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

BUSINESS REPORT(For the Period from April 1, 2018 through March 31, 2019)
1. Particulars Concerning the State of the Group(1) Business Developments[The Mitsubishi Materials Group’s cemented carbide products and cementrelated business demand was solid. However, given the impact of such factors
as a drop in copper prices, higher energy costs, higher costs for smelting and an
inventory shortage loss posted at the end of the fiscal year in the Metals
business operating profit and ordinary income declined.]
During the consolidated fiscal year under review, although signs of an economic
slowdown were seen in China, a moderate recovery was seen in the Asian
economies of Thailand and Indonesia. In the United States, the economy
continued to improve steadily.
In Japan during the consolidated fiscal year under review, employment andincome conditions were on the road to recovery, and capital expenditure showedsigns of increasing. However, improvement in corporate earnings and growth inindustrial production appeared to slow down.
Regarding the business environment for the Mitsubishi Materials Group,
although demand related to cemented carbide products and cement held firm,
factors such as falling copper prices and rising energy costs had a negative
impact.
Under these circumstances, in accordance with its Long-Term Management
Policy for the next 10 years and Medium-Term Management Strategy (FY20182020) that focuses on the planning and implementation of growth strategies, theMitsubishi Materials Group continued to implement various measures as thetheme of “Transformation for Growth” to achieve group-wide policies for the－

1 －enhancement of corporate value, namely “optimization of business portfolio,”“comprehensive efforts to increase business competitiveness,” and “creation of
new products and businesses.”
As a result, consolidated net sales for the fiscal year under review totaled¥1,662,990 million, up 4.0% year on year. However, given the impact of factors
such as higher costs for smelting and inventory shortage loss posted at the endof the fiscal year in the Metals business, operating profit fell 49.4% year on year,to ¥36,861 million, and ordinary income dropped 36.3%, to ¥50,679 million. As
a result of examining the recoverability of deferred tax assets based on various
factors such as operating results during the consolidated fiscal year underreview and the outlook for the future, the Company reversed ¥8.7 billion of its
non-consolidated deferred tax assets. As a result, net income attributable toowners of parent fell 96.2%, to ¥1,298 million.
On a non-consolidated basis, net sales amounted to ¥852,820 million, down
1.9% year on year. Operating loss was ¥10,949 million (previous fiscal year:
operating profit of ¥13,732 million), ordinary income decreased 83.5% to¥5,169 million, and net loss was 13,568 million (previous fiscal year: net
income of ¥25,530 million).
Based on its Articles of Incorporation, the Company is to distribute surpluses
following resolutions at Board of Directors meetings. We regard the distributionof 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 will pay annual dividends of ¥80 per share. If theconsolidated 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 stock. Based on this policy, theBoard of Directors, at its meeting on May 13, 2019, decided to distribute a fiscal
year-end dividend of ¥40 per share, which, combined with the interim dividendof ¥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 andnot to pay a bonus for the fiscal year under review for the President and eight
Titled Executive Officers based on business performance in the fiscal year
under review.

－

2 －A report of the Group’s performance by business segment is presented asfollows.
*Accompanying a partial change in the organization of business division, theCompany has changed the method of business segmentation from Cement,
Metals, Advanced Materials & Tools, Electronic Materials & Components,
Aluminum and Others to Advanced Products, Metalworking Solutions Business,
Metals Business, Cement Business and Others business. In this regard, thesegment information for the previous consolidated fiscal year that is disclosed
herein is made according to the changed method of segmentation.
● Advanced Products[In the copper and copper alloy products business, operating profit declined
mainly due to higher raw materials costs. In the electronic materials &components business, operating profit fell as a result of lower sales primarily
related optical communication equipment. In the aluminum business, operating
profit decreased chiefly because of higher energy costs.]
In the copper and copper alloy products business, net sales increased andoperating profit decreased as a result of an increase in the costs of raw materials,
despite the sales increase that was mainly attributable to the contribution of
MMC Copper Products OY to the consolidated results from the beginning of the
fiscal year.
In the electronics materials & components business, both net sales andoperating profit decreased, reflecting decline in sales of products such as
products for displays, for LSI of smartphones, and for optical communications
related equipment.
In the aluminum products business, net sales increased due to a rise inaluminum prices, despite a decrease in the sales volumes of beverage aluminumbottle cans and rolled and processed products such as extruded products forautomobiles and plate products for litho sheets. While, energy costs rose.
Consequently, the aluminum products business posted an increase in net sales
and a decrease in operating profit.
As a result, net sales for the entire Advanced Products increased year on year,
but operating profit decreased. Ordinary income declined due to the decrease inoperating profit.

－3 －Consolidated net sales in the Advanced Products business amounted to¥570,990 million, up 6.5% from the previous fiscal year. Operating profit fell
35.1% to ¥11,979 million and ordinary income decreased 28.5% to ¥13,227
million.
Metalworking Solutions Business[Operating profit in the cemented carbide products business increased, owing tosolid sales in Japan and overseas. In the sintered products business, operating
loss worsened, as higher sintered parts demand was outweighed by rising costs
for quality inspections and shipments.]
In the cemented carbide products business, net sales and operating profit
increased as a result of strong sales mainly in Japan, Europe, United States,
China and Southeast Asia.
In the sintered products business, net sales increased due to growth in demand
for mainstay sintered parts in Japan and North America. However, the operating
loss expanded due to the increased costs associated with quality inspection andshipments.
As a result, net sales for the entire Metalworking Solutions business increased
year on year, but operating profit decreased. Ordinary income declined mainly
due to the decrease in operating profit.
Consolidated net sales in the Metalworking Solutions Business amounted to¥171,551 million, up 6.4% from the previous fiscal year. Operating profit fell
9.7% to ¥16,771 million and ordinary income decreased 7.1% to ¥15,609
million.

●

Metals Business[In the copper business, operating profit decreased mainly due to undertaking
regular furnace repairs at domestic and overseas smelters as well as risingsmelting costs. In the gold and other valuable metals business, operating profit
declined because of the inventory shortage loss posted at the end of the fiscal
year.]In the copper business, both net sales and operating profit decreased, mainly due
to the lower production volume resulting from periodic furnace repairs at PT.
Smelting in Indonesia and Naoshima Smelter and Refinery and the increased
●

－

4 －

costs for smelting.
In the gold and other valuable metals business, net sales increased while
operating profit declined, mainly because of the inventory shortage loss posted
at the end of the fiscal year, despite increased production of gold as a result of arise in the amount contained in raw materials.
As a result, overall the Metals business posted year-on-year increase in net
sales, but operating profit declined. Ordinary income decreased due to thedecrease in operating profit and dividend income.
Consolidated net sales in the Metals business amounted to ¥720,097 million,
up 0.7% from the previous fiscal year. Operating loss was ¥7,157 million(previous fiscal year: operating profit of ¥12,788 million) while ordinary
income decreased 90.9% to ¥2,323 million.
Cement Business[Operating profit in Japan decreased due mainly to the increase in energy costs.
Operating profit in the United States fell largely on the back of higher fuelcosts.]
Despite the firm performance of construction work of facilities related to theTokyo Olympic and Paralympic Games in the Tokyo metropolitan area, as wellas the extension work of the Hokuriku Shinkansen in the Hokuriku area in Japan,
mainly rising energy costs resulted in a decline in operating profit, even as net
sales increased.
In the United States, although the sales price of ready-mixed concrete rose,
given an increase in fuel and other costs, net sales increased and operating profit
decreased.
As a result, net sales for the entire Cement business increased year on year,
but operating profit decreased. Ordinary income declined mainly due to thedecrease in operating profit.
Consolidated net sales in the Cement business amounted to ¥198,291 million,
up 3.1% from the previous fiscal year. Operating profit fell 30.6% to ¥13,479
million and ordinary income decreased 26.6% to ¥15,447 million.

●

－

5 －

Others Business[Operating profit in the energy-related business increased as a result of higher
coal prices as well as solid hydroelectric power generation and geothermal
power plant steam supply businesses. In the environmental recycling business,
operating profit decreased because of costs arising from the launching of new
businesses. In areas outside the energy-related business and the environmental
recycling business, operating profit increased.]In the energy-related business, net sales decreased but operating profit increased
due to a rise in the sales price of coal as well as the solid performance of thehydroelectric power generation business and the business of supplying steam togeothermal power plants, despite a decline in sales of nuclear energy-related
business.
In the environmental recycling business, net sales increased and operating
profit decreased due to the costs incurred for the launch of new business, despite
an increase in recycling volumes.
Others business excluding the energy-related business and the environmental
recycling business, both net sales and operating profit increased.
In the overall Others business, net sales increased year on year, but operating
profit decreased. Ordinary income increased, reflecting a decrease in equity inlosses of affiliates.
Consolidated net sales in the Others business amounted to ¥255,720 million,
up 2.5% from the previous fiscal year. Operating profit decreased 0.1% to¥13,171 million and ordinary income increased 76.3% to ¥14,656 million.
●

－

6 －

Sales, operating profit (operating loss) and ordinary income for each businesssegment of the Group were as follows:Business
Segment

Item

93rd Period
94th Period(April 2017– March 2018) (April 2018– March 2019) YOY Change(%)
AmountAmount% of Total% of Total(¥ Millions)(¥ Millions)

Net Sales

536,08333.5

570,990

34.3

6.5

Operating Profit

18,46525.4

11,97932.5(35.1)

Ordinary Income

18,491

23.2

13,22726.1(28.5)Net Sales

161,177

10.1

171,551

10.3

6.4

Operating Profit

18,56625.5

16,771

45.5

(9.7)

Ordinary Income

16,80821.1

15,609

30.8

(7.1)

Net Sales

715,34044.7

720,09743.3

0.7

Operating Profit

12,78817.6(7,157)(19.4)－

Ordinary Income

25,400

31.9

2,323

4.6

(90.9)Net Sales

192,378

12.0

198,291

11.9

3.1

Operating Profit

19,42826.7

13,47936.6(30.6)

Ordinary Income

21,04426.4

15,44730.5(26.6)Net Sales

249,503

15.6

255,720

15.4

2.5

Operating Profit

13,18718.1

13,171

35.7

(0.1)

Ordinary Income

8,312

10.4

14,65628.9

76.3

Elimination and Net Sales
Corporate Assets
Operating Profit
or Expenses(Note)
Ordinary Income(254,949)(15.9)(253,660)(15.3)(0.5)(9,616)(13.2)(11,381)(30.9)

18.3(10,436)(13.1)(10,584)(20.9)

1.4

1,599,533

100.0

1,662,990

100.0

4.0

Operating Profit

72,819100.0

36,861

100.0(49.4)

Ordinary Income

79,621

100.0

50,679100.0(36.3)

Advanced
Products

Metalworking
Solutions

MetalsCementOthersNet Sales
Total

Note: Net sales, operating profit and ordinary income resulting from transactions among the Businessdivisions 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 through theissuance of commercial paper and borrowings from banks. Debts (including
corporate bonds) as of the end of the fiscal year under review amounted to¥494,767 million, down ¥26,667 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¥103,418 million, which consisted mainly of maintenance and repairs of existing
facilities in each business, as well as the reinforcement and streamlining ofproduction 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 aluminum beverage cans.
Capital expenditures in this business amounted to ¥26,120 million.

