Consolidated Financial Results for the Six Months Ended September 30, 2020
(Japanese Accounting Standards)
December 16, 2020
Tokyo Stock Exchange
https://www.mmc.co.jp/

Name of Listed Company: Mitsubishi Materials Corporation
Listing:
Stock Code:
5711
URL:
Representative: Naoki Ono, Chief Executive Officer
Contact:
Yuji Omura, General Manager, Corporate Communications Dept.
Scheduled filing date of Quarterly Report:
December 16, 2020
Scheduled date of start of dividend payment:–
Supplementary materials for the quarterly financial results: Yes
Investor conference for the quarterly financial results:
Yes (For Institutional Investors)

Tel: +81-3-5252-5206(Amounts of less than million yen are omitted.)

1. Results of the six months ended September 30, 2020 (From April 1, 2020 to September 30, 2020)(1) Consolidated Results of Operations (cumulative)(Figures in percentages denote the year-on-year change.)
Operating profit(loss)Net sales

The six months ended September 30,
2020
The six months ended September 30,
2019(Note) Comprehensive income:

Profit (loss)
attributable toowners of parent

Ordinary profit(loss)

Million yen%

Million yen%

Million yen%

Million yen%

725,568

-3.1

6,890

-59.4

16,457-39.6-19,150–

748,400-12.5

16,978-38.5

27,242

-17.6

4,511

-69.6

The six months ended September 30, 2020: -12,574 million yen (–%)
The six months ended September 30, 2019: -9,715 million yen (–%)

Profit (loss)
per share

Diluted net income
per share
Yen

Yen-146.43

The six months ended September 30,
2020
The six months ended September 30,
2019

–

34.46

–

(2) Consolidated Financial Position
Total assets
As of September 30, 2020
As of March 31, 2020
(Reference) Shareholders’ Equity:

Shareholders’equity ratio

Total net assets

Million yen

Million yen%

1,944,206

541,63424.3

1,904,050

586,034

26.6

As of September 30, 2020: 472,695 million yen

As of March 31, 2020: 506,781 million yen

2. Dividend Payments
Dividend per share(Record date)

First quarter

Second quarter

Yen

Third quarter

Yen

Year ended March 31, 2020

–

40.00

Year ending March 31, 2021

–

0.00

Year-end

Yen

Year ending March 31, 2021 (Forecast)

Annual
Yen

Yen

–

40.00

80.00

–

40.00

40.00

(Note) Revision of dividend forecast published most recently: No

3. Consolidated Earnings Forecast (From April 1, 2020 to March 31, 2021)(Figures in percentages denote the year-on-year change.)

Net salesYear ending March 31,
2021

Operating profit

Ordinary profit(loss)(loss)

Profit (loss)
attributable toowners of parent

Million yen%

Million yen%

Million yen%

Million yen

1,450,000

-4.4

8,000

-78.9

20,000-59.7

0(Note) Revision to forecast published most recently: Yes

Profit(loss) per
share
%

–

Yen

0.00

* Notes(1) Significant changes of subsidiaries during the term (changes in specific subsidiaries accompanied by a change in thescope of consolidation):
Yes
New: - (Company name: - ), Exempt: 1 Company (Company name: Mitsubishi Shindoh CO., LTD)
(Note) For details, please see “(4) Notes on quarterly consolidated financial statements Changes of significant subsidiaries during
the six months ended September 30, 2020” under “2. Consolidated Financial Statements and Key Notes” on page 16.
(2)

Application of special accounting treatment in the preparation of the quarterly consolidated financial statements: Yes(Note) For details, please see“(4) Notes on quarterly consolidated financial statements, Application of special accounting treatmentin the preparation of quarterly consolidated financial statements” under “2. Consolidated Financial Statements and Key Notes” onpage 16.

(3) Changes in accounting policies, changes of accounting estimates and restatement(i)
Changes in accounting policies due to amendments to accounting standards:(ii)
Other changes in accounting policies:(iii) Changes in accounting estimates:(iv) Restatements:

None
None
Yes
None

(4) Numbers of issued shares (common stock)(i)
Numbers of issued shares at end of period (including treasury shares):Six months ended September 30, 2020:
131,489,535 sharesYear ended March 31, 2020:
131,489,535 shares(ii)
Numbers of treasury shares at end of period:
Six months ended September 30, 2020:
828,649 sharesYear ended March 31, 2020:
550,160 shares(iii) Average number of shares issued during period (quarterly cumulative period):
Six months ended September 30, 2020:
130,780,804 shares
Six months ended September 30, 2019:
130,948,499 shares* This quarterly financial summary is not subject to a quarterly review by certified public accountants or audit firms.
* Explanation about the proper use of financial forecasts and other special notes(Notes concerning forward-looking statements, etc.)
The operating results forecasts and other forward-looking statements contained in this report are based on information currently available
to the Company, as well as certain assumptions that the Company has judged to be reasonable. As such, they do not constitute anassurance that the Company promises to achieve these projected results. Therefore, readers are advised to note that the actual results
may vary materially from the forecasts due to a variety of factors.
Please see “(3) Information on the consolidated earnings forecasts and other future forecasts” under “1. Qualitative Information on
Financial Results for the Six Months Ended September 30, 2020” on page 6 for the assumptions about consolidated earnings forecasts.
(Procedure for obtaining supplementary information on quarterly financial results and quarterly financial briefing)
Mitsubishi Materials Corporation plans to hold a quarterly financial briefing for institutional investors on Wednesday, December 16,
2020. The materials used at this briefing are disclosed on the TDnet and the Company’s web page at the time that the quarterly financial
results are announced.

