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

BUSINESS REPORT(For the Period from April 1, 2016 through March 31, 2017)
1. Particulars Concerning the State of the Group(1) Business Developments[The Group’s operating profit and ordinary income decreased, affected by such factors as thestrong yen, a downturn in copper prices and lower domestic demand for cement.]
During the consolidated fiscal year under review, there was an economic slowdown in
China, Thailand and Indonesia in Asia. However, in the United States, the economy remainedon a modest recovery track.
In the Japanese economy, employment and income conditions were on the road torecovery during the consolidated fiscal year under review. However, consumer spending andcapital expenditure grew at a sluggish pace.
Regarding the business environment for the Mitsubishi Materials Group, foreignexchange markets were characterized by year-on-year yen appreciation, and the Group wasaffected by such factors as a decrease in prices of copper and other major metals and a fall inoverall demand for cement in Japan.
Under these circumstances, the Mitsubishi Materials Group continued to implement
measures based on the group-wide growth strategies set out in its medium-term management
plan (FY2015-2017) “Materials Premium 2016 – Challenge to become the world's leadingbusinesses group”: “Fortifying the foundation for growth,” “Strengthening global
competitiveness,” and “Pursuing a recycling-based business model,” and sought businessdevelopment in overseas markets while promoting business selection and concentration.
As a result, consolidated net sales for the fiscal year under review totaled ¥1,304,068
million, down 8.0% year on year. Operating profit declined 15.1% year on year, to ¥59,761
million, and ordinary income decreased 11.8%, to ¥63,925 million. Net income attributableto owners of parent was ¥28,352 million, down 53.8% year on year.
On a non-consolidated basis, net sales amounted to ¥674,515 million, down 8.3% fromthe previous fiscal year. Operating profit decreased 54.2% to ¥12,120 million, ordinary－

1 －income declined 23.2% to ¥27,202 million, and net income fell 40.3% to ¥19,701 million.
Based on its Articles of Incorporation, the Company is to distribute surpluses following
resolutions at Board of Directors meetings. We regard the distribution of profits to allshareholders as one of our most important priorities. Accordingly, our policy is to makedecisions on profit appropriation based on comprehensive consideration of various factors
related to overall management, such as income over the relevant period, retained earnings,
and financial position. Based on this policy, the Board of Directors, at its meeting on May 11,
2017, decided to distribute a fiscal year-end dividend of ¥40 per share.
The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective
date of October 1, 2016. Taking into consideration this consolidation of the Company’s shares,
the interim dividend of ¥2 per share for the fiscal year under review comes in at ¥20 per share.
Combined with the fiscal year-end dividend of ¥40 per share, the annual dividend amounts to¥60 per share, down ¥40 per share compared with the previous fiscal year.

－

2 －A report of the Group’s performance by business segment is presented as follows.
● Cement[Despite lower sales volumes in Japan and China, operating profit increased on the backof such factors as higher sales volume in the United States.]
The sales volume decreased in Japan because of a decline in demand throughout themarket, chiefly reflecting a delay in construction work mainly due to labor shortages andsluggish growth in demand in the private sector in the Tokyo area. Business restructuring
also had a negative effect on sales.
In the United States, the sales volume of ready-mixed concrete increased due toaggressive sales in Southern California. The sales volume of cement also increased
thanks to the rise in the sales volume of ready-mixed concrete. The sales price of cementrose following its review.
In China, the sales volume declined due to restrictions on production activities at
cement factories, etc. as a countermeasure against severe air pollution and a decline indemand associated with real estate investment in Shandong Province. In the overall
Cement business, cement production amounted to 11.6 million tons, unchanged from thelevel a year ago.
As a result, net sales decreased and operating profit increased year on year for theentire Cement business. Ordinary income also increased because of the rise in operating
profit.
Consolidated net sales in the Cement business amounted to ¥177,566 million, down
10.1% from the previous fiscal year. Operating profit rose 3.9% to ¥20,923 million andordinary income increased 4.1% to ¥20,520 million.
● Metals[In the copper business, operating profit decreased owing mainly to the impact of thestrong yen. In contrast, operating profit in the gold and other valuable metals businessincreased due to successful efforts aimed at reducing costs, among other factors. In thecopper and copper alloy products business, operating profit grew, due in part to higher
sales of products for the automobile sector.]
In the copper business, net sales and operating profit declined, primarily reflecting
year-on-year yen appreciation and a fall in sulfuric acid prices. Copper cathodeproduction for the entire Metals business amounted to 543 thousand tons, up 31 thousand
tons from the previous fiscal year.

－

3 －In the gold and other valuable metals business, net sales decreased while operating
profit increased, reflecting a decrease in production due to a fall in the contained amountin ore, which was offset by cost reductions.
In the copper and copper alloy products business, net sales declined while operating
profit increased mainly due to a yen appreciation, despite an increase in the sales volume
of products for automobiles, and other uses.
As a result, the entire Metals business posted year-on-year decreases in net sales andoperating profit. Ordinary income for the segment increased because of the increases in
dividend income and equity in earnings of affiliates.
Consolidated net sales in the Metals business amounted to ¥629,470 million, down
8.6% from the previous fiscal year. Operating profit fell 28.4% to ¥17,372 million while
ordinary income increased 1.7% to ¥27,513 million.
● Advanced Materials & Tools[Operating profit in the cemented carbide products business decreased, owing to thedownturn in overseas sales and the impact of the strong yen. In the high-performancealloy products business, operating profit declined due to a decrease in domestic sales.]In the cemented carbide products business, net sales and operating profit declined
due to year-on-year yen appreciation in addition to a fall in overseas sales.
In the high-performance alloy products business, sales of products for automobiles
remained firm in North America, but lower sales in Japan caused net sales and operating
profit to decline.
As a result, the overall Advanced Materials & Tools business recorded year-on-year
decreases in net sales and operating profit. Ordinary income declined due to the decreasein operating profit.
Consolidated net sales in the Advanced Materials & Tools business amounted to¥143,415 million, down 5.4% from the previous fiscal year. Operating profit fell 26.5%
to ¥11,774 million and ordinary income decreased 33.8% to ¥9,913 million.
● Electronic Materials & Components[Operating profit in the advanced materials and chemical products business increased asa result of steady trends in sales of semiconductor manufacturing equipment-related andother products. In the electronic components business, operating profit also increased due
largely to higher sales of products for household appliances. In the polycrystalline siliconbusiness, operating profit decreased owing to the drop in sales.]－4 －In the advanced materials and chemical products business, net sales decreased while
operating profit increased because sales of products related to semiconductor
manufacturing equipment and chemical products for hybrid vehicles remained strong,
although sales of products for LSIs for smartphones and power modules were down.
In the electronic components business, both net sales and operating profit increased,reflecting a higher volume of sales of products for home appliances and opticalcommunication related equipment despite a lower volume of sales of products for
information and telecommunications equipment.
The polycrystalline silicon business recorded a decline in net sales and operating
profit due to a fall in sales.
As a result, the entire Electronic Materials & Components business registered yearon-year declines in net sales and operating profit. Ordinary income dropped as a resultof decreases in operating profit and equity in earnings of affiliates.
Consolidated net sales in the Electronic Materials & Components business amounted
to ¥63,087 million, down 10.2% from the previous fiscal year. Operating profit decreased
22.9% to ¥2,454 million and ordinary income fell 55.8% to ¥2,802 million.
● Aluminum[In the aluminum cans business, sales volumes of bottle cans increased. In the rolled
aluminum and processed aluminum products business, sales volumes of products forautomobiles were also up. Operating profit for the overall Aluminum business increased.]In the aluminum can business, sales volume of bottle cans increased, and raw
material costs declined.
In the rolled aluminum and processed aluminum products business, sales volume of
products for automobiles increased. However, net sales declined due to falling market
metal prices.
In the entire Aluminum business, energy costs were lower.
As a result, the entire Aluminum business posted a decrease in net sales and anincrease in operating profit year on year. Ordinary income increased due to the rise inoperating profit.
Consolidated net sales in the Aluminum business amounted to ¥155,962 million,
down 1.7% from the previous fiscal year. Operating profit surged 82.2% to ¥7,886
million and ordinary income jumped 105.4% to ¥7,480 million.

－

5 －● Others[Operating profit in the energy-related business increased as a result of higherhydroelectric power plant electric sales volumes. In the home appliance recycling
businesses, operating profit declined. In areas outside the energy-related and home
appliance recycling businesses, operating profit decreased.]In the energy-related business, electricity sales volume rose due to the completion of
upgrade work on some hydroelectric power plants. However, sales of coal and nuclear
energy-related services fell, resulting in decline in net sales and an increase in operating
profit.
In the home appliance recycling businesses, net sales and operating profit declined,reflecting fluctuation in the recycling unit cost of valuables despite a high volume ofrecycling.
Total net sales and operating profit in the entire Others business excluding the energyrelated business and the home appliance recycling businesses declined.
In the overall Others business, net sales and operating profit also fell from a year
earlier. Ordinary income decreased due to the decrease in operating profit and an increasein the share of loss of entities accounted for using the equity method.
Consolidated net sales in the Others business amounted to ¥218,246 million, down
10.3% from the previous fiscal year. Operating profit declined 2.0% to ¥10,127 million
and ordinary income decreased 27.8% to ¥7,177 million.