●

Metalworking Solutions Business
The Group carried out reinforcement and streamlining work in order to meet theincreasing demand in this business as a whole, as well as maintenance andrepair work at existing facilities.
Capital expenditures in this business amounted to ¥22,810 million.

●

Metals Business
The Group carried out maintenance and repair work at copper smelting andprocessing facilities.
Capital expenditures in this business amounted to ¥29,274 million.

●

－

8 －

Cement BusinessIn addition to the reinforcement of domestic industrial waste treatment facilities,
the Group carried out maintenance and repair work mainly on existing facilities
in Japan and the United States.
In addition, the Group undertook construction of a ready-mixed concrete
factory aimed at enhancing ready-mixed concrete sales capacity and maintainsales offices in the Tokyo Bay area.
Capital expenditures in this business amounted to ¥16,585 million.

●● Others Business
The Group carried out maintenance and repair work at existing facilities.
Capital expenditures in this business amounted to ¥8,626 million.

－

9 －(4) Trends of Assets and Profit and Loss Accounts
1. The Group’s Trends of Assets and Profit and Loss Accounts (Consolidated)
91st Period
92nd Period
93rd Period
94th Period(¥ millions, except per share data) (April 2015 – (April 2016 – (April 2017 – (April 2018 –March 2016) March 2017) March 2018) March 2019)
Net Sales
1,417,895
1,304,068
1,599,533
1,662,990
Operating Profit

70,42059,761

72,81936,861

Ordinary Income

72,442

63,92579,621

50,679Net Income Attributableto Owners of the Parent

61,31628,352

34,595

1,298

Net Income per Share

46.80

216.441)

264.15

9.92

Net Assets

645,017710,195

768,495

723,337

Net Assets per Share

423.83

4,743.271)

5,211.20

4,838.31

Total Assets

1,793,375

1,896,939

2,011,0672)

1,938,270

Note 1: The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective
date of October 1, 2016. Accordingly, net income per share and net assets per share data is
calculated on the assumption that the consolidation of the Company’s shares was
conducted from the beginning of the 92nd business term.
Note 2: The Company has applied the “Partial Revisions to Accounting Standard for Tax EffectAccounting” (Accounting Standards Board of Japan [ASBJ] Statement No. 28, issued on
February 16, 2018) from the beginning of the current consolidated fiscal year. Figures forthe previous consolidated fiscal year have been retroactively adjusted to reflect the relevant
accounting standards.

－

10 －

2. The Company’s Trends of Assets and Profit and Loss Accounts (Nonconsolidated)
91st Period
92nd Period
93rd Period
94th Period(¥ millions, except per share data) (April 2015 – (April 2016 – (April 2017 – (April 2018 –March 2016) March 2017) March 2018) March 2019)
Net Sales
735,501
674,515
869,677
852,820
Operating Profit
26,47812,12013,732(10,949)(Operating Loss)
Ordinary Income

35,40927,202

31,3705,169

Net Income(Net Loss)

33,001

19,701

25,530Net Income (or net loss) per Share

25.19

150.401)

194.93(13,568)

Net Assets

435,094477,706

533,103(103.61)

Net Assets per Share

332.13

3,647.061)

4,070.58

3,542.19

463,862

Total Assets
1,158,968
1,265,120
1,355,3472)
1,269,756
Note 1: The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective
date of October 1, 2016. Accordingly, net income per share and net assets per share data is
calculated on the assumption that the consolidation of the Company’s shares was
conducted from the beginning of the 92nd business term.
Note 2: The Company has applied the “Partial Revisions to Accounting Standard for Tax EffectAccounting” (Accounting Standards Board of Japan [ASBJ] Statement No. 28, issued on
February 16, 2018) from the beginning of the fiscal year under review. Figures for theprevious fiscal year have been retroactively adjusted to reflect the relevant accounting
standards.

－

11 －

(5) Priorities for the Group
1. Measures to Enhance the Group Governance Framework Including
Quality Control
The Company sincerely apologizes to its customers, shareholders, and all otherparties for any and all inconvenience again in connection with the delivery ofsome of the products manufactured and sold in the past that deviated from
customer standards or internal company specifications, due to misconduct
including the rewriting of inspection records data and the insufficient testing,and the revocation of JIS certification for copper slag aggregates in Naoshima
Smelter and Refinery, which were announced from November 2017 through toJune 2018.
In connection with these incidents, the Company’s consolidated subsidiaries
Mitsubishi Cable Industries, Ltd., Diamet Corporation and Mitsubishi
Aluminum Co., Ltd. were found guilty of violating the Unfair Competition
Prevention Act by Tokyo Summary Court in February 2019.
Meanwhile, the Group has been validating the safety of products with thecooperation of customers and has confirmed with respect to all customers that
there are no problems with any major aspects of safety.
The Company and the Group will continue to implement and further develop
the following “Restructuring Measures of the Group Governance Framework
for Quality Control” and the “Group Governance Framework Enhancement
Measures,” in order to prevent such situations again in the future.
(i) Restructuring Measures of the Group Governance Framework for Quality
ControlA) Implementation of a Front Loading System for Order ReceivingB) Enhancement of the Framework and Authority of the Quality Control
Department
C) Expansion of Quality TrainingD) Promoting Automated Inspection Equipment
E) Enhancement of Quality Audits
F) Utilization of Outside Consultant

－

12 －

(ii) Group Governance Framework Enhancement MeasuresA) Enhancement of Framework for Discussion, Reporting and Follow-up ofGovernance-Related MattersB) Improvement of Functions of Management Divisions and its Collaboration
with Operating DivisionsC) Improvement of Human Resources Training and Encouragement of Active
Interaction
D) Audit StrengtheningE) Studies with a Business Optimization Focus
2. Group Priorities[In addition to becoming a leading company in each of the major markets inJapan and overseas, the Group is targeting high levels of profitability andefficiency while working diligently to expand at a pace that exceeds the rate ofmarket growth by optimizing its business portfolio, pursuing thoroughgoingcompetitive advantage and creating new products and businesses.]
Although the U.S. economy is expected to grow steadily, the future of the global
economy is uncertain, with some recent economic indicators pointing to a
slowdown in the U.S. economy, and with the impact of an escalation in tradetensions and economic slowdown in China.
We believe the Japanese economy will continue its modest recovery driven by
domestic demand, amid continued improvements in the employment andincome conditions. However, we are concerned that global economic slowdown
will cause decline in exports and recognize that there may be a downside risk to
the Japanese economy due to overseas political and economic trends.
Turning to the Group’s operating environment, besides the uncertainness ofthe domestic economic outlook, rising energy costs and worsening labor
shortages are also concerns.
Under these circumstances, the Group will pursue a number of measures toenhance its corporate value under the theme “Transformation for Growth” bydeveloping the Long-Term Management Policy, which looks ahead 10 years,
and the Medium-Term Management Strategy for FY2018-FY2020, described asfollows.

－

13 －(i) Long-Term Management Policy
The vision of the Group is to “We will become the leading business group
committed to creating a sustainable world through materials innovation, withthe use of our unique and distinctive technologies, for People, Society and theEarth.” based on a corporate philosophy of “for People, Society and the Earth.”
In an effort to realize this vision, the Group has put in place Medium- to
Long-Term Targets (the Company in the future) and the Group-wide Policy as
the Long-Term Management Policy described as follows.
<Medium- to Long-term Targets (the company in the future)>- Leading company in domestic and overseas key markets- Achieving high profitability and efficiency- Achieving growth that exceeds the market growth rate
<Group-wide Policy>- Optimization of business portfolio- Comprehensive efforts to increase business competitiveness- Creation of new products and businesses(ii)Management Policies in the Medium-Term Management Strategy (for
FY2018-FY2020)
In the Medium-Term Management Strategy, we will pursue the Group-Wide
Policy set in the Long-term Management Policy. To achieve a “accommodation
to changes in the external environment” and the “Build a structure focusing on
strategy,” which were the issues in the previous Medium-Term Management
Plan, we have made the shift from the “Medium-Term Management Plan”
centering on financial plans in the past to the “Medium-Term Management
Strategy” focusing on the planning and implementation of growth strategies.
A) Optimization of business portfolio
The Company will classify its business into three categories: “stable growthbusiness,” “growth promotion business” and “profitability restructuringbusiness,” and will promote selection and concentration and improve capitalefficiency after determining a direction geared to the characteristics of eachbusiness and clarifying any issues. Stable growth business consists of the cement,
metals (smelting), recycling and renewable energy businesses, and in this

－

14 －

category, the Company will aim to strengthen its business foundations by
maintaining and improving cost competitiveness. Growth promotion businessconsists of the metals (copper and copper alloy products) and advanced
materials & tools businesses, and here the Company will seek businessdevelopment in adjacent fields and global markets to outperform market growth.
Profitability restructuring business consists of the electronic materials &components and aluminum businesses. In this category, the Company will work
promptly to solve issues and define the future direction of growth.
B) Comprehensive efforts to increase business competitivenessWe will improve and innovate “manufacturing” in the business divisions
through the optimal use of technology management resources by enhancing the
support system by the corporate divisions. With this, we will makecomprehensive efforts to increase our business competitiveness by promoting“Differentiation” and “New development,” such as the development of new
products and new manufacturing technologies, to become an entity that is one
step ahead of other companies through early responses to changes in thebusiness environment.
C) Creation of new products and businesses
To foster businesses that will become a future revenue foundation and create
new businesses, we will create and foster new products and new businesses thatwill become the core for sustainable growth by positioning important social
needs the Company should meet are identified as “next-generation vehicles,”“internet of things (IoT) and artificial intelligence (AI),” and “building a rich,sustainable society.” The Company plans to create and develop new products
and new businesses that are vital for sustainable development.
In addition, we will promote specific measures, with the following items as
key strategies.
- Achieve growth through innovation- Create value by building a recycling-oriented society- Increase the company’s market presence through investment for growth- Increase efficiency through continuous improvement

－

15 －

3. Issues in each business●Advanced Products

In the copper and copper alloy products business, demand of automotive and otherproducts is expected to remain stable. In this environment, we will continue toincrease profitability by creating business synergy with MMC Copper Products Oy,
which was included in the scope of consolidation from the previous fiscal year,
and by enhancing sales competitiveness through the accelerated development ofhigh-value added products, drawing on our technological and development
capabilities.
In the electronics materials & components business, demand of products forhome appliances and automotive is expected to grow, and demand of products forsemiconductor manufacturing equipment is also expected to recover from thesecond half of FY2020. In these circumstances, we will strive to enhance
profitability by using our core technological capabilities and strengthening oursales competitiveness and our ability to make proposals to customers, always
remaining a step ahead of customers’ needs in each market. In the polycrystalline
silicon, the business environment is expected to remain difficult. However, we will
make efforts to further improve quality and reduce costs to establish businessfoundations, with safety and stable operation as the top priorities.
In the aluminum products business, growth in demand of heat exchanger sheet
materials for automobiles and foil products for lithium-ion battery, which arerolled and processed aluminum products, are expected. We will, therefore, work tostrengthen production capacity and improve productivity and will also promote theestablishment of global supply system mainly in North America, and thedevelopment of high-value added products. In the beverage aluminum bottle cans,
we will develop and increase sales of diverse products, including upsized cans andcans with many different shapes, and we will endeavor to maintain and increase
competitiveness.

