MGC REPORT

2022

Financial Section
Consolidated Financial Summary

1Management’s Discussion and Analysis

3

Consolidated Balance Sheet

15

Consolidated Statement of Income

17

Consolidated Statement of Comprehensive Income

18

Consolidated Statement of Changes in Net Assets

19

Consolidated Statement of Cash Flows21

Notes to Consolidated Financial Statements

22

Independent Auditor’s Report

54

Corprate Data

58

Consolidated Financial Summary
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
Fiscal year period: April 1 to March 31

FY2011FY2012FY2013

FY2014FY2015FY2016

Operating results (Millions of yen)
Net sales¥452,217

467,979

534,443

529,570

593,502556,480

Operating profit

9,083

11,421

11,48814,99634,01843,762

Ordinary profit
Profit (loss) attributableto owners of parent
Share of profit of entities
accounted for using
equity method

26,11627,65130,80442,00045,43262,43012,327(7,793)

14,921

43,34634,13448,013

20,532

19,045

20,46627,895

16,683

21,125

Financial position (Millions of yen)
Current assets¥254,037

261,397

287,642

372,166

341,237

326,674

Total assets

595,250

613,908

657,838

790,784

739,582

738,188

Current liabilities

193,464

195,438

178,897

225,068

214,676

188,426

Net assets

292,111294,895

323,858

422,851

423,135

473,370

Interest-bearing debt

185,185

182,644

204,489

215,614

181,427

118,713¥37,348

31,16927,182

76,982

84,671

82,711(37,274)(30,818)(29,883)(23,531)(31,922)(31,119)(9,876)(14,356)

7,124(25,005)(47,335)(60,217)35,701

26,90737,31072,67875,82867,177¥54.56(34.50)66.07

191.94153.85221.83

1,246.92

1,256.81

1,382.52

1,672.25

1,707.01

1,967.94

Operating profit margin

2.0

2.4

2.1

2.8

5.7

7.9

Return on equity (ROE)

4.4

(2.8)

5.0

12.6

9.0

12.0

Return on assets (ROA)
Return on invested
capital (ROIC)
Equity ratio

4.5

4.6

4.8

5.8

5.9

8.4

5.5

5.8

6.1

7.2

7.3

10.4

47.3

46.2

47.5

47.8

51.0

57.5

Capital expenditures
Depreciation andamortization
Research anddevelopment costs¥42,423

30,982

25,40922,22630,51235,01027,76323,09623,52823,77026,70525,631

17,44915,332

16,122

16,87318,936

19,267

Number of employees

5,216

5,323

5,445

8,254

8,176

8,034

Cash flows (Millions of yen)
Operating activity cash
flow
Investing activity cash
flow
Financing activity cash
flow
Total cash and cash
equivalents at end ofyear
Per share data (Yen)
Earnings per share(EPS)*1
Net assets per share*1
Ratios (%)

Others (Millions of yen)

*1 With and effective date of October 1, 2016, MGC conducted a reverse stock split for MGC's ordinary shares on a 2:1 basis.
As a result, each amounts per share in the above table are calculated by retroactive adjustment applying the above shareconsolidation to preceding periods as well.

1 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

FY2017

FY2018FY2019FY2020

FY2021

Operating results (Millions of yen)
Net sales

FY2021(Thousands of
U.S. dollars)*2¥635,909

648,986

613,344595,718

705,656$5,765,634

Operating profit

62,741

41,38634,26044,51055,360452,325

Ordinary profit
Profit (loss) attributableto owners of parent
Share of profit of entities
accounted for using
equity method

80,711

69,19931,11650,24074,152605,866

60,53155,00021,15836,07048,295394,599

18,27728,408(1,282)

5,162

14,883

121,603(Thousands of
U.S. dollars)*2

Financial position (Millions of yen)
Current assets¥384,249

378,845

358,669

402,141452,210$3,694,828

Total assets

785,687

804,038

771,733

836,364

928,651

7,587,638

Current liabilities

206,835

188,420

163,574

167,947

198,969

1,625,697

Net assets

519,144553,282

548,141

581,411

630,887

5,154,727

Interest-bearing debt

106,964

95,751

74,713

98,476

117,650

Cash flows (Millions of yen)
Operating activity cash
flow
Investing activity cash
flow
Financing activity cash
flow
Total cash and cash
equivalents at end ofyear

961,271(Thousands of
U.S. dollars)*2¥90,72064,042

74,23455,46452,090$425,607(33,614)(42,761)(33,922)(40,370)(64,954)(530,713)(33,038)(31,396)(49,563)

5,154(3,666)(29,953)

90,30480,37970,04391,07592,257753,795

Per share data (Yen)(U.S. dollars)*2

Earnings per share(EPS)*1¥281.39257.46100.50173.41

232.15$1.90

Net assets per share*1

2,187.99

2,354.25

2,368.11

2,520.34

2,733.86

22.34

Operating profit margin

9.9

6.4

5.6

7.5

7.8

7.8

Return on equity (ROE)

13.6

11.3

4.3

7.1

8.8

8.8

Return on assets (ROA)
Return on invested
capital (ROIC)
Equity ratio

10.6

8.7

3.9

6.2

8.4

8.4

13.2

10.9

4.9

7.7

10.4

10.4

59.5

62.6

63.8

62.7

61.2

Ratios (%)

61.2(Thousands of
U.S. dollars)*2

Others (Millions of yen)
Capital expenditures
Depreciation andamortization
Research anddevelopment costs¥30,959

39,27942,38940,282

54,793$447,692

27,02727,451

29,59130,68631,999261,451

18,987

18,607

19,696

19,90521,093

172,343

Number of employees

8,009

8,276

8,954

8,998

9,888

9,888

*2 U.S. dollar amounts are translated from yen, for convenience only, at the approximate rate of ¥122.39 = US$1 prevailing on
March 31, 2022.

2 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Management’s Discussion and Analysis
Results of Operations
1. Management Policies, Operating Environment and Challenges to Be Addressed
Forward-looking statements contained herein are based on MGC Group’s judgment as of March 31, 2022.
1) State of progress in important measures as of the end of fiscal 2021
Our Medium-Term Management Plan launched in fiscal 2021, set two objectives in accord with the MGC Way, the new MGC
Group philosophy system: shift to a profit structure resilient to changes in the business environment, and balance social andeconomic value. MGC is implementing a three-pronged strategy to achieve each objective.
Medium-Term Management Plan
●Objective 1
Shift to a Profit Structure Resilient to Environmental Changes: Business Portfolio Reforms■Strategies- Further strengthen competitively advantageous (“differentiating”) businesses- Accelerate creation and development of new businesses- Reevaluate and rebuild unprofitable businesses
To move forward with business portfolio reforms under the Plan, the MGC Group has reevaluated its business categories,classifying those businesses with both competitive advantage and growth potential as “differentiating businesses.” The MGC
Group is developing a broad range of differentiating businesses. In chemicals and materials, these include Meta-xylenediamine(MXDA), MX-Nylon, aromatic aldehydes and polyacetal (POM); specialty products include electronics chemicals, BT materials,
optical polymers and ultra-high refractive lens monomers. The MGC Group will continue to focus management resources onthese differentiating businesses, further strengthening profitability.
During the fiscal year under review, the Company established a 100%-owned MXDA manufacturing subsidiary, MGC
SPECIALTY CHEMICALS NETHERLANDS B.V., in the city of Rotterdam, in the Netherlands. With the aim of further
strengthening the POM-related business through more closely integrated management, the Company also made the decision totransfer it to wholly owned subsidiary Global Polyacetal Co., Ltd. In addition, in order to enhance the competitiveness of thepolycarbonate (PC) operations, which is one of the foundation businesses of the MGC Group, the Company decided to acquire
an additional 25% equity stake in Mitsubishi Engineering-Plastics Corporation, an equity-method affiliate of MGC, and make it aconsolidated subsidiary on April 3, 2023.
The Company will also work to accelerate creation and development of new businesses. In the fiscal year under review, MGC
forged ahead with active R&D investment and increased the number of research personnel. It also established the NEXX
Technologies Advanced Materials Business Unit at consolidated subsidiary MITSUBISHI GAS CHEMICAL AMERICA, INC.,
with the intention of using prepreg products to develop the market for composite materials in the US.
In terms of initiatives to reevaluate and rebuild unprofitable businesses, the Company made the decision to terminate
production of formalin at the Yokkaichi Plant by around August 2022, and to terminate production of formalin, paraform, andhexamine at the Niigata Plant by around May 2023. Following termination of trimethylolpropane production at the Mizushima
Plant, we are proceeding to reevaluate and rebuild the formalin and polyol product lines. By acquiring the shares of JCHEMICAL, Inc. and making it a subsidiary, we will establish a competitive advantage through the building of an integrated
production system that ranges from formalin raw materials to wood adhesives, with the objective of converting the formalin
business to a base for stable earnings (in April 2022 J-Chemical, Inc. and Yutaka Chemicals Corporation merged, with thename of the resulting company being changed to MGC Woodchem Corporation).
By implementing these strategies, the MGC Group attempts to shift to a profit structure that is resilient to environmental
changes. Specifically, by fiscal 2023, the Group aims to have more than 40% of overall sales come from differentiating
businesses, and for unprofitable businesses or those needing rebuilding to represent less than 3% of total sales.
●Objective 2
Balance Social and Economic Value: Toward Sustainable Growth■Strategies- Solve social issues through business- Harmonize shared-value creation with environmental protection- Strengthen discipline and foundation supporting business activities
Three strategies will be executed with the goal of balancing social and economic value.
In April 2020, MGC identified materiality--priority issues for management--in line with formulating a medium-term management
plan, it has also established new fiscal 2030 targets to allow the company to make steady progress in materiality management,
and has set new key performance indicators (KPIs) for fiscal 2023 aimed at achieving those targets. Specifically, KPIs havebeen set for GHG emission reductions aimed at air quality control, and for investments and R&D expenditures aimed at solving
energy and climate change-related problems. MGC will tie this kind of materiality management to sustainable growth.

3 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Materiality KPIs and SDG targets: Pursuing Creation of Value to Share with Society
Materiality
Category

Creating Shared
Value
(CSV)

KPIs
Elements

Harmonization ofshared-value
creation withenvironmental
protection(E)

Fiscal 2023 targets

Fiscal 2030 targets

Relationship to SDGs
(Targets)

Sales from ICT and mobility
applications

320.0 bil. JPY(Consolidated)

Create new businesses that
accelerate digital innovation

3.6

Contribution to solving energy
and environmental problems

Investment: 12.0 bil. JPY(Consolidated: 2021-2023
cumulative)
Investment: Acquisition;
Financing: Approval basis

Commercialize carbonnegative technology

9.4

Sales from medical and foodapplications

50.0 bil. JPY(Consolidated)• Advances in preventive andpredictive medicine,enhanced healthy life
expectancy• Further advance foodpreservation technology

3.8

Percentage taking fewer than
10 days of annual paid
leave*1,2

0%

0%

8.5
8.8

Serious occupational
accidents*1,300Serious accidents*1,400Highly energy-andresource-efficient
production

GHG emissions intensity
Baseline: fiscal 2013*1

19.9% reduction

28.0% reduction

7.3

Promotion of innovative
R&D

R&D investments devoted tosolving climate change
problems*1

5% or higher

7% or higher

9.5

GHG emissions
Baseline: fiscal 2013*1

28.0% reduction

36.0% reduction

13.2

Renewable energy as apercentage of electric powerpurchased*1

10%

50%

7.2

Zero waste emission rate*1

0.3% or less

0.15% or less

12.5

Contribution throughbusiness operations• Contribute todevelopment of
ICT/mobility society• Solve energy andclimate change
problems• Solve medical andfood problems

Cultivating a corporate
culture of job
satisfaction

Foundation forshared-value
creation(S)

KPIs

Occupational safety
and health/Process
safety and disasterprevention

Proactive response toenvironmental
problems• Air quality control• Water andBiodiversity
Conservation• Reduction ofindustrial waste

9.4

12.3

3.9

*1 On a non-consolidated basis*2 For employees granted 20 days of annual leave*3 Accidents resulting in lost work days eligible for disability compensation, including death and permanent disability,
or potential disability, with four or more lost work days
*4 Accidents that threaten third parties, including those resulting in environmental pollution involving the community orthat cause damage to local residents, and other accidents involving serious damage
2) Future initiatives
Combined with restrictions on economic activity following the prolongation of COVID-19, and the impact on production activities
of semiconductor shortages, the recent emergence of geopolitical risks related to the situation in Ukraine have led to a businessenvironment that remains difficult to read going forward. Nevertheless, the MGC Group will continue to work together as one toachieve the management objectives set out in the plan.
Specifically, with regard to achieving the first objective of “Shift to a profit structure resilient to business environmental
changes,” we will continue to invest proactively in differentiated products including MXDA, electronic chemicals, and BT
materials, and prioritize allocation of management resources to these areas. In addition, for other foundation products, including
PC products and methanol, we will also promote measures to further increase added value and improve efficiency. For
businesses with profitability issues, we aim to move forward with further structural changes and overhauls, primarily in theformalin and polyol businesses, with the goal of removing businesses from the list of those classified as unprofitable businessesor those needing rebuilding. In addition, we will actively commit R&D resources with the aim of creating and nurturing new/nextgeneration businesses.
In order to achieve objective 2, “Balance social and economic value,” we will link our mission of “Creating value to share withsociety” to sustainable growth via materiality management. Particularly with regard to initiatives for carbon neutrality, this is oneof the most important issues for the management strategy of the Company, and one that we will pursue through the use of ourunique and distinctive technology to develop products and technologies that will contribute to decarbonization, while working to
reduce greenhouse gas emissions.

4 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

♦ Reference:

Disclosure in accordance with the recommendations of the TCFD (Task force on Climate-related Financial
Disclosures), addressing the problem of marine plastics

MGC endorsed the TCFD recommendations in May 2019. MGC has assessed the risks and opportunities climate change
represents for the Group, and we are working to strengthen resilience through scenario analysis while also engaging in sounddialogue with our stakeholders. In fiscal 2021 the Group implemented scenario analyses for the polycarbonate and MXDA
businesses, while also confirming the possibility of mitigating the financial impact of the decarbonization scenario throughaddressing recycling and other issues.
Important CSR issues such as climate-change risks are examined by an advisory body attended by corporate sector heads,
based upon which they are reviewed and approved by the CSR Council comprised primarily of directors, including outside
directors, but also attended by audit & supervisory board members and others, and chaired by MGC’s president.
In March 2022, MGC announced a new objective of achieving carbon neutrality for the MGC Group by 2050, with the goal of
limiting the increase in average temperature to below 2°C.
While developing existing MGC businesses with strengths in such initiatives, MGC is leveraging R&D capabilities andpromoting cooperation with other group companies and external third parties. By taking specific measures during the transitional
stage such as using electricity generated from LNG, which has low greenhouse gas emissions, adopting renewable energy, andinstalling carbon-free energy systems and CCUS*, MGC is working to reduce emissions by 36% of our target by 2030, andpushing forward to achieve carbon neutrality by 2050.
Issues around disposal and reuse of post-use plastics, most notably marine plastic pollution, are gaining recognition globally.
MGC Group places priority on recycling and circularity. It is developing recycling technologies, easily recyclable materials andcompostable bioplastics. Other such initiatives include collecting and recycling waste materials generated when customers use
its products and actively participating in similar initiatives led by industry organizations.
* CCUS: CO2 capture, utilization and storage; involves technologies to both capture/store CO 2 and use stored CO2 as, e.g., achemical feedstock.
Disclaimer
This Management’s Discussion & Analysis contains forward-looking statements, including ones pertaining to plans and targets,based on information available at the time these materials were prepared, and certain assumptions deemed reasonable. They
involve uncertainty. Actual performance may differ significantly from such forward-looking statements as a result of various
factors.

2. Business and Other Risks
MGC Group defines “risk” as possibilities or hazards that, if they were to manifest, could inflict economic losses on MGC due tohuman casualties, property damage, reputational damage, opportunity losses or other such detriments. The Group has built arisk management regime designed for both routine and exigent circumstances. Specifically, it has established Basic Rules on
Internal Control & Risk Management, formulated risk management/mitigation policies and established an Internal Control & Risk
Management Committee chaired by the officer in charge of internal control and risk management as a decision-making bodythat reports directly to the president. The committee makes decisions on matters related to risk management policies, initiatives
and plans; matters related to business and operational risk management and guidance, direction and oversight incidental
thereto; and matters related to guidance, direction and oversight related to business continuity planning. Additionally, it
periodically reports to the Board of Directors on the state of risk management.
The main foreseeable risks that could affect the Group’s business results, share price, or financial condition are enumerated
from 1) through 13) below. They are all risks that the Group deems to be a realistic possibility, though specifics such as thedegree and timing of their manifestation and their impacts are impossible to estimate as of the company's annual securities
report's filing date (June 28, 2022) (however, they do not necessarily include every risk to which the Group is exposed).