2

Contents

1. Qualitative Information on Financial Results for the Six Months Ended September 30, 2020 ............................... 4(1) Details of operating results .............................................................................................................................................................. 4(2) Details of financial position ............................................................................................................................................................. 6(3) Information on the consolidated earnings forecasts and other future forecasts ................................................................................ 6

2. Consolidated Financial Statements and Key Notes ................................................................................................. 8(1) Consolidated balance sheets ............................................................................................................................................................ 8(2) Consolidated statement of profit or loss and consolidated statement of comprehensive income ................................................... 10
Consolidated statement of profit or loss .......................................................................................................................................... 10
Consolidated statement of comprehensive income .......................................................................................................................... 11(3) Consolidated statement of cash flows ............................................................................................................................................ 12(4) Notes on quarterly consolidated financial statements .................................................................................................................... 14
Notes on going concern assumption ................................................................................................................................................ 14
Segment information ........................................................................................................................................................................... 14
Notes on significant changes in the amount of shareholders’ equity, if any..................................................................................... 16
Changes of significant subsidiaries during the six months ended September 30, 2020 ................................................................... 16
Application of special accounting treatment in the preparation of quarterly consolidated financial statements .............................. 16
Changes of accounting estimates ..................................................................................................................................................... 16
Change of estimate of provision for loss on business restructuring ................................................................................................. 16
Additional information .................................................................................................................................................................... 16
Contingent liabilities ....................................................................................................................................................................... 19
Related to consolidated statement of income................................................................................................................................... 20
Important subsequent events ........................................................................................................................................................... 21

3

1. Qualitative Information on Financial Results for the Six Months Ended September 30, 2020
(1) Details of operating results1) Overview of operating results
During the first half of the consolidated fiscal year, the global economy was in considerable constraints on its economic
activities due to the global spread of COVID-19. In China, the economy appeared to be recovering, but in Thailand andIndonesia, economic downturn continued. In Europe and the United States, economic downturn also continued.
In Japan, due to COVID-19, the employment and income conditions continued to deteriorate. However, exports andindustrial production showed signs of recovery.
Regarding the business environment for the Mitsubishi Materials Group (hereinafter referred to as “the Group”), the Group
was affected by the global spread of COVID-19. Demand in semiconductor-related sectors remained favorable, while
demand in automobile-related sectors substantially declined. In addition, domestic demand for cement also declined.
Under these circumstances, sales for the consolidated first half of the fiscal year under review totaled ¥725,568 million,
down 3.1% year-on-year. Operating profit decreased 59.4% year-on-year to ¥6,890 million, and ordinary profit fell 39.6%
year-on-year to ¥16,457 million. Also, the Company reported extraordinary losses of ¥21,980 million as provision for loss
on business restructuring. As a result, loss attributable to owners of the parent was ¥19,150 million (compared to profit of¥4,511 million during the same period of last year).
In the “Notice Regarding Submission of the Second Quarterly Securities Report for the Fiscal Year Ending March 31, 2021 ” of today,
the Company announced the results of the investigations on the issues at Robertson’s Ready Mix, Ltd and other companies
that caused the postponement of the announcement of consolidated financial results for the six months ended September
30, 2020. The notice also announced the impact on the consolidated financial statements.
The Company extends its sincere apologies for causing inconvenience and anxiety to its shareholders, investors and all
relevant parties.
2) Overview by segments
From the first quarter of the fiscal year, the reporting segments have been changed. The details are set forth in “2. (4) Notes
on Consolidated Quarterly Financial Statements (Segment Information).” In this regard, the following year-on-yearcomparisons are based on the figures for the same quarter of the previous year reclassified into the new categories.
(Advanced Products)(Billion yen)
FY 2020
Q1-Q2

FY 2021
Q1-Q2

Increase / Decrease (%)

Net sales

191.8

156.0

-35.7

(-18.6%)

Operating profit (loss)

1.5

-1.7

-3.3

(-%)

Ordinary profit (loss)

2.8

0.0

-2.8

(-98.1%)In the Copper & copper alloy products business, both net sales and operating profit declined due to decreased sales mainlyof automotive products, which were affected by the global spread of COVID-19, among others.
In the Electronics materials & components business, while sales of automotive products declined due to the global spreadof COVID-19, among others, sales of semiconductor-related products increased. In addition, the production costs ofpolycrystalline silicon products had decreased. As a result, net sales decreased but operating profit increased.
Consequently, net sales and operating profit for the entire Advanced Products decreased year-on-year. Ordinary profit
declined due to the decrease in operating profit.
(Metalworking Solutions Business)(Billion yen)
FY 2020
Q1-Q2

FY 2021
Q1-Q2

Increase / Decrease (%)

Net sales

78.1

56.6

-21.4

(-27.5%)

Operating profit (loss)

5.5

-3.0

-8.6

(-%)

Ordinary profit (loss)

4.7

-2.8

-7.6

(-%)

In the Cemented carbide products business, both net sales and operating profit declined, due to decreased sales mainly of
automotive products in Japan and major overseas countries excluding China, mainly affected by the global spread of

4

COVID-19.
In the Sintered products, etc. business, losses increased due to decreased sales of sintered parts, which are major products
in Japan and major countries overseas, also affected by the global spread of COVID-19, among others.
Consequently, net sales and operating profit for the entire Metalworking Solutions Business decreased year-on-year.
Ordinary profit declined due to the decrease in operating profit.
(Metals Business)(Billion yen)
FY 2020
Q1-Q2

