Mitsubishi Materials : Financial Section 2022 (A3-sized spread page for viewing)

Financial Section

2022

P2 Management's Discussion and Analysis

P5 Basis of Presenting ConsolidatedFinancial Statements

P6 Consolidated Balance Sheets

P8 Consolidated Statements of Profit or loss

P8 Consolidated Statementsof Comprehensive Income

P9 Consolidated Statements of Changes in Net Assets

P11 Consolidated Statementsof Cash Flows

P12 Notes to Consolidated Financial Statements

P50 Consolidated Supplemental Schedules

P51 Other

P52Independent Auditor's Report on the Consolidated

Financial Statements and Internal Control Over

Financial Reporting

P58 Major Consolidated Subsidiaries and Affiliates

Management's Discussion and Analysis

Overview

Forecast for Fiscal Year 2023

Economic and Business Environment

For the fiscal year ended March 31, 2022 (hereinafter referred to as "FY2022"), the global economy continued to recover gradually in China and the U.S. from the economic downturn caused by the global spread of COVID-19, and showed signs of picking up in Europe, Thailand, and Indonesia.

The Japanese economy during the same period, continued to pick up in exports and industrial production, despite the lingering impact of COVID-19.

Total net assets increased ¥41.3 billion, or 6.7% from the end of previous period and to ¥655.7 billion mainly due to an increase in retained earnings.

As a result, the consolidated shareholder's equity ratio increased from 26.8% at the end of previous period to 27.5%, and net assets per share based on the total number of shares outstanding as at March 31, 2022 increased from ¥4,173.14 at the end of previous period to ¥4,476.52.

Cash Flows

As for the global economy going forward, while the economy is expected to continue picking up as the impact of COVID-19 eases, it also faces the risk of the economic downturn due to influence from the situation in Ukraine, price hikes in raw materials, fluctuations in financial and capital markets, and the re-expansion of COVID-19, among other factors.

Looking ahead, while the Japanese economy is also expected to continue picking up due to economic and social activities move toward normalization, a downturn in the economy is also a concern for the same reasons as in the global economy.

With regard to the business environment surrounding the Group in the future, although solid demand is expected to continue in the automobile and semiconductor industries, the Group expects that rising costs due to energy price hikes and other factors, as well as fluctuations in foreign exchange and metal prices, will affect each business of the Group.

Under these circumstances, for the fiscal year ending March 31, 2023, Consolidated operating performance forecasts predict net sales of ¥1,590.0 billion, operating profit of ¥36.0 billion, ordinary profit of ¥36.0 billion, and profit attributable to owners of parent

In the business environment surrounding the Mitsubishi Materials Group (hereinafter referred to as the "Group"), in addition to the steady growth of metal prices, demand for semiconductors and automotive-related products also remained strong. On the other hand, domestic demand for cement declined.

Business Performance Summary

Under such circumstances, the Group has implemented various measures to enhance corporate value, based on Mission and the Group's medium- to long-term goals from FY2031 to FY2051, as well as the Medium-term Management Strategy for FY2021 to

The cash flows during the consolidated fiscal year ended March 31, 2022 and their causes are as follows:

(Cash flows from operating activities)

Net cash provided by operating activities totaled ¥6.8 billion (decreased by ¥71.5 billion from the previous fiscal year) mainly due to an increase in notes and accounts payable-trade and an increase in inventories, despite strong business performance.

(Cash flows from investing activities)

Net cash used in investing activities totaled ¥3.2 billion

of ¥20.0 billion on the assumption of average exchange rates of ¥120/USD and ¥135/EUR and a copper price of 448¢/lb.

Overview by Segment

		Billions of yen		Millions of U.S. dollars
For the year ended March 31, 2022 and 2021	2022	2021	2022
Advanced Products

FY2023.

Consequently, consolidated net sales for the fiscal year ended March 31, 2022 totaled ¥1,811.7 billion, up by 22.0% year-on- year. Consolidated operating profit increased by 98.4% year-on- year to ¥52.7 billion, and consolidated ordinary profit increased by 70.9% year-on-year to ¥76.0 billion. Also, the Group recorded the extraordinary loss of ¥25.1 billion as losses on business restructuring and the extraordinary income of ¥34.6 billion as gain on sales of investment securities, respectively. As a result, profit attributable to owners of parent totaled ¥45.0 billion (up 84.4% year-on-year).

