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

BUSINESS REPORT(For the Period from April 1, 2017 through March 31, 2018)
1. Particulars Concerning the State of the Group(1) Business Developments[The Mitsubishi Materials Group’s operating results improved compared with the previous fiscal year. In addition to an increase in cement-related business sales in the UnitedStates, this year-on-year improvement largely reflected an upswing in copper prices andfirm demand for products used in the automotive and electronics industries.]
During the consolidated fiscal year under review, signs of recovery were seen in the
Asian economies of China, Thailand and Indonesia. In the United States, the economy
remained on a moderate recovery track.
In the Japanese economy, corporate earnings, employment, and income conditions
were on the road to recovery and capital expenditure and industrial production also increased modestly during the consolidated fiscal year under review.
Regarding the business environment for the Mitsubishi Materials Group, althoughenergy prices rose, copper prices increased and demand in cement-related business in the
United States and demand for products used in the automotive and electronics industries
remained strong.
Under these circumstances, the Company formulated a Long-Term Management Policy for the next 10 years and a Medium-Term Management Strategy (FY2018-2020) that
focuses on the planning and implementation of growth strategies, and we implemented
various measures as a theme of “Transformation for Growth” to achieve group-wide policies for the enhancement of corporate value, namely “optimization of business portfolio,”“comprehensive efforts to increase business competitiveness,” and “creation of new
products and businesses.”
As a result, consolidated net sales for the fiscal year under review totaled ¥1,599,533
million, up 22.7% year on year. Operating profit increased 21.9% year on year, to－1 －¥72,819 million, and ordinary income increased 24.6%, to ¥79,621 million. Net income
attributable to owners of parent was ¥34,595 million, up 22.0% year on year.
On a non-consolidated basis, net sales amounted to ¥869,677 million, up 28.9%
year on year. Operating profit increased 13.3% to ¥13,732 million, ordinary income increased 15.3% to ¥31,370 million, and net income increased 29.6% to ¥25,530 million.
Based on its Articles of Incorporation, the Company is to distribute surpluses following resolutions at Board of Directors meetings. We regard the distribution of profits
to all shareholders as one of our most important priorities. Accordingly, during the periodof the Medium-Term Management Strategy (FY2018-2020), the Company will pay annual dividends of ¥80 per share. If the consolidated dividend payout ratio is lower than
25%, the Company will temporarily increase the dividend to the point where the consolidated dividend payout ratio becomes 25% or purchase treasury stock. Based on this policy, the Board of Directors, at its meeting on May 10, 2018, decided to distribute a fiscal
year-end dividend of ¥50 per share, which, combined with the interim dividend of ¥30
per share, brings the annual dividend for the fiscal year under review to ¥80 per share.
Taking the share consolidation conducted on October 1, 2016 into consideration, the dividend for the previous fiscal year is equivalent to ¥60 per share, which means that thedividend for the fiscal year under review of ¥80 per share represents an increase of ¥20
per share compared with the previous fiscal year.
The Company has made prior announcements about the matter in which the Company’s consolidated subsidiaries Mitsubishi Cable Industries, Ltd., Mitsubishi ShindohCo., Ltd., Mitsubishi Aluminum Co., Ltd., Tachibana Metal Manufacturing Co., Ltd.,and Diamet Corporation had delivered products, etc. that deviated from customer standards or internal company specifications (“Non-Conforming Products”) due to misconduct, including the rewriting of inspection records data, concerning some of the products
manufactured and sold in the past (the “Incident”).
The Company sincerely apologizes to its shareholders, customers and all other parties affected by the Incident for all and any inconvenience and difficulties it has caused.
The Company understands the gravity and seriousness of the situation and will implement measures quickly and properly to strengthen the group governance framework,
including quality control. In order to prevent such a situation again in the future, we will
endeavor to further improve the group governance. In addition, the Company has decided partial relinquishment of the six Representative Directors’ remuneration.
The Incident had the effect of reducing ordinary income by around ¥1.4 billion in
the consolidated fiscal year under review, causing the Company to record an extraordinary loss of ¥3,202 million.

－

2 －A report of the Group’s performance by business segment is presented as follows.
● Cement[Despite an increase in sales volumes, operating profit in Japan decreased due mainly tothe increase in energy costs. Operating profit in the United States improved largely on
the back of higher sales volumes.]
Sales volumes rose in Japan due to the firm performance of construction work of facilities
related to the Tokyo Olympic and Paralympic Games in the Tokyo metropolitan area, as well
as disaster restoration work and road-related work in Kyushu. However, mainly rising energy
costs resulted in a decline in operating profit, even as net sales increased.
In the United States, the sales volumes of ready-mixed concrete increased thanks to strong
private-sector demand related to housing and commercial facilities in Southern California.
In addition, the selling price of cement grew year on year. As a result, both net sales andoperating profit increased.
As a result, net sales for the entire Cement business increased year on year, but operating
profit decreased. Ordinary income increased mainly through an increase in equity in earnings
of affiliates.
Consolidated net sales in the Cement business amounted to ¥192,378 million, up 8.3%
from the previous fiscal year. Operating profit fell 7.1% to ¥19,428 million and ordinary
income increased 2.6% to ¥21,044 million.
● Metals[In the copper business, operating profit improved mainly as a result of an increase inproduction and upswing in copper prices. Operating profit in the gold and other valuable
metals business also grew due largely to increased production. In the copper and copper
alloy products business, operating profit expanded, due in part to higher sales of products
for the automobile sector.]
In the copper business, both net sales and operating profit rose, reflecting an increasein the amount contracted by Onahama Smelting and Refining Co., Ltd., higher production volume and higher copper prices despite periodic furnace repairs conducted at Naoshima Smelter & Refinery.
In the gold and other valuable metals business, both net sales and operating profit
grew, mainly due to increased production as a result of a rise in the amount of gold andother valuable metals contained in the raw material ore.
In the copper and copper alloy products business, net sales and operating profit wereup, chiefly due to an increase in sales of products for automobiles and the inclusion of－

3 －the business results of MMC Copper Products OY in the consolidated statements of income since the second quarter of the fiscal year.
As a result, overall the Metals business posted year-on-year increases in net sales andoperating profit. Ordinary income increased due to a rise in operating profit and dividend
income.
Consolidated net sales in the Metals business amounted to ¥862,759 million, up 37.1%
from the previous fiscal year. Operating profit rose 38.5% to ¥24,059 million while ordinary income increased 31.8% to ¥36,263 million.
* MMC Copper Products Oy is a holding company for the Special Products Division of
the Luvata Group, which the company acquired from Luvata Espoo Oy and its two subsidiaries effective May 2, 2017.
● Advanced Materials & Tools[Operating profit in the cemented carbide products business increased, owing to the upswing in demand in Japan and overseas and vigorous sales promotion. In the high-performance alloy products business, the operating loss narrowed due to higher sales of sintering parts, a mainstay product.]
In the cemented carbide products business, net sales and operating profit increased as aresult of aggressive efforts for sales promotion, in addition to higher demand in the automotive and aerospace industries, which are the main customers for cemented carbide products,
mainly in Japan, Europe, United States and Southeast Asia.
In the high-performance alloy products business, net sales increased and the operating loss
narrowed due to increased sales in Japan, Europe and the United States as a result of growthin demand for mainstay sintering parts and the launch of new products, despite costs, etc.
associated with shipments of non-conforming products.
As a result, overall the Advanced Materials & Tools business recorded year-on-year increases in net sales and operating profit. Ordinary income also rose due to higher operating
profit.
Consolidated net sales in the Advanced Materials & Tools business amounted to¥161,177 million, up 12.4% from the previous fiscal year. Operating profit rose 57.7%
to ¥18,566 million and ordinary income increased 69.6% to ¥16,808 million.

－

4 －● Electronic Materials & Components[Operating profit in the advanced materials and chemical products business increased asa result of an upswing 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 prices.]
In the advanced materials and chemical products business, net sales and operating
profit increased, reflecting a rise in sales of products related to semiconductor manufacturing equipment, products for displays and other products.
In the electronic components business, both net sales and operating profit also increased thanks to a higher volume of sales of products for home appliances and otherproducts.
The polycrystalline silicon business recorded an increase in net sales and a decreasein operating profit, due to a fall in selling prices, despite an increase in sales volume
based primarily on higher demand backed by the strong semiconductor market.
As a result, the entire Electronics Materials & Components business registered yearon-year increases in net sales and operating profit. Ordinary income rose as a result ofhigher operating profit and dividend income.
Consolidated net sales in the Electronic Materials & Components business amounted
to ¥73,462 million, up 16.4% from the previous fiscal year. Operating profit increased
38.6% to ¥3,401 million and ordinary income rose 64.0% to ¥4,595 million.
● Aluminum[In the aluminum cans business, operating profit decreased owing to lower sales of regular and bottle cans. In the rolled aluminum and processed aluminum products business,
operating profit also decreased. This largely reflected the downturn in sales of such products as beverage cans and plate products for Litho sheets, etc.]
In the aluminum can business, net sales and operating profit declined due to a fall insales of both regular cans and bottle cans and rising costs of raw materials.
In the rolled aluminum and processed aluminum products business, net sales and operating profit fell as a result of lower sales, principally of can materials and plate products
for litho sheets, despite higher sales volume of heat exchanger materials for automobiles.
In the business as a whole, energy costs rose.
As a result, the entire Aluminum business posted year-on-year decreases in net sales
and operating profit. Ordinary income also declined due to a fall in operating profit.
Consolidated net sales in the Aluminum business amounted to ¥148,588 million,－

5 －down 4.7% from the previous fiscal year. Operating profit fell 52.1% to ¥3,777 million
and ordinary income declined 59.6% to ¥3,025 million.
● Others[Operating profit in the energy-related business increased as a result of higher sales ofcoal and nuclear energy-related services. In the home appliance recycling businesses,
operating profit increased. This was mainly due to the upswing in the recycling unit costof valuables. In areas outside the energy-related and home appliance recycling businesses,
operating profit increased.]In the energy-related business, net sales and operating profit increased due to expansion in sales increase of coal and nuclear energy-related products.
In the “E-waste” (used electronics and electric products) recycling business, both net
sales and operating profit increased with a rise in the recycling unit cost of valuable, in
addition to continued firmness in recycling volumes.
Total net sales and operating profit in the Others business excluding the energy-related business and the “E-waste” (used electronics and electric products) recycling business increased.
As a result, overall the Others business posted year-on-year increases in net sales andoperating profit. Ordinary income increased due to the rise in operating profit despite
increase in equity in losses of affiliates.
Consolidated net sales in the Others business amounted to ¥249,503 million, up
14.3% from the previous fiscal year. Operating profit increased 30.2% to ¥13,187 million
and ordinary income increased 15.8% to ¥8,312 million.

