[Translation: Please note that the following purports to be an excerpt translation fromthe Japanese original Business Report and Financial Statements prepared for theconvenience of shareholders outside Japan. However, in the case of any discrepancy
between the translation and the Japanese original, the latter shall prevail.]

BUSINESS REPORT(For the Period from April 1, 2019 through March 31, 2020)
1. Particulars Concerning the State of the Group(1) Business Developments[The Mitsubishi Materials Group’s business performance was impacted by the
declining demand in automotive and semiconductor-related sectors, falling copper
prices and weaker domestic demand for cement. However, given the impact ofsuch factors as reduced cost of smelting and an increase in the price of palladiumin the Metals business operating profit increased.]
Regarding the global economy during the consolidated fiscal year, in Asia,
China experienced a continued economic slowdown and a tendency toward
deceleration in economic growth was also seen in Thailand and Indonesia. In the
United States, the economy continued steady improvement.
Regarding the Japanese economy during the consolidated fiscal year, despite
the improvement in employment and income conditions, exports and industrial
production appeared to slow down.
Regarding the business environment for the Group, despite the declining
demand in automotive and semiconductor-related sectors, falling copper prices
and weaker domestic demand for cement, the environment was impacted by anincrease in the price of palladium.
Under these circumstances, in accordance with its Long-Term Management
Policy for the next decade and Medium-Term Management Strategy (FY20182020) that focuses on the planning and implementation of growth strategies, theGroup had continued to implement various measures on the theme of“Transformation for Growth” to achieve Group-wide Policies for the enhancementof corporate value, namely “optimization of business portfolio,” “comprehensive
efforts to increase business competitiveness,” and “creation of new products and－1 －businesses.”
As a result, consolidated net sales for the consolidated fiscal year totaled¥1,516.1 billion, decreased 8.8% year-on-year. Consolidated operating profit
totaled ¥37.952 billion, increased 3.0% year-on-year. Consolidated ordinary profit
decreased 2.1% year-on-year, to ¥49.610 billion. The Company recorded an
impairment loss on fixed assets of ¥27,420 million, an impairment loss on fixed
assets of ¥20,351 million incurred by Mitsubishi Aluminum Co., Ltd., and ¥30,272
million as a provision for loss on business restructuring in the Sintered parts
business, in addition to recording ¥10,423 million as a loss on the Antimonopoly
Act incurred by Universal Can Corporation, a consolidated subsidiary of theCompany. As a result, loss attributable to owners of parent amounted to ¥72,850
million (profit attributable to owners of parent of ¥1,298 million for the previous
fiscal year.)On a non-consolidated basis, net sales amounted to ¥802,655 million, decreased
5.9% year on year. Operating loss was ¥645 million (previous fiscal year:
operating loss of ¥10,949 million), ordinary profit increased 233.4% to ¥17,233
million, and net loss was 49,929 million (previous fiscal year: net loss of ¥13,568
million).
Based on its Articles of Incorporation, the Company is to distribute surpluses
following resolutions at the Board of Directors meetings. We regard the
distribution of profits to all shareholders as one of our most important priorities.
Accordingly, during the period of the Medium-Term Management Strategy(FY2018-2020), the Company planned to pay annual dividends of ¥80 per share.
If the consolidated dividend payout ratio is lower than 25%, the Company will
temporarily increase the dividend to the point where the consolidated dividend
payout ratio becomes 25% or purchase treasury shares. Based on this policy, theBoard of Directors, at its meeting on May 27, 2020, decided to distribute a fiscal
year-end dividend of ¥40 per share, which, combined with the interim dividend of¥40 per share, brings the annual dividend for the fiscal year under review to ¥80
per share (the same amount as the previous fiscal year).
Of note, the Company has decided partial relinquishment of remuneration forten (10) Executive Officers based on business performance in the fiscal year underreview.

－

2 －A report of the Group’s performance by business segment is presented as follows.
* Accompanying a partial change in the organization of business division effective April
1, 2019, the coal-related business in the “Other businesses” was switched to the “Cement
Business,” in which coal is used as thermal energy. In this regard, the segment information
for the previous consolidated fiscal year that is disclosed herein is made according to thechanged method of segmentation.

Advanced Products[In the Copper & copper alloy products business, operating profit decreased due
to decline in sales of products for automobiles and semiconductor-related products.
In the Electronic materials & components business, operating profit fell as a resultof lower sales and an increase in the production costs. In the Aluminum products
business, operating profit fell due to a decrease in sales of regular cans and bottlecans for beverages and products for automobiles.]In the Copper & copper alloy products business, both net sales and operating
profit decreased as a result of a fall in sales of automobile and semiconductorrelated products.
In the Electronics materials & components business, both net sales andoperating profit decreased, reflecting decline in sales of products such as advanced
materials and electronic components, in addition to an increase in the production
costs of polycrystalline silicon products.
In the Aluminum products business, both net sales and operating profit fell due
to a decrease in sales of regular cans and bottle cans for beverages and rolled andprocessed products such as extruded products for automobiles and heat exchange
sheet materials.
Consequently, net sales and operating profit for the entire Advanced Products
decreased year-on-year. Ordinary profit declined due to the decrease in operating
profit.
Consolidated net sales in the Advanced Products business amounted to¥511,954 million, decreased 10.3% from the previous fiscal year. Operating profit
decreased 89.7% to ¥1,237 million and ordinary profit decreased 88.7% to ¥1,499
million.
●－3 －Metalworking Solutions Business[Operating profit in the Cemented carbide products business decreased as a resultof decline in sales both in Japan and overseas. In the Sintered products, etc.
business, the decrease in shipping expenses, despite a fall in sales of mainstay
sintered parts, led to a reduction in operating loss.]
In the Cemented carbide products business, both net sales and operating profit
decreased as a result of decline in sales both in Japan and overseas, particularly in
China.
In the Sintered products, etc. business, the decrease in shipping expenses,
despite a fall in sales of mainstay sintered parts, led to a reduction in operating
loss.
Consequently, net sales and operating profit for the entire Metalworking
Solutions business decreased year-on-year. Ordinary profit declined due to thedecrease in operating profit.
Consolidated net sales in the Metalworking Solutions business amounted to¥150,275 million, decreased 12.4% from the previous fiscal year. Operating profit
decreased 49.1% to ¥8,528 million and ordinary profit decreased 55.4% to ¥6,969
million.
●

Metals Business[In the Copper business, operating profit increased mainly due to reduced cost of
smelting despite falling copper prices. In the Gold and other valuable metals
business, operating profit increased impacted by an increase in the price of metals
despite decreased production volume.]
In the Copper business, net sales fell but operating profit rose, mainly due toreduced cost of smelting despite falling copper prices.
In the Gold and other valuable metals business, net sales declined due todecreased production volume of gold and other valuable metals as a result of a fallin raw material content, but operating profit rose impacted by an increase in theprice of palladium.
As a result, the Metals business overall recorded year-on-year an increase inoperating profit, despite a decline in net sales. Ordinary profit increased due to ahigher operating profit.
Consolidated net sales in the Metals business amounted to ¥665,015 million,
●

－

4 －

decreased 7.6% from the previous fiscal year. Operating profit was ¥19,263
million (previous fiscal year: operating loss of ¥7,157 million) and ordinary profit
was ¥28,083 million (previous fiscal year: ordinary profit of ¥2,323 million).
Cement Business[Operating profit in Japan decreased reflecting lower sales volumes. Operating
profit overseas decreased due to an increase in operating expenses in the UnitedStates and a fall in coal sales prices in the Coal business of Australia.]
In Japan, both net sales and operating profit decreased, reflecting lower sales
volumes mainly due to the decline in demand for road construction work related
to the Tokyo Olympic and Paralympic Games in the Tokyo metropolitan area, road
construction work related to the Shin-Meishin Expressway in the Tokai area, andconstruction work related to recovery efforts from the Great East Japan Earthquake
in the Tohoku area.
Overseas, the cost of raw materials and operating expenses such as personnel
expenses increased despite a rise in the volume of ready-mixed concrete sold in
the United States. In the Coal business of Australia, coal sales prices fell. As aresult, operating profit decreased while net sales increased.
Consequently, both net sales and operating profit for the entire Cement businessdecreased year-on-year. Ordinary profit declined due to the decrease in operating
profit.
Consolidated net sales in the Cement business amounted to ¥238,246 million,
decreased 6.1% from the previous fiscal year. Operating profit decreased 28.2%
to ¥11,921 million and ordinary profit decreased 24.1% to ¥14,968 million.
●

Other Businesses[Operating profit in the Energy-related business increased reflecting higher sales
in nuclear-energy-related services. In the Environmental recycling business,
operating profit decreased due to a rise in operating expenses in addition to decline
in the unit sales price of valuables. In areas outside the Energy-related businessand the Environmental recycling business, operating profit decreased.]In the Energy-related business, net sales and operating profit increased,reflecting higher sales in nuclear-energy-related services.
In the Environmental recycling business, while net sales increased reflecting
●

－

5 －

higher processing volume of home appliance recycling, losses grew due to a risein operating expenses in addition to decline in the unit sales price of valuables.
In the Other businesses, excluding the Energy-related business and theEnvironmental recycling business, net sales and operating profit decreased.
In the Other businesses overall, both net sales and operating profit decreased
year-on-year. Ordinary profit declined due to the decrease in operating profit.
Consolidated net sales in the Other businesses amounted to ¥187,350 million,
decreased 3.8% from the previous fiscal year. Operating profit decreased 16.4%
to ¥8,392 million and ordinary profit decreased 5.5% to ¥9,808 million.

－

6 －Sales, operating profit (operating loss) and ordinary profit for each business segmentof the Group were as follows:Business
Segment

Item

94th Period
95th Period(April 2018– March 2019) (April 2019– March 2020) YOY Change(%)
AmountAmount% of Total% of Total(¥ Millions)(¥ Millions)

Net Sales

570,99034.3

511,95433.8(10.3)

Operating Profit

11,979

32.5

1,237

3.3

(89.7)

Ordinary Profit

13,227

26.1

1,499

3.0

(88.7)Net Sales

171,55110.3

150,275

9.9(12.4)

Operating Profit

16,771

45.5

8,528

22.5

(49.1)

Ordinary Profit

15,609

30.8

6,969

14.0

(55.4)Net Sales

720,09743.3

665,015

43.9

(7.6)

Operating Profit(7,157)(19.4)

19,26350.8－

Ordinary Profit

2,323

4.6

28,083

56.6－

Net Sales

253,65015.3

238,246

15.7

(6.1)

Operating Profit

16,61545.1

11,921

31.4(28.2)

Ordinary Profit

19,72538.9

14,96830.2(24.1)Net Sales

194,764

11.7

187,350

12.4

(3.8)

Operating Profit

10,034

27.2

8,392

22.1

(16.4)

Ordinary Profit

10,378

20.5

9,808

19.8

(5.5)

Elimination and Net Sales
Corporate Assets
Operating Profit
or Expenses(Note)
Ordinary Profit(248,064)(14.9)(236,741)(15.6)(4.6)(11,381)(30.9)(11,390)(30.0)

0.1(10,584)(20.9)(11,717)(23.6)

10.7

1,662,990

100.0

1,516,100

100.0

(8.8)

Operating Profit

36,861

100.0

37,952100.0

3.0

Ordinary Profit

50,679100.0

49,610

100.0

(2.1)

Advanced
Products

Metalworking
Solutions

MetalsCementOthersNet Sales
Total

Note: Net sales, operating profit and ordinary profit resulting from transactions among the business divisions
have been deducted in the “Elimination and Corporate Assets or Expenses” items.

－

7 －(2) Status of Group Financing
During the fiscal year under review, the Group raised funds primarily throughthe issuance of commercial paper and borrowings from banks. Debts (including
corporate bonds) as of the end of the fiscal year under review amounted to¥547,617 million, increased ¥52,849 million from the end of the previous fiscal
year.
(3) Status of Group Capital Expenditures
The Group determines its capital expenditures by carefully selecting investment
cases in the fields where future profit and growth are expected while working to
reduce interest-bearing debt.
In the fiscal year under review, total capital expenditures amounted to ¥88,043
million, which consisted mainly of maintenance and repairs of existing facilities
in each business, as well as the reinforcement and streamlining of production
facilities.
Capital expenditures by business segment in the fiscal year under review wereas follows:
Advanced Products
In addition to carrying out maintenance and repair work at existing facilities inthis business as a whole, the Group mainly undertook reinforcement work on
production facilities for processed copper products.
Capital expenditures in this business amounted to ¥29,929 million.
●

Metalworking Solutions Business
The Group carried out reinforcement and streamlining work in order to meetthe increasing demand in this business as a whole, as well as maintenance andrepair work at existing facilities.
Capital expenditures in this business amounted to ¥18,558 million.
●

Metals Business
The Group carried out maintenance and repair work at copper smelting andprocessing facilities.
Capital expenditures in this business amounted to ¥14,602 million.
●

－

8 －

Cement Business
The Group adopted high-efficiency facilities to reduce thermal energy costs in
the Kyushu Plant (Kanda), and carried out maintenance and repair work on
existing facilities mainly in Japan and the United States.
In addition, the Group implemented maintenance and renovation work onbatcher facilities, etc., in a ready-mixed concrete factory aimed at enhancing
ready-mixed concrete sales capacity and maintaining sales offices.
Capital expenditures in this business amounted to ¥16,542 million.
●

Other Businesses
In addition to the construction of Komatagawa new hydroelectric power plant
in Environment & Energy business, the Group carried out maintenance and repair
work at existing facilities.
Capital expenditures in this business amounted to ¥8,411 million.
●

－

9 －

(4) Trends of Assets and Profit and Loss Accounts
1. The Group’s Trends of Assets and Profit and Loss Accounts (Consolidated)
95th Period
92nd Period
93rd Period
94th Period(¥ millions, except per share data) (April 2016 – (April 2017 – (April 2018 – (April 2019 –March 2017) March 2018) March 2019) March 2020)
Net Sales
1,304,068
1,599,533
1,662,990
1,516,100
Operating Profit

59,761

72,81936,861

37,952

Ordinary Profit

63,92579,621

50,67949,610

Profit (Loss) Attributableto Owners of the Parent

28,352

34,595

1,298(72,850)

216.44*264.159.92(556.34)

Profit (Loss) per ShareTotal Net Assets

710,195

768,495

723,337

586,034

Net Assets per Share

4,743.27*

5,211.20

4,838.31

3,870.35

Total Assets

1,896,939

2,011,067

1,938,270

1,904,050* The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date ofOctober 1, 2016. Accordingly, net income per share and net assets per share data is calculated on theassumption that the consolidation of the Company’s shares was conducted from the beginning of the
92nd business term.