FY 2021
Q1-Q2

Increase / Decrease (%)

Net sales

316.5

358.3

41.7

(13.2%)

Operating profit (loss)

5.3

7.4

2.1

(39.6%)

Ordinary profit (loss)

13.3

15.4

2.1

(15.8%)In the Copper business, net sales increased but operating profit decreased mainly due to a deterioration in purchasing
condition of concentrates while production increased year-on-year.
In the Gold and other valuable metals business, both net sales and operating profit increased mainly due to a hike in goldand palladium prices.
Consequently, net sales and operating profit for the entire Metals Business increased year-on-year. Ordinary profit
increased due to the increase in operating profit.
(Cement Business)(Billion yen)
FY 2020
Q1-Q2

FY 2021
Q1-Q2

Increase / Decrease (%)

Net sales

123.7

105.7

-18.0

(-14.5％)

Operating profit (loss)

6.5

4.1

-2.4

(-36.7％)

Ordinary profit (loss)

7.9

3.8

-4.1

(-51.6％)

In Japan, both net sales and operating profit decreased due to the impact from the suspension of construction work in theTokyo metropolitan and other areas following the spread of COVID-19 as well as the declined demand for disaster recovery
works in the Tohoku and Kyushu regions.
Overseas, in the United States, sales volume of ready-mixed concrete decreased, and the operating expenses including raw
materials costs increased. In addition, in the Coal business in Australia, coal sales prices fell. As a result, both net sales andoperating profit decreased.
Consequently, net sales and operating profit for the entire Cement Business decreased year-on-year. Ordinary profit
declined due to the decrease in operating profit.
(Environment & Energy Business)(Billion yen)
FY 2020
Q1-Q2

FY 2021
Q1-Q2

Increase / Decrease (%)

Net sales

10.9

9.6

-1.2

(-11.8%)Operating profit (loss)

0.2

-0.0

-0.3

(-%)

Ordinary profit (loss)

0.9

0.4

-0.5

(-55.9%)In the Energy-related business, both net sales and operating profit decreased due to decreased sales in the Nuclear-energyrelated services business.
In the Environmental and recycling-related business, though net sales increased due to the increase in home appliancerecycling and incineration ash processing volume, operating loss increased due to the increase in the costs accompaniedwith the launch of a new business and selling, general and administrative expenses.
Consequently, net sales and operating profit for the entire Environment & Energy Business decreased year-on-year.
Ordinary profit declined due to the decrease in operating profit.

5

(Other Businesses)(Billion yen)
FY 2020
Q1-Q2

FY 2021
Q1-Q2

Increase / Decrease (%)

Net sales

136.4

127.3

-9.1

(-6.7％)

Operating profit (loss)

0.1

2.5

2.3

(－％)

Ordinary profit (loss)

0.0

2.2

2.1

(－％)

In the Aluminum beverage cans business, sales of regular cans increased mainly due to an increase in demand for drinking
at home following the spread of COVID-19. Raw materials costs and energy costs also declined. As a result, both net sales
and operating profit increased.
In the Aluminum rolled and processed products business, losses were reduced due to decreased depreciation resulting fromthe recording of impairment loss on fixed assets by Mitsubishi Aluminum Co., Ltd. in the previous fiscal year, as well as
effects of cost reduction and others, in spite of a decrease in sales for mainly automotive products, affected by the global
spread of COVID-19 principally.
In the businesses other than the Aluminum beverage cans business and the Aluminum rolled and processed products
business in the aggregate, both net sales and operating profit decreased.
Consequently, net sales for the entire Other Businesses decreased year-on-year, but operating profit increased. Ordinary
profit increased due to the increase in operating profit.

(2) Details of financial position
Total assets at the end of the second quarter of the consolidated fiscal year under review stood at ¥1,944.2 billion, up ¥40.1
billion from the end of the previous consolidated fiscal year. This was mainly due to an increase in inventories.
Total liabilities were ¥1,402.5 billion, an increase of ¥84.5 billion from the end of the previous consolidated fiscal year.
This was mainly due to an increase in deposited gold bullion and borrowings.
The status of cash flow and factors contributing to these amounts in each category for the first half of the fiscal year underreview are as follows:(Cash Flows from Operating Activities)
Net cash provided by operating activities during the first six months of the year under review totaled ¥46.3 billion(increased by ¥36.7 billion year-on-year) mainly due to a decrease in notes and accounts receivable - trade and an increasein notes and accounts payable - trade despite loss before income taxes.
(Cash Flows from Investing Activities)
Net cash used in investing activities during the first six months of the year under review totaled -¥34.9 billion (decreasedby ¥11.3 billion year-on-year) mainly due to payment for purchase of property, plant and equipment.
(Cash Flows from Financing Activities)
Net cash provided by financing activities during the first six months of the fiscal year under review totaled ¥4 billion(decreased by ¥18.3 billion year-on-year) due to cash from borrowings and commercial papers despite payment forpurchase of shares of subsidiaries not resulting in change in scope of consolidation.
As a result of adding a net increase (decrease) in cash and cash equivalents mainly due to the effect of the exchange ratechanges to the above, cash and cash equivalents at the end of the second quarter of the consolidated fiscal year amounted
to ¥142.6 billion (increased by ¥15.3 billion year-on-year).