－

16 －

●Metalworking Solutions Business

The market condition for cemented carbide products is expected to remain
generally firm despite concern over the impact of the economic slowdown in
China. Under these circumstances, we will continue to conduct effective sales
operations, focusing on industries and regions with high growth potential. In
particular, we will prioritize the investment of our management resources in theaerospace industry, which is in the growth stages, and seek to strengthen
manufacturing, R&D and sales functions. In the area of cutting tools, under thetwo brands DIAEDGE (Mitsubishi Materials Corporation) and MOLDINO(Mitsubishi Hitachi Tool Engineering, Ltd.) we will work on provided customeroriented solutions that will build customer trust as a true partner. In particular, weare promoting the establishment of new technology centers and the enhancementof their functions and capacity in key regions around the world and will continue
to do so in the future. Regarding the sourcing of key materials, tungsten and cobalt,
we will continue working to reduce sourcing risks and sourcing costs byimproving the recycling amount of tungsten and diversifying procurement sources.
Turning to sintered products business, in order to increase earnings of thisbusiness, we will work to enhance quality and productivity by introducing
automated inspection equipment to save labor and implementing measures toimprove yield ratio. In addition, Diamet Corporation which manufactures and sells
sintered parts has continuously posted operating losses and impairment losses on
non-current assets, and is in a state of excessive liabilities. The Company has set a
commitment line and has provided financing to Diamet Corporation.
●Metals Business

The supply capacity of copper mines is not expected to be able to keep pace withrising demand for copper concentrate resulting from the startup of new smelters
and the expansion of existing smelters in countries such as China and India, andconditions for TC/RC are also expected to deteriorate in the short term.
Regarding the copper business, demand for area of electric wire is expected toremain firm in connection with the Tokyo Olympic and Paralympic Games andredevelopment in the Tokyo metropolitan area, and demand for area of rolled
copper products appears to have plateaued slightly but is expected to remain solid,
particularly for automotive. However, we will keep a close watch on future trends

－

17 －

because the uncertainty caused by the trade tensions between the US and China,
Brexit and the economic slowdown in China pose downside risks for demand andcopper prices.
Under these circumstances, in copper mining business, we will focus on
improving existing projects and developing new projects and will support
smelter’s operations by providing smelters with a stable supply of clean copper
concentrate with minimum impurities. In the new Zafranal Project (Peru), we plan
to complete the feasibility study during 2019 and move on to the task of acquiring
environment licenses and permits.
In copper smelting and refining business, thanks to our efforts to expand our
processing capacity of E-Scrap by improving facilities and strengthening ourcollection system, E-Scrap processing capacity of the Group is expected to reach
160,000 tons per year. In the future, we aim to strengthen profitability by fully
utilizing our world-leading collection and processing capacity.
However, with the increase in E-Scrap processing amount, the volumes andtypes of impurities that are input to the smelting process increase, making therecovery rate of valuable metals are lower. We are, therefore, making
improvements to operations by such as expanding facilities to deal with the
problem and this has proved effective to some degree. At the same time, we arealso optimizing management of E-Scrap yards and strengthening inventory
management. In the future, we will continue to focus on further improvements andpromote enhancement of E-Scrap processing technologies. We will also seek tooptimize the material balance which is becoming increasingly complex due to theprocessing of diverse raw materials by promoting stronger collaboration with eachproduction location and working on the establishment of a more efficient recovery
system for valuable metals.
●Cement Business

In Japan, although demand is anticipated from an increase in public works underthe “three-year emergency response plan for disaster prevention, disastermitigation, and building national resilience”, redevelopment project in the Tokyo
metropolitan area and construction projects of Shinkansen, there is also concern
over delays in construction due to labor and transport capacity shortages.
Therefore, domestic demand for cement in FY2020 is estimated at around 42.50

－

18 －

million tons, unchanged from FY2019. In these circumstances, we will strive tosecure sales volumes by steadily taking in demand for cement for the large
projects.
In the United States, demand for cement and ready-mixed concrete is expected
to remain firm because public works are in an upward trend mainly due to thegovernment’s policy of investing in infrastructure. While rising labor costs, fueland energy costs will be a factor affecting profitability, we will pass cost
increases on to customers as appropriate. We will also reduce the cost of cement
through improvement of plant facilities and expand sales of ready-mixed
concrete through the operation of new ready-mixed concrete plants and aim forfurther improvement in sales and profit.
We ask for the ongoing support and cooperation of shareholders as we
implement these measures with the aim of consolidating the collective potentialof the Group and creating value as an integrated business entity.

－

19 －

(6) Major Business Activities of the Group (as of March 31, 2019)
The major business activities of the Group are production and sales of processed
copper products, electronic materials and components, and aluminum products;
production and sale of cemented carbide products and sintered products; refining
and sales of copper, gold, silver and other metals; and production and sales of
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 capsof aluminum beverage cans, rolled aluminum products, processedaluminum 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
Ordinary Portland cement and various other types of cements, cementbased solidification materials, aggregate, ready-mixed concrete
Energy related (coal, geothermal and hydro-power generation, nuclear
fuel cycling 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.)

－

20 －

(7) The Group’s Major Plants and Business Offices (as of March 31, 2019)
1. The Company
Head office (Note)

3-2-3, Marunouchi, Chiyoda-ku, Tokyo
Advanced
Products
Metalworking
Solutions

Plants and others

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)
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: The head office was relocated on March 18, 2019.

－

21 －

2. Major Subsidiaries
Names of Subsidiaries *Mitsubishi Shindoh Co., Ltd., (Tokyo), MMC Copper Products Oy(Finland), Universal Can Corp. (Tokyo), Mitsubishi Aluminum Co.,
Advanced Products
Ltd. (Tokyo),
Mitsubishi Cable Industries, Ltd. (Tokyo), Sambo Metals Corp.
(Osaka)Mitsubishi Hitachi Tool Engineering, Ltd. (Tokyo), Diamet Corp.
Metalworking Solutions (Niigata),
MMC Hartmetall GmbH (Germany)
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), Mitsubishi Materials (Shanghai) Corporation(China), Materials’ Finance Co., Ltd. (Tokyo)
Note: 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.
Business Division

－

22 －

(8) The Status of Employees (as of March 31, 2019)
1. Status of Employees of the Group (Consolidated)
Number of Employees *1

Business Division
Advanced Products*2

10,087 (increased by 442)

Metalworking Solutions*3

8,039(increased by 732)

Metals*2

2,016 (increased by 46)

Cement4,231 (increased by 220)

Others3,319 (decreased by 2)

All Companies (for the whole Group) * 4734 (increased by 29)

Total

28,426 (increased by 1,467)

Note 1: Employee numbers within parentheses denote the change from the previous fiscal year-end.
Note 2: Accompanying a partial change in the organization of business division, the Company haschanged the method of business segmentation from Cement, Metals, Advanced Materials& Tools, Electronic Materials & Components, Aluminum and Others to Advanced
Products, Metalworking Solutions Business, Metals Business, Cement Business andOthers business. Accordingly, segment employee number changes have been calculated
based on employee numbers for Advanced Products and Metals Business at the previous
fiscal year-end that have been reformulated according to the reclassified segments.
Note 3: Employee numbers were up in the Metalworking Solutions business due to such factors as
inclusion of MMC Hard Metal India Pvt. Ltd. in the Company’s scope of consolidation asa subsidiary company.
Note 4: 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)
4,807

Average Age (years)

Increased by 143

－

41.2

23 －

Average Years of
Employment (years)
17.1

(9) The State of Major Subsidiaries and Affiliates (as of March 31, 2019)
1. The State of Major Subsidiaries
Name of theCompany

PT Smelting

Paid-in Capital

Percentage ofOwnership(including
indirectownership) (%)

326 million U.S.
dollars 1)

60.5

MMC Copper
Products Oy

160 million euro1), 2)

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 EcoRefining Co., Ltd.
Materials’ FinanceCo., Ltd.
Mitsubishi AluminumCo., Ltd.

70 million U.S.
dollars 1)

67.0

400 million yen

100.0

30 million yen

100.0

8,196 million yen

90.4

8,713 million yen

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

Mitsubishi ShindohCo., Ltd.
Mitsubishi Cable
Industries, Ltd.
Mitsubishi Hitachi
Tool Engineering, Ltd.

－

24 －

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.
Smelting, processing and recyclingof non-ferrous metals
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

Universal Can Corp.
Robertson’s
Ready Mix, Ltd.

8,000 million yen

80.0

32 million U.S.
dollars 1)

100.0

Production and sales of aluminum
beverage cans
Smelting, processing and recyclingof non-ferrous metals

Note 1: Paid-in capital is shown.
Note 2: This company closes its accounts in December. For that reason, paid-in capital as ofDecember 31, 2018 is listed, but there is no change in the paid-in capital as of March 31,
2019.

2. The State of Major Affiliates
Percentage ofOwnership(including indirectownership) (%)

Name of theCompany

Paid-in Capital(Million Yen)

Ube-Mitsubishi
Cement Corp.

8,000

50.0

NM Cement Co., Ltd

7,001

30.0

495

50.0

6,000

45.0

4,218

33.9

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

－

25 －

Line of Business
Sales of cement and cement
related products
Investment in Nghi Son Cement
Corp. (Vietnam)
Operation
of
solar
power
generation
Production and sales of copper
tubes and fabricated copper tubes
Pre-stressed concrete works, civilengineering and sales of concrete
products

(10) The Group’s Major Lenders (as of March 31, 2019)
Major Lenders

Borrowed
Amount(Million Yen)

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

MUFG Bank, Ltd.

182,405

2,095

1.6

Mizuho Bank, Ltd.

42,843157

0.1

The Norinchukin Bank

19,261500

0.4

The Hachijuni Bank, Ltd.

18,201223

0.2

The Joyo Bank, Ltd.