－

6 －Sales, operating profit and ordinary income for each business segment of the Group wereas follows:Business
Segment

Item

Net Sales
CementOperating Profit
Ordinary Income
Net Sales
MetalsOperating Profit
Ordinary Income
Net Sales
Advanced
Materials & Operating Profit
Tools
Ordinary Income
Electronic Net Sales
Materials & Operating Profit
Components Ordinary Income
Net Sales
Aluminum Operating Profit
Ordinary Income
Net Sales
OthersOperating Profit
Ordinary Income
Elimination Net Sales
andOperating Profit
Corporate
Assets orOrdinary Income
Expenses

91st Period
92nd Period(April 2015– March 2016) (April 2016– March 2017)
AmountAmount% of Total% of Total(¥ Millions)(¥ Millions)
197,500
13.9
177,566
13.6
20,131
28.6
20,92335.0
19,71027.2
20,52032.1
688,72148.6
629,470
48.3
24,24734.4
17,372
29.1
27,04837.3
27,51343.0
151,668
10.7
143,41511.0
16,022
22.8
11,77419.7
14,965
20.7
9,913
15.5
70,254
5.0
63,087
4.8
3,184
4.5
2,454
4.1
6,339
8.8
2,802
4.4
158,665
11.2
155,962
12.0
4,327
6.1
7,886
13.2
3,641
5.0
7,480
11.7
243,26817.2
218,246
16.7
10,331
14.7
10,127
16.9
9,936
13.7
7,177
11.2
(92,182)(6.5)(83,680)(6.4)(7,823)(11.1)(10,778)(18.0)

YOY
Change(%)(10.1)
3.9
4.1
(8.6)
(28.4)
1.7(5.4)(26.5)(33.8)(10.2)(22.9)(55.8)
(1.7)
82.2
105.4
(10.3)(2.0)(27.8)(9.2)
37.8(9,199)(12.7)(11,481)(18.0)

24.8

1,417,895
70,42072,442

100.0
100.0
100.0

1,304,068
59,761
63,925

100.0
100.0
100.0

(8.0)
(15.1)(11.8)(Note)Total

Net Sales
Operating Profit
Ordinary Income

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

－

7 －(2) Status of Group Financing
During the fiscal year under review, the Group raised funds primarily through theissuance of straight bonds totaling ¥30 billion as well as commercial paper and borrowings
from banks. Debts (including corporate bonds) as of the end of the fiscal year amounted to¥528,230 million, up ¥1,921 million from a year earlier.
(3) Status of Group Capital Expenditures
The Group determines its capital expenditures by carefully selecting investment casesin the fields where future profit and growth are expected while working to reduce interestbearing debt.
In the fiscal year under review, total capital expenditures amounted to ¥75,685 million,
which consisted mainly of maintenance and repairs of existing facilities in each business,
as well as reinforcement and streamlining of production facilities.
Capital expenditures by business segment in the fiscal year under review were as
follows:● Cement
In addition to the reinforcement of domestic industrial waste treatment facilities, the Group
carried out maintenance and repair work on existing facilities in Japan and the United States.
Capital expenditures in this business amounted to ¥20,517 million.
● Metals
The Group carried out maintenance and repair work at copper smelting and processing
facilities in Japan.
Capital expenditures in this business amounted to ¥19,339 million.
● Advanced Materials & Tools
The Group carried out reinforcement and streamlining work in order to meet the increasing
demand in this business as a whole, as well as maintenance and repair work at existing
facilities.
Capital expenditures in this business amounted to ¥14,719 million.
● Electronic Materials & Components
In addition to carrying out maintenance and repair work at existing facilities for electricmaterials and components, focusing mainly on semiconductor-related products, the Groupreinforced and streamlined production facilities.
Capital expenditures in this business amounted to ¥2,946 million.

－

8 －● Aluminum

In addition to reinforcing its production facilities for aluminum cans, the Group carried out
maintenance and repair work at existing facilities.
Capital expenditures in this business amounted to ¥8,658 million.
● Others
The Group carried out maintenance and repair work at existing facilities.
Capital expenditures in this business amounted to ¥9,503 million.

－

9 －(4) Trends of Assets and Profit and Loss Accounts
1. The Group’s Trends of Assets and Profit and Loss Accounts (Consolidated)
89th Period
90th Period
91st Period
92nd Period(¥ millions, except per share data) (April 2013 – (April 2014 – (April 2015 – (April 2016 –March 2014) March 2015) March 2016) March 2017)
Net Sales
1,414,796
1,517,265
1,417,895
1,304,068
Operating Profit
66,281
71,87170,42059,761
Ordinary Income
76,90281,09372,442
63,925Net Income Attributable to52,55156,14761,31628,352
Owners of the Parent
Net Income per Share
40.10
42.85
46.80
216.44
Net Assets
525,707629,514645,017710,195
Net Assets per Share
348.54420.36423.83
4,743.27
Total Assets
1,778,505
1,898,157
1,793,375
1,896,939
Note:

The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date ofOctober 1, 2016. Accordingly, net income per share and net assets per share data is calculated on theassumption that the consolidation of the Company’s shares was conducted at the beginning of theconsolidated fiscal year under review.

2. The Company’s Trends of Assets and Profit and Loss Accounts (Non-consolidated)
89th Period
90th Period
91st Period
92nd Period(¥ millions, except per share data) (April 2013 – (April 2014 – (April 2015 – (April 2016 –March 2014) March 2015) March 2016) March 2017)
Net Sales
735,558
810,505
735,501
674,515

Note:

Operating Profit

23,18023,70826,47812,120Ordinary Income

42,13435,69935,40927,202Net Income

42,37733,19333,001

19,701Net Income per Share

32.33

25.33

25.19

150.40Net Assets
Net Assets per ShareTotal Assets

398,674304.22
1,177,558

432,265329.91
1,252,174

435,094332.13
1,158,968

477,706
3,647.06
1,265,120

The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date ofOctober 1, 2016. Accordingly, net income per share and net assets per share data is calculated on theassumption that the consolidation of the Company’s shares was conducted at the beginning of theconsolidated fiscal year under review.

－

10 －

(5) Priorities for the Group
1. Group Priorities[In addition to becoming a leading company in each of the major markets in Japan andoverseas, the Mitsubishi Materials Group is targeting high levels of profitability andefficiency while working diligently to expand at a pace that exceeds the rate of market
growth by optimizing its business portfolio, pursuing thoroughgoing competitive
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, reflecting concern over a slowdown in certain economic indicatorsin the United States, the political situation in the Korean Peninsula, a downturn in the
Chinese economy, and the political trends in Europe and the United States.
We believe the Japanese economy will continue its modest recovery, buoyed by
improvements in the employment and income conditions, but recognize that there may be
a downside risk due to overseas political and economic trends.
Turning to the Group’s operating environment, the Japanese economy appears to be
recovering on the back of growth in exports, etc. However, the recent yen appreciation,rising oil prices and uncertainty over trends in major metal prices give cause for concern.
The Group will pursue a number of measures to enhance its corporate value by
developing the Long-Term Management Policy, which looks ahead 10 years, and theMedium-term Management Strategy for FY2018-FY2020, as described below.
(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, with the use of our uniqueand distinctive technologies, for People, Society and the Earth.” 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 the Medium- to LongTerm Targets (the company in the future) and the Group-wide Policy as the Long-Term
Management Policy as described below.
<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

－

11 －

<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 theexternal 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 “MediumTerm 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 growth business,growth promotion business and profitability restructuring business, and will promoteselection and concentration and improve capital efficiency after determining a direction
geared to the characteristics of each business and clarifying any issues. Stable growthbusiness consists of the cement, metals (smelting), recycling and renewable energy
businesses, and in this category, the Company will aim to strengthen its business foundations
by maintaining and improving cost competitiveness. Growth promotion business consists ofthe metals (copper and copper alloy) and advanced materials & tools businesses, and here theCompany will seek business development 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 tosolve 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 make comprehensive efforts to increase our businesscompetitiveness by promoting “Differentiation” and “New development,” such as thedevelopment of new products and new manufacturing technologies, to become an entity thatis one step ahead of other companies through early responses to changes in the business

－

12 －

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 that will become thecore for sustainable growth by positioning important social needs the Company should meetare 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 implement specific measures, under the key strategies shown below:
 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
2. Issues in Each Business● Cement Business
In Japan, domestic demand for cement is expected to exceed the year-earlier level andstand at approximately 42 million tons, given that the construction of large projects including
those related to the Olympic Games in 2020 and the linear Chuo Shinkansen (in some
sections) are expected to gain momentum. Under these circumstances, we will work to securesales volumes by steadily taking in demand for cement for the large projects.
In the United States, we expect the demand for cement and ready-mixed concrete tomaintain its upward momentum, driven by increasing construction demand in the private
sector. With these developments as a backdrop, we will seek to increase sales and profits bytargeting an increase in sales volume of cement and ready-mixed concrete and further pricerevisions.
● Metals Business
While copper prices currently remain firm, we will keep a close watch on the market
trends going forward, along with the foreign exchange and the stock market conditions.
In copper & copper alloy products, demand of products for automobiles and otherproducts is expected to remain stable.
In this environment, we will continue to seek a shift toward a more solid structure less