－

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

CementMetalsAdvanced
Materials &Tools

Electronic
Materials &Components

Aluminum

OthersElimination andCorporate Assets or Expenses(Note)

Item

92nd Period(April 2016– March 2017)

93rd Period(April 2017– March 2018)

Amount(¥ Millions)

Amount(¥ Millions)% of Total

YOY Change(%)

Net Sales

177,566

13.6

192,378

12.0

8.3

Operating Profit
Ordinary Income
Net Sales

20,92335.0

19,428

26.7

(7.1)

20,52032.1

21,04426.4

2.6

629,470

48.3

862,759

53.9

37.1

17,372

29.1

24,05933.0

38.5

27,51343.0

36,26345.5

31.8

143,41511.0

161,177

10.1

12.4

11,774

19.7

18,566

25.5

57.7

9,913

15.5

16,80821.1

69.6

63,087

4.8

73,462

4.6

16.4

2,454

4.1

3,401

4.7

38.6

2,802

4.4

4,595

5.8

64.0

155,96212.0

148,588

9.3

(4.7)

7,886

13.2

3,777

5.2

(52.1)

7,480

11.7

3,025

3.8

(59.6)

218,246

16.7

249,503

15.6

14.3

10,12716.9

13,187

18.1

30.2

7,177

11.2

8,312

10.4

15.8

(83,680)(6.4)(88,337)

(5.5)

5.6

(10,778)(18.0)(9,601)(13.2)(10.9)(11,481)(18.0)(10,428)(13.1)(9.2)

1,304,068

100.0

1,599,533

100.0

22.7

Operating Profit
Ordinary Income
Net Sales
Operating Profit
Ordinary Income
Net Sales
Operating Profit
Ordinary Income
Net Sales
Operating Profit
Ordinary Income
Net Sales
Operating Profit
Ordinary Income
Net Sales
Operating Profit
Ordinary Income
Net Sales

59,761
100.0
72,819100.0
21.9
Operating Profit
Ordinary In63,925
100.0
79,621
100.0
24.6
come
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.

Total

Note:

% of Total－

7 －(2) Status of Group Financing
During the fiscal year under review, the Group raised funds primarily through the issuanceof straight bonds totaling ¥20 billion as well as commercial paper and borrowings frombanks. Debts (including corporate bonds) as of the end of the fiscal year under review
amounted to ¥521,434 million, down ¥6,795 million from the end of the previous fiscal
year.
(3) Status of Group Capital Expenditures
The Group determines its capital expenditures by carefully selecting investment cases in
the fields where future profit and growth are expected while working to reduce interestbearing debt.
In the fiscal year under review, total capital expenditures amounted to ¥76,231 million,
which consisted mainly of maintenance and repairs of existing facilities in each business,
as well as the reinforcement and streamlining of production facilities.
Capital expenditures by business segment in the fiscal year under review were as follows:● Cement
In addition to the reinforcement of domestic industrial waste treatment facilities, the Group
carried out maintenance and repair work mainly on existing facilities in Japan and theUnited States.
Capital expenditures in this business amounted to ¥16,818 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 ¥22,037 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 ¥16,516 million.
● Electronic Materials & Components
In addition to carrying out maintenance and repair work at existing facilities in this businessas a whole, the Group undertook reinforcement work on production facilities focusing
mainly on semiconductor manufacturing equipment-related products.
Capital expenditures in this business amounted to ¥4,125 million.
● Aluminum
The Group carried out maintenance and repair work at existing facilities.
Capital expenditures in this business amounted to ¥7,343 million.
● Others
The Group carried out maintenance and repair work at existing facilities.
Capital expenditures in this business amounted to ¥9,389 million.

－

8 －(4) Trends of Assets and Profit and Loss Accounts
1. The Group’s Trends of Assets and Profit and Loss Accounts (Consolidated)(¥ millions, except per share data)

91st Period(April 2015 –March 2016)

92nd Period(April 2016 –March 2017)

93rd Period(April 2017 –March 2018)

Net Sales

1,517,265

1,417,895

1,304,068

1,599,533

Operating Profit

71,87170,42059,761

72,819Ordinary Income

81,09372,442

63,92579,62156,14761,31628,352

34,595Net Income per Share

42.85

46.80

216.44(Note)

264.15Net Assets

629,514645,017710,195

768,495(Note)

5,211.20

1,896,939

2,015,084

Net Income Attributable to Owners of the
ParentNote:

90th Period(April 2014 –March 2015)

Net Assets per Share420.36423.83

Total Assets

1,898,157

1,793,375

4,743.27

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 the previous consolidated fiscal year.

2. The Company’s Trends of Assets and Profit and Loss Accounts (Non-consolidated)(¥ millions, except per share data)

Note:

90th Period(April 2014 –March 2015)

91st Period(April 2015 –March 2016)

92nd Period(April 2016 –March 2017)

93rd Period(April 2017 –March 2018)

Net Sales

810,505

735,501

674,515

869,677

Operating Profit

23,70826,47812,12013,732

Ordinary Income

35,69935,40927,202

31,370Net Income

33,19333,001

19,701

25,530Net Income per Share

25.33

25.19

150.40(Note)

194.93

Net Assets

432,265

435,094477,706

533,103(Note)

4,070.58

1,265,120

1,358,233

Net Assets per Share

329.91

332.13

Total Assets

1,252,174

1,158,968

3,647.06

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 the previous consolidated fiscal year.

－

9 －(5) Priorities for the Group①Measures to Enhance the Group Governance Framework Including Quality Con
trol
In November 2017, the Company announced that the Company’s consolidated subsidiaries Mitsubishi Cable Industries, Ltd. and Mitsubishi Shindoh Co., Ltd. had delivered
products, etc. that deviated from customer standards or internal company specifications
due to misconduct, including the rewriting of data, concerning some of the products manufactured and sold in the past, and in February 2018, the Company announced that theCompany’s consolidated subsidiaries Mitsubishi Aluminum Co., Ltd., Tachibana Metal
Manufacturing Co., Ltd., and Diamet Corporation were likewise involved in a similar incident (collectively, the “Incident”). The Company has been taking action, including explanations to customers by each company and confirmation of safety, and the Company
has also been conducting extraordinary quality audits of all of the Group’s manufacturinglocations and checking that there are no quality issues at other locations.
The Company established a Special Investigation Committee, the majority of which
consists of external directors and outside experts, on December 1, 2017. The Committee
investigated the facts and root causes of the Incident and issued its final report to the Company’s Board of Directors on March 28, 2018.
Extraordinary quality audits were completed on May 8, 2018. In cases where matterswith quality control methods, etc. were identified in the audits, corrective action has beentaken. No cases in which there were matters with product quality were identified.
The Company is providing direction and supervision to each company in order toachieve early completion of the task of confirming the safety of products that have alreadydelivered and, with the cooperation of its customers, it will continue to make every effort
to resolve quality issues.
In light of the facts and issues uncovered, the Company formulated and began toimplement the measures (the “Measures”) sequentially, to enhance the Group governanceframework including quality control. The Special Investigation Committee has expressed
the opinion that these measures are appropriate as measures in response to the Incident.
In addition, the “Committee for Monitoring of Measures to Enhance Governance”
consisting of external directors and outside experts was established on May 10, 2018, forthe purpose of supervising the progress, results and operations of the Measures, etc. froma position that is independent from the business execution of the Company, and providing
necessary advice and proposals to the Board of Directors with respect to issues and others.
Moreover, the Company decided to establish the “Committee for Nomination andCompensation,” the majority of whose members are external directors on June 22, 2018,
to guarantee the transparency and objectivity of judgment on the election and removal of

－

10 －

directors and executive officers of the Company and judgement of remuneration by the
Board of Directors.

(i) Restructuring Measures of the Group Governance Framework for Quality Control
The Group is implementing the following measures sequentially in regards to thegovernance framework for quality control announced on December, 2017.
A)

Implementation of a Front Loading System for Order Receiving
Currently, we are planning to implement a system (a Front Loading System) formaking decisions on specifications and receiving orders after considering whether theorder can be accepted taking into account manufacturing capability at various department within the business division including development and design, manufacturing,inspections and sales.
Currently, according to the new guidelines for the front loading system, each business is installing the front loading system. Some businesses have begun considering ofproducts in new orders at receiving orders, based on the guidelines.

B)

Enhancement of the Framework and Authority of the Quality Control Department
Under the leadership of the Quality Management Dept. which was established in
December 2017, the quality management system of each business is being investigated.
By the end of July 2018, a draft policy for the improvements required of each businesswill be formulated to enable those improvements.

C)

Expansion of Quality Training
We will expand quality training aiming to have our group employees at all levels
and in all areas understand the importance of quality and what should be done to maintain and improve quality. We will use the Incident in this training.
After April 2018, training of quality management personnel of the Group (about
300 persons) will be provided by inviting outside experts, and a meeting will be held
for personnel responsible for quality in the Group. In addition, a new handbook for
quality management will be developed and used for training and other purposes.

－

11 －

D)

Promoting Automated Inspection Equipment
For all product inspection data, from when it is obtained during the manufacturing
process though the final inspections, by promoting initiatives such as automating acquisition of inspection data, we will aim to establish a system that will prevent misconduct, including the rewriting of data, and will establish a system that allows for moreaccurate and prompt confirmation that inspection data is consistent with customer specifications.
Currently, the locations where the Incident occurred are installing equipment for
automated processing as soon as it is ready and some locations have already started
operating the equipment. In addition, the details of the process to install the equipment
for automated processing for the entire Group are being discussed. We will formulatea three-year plan to be prepared for this installation.
E)

Enhancement of Quality Audits
With the Quality Management Department and Internal Audit Department in the
Governance Division taking the lead, we will implement the following measures, etc.:
a. Improving the independence of our group’s internal audit departments and strengthening their authority;b. Increasing internal audit staff and increasing the frequency of audits;c. Training human resources to become experts in quality audits;
d. Applying audit methods for the prevention of misconduct;e. Enhancing coordination among the Company’s Internal Audit Department and theinternal audit departments of our subsidiaries and associates; andf. Improving internal audit operations with the use of IT
During FY 2019, quality audits will be conducted, covering about 70 locations in Japan and overseas.
F)

Utilization of Outside Consultant
In order to introduce third party perspective in quality control, we will utilize outside consultants on an ongoing basis specializing in quality control matters. Since January 2018, outside consultants have visited locations where the Incident occurred andprovided guidance and advice on quality management and assurance. The number oflocations these consultants visit will be increased in the future to prevent complacency
in the Group’s quality management activities and to firmly establish effective quality
management activities.

