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 the

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202020

Notes to Consolidated Financial Statements

balance sheet dates. As of March 31, 2020 and 2019, theliabilities for retirement and severance benefits related to theplans were ¥433 million ($3,979 thousand) and ¥337 million,
respectively.

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

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 2020 and 2019.
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, 2020 and 2019 is as follows:
Statutory tax rate
Share of profit of entities accounted
for using equity method
Share of loss of entities accounted
for using equity method
Dividend income eliminated inconsolidation
Valuation allowance
Income not credited for tax purposes
Foreign taxes
Other
Effective tax rate

Valuation allowance for tax
loss carryforward
Valuation allowance for the
total amount of deductible
temporary differences
Valuation allowance

2019

2020

30.6%

30.6%

—

(12.6)

1.1

—

12.9

8.5

(0.2)
(12.7)
1.3
(4.3)
28.7%

(2.5)
(8.4)
1.0
(3.4)
13.2%

Thousands of
U.S. dollars
2020

Millions of yen
2020
2019

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

Significant components of deferred tax assets andliabilities as of March 31, 2020 and 2019 are as follows:

Net deferred tax liabilities

6,719
5,998

$ 60,682
63,218

3,293

3,207

30,258

1,650
2,287
426
1,727
1,124
3,669
27,662

1,604
1,823
458
2,301
787
4,125
27,02615,16121,014
3,914
15,86910,32833,713
254,176(6,103)(6,046)(56,078)(13,265)(13,410)(121,887)(19,368)
8,293(19,457)
7,569(177,966)
76,201(4,050)(5,656)(37,214)(1,255)(1,356)(11,532)(1,949)(1,917)(17,909)

(51)

(46)

(469)

(3,876)(3,566)(35,615)

6,604
6,880

¥

(2,038)(2,828)(25,985)(14,580) (128,742)(14,011)¥ (5,717) ¥ (7,011) $ (52,531)

Notes:
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, 2020 and 2019 was asfollows:
March 31, 2020
Due within
one yearTax loss carryforward*
Valuation allowance
Deferred tax assets

¥

1,073
(809)
264

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

¥

¥

537
(537)
—

March 31, 2019
Due within
one yearTax loss carryforward*
Valuation allowance
Deferred tax assets

¥

1,332
(983)
348

Tax loss carryforward*
Valuation allowance
Deferred tax assets

$

9,859
(7,434)(2,426)¥

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020¥

510
(1,305)—Due after
one year throughtwo years

¥

¥

1,231
(1,228)
2

662
(662)
—

¥

825
(815)
10

¥

512
(512)
—

Due after
one year throughtwo years

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

$

$

4,934
(4,934)—

7,314(7,250)55$*Tax loss carryforward was calculated by multiplying the statutory tax rate.

21

490
(510)
—

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

March 31, 2020
Due within
one year

796
(789)
6

4,502
(4,686)—$

4,686(11,991)—

Due after
five years

¥

2,381
(2,151)
229

Total

¥

2,154
(1,843)
311

Total

¥

Due after
five years$

21,878(19,765)
2,104

Under the Companies Act, the entire amount of the issue
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, 2020 and 2019 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, 2019
The following was approved by the Board of Directors held on
May 25, 2018.
(i) Total dividends(ii) Cash dividends per common share(iii) Record date(iv) Effective date

¥7,476 million¥35
March 31, 2018
June 7, 2018

The following was approved by the Board of Directors
held on November 1, 2018.
(i) Total dividends(ii) Cash dividends per common share(iii) Record date(iv) Effective date

6,719
(6,046)
673

Total

$

60,682(56,078)
4,594¥7,384 million($67,849 thousand)(ii) Cash dividends per common share ¥35 ($0.32)(iii) Record date
September 30, 2019(iv) Effective date
December 5, 2019(i) Total dividends¥7,477 million¥35
September 30, 2018
December 6, 2018(b) Dividends paid during the year ended March 31, 2020
The following was approved by the Board of Directors held on
May 24, 2019.

Due after
five years

¥

6,604
(6,103)500

10. Common Stock¥7,477 million($68,703 thousand)(ii) Cash dividends per common share ¥35 ($0.32)(iii) Record date
March 31, 2019(iv) Effective dateJune 6, 2019(i) Total dividends

The following was approved by the Board of Directors
held on November 5, 2019.