－

13 －

susceptible to price fluctuations by lowering the breakeven point through a reduction inenergy costs and fixed cost. In copper smelting and refining, we will also make efforts toimprove earnings by expanding recycling operations through building a system able toincrease the treating volume of E-Scrap and treat difficult-to-be-processed waste, etc., while
initiatives to achieve stable operations at smelters in Japan and overseas. In copper & copper
alloy products, we will continue to increase profitability by enhancing sales competitivenessthrough the accelerated development of alloys, drawing on our technological anddevelopment capabilities.
● Advanced Materials & Tools BusinessIn the cemented carbide products, there are signs of recovery in the Chinese and North
American markets, and we expect demand to increase, particularly among our main customer
base in the automobile and aerospace industries over the medium to long term. Under thesecircumstances, we will add to sales bases and production bases and will expand our sales
network. We will strive to promote sales, focusing on activities for receiving orders byindustry and increasing direct sales to end users. Furthermore, we will continue working tostabilize our sourcing of tungsten, a key constituent, by improving the recycling ratio andthrough other efforts to diversify procurement sources.
Turning to the high-performance alloy products, we expect demand for our mainstay
sintering parts to increase in line with growth in the automobile industry. The Group will
work to increase earnings mainly by enhancing productivity at production locations.
● Electronic Materials & Components BusinessIn the advanced materials and chemical products, sales of products related to
semiconductor manufacturing equipment are expected to remain firm. In addition, because
demand of products for power modules is also increasing, opportunities to receive orders is
expected to increase. We will strive to enhance profitability by using our core technologicalcapabilities and strengthening our sales competitiveness and our ability to make proposals tocustomers, always remaining a step ahead of customers’ needs in each market.
In the electronic components, sales remain solid thanks to rising sales of products forhome appliances and optical communication related equipment, although sales of products
for information and telecommunications equipment are declining. In addition, we plan toexpand sales of new surge protective devices (SPD). We will continue working to strengthen
our business structure by introducing new products quickly and continuing to reduce costs.
In polycrystalline silicon, we will strive to improve quality and reduce costs by

－

14 －

establishing a safety and efficient operating structure, thereby creating a business foundation
able to ensure profits even when demand is weak.
● Aluminum BusinessIn the aluminum beverage cans, we will seek to achieve stable orders for regular cansand expand sales of aluminum bottle cans, our strategic products. We will also promote theadvantageous procurement of raw materials, stable product quality and cost reduction.
In the rolled and processed aluminum products, we will endeavor to secure orders of
products for beverage cans, automobiles and electronic materials in Japan. Overseas, we will
work to expand sales of products for automobiles where demand is expected to increase.
We will also actively promote the recycling business of used aluminum cans.

－

15 －

(6) Major Business Activities of the Group (as of March 31, 2017)
The major business activities of the Group are production and sales of cement andready-mixed concrete and other products; refining, production and sales of copper, gold,
silver and other metals; production and sales of cemented carbide products and highperformance metal products; production and sales of advanced materials, chemical
products, electronic components and polycrystalline silicon; and production and sales ofaluminum beverage cans , rolled aluminum and processed aluminum products ,etc. The
major products and services of each business are as follows:Business Division
CementMetalsAdvanced Materials& Tools

Electronic Materials& Components

Aluminum

OthersMajor Products
Ordinary Portland cement and various other types of cements, cementbased solidification materials, aggregate, ready-mixed concrete
Copper, gold, silver, lead, tin, sulfuric acid, processed copper products(copper cakes, billets, copper alloy products, wire rods, etc.)
Cemented carbide products (cemented carbide tools, cement carbide
alloy, etc.), high-performance metal products (sintered products, etc.)
Advanced materials (fine materials for assembly, sputtering targets,
precision silicon products, columnar crystal silicon, insulating circuit
substrates, etc.), chemical products (fluorine chemical products,
conductive coatings, etc.), electronic components (surge absorbers,
thermistor sensors, chip antennas, etc.), polycrystalline silicon, silane
gas, etc.
Bodies, ends and caps of aluminum beverage cans, rolled aluminumproducts, processed aluminum products, etc.
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 development, leasing,management, trading, forestry), others (engineering, geological surveys,
resource exploration, and consulting, etc.)

－

16 －

(7) The Group’s Major Plants and Business Offices (as of March 31, 2017)
1. The Company
Head office

1-3-2, Otemachi, Chiyoda-ku, Tokyo

Aomori Plant, Iwate Plant, Yokoze Plant (Saitama),
Higashitani Mine (Fukuoka), Kyushu Plant (Fukuoka)
Akita Refinery, Naoshima Smelter & Refinery
Metals(Kagawa),
Ikuno Plant (Hyogo), Sakai Plant (Osaka)
Advanced Materials Tsukuba Plant (Ibaraki), Gifu Plant, Akashi Plant(Hyogo),Plants and others& Tools
Electronic Materials Sanda Plant (Hyogo), Ceramics Plant (Saitama),
Yokkaichi Plant (Mie)& Components
Saitama Property Management Office,Human Resources Development Center (Saitama),
Others
Production Engineering Center (Saitama)
Energy Project & Technology Center (Saitama)
Sapporo Branch, Tohoku Branch (Miyagi), Nagoya Branch,
Branch (office)Osaka Regional Head Office, Kyushu Branch (Fukuoka)
CementR&D centers

Central Research Institute (Ibaraki)

Overseas offices

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

－

17 －

2. Major Subsidiaries
Business Division
CementMetalsAdvanced Materials& Tools
Electronic Materials& Components
Aluminum

OthersNames of Subsidiaries *MCC Development Corp. (U.S.), Robertson’s Ready Mix, Ltd. (U.S.),
Mitsubishi Cement Corp. (U.S.)PT Smelting (Indonesia), Mitsubishi Shindoh Co., Ltd., (Tokyo),
Mitsubishi Cable Industries, Ltd. (Tokyo), Materials Eco-Refining Co.,
Ltd. (Tokyo), Onahama Smelting & Refining Co., Ltd. (Tokyo), Sambo
Metals Corp. (Osaka)
Diamet Corp. (Niigata), Mitsubishi Hitachi Tool Engineering, Ltd.
(Tokyo), MMC Ryotec Corporation (Gifu)
Mitsubishi Polycrystalline Silicon America Corp. (U.S.),
Mitsubishi Materials Electronic Chemicals Co., Ltd. (Akita),
MMC Electronics (Thailand) Ltd. (Thailand)
Universal Can Corp. (Tokyo), Mitsubishi Aluminum Co., Ltd. (Tokyo),
MA Packaging Co., Ltd. (Tokyo)
Mitsubishi Materials Trading Corp. (Tokyo),
Mitsubishi Materials Techno Corp. (Tokyo), Dia Consultants Co., Ltd.
(Tokyo),Mitsubishi Materials Real Estate Corp. (Tokyo), Materials’ Finance Co.,
Ltd. (Tokyo)

Note: Words within parentheses in the table denote the regions (for domestic subsidiaries) or countries (foroverseas subsidiaries) where each subsidiary's head office is located.

－

18 －

(8) The Status of Employees (as of March 31, 2017)
1. Status of Employees of the Group (Consolidated)
Number of Employees *1

Business Division
Cement4,181 (increased by 15)

Metals5,408 (decreased by 35)

Advanced Materials & Tools

6,831 (increased by 2)

Electronic Materials & Components

1,654 (increased by 80)

Aluminum

2,769 (increased by 11)

Others3,341 (increased by 142)

All Companies (for the whole Group) * 2

675 (increased by 8)

Total

24,859 (increased by 223)

Note 1: Employee numbers within parentheses denote the change from the previous fiscal year-end.
Note 2: Employees stated for all companies (for the whole Group) are attached to administrative divisions thatcannot be demarcated within a specific business division.

2. Status of Employees of the Company (Non-consolidated)
Number of Employees
YOY Change (persons)(persons)
4,580

Average Age (years)

Increased by 55

－

41.1

19 －

Average Years of
Employment (years)
17.5

(9) The State of Major Subsidiaries and Affiliates (as of March 31, 2017)
1. The State of Major Subsidiaries
Name of the Company

Percentage ofOwnership

Paid-in Capital(including indirectownership) (%)

Line of Business

PT Smelting

326 million U.S.
dollars 1)

60.5

Production and sales of electrolytic
copper in Indonesia

MCC Development Corp.

811 million U.S.
dollars 1), 2),70.0

Investment in ready-mixed
concrete businesses in the U.S.

Onahama Smelting &Refining Co., Ltd.

6,999 million yen

55.7

Production and sales of electrolytic
copperSambo Metals Corp.

80 million yen

100.0

Sales of processed copper products
and processed copper alloy
products

1,500 million yen

100.0

Production and sales of sinteredproducts

Mitsubishi Cement Corp.

70 million U.S.
dollars 1), 2)

67.0

Production and sales of cement in
the south-west area of the U.S.

Mitsubishi Polycrystalline
Silicon America Corp.

328 million U.S.
dollars 1)

100.0

Production and sales ofpolycrystalline silicon for
semiconductors in the U.S.

Materials Eco-Refining Co.,Ltd.

400 million yen

100.0

Smelting, processing and recyclingof non-ferrous metals

Materials’ FinanceCo., Ltd.

30 million yen

100.0

Financing the Company and its
affiliates

Mitsubishi Aluminum Co.,Ltd.

8,196 million yen

87.7

Production and sales of rolled andprocessed aluminum products

Mitsubishi ShindohCo., Ltd.

8,713 million yen

100.0

Processing and sales of copper andcopper alloy

8,000 million yen 3)

100.0

Production and sales of optical andelectronic components

Diamet Corp.

Mitsubishi Cable Industries,
Ltd.

－

20 －

Mitsubishi Hitachi Tool
Engineering, Ltd.

1,455 million yen

51.0

Mitsubishi Materials Techno
Corp.

1,042 million yen

100.0

Mitsubishi Materials TradingCorp.

393 million yen

100.0

Mitsubishi Materials
Real Estate Corp.

4,500 million yen

100.0

Sales and leasing of real estate

Universal Can Corp.

8,000 million yen

80.0

Production and sales of aluminum
beverage cans

32 million U.S.
dollars 1), 2)

100.0

Production and sales of readymixed concrete and aggregate in
the south-west area of the U.S.

Robertson’s
Ready Mix, Ltd.