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12 －

(ii) Group Governance Framework Enhancement Measures
The Company considers further enhancement of the Group governance framework
is necessary after it became clear that the background and root causes of the Incident include that recognition of quality and issues of corporate culture and risk information was
not grasped and reported in a timely and appropriate manner and that issues were not discovered in the internal audit. Therefore, the Company is implementing the following
measures sequentially.
A) Enhancement of Framework for Discussion, Reporting and Follow-up of Governance-Related Matters
The Governance Deliberative Council, which was newly established in April 2018,
have been held and the policy for addressing matters relating to the governance of theentire Group, the annual plan and the status of the actions taken were discussed andshared. The measures decided at the meeting will be carried out on a group-wide basis.
In addition, the reporting system of the Company and its subsidiaries will be restructured and the Group’s safety and health, CSR, environment, compliance, quality
and other matters relating to governance will be monitored regularly by the Board of
Directors and the Corporate Strategy Committee of the Company.
B) Improvement of Functions of Management Divisions and its Collaboration withOperating Divisions
In order to improve administrative divisions’ control and support functions forgovernance-related matters, the Company reorganized its structure as of April 1, 2018
and launched the Governance Division (comprising the CSR Department, Safety &Environment Dept., Quality Management Dept. and Internal Audit Dept.)
In addition, the Company will specify departments and persons responsible for thepromotion of governance-related matters in each department within operating divisions, each business establishment, and each subsidiary, with the aim of facilitating
communication of information and to enhance the promotion framework.
C) Improvement of Human Resources Training and Encouragement of Active Interaction
The Company will expand training regarding governance-related matters provided
to the Group’s management and other employees. In addition to promoting human resources interactions in the Group and endeavoring to deepen communication, the Company plans to provide human resources training throughout the Group.

－

13 －

Since January, 2018, there were total of four education sessions for Executive Officers of the Company, Presidents of its subsidiaries and other management executivesof the Group in matters to strengthen the governance framework, legal liability of directors and other related matters, resulting in 290 persons in total attending the sessions.
D)

Internal Audit Strengthening
With respect to the Company’s internal audits of business establishments and subsidiaries, the frequency and content of audits will be enhanced through cooperation
with each department within the Governance Division. The Company will also
strengthen cooperation with the Corporate Auditor such as joint audits, etc.
E)

Studies with a Business Optimization Focus
When considering the Group’s business optimization, whether the governanceframework can sufficiently function is also one of the important decision-making criteria. On that basis, we will seek to achieve an appropriate business portfolio and management framework that match the Group’s governance capabilities

The Company’s Audit & Supervisory Board has reported that it will implement
the following measures for improving the effectiveness of audits by Audit &Supervisory Board members, and the Company will make a necessary response to such efforts.
a. For subsidiaries having Standing Corporate Auditor, the members of the Audit &Supervisory Board Member Assistance Dept. will concurrently serve as part-time
Corporate Auditor of those subsidiaries and cooperation between the Company’s Corporate Auditor and the Standing Corporate Auditor of the subsidiaries will be enhanced.
b. For the subsidiaries having only part-time Corporate Auditor, information will bemade known at an early stage through the monthly report from those part-time Corporate Auditor to enable a response.
c. A new consultation contact method liaising directly with the Company’s Standing
Audit & Supervisory Board members will be established.
d. Enhancement cooperation by joint audits and other activities with the Internal Audit
Dept., Governance Div.
2. Group Priorities[In addition to becoming a leading company in each of the major markets in Japan andoverseas, the Group is targeting high levels of profitability and efficiency while working
diligently to expand at a pace that exceeds the rate of market growth by optimizing its

－

14 －

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 the political situation in the Korean Peninsula, a downturn in the Chinese economy, and the political trends in Europe and theUnited 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 energy prices and worsening labor shortages give cause for concern.
Under these circumstances, the Group will pursue a number of measures to enhance
its corporate value under the theme “Transformation for Growth” by developing theLong-Term Management Policy, which looks ahead 10 years, and the Medium-Term
Management Strategy for FY2018-FY2020, described as follows.
(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 Medium- to Long-TermTargets (the Company in the future) and the Group-wide Policy as the Long-Term Management Policy described as follows.
<Medium- to Long-term Targets (the company in the future)>- Leading company in domestic and overseas key markets- Achieving high profitability and efficiency- Achieving growth that exceeds the market growth rate
<Group-wide Policy>- Optimization of business portfolio- Comprehensive efforts to increase business competitiveness- Creation of new products and businesses

－

15 －

(ii)Management Policies in the Medium-Term Management Strategy (for FY2018FY2020)
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 theissues in the previous Medium-Term Management Plan, we have made the shift from the“Medium-Term Management Plan” centering on financial plans in the past to the “Medium-Term Management Strategy” focusing on the planning and implementation of
growth strategies.
A)

Optimization of business portfolio
The Company will classify its business into three categories: stable growth business, growth promotion business and profitability restructuring business, and will promote selection and concentration and improve capital efficiency after determining a
direction geared to the characteristics of each business and clarifying any issues. Stable
growth business consists of the cement, metals (smelting), recycling and renewableenergy businesses, and in this category, the Company will aim to strengthen its business foundations by maintaining and improving cost competitiveness. Growth promotion business consists of the metals (copper and copper alloy) and advanced materials& tools businesses, and here the Company will seek business development in adjacent
fields and global markets to outperform market growth. Profitability restructuringbusiness consists of the electronic materials & components and aluminum businesses.
In this category, the Company will work promptly to solve issues and define the future
direction of growth.
B)

Comprehensive efforts to increase business competitivenessWe will improve and innovate “manufacturing” in the business divisions throughthe optimal use of technology management resources by enhancing the support systemby the corporate divisions. With this, we will make comprehensive efforts to increase
our business competitiveness by promoting “Differentiation” and “New development,”such as the development of new products and new manufacturing technologies, to become an entity that is one step ahead of other companies through early responses tochanges in the business environment.

C)

Creation of new products and businesses
To foster businesses that will become a future revenue foundation and create new

－

16 －

businesses, we will create and foster new products and new businesses that will become the core for sustainable growth by positioning important social needs the Company should meet are identified as next-generation vehicles, internet of things (IoT)
and artificial intelligence (AI), and building a rich, sustainable society. The Company
plans to create and develop new products and new businesses that are vital for sustainable development.
In addition, we will promote specific measures, with the following items as key
strategies.
- Achieve growth through innovation- Create value by building a recycling-oriented society- Increase the company’s market presence through investment for growth- Increase efficiency through continuous improvement
3. Issues in each business●Cement Business
In Japan, domestic demand for cement in FY2019 is expected to slightly exceed theyear-earlier level and stand at approximately 42.5 million tons, as while the constructionof large projects including those related to the Tokyo Olympic and Paralympic Games
in 2020 and the linear Chuo Shinkansen (in some sections) are expected to gain momentum, there is also concern over delays owing to labor shortages. In these circumstances,
we will strive to secure sales volumes by steadily taking in demand for cement for thelarge projects.
In the United States, the economy is expected to grow at a modest pace, buoyed by
an improvement in the employment situation. Demand for cement and ready-mixed concrete is also expected to remain firm, driven by rising demand in the private sector.
While rising labor costs and energy costs will be a factor affecting profitability, we willpass cost increases on to customers as appropriate. We will also realize stable and efficient operations at cement plants through renovations, reduce the cost of ready-mixed
concrete production by expanding production capacity and increasing the ratio of ourown aggregates, and aim for further improvement in profitability.
●Metals Business
The supply capacity of mines is not expected to be able to keep pace with risingdemand for copper ore in countries such as China and India and purchasing conditions
copper ore are also expected to deteriorate.

－

17 －

While copper prices currently remain high, the existing supply-demand condition
may change as a result of the construction of new smelters in China and India, and wewill keep a close watch on the market trends going forward, along with the foreignexchange 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 structureless susceptible to price fluctuations by lowering the breakeven point through a reduction in energy costs and fixed cost.
In copper smelting and refining, we will ensure earnings through measures such as
endeavoring to achieve stable operations at smelters in Japan and overseas and increasing the treating volume of E-Scrap. In copper & copper alloy products, we will continue
to increase profitability by creating business synergy with MMC Copper Products Oy,
which was included in the scope of consolidation from the current fiscal year, and byenhancing sales competitiveness through the accelerated development of alloys, drawing on our technological and development capabilities.
●Advanced Materials & Tools Business
As in FY2018, market conditions for cemented carbide products are expected to befavorable in FY2019. Under these conditions, we will conduct effective sales operations,focusing on industries and regions with high growth potential. In particular, we willprioritize the investment of our management resources in the aerospace industry, whichis in the growth stages, and seek to strengthen manufacturing, R&D and sales functions.
In the area of cutting tools, we have launched and begun marketing two brands DIAEDGE (Mitsubishi Materials Corporation) and MOLDINO (Mitsubishi Hitachi Tool
Engineering, Ltd.). Under these brands, we will work on providing customer-oriented
solutions that will build customer trust as a true partner. Regarding the sourcing of key
materials, tungsten and cobalt, we will continue working to reduce sourcing risks by
improving the recycling ratio and diversifying procurement sources.
Turning to the high-performance alloy products, we expect demand for our mainstay
sintering parts to remain firm in the automobile industry, as in FY2018. The Group willcontinue working to increase earnings by enhancing quality and productivity.
● 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, demandof products for power modules for next-generation vehicles and chemical products used