13,980218

0.2

Note: Percentages of shareholding were calculated after deducting treasury shares (536,170 shares).

－

26 －

2. Articles Concerning Stock (as of March 31, 2019)(1) Total number of authorized shares: 340,000,000(no change from theprevious fiscal year-end)(2) Total number of issued shares: 131,489,535(no change from the previous
fiscal year-end)(3) Number of shareholders: 95,347(decreased by 3,385 from the previous fiscal
year-end)
This includes 70,630 shareholders with voting rights (decreased by 2,884 fromthe previous fiscal year-end).
(4) Major Shareholders
Name of Shareholders

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

Percentage ofShareholding (%)*

8,912

6.8

8,328

6.4

5,230

4.0

3,101

2.4

2,857

2.2

2,562

2.0

MUFG Bank, Ltd.

2,095

1.6

JP MORGAN CHASE BANK 385151

1,937

1.5

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

1,921

1.5

Mitsubishi Heavy Industries, Ltd.

1,900

1.5

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

Note: Percentages of shareholding were calculated after deducting treasury shares (536,170 shares)

－

27 －

3. Articles Concerning the Company’s Executives(1) Directors and Audit and Supervisory Board Members (as of March 31,
2019)
Title

Position andResponsibilities

Name

Chairman

Akira Takeuchi

Representative
Director President

Naoki Ono

Representative
Director (Executive Osamu Iida
Vice President)
Representative
Director(Senior Managing
Executive Officer)

Yasunobu Suzuki

Representative
Director (Managing Kazuhiro Kishi
Executive Officer)
Representative
Director (Managing
Executive Officer)

Makoto Shibata

Director

Mariko Tokuno2) 16)

Director

Hiroshi Watanabe2) 16)

Director

Hikaru Sugi 2) 16)－

Important Positions of
Other Organizations

General Operation of1)
the Company
Assistant to the President
General Manager,
Technology Div.
President, Advanced
Products Company
responsible for:
New Business
Development&Promotion
Outside Director, P.S.
President, Cement
Mitsubishi Construction
CompanyCo., Ltd
General Manager,
Governance Div.
responsible for:Environment & Energy
Business
Outside Director,
Happinet Corporation3)
Outside Director,
Yamato Holdings Co.,
Ltd. 4)President, Institute forInternational Monetary
Affairs5)

28 －Audit &Supervisory Board
Member (Standing)
Audit &
Supervisory Board
Member (Standing)
Audit &
Supervisory Board
Member (Standing)

Hiroshi Kubota 6)

Soichi Fukui

Hiroshi Sato 7) 8) 16)

Representative Lawyer,
Kasai Sogo Law Office9)
Audit &
Chairman, Daini Tokyo
Naoto Kasai 7) 16)
Supervisory Board
Bar Association10) 11)
Vice President, Japan
MemberFederation of Bar
Associations12) 13)
Audit &
Chairman, Mitsubishi
Tatsuo Wakabayashi
Supervisory Board
UFJ Trust and Banking7) 14) 16)
MemberCorporation 15)
Note 1: Director Naoki Ono resigned as Representative Director President of Materials’
Finance Co., Ltd. on June 22, 2018.
Note 2: Ms. Mariko Tokuno, Mr. Hiroshi Watanabe and Mr. Hikaru Sugi are Outside Directors as
defined in Article 2, Paragraph 15 of the Companies Act.
Note 3: There is no business relationship between the Company and Happinet Corporation.
Note 4: 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
subsidiary of Yamato Holdings Co., Ltd., regarding the consigned transportation of
products. However, the value of the transactions amounts to less than 1% of theCompany’s consolidated net sales.
Note 5: There is no business relationship between the Company and the Institute forInternational Monetary Affairs.
Note 6: Mr. Hiroshi Kubota has to date mainly been assigned to areas that relate to accounting andfinance. As such, he has extensive knowledge in each of these fields.
Note 7: Mr. Hiroshi Sato, Mr. Naoto Kasai and Mr. Tatsuo Wakabayashi are Outside Audit &Supervisory Board Members as defined in Article 2, Paragraph 16 of the Companies Act.
Note 8: Mr. Hiroshi Sato has experience as a financial institution corporate auditor and has
extensive knowledge of finance and accounting.
Note 9: There is no business relationship between the Company and Kasai Sogo Law Office.

－

29 －

Note 10: There is no business relationship between the Company and Daini Tokyo Bar
Association.
Note 11: Audit & Supervisory Board Member Naoto Kasai resigned as Chairman of the Daini
Tokyo Bar Association on March 31, 2019.
Note 12: There is no business relationship between the Company and Japan Federation of Bar
Associations.
Note 13: Audit & Supervisory Board Member Naoto Kasai resigned as Vice Chairman of theJapan Federation of Bar Associations on March 31, 2019.
Note 14: Mr. Tatsuo Wakabayashi has experience in management at financial institutions and has
extensive knowledge of finance and accounting.
Note 15: 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 funds. However, the value of the transactions amounts to less than 2% of ourconsolidated net sales. Moreover, the Company has no business relationship with
MUTB relating to the borrowing of funds.
Note 16: The Company has notified the Tokyo Stock Exchange, Inc. that Ms. Mariko Tokuno,
Mr. Hiroshi Watanabe and Mr. Hikaru Sugi are Independent Directors, and that Mr.
Hiroshi Sato, Mr. Naoto Kasai and Mr. Tatsuo Wakabayashi are Independent Auditorsin accordance with the regulations, respectively. (An Independent Director/Auditor isan Outside Director/Audit & Supervisory Board Member who is unlikely to haveconflicts of interest with general shareholders.)

The following Directors have been given new titles or posted to new positions
shown below on April 1, 2019.
Title

Representative
Director (Managing
Executive Officer)

Position andResponsibilities

Name

Makoto Shibata

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

30 －Important Positions of
Other Organizations

President, Materials’
Finance Co., Ltd.

(Reference) The following Executive Officers had assumed office as of April 1, 2019:
Title

Name

Executive Vice President

Osamu Iida*

Position and Responsibilities
Assistant to the President
General Manager, Technology Div.
President, Advanced Products Company

Senior Managing
Executive Officer

Yasunobu Suzuki*

responsible for:
New Business Development & Promotion

Managing Executive
Officer

Kazuhiro Kishi*

President, Cement Company

Managing Executive
Officer

Makoto Shibata*

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

Shinichi Nakamura

President, Metalworking Solutions Company

Yoshikazu Yasui

General Manager, Human Resources &General Affairs Div.

Susumu Sasaki

General Manager, Governance Div.

Tetsuro Sakai

President, Metals Company

Managing Executive
OfficerManaging Executive
OfficerManaging Executive
OfficerManaging Executive
Officer
Executive Officer

Nobuhiro Takayanagi

Executive Officer

Masaaki Kanda

Executive Officer

Masuhiro Ishitobi

Executive Officer

Yasunori Murakami

Executive Officer

Toru Suzuki

Executive Officer

Shogo Yamaguchi

Executive Officer

Ryuichi Hasegawa

Executive Officer

Jun Nagano

Executive Officer

Kazuto Hirano

Executive Officer

Toshinori Ishii－

President, Mitsubishi Cable Industries, Ltd.
Vice President, Advanced Products Company
Deputy General Manager, Technology Div.
Deputy General Manager, Technology Div.
Vice President, Metalworking Solutions
Company
President, Mitsubishi Materials Southeast
Asia Co., Ltd.
General Manager, Environment & Energy
Business Unit
General Manager, Corporate Production
Engineering Dept., Technology Div.
General Manager, Legal Dept., Corporate
Strategy Div.
Vice President, Cement Company
General Manager, Advanced ProductsCompany

31 －Executive Officer

Hideki Kato

Executive Officer

Takeshi Sakurai

General Manager, Corporate Strategy Dept.,
Corporate Strategy Div.
Vice President, Advanced Products Company

Executive Officer

Masayoshi Isaji

Vice President, Metals Company

Executive Officer

Takeshi Isobe

General Manager, Central Research Institute
General Manager, Finance & Accounting
Executive Officer
Hiroyuki Watanabe
Dept., Corporate Strategy Div.
Executive Officer
Takashi Iwata
Deputy General Manager, Governance Div.
General Manager, Human Resources &Executive Officer
Isao Kadowaki
General Affairs
Vice President, Metalworking Solutions
Executive Officer
Tetsuya Tanaka
Company
Note: Executive Officers marked with an asterisk hold the concurrent position of Director.

－

32 －

(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.) and Audit &Supervisory Board Members’ agreements limiting liability for damages inaccordance with Article 427, Paragraph 1, of the Companies Act. In accordancewith the provisions, the Company has concluded Limited Liability Agreementswith all Outside Directors and all Audit & Supervisory Board Members. The
outline of the agreements is as follows.
1. Limited Liability Agreement with Directors (excluding those who are
Executive Directors, etc.)
With respect to liability as described in Article 423, Paragraph 1 of theCompanies Act, if Directors (excluding those who are Executive Directors, etc.)
performs their duties in good faith and without gross negligence, the Directors
shall be 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 shall indemnify the Directors for damages in excess of the amount of
the liability.
2. Limited Liability Agreement with Audit & Supervisory Board Members
With respect to liability as described in Article 423, Paragraph 1 of theCompanies Act, if the Audit & Supervisory Board Members perform their duty
in good faith and without gross negligence, the Audit & Supervisory Board
Members shall be liable to the Company for damages only to the extent ofminimum liability as set out in Article 425, Paragraph 1 of the Companies Act.
The Company shall indemnify the Audit & Supervisory Board Members fordamages in excess of the amount of the liability.

－

33 －

(3) Directors and Audit & Supervisory Board Members’ Remuneration
Position

Total Amount of
Remuneration(Millions of yen)

Directors (of which Outside
Directors)

413 2)(56)

Remuneration by Type(Millions of yen)
Basic 4)
Bonus 5)
318
(56)

94

Number of
Executives(persons) 1)
12(4)

Audit & Supervisory Board
Members (of which Outside
133 3)
133－
6
Audit & Supervisory Board
(61)
(61)
(4)
Members)
Note 1: The number of Directors/Audit & Supervisory Board Members includes three Directors andone Audit & Supervisory Board Member whose terms ended during the fiscal year underreview. There are nine Directors and five Audit & Supervisory Board Members as of the endof the fiscal year under review.
Note 2: It was resolved at the 91st Ordinary General Meeting of Shareholders held on June 29, 2016that the amount of remuneration to Directors should not exceed ¥49 million per month(excluding salaries as employees for Directors who also serve as employees), including
remuneration not exceeding ¥6 million for Outside Directors.
Note 3: 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 should not exceed¥17 million per month.
Note 4: Of the basic remuneration for Directors, stock-based remuneration is ¥28 million.
Note 5: 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 should not exceed¥170 million per annum.