Production and sales of cemented
carbide tools
Technical construction and civilengineering; production and salesof industrial machinery
Sales of the Company’s products
and other non-ferrous metal
products

Note 1: Paid-in capital is shown.
Note 2: This company closes its accounts in December. For that reason, paid-in capital as of December 31, 2016is listed, but there is no change in the paid-in capital as of March 31, 2017.
Note 3: Mitsubishi Cable Industries, Ltd. reduced its capital on March 14, 2017. As a result, the company’s capitalfell from ¥21,815 million to ¥8,000 million.

－

21 －

2) The State of Major Affiliates
Name of the Company

Percentage ofOwnership

Paid-in
Capital(Million Yen)(including indirectownership) (%)

Ube-Mitsubishi Cement
Corp.

8,000

50.0

NM Cement Co., Ltd

7,001

30.0

Kobelco & Materials
Copper Tube Co., Ltd.

6,000

45.0

P.S. Mitsubishi
Construction Co., Ltd

4,218

33.9

Hitachi Metals MMC
Superalloy, Ltd.

3,808

49.0

－

22 －

Line of Business
Sales of cement and cement
related products
Investment in Nghi Son Cement
Corp. (Vietnam)
Production and sales of copper
tubes and fabricated copper tubes
Pre-stressed concrete works, civilengineering and sales of concrete
products
Production and sales of special heat
resistant alloys, corrosion resistantalloys, special copper alloys and othernon-ferrous metal materials

(10) Acquisition or disposal of shares, equity interests or share options in othercompanies
Based on a resolution of the Board of Directors at a meeting held on September 28, 2016,
the Company decided to acquire the Special Products Division of the Luvata Group throughthe purchase of an equity interest and business transfer effective May 2, 2017.
(11) The Group’s Major Lenders (as of March 31, 2017)
Major Lenders

Borrowed
Amount(Million Yen)

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation

Company Shares held by the Lender
Number of Shares Held(Thousand)

Percentage ofShareholding (%)

122,509

2,465

1.9

87,914

1,159

0.9

Mizuho Bank, Ltd.

39,544157

0.1

The Hachijuni Bank, Ltd.

17,311223

0.2

The Norinchukin Bank

16,662500

0.4Note: Percentages of shareholding were calculated after deducting treasury shares (505,540 shares).

－

23 －

2. Articles Concerning Stock (as of March 31, 2017)(1) Total number of authorized shares: 340,000,000 (decreased by 3,060,000,000 sharesfrom the previous fiscal year-end)
Note: The Company consolidated its shares at a 10:1 ratio of its common stock, andrevised the total number of authorized shares from 3,400,000,000 shares to
340,000,000 shares, with an effective date of October 1, 2016. Accordingly, thetotal number of authorized shares decreased by 3,060,000,000 shares to
340,000,000 shares.
(2) Total number of issued shares: 131,489,535 (decreased by 1,183,405,816 shares fromthe previous fiscal year-end)
Note: The Company consolidated its shares at a 10:1 ratio of its common stock, andrevised the number of shares constituting one share unit from 1,000 shares to 100
shares, with an effective date of October 1, 2016. Accordingly, the total number ofissued shares decreased by 1,183,405,816 shares to 131,489,535 shares.
(3) Number of shareholders: 100,470 (decreased by 8,909 from the previous fiscal yearend)This includes 74,184 shareholders with voting rights (decreased by 3,734 from theprevious 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)
National Mutual Insurance Federationof Agricultural Cooperatives
Meiji Yasuda Life Insurance
Company
The Bank of Tokyo-Mitsubishi UFJ,
Ltd.
Japan Trustee Services Bank, Ltd.
(Trust account 5)
Mitsubishi Heavy Industries, Ltd.

－

24 －

Percentage ofShareholding (%)

9,025

6.9

5,997

4.6

3,135

2.4

3,101

2.4

2,465

1.9

2,399

1.8

1,900

1.5

STATE STREET BANK WEST
CLIENT-TREATY 505234
Japan Trustee Services Bank, Ltd.
(Trust account 2)
Japan Trustee Services Bank, Ltd.
(Trust account 1)

1,772

1.4

1,761

1.3

1,747

1.3

Note: Percentages of shareholding were calculated after deducting treasury shares (505,540 shares)

－

25 －

3. Articles Concerning the Company’s Executives(1) Directors and Audit and Supervisory Board Members (as of March 31, 2017)
Title
Representative Director
Chairman
Representative Director
President

Representative Director(Executive Vice
President)

Naoki Ono

Director

Director

General Operation of theCompany
Assistant to the President
President, Metals
Company
responsible for:
Production Engineering;Aluminum Business
Assistant to the President
President, Cement
Company
responsible for:Environment & CSR,
Resources
responsible for:
Internal Audit; Finance &Accounting

Akira Takeuchi

Osamu Iida

Director

Important Positions of
Other Organizations

Hiroshi Yao

Representative Director(Executive Vice
President)

Representative Director(Senior Managing
Executive Officer)
Representative Director(Senior Managing
Executive Officer)

Position andResponsibilities

Name

Nobuo Shibano

Outside Director, P.S.
Mitsubishi Construction
Co., Ltd.
President, Materials’
Finance Co., Ltd.

General Manager,
Corporate Strategy Div.

Yasunobu Suzuki

Representative Director,
Okamoto Associates,
Inc.2);
Outside Director, Nippon
Yusen Kabushiki Kaisha(NYK Line)3); Outside
Director, NTT DATA
Corporation4)
Senior Advisor, Dai-Ichi
Life Research InstituteInc.5)
Outside Director,
Innotech Corporation6)
Outside Director, Gunosy
Inc.7)
Outside Director,
Happinet Corporation8) 9)

Yukio Okamoto1) 16)

Takashi Matsumoto1) 16)

Mariko Tokuno
1) 16)

10)

－

26 －

Audit & Supervisory
Toshikazu Murai
Board Member (Standing)
Audit & Supervisory
Hiroshi Kubota11)
Board Member (Standing)
Senior Advisor,
Mitsubishi UFJ Trust andBanking Corporation14)
Representative Lawyer,
Kasai Sogo Law Office15)

Audit & Supervisory Board Akio Utsumi12) 13) 16)
MemberAudit & Supervisory BoardNaoto Kasai
12) 16)
Member

Note 1: Mr. Yukio Okamoto, Mr. Takashi Matsumoto and Ms. Mariko Tokuno are Outside Directors as defined in Article
2, Paragraph 15 of the Companies Act.
Note 2: There is no business relationship between the Company and Okamoto Associates, Inc.
Note 3: There is a business relationship for the consigned transportation of coal between the Company and NYK Line.
Note 4: There is a business relationship for the use of IT services between the Company and NTT DATA Corporation.
Note 5: There is no business relationship between the Company and Dai-Ichi Life Research Institute Inc.
Note 6: There is no business relationship between the Company and Innotech Corporation.
Note 7: There is no business relationship between the Company and Gunosy Inc.
Note 8: There is no business relationship between the Company and Happinet Corporation.
Note 9: Ms. Mariko Tokuno stepped down as President, Representative Director and CEO of Ferragamo Japan K.K.
effective September 1, 2016.
Note 10: There is no business relationship between the Company and Ferragamo Japan K.K.
Note 11: Mr. Hiroshi Kubota has to date mainly been assigned to areas that relate to accounting and finance. As such, he
has extensive knowledge in each of these fields.
Note 12: Mr. Akio Utsumi and Mr. Naoto Kasai are Outside Audit & Supervisory Board Members as defined in Article
2, Paragraph 16 of the Companies Act.
Note 13: Mr. Akio Utsumi has experience in management at financial institutions and has extensive knowledge offinance and accounting.
Note 14: There is a business relationship between the Company and Mitsubishi UFJ Trust and Banking Corporation forborrowing funds from it, providing debt guarantee to it, and entrusting the Company's pension funds to it.
Note 15: There is no business relationship between the Company and Kasai Sogo Law Office.
Note 16: The Company has notified the Tokyo Stock Exchange, Inc. that Mr. Yukio Okamoto, Mr. Takashi Matsumotoand Ms. Mariko Tokuno are Independent Directors, and that Mr. Akio Utsumi and Mr. Naoto Kasai are
Independent Auditors in accordance with the regulations, respectively. (An Independent Director/Auditor is an
Outside Director/Audit & Supervisory Board Member who is unlikely to have conflicts of interest withgeneral shareholders.)
Note 17: Mr. Katsuhiko Ishizuka resigned from his position as a result of his passing on November 27, 2016.

－

27 －

The following Directors have been given new titles or posted to new positions shown below on
April 1, 2017.
Title
Representative Director(Executive Vice President)

Position andResponsibilities

Name

Assistant to the President
Osamu Iida General Manager,
Technology Div.

Naoki Ono

Assistant to the President
General Manager, Corporate
Strategy Div.

Representative Director(Senior Managing
Executive Officer)

Nobuo
ShibanoResponsible for:Business optimization,
Environment & Energy
Business, Aluminum
Business, AffiliatedCorporations

Representative Director(Senior Managing
Executive Officer)

Yasunobu
SuzukiPresident, Metals Company

Representative Director(Executive Vice President)

Important Positionsof Other
Organizations

－

28 －

President, Materials’
Finance Co., Ltd.
Outside Director, P.S.
Mitsubishi Construction
Co., Ltd.