－

18 －

in glass is also expected to increase. We will strive to enhance profitability by using ourcore technological capabilities and strengthening our sales competitiveness and ourability to make proposals to customers, always remaining a step ahead of customers’
needs in each market.
In the electronic components, sales of products for home appliances, especially air
conditioning and refrigerators, are strong. We will work to strengthen our production
system to meet growing demand and will also accelerate the development of temperature sensors for automotive for which the market is expected to expand in the future
and aim for their early introduction to the market. Meanwhile, we will continue working
to strengthen our business structure by introducing new products quickly and continuing to reduce costs.
In the polycrystalline silicon business, business environment is expected to face difficult conditions. However, we will make efforts for further improvement quality andreducing costs to establish the stable business foundation, while top priority will beplaced on safety and stable operation to supply high quality products in a timely mannerin response to the changing environment.
●Aluminum BusinessIn the aluminum beverage cans, we will endeavor to maintain and increase competitiveness with seeking to achieve stable orders for regular cans and expand sales ofaluminum bottle cans, our strategic products, and develop and launch cans with newshapes. In addition, we will promote to consider overseas business expansion, whilefurther promote the advantageous procurement of raw materials, stable product quality
and cost reduction.
In the rolled and processed aluminum products, sales of heat exchange sheet materials for automobiles and products for electronic materials are expected to remain strong.
Under these circumstances, we will make efforts to strengthen quality management,
develop high value-added products and increase customer satisfaction. In addition, theestablishment of new manufacturing locations for products for automobiles, demand
for which is expected to increase overseas, will be considered for sales expansion.
We ask for the ongoing support and cooperation of shareholders as we implement
these measures with the aim of consolidating the collective potential of the Group andcreating value as an integrated business entity.

－

19 －

(6) Major Business Activities of the Group (as of March 31, 2018)
The major business activities of the Group are production and sales of cement and readymixed concrete and other products; refining, processing and sales of copper, gold, silver andother metals; production and sales of cemented carbide products and high-performance metal
products; production and sales of advanced materials, chemical products, electronic components and polycrystalline silicon; and production and sales of aluminum beverage cans, rolled
aluminum and processed aluminum products, etc. The major products and services of eachbusiness are as follows:Business Division
CementMetalsAdvanced Materials& Tools
Electronic Materials& Components

Aluminum

OthersMajor Products
Ordinary Portland cement and various other types of cements, cement-based 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, insulated substrates with high thermal
conductivity, etc.), chemical products (fluorine chemical products, high-performance paints, etc.), electronic components (surge absorbers, thermistor sensors,
chip antennas, etc.), polycrystalline silicon, silane gas, etc.
Bodies, ends and caps of aluminum beverage cans, rolled aluminum products,
processed aluminum products, etc.
Energy related (coal, geothermal and hydro-power generation, nuclear fuel cycling business (consignment of surveys, research, design and operations, etc.),
precious metals (precious metals products, jewelry, etc.), environmental and recycling related (recycling of home appliances, etc.), real estate (real estate leasing, forestry), others (engineering, geological surveys, resource exploration, andconsulting, etc.)

－

20 －

(7) The Group’s Major Plants and Business Offices (as of March 31, 2018)
1. The Company
Head office

1-3-2, Otemachi, Chiyoda-ku, Tokyo
CementMetalsAomori Plant, Iwate Plant, Yokoze Plant (Saitama),
Higashitani Mine (Fukuoka), Kyushu Plant (Fukuoka)
Akita Refinery, Naoshima Smelter & Refinery (Kagawa),
Ikuno Plant (Hyogo), Sakai Plant (Osaka)

Advanced MateriPlants and others

als& Tools
Electronic Materials& Components

Tsukuba Plant (Ibaraki), Gifu Plant, Akashi Plant (Hyogo),

Sanda Plant (Hyogo), Ceramics Plant (Saitama), Yokkaichi Plant(Mie)

Saitama Property Management Office,Production Engineering Center (Saitama)
Energy Project & Technology Center (Saitama)
Sapporo Branch, Tohoku Branch (Miyagi), Nagoya Branch,
Osaka Regional Head Office, Kyushu Branch (Fukuoka)
OthersBranch (office)R&D centers

Central Research Institute (Ibaraki)

Overseas offices

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

Note: The Human Resources Development Center (Saitama Prefecture) was closed permanently on December 31. 2017.

－

21 －

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), MMC Copper
Products Oy (Finland), 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 Hartmetall GmbH (Germany)
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), Materials’ Finance Co., Ltd.
(Tokyo)Note: Words within parentheses in the table denote the regions (for domestic subsidiaries) or countries (for overseas subsidiaries) where each subsidiary's head office is located.

－

22 －

(8) The Status of Employees (as of March 31, 2018)
1. Status of Employees of the Group (Consolidated)
Number of Employees *1

Business Division
Cement4,011 (decreased by 170)

Metals*2

6,875 (increased by 1,467)

Advanced Materials & Tools

7,307 (increased by 476)

Electronic Materials & Components*3

1,917 (increased by 263)

Aluminum

2,823 (increased by 54)

Others3,321 (decreased by 20)

All Companies (for the whole Group) * 4705 (increased by 30)

Total

26,959 (increased by 2,100)

Note 1: Employee numbers within parentheses denote the change from the previous fiscal year-end.
Note 2: Employee numbers were up in the Metals business due partly to the impact of converting MMC Copper
Products Oy and 14 Group companies to consolidated subsidiaries.
Note 3: Employee numbers were up in the Electronic Materials & Components business due partly to the impactof efforts aimed at address the increase in production at MMC Electronics Lao Co., Ltd.
Note 4: 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(persons)
4,664

YOY Change (persons)Average Age (years)

Average Years of
Employment (years)

41.7

17.5

Increased by 84

－

23 －

(9) The State of Major Subsidiaries and Affiliates (as of March 31, 2018)
1. The State of Major Subsidiaries
Name of the Company

Paid-in Capital

PT Smelting

326 million U.S.
dollars 1)

Percentage ofOwnership (including indirectownership) (%)
60.5

MMC Copper Products
Oy

160 million euro

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

811 million U.S.
dollars 1), 3)

70.0

6,999 million yen

55.7

Sambo Metals Corp.

80 million yen

100.0

Diamet Corp.

4,750 million yen 4)

100.0

Mitsubishi Cement
Corp.
Mitsubishi Polycrystalline
Silicon America Corp.
Materials Eco-Refining
Co., Ltd.
Materials’ FinanceCo., Ltd.
Mitsubishi AluminumCo., Ltd.

70 million U.S.
dollars 1), 3)
328 million U.S.
dollars 1)

100.01), 2)

67.0
100.0

400 million yen

100.0

30 million yen

100.0

8,196 million yen

90.4

8,713 million yen

100.0

8,000 million yen

100.0

1,455 million yen

51.0

Mitsubishi Materials
Techno Corp.

1,042 million yen

100.0

Mitsubishi Materials
Trading Corp.

393 million yen

100.0

Universal Can Corp.

8,000 million yen

80.0

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

－

24 －

Line of Business
Production and sales of electrolytic copper in Indonesia
Business administration of subsidiaries
that produce and sell processed copper
products
Investment in ready-mixed concretebusinesses in the U.S.
Smelting on consignment of copper
concentrate
Sales of rolled copper products andelectric wires
Production and sales of sintered products
Production and sales of cement in thesouth-west area of the U.S.
Production and sales of polycrystalline
silicon for semiconductors in the U.S.
Smelting, processing and recycling of
non-ferrous metals
Financing the Company and its affiliates
Production and sales of rolled and processed aluminum products
Production and sales of processed copper products and processed copper alloy
products
Production and sales of sealing products
Production and sales of cemented carbide tools
Technical construction and civil engineering; production and sales of industrial machinery
Sales of the Company’s products andother non-ferrous metal products
Production and sales of aluminum beverage cans

Robertson’s
Ready Mix, Ltd.

32 million U.S. dollars 1), 3)

100.0

Production and sales of ready-mixed
concrete and aggregate in the southwest area of the U.S.

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, 2017is listed, but there is no change in the paid-in capital as of March 31, 2018.
Note 3: MMC Development Corp., Mitsubishi Cement Corp., and Robertson’s Ready-Mix, Ltd. changed theiraccount settlement date from December 31 to March 31 effective from the fiscal year under review.
Note 4: Diamet Corp. increased its capital on July 31, 2017. As a result, the company’s capital climbed from
¥1,500 million to ¥4,750 million.

－

25 －

2) The State of Major Affiliates
Name of the Company

Paid-in Capital(Million Yen)

Percentage ofOwnership (including indirectownership) (%)

Ube-Mitsubishi Cement
Corp.

8,000

50.0

NM Cement Co., Ltd

7,001

30.0

LM Sun Power Co., Ltd.

495

50.0

Kobelco & Materials
Copper Tube Co., Ltd.

6,000

45.0

Japan Drilling Co., Ltd.

7,572

20.05

P.S. Mitsubishi
Construction Co., Ltd

4,218

33.9

Line of Business
Sales of cement and cement
related products
Investment in Nghi Son Cement
Corp. (Vietnam)
Operation of solar power generation
Production and sales of copper
tubes and fabricated copper tubes
Offshore drilling for oil and gas exploration and development, construction
and other work
Pre-stressed concrete works, civilengineering and sales of concrete
products(10) Business Transfers, Absorption-Type Company Splits or Incorporation-Type Company Splits
Based on a Board of Directors resolution passed at a meeting on November 29, 2017, theCompany undertook the transfer of all of the shares of Mitsubishi Material Real Estate Corporation (MMRE), a consolidated subsidiary, to Fortress Value Properties Holdings GK, agroup company of Fortress Investment Group LLC. In addition, and ahead of this share transfer, the Company passed a resolution at a meeting of its Board of Directors held on November
29, 2017 to have MMRE take over part of the Company’s real estate business by way of a
split off and absorption-type company split on February 1, 2018.
(11) Acquisition or Disposal of Shares, Equity Interests or Share Options in Other Companies
Based on a resolution of the Board of Directors at a meeting held on September 28, 2016, theCompany decided to acquire the Special Products Division of the Luvata Group through thepurchase of an equity interest and business transfer from Luvata Espoo Oy and its two subsidiaries effective May 2, 2017.