(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 to corporate performance as well as individual
performance. Drawing on the advice of external experts, steps have been taken
to design a system that is highly objective. Remuneration is paid in accordancewith internal rules and regulations approved by the Board of Directors and iscomprised of basic fixed component as well as a bonus that is linked toperformance.

－

34 －

Firstly, the amount of basic remuneration paid to Directors and titled
Executive Officers is determined in accordance with the title and performanceof each individual. The portion of basic remuneration is paid as stock-based
remuneration (not paid to Outside Directors) and a fixed monthly amount isused for purchasing the Company's shares through the Company's Director
shareholding association. The Company's shares acquired based on thisremuneration cannot be sold at least during each individual's term of office. Thisaims to link the remuneration to medium- and long-term corporate performance.
Secondly, the amount of each bonus, as remuneration linked to short-term
corporate performance, is determined as of the end of the fiscal year by taking
into consideration the performance of each individual. In the case of Directors,
who are responsible for certain executive duties, net income attributable toowners of parent and consolidated ordinary income for the fiscal year underreview are used as indicators when assessing performance. In the case of titled
Executive Officers (excluding individuals who concurrently hold the positionsof Directors responsible for certain executive duties), net income attributable toowners of parent, consolidated ordinary income and the results of thedepartment for which the individual is responsible for the fiscal year underreview are used as indicators when assessing performance. Meanwhile, bonuses
can be reduced or removed entirely depending on business conditions and theamount of dividends for the fiscal year when bonuses are paid.
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 internal rules and regulations
approved by the Board of Directors and after taking into consideration thecircumstances of each individual.
2. Audit & Supervisory Board Members
The remuneration for Audit & Supervisory Board Members is set at an
appropriate level based on discussions among them and is not linked tocorporate performance in light of the fact that they assume the responsibility forauditing the execution of duties by Directors as an independent body entrustedby shareholders.

－

35 －

(5) Major Activities of Outside Directors and Auditors
StatusClassification

Major Activities 1)

Name

Outside Director

Mariko Tokuno

Outside Director

Hiroshi Watanabe

Outside Director

Hikaru Sugi

Outside Audit &Supervisory Board
MemberHiroshi Sato

Outside Audit &Supervisory Board
MemberNaoto Kasai

Ms. Mariko Tokuno participated in all 17 meetingsof the Board of Directors held during the fiscal year
under review. Ms. Tokuno provides well-informed
opinions concerning general management as a
Director and well-informed opinions on
international corporate strategy as an informed
specialist on such fields, when necessary.
Mr. Hiroshi Watanabe participated in all 17
meetings of the Board of Directors held during the
fiscal year under review. Mr. Watanabe provides
well-informed opinions concerning generalmanagement as a Director and well-informed
opinions on domestic and international finance aswell as economics, when necessary.
Mr. Hikaru Sugi participated in all 13 meetings ofthe Board of Directors held following his
appointment on June 22, 2018. Mr. Sugi provides
well-informed opinions concerning generalmanagement as a Director and well-informed
opinions on international corporate strategy as an
informed specialist on such fields, when necessary.
Mr. Hiroshi Sato participated in all 17 meetings ofthe Board of Directors and all 17 meetings of the
Audit & Supervisory Board held during the fiscal
year under review. Mr. Sato provides wellinformed opinions as an Audit & Supervisory
Board Member based on his abundant experience
as a manager overseeing finance and accounting,when necessary.
Mr. Naoto Kasai participated in 16 of the 17
meetings of the Board of Directors and 16 of the 17
meetings of the Audit & Supervisory Board held
during the fiscal year under review. Mr. Kasai
provides well-informed opinions as an Audit &Supervisory Board Member, based on his abundant
experience as a lawyer and extensive knowledge
concerning business management, when necessary.

－

36 －

Mr. Tatsuo Wakabayashi participated in all 13
meetings of the Board of Directors and all 14
meetings of the Audit & Supervisory Board held
Outside Audit &following his appointment on June 22, 2018. Mr.
Supervisory Board
Tatsuo Wakabayashi
Wakabayashi provides well-informed opinions as
Memberan Audit & Supervisory Board Member based on
his abundant experience as a manager overseeing
finance and accounting, when necessary.
Note 1: As far as the number of times Board of Directors’ meeting were held, and in addition to theaforementioned, there was one written resolution for which that resolution was considered
as having been resolved by a decision of the Board of Directors pursuant to Article 370 of
the Companies Act and the provisions of Article 27, Paragraph 3, of the Articles ofIncorporation, and there were three one notice made to Directors and Audit & Supervisory
Board Members pursuant to Article 372, Paragraph 1, of the Companies Act.
Note 2: During the terms of Ms. Mariko Tokuno, Mr. Hiroshi Watanabe, Mr. Hiroshi Sato, and Mr.
Naoto Kasai as Outside Director or Outside Audit & Supervisory Board Members,
Mitsubishi Cable Industries, Ltd., Mitsubishi Shindoh Co., Ltd., Mitsubishi Aluminum Co.,
Ltd., Tachibana Metal Mfg Co., Ltd. and Diamet Corporation, which are all consolidated
subsidiaries of the Company, were found to have delivered products that deviated from
customer standards or internal company specifications due to misconduct, including therewriting of data. In addition, the JIS certification was cancelled for copper slag aggregate at
the Company’s Naoshima Smelter & Refinery.
Until they came to light, each member was not cognizant of these cases, but they have sincemade regular remarks at Board Meetings from the viewpoint of enhancing the governancestructure. These cases having been discovered, each member has been investigating thefacts and causes, and making proposals with regard to measures to prevent any recurrence.
Each member has been monitoring progress following the formulation of Group
Governance Framework Enhancement Measures as well as further enhance the governancesystem, such as by providing advice and proposals to the Board of Directors to address
issues as needed.

－

37 －

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, 2019
Content of the Remuneration
Amount(a) Remuneration paid by the Company to Accounting
1)
153 million yen
Auditors(b) Total amount of monetary and other property
benefits paid by the Company and its subsidiaries
435 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 Law. The Audit &Supervisory Board has agreed upon this amount taking into consideration the basis forcalculating compensation, the status of execution of duties of the accounting auditor in theprevious business year and the 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
and Exchange Act and the applicable laws of the concerned foreign countries’ own
legislations).

(3) Content of Non-Auditing Duties
The Company subcontracts “Consulting Operations” and other duties (nonauditing duties) to the Accounting Auditor that are other than the duties of
Article 2, Paragraph 1 of Certified Public Accountants Act.
(4) Policy on Dismissal or Non-reappointment of the Accounting Auditor
Except in cases of dismissal of the Accounting Auditor by the Audit &Supervisory Board as stipulated in Article 340 of the Companies Act, the

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Company’s Audit & Supervisory Board shall as a general rule decide on an
agenda item regarding the decision not to reappoint 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. Based on this decision,
the Board of Directors shall propose this at the General Meeting of Shareholders.

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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.
Under the assumption that approval will be granted at the Ordinary General
Meeting of Shareholders in June 2019, the Company plans to establish a new
system in order to become a Company with a Nominating Committee, etc., makeappropriate revisions to the Fundamental Policy, and maintain suitable operations.
(1) Systems to Ensure Execution of Duties by Directors and Employees in
Conformity with Laws and Articles of Incorporation
1. The Company shall determine the Corporate Philosophy, Values, Code of
Conduct, and Vision (collectively referred to as the “Corporate Philosophy,etc.” as well as internal regulations that should be observed by the Directors
and employees and establish corporate ethics and a compliance system.
2. The Company shall determine execution of duties through the Board of
Directors, Corporate Strategy Committee and other committees in accordancewith laws, Articles of Incorporation, and internal regulations and others. In
addition, the legal department and the relative department shall carry out the
preliminary review of specific significant matters.
3. The Company shall determine the general policies and plans, etc., concerningcompliance at the meetings of the Board of Directors. In addition, theCompany shall appoint a Director from among its Directors or titled
Executive Officers to oversee matters relating to compliance and establish acommittee related to CSR (corporate social responsibility) and a division
responsible for compliance. The Company shall also enforce cross-divisional
compliance promotion activities (including internal education) for the whole
Company.
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 division by the division in charge of internal audits.

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6. In accordance with its Code of Conduct, the Company shall establish internal
structures to ensure appropriate actions under its policy of resolutely rejecting
any involvement whatsoever with anti-social forces.
(2) Systems for Preservation and Management of Information Related to
the Execution of Duties of Directors
The Company shall properly preserve and manage the minutes of the meetingsof Board of Directors, meetings of Corporate Strategy Committee and othersignificant information, based on legislation, Articles of Incorporation andinternal regulations and policies.

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(3) Regulations and Other Systems Concerning Risk Management
1. The Company shall deliberate carefully on significant matters through theBoard of Directors, Corporate Strategy Committee, and other decisionmaking bodies based on legislations, Articles of Incorporation, internal
regulations and others. In addition, the Company shall carry out preliminary
review of significant matters by legal and other related departments based on
the internal regulations and others in order to identify risks and prevent risk
elicitation and manifestation.
2. The Company shall determine the internal regulations, policies, and plans
related to general risk management at the meetings of the Board of Directors.
In addition, the Company shall appoint a Director from among its Directors
or titled Executive Officers to oversee matters relating to risk management
and establish a committee related to CSR and a division responsible for risk
management and shall enforce cross-divisional risk management promotion
activities for the whole Company.
3. The Company shall determine the 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 legislation 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 division by the division in charge of internal audits.
(4) Systems to Ensure Efficient Execution of Duties by Directors
1. The Company shall determine rationally the areas of responsibility of each of
the Directors and let the Executive Officers assist the Directors in their
execution of duties in accordance with the Executive Officers’ system. In
addition, the Company shall determine the areas of responsibility andauthority of each body and division in accordance with the internal
regulations and others.
2. The Company shall determine the management plan, allocate suitable

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management resources and authority among the various divisions to achieve
the plan, and require those divisions to formulate their own specific plans. In
addition, the Directors shall suitably verify the progress state of the plan ofeach division and take appropriate measures when necessary.
3. The Company shall enforce periodic auditing concerning the efficiency of theexecution of duties of each division by the division in charge of internal audit.
(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) to promote compliance and risk management activities by the Group,
including subsidiaries, based on the Corporate Philosophy etc. and internal
regulations that are applied consistently throughout the Group.
2. Concerning each subsidiary, the Company shall aim to improve thesoundness and efficiency of management of the subsidiary, and by extension
the whole Group, by determining a response liaison division within the
Company. The concerned division shall consult and exchange information
with the subsidiary 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 theaccuracy 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 division in charge of internal audit of
the Company.
(6) Particulars Concerning Employees Assigned to Assist Audit &Supervisory Board Members, Such Employees’ Independence from
Directors, and Particulars Concerning Ensuring the Effectiveness ofInstructions by Audit & Supervisory Board Members to Such Employees
The Company shall establish a division and assign dedicated members to
support the operations of the Audit & Supervisory Board Members. In addition,