(3) Information on the consolidated earnings forecasts and other future forecasts
The consolidated earnings forecast for the fiscal year ending March 31, 2021, has been revised from the forecast announced
on September 29, 2020, as below.
Net sales, operating profit(loss) and ordinary profit(loss) are expected to increase compared to the previous forecasts
mainly due to increase in net sales and earnings for the first six months of the fiscal year ending March 31, 2021, in addition
to increase in sales in copper & copper-alloy products and electronic materials in the Advanced Products Business andcemented carbide products in the Metalworking Solutions Business, as well as a hike in metal prices and increases in
dividend income from mining companies in the Metal Business, among others. Profit(loss) attributable to owners of parent
is also expected to increase compared to the previous forecasts due to increase in ordinary profit(loss) as well as increasein extraordinary profit as the Company continues the reduction of strategic holdings. As a result, profit(loss) attributable6to owners of parent is expected to become the break even.
Revisions to Consolidated Earnings Forecasts for the fiscal year ending March 31, 2020
(from April 1, 2020 to March 31, 2021)(Billion yen)
Increase / Decrease (%)
2.1%

Previous forecast
1,420.0

Current forecast
1,450.0

Operating profit(loss)

0.0

8.0

－%

Ordinary profit(loss)
Profit (loss) attributableto owners of parent

7.0

20.0

185.7%

-20.0

0.0

－%

Net sales(Note) The above forecast has been prepared on assumed economic conditions, market trends, and other factors as of the date of thisannouncement, and the results may differ from the forecasts due to various factors arising in the future.

7

2. Consolidated Financial Statements and Key Notes(1) Consolidated balance sheets(Million yen)
As of March 31, 2020
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Machinery and equipment, net
Land, net
Other, net
Total property, plant and equipment,
net
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

8

As of September 30, 2020

134,444
217,259
111,409112,908
127,908
254,001(2,470)955,462

148,066
196,524
113,551
123,077
131,425
281,709(2,599)991,757

218,923
216,487
223,888

214,773
213,563
227,578

659,298

655,915

35,586
15,90651,49232,70014,71947,419183,043
58,866(4,112)
237,796
948,588
1,904,050

189,899
63,373(4,157)249,115
952,449
1,944,206

(Million yen)
As of March 31, 2020
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Commercial papers
Income taxes payable
Provisions
Deposited gold bullion
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Provision for loss on business restructuring
Provision for environmental measures
Other provisions
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets

9

As of September 30, 2020

113,148
191,038
50,000
10,221
14,424294,312
124,746
797,892

137,870
193,300
58,0005,242
13,494
331,746
99,525
839,180

60,000246,578
30,27232,581
6,117
56,312
88,261
520,123
1,318,016

60,000273,636
52,252
29,074
4,632
53,12990,666563,392
1,402,572

119,457
92,393274,723(2,157)484,416

119,457
79,234250,295(2,850)446,137

22,80629,337708
28,059(12,212)(16,997)(145)
28,058(15,953)(14,738)

22,36426,55879,252586,034
1,904,050

68,938541,634
1,944,206

(2) Consolidated statement of profit or loss and consolidated statement of comprehensive income
Consolidated statement of profit or loss
(Million yen)
Six Months Ended
Six Months Ended
September 30, 2019
September 30, 2020
(Apr 1, 2019 - Sep 30, 2019) (Apr 1, 2020 - Sep 30, 2020)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Rental income on non-current assets
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Expense for the maintenance and management ofabandoned mines
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Gain from transfer of business
Other
Total extraordinary income
Extraordinary losses
Reversal of provision for loss on businessrestructuring
Loss on the Antimonopoly Act
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

10748,400
655,585
92,81475,835
16,978725,568
647,158
78,41071,5196,890

644
12,1692,594

442
11,138
2,574

2,163

851

1,582
19,155

3,551
18,558

2,498

2,136

1,942

1,907

4,450
8,891
27,242

4,947
8,991
16,457

1,878
－
98
1,976

465
199
75
740

－

21,98010,423
2,525
12,948
16,270
9,417
6,853
2,341
4,511

－
1,785
23,765(6,568)
8,675(15,243)
3,906(19,150)

Consolidated statement of comprehensive income(Million yen)
Six Months Ended
September 30, 2019
(Apr 1, 2019 - Sep 30, 2019)
Profit (loss)
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

11

Six Months Ended
September 30, 2020
(Apr 1, 2020 - Sep 30, 2020)

6,853(15,243)(9,019)

6,386

1,021
－
(8,388)343(1,535)(1)(4,976)
2,224

(525)

571

(16,568)(9,715)

2,669(12,574)(10,275)(14,957)

559

2,382

(3) Consolidated statement of cash flows(Million yen)
Six Months Ended September Six Months Ended September
30, 2019
30, 2020(Apr 1, 2019 - Sep 30, 2019) (Apr 1, 2020 - Sep 30, 2020)
Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
Increase (decrease) in provision forenvironmental measures
Increase (decrease) in provision for loss on
business restructuring
Increase (decrease) in provision
Increase (decrease) in retirement benefit liability
Interest and dividend income received
Interest expenses
Share of loss (profit) of entities accounted forusing equity method
Loss (gain) on sales of property, plant andequipment
Loss on the Antimonopoly Act
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts
receivable - trade
Decrease (increase) in inventories
Proceeds from sales of gold bullion
Payment for purchase of gold bullion
Increase (decrease) in notes and accounts payable- tradeOther
SubtotalInterest and dividend received
Interest paid
Income taxes (paid) refund
Payment for Loss on the Antimonopoly Act
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Payment for purchase of property, plant andequipment
Proceeds from sales of property, plant andequipment
Payment for purchase of investment securities
Proceeds from sales of investment securities
Proceeds from liquidation of associatedcompanies
Proceeds from sales of shares of subsidiaries
resulting in change in scope of consolidation
Proceeds from transfer of businesses
Payment for loans
Proceeds from collection of loans
Other
Net cash provided by (used in) investing
activities