－

26 －

(12) The Group’s Major Lenders (as of March 31, 2018)
Major Lenders
The Bank of Tokyo-Mitsubishi
UFJ, Ltd. *2
Mitsubishi UFJ Trust andBanking Corporation *3

Borrowed
Amount(Million Yen)

Company Shares held by the Lender
Percentage of
Number of Shares Held
Shareholding(Thousand)(%)*1

115,031

2,465

1.9

88,302

1,159

0.9

Mizuho Bank, Ltd.

42,511157

0.1

The Norinchukin Bank

18,713500

0.4

The Hachijuni Bank, Ltd.

16,761223

0.2Note 1: Percentages of shareholding were calculated after deducting treasury shares (524,766 shares).
Note 2: The Bank of Tokyo-Mitsubishi UFJ, Ltd., has changed its name to MUFG Bank, Ltd. as of April 1, 2018.
Note 3: Mitsubishi UFJ Trust and Banking Co., Ltd. (MUTB) transferred its corporate loan-related business to
MUFG Bank, Ltd. on April 16, 2018. Accordingly, there are no loans from MUTB at present.

－

27 －

2. Articles Concerning Stock (as of March 31, 2018)(1) Total number of authorized shares: 340,000,000 (no change from the previous fiscal
year-end)(2) Total number of issued shares: 131,489,535 (no change from the previous fiscal yearend)(3) Number of shareholders: 98,732 (decreased by 1,738 from the previous fiscal yearend)This includes 73,514 shareholders with voting rights (decreased by 670 from the previous fiscal year-end).
(4) Major Shareholders
Name of Shareholders

Number of Shares Held(Thousand)Japan Trustee Services Bank, Ltd.
(Trust account)
The Master Trust Bank of Japan, Ltd.
(Trust account)

Percentage of Shareholding (%)*1

8,042

6.1

6,948

5.3

3,101

2.4

2,546

1.9

2,496

1.9

The Bank of Tokyo-Mitsubishi UFJ, Ltd. *2

2,465

1.9

STATE STREET BANK WEST CLIENTTREATY 505234

2,197

1.7

GOVERNMENT OF NORWAY

1,966

1.5

Mitsubishi Heavy Industries, Ltd.

1,900

1.5

Japan Trustee Services Bank, Ltd.
(Trust account 1)

1,848

1.4

Meiji Yasuda Life Insurance Company
National Mutual Insurance Federation ofAgricultural Cooperatives
Japan Trustee Services Bank, Ltd.
(Trust account 5)

Note 1: Percentages of shareholding were calculated after deducting treasury shares (524,766 shares)
Note 2: The Bank of Tokyo-Mitsubishi UFJ, Ltd., has changed its name to MUFG Bank, Ltd. as of April 1,
2018.

－

28 －

3. Articles Concerning the Company’s Executives(1) Directors and Audit and Supervisory Board Members (as of March 31, 2018)
Title
Representative Director
Chairman
Representative Director
President
Representative Director(Executive Vice
President)
Representative Director(Executive Vice
President)
Representative Director(Senior Managing
Executive Officer)
Representative Director(Senior Managing
Executive Officer)

Name

Position and Responsibilities

Hiroshi Yao
Akira Takeuchi General Operation of the Company

Osamu Iida

Assistant to the President
General Manager, Technology Div.

Naoki Ono

Assistant to the President
President, Materials’ Finance
General Manager, Corporate Strategy
Co., Ltd.
Div.

Responsible for:Business optimization, Environment
Nobuo Shibano & Energy Business, Aluminum Business, Affiliated Corporations BusinessYasunobu Suzuki

Director

Yukio Okamoto 1) 15)

Director

Mariko Tokuno

President, Metals Company
Representative Director, Okamoto Associates, Inc.2);
Outside Director, Nippon
Yusen Kabushiki Kaisha(NYK Line)3); Outside Director, NTT DATA Corporation4)
Outside Director, Happinet
Corporation5)
Outside Director, Yamato
Holdings Co., Ltd. 6) 7)

1) 15)

Director
Audit & Supervi-

Important Positions of
Other Organizations

HiroshiWatanabe1) 15)
Hiroshi
Kubota 9)

President, Institute for International Monetary Affairs8)

－

29 －

sory Board Member (Standing)
Audit & Supervisory Board Member Soichi Fukui(Standing)
Audit & SuperviHiroshi Satosory Board Member10) 11) 15)(Standing)
Audit & Supervisory
Akio Utsumi
Board Member10) 12) 15)

Senior Advisor, Mitsubishi
UFJ Trust and Banking Corporation13)

Audit & Supervisory
Naoto Kasai
Board Member10) 15)

Representative Lawyer, Kasai
Sogo Law Office14)

Note 1: Mr. Yukio Okamoto, Ms. Mariko Tokuno and Mr. Hiroshi Watanabe 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.
However, the value of the transactions amounts to less than 1% of the Company’s consolidated net sales.
Note 4: There is a business relationship for the use of IT services between the Company and NTT DATA Corporation.
However, the value of the transactions amounts to less than 1% of the Company’s consolidated net sales.
Note 5: There is no business relationship between the Company and Happinet Corporation.
Note 6: Ms. Mariko Tokuno was appointed Outside Director of Yamato Holdings Co., Ltd. on June 23, 2017.
Note 7: There is no business relationship between the Company and Yamato Holdings Co., Ltd. The Company has abusiness relationship with Yamato Transport Co., Ltd., a specified subsidiary of Yamato Holdings Co., Ltd.,
regarding the consigned transportation of products. However, the value of the transactions amounts to less than
1% of the Company’s consolidated net sales.
Note 8: There is no business relationship between the Company and the Institute for International Monetary Affairs.
Note 9: 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 10: Mr. Hiroshi Sato, 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 11: Mr. Hiroshi Sato has experience as a financial institution corporate auditor and has extensive knowledge offinance and accounting.
Note 12: Mr. Akio Utsumi has experience in management at financial institutions and has extensive knowledge offinance and accounting.
Note 13: The Company has a business relationship with Mitsubishi UFJ Trust and Banking Co., Ltd. (MUTB), regarding entrustment of the Company’s pension funds. The Company had a business relationship with MUTB relating to the borrowing of funds, and providing debt guarantees. However, since MUTB transferred its corporate loan-related business to MUFG Bank, Ltd. on April 16, 2018, there is no longer such a business relationship with MUTB.
Note 14: There is no business relationship between the Company and Kasai Sogo Law Office.
Note 15: The Company has notified the Tokyo Stock Exchange, Inc. that Mr. Yukio Okamoto, Ms. Mariko Tokuno
and Mr. Hiroshi Watanabe are Independent Directors, and that Mr. Hiroshi Sato, Mr. Akio Utsumi and

－

30 －

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 with general shareholders.)

The following Directors have been given new titles or posted to new positions shown below on
April 1, 2018.
Title

Name

Important Positions of
Other Organizations

President, Metals Company

Representative Director(Senior Managing
Executive Officer)

Yasunobu Suzuki

Director, Executive
AdvisorHiroshi Yao

Director

Position and Responsibilities

responsible for:
Aluminum Business; New Business
Development and Promotion

Chairman, Mitsubishi Cement Corp.
Chairman, MCC Development Corp.

Nobuo Shibano

－

31 －

(Reference) The following Executive Officers had assumed office as of April 1, 2018:
Title
Executive Vice President
Executive Vice President

Name

Position and Responsibilities
Assistant to the President
General Manager, Technology Div.
Assistant to the President
General Manager, Corporate Strategy Div.

Osamu Iida*
Naoki Ono*

President, Metals Company
Senior Managing Executive Officer

responsible for:Yasunobu Suzuki*

Aluminum Business; New Business Development andPromotion
President, Mitsubishi Cement Corp.
President, MCC Development Corp.
Chairman, Robertson’s Ready Mix, Ltd.
Vice President, Cement Company
President, Electronic Materials & Components Company
President, Mitsubishi Materials Electronic Chemicals Co., Ltd.

Managing Executive OfKimball McCloud
ficer

Managing Executive OfYoshihiko Kimura
ficerManaging Executive OfKazuhiro Kishi
ficer

President, Cement Company

Managing Executive OfMakoto Shibata
ficer

General Manager, Governance Division
responsible for:Environment & Energy Business

Managing Executive OfShinichi Nakamura
ficer

President, Advanced Materials & Tools Company

Executive Officer

Naotoshi Kumano

Executive Officer

Shigemitsu Fukushima

Executive Officer

Tetsuro Sakai

General Manager, Human Resources & General Affairs Div.
responsible for:Affiliated Corporations Business
General Manager, Corporate Culture Innovation
Dept., Human Resources & General Affairs Div.
General Manager, Safety & Environment Dept.,
Governance Div.
Vice President, Metals Company

Executive Officer

Susumu Sasaki

Deputy General Manager, Corporate Strategy Div.

Executive Officer

Nobuhiro Takayanagi

President, Mitsubishi Cable Industries, Ltd.

Executive Officer

Masaaki Kanda

Deputy General Manager, Technology Div.

Executive Officer

Takahiro Yamada

Vice President, Cement Company

Executive Officer

Masuhiro Ishitobi

Deputy General Manager, Technology Div.

Managing Executive OfYoshikazu Yasui
ficer

－

32 －

Executive Officer

Yasunori Murakami

Executive Officer

Toru Suzuki

Executive Officer

Shogo Yamaguchi

Executive Officer

Toshiyuki Shimamura

Executive Officer

Ryuichi Hasegawa

Executive Officer

Jun Nagano

Executive Officer

Hitoshi Kikuchi

Executive Officer

Kazuto Hirano

Executive Officer

Toshinori Ishii

Executive Officer

Hideki Kato

Vice President, Advanced Materials & Tools Company
General Manager, General Affairs Dept., Human Resources & General Affairs Div.
General Manager, Environment & Energy Business
Unit
Vice President, Advanced Materials & Tools Company
General Manager, Corporate Production Engineering
Dept., Technology Div.
General Manager, Legal Dept., Corporate Strategy
Div.
Vice President, Advanced Materials & Tools Company
Vice President, Cement Company
Vice President, Electronic Materials & Components
Company
General Manager, Corporate Strategy Dept., Corporate Strategy Div.

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

－

33 －

(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 theCompanies 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 excessof 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 1 of the Companies Act. The Company shall indemnify the Audit & Supervisory
Board Members for damages in excess of the amount of the liability.