(c) Dividends to be paid after the balance sheet date but
the record date for the payment belongs to the year
ended March 31, 2020
The following was approved by the Board of Directors held on
May 26, 2020.
¥7,279 million($66,884 thousand)(ii) Dividend source
Retained earnings(iii) Cash dividends per common share ¥35 ($0.32)(iv) Record date
March 31, 2020(v) Effective dateJune 8, 2020(i) Total dividends

12. Selling, General and Administrative Expenses
Significant components of selling, general and administrative
expenses are as follows:
Millions of yen
2020
2019

Freight
Stevedoring and warehouse
fee
Salaries
Employees’ bonuses
Pension cost
WelfareTransportation
Depreciation¥ 22,389¥ 21,947

Thousands of
U.S. dollars
2020$ 205,725

3,817

4,015

35,07318,361
5,543
924
4,001
2,685
5,951

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

168,71350,9338,490
36,764
24,672
54,682

13. Research and Development Costs
Research and development costs charged to income for theyears ended March 31, 2020 and 2019 are ¥19,696 million($180,980 thousand) and ¥18,607 million, respectively.

14. Impairment LossYear ended March 31, 2020
MGC reviewed its long-lived assets for impairment and, asa result, recognized an impairment loss in the amount of¥381 million ($3,501 thousand) for the significant asset
groups.
which are as follows:
Location

Usage

Classification

Millions ofyenState of
Machinery and
Manufacturing¥ 381
Michigan,equipment,
facilities
U.S.A.
etc.

Thousands of
U.S. dollars$ 3,501

The long-lived assets that are used for business are grouped
according to the classification which is used for monitoring
the profit and loss continuously under the management
accounting system, and the idle assets are groupedindividually by each item.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202022

Notes to Consolidated Financial Statements

The carrying amount of manufacturing facilities owned bya consolidated subsidiary of the Company were written down
to a recoverable amount because the carrying amount fell
below the recoverable amount.
The recoverable amount was measured using the net
selling value and evaluated based on reasonable estimationby cost approach.
Impairment loss on the asset groups consisted of thefollowing:
Millions of yen
2020

Thousands of
U.S. dollars
2020

¥ 182
86
111
2
¥ 381

$ 1,672
790
1,020
18
$ 3,501

Machinery, equipment and vehicles
Construction in progress
Intangible assets
Other
Total

16. Per Share Information(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, 2020 and 2019 are as follows:
Yen

Earnings per share2019¥ 100.50¥ 257.46

Profit attributable to owners¥ 21,158of parent
Profit not applicable to—common stockholders
Profit attributable to com¥ 21,158
mon stockholders of parent

0.92¥ 55,000$ 194,413——¥ 55,000$ 194,413

Number of shares
2020
2019

The reclassification adjustment and the related income tax
effects allocated to each component of other comprehensive
income for the years ended March 31, 2020 and 2019 are as
follows:
Thousands of
U.S. dollars
2020

Millions of yen
2020
2019

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

210,529,901

213,630,153

The diluted earnings per share for the years ended March
31, 2020 and 2019 are not presented because there are no
dilutive potential shares as of March 31, 2020 and 2019.
(b) Net assets per share¥ (4,700) ¥ (6,508) $(43,187)(19,011)(2,069)507(62,207)(6,770)(6,000)14,674
1,597
1,787(47,524)(5,172)(4,212)
6
(1)
4
(1)
3

1
0
2
(0)
1

55
(9)
37
(9)
28

(3,431)—(3,431)(2,232)—(2,232)(31,526)—(31,526)(3,232)(395)(3,627)241(3,386)(1,120)(787)(1,907)94(1,812)(29,698)(3,630)(33,327)2,214(31,113)(1,621)
3,109
1,488

2,594
—
2,594

(14,895)
28,567
13,673

Net assets per share as of March 31, 2020 and 2019 are as
follows:
Yen

Net assets per share¥ 2,368.11 ¥ 2,354.25

U.S. dollars
2020$ 21.76

17. Leases
Operating lease
Future minimum lease payments required under non-cancellable
operating leases as of March 31, 2020 and 2019 are as follows:
Millions of yen
2020
2019

Within one year
Over one year

¥

889
2,188
¥ 3,077

¥
¥

1,839
2,273
4,112

Thousands of
U.S. dollars
2020$ 8,169
20,105$ 28,273

18. Balances and Transactions with Related Party
The Company has a 50% equity ownership in Mitsubishi
Engineering-Plastics Corporation as of March 31, 2020 and2019.
Balances with the company as of March 31, 2020 and2019 and related transactions for the years then ended aresummarized as follows:¥(10,498) ¥ (5,661) $(96,462)