－

10 －

2. The Company’s Trends of Assets and Profit and Loss Accounts (Nonconsolidated)
95th Period
92nd Period
93rd Period
94th Period(¥ millions, except per share data) (April 2016 – (April 2017 – (April 2018 – (April 2019 –March 2017) March 2018) March 2019) March 2020)
Net Sales
674,515
869,677
852,820
802,655
Operating Profit
12,12013,732(645)(10,949)(Operating Loss)
Ordinary Profit

27,202

31,3705,169

17,233

Profit (Loss)

19,701

25,530(13,568)(49,929)

Profit (Loss) per Share

150.40*194.93(103.61)(381.29)

Total Net Assets

477,706

533,103463,862

378,690

Net Assets per Share

3,647.06*

4,070.58

3,542.19

2,892.05

Total Assets
1,265,120
1,355,347
1,269,756
1,281,542* The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date ofOctober 1, 2016. Accordingly, net income per share and net assets per share data is calculated on theassumption that the consolidation of the Company’s shares was conducted from the beginning of the
92nd business term.

－

11 －

(5) Priorities for the Group
1. Group-wide Issues
The Group has set out on a new “Mission” as medium- and long-term goals
from 2030 to 2050 and the medium-term management strategy for FY2021FY2023 (the “FY2023 Strategy”) as described below. Based on these mission andstrategies, the Group will pursue a number of measures to enhance its corporate
value.
1.1) Mission
Based on its corporate philosophy of “For People, Society and the Earth”, theGroup’s vision is “We will become the leading business group committed tocreating a sustainable society through materials innovation, with use of our uniqueand distinctive technologies, for People, Society and the Earth”.
In formulating the FY2023 Strategy, from the perspective of creating bothsocial and economic values, the Group has set out on a new “Mission” as shown
below in order to implement corporate philosophy and vision as medium- andlong-term goals from 2030 to 2050.
Contribute to build a prosperous society by providing nonferrous metalmaterials, predominantly copper, and high value-added functional materials
and products.
Contribute to build a recycling-oriented society by providing recyclable
products and advanced technology-based waste recycling.
Contribute to build a decarbonized society by developing and promoting theuse of renewable energies such as geothermal energy, and ensuring to consider
the reduction of environmental impact in manufacturing.
1.2) Overall Picture of Value Creation (Value Creation Process)Based on the idea to “create both social and economic values", the Group has
been implementing the creation of economic value by solving social issues andcreating social value through its business.
From this perspective, the information (management philosophy, businessmodel, strategy, governance, etc.) that should be communicated to stakeholders isorganized in a systematic and integrated way as shown in the [Value Creation
Process] below.

－

12 －

[Value Creation Process]The social issues that the Group should solve and related SDGs (a, b) and the key issues(c) that the Group recognizes are listed to the left. The pink circle in the center indicatesthe business activities of the Group itself.
The four items on the left side of the circle in the center indicate the strengths of the Group(d).
By utilizing our strengths, the Group aims to generate the “outputs” as described on theright, under the Group-wide Policy (e) located at the top in the middle. These will be
supplemented with long-term business goals and a long-term strategy for each business(f) or a Medium-term Management Strategy (g).
“Outputs” indicate products & services that the Group creates and contributes to thesociety through those business activities.
This indicates the overall picture of value creation of the Group which leads to the value

－

13 －

that the Group provides and leads to the Mission.
Details of the individual elements (a) to (g) are as described in (1.3) and (1.4) below.

1.3) Individual elements of the value creation process<a. Social issues to be solved by the Group>
The social issues to be solved are extremely extensive and various proposals
have been made.
Within the proposals, the Company has selected the following as social issues
that are closely related to the Group’s business and in which the Group cancontribute.
・Advancing mobility
・Advancement and diversification of digital devices
・Automation of production and business processes
・Longer lifespans of people and buildings
・Effective measures against disasters
・Efficient treatment of urban waste
・Efficient use of mineral resources and alternative substances・Efficient use of energy resources
・Development of renewable and unutilized energies
・CO2 emissions reduction< b. SDGs>
The SDGs (Sustainable Development Goals) adopted by the United Nations in
September 2015 can also be regarded as social issues to be solved.
The Company has selected 7, 8, 9, 11, 12, and 13 as the main items the Groupcan contribute through the businesses of the Group.
・1 (Poverty) No Poverty
・2 (Hunger) Zero Hunger
・3 (Health) Good Health and Well-Being
・4 (Education) Quality Education
・5 (Gender) Gender Equality
・6 (Water and Sanitation) Clean Water and Sanitation

－

14 －

・7 (Energy) Affordable and Clean Energy
・8 (Growth and Work) Decent Work and Economic Growth・9 (Innovation) Industry, Innovation and Infrastructure
・10 (Inequalities) Reduced Inequalities
・11 (Cities) Sustainable Cities and Communities
・12 (Production and Consumption) Responsible Consumption and Production
・13 (Climate Change) Climate Action
・14 (Marina Resources) Life below Water
・15 (Land Resources) Life on Land・16 (Peace) Peace, Justice and Strong Institutions
・17 (Implementation) Partnerships for the Goals<c. Materiality>
The Group summarizes the social issues that the Group should solve and related
SDGs as four issues which have high importance to both stakeholders(shareholders, investors, employees, business partners, creditors, local
communities, etc.) and the Group. In addition, the Group also considers challenges
in our management base and strengthening the foundation of the Group as
materiality.
<Social Issues>
・Stable supply of product/material
・Creation of a recycling-oriented society
・Dealing with climate change
・Environment protection and environmental technologies<Strengthening of the Management Base and Core>・Occupational Health and Safety
・Governance・Development of diverse talents
・Responsibility in value chain
・Stakeholder communication
・Digital transformation

－

15 －

<d. Our Strengths>
・An Advanced recycling technology and business platform
The recycling business can be promoted by diverse and advanced recycling
technology accumulated mainly in the Metals, Cement and Environmental
recycling business, by a wide range of business experience, and by a unique waste
collection network and business platform.
・Value chain from raw materials to products with a stable supply
With a consistent production system from stable procurement of raw material
resources to products, high-quality products can be stably supplied to the market.
・Unique material development and manufacturing technology
As represented by the oxygen-free copper and copper alloy (the Copper &copper alloy business), joining dissimilar materials (the Electronic materials &components business), cemented carbide materials and coating (the Metalworking
Solutions Business), our manufacturing technology and materials development is
supported by atomic level analysis and simulation technologies. These items are
sources of the Company's competitiveness.
・A team that can unite to resolve issues
By respecting diverse personalities, values, and honesty, the Company can unite
individual power and work together to solve issues.
<e. Group-wide Policy>
・Optimization of business portfolio
The Company will focus on following businesses that the Company should takean ownership of: businesses that are consistent with its vision and mission,businesses that are governable by the Company, businesses that are capable ofearning a leadership role in a specific region or the world, and businesses that candeliver stable returns over capital costs on a medium- to long-term basis. In
addition, the Company will build a business portfolio with two axes of profitability
and growth potential to determine the direction of each business, and aim to
optimize the portfolio.
・Comprehensive efforts to increase business competitiveness
The Company will make comprehensive efforts through our manufacturing

－

16 －

excellence strategy, quality management strategy, digital transformation strategy,
and business competitiveness.
As to manufacturing excellence strategy, each site draws a vision based on thebusiness strategy, and aims to raise their manufacturing capabilities to the nextlevel by enhancing the production process.
As to quality management strategy, the Company aims to achieve “proactive
quality” by not allowing non-conforming products through optimizing the
product/process design and equipment maintenance plan.
As to digital transformation strategy, the Company will strengthen customer
contact points and promote data sharing to improve business added-value andoperational competitiveness.
In the next 5 years, the Company will invest approximately ¥30 billion andallocate 100 digital professionals.
・Creation of new products and businesses
In order to create new businesses that will become future revenue bases, theGroup addresses the following as important social needs. "Next-generation
vehicles", "IoT/AI", "urban mines" and "clean energy and decarbonization". The
Group will create and grow new products and businesses that are the core ofsustainability.
1.4) FY2023 Strategy<Financial Plan>
・Financial indicators and goals
FY2023 Strategy emphasizes medium- to long-term profitability and growthpotential. For each business, the profitability will be mainly evaluated with ROIC
and the growth potential will be evaluated by EBITDA growth rate, etc.
ROA is used complementarily in process-type businesses. ROIC/ROE/ROA areused together as group-wide financial indicators.
The Group-wide financial target of FY2023 is ROIC 6.0%, ROA 4.0%, ROE
7.0%, consolidated operating profit of ¥58 billion, consolidated ordinary profit of¥75 billion, and net D/E ratio 1.0 times or less.
・Investment Policy
The total amount of investment for the FY2023 Strategy period is expected toamount to ¥360 billion, ¥190 billion of which is for growth strategy investment

－

17 －

and ¥170 billion for investment for maintenance and upgrading. The Company
will make investments using cash flows from operations, proceeds from businessrestructuring and asset sales.
However, in addition to this, if there are other attractive large-scale investment
projects for growth, investments will be made proactively as longs as a net D/E
ratio of 1.0 times or less is maintained.
・Shareholder Return Policy
The Company recognizes that returning profits to shareholders is one of themost important objectives of management. Considering profit allocation, theGroup makes decisions based on comprehensive assessment of concerned factors,
which include earnings for the period, internal reserves, and financial standing.
For profit allocation during the FY2023 Strategy period, the Company places
importance on distributing stable dividends even when the Company’s
consolidated business results fluctuates. The annual dividends from FY2021 to
FY2023 will be ¥80 per share.
However, in the case that the consolidated payout ratio becomes less than 25%,
the Company plans to temporarily increase the dividend or conduct share buybacks.
Although, the shareholder return policy and the financial plan, which is theassumption for the policy, described in this section are as announced on March 25,2020 and do not take into account the impact of the global spread of COVID-19
beyond that date.
There is a concern that the impact of COVID-19 on the Group’s businesses will
be more serious due to declining domestic and global demands caused by COVID19 for automobiles, semiconductors and construction which have a deep
connection with the Group’s businesses. However, since reasonable estimates are
difficult at the moment, the business outlook for the fiscal year ending March 31,
2021 has not been determined yet. Also, the dividends for the fiscal year ending
March 31, 2021 have not been determined yet.
In addition, the Company will carefully examine the Medium-termManagement Strategy including the financial plan with the shareholder return
policy based on further changes in the business environment caused by COVID19 and its impact on the medium- to long-term business outlook. The Company
will promptly announce any changes in its content if it is deemed necessary.

－

18 －

・Regarding Strategic Holdings
The Company has a policy of not acquiring or holding shares (strategic
holdings) other than purely for investment purposes, except when it is required fortheir business strategy.
<f. Long-term Business Goals and Long-term Strategy for each business /g. FY2023 Strategy>・Advanced Products
Long-term businessgoals
Long-term strategy

Specific measures of
the FY2023 Strategy

Global First Supplier・Create new businesses and products through thesophistication and integration of our core competencies (e.g.
production and development of oxygen-free copper, oxygenfree copper base alloys, and functional materials as well as
technical capabilities such as bonding different materials
bonding different metals, etc.)
・Accelerate marketing activities to replicate successful
practice
・Assign key account managers acting cross-sectionally・Enhance information analysis by digital marketing such as
the employment of AI or IoT・Share product roadmaps with customers (co-creation
capabilities)
・Develop new products through collaboration with Central
Research Institute・Fortify production capabilities such as establishing a mass
production system and improving productivity, etc.)
・Pursue opportunities to execute M&A or business alliances

－

19 －

・Metalworking Solutions BusinessLong-term businessgoals
Long-term strategy

Specific measures of
the FY2023 Strategy

Top 3 supplier in strategic markets
・Promote clean manufacturing
・Provide high-efficiency products with advanced technology
・Expand advanced metal powder business in electronic
devices・Increase recycling rate in our tool recovery system and utilize
renewable energy
・Provide high efficiency tools and digital solutions
・Transition to smart factory and optimization of logistics
and supply chain・Expand advanced metal powder business to rechargeable
battery market

・Metals BusinessLong-term businessgoals
Long-term strategy

Specific measures of
the FY2023 Strategy

Leader in environmentally-friendly mining & smelting businessStable supply and recycling of nonferrous metals,
predominantly copper・Creation of a sustainable raw material portfolio consisting ofclean copper concentrate and E-Scrap
・Promotion of recycling
・Response to climate change
・Secure clean copper concentrate by investing in new mines
・Development impurity removal technology in copper
concentrate
・Optimize valuable metal material flow
・Reduce fossil fuels

－

20 －

・Cement BusinessLong-term businessgoals
Long-term strategy

Specific measures of
the FY2023 Strategy

Leader in the domestic and international cement industry withadvanced environmental technologies
・Stable supply of basic building materials for social
infrastructure and disaster prevention infrastructure
・Sophistication of waste disposal
・Response to climate change by reducing CO2
・Construction of a resilient domestic business foundation
through business restructuring and growth in overseas markets
・Improve and optimize production system through domestic
business restructuring
・Expand capabilities in waste plastics processing andinstallation of chlorine dust cleaning equipment
・Introduce low-temperature burning technology and develop
CO2 reduction, capture, and recycling technologies
・Expansion of US businesses and development of new
overseas bases

・Environment & Energy BusinessLong-term businessgoals

Long-term strategy

Specific measures of
the FY2023 Strategy(Environmental recycling) Driving force of resource-recycling
systems(Renewable energy) Leading company in geothermal
development
・Provision of a safe recycling system with thoroughtraceability, etc.
・Decarbonization by expanding renewable energy business・Expand Home appliance recycling business, advancement of
automation, and improvement of added value of recovered
products
・Demonstrate LiB recycling technologies and solar panel
recycling technology
・Secure stable plant operations in Fly ash recycling businessand biogasification business・Complete Komatagawa new hydroelectric power plant,
construction of Appi geothermal power plant, and survey of
new geothermal sites

－

21 －

・Corporate division’s strategy
The following are the key corporate division’s strategies for support eachbusiness strategy in the FY2023 Strategy.
R&D and marketingstrategy

Manufacturing
excellence strategy

Quality management
strategy

Digital transformation
strategy

By focusing on changes in the external environment such as
megatrends, etc., the Group will create high value-added
products and services mainly in IoT and AI, next-generation
vehicles, urban mines, and clean energy and decarbonization
areas to meet customer needs based on its integrated functions,material composite, infrastructure and mass production, andrecycling technologies.
By formulating and realizing the factory vision based on thebusiness strategy, as well as enhancing the production process,and proactively utilizing external knowledge, the Group willraise its manufacturing capability to the next level.
By optimizing its product/process design and equipment
maintenance plan, the Group will implement proactive quality
management to ensure that non-conforming products are notproduced.
The Group will use Digital Transformation to strengthen our
three key pillars: “Business added-value”, “Business operations
competitiveness”, and “Management speed”. In the next five
years, the Company will invest approximately ¥30 billion andallocate 100 digital professionals.