1) Endogenous Business Risk
Nature of Risk
MGC Group is mainly a manufacturer. With many of its products used as raw materials, intermediate goods or pharmaceutical
inputs in customers’ business activities, its sales are sensitive to economic conditions in the countries and regions where its
customers’ products are sold. In particular, market-priced commodities such as methanol, methanol derivatives, generalpurpose aromatic chemicals and polycarbonate resins are generally prone to declines in unit sales and sales prices during
economic downturns. Such products’ economic sensitivity could adversely affect the Group’s operating results and/or financial
condition.
In specialty and high-value-added product markets, the Group competes on multiple dimensions, including price, quality,
functionality, delivery time and customer service. Intensification of competition due to, for example, the advent of products
offering alternative functionality, could adversely affect the Group’s operating results and/or financial condition. For example,
electronic materials supplied mainly to the electronics industry typically have a short product lifecycle and are constantly
exposed to competition through technological innovation. The Group’s sales consequently could decline as a result of existingproducts’ obsolescence or product development delays. Additionally, some of the Group’s products are sold to only a limited
number of customers. If one customer stops using such a product, the Group’s sales could decrease.
MGC Group externally sources electric power and raw materials like xylene. Its manufacturing operations could be disrupted
if a required input were to become unavailable. Its operating results and/or financial condition could be adversely affected by a
sharp rise in input prices also.

5 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Main Risk Mitigation Measures
MGC Group endeavors to develop new markets and businesses in addition to conducting basic and applied research to develop
new products and manufacturing processes and improve existing ones. Other risk mitigation measures include close
communication and collaboration, inclusive of R&D, with customers, use of long-term supply contracts with both suppliers andcustomers, and sourcing of raw materials and other inputs from multiple suppliers.

2) Overseas Business Risk
Nature of Risk
MGC Group has subsidiaries and manufacturing and sales operations in Asia, North America, South America, the Middle Eastand elsewhere. Depending on country-specific conditions or the global situation, such overseas operations and even dividend
remittances from overseas subsidiaries could be disrupted by political instability or societal or economic turmoil due to a natural
disaster, war, infrastructure failure, a widespread infectious disease outbreak or other unforeseeable circumstances. Other risks
that could adversely affect the Group’s operating results and/or financial condition include problems due to differences in legal
systems, investment restrictions imposed by foreign governments, nationalization or expropriation of assets, and personnel orlabor issues.
Main Risk Mitigation Measures
To respond to overseas risks as effectively and expeditiously as possible, while monitoring the latest developments in the global
situation, MGC Group endeavors to gather information from various sources, including locally stationed expat personnel, joint
venture partners, attorneys and government authorities.

3) Joint Venture Risk
Nature of Risk
MGC Group has numerous manufacturing joint ventures in not only Japan but also foreign countries such as Saudi Arabia,
Venezuela, Thailand, China, South Korea, and Trinidad and Tobago. It sources and sells products such as methanol andengineering plastics through its JVs. The Group’s joint venture partners are not under the control of the Group. There isconsequently no assurance they will make decisions in the best interests of the Group or even the joint ventures themselves. In
the event of a joint venture’s dissolution or other such circumstances, the Group’s operating results and/or financial condition
could be adversely affected.
Main Risk Mitigation Measures
MGC Group seeks to maintain and further improve good communication, share targets and objectives and maintainrelationships with its joint venture partners while mitigating risks through joint venture agreements and other operational
agreements.

4) Product Quality Risk
Nature of Risk
As noted above, MGC Group manufactures many products that are used as raw materials, intermediate goods or
pharmaceuticals in customers’ business activities and that conform to specifications agreed upon with the customer. However, if
it sells a qualitatively defective product, it may have to compensate customers that used the defective product, end-productusers and/or other parties for not only direct damages but also opportunity losses. Its societal reputation also may be impaired.
In such an event, the Group’s operating results and/or financial condition could be adversely affected.
Main Risk Mitigation Measures
Even though most MGC Group manufacturing sites operate in conformance with globally recognized quality control standards,
the Group has liability insurance coverage that includes product liability insurance as a precaution against risk. Other means bywhich the Group mitigates risk include explicitly limiting the scope of its liability as necessary in agreements with customers.

5) Natural Disaster and Accident Risks
Nature of Risk
MGC Group has numerous manufacturing sites in Japan and elsewhere. Their production activities could be disrupted byearthquakes, storms, flooding or other natural disasters, war, terrorism, civil unrest, labor actions, communication infrastructure
failures, lockdowns and other measures taken in response to outbreaks of infectious diseases, equipment malfunctions, humanerror or other unforeseeable circumstances. Given that MGC Group handles hazardous chemical substances on a daily basis, itcannot completely eliminate the possibility of explosions, fires, toxic gas leaks or other accidents that damage production
facilities, harm employees, inflict losses on neighboring property owners or customers, pollute the environment or otherwise
inflict damages. Additionally, many MGC Group manufacturing sites have multiple production facilities that share utilities suchas electricity, water and steam. Interruption of utility service to a manufacturing site consequently could shut down the site’sentire production operations. In such an event, the Group’s operating results and/or financial condition could be adversely
affected.
Main Risk Mitigation Measures
While pursuing continuous improvement based on an environmental safety management system, MGC Group diligently strives
to upgrade its safety and disaster preparedness regime through better risk assessment and thorough safety training. In addition
to, of course, endeavoring to properly maintain and stably operate its manufacturing facilities, the Group also formulates

6 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

business continuity plans and builds redundancy into its network of production sites, including overseas. Additionally, the Group
mitigates risk with broad insurance coverage that includes fire, business interruption, oil pollution and liability insurance.
As a response to the COVID-19 pandemic, MGC Group swiftly set up a Crisis Response Headquarters and has been
expeditiously implementing anti-pandemic measures. Even now, it continues to refine its plants and other workplaces’ antipandemic measures customized to specific operations on a workplace-by-workplace basis to ensure the safety of its
stakeholders, particularly its employees and their families and its customers. Specific measures include proactively using online
videoconferencing throughout the Group to reduce opportunities for contagion, allowing head office staff and other employees towork from home and repeatedly adjusting on-site staffing in response to changing infection rates.

6) Information Security Risk
Nature of Risk
MGC Group possesses confidential and personal information required for its business activities and uses various information
systems in its operations amid ongoing digitalization of its businesses. In the event of a leak of such information, an information
system failure, a cyberattack, fraud committed by a malicious third-party or other such event, the Group’s business activities
and/or operating results could be adversely affected.
Main Risk Mitigation Measures
MGC Group has established an information security regime and internal regulations based on various guidelines and educates
its employees to increase their information-security literacy. It also conducts ongoing initiatives to ensure the adequacy of andupgrade its information security.

7) Compliance Risk
Nature of Risk
MGC Group handles toxic and otherwise hazardous chemical substances, including high-pressure gases, as an inherent aspectof its operations. As such, it is globally subject to various legal and regulatory restrictions at every stage from manufacturing tostorage, distribution and sales. In all its business activities and transactions, the Group is required to not only comply with laws
and regulations but also to fulfill social responsibilities that are not limited to such rules. However, in the event that an
infringement of laws and, regulations, or social norms, including the rules described above, is deemed to have occurred, theGroup’s operating results and/or financial condition could be adversely affected as a result of incurring legal liability andrectification costs, social sanctions and loss of trust.
Main Risk Mitigation Measures
In addition to establishing specialized organizational units to oversee environmental and other regulatory compliance, MGC
Group has built a compliance regime, including an internal whistleblowing system, and endeavors to fully comply with laws andregulations. It also implements various measures to foster a general compliance consciousness among its personnel.
The Group takes a broad view of compliance, one that involves not only abiding by laws but also upholding the fair,transparent, and flexible conduct of business, while respecting social and other norms, in acknowledgment of its responsibilities
to society, and makes this known to all employees.

8) Human Rights Risk
Nature of Risk
Awareness of human rights continues to increase, primarily in developed nations, and companies are now being required tomake efforts at a global level to respect and protect human rights in the course of business, including the supply chain. In theevent that the Group does not address these issues appropriately, the Group’s operating results and/or financial condition could
be adversely affected by not only legal and regulatory responsibility but also the termination of transactions, social sanctions,and loss of trust.
Main Risk Mitigation Measures
The MGC Corporate Behavior Guidelines and the MGC Group Code of Conduct call for respect for human rights, and the Groupis also a signatory of the UN Global Compact. On its own initiative, MGC promotes responsible business, which includes
protection of human rights, through such actions as showing the “Mitsubishi Gas Chemical CSR Procurement Guidelines” andother documents to its supply chain partners in order to gain their understanding and cooperation.

9) Climate Change Risk
Nature of Risk
MGC Group recognizes that climate change caused by greenhouse gases emitted in the course of its business and otheractivities, and a variety of related changes that occur in the natural and business environments constitute material risk factors.
In the event that the Group’s initiatives to address greenhouse gas emissions are inadequate, social sanctions and loss of trust
may result. In addition, for example, if various emissions control measures are introduced, such as new carbon taxes or
emissions trading systems, the Group’s operating results and/or financial condition could be adversely affected.
Main Risk Mitigation Measures
In May 2019, MGC declared its support for the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD). Risks and opportunities posed to MGC Group by climate change are examined by an advisory body attended bygeneral managers of the head office’s corporate sector, based upon which they are reviewed and approved by a CSR Council

7 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

chaired by MGC’s president and comprised primarily of directors, including outside directors, but also attended by audit &supervisory board members and others.
In addition to mitigating risks due to climate change through analyses based on decarbonization scenarios and scenarios inwhich no specific action is taken, the Group will strengthen its resilience to be better able to transform risks into business
opportunities. In FY2021 the Group implemented scenario analyses for the polycarbonate and MXDA businesses, andconfirmed the potentials for mitigating financial impacts in the decarbonization scenarios through addressing recycling and otherissues.
While developing existing MGC businesses with strengths in carbon-neutral initiatives, leveraging R&D capabilities andpromoting cooperation with other group companies and external third parties, by taking specific measures in the transition stage
such as the use of electricity from LNG generation, which has low greenhouse gas emissions, the adoption of renewableenergy, and the installation of carbon-free energy systems and CCUS, MGC is working to achieve carbon neutrality by 2050.

10) Investment Risk
Nature of Risk
MGC Group invests in capital assets and R&D to grow its businesses and increase its competitiveness. In doing so, it focuses
its efforts on strengthening existing businesses and developing new businesses aligned with prospective market needs. The
Group also invests and intends to continue investing in business expansion in Japan and overseas through such means asestablishing or co-founding new companies, including joint ventures, and acquiring existing companies.
If the Group fails to earn adequate returns on such investments or if the value of securities that it holds declines significantly,
leading to impairments on non-current assets, securities valuation losses or equity-method investment losses, its operating
results and/or financial condition could be adversely affected.
Main Risk Mitigation Measures
MGC Group has established and carries out internal investment screening procedures and performs additional due diligence as
warranted by the nature of the prospective investment. Additionally, involved organizational units endeavor to devise
appropriate risk mitigation measures.

11) Currency Risk
Nature of Risk
Export, import, and other transactions denominated in foreign currencies could adversely affect MGC Group’s operating results
and/or financial condition, including by reducing sales revenues or exacerbating losses, as a result of exchange rate
movements.
Additionally, financial statement accounts denominated in overseas the Group subsidiaries’ local currencies are translated
into yen to prepare MGC’s consolidated financial statements. Such currency translation could adversely affect the Group’s
operating results and/or financial condition depending on then-prevailing exchange rates.
Main Risk Mitigation Measures
MGC Group partially hedges currency risk associated with foreign-currency receivables and payables, mainly using currency
forward contracts, in accord with internal regulations.

12) Financing and Interest Rate Risks
Nature of Risk
MGC Group partially meets its financing needs by borrowing from financial institutions. In the event of a precipitous change inthe financial environment, the Group’s operating results and/or financial condition could be adversely affected, including byinability to access funding or increased interest expense due to a rise in interest rates.
Main Risk Mitigation Measures
MGC Group strives to maintain adequate financial soundness as measured by indicators such as debt/equity ratio andshareholders’ equity ratio. It also endeavors to optimize its mix of fixed- and variable-rate debt and maintain healthy, favorable
relationships with financial institutions and other sources of capital.

13) Litigation Risk
Nature of Risk
In the event of an unfavorable outcome to litigation or other legal proceedings brought against MGC Group in connection with its
domestic or overseas operations, the Group’s operating results and/or financial condition could be adversely affected. For
example, the Group seeks to protect its intellectual property through such means as applying for and obtaining patents in Japanand overseas. It also endeavors to avoid infringing on other parties’ rights. However, if litigation pertaining to intellectual
property rights was to be decided against MGC, the Group’s operating results and/or growth could be adversely affected.
Main Risk Mitigation Measures
MGC Group endeavors to not only comply with all laws and regulations applicable to its operations but also avoid disputes
through such means as researching other parties’ rights and drafting proper agreements that explicitly delineate rights andobligations with the assistance of attorneys and other expert advisors.

8 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

3. Management’s Analysis of Financial Position, Business Results and Cash Flows
1) Summary of Operating Performance
The fiscal-2021 financial position, business results and cash flows (collectively referred to below as “operating performance”) of
MGC Group (MGC and its consolidated subsidiaries and equity-method affiliates) are summarized below.
From the first quarter of the fiscal year ended March 31, 2022, the MGC Group adopted the Accounting Standard for
Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020).
(1) Consolidated Business Results
During the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022), outlook for the world economy remained
unstable despite glimmers of economic recovery from pandemic-induced stagnation. With the ongoing impact of logistics
disruptions and semiconductor shortages already hindering economic activities, the eruption of the Russia-Ukraine conflict hascaused raw material and fuel prices to surge sharply, while the depreciation of the yen has become more drastic.
Against this backdrop, the MGC Group nevertheless benefitted from constantly robust demand for semiconductor-related
products reflecting market growth as well as recovery in demand for automotive-related and other products that had beenheavily affected by COVID-19, along with improvement in market prices for general-purpose products, such as methanol, amid
rises in raw material and fuel prices.
In addition, the MGC Group launched a medium-term management plan in April 2021. In line with this plan, the Group aims
to shift to a profit structure resilient to changes in the business environment. To this end, the Group is striving to: “Further
strengthen competitively advantageous (“differentiating”) businesses,” “Accelerate creation and development of new
businesses,” and “Reevaluate and rebuild unprofitable businesses.” These efforts will help push ahead with business portfolio
reforms.
The MGC Group’s net sales increased due mainly to upturns in market prices for methanol and other offerings as well as
recovery in overall sales volume.
Furthermore, operating profit rose, despite increases in raw material and fuel prices, lower sales volumes of optical polymers
and other negative factors affecting profit. This was thanks primarily to the higher sales volumes of semiconductor-related
products, recovery in demand for products that had been affected by fallout from COVID-19, and rising market prices forgeneral-purpose products.
Ordinary profit increased due primarily to higher operating profit as well as growth in equity in earnings of affiliates related toengineering plastics and overseas methanol producing companies.
Profit attributable to owners of parent grew, mainly on higher ordinary profit, despite an increase in extraordinary losses
reflecting such factors as the recording of an impairment loss in connection with business restructuring and other measures.
(Billions of yen)
Fiscal 2020
ChangeFiscal 2021
Net sales
109.9
595.7
705.6
Operating profit
10.8
44.5
55.3
Ordinary profit
23.9
50.2
74.1
Profit attributable to owners of parent
12.2
36.0
48.2
Operating results by segment are as described below.
In addition, the MGC Group revised the definition of its reportable segments in the first quarter of the fiscal year ended March
31, 2022. To provide comparative year-on-year segment results, the Group has restated the operating results of the previous
fiscal year to reflect the revised segmentation.
[Basic Chemicals]
The methanol business saw increases in both net sales and earnings due mainly to a significant upturn in market prices
compared with the previous fiscal year.
Methanol and ammonia-based chemicals posted increases in net sales and earnings reflecting such factors as a rise inneopentyl glycol market prices and a decrease in repair costs, despite higher raw material prices.
High-performance products*1 posted increases in net sales and earnings thanks primarily to recovery in demand for metaxylenediamine (MXDA), which had been affected by fallout from COVID-19 in the previous fiscal year, along with firm sales ofaromatic aldehydes.
Xylene separators and derivatives*2 saw increase in net sales and earnings due mainly to upturns in purified isophthalic acid
(PIA) market prices.
Foamed plastics posted a decrease in earnings compared with the previous fiscal year, due mainly to higher raw material
and fuel prices, despite the higher sales volume of flat panel display shields and automotive materials.
*1 MXDA, MX nylon, aromatic aldehydes and other offerings that had been previously classified as specialty aromatic chemicals*2 Meta-xylene, PIA and other offerings that had been previously classified as general-purpose aromatic chemicals

Net sales
Operating profit
Ordinary profit

Fiscal 2020
328.0
12.8
14.2

9 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Fiscal 2021
419.9
25.7
30.0

(Billions of yen)
Change
91.8
12.9
15.8

[Specialty Chemicals]
Inorganic chemicals posted increases in net sales and earnings thanks primarily to growth in the sales volume of chemicals foruse in semiconductor manufacturing.
Engineering plastics saw increases in net sales and earnings, despite deterioration in the profitability of polycarbonates on
the back of such negative factors as higher raw material and fuel prices, due mainly to robust sales of polyacetal in addition torecovery in sales volumes in automotive-related and other fields.
Optical materials posted decreases in net sales and earnings, despite recovery in optical polymer demand, which bottomed
out in the first quarter. The decreases were due mainly to lower sales volume reflecting inventory adjustment carried out by
customers during the first half.
Electronic materials saw increases in net sales and earnings. This was thanks mainly to robust showings of BT materials for
IC plastic packaging, the core product category for electronic materials, reflecting constantly robust demand for products used inmemory devices and 5G smartphones, along with higher sales volumes, especially in the first half, for general-purpose
materials for a broad range of applications including PC-related devices and home appliances.
Oxygen absorbers such as AGELESSTM posted an increase in earnings, thanks mainly to recovery in domestic demand for
products used for foodstuffs, achieving an improvement from the stagnation brought about by COVID-19 in the previous fiscal
year.