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

2019

2020

Millions of yen
2020
2019

Balances:
Trade accounts receivable
Transactions:
Sales

23

$

Thousands of
U.S. dollars
2020

Millions of yen
2020
2019

15. Other Comprehensive Income

Net unrealized loss onother securities:
Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amountDeferred gains on hedges:
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
incomeU.S. dollars
2020

2020

Thousands of
U.S. dollars
2020¥ 8,820¥ 10,789$ 81,044

31,81538,251

292,337

The Company has a 50% equity ownership in BRUNEIMETHANOL COMPANY SDN. BHD. as of March 31, 2020
and 2019.
As of March 31, 2020 and 2019, the Company has
guaranteed ¥4,016 million ($36,902 thousand) and ¥5,629
million of the company’s loans to financial institutions,
respectively.
The affiliated company of the Company has a 35% equity
ownership in CARIBBEAN GAS CHEMICAL LTD. as of March
31, 2020 and 2019.
As of March 31, 2020 and 2019, the Company has
guaranteed ¥29,075 million ($267,160 thousand) and ¥25,991
million of the company’s loans to financial institutions.
The condensed financial information of all of 15 affiliates(16 in 2019) accounted for by the equity method, including
the significant affiliate, Japan Saudi Arabia Methanol
Company, Inc., are as follows:
Millions of yen
2020
2019

Total current assets
Total non-current assets

Thousands of
U.S. dollars
2020¥ 152,348 ¥ 260,013 $1,399,871
320,092
196,780 2,941,211

Total current liabilities
Total non-current liabilities

118,445
133,268

123,252
69,524

1,088,349
1,224,552

Total net assets

220,698

264,016

2,027,915

Sales
Profit before income taxes
Profit287,249
16,667
4,168

367,395
114,530
72,9452,639,428
153,147
38,29819. Commitments and Contingencies
The Company guarantees certain obligations of its associatedcompanies and employees, etc. As of March 31, 2020 and
2019, guarantees for affiliates and employees, etc. loans
amounted to ¥31,446 million ($288,946 thousand) and¥35,111 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 effectivenessis assessed based on the fluctuation ratio of hedged items
and hedging instruments by comparing the cumulative market
fluctuations or cash flow fluctuations of hedged items andthose of related hedging instruments. The Company omits toassess 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, 2020 and 2019 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 and

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202024

Notes to Consolidated Financial Statements

payables 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.

quoted 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, 2020 and 2019 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.”)(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

Millions of yen

Liabilities:(1) Trade notes and accounts payable(2) Short-term borrowings(3) Accrued expenses(4) Current portion of bonds payable(5) Long-term borrowings
Total liabilities
Derivative transactions (*):
Hedge accounting not applied
Hedge accounting applied
Total derivative transactions

Balance sheet
amount¥78,227141,279

Fair value¥

78,227141,279

Differences¥

Thousands of U.S. dollars
Balance sheet
amountFair value
Differences——$ 718,800
1,298,162$ 718,800
1,298,162—

330,534

330,534$——

35,97235,972¥ 255,480¥ 255,480¥—$ 2,347,514$ 2,347,514

$

—

¥

¥

—
—
—
41
803
845

$ 650,335
312,230
165,469
91,886
266,866$ 1,486,805$ 650,335
312,230
165,469
92,263
274,253$ 1,494,570

$

—
—
—
377
7,378
7,764

—
(1)
(1)

$

$

$

70,77633,98018,00810,00029,043¥ 161,809

70,77633,98018,00810,041
29,847¥ 162,654

¥

¥

¥

¥

¥

(364)
6
(358)

¥

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

25

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

Balance sheet
amount¥91,130155,507

(364)
4
(359)

¥

¥

Fair value$(3,345)55(3,290)$(3,345)37(3,299)

$

$

—
(9)
(9)

¥

91,130155,507

Differences¥——

45,692

44,976¥ 292,330¥ 291,614

¥

(716)

¥

¥

¥

—
—
—
58
898
956

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

¥
¥

(19)
1
(17)

Derivative Transactions:
Please see note 21 Derivative Financial Instruments.