12

16,27031,980(6,568)30,676(3,090)(3,507)－21,980(1,590)(951)(12,814)2,498(2,089)(579)(11,580)
2,136(2,163)

(851)

(103)

(65)

10,423(1,857)
1,405

－
275
4

12,12919,992(27,632)
52,400(52,286)(17,728)
52,403(52,263)(18,589)

25,813705
6,735
14,617(2,483)(9,203)－(2,489)55,55813,388(2,138)(10,010)(10,423)

9,665

46,375(47,575)(36,823)435

406(1,576)
3,299(2,538)
3,971

0

－

68

161

－
(2,147)
176
966

536
(1,962)
181
1,070(46,352)(34,995)

(Million yen)
Six Months Ended
Six Months Ended
September 30, 2019
September 30, 2020
(Apr 1, 2019 - Sep 30, 2019) (Apr 1, 2020 - Sep 30, 2020)
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Net increase (decrease) in commercial papers
Payment for purchase of treasury shares
Cash dividends paid
Cash dividends paid to non-controlling interests
Payment for purchase of shares of subsidiaries
not resulting in change in scope of consolidation
Other
Net cash provided by (used in) financing
activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at end of period

13

8,458
7,750
(33,973)
10,00045,000(15)(5,238)(8,753)

14,042
37,131(22,091)
－
8,000
(694)
(5,237)(1,045)－(24,925)(849)(1,167)

22,3794,010(2,223)(1,062)(16,530)

14,32899,672

127,284

52

1,045

83,193

142,658

(4) Notes on quarterly consolidated financial statements
Notes on going concern assumption
N/A

Segment information[Segment Information]
I. For the six months ended September 30, 2019 (from April 1, 2019 to September 30, 2019)
1. Information on net sales and income of each reporting segment
Environment&
Other
EnergyBusinesses
Business(Million yen)Amountindicated in the
Adjustment
quarterly
amountconsolidated
statements ofprofit and loss

Advanced
Products

Metalworking Solutions
Business

MetalsBusiness

CementBusiness(1) Outside customers

186,60972,276

239,560

122,232

10,670117,050

748,400－

748,400(2) Within consolidated
group

5,243

5,904

77,0271,563

273

19,415

109,428(109,428)－

191,853

78,180316,588

123,795

10,944

136,466

857,828(109,428)

748,400

2,859

4,771

13,368

7,984

979

80

30,043(2,800)27,242Total

Net sales

Total
Segment income (loss)

Notes:
1.
2.

“Other Businesses” include aluminum-related business and engineering-related services.
“Adjustment amount” of segment income (loss) of -¥2,800 million includes the elimination of intersegment transactions of -¥16
million and corporate expenses of -¥2,784 million which are not distributed to the reporting segments. Corporate expenses
consist mainly of general and administrative expenses that do not belong to the reporting segments, basic experiment andresearch expenses, and financial income and expenses.
Segment income (loss) has been adjusted together with ordinary profit on the consolidated statements of profit or loss.

3.

II. For the six months ended September 30, 2020 (from April 1, 2020 to September 30, 2020)
1. Information on net sales and income of each reporting segment
Environment&
Other
EnergyBusinesses
Business(Million yen)Amountindicated in the
Adjustment
quarterly
amountconsolidated
statements ofprofit and loss

Advanced
Products

Metalworking Solutions
Business

MetalsBusiness

CementBusiness(1) Outside customers

150,320

52,263300,829

104,625

9,384

108,144725,568－

725,568(2) Within consolidated
group

5,766

4,422

57,502

1,165

266

19,20688,330(88,330)－

156,086

56,686358,332

105,791

9,651

127,350

813,899(88,330)

725,56853(2,843)

15,476

3,864

431

2,226

19,209(2,751)

16,457Total

Net sales

Total
Segment income (loss)

Notes:
1.

“Other Businesses” include aluminum-related business and engineering-related services.

2.

“Adjustment amount” of segment income (loss) of -¥2,751 million includes the elimination of intersegment transactions of ¥2
million and corporate expenses of -¥2,754 million which are not distributed to the reporting segments. Corporate expenses consist
mainly of general and administrative expenses that do not belong to the reporting segments, basic experiment and researchexpenses, and financial income and expenses.

3.

Segment income (loss) has been adjusted together with ordinary profit on the consolidated statements of profit or loss.

2. Matters regarding the change of the reporting segments, among other changes
The Company has changed its reporting segments as a result of the organizational restructuring made on April 1, 2020.

14

Consequently, the business related to energy and environmental and recycling-related businesses included in the “Other
Businesses” is sectionalized into the “Environment & Energy Business” and the business related to aluminum included in
the “Advanced Products” is sectionalized into the “Other Businesses”.
Further to that, the business related to cement sales included in the “Other Businesses” has been transferred to the “Cement
Business”.
In addition, in order to more properly assess and manage performance of each reporting segment, the Company has
reviewed the method of allocating common costs of the Company and changed the method of calculating the profits orlosses of the reporting segments.
In this regard, the segment information for the first half of the previous consolidated fiscal year is disclosed herein
according to the changed segmentation and calculation methods of the reporting segments.