Net sales
Operating profit
Ordinary profit

Fiscal 2020
267.4
34.8
37.5

Fiscal 2021
285.4
33.6
45.4

(Billions of yen)
Change
17.9
(1.1)
7.8

Fiscal 2021
0.2
(0.0)
0.0

(Billions of yen)
Change
(0.0)
(0.0)
(0.0)

[Other]Other businesses were flat year on year.

Net sales
Operating profit
Ordinary profit

Fiscal 2020
0.3
0.0
0.0

(2) Financial Position
Consolidated assets at March 31, 2022, totaled ¥928.6 billion, a ¥92.2 billion increase from the previous fiscal year-end.
Current assets totaled ¥452.2 billion, a ¥50.0 billion increase attributable largely to increases in notes and accounts
receivable - trade, and contract assets.
Non-current assets totaled ¥476.4 billion, a ¥42.2 billion increase. The main driver of the increase was construction inprogress.
Liabilities totaled ¥297.7 billion, a ¥42.8 billion increase. Current liabilities increased ¥31.0 billion, driven mainly by notes andaccounts payable - trade. Non-current liabilities increased ¥11.7 billion, driven mainly by long-term borrowings.
Net assets totaled ¥630.8 billion, a ¥49.4 billion increase largely due to growth in retained earnings.
The Group consequently ended the fiscal year with an equity ratio 61.2%.
(3) Cash Flows
Cash and cash equivalents at March 31, 2022, totaled ¥92.2 billion, a ¥1.1 billion increase from the previous fiscal year-end.
(Cash Flows from Operating Activities)
Operating activities provided net cash of ¥52.0 billion, ¥3.3 billion less than in the previous fiscal year. The decrease was mainly
due to an increase in inventories.
(Cash Flows from Investing Activities)
Investing activities used net cash of ¥64.9 billion, ¥24.5 billion more than in the previous fiscal year. The increase was mainly
due to an increase in purchase of non-current assets.
(Cash Flows from Financing Activities)
Financing activities used net cash of ¥3.6 billion, ¥8.8 billion more than in the previous fiscal year. The increase was mainly due
to a decline in proceeds from issuance of bonds and an increase in payments on long-term borrowing.

2) Discussion and Analysis of Operating Performance from Management’s Perspective
The following discussion and analysis of MGC Group’s operating performance from management’s perspective contains
forward-looking statements based on management’s judgment as of March 31, 2022.
(1) Assessment, Discussion and Analysis of Operating Performance
Operating results for the fiscal year under review, which was the first year of the Medium-Term Management Plan, and targets
for the final year of the plan (fiscal 2023) are as follows.

10 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Consolidated KPIFiscal 2020 results
Net sales
595.7
Operating profit
44.5
Ordinary profit
50.2
ROIC
7.7%
ROE
7.1%
Note: ROIC = Ordinary profit/invested capital

Fiscal 2021 results
705.6
55.3
74.1
10.4%
8.8%

(Billions of yen)
Fiscal 2023 target
730.0
70.0
80.0
≥ 10%
≥ 9%

Management perceptions of operating results in the fiscal year under review are presented in “(1) Consolidated BusinessResults” under “1) Summary of Operating Performance.”
Medium/long-term challenges to be addressed include the two objectives in the Medium-Term Management Plan and theirrespective three-pronged strategies discussed above in “1) Management Policies, Operating Environment and Challenges to Be
Addressed” under “Results of Operations.” Additionally, we plan to invest a cumulative ¥240 billion and spend a cumulative ¥73
billion on R&D during the plan’s three-year term. In addition to proactively making strategic investments in differentiating
businesses, we will maximally leverage intra- and extra-Group technologies and human resources through our newly
reorganized R&D system to progress as a unified group toward our top priorities: shifting to a profit structure resilient to changes
in the business environment and balancing social and economic value.
Following is management’s assessment, discussion and analysis of operating performance by segment.
[Basic Chemicals]
The operating results for the Basic Chemicals Business Sector are as follows.
(Billions of yen)
Consolidated KPIFiscal 2020 results
FY2021 results
Fiscal 2023 target
Net sales*2
335.7
425.3
410.0
Operating profit
12.8
25.7
25.0
Ordinary profit
14.2
30.0
31.0
*1 Including intersegment sales and transfers*2 In fiscal 2021 the method for classifying business segments was revised, with businesses related to energy and otherareas that had been included in Other Businesses being transferred to Basic Chemicals Business Sector. Segment
information for fiscal 2020 is presented after being restated to reflect the changes in the classification method.
As described in “(1) Consolidated Business Results” under “1) Summary of Operating Performance”, net sales and profits in
FY2021 grew substantially, largely by virtue of a recovery in demand for products which had been impacted by COVID-19,
higher sales volume of high-performance products, and increased methanol prices.
Going forward, we will invest proactively, primarily in differentiated products, such as by establishing new manufacturing
facilities for meta-xylenediamine, aromatic aldehydes, and other specialized aromatic chemicals. In addition, we will promote thedevelopment of manufacturing technology for methanol as a circular carbon product, reduce costs through improving theefficiency of logistics and production, and promote other measures aimed at continuing to enhance added value and improve
efficiency of foundation businesses. We will take further steps to restructure and overhaul unprofitable businesses or thoseneeding rebuilding, primarily formalin and polyol.
[Specialty Chemicals]
The operating results for the Specialty Chemicals Business Sector are as follows.

Consolidated KPIFiscal 2020 results
Net sales*
267.8
Operating profit
34.8
Ordinary profit
37.5* Including intersegment sales and transfers.

Fiscal 2021 results
285.5
33.6
45.4

(Billions of yen)
Fiscal 2023 target
330.0
49.0
53.0

As described in “(1) Consolidated Business Results” under “1) Summary of Operating Performance,” net sales and profits bothgrew in fiscal 2021, despite the deterioration in the unprofitable polycarbonate part of the engineering plastics business, due
mainly to strong sales of polyacetal. Both net sales and profits increased in electronic materials, due mainly to strong sales ofmaterials for memory devices and 5G smartphones. Conversely, both net sales and profits decreased in optical materials, due
mainly to an adjustment of optical polymer inventories at customers in the first half of the fiscal year.
Going forward, we will promote various strategies aimed at growth in differentiated products, such as strengthening the global
rollout of new and existing production sites for super-pure hydrogen peroxide and other electronics chemicals, restructuring thepolyacetal business to enhance our market presence, expanding sales of BT materials by increasing production capacity forelectronic materials at overseas manufacturing subsidiaries, increasing production capacity for optical polymers, and setting up
a new raw material monomer plant. For the foundation businesses of the Specialty Chemicals Business Sector, including thepolycarbonate business, as announced after the acquisition of shares and subsequent consolidation of Mitsubishi Engineering-

11 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Plastics Corporation, we will promote high value-added products to shift to a profit structure resilient to environmental changes.
(2) Factors that May Materially Affect Operating Performance
Factors that may materially affect operating performance are discussed in “2) Business Risks” under “Results of Operations.”
Combined with restrictions on economic activity following the prolongation of COVID-19, and the impact on production
activities of semiconductor shortages, the recent emergence of geopolitical risks related to the situation in Ukraine could lead toa widespread fall in demand in areas related to vehicles, housing and infrastructure, and electrical and electronic equipment,
which would be expected to have a negative impact on Group products that are used as raw materials in these fields. In the
Basic Chemicals Business Sector, the impact on products such as foamed plastic, specialty aromatic chemicals and methanol isa concern. Products subject to similar concerns in the Specialty Chemicals Business Sector include BT materials for IC plastic
packaging, optical polymers, engineering plastics, oxygen absorbers, and other products.
(3) Capital Resources and Liquidity
MGC Group’s main uses of working capital are manufacturing expenses and operating expenses such as selling, general andadministrative expenses.
Its uses of capital for investment purposes include capital expenditures, which it primarily funds with cash on hand,borrowings from financial institutions and bond issuance.
Fiscal 2021 cash flows are analyzed in “(3) Cash Flows” under “1) Summary of Operating Performance.”
MGC ended fiscal 2021 with ¥117.6 billion of interest-bearing debt and ¥92.2 billion of cash and cash equivalents.
(4) Objective Metrics for Assessing Management Policies/Strategies’ Execution Status and Management Targets’
Attainment
Objective metrics MGC Group uses to assess its management policies/strategies execution status and its management targets’
attainment are disclosed above in “1) Management Policies, Operating Environment and Challenges to Be Addressed” under“Results of Operations.” To facilitate swift management decision-making on matters such as investments in and exits frombusinesses, said metrics include a measure of capital efficiency in addition to net sales and profits.
(5) Significant Accounting Estimates and Their Underlying Assumptions
Significant accounting estimates used to prepare consolidated financial statements and their underlying assumptions aredisclosed in “(s) Significant Accounting Estimates” under “1. Summary of Significant Accounting Policies” under “Notes toConsolidated Financial Statements.”

4. Research and Development
In fiscal 2020 the R&D organization structure was significantly revised, such that all research organizations that had previously
belonged to the research sector, research laboratories and the Advanced Business Development Division under corporate
sector came under the unified supervision of the R&D Promotion Division. In FY2021, the R&D Promotion Division and theAdvanced Business Development Division were merged under the Research & Development Division. Under this new structure,
by taking a whole-company perspective to allocating management resources and further accelerating research anddevelopment, we will enhance the profitability of existing businesses and promote the creation of new businesses.
Through R&D activities based on cooperation with external organizations, such as collaboration with and investment instartups, joint research with public research institutions and other initiatives, the Research & Development Division (Future
Strategy Group, New Business Development Group) has continued to create businesses in new business areas. It also took
steps to build businesses around internally developed products, including medical packaging materials and solid electrolytes,
while developing products in new domains, including allergy diagnostics, through open innovation. The factory-grown produce
business in Shirakawa, Fukushima Prefecture, provides reliably safe vegetables to the public.
MGC Group inclusive of its subsidiaries employs a total of 1,015 personnel, roughly10% of its total workforce, in researchand development. Its research expenses totaled ¥21,093 million in fiscal 2021.
Fiscal 2021 research and development costs by segment were as follows:

Segment
Basic Chemicals Business
SectorSpecialty Chemicals Business
Sector(Millions of yen)
Fiscal 2021

12 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

9,804
11,289

5. Capital Expenditures
Summary of Capital Expenditures
Fiscal-2021 capital expenditures of MGC Group (MGC and its consolidated subsidiaries) were as follows.
(Millions of yen)
Fiscal 2021

Segment
Basic Chemicals Business
SectorSpecialty Chemicals Business
SectorOther
Eliminations and corporate
Total

19,25632,623
1
2,911
54,793

6. Dividend(Yen)InterimFiscal 2020
Fiscal 2021

35
45

Fiscal year-end
35
35

Breakdown of interim dividend for the fiscal year ended March 31, 2022:
Ordinary dividend: 35.00 yen
Commemorative dividend: 10.00 yen

13 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Annual70
80

14 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Consolidated Balance Sheet
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
March 31, 2022
Thousands of
U.S. dollars(note 2)Millions of yen

2022

2021

2022

AssetsCurrent assets:
Cash and deposits (notes 3 and 20)¥
Notes and accounts receivable - trade (notes 18 and
20)
Notes and accounts receivable - trade, and contract
assets (notes 18, 20, and 24)
Securities (notes 4 and 18)
Inventories
Other
Less allowance for doubtful receivables
Total current assets

102,049¥

101,785$

833,802—

159,018—

176,5566
155,670
19,381(1,453)452,210—269
121,275
20,209(416)
402,141

1,442,569
49
1,271,918
158,354(11,872)
3,694,828

254,276523,244
42,8893,622
42,38555,361
921,780(645,396)
276,384

234,992
501,700
40,774
3,429
24,76653,054
858,718(608,786)
249,9312,077,588
4,275,219
350,429
29,594346,311452,333
7,531,498(5,273,274)
2,258,224

Intangible assets, net:
Goodwill
Leased assets
Software
Other
Total intangible assets

4,811
4
2,992
3,482
11,290

4,914
5
2,456
3,123
10,49939,30933
24,44628,45092,246

Investments and other assets:
Investment in securities (notes 4, 5, 6 and 20)
Long-term loans receivable
Deferred tax assets (note 9)
Retirement benefit asset (note 8)
Other investments and other assets (note 5)Less allowance for doubtful receivables
Total investments and other assets
Total non-current assets
Total assets

171,446
5,159
3,493
1,226
8,047
(607)
188,765
476,440
928,651

158,718
5,012
3,145
1,396
6,064
(545)
173,792434,223
836,364

1,400,817
42,15228,54010,01765,749(4,960)1,542,324
3,892,802
7,587,638

Non-current assets:
Property, plant and equipment (note 6):
Buildings and structures
Machinery, equipment and vehicles
Land
Leased assets
Construction in progress
Other
Less accumulated depreciation
Total property, plant and equipment

15 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

¥

¥

$

Thousands of
U.S. dollars(note 2)Millions of yen

2022

2021

2022

Liabilities and Net Assets
Current liabilities:
Notes and accounts payable - trade
Short-term borrowings and current installments oflong-term borrowings (notes 6 and 20)
Lease obligations (note 6)
Accrued expenses
Income taxes payable (note 9)
Provision for bonuses
Other (notes 7, 20, 21 and 24)
Total current liabilities¥

Non-current liabilities:
Long-term borrowings (notes 6 and 20)
Lease obligations (note 6)
Retirement benefit liability (note 8)
Provision for directors’ retirement benefits (note 8)
Deferred tax liabilities (note 9)
Asset retirement obligations (note 7)
Provision for business restructuring
Other
Total non-current liabilities
Total liabilities
Stockholders’ equity:
Common stock (note 10):
Authorized 492,428,000 shares; issued 225,739,199
shares in 2022 and 2021
Additional paid-in capital (note 10)
Retained earnings (note 11)
Treasury stock, at cost; 17,693,673 and 17,726,057
shares in 2022 and 2021
Total stockholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities(note 4)
Deferred losses on hedges (note 21)
Foreign currency translation adjustments
Remeasurements of defined benefit plans (note 8)
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets¥
See accompanying notes to consolidated financial statements.

16 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

92,387¥75,308$754,857

38,925565
19,187
11,997
6,144
29,760198,969

40,087543
20,2255,809
5,770
20,201
167,947

318,041
4,616
156,769
98,02350,200243,157
1,625,697

66,621
1,537
6,252
285
11,458
5,216
2,305
5,115
98,794
297,763

56,202
1,643
7,150
217
11,828
5,113
760
4,089
87,006
254,953544,334
12,55851,083
2,329
93,61942,61818,833
41,793807,206
2,432,903

41,97034,339492,455

41,97034,301
459,790342,920
280,570
4,023,654(21,525)547,239(21,562)
514,499(175,872)
4,471,272

11,376
(326)
9,861
614

14,419(618)(3,542)(494)

92,949(2,664)80,5705,017

21,526
62,121
630,887928,651

9,765
57,146
581,411
836,364

175,880
507,566
5,154,727
7,587,638¥$

Consolidated Statement of Income
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2022
Thousands of
U.S. dollars(note 2)Millions of yen

2022
Net sales (notes 18 and 24)¥

705,656

2021
¥

2022

595,718$

5,765,634

Cost of sales (note 13)

543,070

454,760

4,437,209

Gross profit

162,586

140,958

1,328,426

107,225

96,448876,093

55,36044,510452,325

346
3,218
(858)
14,883

362
2,391
(800)
5,162

2,827
26,293(7,010)121,603

3,011
(818)

1,800
(1,396)

24,602(6,684)

(286)

(107)

(2,337)(1,361)—(7,059)———(1,833)
2,616
796(1,733)(960)(1,368)257(1,695)
(984)
(287)
(242)
(1,461)————(11,120)—(57,676)———(14,977)
21,374
6,504(14,160)(7,844)

(188)
(128)

—
—

(1,536)(1,046)

(109)
4,734
14,267

—
2,812
4,441

(891)
38,680116,570

69,62848,951

568,903

16,542555
17,098

10,180(611)
9,568

135,158
4,535
139,701

Selling, general and administrative expenses(notes 12 and 13)
Operating profit
Other income (expenses):
Interest income
Dividend income
Interest expenses
Share of profit of entities accounted for using equity
methodGain on sale of investments in securities (note 4)
Rent expenses
Loss on valuation of investments in securities (note4)
Personnel expenses for seconded employees
Gain on sale of non-current assets
Impairment loss (note 14)
Loss from money transfer scam at subsidiary
Loss on withdrawal from business
Loss on liquidation of subsidiaries
Loss on sale/disposal of non-current assets
Insurance claim income
Gain on step acquisitions
Provision for business restructuring
Provision of allowance for doubtful accounts
Provision for loss on business of subsidiaries andassociates
Fire loss
Loss on change in retirement benefit plan at
subsidiary (note 8)
Other, net
Total other income (expenses)
Profit before income taxes
Income taxes (note 9):
Current
Deferred
Total income taxes
Profit¥52,530¥39,383$429,202

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

¥

4,235
48,295¥

3,312
36,070$34,603
394,599

See accompanying notes to consolidated financial statements.