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

Total Amount of Remuneration (Millionsof yen)Directors (of which
Outside Directors)

455 2)(56)

Remuneration by Type(Millions of yen)
Basic 4)
Bonus 5)
374
(56)

80

Number of Executives(persons) 1)
10(4)

Audit & Supervisory
Board Members (of6
124 3)
124－
which Outside Audit
(3)
(52)
(52)
& Supervisory
Board Members)
Note 1: The number of Directors/Audit & Supervisory Board Members includes one Director and one Audit &Supervisory Board Member whose terms ended during the fiscal year under review. There are nine Directors and five 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 ¥28 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 and titled
Executive Officers to corporate performance as well as individual performance. Drawing
on the advice of external experts, steps have been taken to design a system that is highly
objective. Remuneration is paid in accordance with internal rules and regulations approved by the Board of Directors and is comprised of basic fixed component as well as
a bonus that is linked to performance.
Firstly, the amount of basic remuneration paid to Directors and titled Executive Officers is determined in accordance with the title and performance of 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

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through the Company's Director shareholding association. The Company's shares acquired based on this remuneration cannot be sold at least during each individual's termof 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 of the 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 for the
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 is determined 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 levelbased on discussions among them and is not linked to corporate performance in light of
the fact that they assume the responsibility for auditing the execution of duties by Directors as an independent body entrusted by shareholders.

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(5) Major Activities of Outside Directors and Auditors
StatusClassification

Name

Outside Director

Yukio Okamoto

Outside Director

Mariko Tokuno

Outside Director

Hiroshi Watanabe

Major Activities
Mr. Yukio Okamoto participated in all 19 meetings of theBoard of Directors held during the fiscal year under review. Mr. Okamoto provides well-informed opinions
concerning general management as a Director and wellinformed opinions on international affairs as an informed
specialist on such fields, when necessary.
Ms. Mariko Tokuno participated in all 19 meetings of theBoard of Directors held during the fiscal year under review. Ms. Tokuno provides well-informed opinions concerning general management as a Director and well-informed opinions on international corporate strategy as an
informed specialist on such fields, when necessary.
Mr. Hiroshi Watanabe participated in all 16 meetings ofthe Board of Directors held following his appointment onJune 28, 2017. Mr. Watanabe provides well-informed
opinions concerning general management as a Director
and well-informed opinions on domestic and international finance as well as economics,when necessary.
Mr. Hiroshi Sato participated in all 16 meetings of theBoard of Directors and all 14 meetings of the Audit &Supervisory Board held following his appointment onJune 28, 2017. Mr. Sato provides well-informed opinions
as an Audit & Supervisory Board Member based on his
abundant experience as a manager overseeing financeand accounting, when necessary.
Mr. Akio Utsumi participated in all 19 meetings of theBoard of Directors and all 17 meetings of the Audit &Supervisory Board held during the fiscal year under review. Mr. Utsumi provides well-informed 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 19 meetings of theBoard of Directors and 16 of the 17 meetings of the Audit& Supervisory Board held during the fiscal year underreview. Mr. Kasai provides well-informed opinions as an
Audit & Supervisory Board Member, based on his abundant experience as a lawyer and extensive knowledge
concerning business management, when necessary.

Outside Audit & SuperHiroshi Satovisory Board Member

Outside Audit & SuperAkio Utsumi
visory Board Member

Outside Audit & SuperNaoto Kasai
visory Board Member

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Note 1: As far as the number of times Board of Directors’ meeting were held, and in addition to the aforementioned, there was one written resolution for which that resolution was considered as having been resolved by a decision of the Board of Directors pursuant to Article 370 of the Companies Act and the provisions of Article 27, Paragraph
3, of the Articles of Incorporation, and there were three notices made to Directors and Audit & Supervisory Board

Members pursuant to Article 372, Paragraph 1, of the Companies Act.
Note 2: During the fiscal year under review, Mitsubishi Cable Industries, Ltd., Mitsubishi Shindoh Co., Ltd.,
Mitsubishi Aluminum Co., Ltd., Tachibana Metal Mfg Co., Ltd. and Diamet Corporation, which are allconsolidated subsidiaries of the Company, were found to have delivered products, etc. that deviatedfrom customer standards or internal company specifications due to misconduct, including the rewritingof inspection records data, concerning some of the products manufactured and sold in the past.
While Outside Directors and Outside Audit & Supervisory Board Members were not cognizant of thesecases until they came to light, all Outside Directors and Outside Audit & Supervisory Board Members
made regular remarks at Company Board of Directors’ meetings, from the viewpoint of enhancing thegovernance structure. These cases having been discovered, they have been working to further enhance
the governance system, such as by investigating the facts and causes, and making proposals with regard
to measures to prevent any recurrence. Meanwhile, Outside Director, Mariko Tokuno, has assumed theposition of chairperson of the Special Investigation Committee, established by the Board of Directors tolook into among other things each incident. Outside Director, Hiroshi Watanabe, is also a member of thecommittee.

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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, 2018
Content of the Remuneration
Amount(a) Remuneration paid by the Company to Accounting Audi153 million yen1)
tors(b) Total amount of monetary and other property benefits paidby the Company and its subsidiaries (including the above389 million yen
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 substantially subdivide
the two. This amount thus includes auditing remuneration based on the Financial Instruments and Exchange Law. The Audit & Supervisory Board has agreed upon this amount taking into consideration thebasis for calculating compensation, the status of execution of duties of the accounting auditor in theprevious business year and the opinions of Directors and other related internal departments.
Note 2: Among the major subsidiaries of the Company, PT Smelting, MMC Copper Products, MCC Development
Corp., Mitsubishi Cement Corp., 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 (in accordance with the Companies Act and the Financial Instruments and Exchange Act andthe applicable laws of the concerned foreign countries’ own legislations).

(3) Content of Non-Auditing Duties
The Company subcontracts “Operations Supporting the Publication of the Integrated Report” and other duties (non-auditing duties) to the Accounting Auditor that are other thanthe 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 it isdifficult 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.

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39 －

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 the establishment 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 Corporate Philosophy, Values, Code of Conduct,
and Vision (collectively referred to as the “Corporate Philosophy, etc.” as well as internal regulations that should be observed by the Directors and employees and establish corporate ethics and a compliance system.
2. The Company shall determine execution of duties through the Board of Directors,
Corporate Strategy Committee and other committees in accordance with laws, Articles
of Incorporation, and internal regulations and others. In addition, the legal department
and the relative department shall carry out the preliminary review of specific significant matters.
3. The Company shall determine the general policies and plans, etc., concerning compliance at the meetings of the Board of Directors. In addition, the Company shall appointa Director from among its Directors or titled Executive Officers to oversee mattersrelating to 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 the whole Company.
4. The Company shall establish a reporting desk to deal with particulars related to problems that may arise over compliance.
5. The Company shall enforce periodical auditing concerning the state of compliance ineach division by the division in charge of internal audits.
6. In accordance with its Code of Conduct, the Company shall establish internal structures to ensure appropriate actions under its policy of resolutely rejecting any involvement whatsoever with anti-social forces.
(2) Systems for Preservation and Management of Information Related to the Execution of Duties of Directors
The Company shall properly preserve and manage the minutes of the meetings of Boardof Directors, meetings of Corporate Strategy Committee and other significant infor-

－

40 －

mation, based on legislation, Articles of Incorporation and internal regulations and policies.
(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 togeneral risk management at the meetings of the Board of Directors. In addition, theCompany shall appoint a Director from among its Directors or titled Executive Officers to oversee matters relating to risk management and establish a committee related
to CSR and a division responsible for risk management and shall enforce cross-divisional risk management promotion activities for the whole Company.
3. The Company shall determine the various internal regulations and others 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 an organization to respond to such events.
6. The Company shall enforce periodical auditing concerning the state of risk management in each division by the division in charge of internal audits.
(4) Systems to Ensure Efficient Execution of Duties by Directors
1. The Company shall determine rationally the areas of responsibility of each of the Directors and let the Executive Officers assist the Directors in their execution of duties
in accordance with the Executive Officers’ system. In addition, the Company shalldetermine the areas of 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
those divisions to formulate their own specific plans. In addition, the Directors shallsuitably verify the progress state of the plan of each division and take appropriate

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measures when necessary.
3. The Company shall enforce periodic auditing concerning the efficiency of the execution of duties of each division by the division in charge of internal audit.
(5) Systems to Ensure Appropriate Operations by the Corporate Group Comprising
the Company and its Subsidiaries
1. The Company shall aim to establish corporate ethics and build a Group complianceand risk management system (including an internal education system) to promote compliance and risk management activities by the Group, including subsidiaries, based on
the Corporate Philosophy etc. and internal regulations that are applied consistently
throughout the Group.
2. Concerning each subsidiary, the Company shall aim to improve 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
shall consult and exchange information with the subsidiary concerning specific significant matters.
3. The Company shall establish various regulations related to internal controls concerning financial reporting. The Company shall also establish assessment mechanisms for
those internal controls and build a system to ensure 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 managementof subsidiaries by the division in charge of internal audit of the Company.
(6) Particulars Concerning Employees Assigned to Assist Audit & Supervisory Board
Members, Such Employees’ Independence from Directors, and Particulars Concerning Ensuring the Effectiveness 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 andevaluation of them.
(7) Systems for Reporting to Audit & Supervisory Board Members and for EnsuringThat People Making Reports Shall Not Experience Disadvantageous Treatment as

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42 －

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 accordancewith the method stipulated in legislations and the internal regulations of the Company,in the case where 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 same shall apply in the event that Audit & Supervisory Board Members
request a report about business operations.
2. In the event of a report by a Director or employee of the Company or its subsidiary to
the reporting desk on a compliance-related problem, the department in charge of thereporting desk shall in principle report the content of such report to the Audit & Supervisory Board Members.
3. The division in charge of internal auditing of the Company shall report to the Audit &Supervisory Board Members important items heard from Directors and employees of
the Company and its subsidiaries, as well as important items from audit results.
4. The disadvantageous treatment of people reporting to the Audit & Supervisory Board
Members and the Audit & Supervisory Board (including people reporting indirectly
through others) because of such reporting shall be prohibited, and such prohibition
shall be made known throughout 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 thepayment of such expenses by Audit & Supervisory Board Members, prescribed procedures shall be followed and payment made promptly.
(9) Other Systems to Ensure Effective Auditing by Audit & Supervisory Board
Members
1. Audit & Supervisory Board Members and Representative Directors shall exchange
their opinions periodically and when deemed necessary.
2. Audit & Supervisory Board Members shall be provided with the opportunity to attend
Board of Directors Meetings and other significant meetings of the Company.
●