15

Notes on significant changes in the amount of shareholders’ equity, if any
N/AChanges of significant subsidiaries during the six months ended September 30, 2020
For the first three months ended June 30, 2020, the Group excluded Mitsubishi Shindoh Co., Ltd. which was the Company’s
specified subsidiary company, from the scope of consolidation since it dissolved due to an absorption-type merger in which
the Company was the surviving company.

Application of special accounting treatment in the preparation of quarterly consolidated financial
statements
The Company calculates tax expenses by rationally assuming an effective tax rate after applying tax effect accounting to
net income before income taxes for the consolidated fiscal year, including the second quarter, and multiplying net income
before income taxes for the six months by the estimated effective tax rate.

Changes of accounting estimates
Change of estimate of provision for loss on business restructuring
The Company has reported the provision for loss on business restructuring to prepare for any loss on business restructuring
expected to be incurred by the affiliated company engaging in the Sintered parts business. However, the Company changed
the estimate as a result of transferring shares of such affiliated company on December 4, 2020. Such change increased theloss before income taxes for the first six months of the year under review by ¥21,980 million.

Additional information
Stock-based compensation system
1. Overview of the transaction
The Company has introduced a stock-based compensation system (hereinafter referred to as the “System”) for its executive
officers, operating officers and fellows (excluding non-domestic residents, hereinafter referred to as the “Officers”) since
May 2020.
The System adopts a structure called Board Incentive Plan Trust (hereinafter referred to as the “BIP Trust”). The System
is to issue and grant to the Officers the Company’s shares and cash equal of the amount of the Company’s shares to beconverted into cash, according to the Officers’ positions or the like.
2. The Company’s shares remaining in the BIP Trust
The Company recorded the Company’s shares remaining in the BIP Trust as the treasury shares in the net assets in an
amount of their book value in the BIP Trust (excluding the amount of ancillary expenses). The book value and the numberof the Company’s treasury shares are ¥684 million and 274 thousand shares at the end of the second quarter of the current
consolidated fiscal year.

16Signing of definitive agreement concerning integration of Cement Business and other businesses
The Company and Ube Industries, Ltd. (hereinafter referred to as “Ube Industries”), at the meetings of their respective
Boards of Directors held on September 29, 2020, made formal resolutions to implement the integration of their respective
cement businesses and related businesses (hereinafter referred to as the “Integration”) scheduled around April 2022, andon the same day, signed a definitive agreement between both companies (hereinafter referred to as the “Definitive
Agreement”) for the Integration, as described below.
1. Purpose of the Integration
In 1998, the Company and Ube Industries established Ube-Mitsubishi Cement Corporation (hereinafter referred to as “UbeMitsubishi Cement”) as an equally-owned joint venture. Under the joint venture, the companies integrated their respective
non-consolidated cement sales and logistics functions, realizing a certain degree of benefit, including reductions in logistics
costs as well as head office and branch office expenses.
While the business situations surrounding the cement business in Japan are currently undergoing significant changes,
including slowing demand and fluctuating energy prices dramatically, it is necessary for the Company and Ube Industries
to establish a new framework for their cement businesses that develops the existing relationship, in order to realize thefuture growth of their cement businesses.
In light of these circumstances, the Company and Ube Industries decided to integrate the respective cement businesses andrelated businesses of their corporate groups as an optimal strategic option to combine all of the advantages of the respective
cement businesses and related businesses of both companies such as the Company's (1) Kyushu Plant, which boasts thelargest domestic production capacity; (2) Higashitani Mine, which has abundant limestone resources; and (3) highly
competitive Cement and ready-mixed concrete business in the United States; and Ube Industries' (1) infrastructure facilities
in the Ube area, including large port facilities and coal centers; (2) nationwide ready-mixed concrete manufacturing andsales network; and (3) Ube Materials Industries, Ltd.’s inorganic materials business.
In Japan, the integrated business will pursue strategies to enhance business efficiencies throughout the value chain,including by optimizing the framework for production and rebuilding the sales and logistics organizations for downstream
businesses such as ready-mix concrete. Furthermore, the integrated business will seek to maximize synergies in order tofurther strengthen the business platform for the cement business in Japan to enhance its position as a company that
contributes to the development of social infrastructure and a recycling-oriented society. The management resources
generated from the cement business in Japan will be directed toward concentrated investment in businesses that are
anticipated to generate future growth in and outside of Japan. This includes overseas cement and ready-mix concretebusiness and high-performance inorganic materials business based on high-quality limestone.
Through these efforts, the Company and Ube Industries will strive to achieve sustainable growth by building optimalbusiness management systems for both companies.
2. Scope of the Integration
The scope of the Integration encompasses the cement and ready-mixed concrete businesses, limestone resources businesses,
energy and environmental-related businesses, construction material businesses and other related businesses of theCompany and Ube Industries, both in and outside of Japan.
3. Method of the Integration
The Company and Ube Industries plan to implement the Integration by establishing an equally-owned joint venture(hereinafter referred to as the “New Company”) . The Integration will take the form of an absorption-type joint venture
involving (1) an absorption-type company split with the Company as the splitting company and the New Company as the
successor company; (2) an absorption-type company split with Ube Industries as the splitting company and the New
Company as the successor company, and (3) an absorption-type company merger in which the New Company (being thewholly-owning parent company of Ube-Mitsubishi Cement through the Joint Absorption-Type Company Split) will be thesurviving company and Ube-Mitsubishi Cement (being the wholly-owned subsidiary of the New Company) will be theextinct company.
Following the Integration, the Company and Ube Industries will each own a 50% stake in the New Company.
4. Schedule of the Integration
September 29, 2020
April 2021 (may be subject to change)
May 2021 (may be subject to change)