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the Company shall obtain the consent of the Audit & Supervisory Board
concerning transfer of such employees and consult with the Audit &Supervisory Board concerning assessment and evaluation of them.
(7) Systems for Reporting to Audit & Supervisory Board Members and for
Ensuring That People Making Reports Shall Not Experience
Disadvantageous Treatment as a Result of This Reporting
1. The Directors and employees shall swiftly report appropriate information to
the Audit & Supervisory Board Members or to the Audit & Supervisory
Board in accordance with the method stipulated in legislations and theinternal regulations of the Company, in the case where there is considerable
damage to the Company’s operations in areas for which they are responsibleor the possibility of significant impact on the Company. In addition, the same
shall apply in the event that Audit & Supervisory Board Members request areport about business operations.
2. In the event of a report by a Director or employee of the Company or its
subsidiary to the reporting desk on a compliance-related problem, thedepartment in charge of the reporting desk shall in principle report the content
of such report to the Audit & Supervisory Board Members.
3. The division in charge of internal auditing of the Company shall report to the
Audit & Supervisory Board Members important items heard from Directors
and employees of the Company and its subsidiaries, as well as important
items from audit results.
4. The disadvantageous treatment of people reporting to the Audit &Supervisory Board Members and the Audit & Supervisory Board (including
people reporting indirectly through others) because of such reporting shall be
prohibited, and such prohibition shall be made known throughout theCompany and its subsidiaries.
(8) Particulars on Policies Related to the Handling of Expenses or
Obligations Incurred during the Execution of Duties by Audit &Supervisory Board Members
The Company shall provide budgetary provisions for expenses necessary foraudits by Audit & Supervisory Board Members. In addition, in the event of

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requests for the payment of such expenses by Audit & Supervisory Board
Members, prescribed procedures shall be followed and payment made promptly.
(9) Other Systems to Ensure Effective Auditing by Audit & Supervisory
Board Members
1. Audit & Supervisory Board Members and Representative Directors shallexchange their opinions periodically and when deemed necessary.
2. Audit & Supervisory Board Members shall be provided with the opportunity
to attend Board of Directors Meetings and other significant meetings of theCompany.
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 pages 12-13.

●(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
shares and evaluates the status of compliance within the Group and reportsthat have been submitted to the internal reporting desk. The Company and its
subsidiaries work together to ensure consistent CSR training throughout theGroup and address compliance-related issues.
3. The Company has established certain regulations and guidelines in order toensure 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 and

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systems.
(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 Corporate Strategy Committee. The Company and subsidiaries specify
risk-related initiatives to be undertaken in accordance with Group-wide
policies and enact 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 fromspreading.
(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 andresponsibilities 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 Executives with ranks ofManaging Executive Officer or above, as well as the operational
responsibilities and authority of individual departments, the Company strives
to ensure the appropriateness of an accelerated decision-making and businessexecution.
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.

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(4) Initiatives Related to Internal Audits
Based on an annual audit plan, the Internal Audit Department conducts periodic
audits of the compliance, risk management and management efficiency ofinternal divisions and subsidiaries and reports the results of these audits to theBoard of Directors.
(Reference) Status of Corporate Governance<Fundamental Policy>
In accordance with its Corporate Philosophy “For People, Society and the Earth,”etc. Mitsubishi Materials works to maximize its sustainable development andcorporate value by engaging in fair business activities. To this end, the Company
undertakes various measures to enhance its corporate governance, recognizing theimportance of engaging in efficient and transparent management.
<Framework for Promoting Corporate Governance Enhancement>
To prevent the reoccurrence of deliveries of products, etc. that deviated from
customer standards or internal company specifications as a result of the Company’s
consolidated subsidiaries improperly rewriting inspection data, the formulation,
disclosure, and sequentially implementation of preventive measures (“relevant
subsidiary measures”) and group governance framework enhancement measures(“main enhancement measures”), which includes quality control, are being
undertaken by the relevant subsidiaries where data falsification took place and by
the Company, respectively (refer to pages 12-13 for more details).
On April 1, 2018, the Company newly established the “Group Governance
Enhancement and Promotion Division” as a cross-sectional organization to steadily
implement and confirm the status of the main prevention measures and mainenhancement and other measures; “Governance Deliberative Council” as a bodythat deliberates on business divisions’ governance-related policies and plans(including main enhancement measures) for the fiscal year; and the “Governance
Division (which oversees the Safety & Environment Dept., CSR Dept., Quality
Management Dept., and Internal Audit Dept.)”, which is tasked with governancerelated administrative and support functions.
In addition, on May 10, 2018 the Company established the “Committee for
Monitoring of Measures to Enhance Governance” comprised of outside directors of

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MMC and outside experts with the objectives of monitoring the status of mainenhancement and other measures progress, achievements, and administration from amore independent position than management as well as providing necessary advice
and proposals on related issues to the Board of Directors.
Furthermore, on June 22, 2018, the Company established the “Committee for
Nomination and Compensation” for which the majority of members being outside
directors in order to ensure the transparency and objectivity of the Board of
Director’s decisions regarding the appointment and dismissal of directors andofficers as well as their compensation.
Of note, the Corporate Governance Framework related to the Company’s
management decision making/supervision, business execution, and auditing isoutlined in the following chart, Overview of the Corporate Governance System.

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Overview of the Corporate Governance System

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6. Fundamental Policy Concerning the Control of the Company(1) Fundamental Policy on Parties in Control of Decisions Concerning theCompany’s Finance and Operating Policies
As a general rule, the control of the Company should be determined throughfree market transactions in the Company’s shares on the Stock Exchanges. As amatter of course, the Company believes that the decision to accept or decline a
proposal for a Large-Scale Acquisition of shares (Defined in (3) 2. (i) below.
The same applies below.) should be ultimately left to the individual
shareholders of the Company.
However, there are some Large-Scale Acquisitions of shares that do notcontribute to the corporate value and the common interests of the shareholders,and by extension the medium- and long-term shareholder value (hereinafterreferred to as “medium- and long-term shareholder value”) of the Company,
such as those that obviously harm the medium- and long-term shareholder value,
and those that essentially force shareholders to sell their shares, etc. In addition,
unless the party carrying out a Large-Scale Acquisition of the Company’s sharesis properly aware of the Company’s management environment, understands thesources of its corporate value, and aims to ensure and improve these factors in
the medium and long terms, the Company’s medium- and long-term shareholder
value may possibly be harmed.
Furthermore, while it can go without saying that the freedom of allshareholders’ investment behavior should be respected to the degree that is
possible, the Company believes that there is not always adequate time orprocedures to obtain and to study the information necessary for its shareholders
to assess whether a fixed Large-Scale Acquisition is appropriate under today’s
domestic takeover bid system, and that there is a possibility of that conflictingwith the Company's medium- and long-term shareholder value.
Therefore, the Company believes that it is not appropriate for a party
conducting a Large-Scale Acquisition of shares that could possibly harm theCompany’s medium- and long-term shareholder value as described above, to be
one that dominates Company’s finance and operating policies decisions.
Therefore, the Company believes that it is necessary to maintain a framework tosecure the necessary time and information for its shareholders to assess whether
the acquisition is appropriate, in order to deter acquisitions that conflict with the

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Company's medium- and long-term shareholder value, and to negotiate withpotential Acquirers on behalf of the shareholders.
(2) Overview of Special Measures to Ensure the Implementation of theFundamental Policy
The Company has been developing its various businesses by utilizing
technologies accumulated through its origin, metal and coal mining operations,to form an integrated business entity involved mainly in the Advanced Products,
Metalworking Solutions, Metals, and Cement Business. The Company has afundamental corporate philosophy of contribution to society through its various
business activities and has supplied basic materials indispensable to people’s
lives as a comprehensive basic materials manufacturer. Moreover, the Company
has made consistent efforts to create an affluent society toward helping reduce
environmental impact and establishing a resource-recycling social system. The
Company will continue striving to underpin and enhance the medium-and longterm shareholder value. In addition to advancing its business activities, theCompany will achieve this by earning the further trust of all stakeholders—
including shareholders, employees, customers, local communities, suppliers andmany other related parties—while maintaining a harmonious coexistence withsociety.
In this environment, and looking 10 years into the future, the Group has also
positioned efforts to become the “leading company in domestic and overseas
key markets,” “achieving high profitability and efficiency,” and “achieving
growth that exceeds the market growth rate” as its medium- and long-termtargets (the Company in the future) under its long-term management policy. In
order to meet these targets, the Company has also put in place a Group-wide
policy. This policy entails “optimization of the business portfolio,”“comprehensive efforts to increase business competitiveness,” and the “creationof new product and businesses.” Moving forward, energies will be directed
toward implementing various measures aimed at enhancing corporate value andpromoting the Group-wide policy based on the Medium-Term Management
Strategy for FY2018-FY2020. At the same time, the Group will implement
various specific measures under the key strategies of “achieving growth throughinnovation,” “creating value by building a recycling-oriented society,”

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“increasing the Company’s market presence through investment for growth,”and “increasing efficiency through continuous improvement.”(3) Overview of Efforts to Prevent Inappropriate Parties from Assuming
Control of Decisions Relating to the Company’s Financial and Operating
Policies
The Company, in conformity with its corporate philosophy and various policies
outlined in (2) above, shall continue pursuing maximization of the mediumand long-term shareholder value in the future. At the same time, however, it
may not be possible to ignore the potential of Large-Scale Acquisitions by third
parties that may harm the medium- and long-term shareholder value, as
described in (1) above. Therefore, at its meeting held on May 12, 2016, theBoard of Directors passed a resolution entitled “Renewal of theCountermeasures to Large-Scale Acquisition of the Company’s Shares(Takeover Defense Measures),” (hereinafter referred to as the “NewCountermeasures”), which is a modified version of a plan previously in place.
The New Countermeasures received approval at the 91st Ordinary General
Meeting of Shareholders held on June 29, 2016.
An outline of the New Countermeasures is given below. For more details,
please refer to the May 12, 2016 press release entitled “Renewal of theCountermeasures to Large-Scale Acquisition of the Company’s Shares(Takeover Defense Measures)” posted on the Company’s website (Japanese
language only):
http://www.mmc.co.jp/corporate/ja/news/press/2016/16-0512b.pdf
1. Fundamental Policy of the New Countermeasures
For the purpose of preserving and enhancing the medium- and longterm shareholder value, the Company has set out Countermeasures toLarge-Scale Acquisition of the Company’s Shares (Takeover Defense
Measures) incorporating procedures to be observed by a party carryingout or who plans to carry out a Large-Scale Acquisition of theCompany’s shares. The Company shall warn such parties in advancethat there are procedures with which they will be required to comply,
that the Company may, in certain circumstances, take protective

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measures against the acquisition, and the Company shall, in certain
circumstances, actually take protective measures against theacquisition.
2.