17 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Consolidated Statement of Comprehensive Income
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2022
Thousands of
U.S. dollars(note 2)Millions of yen

2022

2021

ProfitOther comprehensive income arising during the year
(note 15):
Valuation difference on available-for-sale securities
Deferred losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Shares of other comprehensive income of entities
accounted for by the equity method
Total other comprehensive income arisingduring the year¥

Comprehensive income¥

66,232¥

53,101$

541,155

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

60,083
6,149¥

49,2133,887$

490,91450,241

See accompanying notes to consolidated financial statements.

18 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

52,530¥39,383

2022$

429,202(3,118)
(14)
9,330
1,032

6,737
(24)
3,036
2,829

(25,476)(114)
76,232
8,432

6,471

1,137

52,872

13,701

13,718111,945

Consolidated Statement of Changes in Net Assets
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2022

Common stock(note 10)

Balance as of April 1, 2020
Changes arising during year:
Cash dividends (note 11)
Profit attributable to owners of parent
Purchase of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Change in treasury stock of parent
arising from transactions with noncontrolling interests
Net changes other than stockholders’equityTotal changes during the year
Balance as of March 31, 2021
Cumulative effects of changes inaccounting policies
Restated balance
Changes arising during year:
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Change in treasury stock of parent
arising from transactions with noncontrolling interests
Net changes other than stockholders’equityTotal changes during the year
Balance as of March 31, 2022¥

Millions of yen
Stockholders’ equity
Additional paidRetainedin capitalearnings
Treasury stock(note 10)
(note 11)41,970 ¥34,234 ¥439,701 ¥(21,600) ¥494,306(4)
42(14,559)
36,070(4)57(3)(1,418)(14,559)
36,070
14

Total

(3)
(1,418)
51

¥

51

—
41,970 ¥66
34,301 ¥20,088459,790 ¥

41,97034,301

459,73937(21,562) ¥20,192
514,499(21,562)

514,448(5)
42(16,642)
48,295
(5)
81
441
620

(50)

(50)

(16,642)
48,295
39
441
620
(0)

¥

—
41,970 ¥38
34,339 ¥(0)32,715492,455 ¥36(21,525) ¥32,791
547,239

Millions of yen
Accumulated other comprehensive income
Valuationdifference on
available-forsale
securities(note 4)

Balance as of April 1, 2020
Changes arising during year:
Cash dividends (note 11)
Profit attributable to owners ofparentPurchase of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Change in treasury stock of parent
arising from transactions with noncontrolling interests
Net changes other thanstockholders’ equity
Total changes during the year
Balance as of March 31, 2021
Cumulative effects of changes inaccounting policies
Restated balance
Changes arising during year:
Cash dividends
Profit attributable to owners ofparentPurchase of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Change in treasury stock of parent
arising from transactions with noncontrolling interests
Net changes other thanstockholders’ equity
Total changes during the year
Balance as of March 31, 2022¥

Deferred(losses) gains
on hedges(note 21)

7,789 ¥

4 ¥Foreigncurrencytranslation
adjustments(6,701) ¥Remeasurements ofdefinedbenefit plans(note 8)(2,877) ¥Total

Noncontrollinginterests(1,785) ¥ 55,619 ¥Total net
assets548,141(14,559)
36,070(4)57(3)(1,418)
51

¥

6,630
6,630
14,419 ¥

(622)
(622)
(618) ¥

3,159
3,159
(3,542) ¥

2,382
2,382
(494) ¥

11,5501,526
11,5501,526
9,765 ¥ 57,146 ¥13,07733,269581,411

14,419(618)(3,542)

(494)

9,765

(50)
581,360

57,146(16,642)
48,295
(5)
81
441
620
(0)

¥

(3,043)(3,043)
11,376 ¥291
291(326) ¥

19 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

13,404
13,404
9,861 ¥

1,108
1,108
614 ¥

11,761
4,974
11,761
4,974
21,526 ¥ 62,121 ¥

16,73649,527
630,887

Thousands of U.S. dollars (note 2)
Stockholders’ equity
Additional paidRetained
Treasury stockin capitalearnings

Common stock

Balance as of March 31, 2021
Cumulative effects of changes inaccounting policies
Restated balance
Changes arising during year:
Cash dividends
Profit attributable to owners ofparentPurchase of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Change in treasury stock of parent
arising from transactions with noncontrolling interests
Net changes other thanstockholders’ equity
Total changes during the year
Balance as of March 31, 2022$

342,920 $280,260 $

3,756,761 $

342,920

280,260

3,756,344

4,203,767(176,175)

4,203,350

(409)

(409)

(135,975)(135,975)

394,599394,599
(41)
343

319

(41)
662
3,603
5,066

3,603
5,066
(0)

$

—
342,920 $Valuationdifference on
available-forsale securities

Balance as of March 31, 2021
Cumulative effects of changes inaccounting policies
Restated balance
Changes arising during year:
Cash dividends
Profit attributable to owners ofparentPurchase of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Change in treasury stock of parent
arising from transactions with noncontrolling interests
Net changes other thanstockholders’ equity
Total changes during the year
Balance as of March 31, 2022

Total

(176,175) $$310
280,570 $(0)267,301
4,023,654 $

294(175,872) $267,922
4,471,272

Thousands of U.S. dollars (note 2)
Accumulated other comprehensive income
DeferredForeign
Remeasure(losses)
currency
ments ofTotal
gains ontranslation
defined benefit
hedgesadjustments
plans

Noncontrollinginterests

Total net assets

117,812 $(5,049) $(28,940) $(4,036) $79,786 $466,917 $

4,750,478

117,812(5,049)(28,940)(4,036)

79,786466,917(409)
4,750,061(135,975)
394,599
(41)
662
3,603
5,066
(0)

$

(24,863)(24,863)
92,949 $

2,378
2,378
(2,664) $See accompanying notes to consolidated financial statements.

20 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

109,519
109,519
80,570 $

9,053
9,053
5,017 $

96,09496,094
175,880 $

40,64140,641
507,566 $

136,743404,665
5,154,727

Consolidated Statement of Cash Flows
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2022
Thousands of
U.S. dollars(note 2)Millions of yen

2022
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
Amortization of goodwill
Loss on sale/disposal of non-current assets
Impairment loss
Share of profit of entities accounted for using equity method
Increase (decrease) in allowance for doubtful receivables
Increase in net defined benefit liability
Increase (decrease) in provision for directors’ retirement benefits
Provision for business restructuring
Interest and dividend income
Interest expenses
Gain on sale of short-term investments and investments insecurities
Loss on devaluation of short-term investments and investments insecurities
Increase in trade notes and accounts receivable
Increase in inventories
Increase in trade notes and accounts payable
Other, net
Sub totalInterest and dividend received
Dividend received from entities accounted for using equity method
Interest paid
Loss from money transfer scam at subsidiary
Income taxes paid
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of non-current assets
Proceeds from sale of non-current assets
Proceeds from sale of investments in securities
Purchase of investments in securities and subsidiaries
Loan advances
Proceeds from collection of loans receivable
Purchase of shares of subsidiaries resulting in change in scope of
consolidation (note 3)
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Increase in short-term borrowings
Proceeds from long-term borrowings
Payments on long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Proceeds from sale of treasury stock
Dividends paid to stockholders
Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do
not result in change in scope of consolidation
Other, net
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from inclusion ofsubsidiaries in consolidation
Cash and cash equivalents at end of year (note 3)
See accompanying notes to consolidated financial statements.

21 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022¥

69,6282021¥

48,951

2022$

568,903

31,999
396
1,630
7,059
(14,883)
1,027
140
49
1,733
(3,564)858

30,686
371
1,165
1,695
(5,162)
(773)
609
(184)
—
(2,754)800

261,451
3,236
13,31857,676(121,603)
8,391
1,144
400
14,160(29,120)7,010(3,041)(1,766)(24,847)

332(9,273)(28,992)
9,792(12,396)
52,497
3,526
4,439
(818)
—
(10,386)
2,831
52,090347(16,283)(5,527)
2,687(1,271)53,221
2,725
3,577
(791)
(984)
(9,259)6,975
55,464

2,713(75,766)(236,882)
80,007(101,283)
428,932
28,81036,269(6,684)—(84,860)
23,131
425,607(56,347)463
5,724(11,849)(824)
101(38,234)805
4,951(4,619)(4,375)429(460,389)
3,783
46,769(96,813)(6,733)825(2,668)445(64,954)—672(40,370)(21,799)
3,636(530,713)

316
16,641(10,641)——(5)
0(16,642)(2,551)967
17,508(5,886)20,000(10,000)(4)
0(14,559)(1,906)

2,582
135,967(86,943)——(41)
0(135,975)(20,843)—
9,216(3,666)

(396)
(568)
5,154

—
75,300(29,953)

6,502(10,028)
91,075698
20,94770,04353,125(81,935)
744,138

11,21092,257¥

84
91,075$91,592753,795

Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies(a) Basis of Presenting Consolidated Financial Statements
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” (Accounting Standards Board of Japan (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 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 accordance with International
Financial Reporting Standards (IFRS) 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 unless they 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 theJapanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting
principles and practices generally accepted in Japan, which may differ in certain respects from accounting principles andpractices generally accepted in countries and jurisdictions other than Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications have been made in the financial
statements issued domestically in Japan in order to present 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 71subsidiaries (68 in 2021). The
Company and its consolidated subsidiaries are collectively referred to as “MGC.”
All significant intercompany accounts and transactions have been eliminated in consolidation.
MGC AGELESS Co., Ltd., Global Polyacetal Co., Ltd. and MGC SPECIALTY CHEMICALS NETHERLANDS B.V. were
included in the scope of consolidation due to their significance during the year ended March 31, 2022.
Nisshin Transportation Co., Ltd., a non-consolidated subsidiary of MGC, merged with MGC Advance Chemical Inc., having
been a consolidated subsidiary of MGC and MGC Engineering Co., Ltd., having been a non-consolidated subsidiary of MGC,
and changed its company name to MGC Advance Co., Ltd. As a result, MGC Advance Chemical Inc. was excluded from thescope of consolidation, as it was dissolved due to the absorption-type merger, and MGC Advance Co., Ltd. was included in thescope of consolidation, due to its significance, during the year ended March 31, 2022.
JSP Sheet Foam LLC was excluded from the scope of consolidation due to liquidation during the year ended March 31,
2022.
J-CHEMICAL, Inc. was included in the scope of consolidation due to acquisition of its shares. Yutaka Chemicals Corporation
was included in the scope of consolidation due to an increase in its shareholding ratio following the acquisition of shares of JCHEMICAL, Inc.
Japan Circuit Industrial Co., Ltd. was excluded from the scope of consolidation due to liquidation during the year ended
March 31, 2022.
Investments in 15 affiliates (14 in 2021) are accounted for by the equity method.
The Accounting Standards for Consolidation require the control 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 to exercise control over operations is fully consolidated, and a company over which
the parent company and/or its consolidated subsidiaries have the ability to exercise significant influence is accounted for by theequity 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 fair market value at the date of investments.
The unallocated portion of the difference, which is recognized as goodwill, is being amortized using the straight-line method
over an expected benefit period by each investment within 20 years.
The fiscal year-ends of 30 consolidated subsidiaries (33 in 2021) 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 of changes invalue, which have maturities of generally three months or less when purchased, to be cash equivalents.
(d) Securities 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 entities” and “other securities.” Securities classified as “trading securities” are22 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

stated at fair value and unrealized gains or losses are recorded in the consolidated statement of income. Securities classified as“held-to-maturity securities” are stated at amortized cost. Securities classified as “other securities” except for equity securities
without market price are stated at fair value and unrealized gains or losses, net of related taxes, are excluded from earnings andreported as accumulated other comprehensive income in the consolidated balance sheet. Debt classified as “other securities”
for which fair value is not available are stated at the amortized cost. Equity securities classified as “other securities” withoutmarket price is not available are stated at the moving-average cost. Realized gains and losses on the other securities arecomputed using the moving-average cost. Securities held by the Company are classified as held-to-maturity securities,
investments in entities and other securities.
(e) Inventories
Inventories held for sale in the ordinary course of business are measured at the lower of cost or net selling value, which isdefined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses, determinedprincipally 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 estimated useful 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 aredeferred and amortized by the straight-line method over the estimated useful lives (5 years). Intangible assets other thansoftware are deferred and amortized by the straight-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 requires that fixed assets be reviewed for impairment whenever events orchanges 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 the undiscounted future cash
flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would
be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher ofthe 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 andan amount that takes into consideration the possibility of specific liabilities.
(j) Retirement Benefits
In calculating retirement benefit obligation, the benefit formula basis 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 ofservice of the eligible employees (10 years) when such past service costs occur.
Actuarial gains and losses are amortized by the declining-balance method over a certain period within the averageremaining 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 andexecutive officers. The provision for the plans has been made in the accompanying consolidated financial statements for thevested benefits to which directors, corporate auditors and executive officers are entitled if they were to retire or severimmediately at the balance sheet dates (See note 8).
(k) Leases
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.
(l) Foreign Currency Translation
Under the Accounting Standards for Foreign Currency Transactions, foreign currency transactions are translated into yen on thebasis 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 the balance sheet dates, and gains or losses resulting from the translation of foreign
currencies are credited or charged to income. Assets and liabilities of overseas subsidiaries are translated into yen at the rate ofexchange as of the balance sheet date, and revenues and expenses of them are translated into yen using the average rate in
the year, and a comprehensive adjustment resulting from translation is presented as “Foreign currency translation adjustments”
and “Non-controlling interests” in a component of net assets.

23 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

(m) Recognition of Significant Revenues and Expenses
MGC is primarily engaged in business activities related to manufacturing and sales of products in the “Basic Chemicals
Business Sector” and “Specialty Chemicals Business Sector.” For the sale of these products, revenue is recognized upondelivery of the products since MGC determines that the customer obtains control of the products and the performanceobligations are satisfied at the time of delivery. For transactions in which MGC acts as an agent in sales of products tocustomers, revenue is recognized at net amount after deducting the amount paid to the supplier from the total amount ofconsiderations received from the customer.
(n) 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 that deferred income taxes be accounted for under the asset andliability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that havebeen included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected tobe recovered or settled, and the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
(o) Accrual for Environmental Measures
An accrual for environmental measures is provided at an estimated amount of disposal and transport costs of polychlorinatedbiphenyl waste based on the handling cost 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.
(p) Asset Retirement Obligations
The Company recognized an asset retirement obligation which is statutory or similar obligation with regard to the removal of
assets as a liability. An asset retirement obligation is recognized as a liability at the time that the asset is incurred by 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 the cost of the relevant asset by the same amount.
(q) Provision for business restructuring
The Company provides a reasonably estimated amount of structural reform costs for its businesses.
(r) Reclassifications
Certain reclassifications have been made to the prior years’ consolidated financial statements to conform to the presentation
used for the year ended March 31, 2022.
(s) Significant Accounting Estimates
Impairment of fixed assets(1) Amount recorded on the consolidated financial statements for the year ended March 31, 2022 and 2021
Thousands of
U.S. dollars

Millions of yen

2022

2021

¥ 276,384¥ 249,931$ 2,258,224

Intangible assets

11,29010,49992,246

Impairment loss

7,059

2,060

57,676

Property, plant and equipment

2022(2) Information on the nature of significant accounting estimates for identified items
The fixed assets held by the Company and its consolidated subsidiaries are accounted for in accordance with the accounting
standards for impairment of fixed assets. In calculating the recoverable amount used to measure the impairment loss, certain
assumptions are made regarding the economic remaining useful life, future cash flows, discount rate, etc.
Although these assumptions are determined based on management’s best estimates, they may be affected by the results ofchanges in uncertain economic conditions in the future. If a revision is needed, the amount to be recognized in the consolidated
financial statements for the following fiscal year may be affected.
(3) Test for impairment at MITSUBISHI GAS CHEMICAL ENGINEERING-PLASTICS(SHANGHAI)CO., LTD.
MITSUBISHI GAS CHEMICAL ENGINEERING-PLASTICS(SHANGHAI)CO., LTD. is engaged in manufacturing and sales ofpolycarbonates and has adopted IFRS. The Company reviewed this company’s business plans as the spread between prices ofpolycarbonates and its raw material, bisphenol A, has been low for a few years. As a result of the review, the recoverable
amounts of property, plant and equipment and intangible assets fell below their carrying amounts, and an impairment loss of¥3,736 million ($30,525 thousand) was recognized for the year ended March 31, 2022. The balance of property, plant and