－

22 －

・Governance
The following are main measures for the Group’s governance in FY2023
Strategy.
Strengthening
corporate governance

Strengthening group
governance

In June of 2019, the Company transitioned to a Company witha Nomination Committee, etc., and is working on the following
measures・Continuous improvement of the functions of the Board of
Directors
・Formulation of basic corporate governance policy (effective
April 1, 2020)・CEO appointment and dismissal, planning and execution of
successor development plan
・Review of executive remuneration system
・Enhancement of governance of subsidiaries
The Group will implement the following measures to establish
a governance system in which communications can be carriedout smoothly and autonomously between the parent and its
subsidiaries, between the head office and its respective bases,
and among respective bases and the Group companies.
・Evaluation of effectiveness and improvement of the Board of
Directors of the Group companies
・Group companies’ officer training
・Enhancement of governance audits
・Prompt decision making by delegating authority andstrengthening supervisory functions
・Promotion of business operations with an awareness ofdiffering managements in R&D, manufacturing, and humanresources exchange
・Accelerated strategy execution by Digital Transformation
Management Office

－

23 －

HR strategy

Change oforganizations

The Group will work on the following measures with the aimof securing and fostering adaptive human resources and forging
a healthy organizational culture.
・(Talent) Secure and develop human resources
・(Organizational culture) Enhance motivation andmanagement capabilities of the Group companies
・(Improvement of social value) Engage in the employment ofdiverse talents and health & productivity management(Business Divisions)・Promotion of Environment & Energy Business Division to
in-house Company
・Separation of Aluminum Division from Advanced ProductsCompany(Corporate Division)
・Establishment of Marketing Department
・Establishment of Corporate Communications Department(Company-wide organization)
・Establishment of Digital Transformation Management Office・Establishment of Sustainable Management Office

2. Measures for Strengthening the Group Governance System Including
Quality Control
Concerning some of the products manufactured and sold in the past, in light ofincidents where some products delivered had deviated from customer standards orinternal company specifications due to misconduct, including the rewriting of
inspection records data and insufficient testing, the Company and the Group has
been working on various measures (the “Measures”) since December of 2017 toenhance the Group governance system framework including quality control inorder to prevent such incidences.
In addition, the “Committee for Monitoring of Measures to Enhance
Governance” (the “Committee for Monitoring”) was established on May 10, 2018,
for the purpose of supervising the progress of the Measures etc., from an
independent perspective separated from business execution.
As the Company and the Group have been implementing the Measures as

－

24 －

planned, and as the Company currently has an outlook for the future that each site
will be able to continue autonomous work on strengthening quality control andgovernance, we dissolved the Committee for Monitoring on May 13, 2020.
After the dissolution of the Committee for Monitoring, we will supervise andpromote actions related to group governance including quality control at the“Sustainable Management Office” established on April 1, 2020. While doing so,
we will continue to discuss and confirm the progress of our action plans forenhancing the governance at the “Meeting of the Governance Deliberative Council”
which has been held regularly since April 2018.
In accordance with the policy established by the Sustainable Management
Office and so on and the governance plan approved by the Meeting of theGovernance Deliberative Council, each site of the Company and the Group will
autonomously promote actions to strengthen governance while the corporate
division supports such actions of each site. In addition, the Sustainable
Management Office will report to the Board of Directors on the status of our efforts
to enhance governance and monitor them regularly.
The Company and the Group will endeavor to further improve group
governance, including quality control of the Company and the Group, in order toprevent such situations in the future.
3. Measures to Reinforce the Antimonopoly Act Compliance Framework
In September 2019, Universal Can Corporation, a consolidated subsidiary of
the Company, received a cease and desist order and an order for surcharge payment
from the Japan Fair Trade Commission (hereinafter “JFTC”) for violating the
Antimonopoly Act concerning transactions of aluminum beverage cans before
March 31, 2016.
The Company sincerely apologizes to shareholders for any and allinconvenience and concerns this has caused.
The Company and the Group understand the gravity of this issue and willcontinue to reinforce the Antimonopoly Act compliance framework to preventthese kind of situations in the future and sequentially have formulated andimplemented measures such as clarification of rules by enacting regulations,continuous enhancement of education and enlightenment, and strengthening theauditing framework.

－

25 －

4. Issues in Each Business* In this section, accompanying a partial change in the organization of businessdivisions as of April 1, 2020, the Company has classified and reported theEnvironment & Energy Business, which belonged to Other Businesses, and theAluminum Business, which belonged to Advanced Products, as a new independent
business division.
Regarding the outlook for the global economy, as economic activities willremain considerably constrained until the global spread of COVID-19 is undercontrol, global economic growth is expected to enter negative territory, which may
worsen the economic slump.
Regarding the Japanese economy down the road, the global spread of COVID19 has raised concerns over a slowdown in consumer spending and a fall ininvestments and exports in future.
Under these circumstances, it is feared that the Group’s performance will be
impacted by declines in demand in such sectors as automobiles, semiconductors,
and construction in Japan and overseas, which are deeply connected with theGroup’s business.
●

Advanced Products
Demand of automotive and semiconductor-related sectors, which are the mainmarkets for advanced products, is expected to increase over the medium- to longterm due to the spread of next-generation vehicles and high-capacity
communications.
However, due to the global spread of COVID-19, there is a concern overdeclining demand in automotive and semiconductor-related products. The Groupwill keep a close watch on economic conditions and the market environment.
Under these circumstances, regarding copper and copper alloy products, theCompany conducted an absorption-type merger of Mitsubishi Shindoh Co., Ltd.
on April 1, 2020.
While maximizing the effect of the merger with the company, the Group will
strengthen marketing, R&D, and sales systems, and expand production capacity toprovide high-value-added products through integrated development
manufacturing and sales, in addition to enhancing profitability.

－

26 －

For electronics materials & components, the Group aims to become a highly
profitable business entity that sustains growth potential by providing products withhigh added-value through material technology to high-growth industries such as
next-generation vehicles, semiconductors, and electronics.
For polycrystalline silicon, the business environment is expected to remaindifficult. However, the Group will reinforce profitability by securing safe andstable operation, quality improvement, and cost reduction.
●

Metalworking Solutions Business
The market environment for cemented carbide products is expected to haveincreased demand over the medium- to long-term in the aircraft and medical fields.
However, due to the global spread of COVID-19, in addition to decline indemand reflecting the economic slowdown in Japan and in major overseas
countries. There are concerns over a sourcing risk of raw materials and a slowdownof production activities by customers, etc. Therefore, the Company will keep aclose watch on economic conditions and the market environment.
Under these circumstances, while the Company will continue to work on
strengthening sales activities to the automotive industry, which is a major customer,
the Company will prioritize the investment of our management resources in theaerospace industries and medical industries, which are expected to grow over the
medium- to long-term, and seek to strengthen development, manufacturing, andsales functions.
Regarding cutting tools, under the two brands DIAEDGE (Mitsubishi Materials
Corporation) and MOLDINO (MOLDINO Tool Engineering, Ltd.), while utilizing
the technology sites (technical center) established in key regions of the world, theCompany will work on providing customer-oriented solutions that will build
customer trust as a true partner. Regarding the sourcing of key materials, tungsten
and cobalt, the Company will continue working to reduce sourcing risks andsourcing costs by improving the amount of tungsten recycled and diversifying
procurement sources. In addition, the Company will utilize mineral resources
efficiently in order to contribute to build a recycling-oriented society.
Turning to sintered products, etc., in order to increase earnings of this business,
the Company will work to enhance quality and productivity by introducing
automated inspection equipment to save labor and implementing measures to

－

27 －

improve yield ratio. In addition, Diamet Corporation, which manufactures andsells sintered parts, has continuously recorded operating losses and impairment
losses on fixed assets, and is in a state of excessive liabilities. The Company has
provided financing to Diamet on grounds of a credit line.
*As of April 1, 2020, the Company made Mitsubishi Hitachi Tool Engineering,
Ltd. a wholly owned subsidiary by acquiring additional shares and changed thecompany name to MOLDINO Tool Engineering, Ltd.
●

Metals Business
Regarding the Copper business, one of our main products, the Company can
expect growth in demand over the medium- to long-term in the field of plates andstrips.
Regarding the procurement of copper concentrate, which is a major raw
material, it is expected that the supply-demand balance will be eased due to theslowdown of the expansion rate of smelting capacity in China, and the start andexpansion of operations at several new large-scale mines.
However, due to the global spread of COVID-19, there is a concern oversourcing risk of raw materials associated with a decline in the operating rate ofoverseas copper mines, falling copper prices, and declining copper demand, etc.
The Company will keep a close watch on economic conditions and the market
environment.
Under these circumstances, resources business divisions will work on
improvement and reinforcement of the facilities at the Los Pelambres Copper Mine,
Escondida Copper Mine, and the Copper Mountain Mine, as well as developmentof new projects. In addition, resources business divisions will support smelting
operations by providing smelters with a stable supply of clean copper concentratewith minimum impurities.
In FY2021, in addition to existing projects, the Company will participate indevelopment projects at the Mantoverde Copper Mine for which the Company
signed an acquisition of stake in, in FY2020. The Company will also focus on
research at the Mining & Metallurgy Laboratories established on April 1, 2020,
aimed to develop technologies for removing impurities in copper concentrate, etc.
In smelting business divisions, the Company will utilize the world-leading EScrap processing capacity to enhance profitability. At the same time, the Company

－

28 －

will work on optimizing the material flow in order to efficiently recover andrecycle trace components that grow in the process with an increase in processing
volume for E-Scrap.
Furthermore, the Company has again set out to raise dealing with climatechange as a theme, to maximize the environmental advantages of the Company’s
unique Mitsubishi process which has a low impact on the environment. theCompany will also contribute to build a decarbonized society by working on
smelting process reform, such as reducing fossil fuels, improving efficiency inenergy conversion and energy use, and use of renewable energies, etc.
●

Cement Business
In Japan, during FY2021, construction delays due to a series of natural disasters
during the last fiscal year will be resolved, and growth in demand is expected due
to large-scale projects such as urban redevelopment projects, etc. On the other
hand, there is a concern over delays in construction due to labor and transportcapacity shortages and demand is expected to decline over the medium to longterm.
Overseas, the Company expect a moderate increase in demand for cement andready-mixed concrete in FY2021.
However, due to the global spread of COVID-19, there is a concern overdeclining shipment volume of cement due to construction delays. The Company
will keep a close watch on economic conditions and the market environment.
Under these circumstances, in order to respond to a decrease in demand for
cement in Japan, which is forecasted to continue in the future, the Company has
signed a letter of intent to start specific discussions and considerations for an
integration of business with Ube Industries, Ltd., which is to be implemented
around April 2022, aiming to optimize production systems and establish a stableprofit base through economies of scale.
Under the integration, the Company will aim to implement sustainable growthby directing cash flows generated from the cement business in Japan toward
concentrated investment in businesses that are anticipated to generate growth inand outside of Japan.
In addition, the Company will strive to secure sales volumes by steadily taking
in demand for cement for large projects. The Company will also strive to reduce

－

29 －

failure rates in manufacturing and maintain stable supplies.
Furthermore, the Company will contribute to build a recycling-oriented society
by strengthening waste disposal facilities, introducing high-efficiency facilities,
and expanding the use of energy alternative waste.
Overseas, in order to bring in steady medium- to long-term demand in the
United States, the Company will strive to further strengthen our business platformby expanding our operating base into growth markets and expanding andstrengthening our vertical value chain structure.
●

Environment & Energy Business
Regarding the environment & energy-related business environment, there is astrong demand for strengthening our response to environmental problems such as
efficient treatment of urban waste, efficient use of energy resources, and requests
for CO2 emissions reduction, as medium to long-term social issues.
However, due to the global spread of COVID-19, there are concerns over delays
in renewable energy related construction work. The Company will keep a close
watch on economic conditions and the market environment.
Under these circumstances, in energy-related fields, the Company will expand
our renewable energy business and contribute to build a decarbonized society.
In addition to completing ongoing construction of Komatagawa newhydroelectric power plant from the previous fiscal year, the Company will proceedwith the construction of the Appi Geothermal Power Plant on schedule andcontinue to carry out surveys of new geothermal sites to develop new businesses.
Regarding the environmental and recycling-related business, while theCompany will expand our home appliance recycling business and car recycling
business through advancement of automation and improving the added value ofrecovered products, the Company will proactively work demonstrating lithium-ion
battery recycling technologies and solar panel recycling technology.
Furthermore, the Company will aim to secure stable plant operations in the fly
ash recycling business and biogasification business for food waste, and strive todevelop a recycling business that does not rely on final disposal sites.
●

Aluminum Business
Regarding aluminum beverage cans, domestic demand for ordinary cans is not

－

30 －

expected to increase sharply in the future. Bottle cans are also stagnating due tothe release of PET bottle coffee.
Regarding rolled and processed products, increasing demand over the mediumto long-term is expected due to the growth of next-generation vehicles.
However, due to the global spread of COVID-19, there is a concern overslowdown of production activities of our main customers, etc. The Company willkeep a close watch on economic conditions and the market environment.
Under these circumstances, regarding aluminum beverage cans, the Company
promotes adding value to products such as large bottle cans. In addition, from theperspective of environmental protection, the Company will make further efforts
on a sales expansion of bottle cans as alternatives to plastic bottles, reducing thesize and weight of products and recycling used aluminum cans.
Regarding rolled and processed products, the Company will promote increasing
sales of can materials which is expected to have continuous demand. The
Company will also promote increasing sales of foil products for lithium-ion
batteries and investing in production facilities, as well as strengthening thebusiness of heat exchanger materials and extruded products for automobiles.
In addition, the Company will build a competitive corporate structure bystrengthening cost competitiveness as well as promoting production stabilizationand selection and concentration of businesses and products in order to ensurestable profitability and achieve sustainable growth.
We ask for the ongoing support and cooperation of shareholders as we will
promote value creation by implementing these measures which consolidated thecollective potential of the Group.