Signing of the Definitive Agreement
Establishment of the New Company
Approval of the absorption-type company split agreement by the Board of17

May 2021 (may be subject to change)
June 2021 (may be subject to change)
April 2022 (may be subject to change)

Directors of both companies
Signing of the absorption-type company split agreement by both companies
Obtaining approval of the Integration at the ordinary general shareholders’meetings of the Company and Ube Industries
Effective date of the Integration

Note:
The implementation of the Integration is subject to completing the necessary filings for the Integration with relevant
agencies in and outside of Japan including the Japan Fair Trade Commission, and acquiring approvals (hereinafter referred
to as the “Approvals and Other Related Procedures”). Furthermore, it is subject to approval at the general shareholders’meetings of both companies (except where the integration clearly satisfies the requirements for a simplified absorptiontype company split as stipulated in Article 784, Paragraph 2 of the Companies Act of Japan), and subject to circumstancesor events not arising that critically and adversely impact the assets, debts, financial position, business results, cash flows
or future revenue plans of the relevant businesses of both companies.
The Integration schedule is provisional at this time and subject to change based on discussions between the companies,
because of the Approvals and Other Related Procedures or other reasons having to do with fulfilling necessary procedures.
(Accounting estimates associated with the spread of COVID-19)
Due to the global spread of COVID-19, the Group’s major business locations in Japan and overseas have been affected bydecreased demand mainly for automotive products.
However, as a result of examinations based on third-party information and others available as of the end of the second
quarter of the current consolidated fiscal year, no material change has been made in the assumptions, including the spreadin the future and winding-down timing of COVID-19, described in the Annual Securities Report (Additional information)(Accounting estimates associated with the spread of COVID-19) for the previous consolidated fiscal year.

18

Contingent liabilities(Matters concerning taxation in Indonesia)
Previous consolidated fiscal year (As of March 31, 2020)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter referred to as
the “PTS”) received a notice of reassessment in an amount of US$47 million (¥5,209 million based on the exchange rate
at the end of the previous consolidated fiscal year) from the Indonesian National Tax Authority, regarding the sales
transaction pricing of PTS for the year ended December 31, 2009. On January 28, 2015, the PTS made a provisional depositof US$14 million (¥1,523 million) as a part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on March 25, 2015, because thisassessment, which claimed there was a sales shortage on the part of the PTS based on a comparison of the profit margin
ratio with other companies selected by the Indonesian National Tax Authority, was highly unreasonable and found to beunacceptable by the Company and the PTS.
The written objection submitted by the PTS on March 25, 2015 was dismissed by the Indonesian National Tax Authority
on March 16, 2016. Therefore, the PTS filed a complaint to the tax court on June 6, 2016 to present its fairness of the viewof the Company and the PTS. However, it was dismissed on January 30, 2020. Along with this, the PTS paid the shorted
amount of deposit of US$33 million (¥3,685 million) on March 23, 2020 and paid a surcharge of US$33 million (¥3,685
million) on April 24, 2020, respectively. However, the court decision ruled by the tax court was unacceptable to theCompany and the PTS, and the PTS appealed to the Supreme Court on June 8, 2020 to present the fairness of the view of
the Company and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$22 million (¥2,484 million)
from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on hedging for the fiscal
year ended December 31, 2012. On December 27, 2017, the PTS made a provisional deposit of US$6 million (¥685 million)
as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2018, because
this assessment was from a point of view that unilaterally negated the basis for recording gains and losses on hedging, etc.
of the PTS and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on February 27, 2018 was dismissed by the Indonesian National Tax Authority
on February 25, 2019. Therefore, on May 17, 2019, the PTS filed a complaint to the tax court in Indonesia to present thefairness of the view of the Company and the PTS.
On December 5, 2018, the PTS also received a notice of reassessment in an amount of US$15 million (¥1,655 million)
from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on hedging for the fiscal
year ended December 31, 2014. On December 27, 2018, the PTS made a provisional deposit of US$5 million (¥638 million)
as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2019, because
this assessment was from a view that unilaterally negated the basis for recording gains and losses on hedging, etc. of the
PTS and found to be unacceptable by the Company and the PTS.
On January 20, 2020, the PTS received a notice from the Indonesian National Tax Authority regarding the written objection
submitted by the PTS on February 27, 2019, and the written objection of the PTS was accepted for US$9 million (¥1,020
million). For US$4 million (¥515 million), for which the written objection was dismissed, the PTS has decided to file acomplaint to the tax court in Indonesia.
In the previous consolidated fiscal year, the total amount for additional collection being disputed by the PTS, including
amounts for the fiscal year described above as well as amounts for the fiscal year ended December 31, 2011, the fiscal year
ended December 31, 2013, the fiscal year ended December 31, 2015, the fiscal year ended December 31, 2016 and thefiscal year ended December 31, 2018, is US$125 million (¥13,669 million). There are some cases that a surcharge may be
imposed due to the objections or the results of tax trials.
Second quarter of the current consolidated fiscal year (As of September 30, 2020)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter referred to as
the PTS”) received a notice of reassessment in an amount of US$47 million (¥5,064 million based on the exchange rate at
the end of the second quarter of the consolidated fiscal year ) from the Indonesian National Tax Authority, regarding thesales transaction pricing of the PTS for the year ended December 31, 2009. On January 28, 2015, the PTS made a
provisional deposit of US$14 million (¥1,481 million) as a part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on March 25, 2015, because thisassessment, which claimed there was a sales shortage on the part of the PTS based on a comparison of the profit margin19