(Reference) The following Executive Officers had assumed office as of April 1, 2017:
Title
Executive Vice
President
Executive Vice
President

Name
Osamu Iida*
Naoki Ono*

Senior Managing
Executive Officer

Nobuo Shibano*

Senior Managing
Executive Officer

Yasunobu Suzuki*

Managing Executive
Officer

Kimball McCloud

Managing Executive
OfficerManaging Executive
OfficerManaging Executive
OfficerManaging Executive
Officer

Position and Responsibilities
Assistant to the President
General Manager, Technology Div.
Assistant to the President
General Manager, Corporate Strategy Div.
Responsible for:Business optimization, Environment & Energy
Business, Aluminum Business, AffiliatedCorporations
President, Metals Company
President, Mitsubishi Cement Corp.
President, MCC Development Corp.
Chairman, Robertson’s Ready Mix, Ltd.
Vice President, Cement Company
President, Electronic Materials & Components
Company

Yoshihiko Kimura
Fumio Tsurumaki

President, Advanced Materials & Tools Company

Kazuhiro Kishi

President, Cement Company

Makoto Shibata

General Manager, General Administration Div.

Executive Officer

Kiyoshi Furukawa

Executive Officer

Tatsuro Mizuno

Executive Officer

Shinichi Nakamura

Executive Officer

Junichi Harada

Executive Officer

Yoshikazu Yasui

Executive Officer

Kazuki Mizushima

Executive Officer

Hiroshi Nojiri

Executive Officer

Naotoshi Kumano

Executive Officer

Shigemitsu Fukushima

Executive Officer

Tetsuro Sakai－

Vice President, Electronic Materials & Components
Company
Vice President, Cement Company
Vice President, Advanced Materials & Tools
Company
General Manager, Aluminum Div.
General Manager, Human Resources Dept., General
Administration Div.
Deputy General Manager, Technology Div.
General Manager, Corporate Marketing & Overseas
Business Development Dept., Corporate Strategy
Div.
General Manager, Corporate Culture Innovation
Dept., Corporate Strategy Div.
General Manager, Safety & Environment Dept.,
Technology Div.
Vice President, Metals Company

29 －Executive Officer

Susumu Sasaki

Deputy General Manager, Corporate Strategy Div.

Executive Officer

Nobuhiro Takayanagi

Vice President, Metals Company

Executive Officer

Masaaki Kanda

Executive Officer

Takahiro Yamada

Executive Officer

Masuhiro Ishitobi

Executive Officer

Yasunori Murakami

Executive Officer

Toru Suzuki

General Manager, Environment & Energy Business
Unit
Vice President, Cement Company
Deputy General Manager, Technology Div.
Vice President, Advanced Materials & Tools
Company
General Manager, General Affairs Dept., General
Administration Div.

Note: Executive Officers marked with an asterisk hold the concurrent position of Director.

(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 in accordance with Article 427,
Paragraph 1, of the Companies Act. In accordance with the provisions, the Company has
concluded Limited Liability Agreements with 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 the Companies Act,if Directors (excluding those who are Executive Directors, etc.) performs their duties ingood faith and without gross negligence, the Directors shall be liable to the Company fordamages 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 the Companies Act,if the Audit & Supervisory Board Members perform their duty in good faith and withoutgross negligence, the Audit & Supervisory Board Members shall be liable to the Company
for damages only to the extent of minimum liability as set out in Article 425, Paragraph 1of the Companies Act. The Company shall indemnify the Audit & Supervisory Board
Members for damages in excess of the amount of the liability.

－

30 －

(3) Directors and Audit & Supervisory Board Members’ Remuneration
Position
Directors (of which
Outside Directors)
Audit & Supervisory
Board Members (ofwhich Outside Audit& Supervisory Board
Members)

Total Amount of
Remuneration(Millions of yen)

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

Number of
Executives(persons) 1)

431 2)
(49)

367
(49)

64

11
(3)

124 3)
(50)

124
(50)

－

7
(4)

Note 1: The number of Directors includes two Directors and three Audit & Supervisory Board Members whoseterms ended during the fiscal year under review. There are nine Directors and four Audit & Supervisory
Board Members as of the end of the fiscal year under review.
Note 2: It was resolved at the 91st Ordinary General Meeting of Shareholders held on June 29, 2016 that theamount 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 theamount of remuneration to Audit & Supervisory Board Members should not exceed ¥17 million permonth.
Note 4: Of the basic remuneration for Directors, stock-based remuneration is ¥27 million.
Note 5: It was resolved at the 81st Ordinary General Meeting of Shareholders held on June 29, 2006 that theamount 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 andtitled 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 thatis highly objective. Remuneration is paid in accordance with internal rules andregulations approved by the Board of Directors and is comprised of basic fixedcomponent as well as a bonus that is linked to performance.
Firstly, the amount of basic remuneration paid to Directors and titled Executive
Officers is determined in accordance with the title and performance of each individual.
The portion of basic remuneration is paid as stock-based remuneration (not paid to
Outside Directors) and a fixed monthly amount is used for purchasing the Company's
shares through the Company's Director shareholding association. The Company's sharesacquired based on this remuneration cannot be sold at least during each individual's term

－

31 －

of office. This aims 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 forcertain executive duties, net income attributable to owners of parent and consolidated
ordinary income for the fiscal year under review are used as indicators when assessing
performance. In the case of titled Executive Officers (excluding individuals who
concurrently hold the positions of Directors responsible for certain executive duties), net
income attributable to owners of parent, consolidated ordinary income and the results ofthe department for which the individual is responsible for the fiscal year under review
are used as indicators when assessing performance. Meanwhile, bonuses can be reduced
or removed entirely depending on business conditions and the amount of dividends forthe fiscal year when bonuses are paid.
Recognizing that the role of Outside Directors is to objectively oversee and verify
the activities of Directors as they carry out their executive duties from a position thatindependent of the Company, remuneration is limited to a fixed amount that isdetermined in accordance with internal rules and regulations approved by the Board of
Directors and after taking into consideration the circumstances 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 to corporate performance inlight of the fact that they assume the responsibility for auditing the execution of duties
by Directors as an independent body entrusted by shareholders.

－

32 －

(5) Major Activities of Outside Directors and Auditors
StatusClassification

Name

Major Activities

Outside Director

Yukio Okamoto

Outside Director

Takashi Matsumoto

Outside Director

Mariko Tokuno

Outside Audit &Supervisory Board
MemberKatsuhiko Ishizuka

Outside Audit &Supervisory Board
MemberAkio Utsumi－

Mr. Yukio Okamoto participated in 15 of the 16
meetings of the Board of Directors held during the
fiscal year under review. Mr. Okamoto provides
well-informed opinions concerning generalmanagement as a Director and well-informed
opinions on international affairs as an informed
specialist on such fields, when necessary.
Mr. Takashi Matsumoto participated in all 16
meetings of the Board of Directors held during the
fiscal year under review. Mr. Matsumoto provides
well-informed opinions as a director with insight
related to administrative and fiscal policy, financeand other general aspects of the economy, whennecessary.
Ms. Mariko Tokuno participated in all 13 meetingsof the Board of Directors held following her
appointment on June 29, 2016. Ms. Tokuno
provides well-informed opinions concerning
general management as a Director and wellinformed opinions on international corporate
strategy as an informed specialist on such fields,
when necessary.
Mr. Katsuhiko Ishizuka participated in all 7
meetings of the Board of Directors and all 6
meetings of the Audit & Supervisory Board held
between the period following his appointment onJune 29, 2016 and his resignation due to passingon November 27, 2016. Mr. Ishizuka provided
well-informed opinions concerning finance andaccounting as well as corporate planning and othergeneral management as an Audit & Supervisory
Board Member, when necessary.
Mr. Akio Utsumi participated in all 16 meetings ofthe Board of Directors and all 15 meetings of the
Audit & Supervisory Board held during the fiscal
year under review. Mr. Utsumi provides well-

33 －Outside Audit &Supervisory Board
Memberinformed opinions as an Audit & Supervisory
Board Member, based on his abundant experience
as a manager in a financial institution and extensive
knowledge concerning business management,
when necessary.
Mr. Naoto Kasai participated in all 16 meetings ofthe Board of Directors and all 15 meetings of the
Audit & Supervisory Board held during the fiscal
year under review. Mr. Kasai provides wellinformed opinions as an Audit & Supervisory
Board Member, based on his abundant experience
as a lawyer and extensive knowledge concerningbusiness management, when necessary.

Naoto Kasai

－

34 －

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, 2017
Content of the Remuneration
Amount(a) Remuneration paid by the Company to
143 million yen1)
Accounting Auditors(b) Total amount of monetary and other property
benefits paid by the Company and its subsidiaries
361 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 based on the Companies Act.
In the Auditing Agreement entered with the Accounting Auditor it is not possible to substantiallysubdivide 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 for calculating compensation, the status of execution of duties of the accounting
auditor in the previous business year and the opinions of Directors and other related internal departments.
Note 2: Among the major subsidiaries of the Company, PT Smelting, MCC Development Corp., Mitsubishi
Cement Corp., Mitsubishi Polycrystalline Silicon America Corp., and Robertson’s Ready Mix, Ltd. use
the services 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 (inaccordance with the Companies Act and the Financial Instruments and Exchange Act and the applicablelaws of the concerned foreign countries’ own legislations).

(3) Content of Non-Auditing Duties
The Company subcontracts “Financial Due Diligence Work” 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 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 itis difficult for the Accounting Auditor to execute its duties appropriately. Based on thisdecision, the Board of Directors shall propose this at the General Meeting of
Shareholders.