－

31 －

(6) Major Business Activities of the Group (as of March 31, 2020)
The major business activities of the Group are production and sales ofprocessed copper products, electronic materials and components, and aluminumproducts; production and sale of cemented carbide products and sintered products;
refining and sales of copper, gold, silver and other metals; and production and salesof cement and ready-mixed concrete and other products. The major products andservices of each business are as follows:Business Division

Advanced Products

Metalworking
Solutions
MetalsCementOthersMajor Products
Processed copper products (copper cakes, billets, copper alloy products,
wire rods, etc.), electronic materials and components (functional
materials, chemical products, electronic devices, polycrystalline silicon,etc.), aluminum products (bodies, ends and caps of aluminum beveragecans, rolled aluminum products, processed aluminum products, etc.)
Cemented carbide products (cemented carbide tools, cement carbide
alloy, etc.), sintered products (sintered parts, etc.), etc.
Copper, gold, silver, lead, tin, sulfuric acid, palladium
Ordinary Portland cement and various other types of cements, cementbased solidification materials, aggregate, ready-mixed concrete, coal
Energy related (geothermal and hydro-power generation, nuclear fuelcycling business (consignment of surveys, research, design andoperations, etc.), precious metals (precious metals products, jewelry,etc.), environmental and recycling related (recycling of home
appliances, etc.), real estate (real estate management, forestry), others(engineering, geological surveys, resource exploration, and consulting,
etc.)

－

32 －

(7) The Group’s Major Plants and Business Offices (as of March 31, 2020)
1. The Company
Head office3-2-3, Marunouchi, Chiyoda-ku, Tokyo
Advanced
Products
Metalworking
Solutions

Plants and others
1) 2)

Branch (office)Sakai Plant (Osaka), Sanda Plant (Hyogo), Ceramics Plant(Saitama), Yokkaichi Plant (Mie)Tsukuba Plant (Ibaraki), Gifu Plant, Akashi Plant (Hyogo)

Akita Refinery, Naoshima Smelter & Refinery (Kagawa),
Ikuno Plant (Hyogo)
Aomori Plant, Iwate Plant, Yokoze Plant (Saitama),
CementHigashitani Mine (Fukuoka), Kyushu Plant (Fukuoka)
Smart Factory Promotion Center (Saitama),
Saitama Property Management Office,
Others
Production Engineering Center (Saitama)
Energy Project & Technology Center (Saitama)
Sapporo Branch, Tohoku Branch (Miyagi), Nagoya Branch,
Osaka Regional Head Office, Kyushu Branch (Fukuoka)
MetalsR&D centers

Central Research Institute (Ibaraki)

Overseas offices

Vancouver Office (Canada), Chile Office, London Office (United Kingdom)

Note 1: Accompanying the Company absorbing and merging Mitsubishi Shindoh Co., Ltd., whichcame into effect on April 1, 2020, the Wakamatsu Plant (Fukushima) and the Sambo Plant(Osaka) were installed in Advanced Products.
Note 2: Smart Factory Promotion Center was established on September 1, 2019.

－

33 －

2. Major Subsidiaries
Names of Subsidiaries 1)
Mitsubishi Shindoh Co., Ltd., (Tokyo), MMC Copper Products Oy(Finland), Universal Can Corp. (Tokyo), Mitsubishi Aluminum Co.,
Advanced Products2) 3)
Ltd. (Tokyo), Mitsubishi Cable Industries, Ltd. (Tokyo), Sambo Metals
Corp. (Osaka)
Metalworking Solutions Mitsubishi Hitachi Tool Engineering, Ltd. (Tokyo), Diamet Corp.
4)(Niigata), Mitsubishi Materials U.S.A. Corporation (U.S.)PT Smelting (Indonesia), Onahama Smelting & Refining Co., Ltd.
Metals(Tokyo), Materials Eco-Refining Co., Ltd. (Tokyo)
MCC Development Corp. (U.S.), Robertson’s Ready Mix, Ltd. (U.S.),
CementMitsubishi Cement Corp. (U.S.)
Mitsubishi Materials Trading Corp. (Tokyo), Mitsubishi Materials
OthersTechno Corp. (Tokyo), Dia Consultants Co., Ltd. (Tokyo), Materials’
Finance Co., Ltd. (Tokyo)
Note 1: Words within parentheses in the table denote the regions (for domestic subsidiaries) or
countries (for overseas subsidiaries) where each subsidiary's head office is located.
Note 2: The Company absorbed and merged Mitsubishi Shindoh Co., Ltd. on April 1, 2020
Note 3: As of May 13, 2020, MMC Copper Products Oy changed the company name to Luvata Oy.
Note 4: As of April 1, 2020, the Company made Mitsubishi Hitachi Tool Engineering, Ltd. a wholly
owned subsidiary by acquiring additional shares and changed the company name to
MOLDINO Tool Engineering, Ltd.
Business Division

－

34 －

(8) The Status of Employees (as of March 31, 2020)
1. Status of Employees of the Group (Consolidated)
Number of Employees 1)

Business Division
Advanced Products

10,264 (increased by 177)

Metalworking Solutions

7,792 (decreased by 247)

Metals2,034 (increased by 18)

Cement

4,434 (increased by 203)

Others3,299 (decreased by 20)

All Companies (for the whole Group) 2)

778 (increased by 44)

Total

28,601 (increased by 175)

Note 1: Employee numbers within parentheses denote the change from the previous fiscal year-end.
Note 2: Employees stated for all companies (for the whole Group) are attached to administrative
divisions that cannot be demarcated within a specific business division.

2. Status of Employees of the Company (Non-consolidated)
Number of Employees
YOY Change (persons)(persons)
4,906

Average Age (years)

Increased by 99

－

41.3

35 －

Average Years of
Employment (years)
17.3

(9) The State of Major Subsidiaries and Affiliates (as of March 31, 2020)
1. The State of Major Subsidiaries
Name of theCompany

Paid-in Capital

Percentage ofOwnership(including
indirectownership) (%)

326 million U.S.
dollars 1)

PT Smelting

60.5

MMC Copper
Products Oy 2)

160 million euro1), 3)

100.0

MCC Development
Corp.
Onahama Smelting &Refining Co., Ltd.

811 million U.S.
dollars 1)

70.0

6,999 million yen

55.7

Sambo Metals Corp.

80 million yen

100.0

Mitsubishi Cement
Corp.
Materials’ FinanceCo., Ltd.
Mitsubishi AluminumCo., Ltd.

70 million U.S.
dollars 1)

67.0

30 million yen

100.0

8,196 million yen

90.4

8,713 million yen 3)

100.0

8,000 million yen

100.0

1,455 million yen

51.0

Mitsubishi Materials
Techno Corp.

1,042 million yen

100.0

Mitsubishi Materials
Trading Corp.

393 million yen

100.0

Universal Can Corp.

8,000 million yen

80.0

Mitsubishi ShindohCo., Ltd. 4)
Mitsubishi Cable
Industries, Ltd.
Mitsubishi Hitachi
Tool Engineering, Ltd.
5)

－

36 －

Line of Business

Production and sales of electrolytic
copper in Indonesia
Business administration ofsubsidiaries that produce and sell
processed copper products
Investment in ready-mixed concretebusinesses in the U.S.
Smelting on consignment of copper
concentrate
Sales of rolled copper products andelectric wires
Production and sales of cement in
the south-west area of the U.S.
Financing the Company and its
affiliates
Production and sales of rolled andprocessed aluminum products
Production and sales of processed
copper products and processed
copper alloy products
Production and sales of sealing
products
Production and sales of cemented
carbide tools
Technical construction and civilengineering; production and sales ofindustrial machinery
Sales of the Company’s products
and other non-ferrous metal
products
Production and sales of aluminum
beverage cans

Robertson’s
Ready Mix, Ltd.

32 million U.S.
dollars 1)

100.0

Smelting, processing and recyclingof non-ferrous metals

Note 1: Paid-in capital is shown.
Note 2: As of May 13, 2020, MMC Copper Products Oy changed the company name to Luvata Oy.
Note 3: This company closes its accounts in December. For that reason, paid-in capital as ofDecember 31, 2019 is listed, but there is no change in the paid-in capital as of March 31,
2020.
Note 4: The Company absorbed and merged Mitsubishi Shindoh Co., Ltd. on April 1, 2020
Note 5: As of April 1, 2020, the Company made Mitsubishi Hitachi Tool Engineering, Ltd. a wholly
owned subsidiary by acquiring additional shares and changed the company name to
MOLDINO Tool Engineering, Ltd.

2. The State of Major Affiliates
Name of theCompany

Paid-in Capital(Million Yen)

Percentage ofOwnership(including indirectownership) (%)

Line of Business

Ube-Mitsubishi
Cement Corp.

8,000

50.0

NM Cement Co., Ltd

7,001

30.0

495

50.0

Operation of solar power generation

6,000

45.0

Production and sales of copper
tubes and fabricated copper tubes

4,218

33.9

Pre-stressed concrete works, civilengineering and sales of concrete
products

LM Sun Power Co.,Ltd.
Kobelco & Materials
Copper Tube Co.,
Ltd.*
P.S. Mitsubishi
Construction Co., Ltd

Sales of cement and cement
related products
Investment in Nghi Son Cement
Corp. (Vietnam)

Yuzawa Geothermal
Operation of geothermal power
Power Generation
3,802
30.0
generation
Corporation* The Company plans to transfer all the shares in Kobelco & Materials Copper Tube Co., Ltd. that
the Company holds to CTJ Holdings2 LLC as of June 30, 2020.

－

37 －

(10) Business Transfers, Absorption-type Company Splits or Incorporationtype Company Splits
The Company and Ube Industries, Ltd. resolved at their respective Board of
Directors meetings, held on February 12, 2020, to start specific discussions andconsiderations for an integration of the Cement business and related business ofboth companies, which is to be implemented around April 2022 (hereinafterreferred to as the “Integration”). Both companies concluded a memorandum of
understanding on the same day.
Going forward, both companies will proceed with the specific discussions andconsiderations for the Integration and plan to conclude a final agreement on the
Integration around the end of September 2020.
(11) Succession of Rights and Obligations in Businesses of Other Companies
Through Absorption-type Company Mergers and Splits
The Company resolved at the Board of Directors meeting held on July 31, 2019,
to conduct an absorption-type merger between the Company and Mitsubishi
Shindoh Co., Ltd., which was a consolidated subsidiary of the Company, with theformer as the surviving company and the latter as the absorbed company, which
was to come into effect on April 1, 2020. Both companies concluded the merger
agreement on the same day. The Company conducted an absorption-type mergerof Mitsubishi Shindoh Co., Ltd. and succeeded all rights and obligations held by
Mitsubishi Shindoh Co., Ltd., on April 1, 2020.
(12) Acquisition or Disposal of Shares, Equity Interests or Share Options in
Other Companies
The Company resolved at the Board of Directors meeting held on February 26,
2020, to acquire all shares in Mitsubishi Hitachi Tool Engineering, Ltd., which
was a consolidated subsidiary of the Company, held by Hitachi Metals, Ltd. out of
all issued shares (hereinafter referred to as the “Acquisition”). Consequently, theCompany made Mitsubishi Hitachi Tool Engineering, Ltd. a wholly owned
subsidiary on April 1, 2020. The subsidiary changed the company name to
MOLDINO Tool Engineering, Ltd. after the Acquisition.

－

38 －

(13) The Group’s Major Lenders (as of March 31, 2020)
Major Lenders

Borrowed
Amount(Million Yen)

Company Shares held by the Lender
Percentage of
Number of Shares
Shareholding
Held
(%)*
(Thousand)

MUFG Bank, Ltd.

173,634

2,003

1.5

Mizuho Bank, Ltd.

53,191157

0.1

The Norinchukin Bank

21,894500

0.4

The Hachijuni Bank, Ltd.

18,201223

0.2Development Bank of JapanInc.

16,120--Note: Percentages of shareholding were calculated after deducting treasury shares (547,837 shares).

(14) Other Important Matters Concerning the State of the GroupThe Company reached an agreement to acquire 30% of the concessions of the
Mantoverde Copper Mine, located in the Atacama region of northern Chile, from
Mantos Copper Holding SpA, and to participate in development projects plannedby the mine. Consequently, the Company decided on February 7, 2020 to sign
definitive agreements, including share subscription agreement and shareholders
agreement. On the same day, the Company entered into the share subscription
agreement.

－

39 －

2. Articles Concerning Stock (as of March 31, 2020)(1) Total number of authorized shares: 340,000,000 (no change from the previous
fiscal year-end)(2) Total number of issued shares: 131,489,535 (no change from the previous
fiscal year-end)(3) Number of shareholders: 93,001 (decreased by 2,346 from the previous fiscal
year-end)
This includes 67,991 shareholders with voting rights (decreased by 2,639 fromthe previous fiscal year-end).
(4) Major Shareholders
Name of Shareholders

Number of Shares Held(Thousand)

The Master Trust Bank of Japan, Ltd.
(Trust account)
Japan Trustee Services Bank, Ltd.
(Trust account)
NORTHERN TRUST CO. (AVFC) RE
SILCHESTER INTERNATIONALINVESTORS INTERNATIONALVALUE EQUITY TRUST

Percentage ofShareholding (%)*

9,575

7.3

8,594

6.6

5,769

4.4

3,101

2.4

3,097

2.4

2,659

2.0

2,461

1.9

JP MORGAN CHASE BANK 385151

2,248

1.7

NORTHERN TRUST CO. (AVFC) SUB
A/C NON TREATY

2,054

1.6

MUFG Bank, Ltd.