24 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

equipment and intangible assets related to MITSUBISHI GAS CHEMICAL ENGINEERING-PLASTICS(SHANGHAI)CO., LTD. at
the March 31, 2022 was ¥1,557 million ($12,722 thousand) and ¥1,551 million ($12,673 thousand), respectively.
The recoverable amount is calculated based on discounted future cash flows. In calculating the cash flows, assumptions
regarding sales volume, sales prices, marginal profit ratio, discount rates, and other items have been made based on trends
from prior years, market data for polycarbonates and bisphenol A, and the cost of capital of other companies in the same
industry.
(t) Changes in Accounting Policies
Application of the Accounting Standard for Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) andrelevant ASBJ regulations from the beginning of the year ended March 31, 2022. Revenue is recognized at the amount
expected to be received in exchange for the promised goods or services when the control of the goods or services is transferredto the customer.
As for paid-in transactions in which MGC is obligated to repurchase paid-in supplies, revenue was previously recognized fortransfer of the supplies. The Company has changed the method not to recognize revenue for the transfer of the supplies and theextinguishment of such supplies.
As for transactions in which MGC acts as an agent in sales of products to customers, previously, the total amount ofconsiderations received from the customer was recognized as revenue. Revenue is now recognized at net amount after
deducting the amount paid to the supplier of the products from the total amount of considerations received from the customer.
The application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations is subject to thetransitional treatment prescribed in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition. The
cumulative effect of the retrospective application, assuming the new accounting policy had been applied to periods prior to thebeginning of the year ended March 31, 2022, was added to or subtracted from the opening balance of retained earnings for theyear ended March 31, 2022, and thus the new accounting policy was applied from such opening balance.
In addition, “notes and accounts receivable - trade,” which were presented under current assets in the consolidated balance
sheet as of March 31, 2021, have been included in “notes and accounts receivable - trade, and contract assets” from the year
ended March 31, 2022. However, in accordance with the transitional treatment prescribed in Paragraph 89-2 of the AccountingStandard for Revenue Recognition, no reclassification has been made for related figures as of March 31, 2021 based on the
new presentation method.
As a result, compared to those before the application of the Accounting Standard for Revenue Recognition, net sales, costof sales and selling, general and administrative expenses decreased by ¥34,823 million ($284,525 thousand), ¥34,712 million($283,618 thousand) and ¥79 million ($645 thousand), respectively, for the year ended March 31, 2022. Operating profit andprofit before income taxes decreased by ¥31 million ($253 thousand) and ¥3 million ($25 thousand), respectively. In addition,
the beginning balance of retained earnings decreased by ¥50 million ($409 thousand). The impact on the figures in the
consolidated statement of cash flows is insignificant.
The impact on the figures in per share information is described 16. PER SHARE INFORMATION.
In accordance with the transitional treatment prescribed in Paragraph 89-3 of the Accounting Standard for Revenue
Recognition, notes on revenue recognition for the year ended March 31, 2021 have not been provided.
Application of the Accounting Standard for Fair Value Measurement
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) andrelevant ASBJ regulations from the beginning of the year ended March 31, 2022, and it has applied the new accounting policies
set forth by the Accounting Standard for Fair Value Measurement prospectively in accordance with the transitional treatmentprescribed in Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).
Previously, equity securities classified as other securities with market price were stated at fair value based on the average
market price for a period of one month before the fiscal year end. Due to the application of this accounting standard, the method
has been changed to state at fair value based on the market price at the fiscal year end. The impact of the application on the
consolidated financial statements for the year ended March 31, 2022 is immaterial.
The Company has provided notes on the breakdown by level of fair value of financial instruments and other matters in thenote “Financial Instruments.” However, information for the year ended March 31, 2021 has not been included in this note
accordance with the transitional treatment prescribed in Paragraph 7-4 of the “Implementation Guidance on Disclosures about
Fair Value of Financial Instruments” (ASBJ Guidance No. 19, July 4, 2019).
(u) Accounting Pronouncements Not Yet Adopted- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, issued on July 4,
2019)
The ASBJ revised the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31) on June 17, 2021. At the time of its initial release on July 4, 2019, deliberation on method of fair value measurement forinvestment trusts and investments in partnership and similar instruments for which net interest amounts are recorded in thebalance sheet, were to be performed roughly over one year period after the release as further consideration had been required
among related parties.
The implementation guidance will be applied from the beginning of the year ending March 31, 2023.
The impact of the application of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” on the
consolidated financial statements is currently under consideration.

25 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

(v) Additional Information
Assumptions regarding impact of novel coronavirus (COVID-19) in making accounting estimate
Although there are concerns about a decrease in demand, etc. due to the impact of the COVID-19, the Company believes
that the impact on the accounting estimates for impairment of fixed assets, etc. will be immaterial.

2. Financial Statement Translation
The translations of the yen amounts into U.S. dollars are included solely for the convenience of the readers, using the prevailingexchange rate as of March 31, 2022, which was ¥122.39 to U.S. $1. This translation should not be construed as arepresentation that the amounts shown could be converted into U.S. dollars at such rate.

3. Cash and Cash Equivalents(a) Reconciliation between “Cash and deposits” in the consolidated balance sheet and “Cash and cash equivalents” in the
consolidated statement of cash flows as of March 31, 2022 and 2021 is as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Cash and deposits
Time deposits with maturities of over three months
Securities
Cash and cash equivalents

¥

¥

2021

102,049(9,797)
6
92,257¥¥2022

101,785(10,980)
269
91,075$$

833,802(80,047)49
753,795(b) Details of the assets and liabilities of subsidiaries that have been included in the scope of consolidation due to acquisition ofshares
As of March 31, 2022
J-CHEMICAL, Inc. has been included in the scope of consolidation due to acquisition of its shares. The components of assets
and liabilities at the time of acquisition, the acquisitions cost and net expenditure for this acquisition are as follows:
Millions of yen

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Goodwill
Stock acquisition cost
Cash and cash equivalents of the new consolidated subsidiary
Expenditure for acquisition

¥

¥
¥

2022
2,974
2,297
(2,140)
(173)
292
3,250
(581)
2,668

Thousands of
U.S. dollars

$

$
$

2022
24,29918,768(17,485)(1,414)
2,386
26,554(4,747)
21,7994. Securities and Investments in Securities
Balance sheet amount, acquisition cost, and gross unrealized gain and loss of other securities with fair value as of March 31,
2022 and 2021 are summarized as follows:

Balancesheet
amountMarch 31, 2022
Equity securities
Bonds
Other securities¥¥
March 31, 2021
Equity securities
Other securities¥¥

Millions of yen
Gross
Gross
unrealized
unrealized
gain
loss

Acquisition
cost

31,798 ¥
1,737
104
33,639 ¥17,148 ¥—55
17,204 ¥(497) ¥
(0)—(497) ¥

15,146
1,737
48
16,932

38,702 ¥87
38,790 ¥21,364 ¥—21,364 ¥(383) ¥
(12)(396) ¥

17,721100
17,821

26 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Balance
sheet
amountMarch 31, 2022
Equity securities
Bonds
Other securities$$

259,809 $14,192
850
274,851 $Thousands of U.S. dollars
Gross
Gross
unrealized
unrealized
gain
loss

140,109 $—449
140,567 $Acquisition
cost(4,061) $(0)—(4,061) $123,752
14,192
392
138,345

Securities classified as other securities without market price are unlisted equity securities amounting to ¥3,843 million($31,400 thousand) and ¥5,839 million as of March 31, 2022 and 2021, respectively.
For the years ended March 31, 2022 and 2021, proceeds from the sale of other securities are ¥5,724 million ($46,769
thousand) and ¥4,648 million, respectively. Gross realized gains are ¥3,041 million ($24,847 thousand) and ¥1,807 million forthe years ended March 31, 2022 and 2021, respectively.
The Company recognized impairment losses on securities of ¥332 million ($2,713 thousand) and ¥228 million for the years
ended March 31, 2022 and 2021, respectively.
The Company recognizes impairment losses on securities with market price when the fair value declines by more than 50
percent. When the fair value declines by more than 30 percent but less than 50 percent, the Company recognizes necessary
impairment losses as a result of considering the possibility of recovery. The Company recognizes impairment losses on
securities without market price when the value declines significantly due to an issuer’s financial condition.

5. Investments in Affiliates
The aggregate carrying amounts of investments in affiliates as of March 31, 2022 and 2021 are ¥135,490 million ($1,107,035
thousand) and ¥113,660 million, respectively.

6. Short-term and Long-term Borrowings
Short-term borrowings are represented by bank loans which are due within one year. The weighted average interest rate ofshort-term borrowings is 1.7% and 0.9% as of March 31, 2022 and 2021, respectively.
Long-term borrowings as of March 31, 2022 and 2021 is summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Loans, principally from banks, maturing in installments through 2035
with weighted average interest of 0.99% as of March 31, 2022,
partially secured by mortgage of property, plant and equipment andsecurities
Loans, principally from banks, maturing in installments through 2035
with weighted average interest of 0.18% as of March 31, 2021,
partially secured by mortgage of property, plant and equipment andsecurities
Lease obligations maturing in installments through 2056 as of March
31, 2022
Lease obligations maturing in installments through 2056 as of March
31, 2021
Unsecured bonds, due 2030 with interest of 0.340%
Unsecured bonds, due 2025 with interest of 0.170%
Less current installments:
Loans
Lease obligations

¥

2021

63,753

¥

2022

—

$

520,900—

55,185

—

2,102

—

17,175—
10,00010,00085,8552,186
10,00010,00077,371—
81,70681,706
701,487

8,092
10,413
66,117
565
543
4,616
¥
77,198¥66,415$
630,754
Note: The weighted average interest rates on lease obligations as of March 31, 2022 and 2021 are omitted because leaseobligations were recorded in the consolidated balance sheet based on the total lease payment which includes assumed
interests portion.

27 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

The aggregate annual maturities of loans after March 31, 2023, are as follows:
Millions of
Yen

Year ending March 31,
2024
2025
2026
2027

Thousands of
U.S. dollars

17,028
5,142
4,104
1,868

¥

$

139,129
42,01333,532
15,263

The aggregate annual maturities of bonds after March 31, 2023, are as follows:

Millions ofYen

Thousands of
U.S. dollars

Year ending March 31,
2024

¥

—

—

$

2025

—

—

2026

10,00081,7062027——

Property, plant and equipment, Notes and accounts receivable-trade, and contract assets and Securities with a book value
as of March 31, 2022 of ¥29,903 million ($244,326 thousand) were mortgaged to secure certain debts.
As is customary in Japan, both short-term and long-term bank 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 event of 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 and landlease 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 the Company and certain consolidated subsidiaries. The Company isobliged to conduct a special treatment when asbestos are removed. The asset retirement obligations are based on estimatedfuture cash flows for the treatment. The obligations are calculated by using the estimated useful lives of the fixed assets mainlyof 8 years and discounted rate mainly of 1.035%.
The following table provides a total asset retirement obligation for the years ended March 31, 2022 and 2021:
Thousands of
U.S. dollars

Millions of yen

2022
Balance at beginning of year
Liabilities incurred due to the acquisition
Increase due to change of estimate
Accretion expenses
Liabilities settled
Other
Balance at end of year

¥

¥

5,113
1
—
43
(85)
261
5,334

2021
¥

¥

3,560
0
1,406
41
(0)
104
5,113

2022
$

$

41,776
8
―
351
(695)
2,133
43,582(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 the Company
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 and pipelines according to law and lease contracts, and the piers and pipelines
can be used for a substantial long-term with appropriate repair. Asset retirement obligations relating to these assets are notrecognized 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.

28 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Certain consolidated subsidiaries apply the simplified method in computing net defined benefit liability and retirement
benefit expenses for their defined benefit corporate pension plans and lump-sum retirement benefit plans.
In the year ended March 31, 2022, Mitsubishi Gas Chemical Trading Inc., a consolidated subsidiary of the Company,
integrated retirement benefit plans of the former TOKYO SHOKAI, LTD., the former RYOYO TRADING CO., LTD. and theformer RYOKO CHEMICAL CO., LTD. into a new retirement benefit plan. In line with this integration, the method of calculating
retirement benefit obligations was also unified to the principle method.
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

Retirement benefit obligation at beginning of year
Service costs
Interest costs
Actuarial gains and losses arising during year
Retirement benefits paid
Effect of change in retirement benefit plan at subsidiary
Other
Retirement benefit obligation at end of year

¥

¥

2022
42,555
2,190
379
(36)
(2,492)424
5443,0762021
41,794
2,175
375
111
(2,129)—227¥
42,555¥

Thousands of
U.S. dollars

2022
347,700
17,894
3,097(294)(20,361)
3,464
441
$
351,957$(b) Reconciliation between plan assets at beginning of year and end of year (excluding plans applying the simplified
method):Millions of yen

Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses arising during year
Contribution from employer
Retirement benefits paid
Effect of change in retirement benefit plan at subsidiary
Other
Plan assets at end of year

¥

¥

2022
39,548
527
1,106
1,133
(1,688)160
1240,8002021
36,248
498
2,798
1,412
(1,478)—68¥
39,548¥

Thousands of
U.S. dollars

2022
323,131
4,306
9,037
9,257
(13,792)
1,307
98$
333,361$(c) Reconciliation between retirement benefit liabilities of plans applying the simplified method at beginning of year
and end of year:
Millions of yen

Retirement benefit liability at beginning of year
Retirement benefit expenses
Retirement benefits paid
Contribution to plans
Increase due to change in scope of consolidation
Effect of change in retirement benefit plan at subsidiary
Other
Retirement benefit liability at end of year

29 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

2022
2,746
295
(133)
(7)
254
(397)
(6)
¥
2,750
¥

2021
2,813
164
(189)
36
—
(92)
14
¥
2,746
¥

Thousands of
U.S. dollars

2022
22,4362,410(1,087)(57)
2,075(3,244)(49)$
22,469$(d) Reconciliation between retirement benefit obligations and plan assets at end of year and net defined benefit asset
and defined benefit liability on the consolidated balance sheet:
Thousands of
U.S. dollars

Millions of yen

Funded retirement benefit obligation
Plan assets¥

Unfunded retirement benefit obligation
Net balance of liability and asset recorded on the consolidatedbalance sheet
Retirement benefit asset
Retirement benefit liability
Net balance of liability and asset recorded on the consolidatedbalance sheet

2022
43,097(42,997)
99
4,926

¥

2021
42,695(41,396)
1,299
4,454

2022
$

352,128(351,311)
809
40,248

¥

5,025

¥

5,753

$

41,057¥(1,226)
6,252¥(1,396)
7,150$(10,017)51,083

¥

5,025

¥

5,753

$

41,057(e) Retirement benefit expenses and components thereof:
Thousands of
U.S. dollars

Millions of yen

2022
2,190
379
(527)
(209)
(13)
295
109
29
¥
2,253

Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service costs
Retirement benefit expenses applying the simplified method
Loss on change in retirement benefit plan at subsidiary
Other
Retirement benefit expenses under defined benefit plans
(f)

¥

2021
2,175
375
(498)
415
0
164
—
(2)
¥
2,630
¥

2022
17,894
3,097(4,306)(1,708)
(106)
2,410
891
237
$
18,408$Components of items recorded in remeasurements of defined benefit plans in other comprehensive income, before
tax, are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Past service costs
Actuarial gains and losses
Total

¥
¥

2021

223
780
1,004

¥
¥

0
3,064
3,065

2022
1,822
6,373
$
8,203
$

(g) Components of items recorded in remeasurements of defined benefit plans in accumulated other comprehensive
income, before tax, are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Unrecognized past service costs
Unrecognized actuarial gains and losses
Total

¥
¥

2021

(261)
(1,871)(2,132)(h) Plan assets(i) Components of plan assets
Percentages to total plan assets by major category are as follows:

Debt securities
Equity securities
Cash and deposits
Other
Total

30 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

2022
30%
36
12
22
100%

2021
32%
37
11
20
100%

¥
¥

(37)
(1,088)(1,126)$$2022(2,133)(15,287)(17,420)

(ii) Determination of expected long-term rate of return on plan assets
The expected long-term rate of return on plan assets is determined considering current and expected allocation of plan assets
and current and expected long-term rate of return derived from various components of plan assets.
(i) Actuarial assumptions

Discount rate
Expected long-term rate of return on plan assets

2022
Mainly 0.8%
Mainly 2.0%

2021
Mainly 0.8%
Mainly 2.0%

Defined contribution plans
The required contribution of MGC to the defined contribution plans amounted to ¥816 million ($6,667 thousand) and ¥548
million as of March 31, 2022 and 2021, respectively.
Directors, corporate auditors and executive officers are not covered by the plans described above. For such persons, theCompany and certain subsidiaries had unfunded defined benefit pension plans. Under the plans, directors, corporate auditorsand executive officers are entitled to lump-sum payments based on the current rate of pay and length of service when theyleave the companies. MGC provides for the amount of 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. As of March 31, 2022 and 2021, theliabilities for retirement and severance benefits related to the plans were ¥285 million ($2,329 thousand) and ¥217 million,
respectively.

9. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese corporate, inhabitant and business taxes based on income
which, in the aggregate, result in a statutory tax rate of approximately 30.6% in 2022 and 2021.
A reconciliation of the statutory tax rate and the effective tax rate as a percentage of profit before income taxes for the years
ended March 31, 2022 and 2021 is as follows:

Statutory tax rate
Share of profit of entities accounted for using equity method
Dividend income eliminated in consolidation
Valuation allowance
Income not credited for tax purposes
Foreign taxes
Other
Effective tax rate

31 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

2022

2021

30.6%
(6.5)
5.7
3.5
(6.2)
0.7
(3.3)
24.6%

30.6%
(3.2)
4.6
(6.7)
(4.8)
1.1
(2.1)
19.5%

Significant components of deferred tax assets and liabilities as of March 31, 2022 and 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Deferred tax assets:
Tax loss carryforward
Retirement benefit liability
Loss on valuation of investments in securities
Provision for bonuses¥

Intercompany profits
Depreciation
Impairment loss
Asset retirement obligations
Other
Valuation allowance for tax loss carryforward
Valuation allowance for the total amount of deductible temporary
differences
Valuation allowance

Deferred tax liabilities:
Valuation difference on available-for-sale securities
Gain by contributing the assets to the trust
Tax purpose reserves etc. regulated by Japanese tax law
Asset retirement cost
Retained earnings of overseas consolidated subsidiaries andothersOther
Net deferred tax assets (liabilities)

Notes

¥

2021

6,092
7,178
1,249
1,684
2,921
445
3,120
1,676
4,724
29,093(4,756)

¥

2022

6,193
6,947
1,227
1,717
2,335
408
1,657
1,605
3,498
25,592(4,658)49,77558,64910,205
13,75923,866
3,636
25,492
13,694
38,598
237,707(38,859)$(14,269)(19,025)
10,067(11,433)(16,091)
9,501(116,586)(155,446)
82,253(4,992)(1,255)(2,189)(132)(6,328)(1,255)(2,009)(192)(40,788)(10,254)(17,885)(1,079)(5,174)(4,287)(18,032)(7,964)(4,195)(4,203)(18,184)(8,682)(42,275)(35,027)(147,332)(65,071)¥$

1: The change in valuation allowance is mainly due to a decrease of valuation allowance for devaluation loss on
investment in securities.
2: The expiration of tax loss carryforward and the resulting net deferred tax assets as of March 31, 2022 and 2021
were as follows:

March 31, 2022
Due
withinone yearTax losscarryforward*
Valuation allowance
Deferred tax assets¥

Due after
one yearthrough
two years

Due after
two years
throughthree years

Due after
five
years

Total

279 ¥

1,116 ¥

1,097 ¥

717 ¥

2,056 ¥

6,092

(42)
782

(55)
223

(1,097)19(1,091)
5

(654)
63

(1,814)242(4,756)1,336

Due
withinone year¥

Due after
four years
throughfive years

825 ¥March 31, 2021

Tax losscarryforward*
Valuation allowance
Deferred tax assets

Millions of yen
Due after
three years
throughfour years

Due after
one yearthrough
two years

Due after
two years
throughthree years

Millions of yen
Due after
three years
throughfour years

Due after
four years
throughfive years

Due after
five
years

Total

1,085 ¥

651 ¥

411 ¥

87 ¥

1,708 ¥

2,249 ¥

6,193

(259)
825

(335)
315

(411)
—

(72)
14

(1,707)1(1,871)378(4,658)1,535

32 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

March 31, 2022
Due
within one
year

Due after
one yearthrough
two years

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

Tax loss$
6,741 $
2,280 $
9,118 $
carryforward*
Valuation allowance
(343)
(449)
(8,963)
Deferred tax assets
6,389
1,822
155
* Tax loss carryforward was calculated by multiplying the statutory tax rate.

Due after
four years
throughfive years

Due after
five
years

Total

8,963 $

5,858 $

16,799 $49,775(8,914)41(5,344)515(14,821)
1,977(38,859)
10,916

10. Common Stock
Under the Companies Act, the entire amount of the issue price of shares is required to be designated as stated common stock
account although a company in Japan may, by resolution of its Board of Directors, account for an amount not exceeding 50% of
the issue price of new shares as additional 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 and its
Japanese subsidiaries be appropriated as a legal reserve. No further appropriations are required when the total amount of theadditional 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 the stockholders. Balancesof the legal reserve are included in retained earnings in the accompanying consolidated balance sheet.
Cash dividends charged to retained earnings for the years ended March 31, 2022 and 2021 represent dividends paid out
during those years. The amount available for dividends is based on the amount recorded in the Company’s non-consolidated
books of account in accordance with the Companies Act.
(a) Dividends paid during the year ended March 31, 2021
The following was approved by the Board of Directors held on May 26, 2020
(i)
(ii)
(iii)
(iv)

Total dividends
Cash dividends per common share
Record date
Effective date

¥7,279 million¥35
March 31, 2020
June 8, 2020

The following was approved by the Board of Directors held on November 2, 2020
(i)
(ii)
(iii)
(iv)

Total dividends
Cash dividends per common share
Record date
Effective date

¥7,280 million¥35
September 30, 2020
December 4, 2020(b) Dividends paid during the year ended March 31, 2022
The following was approved by the Board of Directors held on May 26, 2021
(i)
(ii)
(iii)
(iv)

Total dividends
Cash dividends per common share
Record date
Effective date

¥7,280 million ($59,482 thousand)¥35 ($0.29)
March 31, 2021
June 7, 2021

The following was approved by the Board of Directors held on November 5, 2021
(i)
(ii)
(iii)
(iv)

Total dividends
Cash dividends per common share
Record date
Effective date33 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

¥9,362 million ($76,493 thousand)¥45 ($0.37)
September 30, 2021
December 6, 2021

(c) Dividends to be paid after the balance sheet date but the record date for the payment belongs to the year ended
March 31, 2022
The following was approved by the Board of Directors held on May 26, 2022.
(i)
(ii)
(iii)
(iv)
(v)

Total dividends
Dividend source
Cash dividends per common share
Record date
Effective date

¥7,281 million ($59,490 thousand)
Retained earnings¥35 ($0.29)
March 31, 2022
June 9, 2022

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

Millions of yen

2022
Freight
Stevedoring and warehouse fee
Salaries
Employees’ bonuses
Pension cost
WelfareTransportation
Depreciation

¥

2021

27,713
3,811
19,842
5,785
1,118
5,045
847
5,906

¥

21,435
3,738
18,961
5,747
1,431
4,846
670
5,681

2022
$

226,432
31,138
162,12147,2679,135
41,221
6,921
48,256

13. Research and Development Costs
Research and development costs charged to following items for the years ended March 31, 2022 and 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Research and development costs which were included in selling,
general and administrative expenses
Research and development costs which were included in generaland administrative expenses and manufacturing costs

34 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022¥

19,75521,0932021¥

18,595
19,9052022$

161,410
172,343

14. Impairment Loss
MGC reviewed its long-lived assets for impairment and, as a result, recognized an impairment loss for the years ended March
31, 2022 and 2021 as follows:

Location

Usage

Classification

2022
Shanghai City,
China
Shirakawa-shi
Fukushima Pref.
Japan
Yokkaichi-shi
Mie Pref.
Japan
Niigata-shi
Niigata Pref.
Japan
Maebashi-shi
Gunma Pref.
Japan
Kurashiki-shi
Okayama Pref.
Japan
Ishikari-shi
Hokkaido Pref.
Japan
Tainai-shi
Niigata Pref.
Japan
Kurashiki-shi
Okayama Pref.
Japan
Yokkaichi-shi
Mie Pref.
Japan
State of Michigan,
U.S.A

Manufacturing facilities
for synthetic resins
Facilities for rent

Buildings,
machinery andequipment, etc.
Buildings,
machinery andequipment, etc.

Thousands of
U.S. dollars

Millions of yen

2021

2022

¥3,736¥―$30,525

1,194

―

9,756

Manufacturing facilities
for synthetic resins

Machinery andequipment, etc.

769

―

6,283

Manufacturing facilities
for organic chemicals

Machinery andequipment, etc.

611

―

4,992

Manufacturing facilities

Buildings,
machinery andequipment, etc.

177

―

1,446

Manufacturing facilities
for aromatic chemicals

Machinery andequipment

147

―

1,201

Manufacturing facilities

Buildings,
machinery andequipment, etc.

117

―

956

Manufacturing facilities
for natural gas andcrude oil

Machinery andequipment, etc.

―

1,258

―

Manufacturing facilities
for organic chemicals

Machinery andequipment, etc.

―

373

―

Manufacturing facilities
for optical material

Machinery andequipment, etc.

―

144

―

Manufacturing facilities

Machinery andequipment, etc.

―

219

―

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 grouped individually by each
item.
The carrying amounts of manufacturing facilities owned by the Company and its consolidated subsidiaries, and of facilities
for rent owned by the Company were written down to their recoverable amounts because the carrying amounts fell below therecoverable amounts.
The recoverable amounts were measured using the net selling value or value in use per each asset group, and evaluatedbased on reasonable estimation by cost approach or based on memorandum value due to negative future cash flow.

Impairment loss on the asset groups consisted of the following:Thousands of
U.S. dollars

Millions of yen

Buildings and structures
Machinery, equipment and vehicles
Intangible assets
Other
Total

35 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

2022
¥2,0844,243
55
373¥6,756

2021
¥234
1,740
—
18
¥1,9942022$17,028
34,668449
3,048$55,20115. Other Comprehensive Income
The reclassification adjustment and the related income tax effects allocated to each component of other comprehensive income
for the years ended March 31, 2022 and 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Valuation difference on available-for-sale securities:
Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amount¥Deferred losses on hedges:
Arising during the year
Reclassification adjustment
Before tax amountTax benefit
Net-of-tax amount2021(1,433)(2,974)(4,407)
1,289(3,118)¥2022

10,747(1,799)8,948(2,210)6,737$(11,708)(24,299)(36,008)
10,532(25,476)

(20)
—
(20)
6
(14)

(34)
―
(34)
10
(24)

(163)
—
(163)
49
(114)

Foreign currency translation adjustments:
Arising during the year
Net-of-tax amount

9,330
9,330

3,036
3,036

76,232
76,232Remeasurements of defined benefit plans:Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amount

1,313
(309)
1,004
28
1,032

2,691
373
3,065
(235)
2,829

10,728(2,525)
8,203
229
8,432

Share of other comprehensive income of entities accounted for by
the equity method:
Arising during the year
Reclassification adjustment
Net-of-tax amount

6,471
—
6,471

1,137
―
1,137

52,872—
52,872

Total other comprehensive income

36 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022¥

13,701¥

13,718$111,945

16. Per Share Information
As stated in “Changes in Accounting Policies,” the Company has applied the Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations, and complied with the transitional treatmentprescribed in the proviso Paragraph 84 of the Accounting Standard for Revenue Recognition.
The impact on net assets per share and earnings per share as of and for the year ended March 31, 2022 is immaterial.
(a) Earnings per share
Earnings per share, and reconciliation of the numbers and the amounts used in the earnings per share computations for theyears ended March 31, 2022 and 2021 are as follows:
Yen

U.S. dollars

2022
Earnings per share

¥

2021

232.15¥2022

173.41Thousands of
U.S. dollars

Millions of yen

2022

1.90

$

2021

2022

Profit attributable to owners of parent
Profit not applicable to common stockholders¥

48,295—¥36,070—$394,599—

Profit attributable to common stockholders of parent¥

48,295¥36,070$394,599

Number of shares

Weighted average number of shares outstanding on which earnings
per share is calculated

2022

2021

208,036,405

208,004,306

The diluted earnings per share for the years ended March 31, 2022 and 2021 are not presented because there are no
dilutive potential shares as of March 31, 2022 and 2021.
(b) Net assets per share
Net assets per share as of March 31, 2022 and 2021 are as follows:
Yen

U.S. dollars

2022
Net assets per share

¥

2021

2,733.86¥

2,520.34

2022
$

22.34

17. Leases
Operating lease
Future minimum lease payments required under non-cancellable operating leases as of March 31, 2022 and 2021 are as
follows:
Thousands of
U.S. dollars

Millions of yen

2022
Within one year
Over one year¥¥

37 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

754
2,470
3,224

2021
¥
¥

871
3,449
4,320

2022
$
$

6,161
20,181
26,342

18. Balances and Transactions with Related Party
The Company has a 50% equity ownership in Mitsubishi Engineering-Plastics Corporation as of March 31, 2022 and 2021.
Balances with the company as of March 31, 2022 and 2021 and related transactions for the years then ended aresummarized as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Balances:
Accounts receivable - trade
Transactions:
Sales

¥

2021

9,509

¥

39,252

10,7362022$

77,694
320,71229,226The Company has a 50% equity ownership in BRUNEI METHANOL COMPANY SDN. BHD. as of March 31, 2022 and2021.
As of March 31, 2022 and 2021, the Company has guaranteed ¥1,235 million ($10,091 thousand) and ¥2,588 million of thecompany’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,
2022 and 2021.
As of March 31, 2022 and 2021, the Company has guaranteed ¥27,612 million ($225,607 thousand) and ¥27,309 million of
the company’s loans to financial institutions.
The condensed financial information of all of 15 affiliates (14 in 2021) accounted for by the equity method, including thesignificant affiliate, Japan Saudi Arabia Methanol Company, Inc., are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Total current assets
Total non-current assets¥

252,314421,8302021¥

187,161
391,8542022$

2,061,557
3,446,605

Total current liabilities
Total non-current liabilities

169,348
205,190

140,296
190,721

1,383,675
1,676,526

Total net assets

299,706

247,996

2,448,778

Sales
Profit before income taxes
Profit

410,666
56,27435,856

270,563
21,793
11,806

3,355,389
459,792
292,965

19. Commitments and Contingencies
The Company guarantees certain obligations of its associated companies and employees, etc. As of March 31, 2022 and 2021,
guarantees for affiliates and employees, etc. loans amounted to ¥35,809 million ($292,581 thousand) and ¥29,719 million,
respectively.

20. Financial Instruments
Conditions of financial instruments(a) Management policy
MGC raises necessary funds through bank borrowings and issue 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 to customer’s credit risk. Maturities of trade notes and accounts payable aremostly 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.
Securities and investments in securities are mainly held-to-maturity bonds and equity securities held for business relations
and are exposed to market fluctuation risk.
Borrowings, bonds and lease obligations for finance leases are mainly for financing of funds for capital expenditure andoperating. 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.

38 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

MGC uses foreign exchange contracts to hedge future fluctuation of foreign exchange rates of operating receivables andpayables and forecasted transactions denominated in foreign currencies, interest rate swaps and currency swaps to hedge
future fluctuation of interest rates and foreign exchange rates of borrowings.
Hedge accounting is applied for certain derivative transactions. MGC applies the deferral hedge accounting method forhedge accounting. MGC has entered into forward exchange contracts for receivables and payables and forecasted transactions
denominated in foreign currencies, and interest rate swap agreements to manage interest rate exposures on certain borrowings.
Hedges for fluctuation risk of foreign exchange rates that meet certain criteria are accounted 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 recognized over the life of the agreements as an adjustment to interest
expense. MGC employs derivative transactions within actual demand and does not hold or issue derivative financial instruments
for speculative purposes. The hedge effectiveness is assessed based on the fluctuation ratio of hedged items and hedging
instruments by comparing the cumulative market fluctuations or cash flow fluctuations of hedged items and those of related
hedging instruments. The Company omits to assess hedge effectiveness of interest rate swaps which qualify for hedge
accounting and meet certain criteria.
(c) Financial instruments risk management(i) Credit risk
To mitigate and quickly capture the collectability issues, sales administration divisions regularly monitor major customers’ credit
status, and perform due date controls and balance controls for each customer in accordance with trade receivables and credit
control rules. Held-to-maturity securities are debt securities readily convertible into cash which are invested in accordance withinvestment of surplus funds rules.
Maximum risk as of March 31, 2022 and 2021 is represented by the carrying amount of financial assets exposed to credit
risk.
(ii) Market risk
The finance departments have executed the transactions with market 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 a forward exchange
contract for hedging the cash flow fluctuation risk associated with operating receivables and payables and forecasted
transactions denominated in foreign currencies and surplus funds. To mitigate the foreign currency and interest rate fluctuation
risk, MGC enters into an interest rate swap and a currency swap for hedging the cash flow fluctuation risk associated withborrowings.
MGC regularly monitors a price and an issuer’s financial condition, and continuously considers whether MGC holds the
securities or the investments in securities except for held-to-maturity bond.
(iii) Liquidity risk
To mitigate the liquidity risk, a finance department prepares and updates a funds management plan as necessary, and maintains
an appropriate level of liquidity.

(d) Supplemental explanation regarding fair value of financial instruments
Fair value of financial instruments is calculated based on certain assumptions, and the fair 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.