New Countermeasures Details(i) Targeted Large-Scale Acquisitions
The New Countermeasures shall apply in cases where there is anacquisition of share certificates, or the like of the Company that
falls under a. or b. below or any similar action (hereinafter referred
to as a “Large-Scale Acquisition”). Any party carrying out or
proposing a Large-Scale Acquisition (hereinafter referred to as“Acquirer”) must comply with procedures predetermined in the
New Countermeasures.
a. An acquisition that would result in the holding ratio of sharecertificates, etc., of a holder amounting to 20% of more of theshare certificates, etc., issued by the Company
b. A takeover bid that would result in the ownership ratio of sharecertificates, etc., of the share certificate relating to the takeoverbid, and the owning ratio of share certificates, etc., of a person
having a special relationship totaling at least 20% of the sharecertificates, etc., issued by the Company.
(ii) Prior Submission of Letter of Intent to the Company
The Acquirer will submit a statement in Japanese (hereinafterreferred to as a “Letter of Intent”) to the Board of Directors such asa promise to observe the procedures prescribed in the New
Countermeasures, before executing the Large-Scale Acquisition.
(iii) Provision of Information
When the Acquirer submits the Letter of Intent, the Company will
send to the Acquirer an Information List that details all theinformation necessary to be initially submitted. The Acquirer willsubmit to the Company adequate information pursuant to the
Information List.

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The Board of Directors shall require the Acquirer to submit the
information within the period set by the Board (hereinafter referred
to as “Information Provision Requirement Period”), which is 60
days following the sending of the above-mentioned Information
List, and the Board of Directors’ Evaluation Period (Defined in (v)below. This also applies below.) shall commence immediately upon
the expiration of the Information Provision Requirement Period.
However, if a request for an extension based on a plausible reason
is received from the Acquirer, the Information Provision
Requirement Period may be extended as needed up to a maximumof 30 days. Alternatively, if the Board of Directors determines thatthe information submitted by the Acquirer is sufficient, then a
Notice of Completion of Providing Information (Defined in (iv)
below. This also applies below.) shall be issued immediately to theAcquirer even if it is before the expiration of the Information
Provision Requirement Period and the Board of Directors’
Evaluation period will commence.
(iv) Disclosure of Information
The Company will disclose the fact that there has been a proposalby an Acquirer to obtain Large-Scale Acquisition and describe thebackground. Furthermore, if there is information deemed to berequired by judgment of the shareholders, that information will be
disclosed at a time that is deemed to be appropriate.
Also, in the event that the Board of Directors judges that the
information provided by the Acquirer is adequate, the Acquirer will
be notified (hereinafter referred to as “Notice of Completion ofProviding Information”) of that quickly and that will be disclosed.
(v) Establishment of the Board of Directors’ Evaluation Period
The Board of Directors will begin evaluating and considering theLarge-Scale Acquisition after Notice of Completion of Providing
Information or when the Information Provision Requirement Period
has ended. The period for the Board of Directors to evaluate,

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consider, negotiate, form opinions or to offer an alternative
proposal (hereinafter referred to as “the Board of Directors’
Evaluation Period”) will be a maximum of 60 days or a maximumof 90 days depending on the status of the Large-Scale Acquisition.
However, the Board of Directors’ Evaluation Period may be
extended by a maximum of 30 days when deemed necessary by the
Board of Directors, or when recommended by the Independent
Committee.
(vi) Consulting with the Independent Committee
When countermeasures are invoked in the New Countermeasures,in order to eliminate arbitrary decisions by the Board of Directors,
the Independent Committee will be setup composed of only people
who are independent of Executive personnel that conduct business
operations for the Company.
In the event that the Acquirer has not observed the procedures
defined in the New Countermeasures, or when it is found that theLarge-Scale Acquisition of shares by the Acquirer will cause
notable damage to the medium- and long-term shareholder value of
the Company, the Board of Directors can consult with the
Independent Committee about whether to invoke countermeasureswhen it is judged appropriate to invoke countermeasures.
(vii) Recommendation by the Independent Committee Concerning
the Invocation of Countermeasures
When there has been consultation by the Board of Directors
regarding whether to invoke countermeasures, the Independent
Committee will make recommendations for the Board of Directors
regarding whether to invoke countermeasures.
(viii) Resolution by the Board of Directors
The Board of Directors will comply to the greatest degree possible
with the recommendation of the Independent Committee outlined in(vii) above and will implement a resolution to invoke

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countermeasures.
(ix) Holding a Shareholders Meeting to Confirm Their Intent
Excluding instances when it is notably difficult to convene ageneral meeting of shareholders, for the following reasons, theBoard of Directors can debate bills for invoking countermeasuresby convening a general meeting of shareholders (hereinafter theshareholders’ meeting is referred to as the “Shareholders Meeting
to Confirm Their Intent”).
a. When the Independent Committee makes a recommendation
concerning the invocation of countermeasures that isconditional upon receiving prior approval at a general meetingof shareholders; andb. The Board of Directors deems that it is appropriate to confirm
the intent of all shareholders.
The Board of Directors shall pass a resolution to invokecountermeasures in compliance with the resolution passed at the
Shareholders Meeting to Confirm Their Intent.
(x) Period to Start Large-Scale Acquisition
When it has been determined by the Board of Directors to convene
the Shareholders Meeting to Confirm Their Intent, the Acquirer
may not start Large-Scale Acquisition until the Board of Directors
has implemented a resolution to invoke the countermeasures basedon the resolution of the Shareholders Meeting to Confirm Their
Intent. Also, when the Shareholders Meeting to Confirm Their
Intent has not been convened, it is possible to start the Large-Scale
Acquisition only after the Board of Directors’ Evaluation Period
has passed.
(xi) Termination or Withdrawal of Countermeasures
In the event that invoking the countermeasures was decided, theBoard of Directors can consult with the Independent Committee
regarding whether to terminate or withdraw the countermeasures

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for the following reasons.
a. When the Acquirer has terminated or withdrawn the LargeScale Acquisition; andb. Changes occurred in the facts that presumed judgment of
whether to invoke the countermeasures, and the circumstances
are considered not to be appropriate for maintaining the invokedcountermeasures in view of ensuring and enhancing theCompany's medium- and long-term shareholder value.
The Board of Directors will resolve to terminate or withdraw thecountermeasures when it is judged inappropriate to maintain the
countermeasures, complying to the greatest degree possible withthe recommendation of the Independent Committee.
(xii) Specific Content of the Countermeasures in the New
Countermeasures
As a countermeasure invoked in accordance with the New
Countermeasures, the Company shall, in principle, exercise thegratis allotment of stock acquisition rights.
Such stock acquisition rights shall be allotted to shareholders asof the allotment date. One right will be allotted per common stockof the Company. Under the New Countermeasures, the Company
intends to attach conditions that the Acquirer or other ineligible
parties that meet criteria specified separately may not exercise thestock acquisition rights. Further, the Company plans to attach
conditions that enable the Company to acquire the stock acquisitionrights allotted to persons other than ineligible parties and, in
exchange, issue one common stock of the Company per such stockacquisition right.
(xiii) Effective Period, Abolition, or Amendment of the New
Countermeasures
The New Countermeasures shall be effective until the closing of the94th Ordinary General Meeting of Shareholders of the Company, tobe held in June 2019.

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Also, even before expiration of the effective period, the New
Countermeasures will be abolished immediately, for the following
reasons.
a. When a general meeting of shareholders of the Company passes
a resolution to abolish the New Countermeasures; andb. When the Board of Directors passes a resolution to abolish the
New Countermeasures.
Also, the Company can change the New Countermeasures within ascope that does not violate the basic policy for formalities in linewith revisions to laws and ordinances and the like.
(4) Determination by the Board of Directors, and the Reasons thereof, that
the Measures in (2) above are in Accordance with the Basic Policy in (1)above and as such do not Harm the Common Interests of Shareholders or
Aim to Maintain the Status of the Company’s Officers
The Board of Directors has determined that the measures in (2) above are inaccordance with the basic policy in (1) above. Such reason is that, by securing andenhancing the Company’s medium- and long-term shareholder value through themeasures in (2) above, and appropriately reflecting it in the value of theCompany’s shares, it will become difficult to conduct a Large-Scale Acquisition
that adversely affects the Company’s medium- and long-term shareholder value.
Accordingly, the Board of Directors has determined that the measures in (2)above do not harm the common interests of the Company’s shareholders and are
not aimed to maintain the status of the Company’s Officers.
(5) Determination by the Board of Directors, and the Reasons thereof, that
the Measures in (3) above are in Accordance with the Basic Policy in (1)above and as such do not Harm the Common Interests of Shareholders or
Aim to Maintain the Status of the Company’s Officers
The measures in (3) above prevent inappropriate parties, in the context of thebasic policy in (1) above, from controlling decisions on policies relating to theCompany’s finances and operations. Such reason is that, by enabling theCompany to invoke countermeasures against an Acquirer who does not provide
sufficient information or does not accede to a request for securing a sufficient

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period for their examination etc., the Company may prevent a Large-Scale
Acquisition that will significantly harm the Company’s medium- and long-term
shareholder value. Additionally, the measures in (3) above are implemented withthe objective of securing and enhancing the Company’s medium- and long-term
shareholder value, and in line with such objective, to have the Acquirer provide
the necessary information beforehand concerning the Large-Scale Acquisition thatsaid Acquirer intends to make so that the required period of time is secured forevaluating and examining, etc., the details thereof. Furthermore, a variety ofsystems and procedures are in place to ensure the reasonableness and fairness ofthe measures in (3) above for the reason that these measures contain a procedure
for confirming the intent of all shareholders, establish the Independent Committee
comprising highly independent members, give utmost respect to the Committee’s
recommendation, establish reasonable and objective criteria for the invocation ofcountermeasures, and eliminate arbitrary judgments by the Board of Directors bybasing the invocation of countermeasures on a resolution passed at a Shareholders
Meeting to Confirm Their Intent.
Accordingly, the Board of Directors determines that the measures in (3)above are in accordance with the basic policy in (1) above, and do not harm thecommon interests of the Company’s shareholders and are not aimed atmaintaining the status of the Company’s Officers.
(Reference)
The effective period of the New Countermeasures will expire at the close of the94th Ordinary General Meeting of Shareholders, to be held on June 21, 2019. At
its meeting held on April 25, 2019, the Board of Directors passed a resolution to
not renew and abolish the New Countermeasures.
In this Business Report, the figures for financial amounts and number ofshares are rounded down to the nearest stated unit. Figures for ratios havebeen rounded up or down to the nearest stated decimal place.