Liabilities:
・ Trade notes and accounts payable, Short-term borrowings,
and Accrued expenses

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

¥
¥

(19)
(3)
(22)

Unlisted equity securities

Millions of yen
2020
2019

Thousands of
U.S. dollars
2020¥ 116,699 ¥ 131,342$ 1,072,305

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
Certificates of deposit
Other securities with maturity (bonds)
Total

¥

¥

¥
¥

—
(4)
(4)

78,227141,279

0
3,000—
222,507

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
Certificates of deposit
Other securities with maturity (bonds)
Total

$

718,800
1,298,162

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

¥

—
—

0
—
—
0

¥

¥

¥

—
—

—
—
—
—

Due after
ten years

¥

$

—
—

0
—
—
0

$

$

$

—
—

—
—
—
—

—
—

—
—
10
10

¥

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

027,566—$ 2,044,537

(716)

¥

* 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, 2020—

Millions of yen

March 31, 2019
Assets:(1) Cash(2) Trade notes and accounts receivable(3) Short-term investments and investments insecurities
Total assets

The carrying amount approximates fair value because of theshort maturity of these instruments.
・ Current portion of bonds payable
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.

<2> Financial instruments of which the fair value is extremely difficult to measure

Fair value of financial instruments is measured based on the

March 31, 2020
Assets:(1) Cash(2) Trade notes and accounts receivable(3) Short-term investments and investments insecurities
Total assets<1> Fair value measurement of financial instruments

Due after
ten years

$

$

—
—

—
—
92
92

<4> The annual maturities of the bonds and long-term borrowings as of March 31, 2020

Due within
one year

Bonds
Long-term borrowings*Derivative receivables and payables
are on net basis. Items that are net
payables are shown in parenthesis.

¥

10,0005,853

Due within
one year

Bonds
Long-term borrowings$

91,88653,781

Due after
one year throughtwo years

¥

—
9,733

Due after
one year throughtwo years$—
89,433

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

¥

—
4,190

¥

—
3,744

Thousands of U.S. dollars
Due after
Due after
two years throughthree years throughthree years
four years$—
38,500$—34,402

Due after
four years throughfive years

¥

—
2,169

Due after
five years¥

Due after
four years throughfive years$—
19,930—9,206

Due after
five years$—
84,591

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202026

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, 2020 and 2019 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, 2020
Forward exchange contracts:
To sell foreign currency:¥ 11,642 ¥U.S. dollar
2,329
Euro
59
Thai Baht
370
New Taiwan dollar
882
Chinese Yuan
614
Korean Won
To buy foreign currency:
298
U.S. dollar
Canadian dollar
1,396
New Taiwan dollar
2Currency swap agreements:
Receive/U.S. dollar,
545
Pay/Japanese Yen
Receive/U.S. dollar,
547
Pay/Thai Baht
¥ 18,689 ¥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
0
New Taiwan dollar
Currency swap agreements:
Receive/U.S. dollar,
545
Pay/Japanese Yen
Receive/U.S. dollar,
554
Pay/Thai Baht
¥ 19,981 ¥Valuation
gain(loss)(17) ¥
(27)
(0)
(10)
(0)
5

(17)
(27)
(0)
(10)
(0)
5

(11)
(68)
(0)

(11)
(68)
(0)

Thousands of U.S. dollars
Contract
Valuationor notionalgain
amounts
Fair value(loss)March 31, 2020
Forward exchange contracts:
To sell foreign currency:$ 106,974 $U.S. dollar
Euro21,400542
Thai Baht
New Taiwan dollar
3,400
8,104
Chinese Yuan
Korean Won
5,642
To buy foreign currency:
2,738
U.S. dollar
12,827
Canadian dollar
18
New Taiwan dollar
Currency swap agreements:
Receive/U.S. dollar,
5,008
Pay/Japanese Yen
Receive/U.S. dollar,
5,026
Pay/Thai Baht
$ 171,727 $(156) $
(248)
(0)
(92)
(0)
46

(156)
(248)
(0)
(92)
(0)
46

March 31, 2020
Forward exchange contracts:

(101)
(625)
(0)

(101)
(625)
(0)

To buy foreign currency:

(0)

(0)

(184)

(184)

(1,378) $(1,378)

(0)

(20)

(20)

(150) ¥

(150)

(29) ¥
2
(0)
4

(29)
2
(0)
4

(3)
(18)
(0)

(3)
(18)
(0)

8

8

(7)

(7)

(43) ¥(43)

Hedgeditems

Hedgeditems

Millions of yen
Contract
or notionalamounts
Fair value

Accounts
receivable

To sell foreign currency:
U.S. dollar
Chinese Yuan¥

U.S. dollar

March 31, 2020
Interest rate swap agreements:
Receive/floating and¥ 4,430
pay/fixed
March 31, 2019
Interest rate swap agreements:
Receive/floating and¥ 4,588
pay/fixed

Fair value(214)

To buy foreign currency:
U.S. dollar

24¥

March 31, 2020
Interest rate swap agreements:
Receive/floating and$ 40,706
pay/fixed¥$ (1,966)*The fair value of interest rate swap agreements is estimatedbased on quotes from counterparties.