－

35 －

5. Systems to Ensure Appropriate Business Operations and the Status of Operation ofThose Systems● Fundamental Policy
The Board of Directors has resolved the following fundamental policy regarding theestablishment of systems to ensure appropriate business 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 Code of Conduct and internal regulations that should beobserved by the Directors and employees and establish corporate ethics and a compliancesystem.
2. The Company shall determine execution of duties through the Board of Directors,
Corporate Strategy Committee and other committees in accordance with laws, Articles ofIncorporation, and internal regulations and others. In addition, the legal department andthe relative department shall carry out the preliminary review of specific significant
matters.
3. The Company shall determine the general policies and plans, etc., concerning complianceat the meetings of the Board of Directors. In addition, the Company shall appoint a Director
in charge of compliance and establish a committee 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 thewhole 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 of compliance in eachdivision by the division in charge of internal audits.
6. In accordance with its Code of Conduct, the Company shall establish internal structures toensure 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 Executionof Duties of Directors
The Company shall properly preserve and manage the minutes of the meetings of Boardof Directors, meetings of Corporate Strategy Committee and other significant information,
based on legislation, Articles of Incorporation and internal regulations and policies.

－

36 －

(3) Regulations and Other Systems Concerning Risk Management
1. The Company shall deliberate carefully on significant matters through the Board of
Directors, Corporate Strategy Committee, and other decision-making bodies based on
legislations, Articles of Incorporation, internal regulations and others. In addition, theCompany shall carry out preliminary review of significant matters by legal and otherrelated 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 generalrisk management at the meetings of the Board of Directors. In addition, the Company shallappoint the director in charge of risk management and establish a committee related to
CSR and a division responsible for risk management, and shall enforce cross-divisionalrisk management promotion activities for the whole Company.
3. The Company shall determine the various internal regulations and others and enforce
suitable management concerning individual risks, including financial transaction risk,
credit transaction risk and information leakage risk.
4. The Company shall enforce suitable management based on the legislation and ordinances
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, and establish anorganization to respond to such events.
6. The Company shall enforce periodical auditing concerning the state of risk managementin 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 accordancewith the Executive Officers’ system. In addition, the Company shall determine the areasof responsibility and authority of each body and division in accordance with the internal
regulations and others.
2. The Company shall determine the management plan, allocate suitable management
resources and authority among the various divisions to achieve the plan, and require thosedivisions to formulate their own specific plans. In addition, the Directors shall suitably
verify the progress state of the plan of each division and take appropriate measures whennecessary.
3. The Company shall enforce periodic auditing concerning the efficiency of the executionof duties of each division by the division in charge of internal audit.

－

37 －

(5) Systems to Ensure Appropriate Operations by the Corporate Group Comprising theCompany and its Subsidiaries
1. The Company shall aim to establish corporate ethics and build a Group compliance andrisk management system (including an internal education system) to promote complianceand risk management activities by the Group, including subsidiaries, based on codes ofconduct and internal regulations that are applied consistently throughout the Group.
2. Concerning each subsidiary, the Company shall aim to improve the soundness andefficiency of management of the subsidiary, and by extension the whole Group, bydetermining a response liaison division within the Company. The concerned division shallconsult 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 thoseinternal controls and build a system to ensure the accuracy of the Group’s financial reports.
4. In addition to the above-mentioned 1, 2 and 3, the Company shall enforce periodic auditing
concerning compliance, risk management and the efficiency of management ofsubsidiaries 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 of Instructions by Audit & Supervisory
Board Members to Such Employees
The Company shall establish a division and assign dedicated members to support theoperations of the Audit & Supervisory Board Members. In addition, the Company shallobtain the consent of the Audit & Supervisory Board concerning transfer of such employees
and consult with the Audit & Supervisory Board concerning assessment and evaluation ofthem.
(7) Systems for Reporting to Audit & Supervisory Board Members and for EnsuringThat 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 themethod stipulated in legislations and the internal regulations of the Company, in the casewhere there is considerable damage to the Company’s operations in areas for which they
are responsible or the possibility of significant impact on the Company. In addition, the

－

38 －

same shall apply in the event that Audit & Supervisory Board Members request a reportabout business operations.
2. In the event of a report by a Director or employee of the Company or its subsidiary to thereporting desk on a compliance-related problem, the department 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 theCompany 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 shallbe made known throughout the Company 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 for audits by
Audit & Supervisory Board Members. In addition, in the event of requests for the paymentof such expenses by Audit & Supervisory Board Members, prescribed procedures shall befollowed and payment made promptly.
(9) Other Systems to Ensure Effective Auditing by Audit & Supervisory Board
Members
1. Audit & Supervisory Board Members and Representative Directors shall exchange theiropinions 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 the Company.
 Overview of Operational Status
Principal initiatives to secure the operation of systems to ensure appropriate business
operations are indicated below.
(1) Initiatives Related to Compliance
1. The Company and its subsidiaries share a corporate code of conduct (“The 10 Articlesof Our Code of Conduct”) aimed at ensuring sound corporate activities that comply
with laws and regulations and are in accordance with social mores. Awareness of thiscode of conduct is instilled throughout the Group.

－

39 －

2. Based on regulations related to CSR, the CSR Committee—which is chaired by the
President and whose secretariat is the CSR Department—meets regularly. In addition
to deliberating annual policies and plans related to overall compliance activities, thecommittee 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 the Group andaddress compliance-related issues.
(2) Initiatives Related to Risk Management
1. The above-mentioned CSR Committee deliberates annual policies and plans related tooverall risk management. In addition, each fiscal year the committee specifies riskrelated initiatives to be undertaken by individual company departments and individual
subsidiaries in an effort to enact risk management activities with regard to measures
to reduce these risks.
2. Regarding work-related accidents, meetings of the Zero Accident Committee andGroup 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 manuals and business continuity plans (BCPs) prescribing
action guidelines in the event of large-scale accidents, natural disasters or terrorism. In
addition, the Crisis Management Committee meets during normal times and times ofcrisis alike to prevent damage from spreading.
(3) Initiatives Related to Enhancing Management Soundness and Efficiency
1. The Company formulates medium-term management plans and annual budgets andstrives to appropriately allocate management resources and responsibilities among its
various departments. The status of significant business execution is reported to theBoard of Directors.
2. By clearly indicating the scope of responsibility of Executives with ranks of Managing
Executive Officer or above, as well as the operational responsibilities and authority of
individual departments, the Company strives to ensure the appropriateness of anaccelerated decision-making and business execution.
3. For each subsidiary, the Company determines a response liaison division within the
Company. That division receives reports on significant investment projects andcompliance-related problems, and consults and exchanges information with thesubsidiary on such matters.

－

40 －

(4) Initiatives Related to Internal Audits
Based on an annual audit plan, the Internal Audit Department conducts periodic auditsof the compliance, risk management and management efficiency of internal divisions andsubsidiaries and reports the results of these audits to the Board of Directors.
(5) Initiatives Related to Audits by Audit & Supervisory Board Members
1. Audit & Supervisory Board Members attend meetings of the Board of Directors,
Corporate Strategy Committee and other important meetings, visit Company offices
and exchange opinions with Representative Directors.
2. Audit & Supervisory Board Members periodically receive reports of internal audit
results and reports submitted to the internal reporting desk.
3.Dedicated members are allocated to the Audit & Supervisory Board Member
Assistance Dept. Audit & Supervisory Board Members’ opinions are taken into
account with regard to the assignment and evaluation of personnel assigned to thisdepartment, in the aim of enhancing the effectiveness of audits by the Audit &Supervisory Board Members.

－

41 －

(Reference) Status of Corporate Governance<Fundamental Policy>
In accordance with its corporate code of conduct (“The 10 Articles of Our Code of
Conduct”), through fair business activities the Company seeks to ensure its sustainable
development and maximize its corporate value. For this purpose, the Group recognizes theimportance of efficient and transparent management and is steadily undertaking measuresthat fully realize its corporate governance. The figure below shows the corporate
governance structure regarding management decision-making and oversight, and businessexecution and audit in the Company.
Overview of the Corporate Governance System

Note: Effective from April 1, 2017, the Company reviewed a portion of its Code of
Conduct. At the same time, steps were taken to revise its corporate philosophy and vision
while putting in place a new Code of Conduct and values.

－

42 －

6. Fundamental Policy Concerning the Control of the Company(1) Fundamental Policy on Parties in Control of Decisions Concerning the Company’s
Finance and Operating Policies
As a general rule, the control of the Company should be determined through freemarket transactions in the Company’s shares on the Stock Exchanges. As a matter ofcourse, the Company believes that the decision to accept or decline a proposal for aLarge-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 not contributeto the corporate value and the common interests of the shareholders, and by extension
the medium- and long-term shareholder value (hereinafter referred to as“medium- andlong-term shareholder value”) of the Company, such as those that obviously harm themedium- 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 shares is properly aware of the Company’s management
environment, understands the sources of its corporate value, and aims to ensure andimprove these factors in the medium and long terms, the Company’s medium- and longterm shareholder value may possibly be harmed.
Furthermore, while it can go without saying that the freedom of all shareholders’investment behavior should be respected to the degree that is possible, the Company
believes that there is not always adequate time or procedures 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 isa possibility of that conflicting with the Company's medium- and long-term shareholder
value.
Therefore, the Company believes that it is not appropriate for a party conducting aLarge-Scale Acquisition of shares that could possibly harm the Company’s medium- andlong-term shareholder value as described above, to be one that dominates Company’s
finance and operating policies decisions. Therefore, the Company believes that it isnecessary to maintain a framework to secure the necessary time and information for its
shareholders to assess whether the acquisition is appropriate, in order to deter
acquisitions that conflict with the Company's medium- and long-term shareholder value,
and to negotiate with potential Acquirers on behalf of the shareholders.