39 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Fair value of financial instruments
Balance sheet amount, fair value, and differences as of March 31, 2022 and 2021 are as follows.
Millions of yen
Balancesheet
amountMarch 31, 2022
Assets:(1) Securities and investments insecurities
Total assets
Liabilities:(1) Bonds(2) Long-term borrowings
Total liabilities
Derivative transactions (*4):
Hedge accounting not applied:
Hedge accounting applied:
Total derivative transactions

Thousands of U.S. dollars

Fair value

Balancesheet
amountDifferences

Fair value

Differences¥¥

33,63633,636¥¥33,63633,636

¥
¥

—
—

$
$

274,826
274,826$$

274,826
274,826

$
$

—
—

¥

20,00046,621
66,621¥

19,866
47,46567,332¥(133) $
843
710 $

163,412
380,922544,334$

162,317387,818
550,143$$(1,087)
6,888
5,801

(3,726) $(392)(4,118) $

—
—
—

¥

¥
¥

¥

(456) ¥
(48)(504) ¥¥

(456) ¥
(48)(504) ¥

—
—
—

$
$

$

(3,726) $(392)(4,118) $Millions of yen
Balancesheet
amountMarch 31, 2021
Assets:(1) Securities and investments insecurities
Total assets

Fair value

Differences¥¥

39,56839,568¥¥39,56839,568

¥
¥

—
—

¥

20,000¥19,976¥(24)

Liabilities:(1) Bonds

36,202(2) Long-term borrowings
Total liabilities
Derivative transactions (*4):
Hedge accounting not applied:
Hedge accounting applied
Total derivative transactions¥¥¥

56,202

36,177¥(320) ¥
(27)(348) ¥

56,153

(24)
¥

(48)

(320) ¥
(27)(348) ¥———

*1. Disclosure of notes on Cash is omitted. Disclosure of notes on Deposits, Notes and accounts receivable - trade, and contract
assets, Notes and accounts payable - trade, Short-term borrowings, Accrued expenses and Income taxes payable is omitted
since their carrying amounts approximate their fair values because of the short maturity of these instruments.
*2. Equity securities without market price are not included in “Assets (1) Securities and investments in securities.” The balance
sheet amount of these instruments is as follows:

Thousands of
U.S. dollars

Millions of yen

2022
Unlisted equity securities¥

137,5312021¥

119,4192022$

1,123,711*3. Investment in partnerships is not included in “Assets (1) Securities and investments in securities” as the Company has applied
the accounting treatment prescribed in Paragraph 27 of the Implementation Guidance on Accounting Standard for Fair Value
Measurement. The balance sheet amount of these instruments is as follows:

Investment in partnerships

Millions of yen

Thousands of
U.S. dollars

2022

2022

¥

284

$

2,320

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

40 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

<1> Projected future redemption of monetary claim and securities with maturities as of March 31, 2022
Millions of yen
Due after one
Due after five
year through five
years through ten
years
years

Due within one
year(1) Cash and deposits(2) Notes and accounts receivable trade, and contract assets(3) Securities and investments insecurities:
Held-to-maturity securities:
Government bonds
Certificates of deposit
Other securities with maturity:
Bonds
Other
Total

¥

¥

Due after ten
years

102,049 ¥

— ¥

— ¥

—

175,993

—

—

—

—
—

—
—

—
—

—
—

—
—
— ¥

—
—
— ¥

—
—
278,042 ¥

1,737
100
1,837

Thousands of U.S. dollars
Due after one
year through fiveyears

Due within one
year(1) Cash and deposits(2) Notes and accounts receivable trade, and contract assets(3) Securities and investments insecurities:
Held-to-maturity securities:
Government bonds
Certificates of deposit
Other securities with maturity:
Bonds
Other
Total

$

$

833,802 $Due after five
years through ten
years

Due after ten
years

— $

— $

—

1,437,969

—

—

—

—
—

—
—

—
—

—
—

—
—
— $

—
—
— $

—
—
2,271,771 $

14,192817
15,009<2> The annual maturities of the bonds and long-term borrowings as of March 31, 2022

Due within
one year

Bonds
Long-term borrowings

¥

— ¥
8,092

Due within
one year

Bonds
Long-term borrowings$

Due after
one yearthrough two
years

― $
66,117— ¥17,028Due after
one yearthrough two
years

― $
139,129

Millions of yen
Due after
Due after
two years
three years
throughthrough four
three years
years

— ¥
5,142

10,000 ¥Due after
four years
through five
years

― ¥

4,104

1,868

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

Due after
four years
through five
years

― $
42,01381,706 $33,532― $15,263Due after
five years

10,00018,477

Due after
five years

81,706150,968

Breakdown by level of fair value of financial instruments
Fair value of financial instruments is categorized into following three levels depending on observability and materiality of inputs
used for the measurement of fair values.
Level 1: Fair value determined based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Fair value determined based on inputs other than quoted market prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3: Fair value determined based on significant unobservable inputs for the asset or liability.
If multiple inputs that have significant impact on the fair value measurement are used, the fair value is categorized in the level ofthe lowest level input used in the fair value measurement.

41 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

(i) Financial instruments whose fair value is presented as carrying amount in the balance sheet
Millions of yen

2022
Fair value
Level 1
Securities and investments in securities:
Other securities:
Equity securities
Bonds
Other
Total assets
Derivative transactions (*):
Hedge accounting not applied:
Forward exchange contracts andcurrency swap agreements
Interest rate swap agreements
Hedge accounting applied:
Forward exchange contracts
Total derivative transactions¥¥

Level 2

31,795—104
31,899

¥

—
—

¥

¥

—
—

¥

¥

¥

Level 3

—
1,737
—
1,737

¥

(498)
42

¥

¥

(48)
(504)

—
—
—
—

¥

—
—

¥

—
—

¥

Total
31,795
1,737
104
33,636

¥

(498)
42
(48)
(504)

¥

Thousands of U.S. dollars

2022
Fair value
Level 1
Securities and investments in securities:
Other securities:
Equity securities
Bonds
Other
Total assets
Derivative transactions (*):
Hedge accounting not applied:
Forward exchange contracts andcurrency swap agreements
Interest rate swap agreements
Hedge accounting applied:
Forward exchange contracts
Total derivative transactions$$

Level 2259,784—
850
260,634

$

—
—

$

$

—
—

$

$

$

Level 3—
14,192—
14,192$(4,069)
343

$

$

(392)
(4,118)

—
—
—
—

$

—
—

$

—
—

$

Total

$

259,784
14,192
850
274,826(4,069)343(392)(4,118)$* Derivative receivables and payables are on net basis. Items that are net payables are shown in parenthesis.

(ii) Financial instruments whose carrying amount in the balance sheet is not based on fair value
Millions of yen

2022
Fair value
Bonds
Long-term borrowings
Total liabilities¥¥

Level 1
19,866—
19,866¥¥

Level 2—
47,46547,465¥¥

Level 3
—
—
—

¥
¥

Total
19,866
47,46567,332Thousands of U.S. dollars

2022
Fair value
Bonds
Long-term borrowings
Total liabilities$$

Level 1
162,317—
162,317$$

Level 2—
387,818
387,818$$

Level 3
—
—
—

$
$

Total
162,317387,818
550,143

Note: Explanation on techniques and inputs used for fair value measurement
Securities and investments in securities:
Equity securities are valued using quoted market prices. The fair value of equity securities is categorized in Level 1 as they aretraded in active markets. The fair value of bonds is categorized in Level 2 since it is not considered a quoted price in an active
market as bonds they are not frequently traded in the market.
Derivative transactions:
The fair value of derivatives is determined based on prices obtained from counterparty financial institutions and categorized in
Level 2.

42 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Bonds:
The fair value of bonds issued by the Company is determined based on market prices and categorized in Level 1.
Long-term borrowings:
The fair value of long-term borrowings is determined by the present value based on the total principal and interest discounted by
the interest rates assumed for similar new loans, and categorized in Level 2.

21. Derivative Financial Instruments
The contract or notional amounts and fair value of derivative financial instruments held as of March 31, 2022 and 2021 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 ornotional amounts

Valuation
gain (loss)

Fair value

March 31, 2022
Forward exchange contracts:
To sell foreign currency:
U.S. dollar
Euro
Thai Baht
New Taiwan dollar
Chinese Yuan
To buy foreign currency:
U.S. dollar
New Taiwan dollar
Currency swap agreements:
Receive/U.S. dollar, Pay/Japanese Yen
Receive/U.S. dollar, Pay/Thai Baht
Receive/Japanese Yen, Pay/Chinese Yuan¥¥

15,953
3,387
230
604
2,254

¥

(123) ¥
(6)
(0)
(21)
(0)

(123)
(6)
(0)
(21)
(0)

189
2

2
(0)

2
(0)

802
575
1,926
25,926439(402)(498) ¥

43
9
(402)
(498)

¥

Millions of yen
Contract ornotional amounts

March 31, 2021
Forward exchange contracts:
To sell foreign currency:
U.S. dollar
Euro
Thai Baht
New Taiwan dollar
Chinese Yuan
To buy foreign currency:
U.S. dollar
New Taiwan dollar
Chinese Yuan
Currency swap agreements:
Receive/U.S. dollar, Pay/Japanese Yen
Receive/U.S. dollar, Pay/Thai Baht
Receive/Japanese Yen, Pay/Chinese Yuan¥¥

43 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

8,962
2,821
114
512
2,340

Valuation
gain (loss)

Fair value

¥

(7) ¥
(3)
(0)
1
(1)

(7)
(3)
(0)
1
(1)

591
1
73

(18)
(0)
(0)

(18)
(0)
(0)

518
517
1,684
18,136

34
(20)
(164)
(178) ¥

34
(20)
(164)
(178)

¥

Thousands of U.S. dollars
Contract ornotional amounts

March 31, 2022
Forward exchange contracts:
To sell foreign currency:
U.S. dollar
Euro
Thai Baht
New Taiwan dollar
Chinese Yuan
To buy foreign currency:
U.S. dollar
New Taiwan dollar
Currency swap agreements:
Receive/U.S. dollar, Pay/Japanese Yen
Receive/U.S. dollar, Pay/Thai Baht
Receive/Japanese Yen, Pay/Chinese Yuan$$

Valuation
gain (loss)

Fair value

130,346
27,674
1,879
4,935
18,417$(1,005) $
(49)
(0)
(172)
(0)

1,544
16

16
(0)

6,553
4,698
15,737
211,831351
74(3,285)(4,069) $$(1,005)
(49)
(0)
(172)
(0)
16
(0)
351
74
(3,285)(4,069)(b) Interest rate swap agreements
Millions of yen
Contract ornotional amounts

Valuation
gain (loss)

Fair value

March 31, 2022
Interest rate swap agreements:
Receive/floating and pay/fixed

¥

3,606

¥

42 ¥

42

March 31, 2021
Interest rate swap agreements:
Receive/floating and pay/fixed

¥

4,014

¥

(142) ¥

(142)

Thousands of U.S. dollars
Contract ornotional amounts

March 31, 2022
Interest rate swap agreements:
Receive/floating and pay/fixed$

29,463

Valuation
gain (loss)

Fair value

$

343

$

343

Derivative financial instruments to which hedge accounting is applied are summarized as follows:
Forward exchange contracts

Hedged items

March 31, 2022
Forward exchange contracts:
To sell foreign currency:
U.S. dollar
To buy foreign currency:
U.S. dollar
To sell foreign currency:
U.S. dollar
To buy foreign currency:
U.S. dollar

Accounts
receivable - trade

Millions of yen
Contract orFair value
notional amounts

¥

¥

(79)

Accounts
payable - trade

245

11

Forecasted
transactions

1,101

(48)

Forecasted
transactions¥

44 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

1,579

90
3,017

¥

0
(116)

Millions of yen
Contract orFair value
notional amounts

Hedged items

March 31, 2021
Forward exchange contracts:
To sell foreign currency:
U.S. dollar
To buy foreign currency:
U.S. dollar
To sell foreign currency:
U.S. dollar
To buy foreign currency:
U.S. dollar

Accounts
receivable - trade

1,766
218

¥

Accounts
payable - trade
Forecasted
transactions

875

(28)

Forecasted
transactions

16

0

2,877

¥

(104)

¥

Thousands of U.S. dollars
Contract orFair value
notional amounts

Hedged items

March 31, 2022
Forward exchange contracts:
To sell foreign currency:
U.S. dollar
To buy foreign currency:
U.S. dollar
To sell foreign currency:
U.S. dollar
To buy foreign currency:
U.S. dollar

(83)
7

¥

Accounts
receivable - trade

12,901

$

(645)

$

Accounts
payable - trade

2,002

90

Forecasted
transactions

8,996

(392)

Forecasted
transactions

735
24,651

$

0
(948)

$

22. Investment and Rental Property
The Company and certain consolidated subsidiaries own land and 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 the years ended
March 31, 2022 and 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Consolidated balance sheet amount:
Balance at beginning of the year
Increase/(decrease)
Balance at end of the year
Fair value
Notes:

2021¥¥

10,200(3,886)
6,314

¥

9,448

¥

2022
$

¥

10,793(592)
10,200$83,340(31,751)
51,589¥13,665$77,196

1. Consolidated balance sheet amount is its cost minus accumulated depreciation and accumulated impairment loss.
2. Decrease for the year ended March 31, 2022 was mainly due to exclusion of ¥3,755 million ($30,681 thousand) onchanges in the scope of consolidation. Decrease for the year ended March 31, 2021 was mainly due todepreciation expense of ¥676 million the Company recorded.
3. Fair value is based on roadside value, etc.

Rent income from the rental property is ¥230 million ($1,879 thousand) and ¥232 million for the years ended March 31,
2022 and 2021, respectively.

45 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

23. Business Combination
Business combination through acquisition
1. Summary of the combination
1) Name and business of the company acquired(i) Name: J-CHEMICAL, Inc.
Business: Sales of adhesives, formalin, etc.
(ii) Name: Yutaka Chemicals Corporation
Business: Manufacturing and sales of adhesives, formalin, etc.
2) Reason for the combination
Through the acquisition of the companies’ shares, the Company aims to strengthen a stable earnings base of the formalin
business by achieving an integrated production from raw materials to woody adhesives and gaining a competitive
advantage.
3) Date of the combination
May 31, 2021
4) Legal form of combination
Acquisition of equity shares for cash consideration
5) Post-combination name of the acquired company
No change
6) Percentage of voting rights acquired(i) J-CHEMICAL, Inc.
Voting rights held immediately before stock acquisition: —%Percentage of additional voting rights acquired on the date of business combination: 100.00%
Voting rights after stock acquisition: 100.00%(ii) Yutaka Chemicals Corporation
Voting rights held immediately before stock acquisition: 50.00%
Percentage of additional voting rights acquired on the date of business combination: 50.00% (including indirect holding of
50.00%)
Voting rights after stock acquisition: 100.00% (including indirect holding of 50.00%)
7) Basis for determining acquiring company
The Company acquired shares for cash consideration.
2. Period of the acquired company’s financial results included in the consolidated financial statements
From June 30, 2021 to March 31, 2022
3. Acquisition cost and type of consideration paid
Thousands of
U.S. dollars

Millions of yen

Consideration paid for the acquisition
Acquisition cost

Cash and deposits

¥
¥

3,250
3,250

$
$

26,55426,554

4. Difference between acquisition cost of the acquired company and sum of acquisition costs of individual transactions
Thousands of
U.S. dollars

Millions of yen

Gain on step acquisition

¥

796 $

6,504

5. Principal acquisition related expenses
Thousands of
U.S. dollars

Millions of yen

Advisory fees

¥

21 $

172

6. Amount of goodwill recognized, reason for the recognition, and amortization method and period
1) Goodwill recognized¥292 million ($2,386 thousand)2) Reason for the recognition
Goodwill was recognized as the excess of acquisition cost over the Company’s interest in net assets of the acquiredcompany.
3) Amortization method and period
Straight-line method over 9 years

46 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

7. Details of the assets acquired and the liabilities assumed at the date of the business combination(i) J-CHEMICAL, Inc.
Thousands of
U.S. dollars

Millions of yen

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

¥

2,974
2,297
5,271
2,140
173
2,314

¥
¥
¥

$

24,29918,76843,067
17,485
1,414
18,907$$$(ii) Yutaka Chemicals Corporation
Thousands of
U.S. dollars

Millions of yen

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

¥
¥
¥
¥

1,194
1,312
2,507
527
307
834

$
$
$
$

9,756
10,72020,484
4,306
2,508
6,814

8. Estimated impact on the consolidated statement of income for the year ended March 31, 2022 on the assumption that thebusiness combination had been completed at the beginning of the year ended March 31, 2022 and the calculation method
Not disclosed since it is difficult to determine the estimated impact for the year ended March 31, 2022.