2,003

1.5

Meiji Yasuda Life Insurance Company
NORTHERN TRUST CO. (AVFC) RE
U.S TAX EXEMPTED PENSIONFUNDSJapan Trustee Services Bank, Ltd.
(Trust account 5)
Japan Trustee Services Bank, Ltd.
(Trust account 9)

Note: Percentages of shareholding were calculated after deducting treasury shares (547,837 shares)

－

40 －

3. Articles Concerning the Company’s Executives(1) Directors and Executive Officers
1. Directors (as of March 31, 2020)
Title

Position andResponsibilities
Member of theNomination Committee
Member of theRemuneration Committee
Member of theNomination Committee
Member of theRemuneration Committee

Name

Director, Chairmanof the Board

Akira Takeuchi

Director

Naoki Ono1)

Director

Makoto Shibata1)

Director

Hiroshi Kubota3) 4) 16)

Member of the Audit
Committee

Director

Soichi Fukui3) 16)

Member of the Audit
Committee

Director

Director

Director

Director
Director

President, Materials’
Finance Co., Ltd. 2)

Mariko Tokuno5) 17)

Hiroshi Watanabe5) 8) 17)

Hikaru Sugi 5) 17)
Hiroshi Sato3) 5) 10) 16) 17)

Naoto Kasai 5) 16) 17)

Important Positions of
Other Organizations

Member of theOutside Director,
Nomination Committee
Happinet Corporation6)(Chairperson)
Outside Director, Yamato
Member of theHoldings Co., Ltd. 7)
Remuneration Committee
President, Institute forMember of the Audit
International Monetary
Committee
Affairs9)
Member of theNomination Committee
Member of theRemuneration Committee
Member of the Audit
Committee (Chairperson)
Member of the Audit
Committee－

41 －Representative Lawyer,
Kasai Sogo Law Office11)

Chairman, Mitsubishi
UFJ Trust and Banking
Tatsuo Wakabayashi
Corporation 12) 13)
Director
5) 16) 17)
Outside Director,
Mitsubishi Logistics
Corporation14) 15)
Note 1: Mr. Naoki Ono and Mr. Makoto Shibata hold the concurrent position of Executive
Officer.
Note 2: Mr. Makoto Shibata resigned as Representative Director President of Materials’ FinanceCo., Ltd. on March 31, 2020.
Note 3: Mr. Hiroshi Kubota, Mr. Soichi Fukui and Mr. Hiroshi Sato are Full-time Members of the
Audit Committee. The Company shall assign Full-time Members of the Audit Committee inorder to improve the effectiveness of audits conducted by the Audit Committee.
Note 4: Mr. Hiroshi Kubota, a Member of the Audit Committee, has to date mainly been assigned toareas that relate to accounting and finance. As such, he has extensive knowledge in each ofthese fields.
Note 5: Ms. Mariko Tokuno, Mr. Hiroshi Watanabe, Mr. Hikaru Sugi, Mr. Hiroshi Sato, Mr. Naoto
Kasai and Mr. Tatsuo Wakabayashi are Outside Directors as defined in Article 2, Paragraph
15 of the Companies Act.
Note 6: There is no business relationship between the Company and Happinet Corporation.
Note 7: There is no business relationship between the Company and Yamato Holdings Co., Ltd. The
Company has a business relationship with Yamato Transport Co., Ltd., a specified subsidiaryof Yamato Holdings Co., Ltd., related to such activities as the consigned transportation of
products. However, the value of the transactions amounts to less than 1% of the consolidated
net sales of the Company and Yamato Holdings Co., Ltd.
Note 8: Mr. Hiroshi Watanabe, a Member of the Audit Committee, has extensive knowledge offinance and accounting through his experiences as Vice-Minister of Finance for International
Affairs at the Ministry of Finance and in management at government-affiliated financial
institutions.
Note 9: There is no business relationship between the Company and the Institute for International
Monetary Affairs.
Note 10: Mr. Hiroshi Sato, Chairperson of the Audit Committee, has experience as a corporate
auditor of a financial institution and has extensive knowledge of finance and accounting.
Note 11: There is no business relationship between the Company and Kasai Sogo Law Office.
Note 12: The Company has a business relationship with Mitsubishi UFJ Trust and Banking
Corporation (MUTB), related to such activities as entrustment of the Company’s pension
Member of theNomination Committee
Member of theRemuneration Committee(Chairperson)

－

42 －

funds. However, the value of the transactions amounts to less than 2% of the consolidated
net sales of the Company and MUTB. Moreover, the Company has no business relationshipwith MUTB relating to the borrowing of funds.
Note 13: Mr. Tatsuo Wakabayashi resigned from Chairman of Mitsubishi UFJ Trust and Banking
Corporation (MUTB) on April 1, 2020 and assumed the office of Senior Advisor of suchcompany.
Note 14: Mr. Tatsuo Wakabayashi assumed the office of Outside Director, Mitsubishi Logistics
Corporation on June 27, 2019.
Note 15: The Company has a business relationship with Mitsubishi Logistics Corporation regarding
the consigned transportation of products. However, the value of the transactions amounts toless than 1% of the consolidated net sales of the Company and Mitsubishi Logistics
Corporation.
Note 16: Mr. Hiroshi Kubota, Mr. Soichi Fukui, Mr. Hiroshi Sato, Mr. Naoto Kasai and Mr. Tatsuo
Wakabayashi had been Audit & Supervisory Board Members of the Company until thechange to a Company with a Nomination Committee on June 21, 2019 and assumed theoffice of Directors on the same day.
Note 17: The Company has notified the Tokyo Stock Exchange, Inc. that Ms. Mariko Tokuno, Mr.
Hiroshi Watanabe, Mr. Hikaru Sugi, Mr. Hiroshi Sato, Mr. Naoto Kasai and Mr. Tatsuo
Wakabayashi are Independent Directors in accordance with the regulations, respectively.
(An Independent Director is an Outside Director who is unlikely to have conflicts ofinterest with general shareholders.)
Note 18: Mr. Osamu Iida, Mr. Yasunobu Suzuki and Mr. Kazuhiro Kishi resigned as Directors andassumed the office of Executive Officers at the closing of the 94th Ordinary General
Meeting of Shareholders held on June 21, 2019.

－

43 －

2. Executive Officers (as of March 31, 2020)
Title
Chief Executive
Officer(Representative
Executive Officer)
Executive Vice
President andExecutive Officer(Representative
Executive Officer)

Senior Managing
Executive Officer

Position andResponsibilities
General Operation of
the Company
responsible for:
Audit

Name

Naoki Ono1)

Osamu Iida2)

Assistant to the President
General Manager,
Technology Div.

Yasunobu Suzuki

President, Advanced
Products Company
responsible for:
New Business
Development&Promotion

Important Positions of
Other Organizations

Managing Executive
Kazuhiro Kishi
OfficerPresident, Cement
Company

Outside Director, P.S.
Mitsubishi Construction
Co., Ltd.

Managing Executive
Makoto Shibata1)
Officer

General Manager,
Corporate Strategy Div.
responsible for:Affiliated Corporations
Business

Representative Director
President, Materials’
Finance Co., Ltd. 3)

Managing Executive
Shinichi Nakamura
OfficerPresident,
Metalworking Solutions
Company

Managing Executive
Yoshikazu Yasui2)
Officer

General Manager,
Human Resources &General Affairs Div.

Managing Executive
Susumu Sasaki
Officer

General Manager,
Governance Div.

Managing Executive
Tetsuro Sakai
OfficerPresident, Metals
Company－

44 －Executive Officer

General Manager,
Environment & Energy
Business Unit

Shogo Yamaguchi

Note 1: Mr. Naoki Ono and Mr. Makoto Shibata hold the concurrent position of Director.
Note 2: Mr. Osamu Iida and Mr. Yoshikazu Yasui resigned as Executive Officer on March 31, 2020.
Note 3: Mr. Makoto Shibata resigned as Representative Director President of Materials’ Finance Co.,
Ltd. on March 31, 2020.

－

45 －

The following Executive Officers have been given new titles or posted to new positions shown
below on April 1, 2020.
Position andImportant Positions of
Title
Name
Responsibilities
Other Organizations
GeneralOperationoftheChief Executive
Company
Officer
Naoki Ono
(Representative
responsible for: Audit
Executive Officer)
CEO
Executive Vice
President andPresident, Advanced
Executive Officer
Yasunobu Suzuki
Products Company(Representative
Executive Officer)
General Manager,
Managing Executive
MakotoShibataCorporate Strategy Div.
Officer
CFO
Managing Executive
Shinichi Nakamura
Officer

General Manager,
Technology Div.

Managing Executive
Susumu Sasaki
Officer

General Manager,
Governance Div.
responsible for:
Aluminum Business andAffiliated Corporations
Business

Managing Executive
Shogo Yamaguchi
OfficerPresident, Environment &Energy Business Company

Managing Executive
Nobuhiro Takayanagi*
Officer

Vice President, Advanced
Products Company

Managing Executive
Jun Nagano*
Officer

General Manager, Human
Resources & General
Affairs Div.

Managing Executive
Tetsuya Tanaka*
OfficerPresident, Metalworking
Solutions Company*Mr. Nobuhiro Takayanagi, Mr. Jun Nagano and Mr. Tetsuya Tanaka assumed the office of
Executive Officer on April 1, 2020.

－

46 －

(2) Outline of the Content of Limited Liability Agreement
Provisions of the Articles of Incorporation allow the Company to execute with
Directors (excluding those who are Executive Directors, etc.) agreements limiting
liability for damages in accordance with Article 427, Paragraph 1 of theCompanies Act. In accordance with the provisions, the Company has concluded
Limited Liability Agreements with all of the Non-executive Directors. The outlineof the agreements is as follows:
With respect to liability as described in Article 423, Paragraph 1 of theCompanies Act, if Directors (excluding those who are Executive Directors, etc.)
perform their duties in good faith and without gross negligence, the Directors shallbe liable to the Company for damages only to the extent of minimum liability as
set out in Article 425, Paragraph 1 of the Companies Act. The Company shallindemnify the Directors for damages in excess of the amount of the liability.

－

47 －

(3) Remuneration of Directors, Audit & Supervisory Board Members andExecutive Officers
Remuneration by Type(Millions of yen)
Basic 5)
Bonus 6)

Position

Total Amount of
Remuneration(Millions of yen)

Number of
Executives(persons) 7)

Directors (of which Outside
Directors)

273 3)
(99)

273
(99)

－

14
(6)

Audit & Supervisory Board
Members 1) (of which
Outside Audit &Supervisory Board
Members)

33 4)
(15)

33
(15)

－

5
(3)

Executive Officers 2)

275

275

－

10

Note 1: The Company made the transition from being a Company with a Board of Auditors to a
Company with a Nomination Committee upon approval at the 94th Ordinary General
Meeting of Shareholders held on June 21, 2019. Accordingly, the total amount of
remuneration to Audit & Supervisory Board Members and the number of executives to be
paid described on the above table refer to those in the fiscal year under review for Audit &Supervisory Board Members who served between April 1 and June 21, 2019.
Note 2: The total amount of remuneration paid to executives who served as Director and Executive
Officer concurrently is described in the Executive Officers column.
Note 3: It was resolved at the 91st Ordinary General Meeting of Shareholders held on June 29,
2016, that the amount of remuneration to Directors prior to the transition to being a
Company with a Nomination Committee should not exceed ¥49 million per month,including remuneration not exceeding ¥6 million per month to Outside Directors.
Note 4: It was resolved at the 82nd Ordinary General Meeting of Shareholders held on June 28,
2007, that the amount of remuneration to Audit & Supervisory Board Members prior to thetransition to being a Company with a Nomination Committee should not exceed ¥17
million per month.
Note 5: Of the basic remuneration for Directors, stock-based remuneration (paying a fixed monthly
amount used for purchasing the Company’s shares) is ¥6 million. Of the basic remuneration
for Executive Officers, stock-based remuneration is ¥27 million. Based on a resolution at
the Remuneration Committee, the Company revised a remuneration system for Directors

－

48 －

and Executive Officers from FY2021 onward and has adopted stock-based remuneration
using a trust instead of the current stock-based remuneration system. The remuneration
system for Directors and Executive Officers from FY2021 onward is outlined in “Outline ofRemuneration System for Directors and Executive Officers from FY2021” as mentioned
later.
Note 6: It was resolved at the 81st Ordinary General Meeting of Shareholders held on June 29,
2006, that the amount of bonuses for Directors other than Outside Directors prior to thetransition to being a Company with a Nomination Committee should not exceed ¥170
million per annum.
Note 7: The number of executives to be paid includes three (3) Directors and five (5) Audit &Supervisory Board Members who resigned during the fiscal year under review. There are
eleven (11) Directors and ten (10) Executive Officers as of the end of the fiscal year underreview. The number of Executives to be paid include those who resigned as Directors andthen were appointed as Executive Officers, and those who resigned as Audit & Supervisory
Board Members and then were appointed as Directors at the time of the transition to a
Company with a Nomination Committee, as well as those who serve as Directors andExecutive Officers concurrently. There are overlaps in the total.

－

49 －

(4) Policy Regarding the Determination of Remuneration
1. Directors and titled Executive Officers
We make it a basic policy to appropriately link the remuneration for Directors
and titled Executive Officers until June 2019 to corporate performance as well as
individual performance. Drawing on the advice of external experts, steps havebeen taken to design a system that is highly objective. Remuneration is comprisedof basic fixed component as well as a bonus that is linked to performance.
Firstly, the amount of basic remuneration paid to Directors and titled Executive
Officers is determined in accordance with the title and performance of eachindividual. The portion of basic remuneration is paid as stock-based remuneration(not paid to Outside Directors) and a fixed monthly amount is used for purchasing
the Company's shares through the Company's Director shareholding association.
The Company's shares acquired based on this remuneration cannot be sold at least
during each individual's term of office. This aims to link the remuneration to
medium- and long-term corporate performance.
Secondly, bonuses, as remuneration linked to short-term corporate performance,
are determined after the fiscal year by taking into consideration the performanceof each individual following the formula using indicators consisting of net income
attributable to owners of parent and consolidate ordinary profit for the fiscal year
under review, important consolidated indicators when assessing corporate
performance. Since the formula is linked to the results of net income attributableto owners of parent and consolidate ordinary profit, the targets for indicators
related to bonuses are not set for each fiscal year, rather there will be cases of nonpayment and amount decreases depending on corporate conditions and the amountof dividends for the fiscal year under review to which the provision of bonuses issubject.
Recognizing that the role of Outside Directors is to objectively oversee andverify the activities of Directors as they carry out their executive duties from a
position that independent of the Company, remuneration is limited to a fixedamount that is determined in accordance with the policies approved by the Boardof Directors and after taking into consideration the circumstances of eachindividual.