4
11

1,519 ¥

(20)

Accounts
payableU.S. dollar

20

0

5

0

1,038
2,583 ¥

1(18)

Forecasted
transactions

To sell foreign currency:

Forecasted
transactions

To buy foreign currency:
U.S. dollar

Hedgeditems

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

March 31, 2020
Forward exchange contracts:
To sell foreign currency:

Accounts
receivable

U.S. dollar
Chinese Yuan
$ (1,966)

537
2,695 ¥

Accounts
receivable

24

Thousands of U.S. dollars
Contract
Valuationor notionalgain
amounts
Fair value(loss)

2

To buy foreign currency:

U.S. dollar

9
(0)

5,201

28

2,150

18

4,934
$ 24,763 $37101

Forecasted
transactions

U.S. dollar
To buy foreign currency:$ 11,853 $597
Accounts
payableU.S. dollar
To sell foreign currency:

¥

360 ¥

(1)

980 ¥

(5)

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

March 31, 2020
Interest rate swap agreements:
Receive/floating andLong-term$
borrowings
pay/fixed

3,308 $

(9)* The fair value of interest rate swap agreements is estimatedbased on quotes from counterparties.

¥

¥

234

March 31, 2019
Forward exchange contracts:

To buy foreign currency:¥ (214)3

Forecasted
transactions

U.S. dollar¥

566

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

Hedgeditems

U.S. dollar

U.S. dollar
Valuation
gain(loss)

1(0)Forecasted
transactions

To sell foreign currency:

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

1,290 ¥
65

Millions of yen
Contract
or notionalamounts
Fair value

March 31, 2020
Interest rate swap agreements:
Receive/floating andLong-term¥
borrowings
pay/fixed

Accounts
payable¥* The fair value of forward exchange contracts and currency
swap agreements is estimated based on quotes fromcounterparties.

Contract
or notionalamounts(b) Interest rate swap agreements(a) Forward exchange contracts

Millions of yen(0)

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

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

22. Investment and Rental Property
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, 2020 and 2019 are as follows:
Millions of yen
2020
2019

Thousands of
U.S. dollars
2020

Consolidated balance sheet
amount:Balance at beginning of¥
the year
Increase/(decrease)
Balance at end of the year ¥15,150 ¥11,642 $ 139,208(4,357)
10,793 ¥(40,035)
3,507
15,150 $ 99,173

Fair value

14,117 ¥18,096 $ 129,716¥

Notes:
1. Consolidated balance sheet amount is its cost minus
accumulated depreciation and accumulated impairment
loss.
2. Decrease for the year ended March 31, 2020 was mainly
due to a loss of ¥4,381 million ($40,257 thousand) on
reduction of property, plant and equipment located in QQL
Innovation Center Shirakawa. Increase for the year ended
March 31, 2019 was mainly due to new rents executed by
the Company of ¥3,778 million.
3. Fair value is based on roadside value, etc.
Rent income from the rental property is ¥438 million($4,025 thousand) and ¥400 million for the years ended
March 31, 2020 and 2019, respectively.

27

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202028

Notes to Consolidated Financial Statements

6. Details of the assets acquired and the liabilities assumed at
the date of the business combination

23. Business Combination
Business combination through acquisition
TOHO EARTHTECH,INC.
1. Summary of the combination
1) Name and business of the company acquired
Name: TOHO EARTHTECH,INC.
Business: Manufacturing and sales of natural gas andiodine and seismic reinforcement work
2) Reason for the combination
The Company aims to enhance business capabilities ofnatural gas chemicals.
3) Date of combination
June 27, 20194) Legal form of the combination
Acquisition of equity shares for cash consideration
5) Post-combination name of the acquired company
TOHO EARTHTECH,INC.
6) Percentage of voting rights acquired
Voting rights held immediately before stock acquisition:
47.55%
Percentage of additional voting rights acquired on thedate of business combination: 2.56%
Voting rights after stock acquisition: 50.11%
7) Basis for determining acquiring company
The Company acquired shares for cash considerationand obtained majority of voting rights.
2. Period of the acquired company’s financial results includedin the consolidated financial statements
From April 1, 2019 to March 31, 2020
3. Acquisition cost and type of consideration paid
Stock acquisition cost is not disclosed due toconfidentiality with the seller.
4. Difference between acquisition cost of the acquiredcompany and sum of acquisition costs of individualtransactions