43(2) Overview of Special Measures to Ensure the Implementation of the Fundamental
PolicyThe 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 in Cement, Metals, Advanced Materials & Tools, Electronic
Materials & Components and Aluminum businesses. The Company has a fundamental
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 anaffluent society toward helping reduce environmental impact and establishing a resourcerecycling social system. The Company will continue striving to underpin and enhance
the medium-and long-term shareholder value. In addition to advancing its businessactivities, the Company will achieve this by earning the further trust of all stakeholders—
including shareholders, employees, customers, local communities, suppliers and manyother related parties—while maintaining a harmonious coexistence with society.
In this environment, the Group implemented various measures based on the threeoverall growth strategies of “fortifying the foundation for growth,” “strengthening global
competitiveness,” and “pursuing a recycling-based business model” identified under its
medium-term management plan (FY2015–2017) “Materials Premium 2016—Challenge
to become the world’s leading business group.”
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,” an “achieving growth that exceeds the market growth rate” as its
medium- and long-term targets (the Company in the future) under its long-term
management policy. In order to meet these targets, the Company has also put in place aGroup-wide policy. This policy entails “optimization of the business portfolio,”“comprehensive efforts to increase business competitiveness,” and the “creation of new
product and businesses.” Moving forward, energies will be directed toward
implementing various measures aimed at enhancing corporate value and promoting theGroup-wide policy based on the medium-term management strategy for FY2018FY2020.
(3) Overview of Efforts to Prevent Inappropriate Parties from Assuming Control ofDecisions 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 medium- and longterm shareholder value in the future. At the same time, however, it may not be possible

－

44 －

to ignore the potential of Large-Scale Acquisitions by third parties that may harm themedium- and long-term shareholder value, as described in (1) above. Therefore, at its
meeting held on May 12, 2016, the Board of Directors passed a resolution entitled“Renewal of the Countermeasures to Large-Scale Acquisition of the Company’s Shares(Takeover Defense Measures),” (hereinafter referred to as the “New Countermeasures”),
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 June29, 2016.
An outline of the New Countermeasures is given below. For more details, pleaserefer to the May 12, 2016 press release entitled “Renewal of the Countermeasures toLarge-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 long-term
shareholder value, the Company has set out Countermeasures to Large-Scale Acquisitionof the Company’s Shares (Takeover Defense Measures) incorporating procedures to beobserved by a party carrying out or who plans to carry out a Large-Scale Acquisition of
the Company’s shares. The Company shall warn such parties in advance that there areprocedures with which they will be required to comply, that the Company may, in certain
circumstances, take protective measures against the acquisition, and the Company shall,in certain circumstances, actually take protective measures against the acquisition.
2. New Countermeasures Details(i) Targeted Large-Scale Acquisitions
The New Countermeasures shall apply in cases where there is an acquisition ofshare 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 share certificates, etc., of aholder amounting to 20% of more of the share certificates, etc., issued by theCompanyb. A takeover bid that would result in the ownership ratio of share certificates, etc.,of the share certificate relating to the takeover bid, and the owning ratio of sharecertificates, etc., of a person having a special relationship totaling at least 20% of45the share certificates, etc., issued by the Company.
(ii) Prior Submission of Letter of Intent to the Company
The Acquirer will submit a statement in Japanese (hereinafter referred to as a
“Letter of Intent”) to the Board of Directors such as a promise to observe theprocedures 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 theAcquirer an Information List that details all the information necessary to be initiallysubmitted. The Acquirer will submit to the Company adequate information pursuant to
the Information List.
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 theInformation 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 maximum of 30 days.
Alternatively, if the Board of Directors determines that the 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 proposal by an Acquirer
to obtain Large-Scale Acquisition, and describe the background. Furthermore, if there
is information deemed to be required 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 of Providing Information”) of that quickly and that will be
disclosed.

－

46 －

(v) Establishment of the Board of Directors’ Evaluation Period
The Board of Directors will begin evaluating and considering the Large-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, 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 maximum of 90 days depending on the status of theLarge-Scale Acquisition.
However, the Board of Directors’ Evaluation Period may be extended by amaximum of 30 days when deemed necessary by the Board of Directors, or whenrecommended by the Independent Committee.
(vi) Consulting with the Independent Committee
When countermeasures are invoked in the New Countermeasures, in order toeliminate 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 the Large-Scale Acquisition of shares by the
Acquirer will cause notable damage to the medium- and long-term shareholder valueof the Company, the Board of Directors can consult with the Independent Committee
about whether to invoke countermeasures when it is judged appropriate to invokecountermeasures.
(vii) Recommendation by the Independent Committee Concerning the Invocation ofCountermeasures
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 therecommendation of the Independent Committee outlined in (vii) above, and will
implement a resolution to invoke countermeasures.
(ix) Holding a Shareholders Meeting to Confirm Their Intent
Excluding instances when it is notably difficult to convene a general meeting of47

shareholders, for the following reasons, the Board of Directors can debate bills forinvoking countermeasures by convening a general meeting of shareholders(hereinafter the shareholders’ 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 is conditional upon receiving prior approval
at a general meeting of shareholders; andb. The Board of Directors deems that it is appropriate to confirm the intent of allshareholders.
The Board of Directors shall pass a resolution to invoke countermeasures incompliance 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 theShareholders Meeting to Confirm Their Intent, the Acquirer may not start LargeScale Acquisition until the Board of Directors has implemented a resolution to
invoke the countermeasures based on 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, the Board of
Directors can consult with the Independent Committee regarding whether toterminate or withdraw the countermeasures for the following reasons.
a. When the Acquirer has terminated or withdrawn the Large-Scale Acquisition;
andb. Changes occurred in the facts that presumed judgment of whether to invoke thecountermeasures, and the circumstances are considered not to be appropriate formaintaining the invoked countermeasures in view of ensuring and enhancing theCompany's medium- and long-term shareholder value.
The Board of Directors will resolve to terminate or withdraw the countermeasureswhen it is judged inappropriate to maintain the countermeasures, complying to thegreatest degree possible with the recommendation of the Independent Committee.
(xii) Specific Content of the Countermeasures in the New Countermeasures

－

48 －

As a countermeasure invoked in accordance with the New Countermeasures, theCompany shall, in principle, exercise the gratis allotment of stock acquisition rights.
Such stock acquisition rights shall be allotted to shareholders as of the allotment
date. One right will be allotted per common stock of the Company. Under the New
Countermeasures, the Company intends to attach conditions that the Acquirer orother 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 acquisition rights allotted to persons other thanineligible parties and, in exchange, issue one common stock of the Company per suchstock acquisition right.
(xiii) Effective Period, Abolition, or Amendment of the New Countermeasures
The New Countermeasures shall be effective until the closing of the 94th
Ordinary General Meeting of Shareholders of the Company, to be held in June 2019.
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 toabolish 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 a scope that does
not violate the basic policy for formalities in line with revisions to laws andordinances 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 assuch 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 in accordancewith the basic policy in (1) above. Such reason is that, by securing and enhancing theCompany’s medium- and long-term shareholder value through the measures in (2) above,
and appropriately reflecting it in the value of the Company’s shares, it will become difficult
to conduct a Large-Scale Acquisition that adversely affects the Company’s medium- andlong-term shareholder value.
Accordingly, the Board of Directors has determined that the measures in (2) above do notharm the common interests of the Company’s shareholders and are not aimed to maintain thestatus of the Company’s Officers.

49

(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 assuch 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 the basic policyin (1) above, from controlling decisions on policies relating to the Company’s finances andoperations. Such reason is that, by enabling the Company to invoke countermeasures against
an Acquirer who does not provide sufficient information or does not accede to a request for
securing a sufficient period for their examination etc., the Company may prevent a LargeScale Acquisition that will significantly harm the Company’s medium- and long-term
shareholder value. Additionally, the measures in (3) above are implemented with theobjective 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 that said Acquirer intends to make sothat the required period of time is secured for evaluating and examining, etc., the details
thereof. Furthermore, a variety of systems and procedures are in place to ensure thereasonableness and fairness of the measures in (3) above for the reason that these measurescontain 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 by basing 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 inaccordance with the basic policy in (1) above, and do not harm the common interests of theCompany’s shareholders and are not aimed at maintaining the status of the Company’s
Officers.
In this Business Report, the figures for financial amounts and number of shares arerounded down to the nearest stated unit. Figures for ratios have been rounded up or down
to the nearest stated decimal place.

－

50 －

Consolidated Balance Sheets[As of March 31, 2017](Millions of yen)

Item

Amount[ASSETS]
Current Assets:

Item

Amount[LIABILITIES]
867,469

Current Liabilities:

706,665

Cash and deposits

141,264

Notes and accounts payable-trade114,502

Notes and accounts receivable-trade213,343

Short-term loans payable

203,819

Merchandise and finished goods

85,878Current portion of bonds payable

15,000Work in process

101,643

Income taxes payable

16,154

Raw materials and supplies

100,757

Deferred tax liabilities

352

9,375

Accrued for bonuses

12,880241,406

Deferred income taxes
Gold bullion on loan

110,458

Gold payable

Other

107,284

Allowance for loss on disposal of inventories

Allowance for doubtful accounts(2,537)

Other

Non-current Assets:

637
101,910

1,029,470

Non-current Liabilities:

480,079

Property, Plant and Equipment:

666,226

Bonds payable

55,000

Building and structures, net

154,828

Long-term loans payable

254,411

Machinery and equipment, net

213,586

Reserve for directors’ retirement benefits

1,365

Land, net

260,805

Reserve for loss on subsidiaries and affiliates

4,137

Construction in progress

23,091

Reserve for environmental measures

32,568Other, net

13,914

Deferred tax liabilities

23,526

Deferred tax liabilities for land revaluation

25,590Intangible Assets:

58,574

Net defined benefit liability

56,037

Goodwill

43,436

Other

27,443Other

15,138

Total Liabilities

1,186,744[NET ASSETS]
Investments and Other Assets:
Investment securities

Shareholders’ Equity:543,390304,669

Capital stock

119,457

252,067

Capital surplus

92,422Retained earnings

333,526

Retirement benefit asset

393

Deferred income taxes

26,425

Other

31,332

Allowance for doubtful accounts(5,549)Treasury stock
Accumulated Other Comprehensive Income:
Valuation difference on securities(2,017)
77,891
55,226

available for sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment(1,418)Remeasurements of defined benefit plans(11,735)

Non-controlling interests
Total Net Assets
Total Assets
1,896,939
Note: All amounts less than one million yen are rounded down.