－

50 －

2. Audit & Supervisory Board Members
The remuneration for Audit & Supervisory Board Members until June 2019 is
set at an appropriate level based on discussions among them and is a fix amountthat is not linked to corporate performance in light of the fact that they assume theresponsibility for auditing the execution of duties by Directors as an independent
body entrusted by shareholders.
Accompanying the Company’s transition to a Company with a Nomination
Committee on approval at the 94th Ordinary General Meeting of Shareholders
held on June 21, 2019, the policy regarding determination of remuneration for
Directors and Executive Officers and remuneration for individuals are determinedby the Remuneration Committee. The Remuneration Committee decided that
remuneration for Directors and Executive Officers from July 2019 onward follow
the above policy.
Additionally, the Company revised the remuneration system for Directors andExecutive Officers from FY2021 onward following a resolution of theRemuneration Committee. The following is an outline of the remuneration system
for Directors and Executive Officers from FY2021 onward.
<< Outline of Remuneration System for Directors and Executive Officers fromFY2021>>
With the aim of creating an attractive remuneration system for outstanding
management personnel that will drive improvements in the Group's corporate
value from a medium- to long-term viewpoint and establishing remuneration
governance that will enable the Company to fulfill its accountability to
stakeholders, including shareholders, the Company shall establish a policy on
determining the remuneration for Directors and Executive Officers (hereinafter,"Officers") and a remuneration system as follows:
1. Policy on Determining Remuneration for Officers(1) A system shall be created that provides competitive standards forremuneration compared with companies of a business category and size similar
to the Group.

－

51 －

(2) The performance of the functions and duties assumed by each Officer andcontributions to the improvement of medium- to long-term corporate value shallbe evaluated in a fair and equitable manner, and the evaluation results shall bereflected in remuneration.
(3) In order to have remuneration function as a sound incentive to improve theGroup's medium- to long-term corporate value, remuneration shall consist ofbasic remuneration, an annual bonus based on performance evaluations in eachfiscal year, etc. and stock-based compensation, which is a medium- to long-term
incentive linked to medium- to long-term performance and corporate value. The
remuneration composition ratio shall be determined appropriately in accordancewith one’s job position. Provided, however, that for Directors (excluding those
who concurrently hold the posts of Director and Executive Officer), only basic
remuneration shall be paid in cash, in light of their function and role ofsupervising the performance of job duties by the Executive Officers.
(4) An annual bonus shall be determined based on an appropriate evaluation of
the performance in each fiscal year as well as the status of the implementation of
medium- to long-term management strategies, etc., and reflected in remuneration.
(5) A medium- to long-term incentive shall be stock-based compensation thatenables Officers to share awareness of profits with shareholders in order toenhance corporate value from a medium- to long-term viewpoint.
(6) The policies for determining remuneration and the amount of individual
remuneration shall be deliberated and determined by the Remuneration
Committee composed of a majority of Independent Outside Directors.
(7) Necessary information shall be disclosed actively so that stakeholders
including shareholders can monitor the relationship between performance, etc.
and remuneration.
2. Remuneration System for Officers(1) Directors (excluding those who concurrently hold the posts of Director andExecutive Officer)
The remuneration system for Directors shall be determined so that only basic
remuneration shall be paid in cash, taking into consideration an individual
Director’s job position, whether he/she is a full-time/part-time Director, etc. andreferring to the standards for remuneration of other companies based on the

－

52 －

research of outside experts.
(2) Executive Officers
The remuneration payable to Executive Officers shall consist of basic
remuneration, which is fixed remuneration, and an annual bonus and stock-based
compensation, which are performance-linked remuneration. The remuneration
composition ratio shall be in line with “Basic remuneration/Annual bonus/Stockbased compensation = 1.0/0.6/0.4” (*In the case where the annual bonus payment
rate is 100%) as to the Chief Executive Officer, and for other Executive Officers,
the ratio of performance-linked remuneration to basic remuneration shall be set
lower than that for the Chief Executive Officer.
Further, the standards for remuneration shall be determined by referring to thestandards of peer companies (similar-sized companies determined by the
Remuneration Committee) based on the research of outside experts.
<Basic Remuneration>
Basic remuneration shall be paid in cash as fixed remuneration in accordancewith one’s job position.
<Annual Bonus (Short-term Incentive Remuneration)>
The annual bonus shall be determined based on the evaluation of consolidated
operating profit growth rate compared with other companies, as well as aperformance evaluation and non-financial evaluation, on a single-year basis.
The specific evaluation items shall be as follows:<<Evaluation Items>>(i) Current net profit attributable to owners of parent, which is the final resultof management and by which common profit awareness is shared withshareholders(ii) Consolidated operating profit (or, in the case of an Executive Officer incharge of business activities, operating earnings from the relevant businesssector), based on which the earning capacity of one’s main job is evaluated(iii) Non-financial evaluation that evaluates the value of efforts aimed at the
improvement of medium- to long-term corporate value, which is less likely tobe represented in a short-term performance(iv) Consolidated operating profit growth rate compared with other companies,

－

53 －

as a final adjustment factor to give an impression of growth greater thanmarket growth (comparison with 6 non-ferrous metal companies and similarsized manufacturing companies)<<Evaluation Weight>>
Based on the evaluations of each portion of 40%, 40% and 20% of the baseamount, which depends on one’s job position, in terms of current net profit
attributable to owners of parents, consolidated operating profit (or, in the caseof an Executive Officer in charge of business activities, operating earnings
from the relevant business sector) and non-financial factors, respectively, theannual bonus shall be determined by using consolidated operating profit
growth rate as an adjustment factor.

<Stock-based compensation (Medium- to Long-term Incentive
Remuneration)>
Stock-based compensation shall be a system that utilizes a trust for the purposeof achieving the sharing of common profit awareness with shareholders, whichshall be used as an incentive for the improvement of the medium- to long-term
corporate value of the Group and under which shares shall be delivered, in
accordance with one’s job position, upon retirement from the post of Officer.
No performance conditions nor stock price conditions shall be set with respect
to the shares to be delivered.
Please note that in the case of a non-resident staying in Japan, different
treatment may be applied under laws or for any other relevant circumstances.

－

54 －

(5) Major Activities of Outside Directors and Auditors
StatusClassification

Name

Attendance for Meetings of theBoard of Directors, etc. held
during the fiscal year underreview

Director

Mariko Tokuno

Board of Directors: 16/16
Nomination Committee: 11/11
Remuneration Committee: 10/10

Director

HiroshiWatanabe

Board of Directors: 14/16
Audit Committee: 12/14

Director

Hikaru Sugi

Board of Directors: 16/16
Nomination Committee: 11/11
Remuneration Committee: 10/10

－

55 －

Major Activities
Ms. Mariko Tokuno has insight into
corporate strategy and general aspectsof management from a global
perspective gained through her
extensive experience as a manager of
the Japanese operations of leadinginternational firms. Ms. Tokuno
provides well-informed opinions as a
Director, Chairperson of theNomination Committee and a Memberof the Remuneration Committee.
Mr. Hiroshi Watanabe has knowledgeof domestic and overseas finance,
economics and other general aspectsof management gained through his
experience in key positions at the
Ministry of Finance and inmanagement positions in governmentaffiliated financial institutions.
Mr. Watanabe provides well-informed
opinions as a Director and a Memberof the Audit Committee.
Mr. Hikaru Sugi has extensive
technical knowledge in development,
design and manufacturing processes,
and also has insight into corporate
strategy from a global perspective andgeneral aspects of management
through his experience as a manager
of a manufacturer that develops its
business all over the world.
Mr. Sugi provides well-informed
opinions as a Director, a Member of
the Nomination Committee and a
Member of the Remuneration

Committee.

Mr. Hiroshi Sato has insight into
finance, accounting and other aspectsof corporate management from his
Board of Directors: 16/16
experience as a corporate auditor in a
Audit Committee: 14/14
Director
Hiroshi Satofinancial institution and as a
Audit & Supervisory Board: 3/3
1) 2) management at a manufacturer.
Mr. Sato provides well-informed
opinions as a Director andChairperson of the Audit Committee.
Mr. Naoto Kasai provides wellBoard of Directors: 15/16
informed opinions as a Director and a
Audit Committee: 13/14
Member of the Audit Committee
Director
Naoto Kasai
Audit & Supervisory Board: 3/3 based on his abundant experience as a1) 2)
lawyer and extensive knowledge
concerning business management.
Mr. Tatsuo Wakabayashi has insight
into finance, accounting and otheraspects of corporate managementfrom his extensive experience as a
Board of Directors: 16/16
manager after having served as
Nomination Committee: 11/11
TatsuoPresident and Chairman at financial
Director
Remuneration Committee: 10/10
Wakabayashi
institutions.
Audit & Supervisory Board: 3/3
1) 2) Mr. Wakabayashi provides wellinformed opinions as a Director, aMember of the Nomination
Committee and Chairperson of theRemuneration Committee.
Note 1: Mr. Hiroshi Sato, Mr. Naoto Kasai and Mr. Tatsuo Wakabayashi had been Audit &Supervisory Board Members of the Company until the Company made the transition to a
Company with a Nomination Committee on June 21, 2019. Accordingly, their Number ofAttendance at Board Meetings includes the record from when they were Audit & Supervisory
Board Members.
Note 2: The number of times the Audit & Supervisory Board were held is the record for the period
until the time the Company changed to a Company with a Nomination Committee on June21, 2019.
Note 3: As far as the number of times the Board of Directors were held, and in addition to theaforementioned, there were two notices made to Directors pursuant to Article 372, Paragraph

－

56 －

1 and 3, of the Companies Act.
Note 4: In September 2019, Universal Can Corporation, a consolidated subsidiary of the Company,
received a cease and desist order and an order for surcharge payment from the JFTC forviolating the Antimonopoly Act concerning transactions of aluminum beverage cans before
March 31, 2016.
Until the case came to light, Ms. Mariko Tokuno, Mr. Hiroshi Watanabe, Mr. Hikaru Sugi,
Mr. Hiroshi Sato, Mr. Naoto Kasai and Mr. Tatsuo Wakabayashi were not cognizant of thiscase, but they have made regular remarks at the Board of Directors, etc. from the viewpointof compliance with laws and regulations. Since the case has been discovered, they haveproperly fulfilled their duties by investigating the facts and causes and making proposals withregard to measures to prevent any recurrence.

－

57 －

4. Articles Concerning Accounting Auditor(1) Name of the Accounting Auditor: KPMG AZSA LLC(2) Remuneration of Accounting Auditor for the Year Ended March 31, 2020
Content of the Remuneration
Amount(a) Remuneration paid by the Company to Accounting
1)
162 million yen
Auditors(b) Total amount of monetary and other property
benefits paid by the Company and its subsidiaries
434 million yen(including the above-mentioned)
Note 1: The Company has not subdivided the amount of remuneration for auditing based on the
Financial Instruments and Exchange Act and the amount of remuneration for auditing basedon the Companies Act. In the Auditing Agreement entered with the Accounting Auditor it is
not possible to substantially subdivide the two. This amount thus includes auditing
remuneration based on the Financial Instruments and Exchange Act. The Audit Committee
has agreed upon this amount taking into consideration the basis for calculating compensation,
the status of execution of duties of the Accounting Auditor in the previous business year andthe opinions of Directors and other related internal departments.
Note 2: Among the major subsidiaries of the Company, PT Smelting, MMC Copper Products, MCC
Development Corp., Mitsubishi Cement Corp., and Robertson’s Ready Mix, Ltd. use theservices of auditing corporations (including auditors who have the appropriate auditing
qualifications abroad) other than the services of KPMG AZSA LLC., to audit accounting
related documents (in accordance with the Companies Act and the Financial Instruments andExchange Act and the applicable laws of the concerned foreign countries’ own legislations).

(3) Content of Non-Auditing Duties
The Company entrusts with the Accounting Auditor preparation of comfort
letters accompanying issuance of corporate bonds, etc., which are services otherthan the ones stipulated in Article 2, paragraph 1, of the Certified Public
Accountants Act (non-auditing services).
(4) Policy on Dismissal or Non-reappointment of the Accounting Auditor
Except in cases of dismissal of the Accounting Auditor by Audit Committee as
stipulated in Article 340 of the Companies Act, the Company’s Audit Committee

－

58 －

shall as a general rule decide on an agenda item regarding the decision not toreappoint or to dismiss the Accounting Auditor in the event it is recognized that
it is difficult for the Accounting Auditor to execute its duties appropriately. Basedon this decision, the Board of Directors shall propose this at the General Meetingof Shareholders.

－

59 －

5. Systems to Ensure Appropriate Business Operations and the Status ofOperation of Those Systems● Fundamental Policy
The Board of Directors has resolved the following fundamental policy regarding
the establishment of systems to ensure appropriate business operations.
Based upon the approval at the Ordinary General Meeting of Shareholders in June2019 the Company has become a Company with a Nominating Committee, andplans to establish a new system in order to make appropriate revisions to theFundamental Policy and maintain suitable operations.
(1) Systems to Ensure the Execution of Duties by Executive Officers andEmployees in Conformity with Laws and the Articles of Incorporation
1. The Company shall determine the Corporate Philosophy, etc. as the supremecommon rule of Mitsubishi Materials Group, and also shall put in place internal
regulations to establish a compliance system.
2. The Company shall determine through the Board of Directors, the Executive
Officers’ Meeting and other committees, etc. the details for the execution ofduties by the Executive Officers and employees in accordance with laws, theArticles of Incorporation and internal regulations, etc. In addition, the legal
department and the related departments shall carry out the preliminary reviewof specific significant matters.
3. The Company shall appoint an Officer from among its Executive Officers tooversee matters relating to compliance and establish an organization forsustainability and a department responsible for compliance, and shall also
enforce cross-divisional compliance promotion activities (including internal
education) for the whole Company based on the policies, plans, etc. to beestablished for each fiscal year.
4. The Company shall establish a reporting desk to deal with particulars related
to problems that may arise over compliance.
5. The Company shall enforce periodical auditing concerning the state ofcompliance in each department by the department in charge of internal audits.
6. In accordance with our Corporate Philosophy, etc., the Company shall establish
internal structures to ensure appropriate actions under its policy of resolutely

－

60 －

rejecting any involvement whatsoever with anti-social forces.
(2) Systems for Preservation and Management of Information Related to the
Execution of Duties of Executive Officers
The Company shall properly preserve and manage the minutes of the Executive
Officers’ Meeting and other significant information, based on laws, the Articles
of Incorporation and internal regulations, etc.
(3) Regulations and Other Systems Concerning Risk Management
1. The Company shall deliberate carefully on significant matters through theBoard of Directors, the Executive Officers’ Meeting and other decision-making
bodies based on laws, the Articles of Incorporation, internal regulations, etc. In
addition, the Company shall carry out the preliminary review of significant
matters through legal and other related departments based on the internal
regulations and others in order to identify risks and prevent risk elicitation andmanifestation.
2. The Company shall determine the internal regulations, policies and plans, etc.
related to general risk management. In addition, the Company shall appoint an
Officer from among its Executive Officers to oversee matters relating to risk
management and establish an organization for sustainability and a department
responsible for risk management and shall enforce cross-divisional risk
management promotion activities for the whole Company.
3. The Company shall determine various internal regulations and others andenforce suitable management concerning individual risks, including financialtransaction risk, credit transaction risk and information leakage risk.
4. The Company shall enforce suitable management based on the laws andordinances concerning work-related accidents.
5. The Company shall build a communication system with the aim of preventing
damage from accidents on a massive scale, natural disasters or terrorism, andestablish an organization to respond to such events.
6. The Company shall enforce periodical auditing concerning the state of risk
management in each department by the department in charge of internal audits.