Gain on step acquisition

Millions ofyen

Thousands of
U.S. dollars¥ 1,016$ 9,336

5. Amount of goodwill recognized, reason for the recognition,
and amortization method and period
1) Goodwill recognized¥1,849 million ($16,990 thousand)2) Reason for the recognition
Goodwill was recognized as the excess of acquisition
cost over the Company’s interest in net assets of theacquired company.
3) Amortization method and period
Straight-line method over 15 years

29

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

Millions of yen

Thousands of
U.S. dollars¥ 6,568$ 60,351

4,907

45,089¥11,475$105,440¥ 1,579$ 14,509

1,509

13,866¥ 3,088$ 28,375

4. Difference between acquisition cost of the acquiredcompany and sum of acquisition costs of individualtransactions up to the acquisition date

Loss on step acquisition

1. Summary of the combination
1) Name and business of the company acquired
Name: Japan U-PiCA Company, Ltd.
Business: Manufacturing and sales of unsaturated
polyester resins
2) Reason for the combination
The Company aims to utilize operating resources suchas manufacturing facilities and know-how mutually andefficiently by means of making the acquired company
consolidated and unlisted based on prompt and flexible
decision by management.
3) Date of combination
March 30, 2020
4) Legal form of the combination
Acquisition of equity shares for cash consideration
5) Post-combination name of the acquired company
Japan U-PiCA Company, Ltd.
6) Percentage of voting rights acquired
Voting rights held immediately before stock acquisition:
46.14%
Percentage of additional voting rights acquired on thedate of business combination: 20.26%
Voting rights after stock acquisition: 66.40%
7) Basis for determining acquiring company
The Company acquired shares for cash considerationand obtained majority of voting rights.
2. Period of the acquired company’s financial results includedin the consolidated financial statements
Financial results of the acquired company from April 1,
2019 to March 31, 2020 were recorded in equity inearnings (losses) of affiliates in the consolidated statementof income because this company was accounted for byequity method.
3. Acquisition cost and type of consideration paid

Consideration
paid for acquisition
Acquisition cost

Cash

Thousands of
U.S. dollars¥ 197$ 1,810

5. Principal acquisition related expenses
Millions ofyen

Advisory fees

Japan U-PiCA Company, Ltd.

Millions of
yen

¥

63

Thousands of
U.S. dollars$

579

6. Amount of negative goodwill recognized and reason for therecognition
1) Negative goodwill recognized¥492 million ($4,521 thousand)2) Reason for the recognition
Negative goodwill was recognized as the excess of theCompany’s interest in net assets of the acquiredcompany over the acquisition cost.
7. Details of the assets acquired and the liabilities assumed at
the date of the business combination

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

Millions of yen

Thousands of
U.S. dollars¥ 9,227$ 84,784

3,485

32,022¥12,713$116,815¥ 2,559$ 23,514

1,059

9,731

¥ 3,618$ 33,245

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 (AGELESSTM).
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 inJapan (See note 25). Intersegment revenue and transfer are
based on arm’s-length transactions.

8. Estimated impact on the consolidated statement of income
for the year ended March 31, 2020 on the assumption thatthe business combination had been completed at the
beginning of the year ended March 31, 2020 and thecalculation method

Net sales
Operating income
Net loss

Millions of yen

Thousands of
U.S. dollars¥ 8,973$ 82,450

222

2,040

85

781

(Calculation method of estimated impact)
Net sales and profit and loss information calculated on theassumption that the business combination was completed
at the beginning of the year ended March 31, 2020 areused at the estimated impact.
This note has not been audited.