ratio with other companies selected by the Indonesian National Tax Authority, was highly unreasonable and found to beunacceptable by the Company and the PTS.
The written objection submitted by the PTS on March 25, 2015 was dismissed by the Indonesian National Tax Authority
on March 16, 2016. Therefore, the PTS filed a complaint to the tax court on June 6, 2016 to present its fairness of theview of the Company and the PTS. However, it was dismissed on January 30, 2020. Along with this, the PTS paid theshorted amount of deposit of US$33 million (¥3,583 million) on March 23, 2020, and paid a surcharge of US$33 million(¥3,583 million) on April 24, 2020, respectively. However, the court decision ruled by the tax court was unacceptable to
the Company and the PTS, and the PTS appealed to the Supreme Court on June 8, 2020 to present the fairness of theview of the Company and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$22 million (¥2,415 million)
from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on hedging for the fiscal
year ended December 31, 2012. On December 27, 2017, the PTS made a provisional deposit of US$6 million (¥666
million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2018, because
this assessment was from a point of view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on February 27, 2018 was dismissed by the Indonesian National Tax
Authority on February 25, 2019. Therefore, on May 17, 2019, the PTS filed a complaint to the tax court in Indonesia topresent the fairness of the view of the Company and the PTS.
On December 5, 2018, the PTS also received a notice of reassessment in an amount of US$15 million (¥1,609 million)
from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on hedging for the fiscal
year ended December 31, 2014. On December 27, 2018, the PTS made a provisional deposit of US$5 million (¥621
million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2019, because
this assessment was from a view that unilaterally negated the basis for recording gains and losses on hedging, etc. of the
PTS and found to be unacceptable by the Company and the PTS.
On January 20, 2020, the PTS received a notice from the Indonesian National Tax Authority regarding the written
objection submitted by the PTS on February 27, 2019, and the written objection of the PTS was accepted for US$9
million (¥992 million). For US$4 million (¥501 million), for which the written objection was dismissed, the PTS filed acomplaint to the tax court in Indonesia on July 7, 2020 to present the fairness of the view of the Company and the PTS.
At the end of the second quarter of the consolidated fiscal year, the total amount of additional charges, which PTS
currently disputes, was US$121 million (¥12,849 million). It includes amounts for all fiscal years described above, as
well as amounts for the fiscal year ended December 31, 2011, the fiscal year ended December 31, 2015, the fiscal year
ended December 31, 2016 and the fiscal year ended December 31, 2018. There are some cases that surcharges may be
imposed due to formal objections or tax trial results.

Related to consolidated statement of income* Reversal of provision for loss on business restructuring
For the six months ended September 30, 2020 (April. 1, 2020–September 30, 2020)
The Company has reported the provision for loss on business restructuring to prepare for any loss on businessrestructuring expected to be incurred by the affiliated company engaging in the Sintered parts business. However, on the
Company recorded an additional amount of ¥21,980 million in extraordinary losses for the first six months of the fiscal
year under review, due to the implementation of the transfer of the affiliated company’s shares on December 4, 2020.

20

Important subsequent events
Transfer of the affiliated company’s shares
The Company has adopted a formal resolution at the meeting of its Board of Directors held on November 25, 2020, totransfer (hereinafter referred to as “the Transfer”) the entire shares of Diamet Corporation (hereinafter referred to as“Diamet”), which is a consolidated subsidiary of the Company, to Endeavor II United Investment Limited Partnership forwhich Endeavor United Co., Ltd. (hereinafter referred to as “Endeavor”) serves as a unlimited liability partner, andexecuted the definitive agreement concerning the Transfer with Endeavor on the same date and carried out the Transfer on
December 4, 2020.
1. Background and reason for the Transfer
Due to deteriorating earnings from the sintered parts business (hereinafter referred to as “the Sintered parts business”) of
the Group in which Diamet and its subsidiaries and affiliated companies have engaged, the Company has provided financial
support to Diamet, which leads the Sintered parts business, including the underwriting of capital increase and direct loans.
However, as it has revealed that such support alone is unlikely to be sufficient to improve revenue of the Sintered parts
business, the Company has been discussing the treatment of the Sintered parts business, including transferring to third
parties. From these rationales, the Company has reached an agreement with Endeavour to transfer the business to
Endeavour aiming at restructuring it under the Endeavour’s leadership.
Endeavour is a Japanese investment fund which has extensive experience in business revitalization. The Company believes
that a business restructuring led by Endeavour is the best way to revitalize and stabilize the Sintered parts business.
2. Scope of the transfer
The Company transferred entire shares of Diamet held by the Company. Accordingly, PM Techno Corporation, Diamet
Klang (Malaysia) Sdn. Bhd., and Guangdong Diamet Powder Metallurgy Co., Ltd., which are the subsidiaries of Diamet
and also the consolidated subsidiaries of the Company, will be out of the scope of consolidation.
3. Schedule of the Transfer
September 29, 2020: Signing of the memorandum of understanding
November 25, 2020: Signing of definitive agreement
December 4, 2020: Effective date of the Transfer

21