－

61 －

(4) Systems to Ensure Efficient Execution of Duties by Executive Officers
1. The Company has chosen to be a Company with a Nomination Committee
among the governance systems under the Companies Act and will accelerate
decision making with the appropriate transfer of authority to Executive
Officers with respect to decisions on matters concerning the execution of duties.
The Company will establish the rules for official authority and decision making
based on the areas of responsibility of each Executive Officer and internal
regulations.
2. The Company shall determine the management plan, allocate suitable
management resources and authority among the departments controlled byeach Executive Officer to achieve the plan, and require those departments toformulate their own specific plans. In addition, the Executive Officers shallsuitably verify the progress state of the plan of each department and takeappropriate measures when necessary.
3. The department in charge of internal audits shall conduct periodic auditing
concerning the efficiency of the execution of duties of the Executive Officers
and each department.
(5) Systems to Ensure Appropriate Operations by the Corporate Group
Comprising the Company and its Subsidiaries
1. The Company shall aim to establish corporate ethics and build a Group
compliance and risk management system (including an internal education
system) through the promotion of activities and behaviors, etc. toward
compliance and risk management by the Group, including subsidiaries, basedon the Corporate Philosophy, etc. and internal regulations, etc. that are appliedconsistently throughout the Group.
2. Concerning each subsidiary, the Company shall aim to improve the soundness
and efficiency of management of the subsidiary, and by extension the wholeGroup, by determining a response liaison department within the Company. The
concerned department shall consult and exchange information with thesubsidiary concerning specific significant matters.
3. The Company shall establish various regulations related to internal controls
concerning financial reporting. The Company shall also establish assessment
mechanisms for those internal controls and build a system to ensure the

－

62 －

accuracy of the Group’s financial reports.
4. In addition to the above-mentioned 1, 2 and 3, the Company shall enforce
periodic auditing concerning compliance, risk management and the efficiencyof management of subsidiaries by the department in charge of internal auditsof the Company.
(6) Matters Concerning Directors and Employees Assigned to Assist the Audit
Committee, Matters Concerning the Independence of Such Directors andEmployees from Executive Officers, and Matters Concerning Ensuring theEffectiveness of Instructions Provided by the Audit Committee to Such
Directors and Employees
1. The Company shall establish a department to assist with the operations of the
Audit Committee within the department in charge of internal audits. Further,
the Company shall assign necessary personnel as employees to assist with theoperations of the Audit Committee within such department.
2. The Audit Committee may give instructions to the department in charge ofinternal audits when necessary for the performance of duties.
3. The head of the department in charge of internal audits and the employees
assigned to assist with the duties of the Audit Committee shall give preference
to the instructions of the Audit Committee if there is an inconsistency between
the instructions given by the Audit Committee and those given by the
Executive Officer with respect to the operations of the Audit Committee.
4. The head of the department in charge of internal audits shall obtain the approvalof the Audit Committee with respect to the reallocation of any employee who
is assigned to assist with the operations of the Audit Committee and shalldiscuss with the Audit Committee about personnel performance evaluation.
(7) Systems for Reporting to the Audit Committee and for Ensuring That
People Making Reports Shall Not Experience Disadvantageous Treatment
as a Result of This Reporting
1. The Directors (excluding those who are Members of the Audit Committee),
Executive Officers and employees shall swiftly report appropriate information
to the Audit Committee in accordance with the method stipulated in laws andthe internal regulations of the Company, in the case where there is considerable

－

63 －

damage to the Company’s operations in areas for which they are responsible or
the possibility of significant impact on the Company. In addition, the same
shall apply in the event that the Audit Committee requests a report aboutbusiness operations.
2. In the event of a report by a Director, Executive Officer, Audit & Supervisory
Board Member or employee, etc. of the Company or its subsidiary to thereporting desk on a compliance-related problem, the department in charge ofthe reporting desk shall in principle report the content of such report to the Fulltime Member of the Audit Committee.
3. The department in charge of internal audits of the Company shall report to the
Audit Committee important items heard from Directors, Executive Officers,
Audit & Supervisory Board Members and employees, etc. of the Company andits subsidiaries, as well as important items from audit results. As for the mattersdetermined to be necessary for the operations of the Audit Committee, thedepartment in charge of such matters shall make a periodic report.
4. The Company and its subsidiaries shall ensure that the people reporting to the
Audit Committee (including people reporting indirectly through others) would
not be treated unfavorably because of such reporting by including provisions
to such effect in the internal regulations, etc.
(8) Matters Concerning Policies Related to the Handling of Expenses or
Obligations Incurred During the Execution of Duties by the Members of
the Audit Committee
Any Member of the Audit Committee may request the Company in advance to
pay expenses, etc. deemed to be necessary for the execution of its duties. Further,
any Member of the Audit Committee may request the Company after the fact toreimburse any expense paid out on an emergency or temporary basis. The
Company shall pay expenses necessary for the execution of duties of the Membersof the Audit Committee upon request by any of such Members.
(9) Other Systems to Ensure Effective Auditing by the Audit Committee
1. The Audit Committee shall exchange opinions with the Executive Officers,
including the Chief Executive Officer, the department in charge of internal
audits and other departments necessary for the execution of duties of the Audit

－

64 －

Committee, as well as the Accounting Auditor, etc., periodically and when
deemed necessary.
2. The Full-time Members of the Audit Committee shall be provided with theopportunity to attend the Executive Officers’ Meeting and other significant
meetings of the Company, and the Company shall establish systems to enableeach Member of the Audit Committee to review, through the internal
information system, the materials and minutes of any significant meetings
related to the execution of business duties.
Overview of Operational Status
Principal initiatives to secure the operation of systems to ensure appropriate
business operations are indicated as follows. Furthermore, the Company has
established and commenced the progressive implementation of measures (which
are indicated as follows) aimed at strengthening the Group’s governance system
including quality control as outlined on page 24.

●(1) Initiatives Related to Compliance
1. The Company and its subsidiaries share a Corporate Philosophy etc. aimed atensuring sound corporate activities that comply with laws and regulations andare in accordance with social mores. Awareness of the Company’s Corporate
Philosophy etc. is instilled throughout the Group.
2. Based on regulations related to CSR, the CSR Committee—whose secretariat
is the CSR Department—meets regularly. In addition to deliberating annual
policies and plans related to overall compliance activities, the committee sharesand evaluates the status of compliance within the Group and reports that havebeen submitted to the internal reporting desk. The Company and its subsidiaries
work together to ensure consistent CSR training throughout the Group andaddress compliance-related issues. To promote response to management issues
on sustainability of the Group in a centralized manner, the “Sustainable
Management Office” was established on April 1, 2020. Accordingly, parts ofvarious committees including the CSR Committee, task forces, and others wereconsolidated or abolished, and their roles and functions were transferred to the“Sustainable Management Office.”
3. The Company has established certain regulations and guidelines in order to

－

65 －

ensure optimal quality. These regulations and guidelines are applied across theGroup as a whole. Every effort is made to ensure the proper management ofquality. This includes putting in place a quality management structure andsystems.
(2) Initiatives Related to Risk Management
1. Group-wide policies and annual plans related to risk management areformulated and then reported to the Board of Directors upon deliberation by
the CSR Committee and Governance Deliberative Council and approval by the
Executive Officers’ Meeting. The Company and subsidiaries specify riskrelated initiatives to be undertaken in accordance with Group-wide policies andenact appropriate measures to reduce these risks.
2. Regarding work-related accidents, meetings of the Zero Accident Committee
and Group Safety meetings are convened to decide on management priorities
and share information about legal updates, thereby endeavoring to ensure an
appropriate response.
3. The Company formulates business continuity plans (BCPs) prescribing action
guidelines in the event of large-scale accidents, natural disasters or terrorism.
In addition, the CSR Committee and Crisis Management Committee meetduring normal times and times of crisis alike to prevent damage from spreading.
As mentioned in (2) 1 above, the “Sustainable Management Office” wasestablished on April 1, 2020. Accordingly, parts of various committees
including the CSR Committee, task forces, and others were consolidated orabolished, and their roles and functions were transferred to the “Sustainable
Management Office.”(3) Initiatives Related to Enhancing Management Soundness and Efficiency
1. The Company formulates Medium-Term Management Strategy and annual
budgets and strives to appropriately allocate management resources anddelegate authorities among its various departments. The status of significant
business execution is reported to the Board of Directors.
2. By clearly indicating the scope of responsibility of Executive Officers, as wellas the operational responsibilities and authority of individual departments, theCompany strives to ensure the appropriateness of an accelerated decision-

－

66 －

making and business execution.
3. For each subsidiary, the Company identifies a responsible liaison division
within the Company. That division receives reports on significant investment
projects and compliance-related problems and consults and exchanges
information with the subsidiary on such matters.
(4) Initiatives Related to Internal Audits
Based on an annual audit plan, the Internal Audit Department conducts periodic
internal audits of the compliance, risk management and management efficiency
of internal divisions and subsidiaries and reports the results of these audits to theBoard of Directors.
(5) Initiatives Related to Audits by Audit Committee
1. Members of the Audit Committee attend Executive Officers’ Meetings andother important meetings, visit Company offices and exchange opinions with
Executive Officers, etc.
2. The reports of internal audit results and reports submitted to the internalreporting desk are periodically reported to the Full-time Member of the Audit
Committee by the department in charge of the reporting desk.
3. A section is installed in the Internal Audit Department to assist duties of the
Audit Committee. Additionally, personnel as employees necessary for assisting
duties of the Audit Committee are assigned to the relevant department. Transferof such employees is subject to the consent of the Audit Committee, and theirpersonal performance evaluations are conducted in consultation with the Audit
Committee to enhance effectiveness in the Audit Committee.

－

67 －

(Reference) Status of Corporate Governance<Fundamental Policy>
 We have, based on the corporate philosophy of the Group, vision, values, codeof conduct, mission and the Basic Policy on Corporate Governance(*)
established by the Board of Directors, developed trust with all stakeholders
related to the Company and its subsidiaries, such as shareholders and investors
as well as employees, customers, client or supplier companies, creditors and local
communities, and also develop our corporate governance.
 Among the governance systems under the Companies Act, we have chosen to bea Company with a Nomination Committee, and by separating supervision andexecution, will strengthen the Board of Directors’ management supervisory
functions, improve the transparency and fairness of management and acceleratebusiness execution and decision making.
 We acknowledge the enhancement of corporate governance to be one of the mostimportant management issues, and continuously make efforts to improve ourcorporate governance.
(*) We have prepared the “Basic Policy on Corporate Governance,” which isdisclosed on the Company’s website, as a compilation of the basic approach toand framework of corporate governance.
https://www.mmc.co.jp/corporate/en/csr/view/governance.html
The Corporate Governance Framework related to the Company’s management
decision making/supervision, business execution, and auditing is outlined in thefollowing chart, Overview of the Corporate Governance System.

－

68 －

[Overview of the Corporate Governance System] *Chart as of June 1, 2020

－

69 －

<Composition of the Board of Directors>
Our basic approach to the structure of the Board of Directors, which fulfills theroles of determining the direction of management and exercising supervision over the
progress of business execution, is to ensure that it comprises a diverse range of humanresources with different expert knowledge, experience, and other qualities.
Based on the foregoing approach, we ensure the balance as well as the diversity ofknowledge, experience and ability of the Board of Directors as a whole byconstituting the Board of Directors with Directors (other than Outside Directors) who
have considerable knowledge and experience, as well as a high level of specialist
capabilities, in the management of each Business/Corporate Division, and several
Outside Directors who have expert knowledge and extensive experience in corporate
management, as well as finance and accounting, legal affairs, administrative affairs,
science and technology, international relations, etc.
The Board of Directors shall have the appropriate number of Directors which isdetermined as not more than 15 Directors in the Articles of Incorporation, and iscomposed of a majority of Independent Outside Directors. The Nomination
Committee, the Audit Committee and the Remuneration Committee are composed ofa majority of Independent Outside Directors and the Chairperson of each Committee
is performed by an Independent Outside Director.
< Evaluation of the effectiveness of the Board of Directors >The Company analyses and evaluates the effectiveness of the Board of Directors
based on the evaluation by each Director on an annual basis.
The method applied to evaluate the effectiveness of the Board of Directors in
FY2020, and a summary of the results of such are outlined below.
(1) Method of analysis/evaluation
Answers to a questionnaire distributed to all 11 Directors in December 2019 wereretrieved. Based on the results of this questionnaire, a review of the effectiveness of
the Board of Directors was conducted at a meeting of the Board of Directors held in
February 2020, with a resolution reached on evaluations of the effectiveness of theBoard of Directors in FY 2020 at a meeting of the Board of Directors held in March
2020.
This questionnaire was implemented by revising the questions, taking into