Millions of yen

Thousands of
U.S. dollars¥ 2,338$ 21,483

24. Segment Information¥ 2,338$ 21,483

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.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202030

Notes to Consolidated Financial Statements

Notes:The reported segment information for the Company and its consolidated subsidiaries for the years ended
March 31, 2020 and 2019 is summarized as follows:

Natural gas
chemicals

Sales:
Sales to third parties
Inter-segment sales¥

Aromatic
chemicals

157,158 ¥
6,632
163,790 ¥(5,711) ¥194,091 ¥¥¥¥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

6,352 ¥
123
59
112
(4,973)200,174952
201,127
10,470204,126

Specialty
chemicals¥¥¥¥

9,588 ¥
256
218
710
49

200,396
1,621
202,017
22,329235,638

Millions of yen
2020
Information
and advanced
materials¥¥¥¥

54,716 ¥165
54,881 ¥
5,846 ¥
75,080 ¥Other

Adjustments

898 ¥
123
1,021 ¥
8 ¥
34,569 ¥8,724 ¥
—
236
562
3,357

3,853 ¥
—
27
72
344

19 ¥
1
9
5
(60)

Consolidated— ¥(9,495)(9,495) ¥(1,827) ¥28,226 ¥613,344—613,344
31,116
771,733

1,052 ¥
—
14
(494)
—

29,591380
565
968(1,282)64,623499

20,002

10,537—(149)

95,513

7,294

15,022

14,677

2,635

1

2,759

42,389principles generally accepted in Japan (See note 25).

1. Other includes listed affiliates and real estate business
which are not included in reported segments.

Related information

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
2020

Millions of yen
2020
2019

Elimination of intersegment transactions
Unallocated companywide expenses¥¥(165) ¥

95 $2. Geographical information(1) Sales(1,516)(1,661)(689)(1,827) ¥(594) $ (16,788)(15,262)* Company-wide expenses are administrative expenses,
financial income and expenses and other income andexpenses which are not allocated to reported segments.

Millions of yen
2020
2019

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

¥

276,706¥

89,653
162,630
37,19647,157613,344

Thousands of
U.S. dollars
2020¥

298,538 $ 2,542,553¥

79,518
823,789
171,965
1,494,349
51,086
341,781
47,876433,309648,986 $ 5,635,799(2) Adjustments in segment assets

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¥¥¥¥

5,512 ¥—
8176
19,402¥¥¥

8,734 ¥
260
218
772
7

204,634
1,099
205,734
28,206
238,546¥

Other

Adjustments

Consolidated¥¥¥

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

39,279Adjustments

Consolidated

58,366 $
1,130
542
1,029
(45,695)

Thousands of U.S. dollars
2020
Information
Specialty
and advanced
chemicals
materials
Other

Aromatic
chemicals$ 1,444,069 $ 1,839,327
60,9398,748$ 1,505,008 $ 1,848,084$(52,476) $96,205$ 1,783,433 $ 1,875,641

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¥

Millions of yen
2020
2019

74,222Natural 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$ 1,841,367
14,895$ 1,856,262$ 205,173$ 2,165,193

88,101 $
2,352
2,003
6,524
450

$
$
$
$

502,766 $
1,516
504,282 $
53,717 $689,883 $

8,251 $
1,130
9,382 $
74 $
317,642 $80,162 $
—
2,169
5,164
30,84635,404 $
—
248
662
3,161

175 $
9
83
46
(551)

— $ 5,635,799(87,246)—(87,246) $ 5,635,799(16,788) $ 285,914
259,359 $ 7,091,179
9,666 $—
129
(4,539)—271,901
3,492
5,192
8,895
(11,780)

593,798

4,585

183,791

96,821—(1,369)877,635

67,022138,032

134,862

24,212

925,351

389,497

Elimination of intersegment balances
Unallocated companywide assets

Thousands of
U.S. dollars
2020¥ (39,758) ¥ (39,154) $ (365,322)¥

67,98585,48028,226 ¥46,326 $ 259,359

Note: Geographical sales are classified by customer’s
location.
(2) Property, plant and equipment

624,690*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¥1,052 million ($9,666 thousand) and ¥858 million are
depreciation and amortization of company-wide assets
which are not allocated to reported segments for theyears ended March 31, 2020 and 2019, respectively.
(4) “Adjustments in interest income” of ¥14 million ($129
thousand) and ¥36 million are mainly elimination ofintersegment transactions for the years ended March 31,
2020 and 2019, respectively.
(5) “Adjustments in interest expenses” of ¥(494) million ($(4,539) thousand) and ¥(582) million are mainly
elimination of intersegment transactions for the years
ended March 31, 2020 and 2019, respectively.
(6) “Adjustments in investments in affiliates accounted forby the equity method” of ¥(149) million ($(1,369)
thousand) and ¥800 million are mainly investments
which are not allocated to reported segments for theyears ended March 31, 2020 and 2019, respectively.
(7) “Adjustments in capital expenditures” of ¥2,759 million($25,351 thousand) and ¥2,146 million are related tocompany-wide assets which are not allocated toreported segments for the years ended March 31, 2020
and 2019, respectively.