－

59 －

Consolidated Balance Sheets[As of March 31, 2019](Millions of yen)
Item

AmountItem[ASSETS]
Current Assets:
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Gold bullion on loan
Other909,647
108,648248,220
92,452
108,293
134,825
99,154
120,954

Allowance for doubtful accounts
Non-current Assets:
Property, Plant and Equipment:
Building and structures, net
Machinery and equipment, net
Land, net

(2,900)1,028,622
687,415
157,448
243,815
235,664

Construction in progress
Other, net
Intangible Assets:
Goodwill

34,211
16,27558,74040,816

Other
Investment and Other Assets:
Investment securities
Retirement benefit asset
Deferred income taxes
Other
Allowance for doubtful accounts

17,924282,467
236,572
1,050
19,61029,322(4,088)－[LIABILITIES]Current Liabilities:
Notes and accounts payable-trade
Short-term loans payable
Current portion of bonds payable
Income taxes payable
Accrued for bonuses
Gold payable
Allowance for loss on disposal of
inventories
Provision for product warranties
Other
Non-current Liabilities:
Bonds payable
Long-term loans payable
Reserve for loss on subsidiaries andaffiliates
Provision for product warranties
Reserve for environmental measures
Deferred tax liabilities
Deferred tax liabilities for land
revaluation
Reserve for directors’ retirement
benefits
Net defined benefit liability
Other
Total Liabilities[NET ASSETS]
Shareholders’ Equity:
Capital stock
Capita surplus
Retained earnings
Treasury stock
Accumulated Other Comprehensive
Income:Valuation difference on available
for sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation
adjustment

60 －Amount728,011
147,566
180,100
5,000
7,869
12,872
253,918624
1,435
118,623
486,92150,000259,667805
1,040
40,427
25,61624,0971,623
50,003
33,6391,214,933
562,659
119,457
92,393352,932(2,123)70,922
51,220124
33,023(5,828)

Total Assets

1,938,270

Remeasurements of defined
benefit plans
Non-controlling interests
Total Net Assets
Total Liabilities and Net Assets

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

－

61 －

(7,617)89,754
723,337
1,938,270

Consolidated Statements of Operations[For the year ended March 31, 2019](Millions of yen)
Item

AmountNet Sales
Cost of Sales
Gross Profit
Selling, general and administrative expenses
Operating Profit
Non-Operating Profit:
Interest income
Dividends income
Rent income on non-current assets
Equity in earnings of affiliates
Other
Non-Operating Expenses:
Interest expenses
Expenses for settlement of remaining business in mine
Expenses for rent in undertaking
Loss on retirement of non-current assets
Other
Ordinary Income
Extraordinary Income:Gain on sales of non-current assets
Gain on sales of marketable securities and investments insecurities
Other
Extraordinary Losses:
Loss on impairment
Corporate income taxes, resident taxes and business tax
Loss on valuation of investment securities
Provision for product warranties
Other
Income before Income Taxes
Corporate income taxes, resident taxes and business tax
Income taxes adjustments
Net Income
Net Income attributable to non-controlling interests
Net Income attributable to owners of the parent
Note: All amounts less than one million yen are rounded down.

－

62 －

1,662,990
1,469,911
193,078
156,21736,861
32,412
1,254
19,577
5,123
3,594
2,861
18,593
4,855
3,382
3,043
2,435
4,876
50,679
7,919
5,021
1,596
1,301
22,253
8,440
6,630
3,376
2,529
1,275
36,345
16,187
12,550
7,606
6,307
1,298

Statement of Changes in Consolidated Shareholders’ Equity[For the year ended March 31, 2019](Millions of yen)
Shareholders’ Equity
Capital stock
Balance as of April 1, 2018

Retainedearnings

Capital surplus

119,457

92,422

361,430

Changes of items during theyear
Cash dividends from retained
earnings
Net income attributable toowners of the parent
Reversal of revaluation
reserve for land
Increase associated with theincrease number ofconsolidated subsidiaries
Increase associated with thedecreased number of equitymethod affiliates(2,089)1,298(11,786)

48

48

1,940

1,940

0

0

1,298

(36)

(0)

Changes in equity of parent
company related totransactions with noncontrolling interests
Net change in items otherthanshareholders’ equity

571,222(11,786)

Acquisition of treasury stock
Disposition of treasury stock

Total
shareholders’equityTreasury stock

(36)

1

1

(28)

Total change during the year－

Balance as of March 31, 2019

119,457

(28)

(29)

(8,498)92,393352,932(34)(8,562)(2,123)562,659

Accumulated Other Comprehensive Income

Balance as of April 1, 2018

Valuationdifference on
securities
available-forsale

Deferred
gains orlosses onhedges

Revaluation reserve
for land

95,487

1,068

33,071

Changes of items during theyear
Cash dividends fromretained earnings
Net income attributable toowners of the parent

NonForeign Remeasurem
Total other controllingcurrency
ents ofcomprehensi Interests
translation
definedve incomeadjustments benefit plans(10,312)(8,066)111,249

86,023

Total Net
Assets768,495(11,786)

1,298

－

63 －

Reversal of revaluation
reserve for land
Increase associated with theincrease number ofconsolidated subsidiaries
Increase associated with thedecreased number of equitymethod affiliates

48
1,940

0
(36)

Acquisition of treasury stock
Disposition of treasury stock
Changes in equity of parent
company related totransactions with noncontrolling interests
Net change in items otherthan shareholders’ equity

1

(28)
(944)

(48)

4,484

Total change during the year

(44,267)

4,484

448

Balance as of March 31, 2019

51,220124

33,023(5,828)(7,617)(44,267)

(944)

(48)

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

－

64 －

448

(40,326)

3,730
3,730

(36,595)

70,92289,754

723,337(40,326)(45,158)

Balance Sheets[As of March 31, 2019](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

448,221
17,395
2,765
77,09738,08841,25465,35821,922739
7,923
15,65999,154
52,6258,657(421)
821,535
319,301
57,60033,90883,3080
132
3,356
128,221

Lease assets

745

Construction in progress

10,949

Timber

1,078

Intangible Assets:

2,900

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

412
2,168
57
261
499,333
165,057
304,938
4
66
2,131

－

65 －

Item
[LIABILITIES]Current Liabilities:
Notes payable
Accounts payable
Short-term loans payable
Commercial payable
Lease obligation
Other payables
Accrued expenses
Income taxes payable
Advance received
Progress payment received
Unearned revenue
Accrued bonuses
Employee deposits
Facilities related notes payable
Other facilities related payable
Assets removal liabilities
Gold payable
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
Reserve for loss on business of
Subsidiaries and associates
Provision for environmental
measures
Assets removal liabilities
Guarantee deposits received
Other
Total Liabilities[NET ASSETS]
Shareholders’ Equity:
Capital stock
Capita surplus
Capital reserve
Other capital surplus

Amount467,441
1,285
32,797
94,047
5,000
270
5,102
26,939621
2,797
13,756
207
4,215
8,683
1,169
13,259580
253,918
2,789
338,452
50,000194,726447
12,52921,203
10,304742
40,427
452
4,637
2,981
805,894
388,664
119,457
113,000
85,65427,346

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

6
36,531
489
5,157
(27)
(15,022)

Allowance for doubtful accounts

Total Assets

1,269,756

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

－

66 －

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

158,323
158,323
13
158,309(2,116)75,19747,354(257)
28,099463,862
1,269,756

Statements of Operations[For the year ended March 31, 2019](Millions of yen)
Item

AmountNet Sales
Cost of Sales
Gross Profit
Selling, general and administrative expenses
Operating loss
Non-Operating Profit:
Interest income
Dividends income
Rent income on non-current assets
Miscellaneous revenue
Non-Operating Expenses:
Interest expenses
Expenses for rent in undertaking
Settlement expenses of remaining business in mine
Loss on retirement of non-current assets
Allowance for doubtful accounts
Miscellaneous losses
Ordinary Income
Extraordinary Income:Gain on sales of marketable securities and investments
in securities
Reversal of allowance for investment loss
Gain on sales of subsidiaries and affiliates' stocks
Gain on sales of non-current assets
Extraordinary Losses:
Provision for environmental measures
Loss on valuation of stocks of subsidiaries and affiliates
Impairment loss
Other
Pretax net loss
Corporate income taxes, resident taxes and business tax
Income taxes adjustments
Net loss
Note: All amounts less than one million yen are rounded down.

－

67 －

852,820
812,528
40,291
51,24010,94938,753742
31,827
4,836
1,347
22,635
2,052
3,139
3,335
2,658
9,416
2,031
5,169
1,626
1,190
235
150
50
11,511
6,630
3,142
380
1,358
4,715
140
8,713
13,568

Statement of Changes in Shareholders’ Equity[For the year ended March 31, 2018](Millions of yen)
Shareholders’ Equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance as of April
1, 2018
Change during theyear
Provision ofvoluntary retained
earnings
Reversal ofvoluntary retained
earnings
Cash dividends
fromretained earnings
Net loss
Reversal ofrevaluation reserve
for landAcquisition oftreasury stock
Disposition oftreasury stock
Net change initems other thanshareholders’equityTotal change during
the year
Balance as ofMarch 31, 2019

119,457

Capitalreserve

Other
capitalsurplus85,65427,346

Reserve forReserve for
special accountadvanced
Total capitalfordepreciation
surplusadvancedofdepreciation of
Non-current
noncurrent
assetsassets113,000

6,761

526

(6,761)

(526)

Total
retainedearnings

Treasurystock

13

176,243

183,545(2,082)

13

(13)

－

－

(13)

7,302

－

－

(11,786)(11,786)(11,786)

133

－

－

119,457

85,654

(0)

(0)

(0)

27,346(6,761)(526)－

113,000－

Valuation and Translation Adjustments

Balance as of April 1,
2018
Changes of items
during the year
Provision ofvoluntary retained
earnings
Reversal of voluntary
retained earnings
Cash dividends fromretained earnings
Net loss

Earnedsurpluscarriedforward(13,568)(0)Valuationdifference
on securities
available for-sale

Deferred
gains orlosses onhedges

Revaluation
reserve for
land

Total
Valuation andtranslation
adjustments

90,186761

28,233

119,181

Total Net
Assets533,103－－(11,786)(13,568)

－

68 －

Total
shareholders’equityDepositforminingsearch－13(17,933)
158,309(13,568)(13,568)

133(25,221)
158,323

413,921

133

(36)
1

(36)

(34)

(25,256)(2,116)1

388,664

Reversal ofrevaluation reserve
for landAcquisition oftreasury stock
Disposition oftreasury stock
Net change in items
other thanshareholders’ equity
Total change during
the year
Balance as of March
31, 2019

133
(36)
1

(42,831)(1,018)(133)(43,984)(43,984)

47,354(257)

28,09975,197

463,862(42,831)(1,018)(133)(43,984)(69,240)

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

－

69 －