－

70 －

consideration the change to a Company with a Nomination Committee after theapproval at the 94th Ordinary General Meeting of Shareholders held on June 21, 2019and other factors.
(2) FY 2020 questionnaire items
The core questionnaire items are as follows.
1. Matters concerning the change to a Company with a Nomination Committee
・Matters pertaining to the confirmation of the status of achievement of the purposeof such change, supervision of the status of execution of job duties by each of theNomination Committee, Audit Committee and Remuneration Committee, etc.
2. Matters considered particularly important for improving corporate value・Matters pertaining to management strategies, digital transformation, etc.
3. Matters pertaining to the effectiveness of management monitoring
・Matters pertaining to supervision of the reduction of the Strategic Share Holdings,
supervision of Group governance, etc.
4. Matters pertaining to the operation of the Board of Directors
・Matters pertaining to the composition of the Board of Directors, the frequency of
meetings, proposals and discussion materials, etc.
(3) Summary of FY 2020 evaluation results
As a result of deliberations by the Board of Directors, the Board of Directors wasable to verify that it achieved a sufficient level of effectiveness for FY 2020.
1. Matters pertaining to the change to a Company with a Nomination Committee
Although the objectives of the change to a Company with a Nomination Committee,that is, “acceleration of decision making in business execution,” “strengthening ofmanagement supervisory functions,” and “improvement of management transparency
and fairness”, are in the process of being effectively achieved, the view was raisedthat improvements would need to be made continually going forward as it has notbeen long since such change was made. In particular, as for the “strengthening of

－

71 －

management supervisory functions,” some opined that there was still room for
improvement of the manner of supervision, including the content of reports made by
the Executive Officers.
In view of this feedback, the Board of Directors will consider how to appropriately
manage the Company as a Company with a Nomination Committee.
2. Matters considered particularly important for improving corporate value
While the view was raised that thorough discussions took place in establishing the
Medium-term Management Strategy, some opined that there was still room for
improvement of method and content, etc. of reporting so as to effectively fulfill thesupervisory function for the management strategies, including the measures taken
based on the Medium-term Management Strategy.
In view of this feedback, the Board of Directors will review the appropriate meansof supervising the management strategies, including the Medium-term Management
Strategy, etc.
3. Matters pertaining to the effectiveness of management monitoring
While the view was raised that in-depth discussions took place with respect to thepolicy, etc. for reduction of the Strategic Share Holdings, some opinions were raisedthat the status of reductions to be made hereafter would need to be overseen
continually going forward. While the evaluation of the supervision of Group
governance, etc. had improved compared with last year, and the view was raised thatsufficient reports and instructions had been provided, some opinions were raised thatfurther discussions and consideration would be required so as to achieve a higher
level of Group governance.
In view of this feedback, the Board of Directors will look at taking further steps toimprove the effectiveness of management monitoring measures.
4. Matters pertaining to the operation of the Board of Directors
The evaluation of the proposals to be submitted to the Board of Directors had
improved compared with last year, and some opined that it had become organized toa certain extent as a result of the change to a Company with a Nomination Committee
and the delegation of authority to the Executive Officers.

－

72 －

As for the materials for the Board of Directors, while the view was raised that someideas had been devised therefor and the materials had become more efficient, some
opinions were raised that there was still room for improvement as to the volume andthe content thereof.
In view of this feedback, the Board of Directors will review the form that thematerials should take in order to facilitate smoother discussions.
Looking ahead, the Board of Directors will keep making continuous efforts towardfurther effectiveness improvements, including in relation to the above matters.

－

73 －

Consolidated Balance Sheets[As of March 31, 2020](Millions of yen)
Item
[ASSETS]
Current Assets:
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Leased gold bullion
Other
Allowance for doubtful accounts
Non-current Assets:
Property, Plant and Equipment:
Building and structures, net
Machinery, equipment and vehicles,net
Land, net
Construction in progress

AmountItem955,462
134,444
217,259
111,409112,908
127,908
95,557
158,444(2,470)948,588659,298
155,868
233,923
216,487
29,298Other, net

23,720Intangible Assets:

51,492

Goodwill

35,586

Other
Investment and Other Assets:
Investment securities
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts

15,906
237,796
183,043
3,211
15,57240,081(4,112)－[LIABILITIES]
Total Current Liabilities:
Notes and accounts payable-trade
Short-term borrowings
Commercial papers
Income taxes payable
Provision for bonuses
Provision for loss on disposal of
inventories
Provision for product compensation
Deposited gold bullion
Other
Non-current Liabilities:
Bonds payable
Long-term borrowings
Deferred tax liabilities
Deferred tax liabilities for land
revaluation
Provision for loss on business of
subsidiaries and associates
Provision for loss on businessrestructuring
Reserve for environmental
measures
Provision for product compensation
Provision for directors’ retirement
benefits
Retirement benefit liability
Other
Total Liabilities[NET ASSETS]
Shareholders’ Equity:
Share capital
Capita surplus
Retained earnings
Treasury shares
Accumulated Other Comprehensive
Income:Valuation difference on available
for sale securities
Deferred gains or losses on hedges

74 －Amount
797,892
113,148
191,038
50,000
10,221
12,944670
809
294,312
124,746
520,123
60,000246,578
26,66721,514
4,014
30,27232,581392
1,710
56,31240.0781,318,016
484,416
119,457
92,393274,723(2,157)22,36422,806708

Total Assets

Revaluation reserve for land
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Non-controlling interests
Total Net Assets
Total Liabilities and Net Assets

1,904,050

Note: All amounts less than one million yen are rounded down.

－

75 －

28,059(12,212)(16,997)
79,252586,034
1,904,050

Consolidated Statements of Operations[For the year ended March 31, 2020](Millions of yen)
Item

AmountNet Sales
Cost of Sales
Gross Profit
Selling, general and administrative expenses
Operating Profit
Non-Operating Income:Interest income
Dividends income
Rental income from non-current assets
Share of profit of entities accounted for using equity method
Other
Non-Operating Expenses:
Interest expenses
Expenses for the maintenance and management of abandoned
mines
Rental expenses on non-current assets
Loss on retirement of non-current assets
Foreign exchange losses
Other
Ordinary Profit
Extraordinary Income:Gain on sales of investment securities
Gain on sales of non-current assets
Other
Extraordinary Losses:
Impairment loss
Provision for loss on business restructuring
Loss on the Antimonopoly Act
Loss on valuation of investment securities
Other
Profit (loss) before Income Taxes
Corporate income taxes, resident taxes and business tax
Income taxes adjustments
Profit (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent
Note: All amounts less than one million yen are rounded down

－

76 －

1,516,100
1,325,438
190,662
152,70937,952
31,362
1,302
18,403
5,110
3,521
3,023
19,704
4,858
4,018
3,066
2,346
2,073
3,340
49,61016,562
14,535826
1,199
106,671
55,09530,272
10,4234,830
6,050
40,49818,248
10,561
69,3083,541
72,850Statement of Changes in Consolidated Shareholders’ Equity[For the year ended March 31, 2020](Millions of yen)
Shareholders’ Equity
Share capital
Balance as of April 1, 2019

Capital surplus

119,457

92,393Retainedearnings

Treasury shares

352,932(2,123)

Total
shareholders’equity562,659

Changes during the year
Cash dividends
Profit (loss) attributable toowners of the parent
Reversal of revaluation
reserve for land
Increase due to increase
number of consolidated
subsidiaries
Purchase of treasury shares(10,476)(10,476)(72,850)(72,850)

4,963

4,963

153

153

(34)
(0)

0

(34)
0

Disposal of treasury shares
Changes in ownershipinterest of parent due totransaction with noncontrolling interests
Net changes in items otherthan shareholders’ equity, net
Total changes during the year－

(0)(78,208)(33)(78,242)

Balance as of March 31, 2020

119,457

92,393274,723(2,157)484,416(0)(0)

Accumulated Other Comprehensive Income

Balance as of April 1, 2019

Valuationdifference on
available-forsale
securities
51,220

Deferred
gains orlosses onhedgesTotal
NonForeign Remeasurem
accumulated controllingcurrency
ents ofother
Interests
translation
definedcomprehensi
adjustments benefit plans
ve income
33,023(5,828)(7,617)70,92289,754

Revaluation reserve
for land124

Total Net
Assets723,337

Changes during the year
Cash dividends(10,476)

Profit (loss) attributable toowners of the parent
Reversal of revaluation
reserve for land
Increase due to increase
number of consolidated
subsidiaries
Purchase of treasury shares(72,850)
4,963
153

(34)

－

77 －

Disposal of treasury shares
Changes in ownershipinterest of parent due totransaction with noncontrolling interests
Net change in items otherthan shareholders’ equity, net
Total changes during theyear
Balance as of March 31, 2020

0(0)(28,413)583(4,963)(6,383)(9,379)(48,557)(10,502)(59,060)(28,413)583(4,963)(6,383)(9,379)(48,557)(10,502)(137,302)

22,806708

28,059(12,212)(16,997)

22,364

79,252586,034

Note: All amounts less than one million yen are rounded down.

－

78 －

Balance Sheets[As of March 31, 2020](Millions of yen)
Item

Amount[ASSETS]
Current Assets:
Cash and deposits
Notes receivable
Accounts receivable
Merchandise and finished goods
Work in process
Raw materials and supplies
Advanced payment
Prepaid expenses
Short-term loans receivable
Other receivable
Gold receivable
Gold bullion on loan
Other
Allowance for doubtful accounts
Non-current Assets:
Property, Plant and Equipment:
Buildings
Structures
Machinery and equipment
Vessels
Vehicles and delivery equipment
Tools, furniture and fixtures
Land

535,738
54,6302,235
70,88450,82453,07456,31818,795
1,241
5,476
17,69895,557
88,125
21,264(389)
745,804
296,685
55,58232,182
72,922
0
101
3,057
118,756

Lease assets
Construction in progress

804
12,1971,080

TimberIntangible Assets:
Mining rights
SoftwareLease assets
Other
Investment and Other Assets:
Investment securities
Securities of affiliates
Bonds of affiliates
Investments

2,384
399
1,702
35
247
446,734
117,154
290,525
4
66

－

Item
[LIABILITIES]
Total Current Liabilities:
Notes payable
Accounts payable
Short-term borrowings
Commercial papers
Lease obligation
Other payables
Accrued expenses
Income taxes payable
Advance received
Progress payment received
Unearned revenue
Provision for bonuses
Employee deposits
Facilities related notes payable
Other facilities related payable
Deposited gold bullion
Other
Non-current Liabilities:
Bonds payable
Long-term loans payable
Lease obligation
Deferred tax liabilities
Deferred tax liabilities for land
revaluation
Provision for retirement benefit
Provision for loss on business of
subsidiaries and associates
Provision for environmental
measures
Provision for loss on businessrestructuring
Assets removal liabilities
Guarantee deposits received
Other
Total Liabilities[NET ASSETS]
Shareholders’ Equity:
Share capital
Capita surplus
Capital reserve

79 －Amount545,541995
32,98484,86850,000245
12,71324,425
3,602
2,076
9,892
196
4,794
8,696
335
10,165294,3125,235
357,31160,000
194,190646
12,553
20,546
10,609687
32,581
17,466
458
4,592
2,977
902,852
329,682
119,457
113,000
85,654

Investments in affiliates
Long-term loans receivable
Long-term loans to affiliates
Prepaid pension coasts
Other
Allowance for investment loss

2,186
4
63,789
2,443
4,060
(83)
(33,418)

Allowance for doubtful accounts

Total Assets

1,281,542

Other capital surplus
Retained earnings
Other retained earnings
Deposit for mining search
Earned surplus carried forward
Treasury shares
Valuation and Translation
Adjustment:
Valuation difference on available
for sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Total Net Assets
Total Liabilities and Net Assets

Note: All amounts less than one million yen are rounded down

－

80 －

27,34599,374
99,374
1
99,372(2,150)49,00822,035329
26,643
378,690
1,281,542

Statements of Operations[For the year ended March 31, 2020](Millions of yen)
Item

AmountNet Sales
Cost of Sales
Gross Profit
Selling, general and administrative expenses
Operating loss
Non-Operating Income:Interest income
Dividends income
Rental income from non-current assets
Miscellaneous revenue
Non-Operating Expenses:
Interest expenses
Expenses for the maintenance and management ofabandoned mines
Expenses for rent in undertaking
Rental expenses on non-current assets
Allowance for doubtful accounts
Miscellaneous losses
Ordinary Profit
Extraordinary Income:Gain on sales of investments in securities
Other
Extraordinary Losses:
Impairment loss
Provision for loss on business restructuring
Loss on valuation of stocks of subsidiaries and affiliates
Other
Pretax net loss
Corporate income taxes, resident taxes and business tax
Income taxes adjustments
Profit (loss)
Note: All amounts less than one million yen are rounded down.

－

81 －

802,655
752,186
50,46851,114645
49,499688
42,676
4,937
1,196
31,620
1,836
3,776
3,169
2,025
18,286
2,526
17,233
12,986
12,570416
66,76527,42017,466
16,154
5,724
36,544
4,132
9,251
49,929

Statement of Changes in Shareholders’ Equity[For the year ended March 31, 2020](Millions of yen)
Shareholders’ Equity
Capital surplus
SharecapitalBalance as of April 1,
2019

Retained earnings
Other retained earnings

Capitalreserve

119,457

85,654

Other capital Total capitalsurplussurplus27,346

13

Earnedsurpluscarriedforward158,309

1(1)

Deposit formining search

113,000

Total
retainedearnings
158,323

TreasurysharesTotalshareholders’equity(2,116)388,664

Changes during the year
Provision of voluntary
retained earnings
Reversal of voluntary
retained earnings
Cash dividends fromretained earnings
Profit (loss)
Reversal of revaluation
reserve for land
Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other than shareholders’equity, net
Total changes during theyear
Balance as of March 31,
2020

(13)

(0)

(0)

13

－

－

(10,476)(10,476)(10,476)(49,929)(49,929)(49,929)

1,456

1,456

1,456
(34)

(34)

0

0

－

(0)

(0)

(12)

(58,936)(58,948)(33)(58,982)

119,457

85,65427,345

113,000

1

99,372

99,374(2,150)329,682

Valuationdifferenceonavailablefor-salesecurities
47,354

Deferred
gains orlosses onhedges

Revaluation
reserve for
land

Total
Valuationandtranslation
adjustments

Total Net
Assets(257)

28,09975,197

463,862

Changes during the year
Provision of voluntary
retained earnings
Reversal of voluntary
retained earnings
Cash dividends fromretained earnings
Profit (loss)
Reversal of revaluation
reserve for land
Purchase of treasury
shares
Disposal of treasury
sharesNet change in items－－

Valuation and Translation Adjustments

Balance as of April 1,
2019

－

－
－
(10,476)(49,929)
1,456
(34)
0
(25,319)586(1,456)(26,189)－(26,189)82 －other than shareholders’equity, net
Total changes during theyear
Balance as of March 31,
2020(25,319)586(1,456)(26,189)(85,171)

22,035329

26,64349,008378,690

Note: All amounts less than one million yen are rounded down.

－

83 －