Millions of yen
2020
2019

Japan
Asia
U.S.A.
Other
Total

¥

¥

172,804
35,07926,675
5,278
239,838¥¥

Thousands of
U.S. dollars
2020

167,089 $ 1,587,834
35,086322,328
22,930245,107
3,385
48,498228,492 $ 2,203,786

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.

3. Segment profit is adjusted with “Keijo-rieki” disclosed in the
consolidated statement of income under accounting

31

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202032

Notes to Consolidated Financial Statements

Independent Auditor’s Report

Information of impairment loss on fixed assets by reported segments

Natural gas
chemicals

Impairment loss¥

0

Aromatic
chemicals¥

Natural gas
chemicals

Impairment loss

$

0

381 ¥

Aromatic
chemicals$

3,501 $

Specialty
chemicals—Millions of yen
2020
Information
and advanced
materials

¥

—

Other

¥

Adjustments

—

¥

—

$

17

¥

—

¥

156

$

Thousands of U.S. dollars
2020
Information
Specialty
and advanced
chemicals
materials
Other

—

$

—

$

—

Adjustments—

Consolidated¥

381

Consolidated

$

3,501

There was no impairment loss on fixed assets for the year ended March 31, 2019.

Information of balance of goodwill by reported segments

Natural gas
chemicals

Goodwill¥

1,726

Aromatic
chemicals¥

Natural gas
chemicals

Goodwill¥—

Aromatic
chemicals¥

Natural gas
chemicals

Goodwill$

15,8603,549 ¥

3,841 ¥

Aromatic
chemicals$

32,610 $Specialty
chemicals—

Specialty
chemicals—Millions of yen
2020
Information
and advanced
materials

¥

—

Other

¥

Millions of yen
2019
Information
and advanced
materials¥—

Adjustments

Other

¥

Adjustments

Thousands of U.S. dollars
2020
Information
Specialty
and advanced
chemicals
materials
Other

—

$

—

$

—

—

Adjustments—

Consolidated

¥

5,293

Consolidated

¥

3,841

Consolidated$

48,635

Information of negative goodwill by reported segments
Negative goodwill of ¥492 million ($4,521 thousand) was recognized in the other segment because Japan U-PiCA Company,
Ltd. became a subsidiary during the year ended March 31, 2020. No negative goodwill was recognized for the year ended March
31, 2019.

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.

33

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

Millions of yen
2020
2019

Sales
Gross profit
Operating income
Ordinary income
Profit before income
taxes
Profit¥Thousands of
U.S. dollars
2020

613,344 ¥
131,394
34,26031,116

648,986 $ 5,635,799
136,129
1,207,333
41,386
314,80369,199285,91434,34369,066

315,566

24,48759,979225,002

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202034

Independent Auditor’s Report

Shareholder Information
Information for Shareholders (As of March 31, 2020)
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
225,739,199
Stock transaction units
100 - shares
Number of shareholders
24,777

Individuals and others

16.3％

Financial institutions

39.9％

Foreign investors

31.3％
Securities companies

2.3％
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)

15,260

7.3%

Japan Trustee Services Bank, Ltd. (Trust Account)

9,346

4.5%

Meiji Yasuda Life Insurance Company

8,797

4.2%

Nippon Life Insurance Company

8,795

4.2%

The Norinchukin Bank

5,026

2.4%

AGC Inc.

4,835

2.3%

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

3,711

1.8%

JP MORGAN CHASE BANK 385151

3,183

1.5%

The Bank of Yokohama,Ltd.

3,085

1.5%

J.P. MORGAN BANK LUXEMBOURG S.A. 1300000

2,794

1.3%

Name of shareholder

1. MGC holds 17,758 thousand shares of treasury stock, which is not included in the above list of major shareholders.
2. Percentage of total outstanding shares does not include treasury stock.

Monthly stock price range and trading volume■■Trading volume(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)002017.42018.42019.4

Dividend per share■Interim ■Fiscal year-end
(yen)
60
40
20
0

35

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 2020

59
35
32
16

38
22

16

16

2016.32017.3

70
35

70
35

35

35

24

2018.32019.32020.3

Note: With an 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 graphs are calculated assuming that thereverse stock split had been conducted at the beginning of April, 2015.

MITSUBISHI GAS CHEMICAL COMPANY, INC. Corporate Report 202036