51

888
34,930Total Liabilities and Net Assets

88,913
710,195
1,896,939

Consolidated Statements of Operations[For the year ended March 31, 2017](Millions of yen)

Item

AmountNet Sales

1,304,068

Cost of Sales

1,104,402
199,665

Gross Profit

139,904

Selling, general and administrative expenses
Operating Profit

59,761

Non-Operating Profit:

22,811

Interest income

587

Dividends income

14,692Rent income on non-current assets

4,863
1

Equity in earnings of affiliates

2,666

Other

18,646

Non-Operating Expenses:
Interest expenses

4,922

Loss on retirement of non-current assets

4,076

Expenses for rent in undertaking

3,061

Expenses for settlement of remaining business in mine

3,565

Other

3,020

Ordinary Income

63,925Extraordinary Income:

38,522Gain on sales of marketable securities and investments in securities

19,072Gain on sales of non-current assets

16,545

Insurance income

2,400
503

Other
Extraordinary Losses:

42,863

Provision for environmental measures

23,912

Loss on impairment

9,977

Loss on valuation of investment securities

5,049
3,924

Other
Income before Income Taxes

59,584

Corporate income taxes, resident taxes and business tax

24,594(583)

Income taxes adjustments

35,573Net Income

7,220

Net Income attributable to non-controlling interests

28,352Net Income attributable to owners of the parent
Note: All amounts less than one million yen are rounded down.

－

52 －

Statement of Changes in Consolidated Shareholders’ Equity[For the year ended March 31, 2017](Millions of yen)
Shareholders’ Equity
Capital stock

Balance as of April 1, 2016
Changes of items during the year
Cash dividends from retained
earnings
Net income attributable toowners of the parent
Reversal of revaluation reserve for
land
Increase associated with the increase
number of consolidated subsidiaries
Increase associated with the decrease
number of equity method affiliates
Acquisition of treasury stock
Disposition of treasury stock
Retirement of treasury stock
Changes in equity of parent company
related to transactions with noncontrolling interests
Net change in items other thanshareholders’ equity
Total change during the year
Balance as of March 31, 2017

Capital surplus

119,457

92,266

Retained earnings

Treasury stock

Total
shareholders’equity(1,953)

512,797

303,026(9,170)(9,170)28,35228,352(1,165)(1,165)

127

127

12,355

12,355
(63)

(63)
(0)
(0)

(0)
(0)
157

－
119,457

156
92,422

157

30,499333,526(63)(2,017)30,592
543,390

Accumulated Other Comprehensive Income

Balance as of April 1, 2016

Valuationdifferenceonsecurities
availableforsale

Deferred
gains orlosses onhedges

Revaluation
reserve forland

Foreigncurrencytranslation
adjustments

21,645(199)

34,282

3,647

Remeasur
Total
ements ofotherdefinedcomprehenbenefitsiveplansincome(16,946)

42,430NoncontrollingInterests

Total Net
Assets89,789645,017

Changes of items during the year
(9,170)Cash dividends from retained
earnings
Net income attributable toowners of the parent
Reversal of revaluation reserve for
land
Increase associated with the increase
number of consolidated subsidiaries
Increase associated with the decrease
number of equity method affiliates

28,352(1,165)
127
12,355Acquisition of treasury stock(63)

Disposition of treasury stock(0)

Retirement of treasury stock(0)

Changes in equity of parent
company related to transactions
with non-controlling interests
Net change in items other thanshareholders’ equity

157
33,581

1,087

647(5,066)

5,211

35,460(876)

34,584

Total change during the year

33,581

1,087

647(5,066)

5,211

35,460(876)

65,177

Balance as of March 31, 201755,226888

34,930(1,418)(11,735)

77,891

88,913

710,195

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

53Balance Sheets[As of March 31, 2017](Millions of yen)

Item
[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 receivables
Other receivables
Gold receivable
Gold bullion on loan
Deferred income taxes
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
Lease assets
Construction in progress
TimberIntangible Assets:
Mining rights
SoftwareLease assets
Other
Investments and Other Assets:
Investment securities
Securities of affiliates
Bonds of affiliates
Investments
Investments in affiliates
Long-term loans receivable
Long-term loans to affiliates

Amount473,271
67,3602,776
69,60541,66649,044
42,83816,422
855
3,009
9,008
110,458
49,084
3,095
8,770
(726)
791,849
302,492
54,93830,40373,7330
96
2,208
128,463544
11,018
1,084
3,652
437
2,876
53
285
485,704
172,451
303,038
4
66
3,068
10
5,789

Other

6,434

Allowance for investment loss

(365)

Allowance for doubtful accounts(4,795)Item[LIABILITIES]Current Liabilities:
Notes payable
Accounts payable
Short-term loans payable
Current portion of bonds 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 payables
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 benefits
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
Capital surplus
Capital reserve
Other capital surplus
Retained earnings
Other retained earnings
Reserve for advanced depreciation of noncurrent assets
Deposit for mining search
Reserve for loss on
specified business restructuring investment
Earned surplus carried forward

Treasury stock
Valuation and Translation Adjustments:
Valuation difference on securities available for sale
Deferred gains or losses on hedges
Revaluation reserve for land
Total Net Assets
Total Assets
1,265,120
Total Liabilities and Net Assets
Note: All amounts less than one million yen are rounded down.

－

54 －

Amount472,452
1,672
31,713
105,659
15,000349
5,762
27,998
6,955
3,636
6,008
81
4,856
8,267
919
8,883
241,406
3,281
314,960
55,000173,074
446
9,945
21,755
9,403
2,732
32,568
450
4,501
5,082
787,413397,053
119,457
113,000
85,65427,346
166,604
166,604
5,593
0
2,704
158,305(2,010)80,653
51,256584
28,812477,706
1,265,120

Statements of Operations[For the year ended March 31, 2017](Millions of yen)

Item

AmountNet Sales

674,515

Cost of Sales

614,580
59,934Gross Profit

47,814

Selling, general and administrative expenses
Operating Profit

12,120Non-Operating Profit:

29,154

Interest income

394

Dividends income

22,730Rent income on non-current assets

4,572

Miscellaneous revenue

1,456

Non-Operating Expenses:

14,073

Interest expenses

2,303

Expenses for rent in undertaking

3,061

Settlement expenses of remaining business in mine

3,239

Loss on retirement of non-current assets

2,368

Miscellaneous losses

3,099

Ordinary Income

27,202Extraordinary Income:

32,560Gain on sales of non-current assets

15,826

Gain on sales of subsidiaries and affiliates' stocks

15,168
1,564

Other

34,404Extraordinary Losses:
Provision for environmental measures

23,912

Loss on valuation of stocks of subsidiaries and affiliates

6,538

Impairment loss

2,225
1,728

Other
Income before Income Taxes

25,357

Corporate income taxes, resident taxes and business tax

9,909(4,252)

Income taxes adjustments

19,701Net Income
Note: All amounts less than one million yen are rounded down.

55

Statement of Changes in Shareholders’ Equity[For the year ended March 31, 2017](Millions of yen)
Shareholders’ Equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance as of April 1,
2016

119,457

Treasury
stock

Total
shareholders’equity(1,946)

387,097

Capitalreserve

Other
capitalsurplusTotal
capitalsurplusReserveforadvanceddepreciatio
n ofnoncurrent
assets

Deposit forminingsearchReservefor loss on
specifiedbusiness
restructuringinvestment

Earnedsurpluscarriedforward85,65427,347113,001

5,724

20

2,707

148,131

156,584

356

0

(357)

－

－

(487)

(20)

511

－

－

(9,170)(9,170)(9,170)19,701

19,701

19,701

(511)

(511)

(511)

Total
retainedearnings

Change during the year
Provision of voluntary
retained earnings
Reversal of voluntary
retained earnings
Cash dividends fromretained earnings(3)

Net income
Reversal of revaluation
reserve for land
Acquisition of treasury
stock
Disposition of treasurystock
Net change in items
other thanshareholders’ equity
Total change during theyear
Balance as of March 31,
2017－
119,457

(65)

(65)

2

1

(0)

(0)

－

(0)

(0)

(130)

(19)

(3)

10,173

10,019

(63)

9,955

85,65427,346

113,000

5,593

0

2,704

158,305

166,604(2,010)397,053(Millions of yen)
Valuation and Translation Adjustments

Balance as of April 1, 2016

Valuationdifference on
securities
available -for-sale
19,400

Deferred gains orlosses on hedges

Revaluation
reserve for land

Total Valuationand translation
adjustments

Total Net Assets

295

28,301

47,997435,094

Changes of items during the year

31,856288

511

32,656－－(9,170)19,701(511)(65)
132,65631,856
51,256

288
584

511
28,81232,65680,65342,612477,706

Provision of voluntary retained earnings
Reversal of voluntary retained earnings
Cash dividends from retained earnings
Net income
Reversal of revaluation reserve for land
Acquisition of treasury stock
Disposition of treasury stock
Net change in items other thanshareholders’ equity
Total change during the year
Balance as of March 31, 2017

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

－

56 －