Overview of Operational Status
Principal initiatives to secure the operation of systems to ensure appropriate business

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43 －

operations are indicated as follows. Furthermore, the Company has established and commenced the progressive implementation of measures (which are indicated as follows)
aimed at strengthening the Group’s governance system including quality control as outlined on pages 10 to 13.
(1) Initiatives Related to Compliance
1. The Company and its subsidiaries share a Corporate Philosophy etc. aimed at ensuringsound corporate activities that comply with laws and regulations and are in accordancewith social mores. Awareness of the Company’s Corporate Philosophy etc. is instilled
throughout the Group.
2. Based on regulations related to CSR, the CSR Committee—whose secretariat is the
CSR Department—meets regularly. In addition to deliberating annual policies andplans related to overall compliance activities, the committee shares and evaluates thestatus of compliance within the Group and reports that have been submitted to the internal reporting desk. The Company and its subsidiaries work together to ensure consistent CSR training throughout the Group and address compliance-related issues.
3. The Company has established certain regulations and guidelines in order to ensure
optimal quality. These regulations and guidelines are applied across the Group as awhole. Every effort is made to ensure the proper management of quality. This includes
putting in place a quality management structure and systems.
(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 business continuity plans (BCPs) prescribing action guidelines in the event of large-scale accidents, natural disasters or terrorism. In addition,
the Crisis Management Committee(Note) meets during normal times and times of crisis
alike to prevent damage from spreading.
Note: Reporting to the CSR Committee, reorganized as the Crisis Management Committee as of April 1, 2018.

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(3) Initiatives Related to Enhancing Management Soundness and Efficiency
1. The Company formulates Medium-Term Management Strategy and annual budgets
and strives to appropriately allocate management resources and responsibilities amongits 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 an accelerated decision-making and business execution.
3. For each subsidiary, the Company identifies a responsible liaison division within the
Company. That division receives reports on significant investment projects and compliance-related problems and consults and exchanges information with the subsidiaryon such matters.
(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 andexchange 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 accountwith regard to the assignment and evaluation of personnel assigned to this department,in the aim of enhancing the effectiveness of audits by the Audit & Supervisory Board
Members.

－

45 －(Reference) Status of Corporate Governance<Fundamental Policy>
In accordance with its Corporate Philosophy “For People, Society and the Earth,”,etc.
Mitsubishi Materials works to maximize its sustainable development and corporate value by
engaging in fair business activities. To this end, the Company undertakes various measures
to enhance its corporate governance, recognizing the importance of en-gaging in efficient andtransparent management..
<Framework for Promoting Corporate Governance Enhancement>
To prevent the reoccurrence of deliveries of products,etc that deviated from customer standards or internal company specifications as a result of the Company’s consolidated subsidiaries improperly rewriting inspection data, the formulation, disclosure, and sequentially implementation of preventive measures (“relevant subsidiary measures”) and group governanceframework enhancement measures (“main enhancement measures”), which includes quality
control, are being undertaken by the relevant subsidiaries where data falsification took placeand by the Company, respectively (refer to pages 10-14 for more details).
On April 1, 2018, the Company newly established the “Group Governance Enhancement
and Promotion Division” as a cross-sectional organization to steadily implement and confirm
the status of the main prevention measures and main enhancement and other measures; “Governance Deliberative Council” as a body that deliberates on business divisions’ governancerelated policies and plans (including main enhancement measures) for the fiscal year; and the“Governance Division (which oversees the Safety & Environment Dept., CSR Dept., Quality
Management Dept., and Internal Audit Dept.)”, which is tasked with governance-related administrative and support functions.
In addition, on May 10, 2018 the Company established the “Committee for Monitoring of
Measures to Enhance Governance” comprised of outside directors of MMC and outside experts with the objectives of monitoring the status of main enhancement and other measuresprogress, achievements, and administration from a more independent position than management as well as providing necessary advice and proposals on related issues to the Board of
Directors.
Furthermore, on June 22, 2018, the Company decided to establish the “Committee for
Nomination and Compensation” for which the majority of members being outside directors
in order to ensure the transparency and objectivity of the Board of Director’s decisions regarding the appointment and dismissal of directors and officers as well as their compensation.
Of note, the Corporate Governance Framework related to the Company’s management decision making/supervision, business execution, and auditing is outlined in the following chart,
Overview of the Corporate Governance System.

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46 －

Overview of the Corporate Governance System47

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 free market
transactions in the Company’s shares on the Stock Exchanges. As a matter of course, theCompany believes that the decision to accept or decline a proposal for a Large-Scale
Acquisition of shares (Defined in (3) 2. (i) below. The same applies below.) should be
ultimately left to the individual shareholders of the Company.
However, there are some Large-Scale Acquisitions of shares that do 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 and improvethese factors in the medium and long terms, the Company’s medium- and long-term
shareholder value may possibly be harmed.
Furthermore, while it can go without saying that the freedom of 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 is a 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 is necessary 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 thatconflict with the Company's medium- and long-term shareholder value, and to negotiatewith potential Acquirers on behalf of the shareholders.
(2) Overview of Special Measures to Ensure the Implementation of the Fundamental
PolicyThe Company has been developing its various businesses by utilizing technologies accu-

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48 －

mulated 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 an affluent 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 business activities, 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, and looking 10 years into the future, the Group has also positioned efforts to become the “leading company in domestic and overseas key markets,”“achieving high profitability and efficiency,” and “achieving growth that exceeds themarket 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 a Group-wide policy. This policy entails “optimization of the businessportfolio,” “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. At the same time, the Group will implement various specific measures under
the key strategies of “achieving growth through innovation,” “creating value by buildinga recycling-oriented society,” “increasing the Company’s market presence through investment for growth,” and “increasing efficiency through continuous improvement.”(3) Overview of Efforts to Prevent Inappropriate Parties from Assuming Control ofDecisions Relating to the Company’s Financial and Operating Policies
The Company, in conformity with its corporate philosophy and various policies outlinedin (2) above, shall continue pursuing maximization of the medium- and long-term shareholder value in the future. At the same time, however, it may not be possible to ignore
the potential of Large-Scale Acquisitions by third parties that may harm the mediumand 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 is49

a modified version of a plan previously in place. The New Countermeasures received
approval at the 91st Ordinary General Meeting of Shareholders held on June 29, 2016.
An outline of the New Countermeasures is given below. For more details, 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 Acquisition of the Company’s Shares (Takeover Defense Measures) incorporating procedures to be observed bya 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 are procedureswith 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 a holder amounting to 20% of more of the share certificates, etc., issued by
the Company
b. 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 ratioof share certificates, etc., of a person having a special relationship totaling atleast 20% of 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 the procedures

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50 －

prescribed in the New Countermeasures, before executing the Large-Scale Acquisition.
(iii) Provision of Information
When the Acquirer submits the Letter of Intent, the Company will send to the Acquirer an Information List that details all 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 the Information Provision Requirement Period. However, if a request for an
extension based on a plausible reason is received from the Acquirer, the Information
Provision Requirement Period may be extended as needed up to a maximum of 30days. 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 the Acquirer 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 andthat will be disclosed.
(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 Infor-

51

mation 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 a maximum of 30 days when deemed necessary by the Board of Directors, or when recommended by the Independent Committee.
(vi) Consulting with the Independent Committee
When countermeasures are invoked in the New Countermeasures, in order to eliminate arbitrary decisions by the Board of Directors, the Independent Committee will
be setup composed of only people who are independent of Executive personnel that
conduct business operations for the Company.
In the event that the Acquirer has not observed the procedures defined in the
New Countermeasures, or when it is found that the Large-Scale Acquisition ofshares by the Acquirer will cause notable damage to the medium- and long-term
shareholder value of the Company, the Board of Directors can consult with the Independent Committee about whether to invoke countermeasures when it is judged
appropriate to invoke countermeasures.
(vii) Recommendation by the Independent Committee Concerning the Invocationof Countermeasures
When there has been consultation by the Board of Directors regarding whether to
invoke countermeasures, the Independent Committee will make recommendations
for the Board of Directors regarding whether to invoke countermeasures.
(viii) Resolution by the Board of Directors
The Board of Directors will comply to the greatest degree possible with the recommendation of the Independent Committee outlined in (vii) above and will implement a resolution to invoke countermeasures.
(ix) Holding a Shareholders Meeting to Confirm Their Intent
Excluding instances when it is notably difficult to convene a general meeting ofshareholders, 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

－

52 －

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 in compliance with the resolution passed at the Shareholders Meeting to Confirm Their
Intent.
(x) Period to Start Large-Scale Acquisition
When it has been determined by the Board of Directors to convene the Shareholders
Meeting to Confirm Their Intent, the Acquirer may not start Large-Scale Acquisition until the Board of Directors has implemented a resolution to invoke the countermeasures 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 to terminate orwithdraw 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
for maintaining the invoked countermeasures in view of ensuring and enhancing the Company'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
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

53

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 persuch stock 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 and ordinances and the like.
(4) Determination by the Board of Directors, and the Reasons thereof, that the
Measures in (2) above are in Accordance with the Basic Policy in (1) above and as such
do not Harm the Common Interests of Shareholders or Aim to Maintain the Status of
the Company’s Officers
The Board of Directors has determined that the measures in (2) above are in accordance withthe basic policy in (1) above. Such reason is that, by securing and enhancing the Company’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- and long-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.
(5) Determination by the Board of Directors, and the Reasons thereof, that the
Measures in (3) above are in Accordance with the Basic Policy in (1) above and as

－

54 －

such do not Harm the Common Interests of Shareholders or Aim to Maintain the
Status of the Company’s Officers
The measures in (3) above prevent inappropriate parties, in the context of the basic policy in(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 the objective ofsecuring and enhancing the Company’s medium- and long-term shareholder value, and inline with such objective, to have the Acquirer provide the necessary information beforehand
concerning the Large-Scale Acquisition that said Acquirer intends to make so that 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 the reasonableness andfairness of the measures in (3) above for the reason that these measures contain a procedure
for confirming the intent of all shareholders, establish the Independent Committee comprising highly independent members, give utmost respect to the Committee’s recommendation,
establish reasonable and objective criteria for the invocation of countermeasures, 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 are rounded
down to the nearest stated unit. Figures for ratios have been rounded up or down to thenearest stated decimal place.