24. Revenue Recognition(a)Breakdown of revenue from contracts with customers for the year ended March 31, 2022
Millions of yen

2022
Reported segment

Basic Chemicals
Business Sector

Natural-gas chemicals¥
Aromatic chemicals
Specialty chemicals
Information andadvanced materials
Other
Revenue from contracts
with customers¥
Other revenue¥
Sales to third parties¥

Specialty
Chemicals
Business Sector

Other(note)

Adjustments

Total

219,791 ¥
200,167—— ¥—213,908

— ¥
—
—

— ¥
—
—

219,791
200,167
213,908——

71,511
—

—
76

—
(0)

71,511
76

419,959 ¥— ¥419,959 ¥285,419 ¥— ¥285,419 ¥

76 ¥
200 ¥
277 ¥

(0) ¥
— ¥
(0) ¥

705,456200
705,656

Thousands of U.S. dollars

2022
Reported segment
Basic
Chemicals Business
SectorNatural-gas chemicals
Aromatic chemicals
Specialty chemicals
Information andadvanced materials
Other
Revenue fromcontracts withcustomers
Other revenue
Sales to third parties$

Specialty
Chemicals
Business Sector

1,795,825 $
1,635,485
—
—
—

$
$
$

3,431,318 $— $3,431,318 $— $—1,747,757

Other(note)

Adjustments

— $
—
—

— $
—
—

1,795,825
1,635,485
1,747,757

584,288
—

—
621

—
(0)

584,288621

2,332,045 $— $2,332,045 $621 $1,634 $
2,263 $

(0) $
— $
(0) $

5,764,000
1,634
5,765,634

Note: Other includes real estate business which is not included in reported segments.

47 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Total

(b)

Basic information to understand the revenue from contracts with customers

Based on the following five-step approach, MGC recognizes revenue at the time of the transfer of promised goods orservices to customers in the amount that reflects the consideration to which MGC expects to be entitled in exchange forthose goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
MGC is primarily engaged in business activities related to manufacturing and sales of products in the “Basic Chemicals
Business Sector” and “Specialty Chemicals Business Sector.” For the sale of these products, revenue is recognized upondelivery of the products since MGC determines that the customer obtains control of the products and the performanceobligations are satisfied at the time of delivery.
Revenue is measured at the amount of consideration promised in a contract with a customer, excluding discounts,
rebates, returns, etc. For transactions in which MGC acts as an agent in sales of products to customers, revenue isrecognized at net amount after deducting the amount paid to the supplier from the total amount of considerations received
from the customer.
Consideration in sales contracts for goods and products is principally received within one year from the time control of
the goods and services are transferred to the customer and does not include any significant financing component.
Information to understand amounts of revenue for the year ended March 31, 2022 and the year ending March 31,
2023 onward(i) Balance of contract assets and contract liabilities
The MGC’s contract assets and contract liabilities are not presented since their balance is immaterial and there is no
significant fluctuation. Revenue recognized in the year ended March 31, 2022 from performance obligations that weresatisfied (or partially satisfied) in prior periods is not material.

(c)(ii) Transaction price allocated to the remaining performance obligations
MGC has applied a practical expedient and does not provide information on the transaction price allocated to theremaining performance obligations since there is no significant contract that has an original expected duration of one
year or more, excluding the sales-based or usage-based royalty. In addition, there is no significant amount not includedin the transaction price among considerations arising from contracts with customers.
(d)Notes and accounts receivable - trade, and contract assets from contracts with customers is as follows

Notes receivable- trade
Accounts receivable- trade
Contract assets(e)¥Millions of yen

Thousands of
U.S. dollars

2022

2022

18,675
157,317562$

152,586
1,285,375
4,592

The amount of contract liabilities from contracts with customers is as follows

Contract liabilities¥

Millions of yen

Thousands of
U.S. dollars

2022

2022
124

$

1,013

25. Segment Information
The Company introduced company-based organization for clarifying management’s responsibility in operation and for managing
efficiently. Each company develops a business strategy for their products and services and conducts business.
The MGC’s reported segments consist of “Basic Chemicals Business Sector” and “Specialty Chemicals Business Sector”
for which the Company is able to obtain respective financial information separately in order for the Board of Directors to conductperiodic investigation to determine distribution of management resources and evaluate their business results.
The Company reviewed the classification of its business segments, and as a result, businesses related to energy, whichwere previously included in “other businesses,” have been included in the “Basic Chemicals Business Sector” from the year
ended March 31, 2022.
“Basic Chemicals Business Sector” mainly produces and sells methanol, chemical products for methanol and ammonia, life
science products, general aromatic products, specialty aromatic products, foaming plastics and electric power.
“Specialty Chemicals Business Sector” mainly produces and sells inorganic chemicals, plastic lens monomer, engineering
plastics, electronic materials and oxygen absorbers.
The segment information for the year ended March 31, 2021 is disclosed based on the new reported segment classification
applied from the year ended March 31, 2022.

48 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Segment sales, profit, assets, liabilities and others are calculated by accounting methods similar to those employed toprepare the accompanying consolidated financial statements. Segment profit are calculated based on “Keijo-rieki” disclosed in
the consolidated statement of income under accounting principles generally accepted in Japan (See note 26). Intersegment
revenue and transfer are based on arm’s-length transactions.
Change in accounting policy
As stated in “Changes in Accounting Policies,” the Company has applied the Accounting Standard for Revenue Recognition andrelevant ASBJ regulations and changed the accounting method for revenue recognition. Accordingly, the method for determining
profit or loss in the business segments has been also changed.
As a result of the change, for the year ended March 31, 2022, sales to third parties and segment profit in the Basic
Chemicals Business Sector decreased by ¥14,989 million ($122,469 thousand) and ¥14 million ($114 thousand), respectively. In
the Specialty Chemicals Business Sector, sales to third parties decreased by ¥19,833 million ($162,048 thousand) and segment
profit increased by ¥4 million ($33 thousand). Adjustments for segment loss decreased by ¥6 million ($49 thousand).
The MGC’s reported segment information for the years ended March 31, 2022 and 2021 is summarized as follows:

Millions of yen

2022
Basic
Chemicals
Business
SectorSales:
Sales to third parties
Inter-segment sales¥¥

Segment profit¥
Segment assets¥
Others:Depreciation and¥amortization
Amortization of goodwill
Interest income
Interest expenses
Share of profit (loss) ofentities accounted for using
equity method
Investments in entities accounted
for by the equity method
Capital expenditures

Specialty
Chemicals
Business
SectorOther

Adjustments

Consolidated

419,959 ¥5,383
425,343 ¥

285,419 ¥98
285,518 ¥

277 ¥
16
294 ¥

(0) ¥
(5,499)(5,499) ¥705,656―
705,656

30,083 ¥481,866 ¥

45,433 ¥405,824 ¥22 ¥26,971 ¥(1,387) ¥13,988 ¥74,152
928,651

17,165 ¥13,083 ¥18 ¥1,732 ¥

31,999

393
268
411

―
140
687

3
0
0

―
(62)
(240)

396
346
858

5,136

9,747

―

0

14,88386,14939,434―(40)

125,543

19,25632,623

1

2,911

54,793

49 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Millions of yen

2021
Basic
Chemicals
Business
SectorSales:
Sales to third parties
Inter-segment sales¥¥

Segment profit¥
Segment assets¥
Others:Depreciation and¥amortization
Amortization of goodwill
Interest income
Interest expenses
Share of profit (loss) ofentities accounted for using
equity method
Investments in entities accounted
for by the equity method
Capital expenditures

Specialty
Chemicals
Business
SectorOther

Adjustments

Consolidated

340 ¥
6
347 ¥

(158) ¥
(8,014)(8,172) ¥595,718¥

267,457 ¥368
267,825 ¥

14,238440,838¥¥

37,552 ¥351,917 ¥89 ¥26,573 ¥(1,639) ¥17,034 ¥50,240836,364

16,479¥13,090 ¥82 ¥1,034 ¥

30,686

368
228
550

―
190
581

3
5
2

―
(61)
(335)

371
362
800

1,972

3,180

―

9

5,162

73,53530,831―(149)

104,217

19,791

18,619328

1,543

40,282

328,078
7,639
335,717¥―595,718

Thousands of U.S. dollars

2022
Basic
Chemicals
Business
SectorSales:
Sales to third parties
Inter-segment sales$$

Segment profit$
Segment assets$
Others:Depreciation and amortization$
Amortization of goodwill
Interest income
Interest expenses
Share of profit (loss) of entities
accounted for using equity
methodInvestments in entities accounted
for by the equity method
Capital expenditures
Notes:

1.
2.

Specialty
Chemicals
Business
SectorOther

Adjustments

Consolidated

3,431,318 $
43,982
3,475,308 $

2,332,045 $801
2,332,854 $

2,263 $
131
2,402 $

(0) $(44,930)(44,930) $5,765,634―
5,765,634

245,796 $3,937,135 $

371,215 $3,315,826 $180 $220,369 $(11,333) $114,290 $

605,866
7,587,638

140,248 $
3,211
2,190
3,358

106,896 $
―
1,144
5,613

147 $
25
0
0

14,151 $―(507)(1,961)

261,451
3,236
2,827
7,010

41,964

79,639―0

121,603703,889

322,200―(327)

1,025,762

157,333

266,550

8

23,785447,692

Other includes real estate business which is not included in reported segments.
Adjustments in the above tables are made for the followings:(1) Adjustments in segment profit
Thousands of
U.S. dollars

Millions of yen

2022

2021

2022

(109)
¥
30
$
(891)
(1,278)(1,670)(10,442)¥(1,387)¥(1,639)$(11,333)* Company-wide expenses are administrative expenses, financial income and expenses and other income andexpenses which are not allocated to reported segments.
Elimination of intersegment transactions
Unallocated company-wide expenses

50 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022¥

(2) Adjustments in segment assets
Thousands of
U.S. dollars

Millions of yen

2022

2022

(63,025)¥(50,598)$(514,952)
77,013
67,632629,243¥
13,988¥17,034$
114,290* Company-wide assets include cash and deposits which are not allocated to reported segments.
(3) “Adjustments in depreciation and amortization” of ¥1,732 million ($14,151 thousand) and ¥1,034 million are
depreciation and amortization of company-wide assets which are not allocated to reported segments for theyears ended March 31, 2022 and 2021, respectively.
(4) “Adjustments in interest income” of ¥(62) million ($(507) thousand) and ¥(61) million are mainly elimination ofintersegment transactions and interest income which are not allocated to reported segments for the years
ended March 31, 2022 and 2021, respectively.
(5) “Adjustments in interest expenses” of ¥(240) million ($(1,961) thousand) and ¥(335) million are mainly
elimination of intersegment transactions for the years ended March 31, 2022 and 2021, respectively.
(6) “Adjustments in investments in entities accounted for by the equity method” of ¥(40) million ($(327) thousand)and ¥(149) million are mainly investments which are not allocated to reported segments for the years ended
March 31, 2022 and 2021, respectively.
(7) “Adjustments in capital expenditures” of ¥2,911 million ($23,785 thousand) and ¥1,543 million are related tocompany-wide assets which are not allocated to reported segments for the years ended March 31, 2022 and
2021, respectively.
Segment profit is adjusted with “Keijo-rieki” disclosed in the consolidated statement of income under accounting
principles generally accepted in Japan (See note 26).
Elimination of intersegment balances
Unallocated company-wide assets

3.

2021

¥

Related information
1. Information by products and services
Disclosures are omitted because the classification of products and services are same as the classification of the reported
segments.
2. Geographical information(1) Sales
Thousands of
U.S. dollars

Millions of yen

2022
Japan
Asia:
China
Other
U.S.A.
Other
Total
Note: Geographical sales are classified by customer’s location.

2021

¥

312,433¥

92,207
176,280
52,14372,591
705,656

2022¥

242,901$ 2,552,766¥

103,487
157,226
49,35342,748595,718

753,387
1,440,314
426,040
593,112$ 5,765,634(2) Property, plant and equipment
Thousands of
U.S. dollars

Millions of yen

2022
Japan
Asia
U.S.A.
Other
Total

¥

¥

189,484
50,331
29,557
7,010
276,384

2021¥¥

178,945
40,22625,585
5,174
249,9312022$ 1,548,198
411,235
241,498
57,276$ 2,258,224

3. Information by major customers
Disclosures are omitted because no particular customer whose sales are over 10% of sales in the consolidated statement ofincome exists.

51 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Information of impairment loss on fixed assets by reported segments
Millions of yen

2022
Basic Chemicals
Business Sector

Impairment loss¥

Specialty Chemicals
Business Sector

1,160 ¥

Other

4,694 ¥

Adjustments

10 ¥1,194 ¥

Consolidated

7,059

Millions of yen

2021
Basic Chemicals
Business Sector

Impairment loss¥

Specialty Chemicals
Business Sector

1,851 ¥

Other

208 ¥

Adjustments

— ¥

— ¥

Consolidated

2,060

Thousands of U.S. dollars

2022
Basic Chemicals
Business Sector

Specialty Chemicals
Business Sector

Other

Adjustments

Consolidated

Impairment loss$
9,478 $
38,353 $82 $9,756 $
57,676
Note: Adjustments for the year ended March 31, 2022 are impairment loss on company-wide assets which are not allocated toreported segments.
Information of balance of goodwill by reported segments
Millions of yen

2022
Basic Chemicals
Business Sector

Goodwill¥

Specialty Chemicals
Business Sector

4,811 ¥

Adjustments

Other

― ¥

― ¥

― ¥

Consolidated

4,811

Millions of yen

2021
Basic Chemicals
Business Sector

Goodwill¥

Specialty Chemicals
Business Sector

4,900 ¥

Adjustments

Other

— ¥

13 ¥

— ¥

Consolidated

4,914

Thousands of U.S. dollars

2022
Basic Chemicals
Business Sector

Goodwill$

Specialty Chemicals
Business Sector

39,309 $― $Information of negative goodwill by reported segments
No negative goodwill was recognized for the years ended March 31, 2022 and 2021.

52 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Adjustments

Other

― $

― $

Consolidated

39,30926. The Statement of Income Disclosure under Accounting Principles Generally Accepted inJapan
Under accounting principles generally accepted in Japan, an ordinary profit, “Keijo-rieki” should be disclosed in the statementof income. The ordinary profit is an income figure with certain adjustments made to profit before income taxes.
Followings are the summary information of the statement of income under accounting principles generally acceptedin Japan.
Thousands of
U.S. dollars

Millions of yen

2022
Net sales
Gross profit
Operating profit
Ordinary profit
Profit before income taxes
Profit¥705,656
162,586
55,36074,152
69,62852,5302021¥

595,718
140,958
44,51050,24048,951
39,3832022$

5,765,634
1,328,426
452,325
605,866
568,903429,202

27. Subsequent Events
Purchase and retirement of treasury stock
At the Board of Directors on May 12, 2022, the Company resolved to purchase its treasury stock in accordance with
provisions of the Articles of Incorporation of the Company under the Article 459, Paragraph 1 of the Companies Act and to
retire its treasury stock in accordance with provisions of the Article 178 of the Companies Act.
(i) Reason for the purchase and retirement of treasury stock
In order to enhance shareholder returns, improve capital efficiency and execute flexible capital policy.
(ii) Detail of shares to be purchased
1) Type of shares to be purchased: Common stock2) Number of shares to be purchased: Up to 3,500,000 shares
3) Aggregate purchase amount: Up to ¥8,000 million ($65,365 thousand)4) Purchase period: From May 13, 2022 to July 29, 2022
5) Purchase method: Market purchases(iii) Detail of shares to be retired1) Type of shares to be retired: Common stock2) Number of shares to be retired: 3,500,000 shares
3) Number of issued shares after the retirement: 222,239,199 shares
4) Planned retirement date: July 29, 2022

53 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Independent Auditor’s Report54 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

55 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

56 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

57 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022

Corporate Data
Corporate Information (As of March 31, 2022)
Company NameMITSUBISHI GAS CHEMICAL COMPANY, INC.

Address

Mitsubishi Building
5-2 Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-8324, Japan

Originally founded

January 15, 1918

Incorporated

April 21, 1951

Capital41.97 billion yen

Fiscal Year

Accounts closed in March

Number of employees

2,461(non-consolidated)
9,888 (consolidated)

Shareholder Information (As of March 31, 2022)
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 unit

100

Number of shareholders

32,175Composition of shareholders
Financial institutions
Securities companies

48.8%
3.6%

Other companies in Japan
Foreign investors
Individuals and others

8.5%
22.2%
16.9%

* Transitioned to the Tokyo Stock Exchange Prime Market on April 4, 2022
Major shareholders (top 10)
Investment in MGC
Name of shareholder

Number ofshares held
(thousands)

Percentage
of total
outstanding
sharesThe Master Trust Bank of Japan, Ltd. (Trust Account)

35,163

16.9

Custody Bank of Japan, Ltd. (Trust Account)

17,472

8.4

Meiji Yasuda Life Insurance Company

8,797

4.2

Nippon Life Insurance Company

7,326

3.5

The Norinchukin Bank

5,026

2.4

AGC Inc.

3,929

1.8

Custody Bank of Japan, Ltd. (Trust Account 4)

3,574

1.7

The Bank of Yokohama, Ltd.

3,085

1.4

JPMorgan Securities Japan Co., Ltd.

3,076

1.4

MUFG Bank, Ltd.

2,700

1.3

Notes 1: MGC holds 17,693 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.

58 | MITSUBISHI GAS CHEMICAL COMPANY, INC. MGC Report 2022