55

Consolidated Balance Sheets[As of March 31, 2018](Millions of yen)
Item

Amount[ASSETS]
Current Assets:
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Gold bullion on loan
Other954,146
93,389260,427
91,772132,043
142,275
9,068
88,862
138,824

Allowance for doubtful accounts(2,518)Non-current Assets:
Property, Plant and Equipment:
Building and structures, net
Machinery and equipment, net
Land, net

1,060,938
645,559
153,490
217,620
236,709

Construction in progress
Other, net

23,105
14,632Intangible Assets:
Goodwill
Other64,574
44,636
19,938Investment and Other Assets:
Investment securities
Retirement benefit asset
Deferred income taxes
Other

350,804
303,924449
17,91432,813

Allowance for doubtful accounts(4,297)

Total Assets
2,015,084
Note: All amounts less than one million yen are rounded down.

－

Item[LIABILITIES]Current Liabilities:
Notes and accounts payable-trade
Short-term loans payable
Current portion of bonds payable
Income taxes payable
Deferred tax liabilities
Accrued for bonuses
Gold payable
Allowance for loss on disposal of inventories
Other
Non-current Liabilities:
Bonds payable
Long-term loans payable
Reserve for directors’ retirement benefits
Reserve for loss on subsidiaries and affiliates
Reserve for environmental measures
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Net defined benefit liability
Other
Total Liabilities[NET ASSETS]
Shareholders’ Equity:
Capital stock
Capita surplus
Retained earnings
Treasury stock
Accumulated Other Comprehensive Income:
Valuation difference on available forsale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit
plans
Non-controlling interests
Total Net Assets
Total Liabilities and Net Assets

56 －Amount777,080
158,369
206,142
25,0009,151
79
13,228
246,227783
118,097
469,508
50,000240,292
1,384
986
37,83340,03924,162
51,647
23,162
1,246,589
571,222
119,457
92,422
361,430(2,089)111,249
95,487
1,068
33,071(10,312)(8,066)86,023
768,495
2,015,084

Consolidated Statements of Operations[For the year ended March 31, 2018](Millions of yen)
Item

AmountNet Sales
Cost of Sales
Gross Profit
Selling, general and administrative expenses
Operating Profit
Non-Operating Profit:
Interest income
Dividends income
Rent income on non-current assets
Other
Non-Operating Expenses:
Interest expenses
Equity in loss of affiliates

Loss on retirement of non-current assets
Expenses for rent in undertaking
Expenses for settlement of remaining business in mine
Other
Ordinary Income
Extraordinary Income:Gain on sales of non-current assets
Gain on sales of marketable securities and investments in securities
Other
Extraordinary Losses:
Loss on impairment
Corporate income taxes, resident taxes and business tax
Loss on non-conforming products

Loss on valuation of investment securities
Other
Income before Income Taxes
Corporate income taxes, resident taxes and business tax
Income taxes adjustments
Net Income
Net Income attributable to non-controlling interests
Net Income attributable to owners of the parent
Note: All amounts less than one million yen are rounded down.

57

1,599,533
1,379,877
219,655
146,835
72,81927,784812
19,447
4,866
2,657
20,982
5,058
1,336
4,494
2,867
4,098
3,127
79,621
14,179
6,760
5,667
1,752
26,023
11,035
9,092
3,202
400
2,291
67,777
18,941
4,698
44,137
9,542
34,595

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

Shareholders’ Equity
Capital stock

Retained earnings

Treasury stock

92,422

333,526(2,017)

119,457

Balance as of April 1, 2017

Total
shareholders’equityCapital surplus

543,390

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 from change of fiscal
year end of consolidated subsidiaries
Increase associated with theincrease number of consolidated subsidiaries(9,168)(9,168)34,59534,595

1,711

1,711

83

83

681

681

Acquisition of treasury stock(0)

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

(72)

(72)

0

0

(0)

(0)

Total change during the year－

(0)27,903(71)

27,831

Balance as of March 31, 2018

119,457

92,422

361,430(2,089)571,222

Accumulated Other Comprehensive Income

Balance as of April 1, 2017

Valuationdifference on
securities
available-forsale

Deferred
gains orlosses onhedges55,226888

Foreign cur- RemeasureRevaluation
Total other Non-control- Total Net Asrency transla- ments of dereserve forcomprehensive ling Interests
sets
tion adjust- fined benefit
landincomements
plans

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

77,891

88,913

710,195

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 from change of fiscal year end of consolidated(9,168)34,595
1,711
83

－

58 －

subsidiaries
Increase associated with theincrease number of consolidated subsidiaries

681

Acquisition of treasury stock(72)

Disposition of treasury stock0

Changes in equity of parent
company related to transactions with non-controllinginterests
Net change in items other thanshareholders’ equity(0)40,260180(1,858)(8,894)

3,669

33,358(2,889)30,468

Total change during the year

40,260180(1,858)(8,894)

3,669

33,358(2,889)58,300

Balance as of March 31, 2018

95,487

1,068

33,071(10,312)(8,066)111,249

86,023

768,495

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

59Balance Sheets[As of March 31, 2018](Millions of yen).

Item

Amount[ASSETS]
Current Assets:
Cash and deposits
Notes receivable
Accounts receivable
Merchandise and finished goods
Work in process
Raw materials and supplies
Advanced payment
Prepaid expenses
Short-term loans 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

490,707
22,571
3,235
85,01537,87954,38871,56633,808931
11,582
13,36388,86258,3022,886
8,430(2,117)
867,525
310,315
57,23533,01578,2660
114
2,699
128,657
545

Construction in progress

8,705

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

1,076
3,380
424
2,653
31
270
553,829
228,583
307,889
4
66

－

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
Reserve for loss on guarantees
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

60 －Amount497,078
1,353
39,881
102,820
25,000270
6,730
27,061
1,485
3,163
13,447
99
5,264
92
8,491
527
11,761
246,227
3,399
328,051
50,000174,271405
25,60021,26910,298924
37,833
1,057
4,599
1,791
825,129
413,921
119,457
113,000
85,65427,346Investments in affiliates
Long-term loans receivable

2,081
8

Long-term loans to affiliates

15,499

Other

3,739

Allowance for investment loss
Allowance for doubtful accounts(365)(3,678)

Total Assets

Retained earnings
Other retained earnings
Reserve for advanced depreciation of
noncurrent assets
Reserve for special account for advanced depreciation of noncurrent
assets
Deposit for mining search
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 Liabilities and Net Assets

1,358,233

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

61

183,545
183,545
6,761
526
13
176,243(2,082)
119,181
90,186761
28,233533,103
1,358,233

Statements of Operations[For the year ended March 31, 2018](Millions of yen)
Item
Net Sales
Cost of Sales
Gross Profit
Selling, general and administrative expenses
Operating Profit
Non-Operating Profit:
Interest income
Dividends income
Rent income on non-current assets
Miscellaneous revenue
Non-Operating Expenses:
Interest expenses
Expenses for rent in undertaking
Settlement expenses of remaining business in mine
Loss on retirement of non-current assets
Miscellaneous losses
Ordinary Income
Extraordinary Income:Gain on sales of subsidiaries and affiliates' stocks
Gain on sales of non-current assets
Reversal of provision for loss on business of subsidiaries and affiliates
Other
Extraordinary Losses:
Provision for environmental measures
Loss on valuation of stocks of subsidiaries
and affiliates
Impairment loss
Other
Income before Income Taxes
Corporate income taxes, resident taxes andbusiness tax
Income taxes adjustments
Net Income
Note: All amounts less than one million yen are rounded down.

－

62 －

Amount869,677
806,684
62,99249,26013,73230,974537
24,275
4,615
1,545
13,335
2,141
2,946
3,839
2,534
1,873
31,37014,246
7,860
4,409
1,669
308
19,804
9,092
6,500
36
4,175
25,812
2,277(1,994)25,530Statement of Changes in Shareholders’ Equity[For the year ended March 31, 2018](Millions of yen)

Balance as of April 1, 2017

Shareholders’ Equity
Capital surplus
Retained earnings
Other retained earnings
Reserve forReserve for special acReserve for
Capital
Total reEarned
Capital re- Other capi- Total capital advanced
count for Deposit for loss on specistock
surplus tained earnserve tal surplus surplus
depreciation advanced
mining fied businessings
carried forof non cur- depreciation
search restructuring
ward
rent assets of noncurinvestment
rent assets
119,457
85,65427,346
113,0005,593－
02,704 158,305
166,604

Total
Treasuryshareholdstockers’ equity－－(2,010)397,053

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

1,612

526

(444)

13
(0)

(2,152)(2,704)

Net income
Reversal of revaluation reserve for land

3,149

－

－

(9,168)(9,168)(9,168)25,53025,53025,530578

578

Acquisition of treasury stock
Disposition of treasury stock
Net change in items otherthan shareholders’ equity
Total change during the year
Balance as of March 31, 2018

Balance as of April 1, 2017
Changes of items during theyear
Provision of voluntary retained earnings
Reversal of voluntary retained earnings
Cash dividends from retained earnings－
119,457－
85,654

(0)

(0)

(0)
27,346(0)
113,000

1,167
6,761

526
526

Valuation and Translation Adjustments
Valuation differTotal Valuation
Deferred gains or Revaluation reserve
ence on securities
and translation adlosses on hedges
for landavailable -for-salejustments
51,256584
28,81280,653(2,704)－

Total Net Assets
477,706－－(9,168)Net income
Reversal of revaluation reserve for land
Acquisition of treasury
stock
Disposition of treasurystock
Net change in items otherthanshareholders’ equity
Total change during the year
Balance as of March 31, 201812
13

25,530578(72)
038,929176(578)

38,52738,52738,92990,186

176
761

(578)
28,23338,527
119,181

55,396533,103

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

63

17,937
176,243

16,940183,545

578
(72)

(72)

0

0

(71)
(2,082)

16,868413,921