Financial Position and Liquidity

(decreased by ¥98.5 billion from the previous fiscal year) mainly due to spending on capital expenditure and sales of investment securities, etc.

(Cash flows from financing activities)

Net cash used by financing activities totaled ¥5.0 billion (net cash provided by financing activities for the previous fiscal year was ¥41.5 billion) mainly due to dividend payments.

After factoring in the impact of exchange rate fluctuation, cash and cash equivalents at the end of the current consolidated fiscal year amounted to ¥153.6 billion (increased by ¥6.1 billion from the previous fiscal year end).

Net sales	¥	485.9	¥	357.1
Operating profit		14.7		2.8
Operating margin		3.0%		0.8%
Metalworking Solutions Business
Net sales	¥	132.6	¥	119.3
Operating profit		14.1		(1.1)
Operating margin		10.6%		(1.0%)
Metals Business
Net sales	¥	997.1	¥	728.2
Operating profit		25.2		18.8
Operating margin		2.5%		2.6%
Cement Business

$ 3,970.4

120.4

$ 1,083.5

115.3

$ 8,147.5

206.4

As of March 31, 2022, total assets increased ¥89.4 billion, or 4.4% from the end of previous period to ¥2,125.0 billion. Total current assets increased ¥199.0 billion, or 19.1% from the end of previous period to ¥1,238.9 billion mainly due to an increase in leased gold bullion. Total non-current assets decreased ¥109.5 billion, or 11.0% from the end of previous period to ¥886.0 billion mainly due to a decrease in investment securities.

Total liabilities increased ¥48.1 billion, or 3.4% from the end

Net sales	¥	209.8	¥	215.8
Operating profit		3.2		6.6
Operating margin		1.6%		3.1%
Environment & Energy Business
Net sales	¥	17.8	¥	26.2
Operating profit		2.2		1.7
Operating margin		12.5%		6.8%
Other Businesses

$ 1,714.4

26.6

$ 146.0

18.3

of previous period to ¥1,469.2 billion. Total current liabilities increased ¥67.8 billion, or 7.9% from the end of pervious period to ¥926.6 billion mainly due to an increase in deposited gold bullion. Total non-current liabilities decreased ¥19.7 billion, or 3.5% from the end of previous period to ¥542.5 billion mainly due to a decrease in long-term borrowings. The balance of interest-bearing debts, which adds bonds payable and commercial papers to borrowings decreased ¥20.7 billion or 3.3% from the end of

Net sales	¥	253.6	¥	266.7
Operating profit		7.3		8.8
Operating margin		2.9%		3.3%
Total
Net sales	¥	1,811.7	¥	1,485.1
Operating profit		52.7		26.5
Operating margin		2.9%		1.8%

$ 2,072.4

60.1

$ 14,803.1

430.7

previous period to ¥608.7 billion.

Note:

U.S. dollar amounts are translated from Japanese yen using the prevailing exchange rate at March 31, 2022, which was ¥122.39 to U.S.$1.

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Basis of Presenting Consolidated Financial Statements

Capital Expenditures

• This is an English translation of "consolidated financial

statements and notes" among "Part 5. Financial Information

• The translations of the Japanese yen amount into U.S. dollars

are included solely for the convenience of readers outside of

The Group determines capital expenditure allocations by carefully selecting projects in areas where future earnings and growth are expected while striving to reduce interest-bearing debt.

The total capital expenditure for FY2022 was ¥81.4 billion, as a result of maintenance and repair work on existing facilities in each business, as well as the expansion and rationalization of production facilities. Capital expenditures for each business segment for FY2022 are as follows:

Advanced Products

In addition to maintenance and repair work on existing facilities in this business as a whole, the Group carried out work, etc. to strengthen the production facilities mainly in the Copper alloy products business. Capital expenditures in this business segment amounted to ¥20.6 billion.

Metals Business

The Group carried out maintenance and repair work in this business as a whole. Capital expenditures in this business segment amounted to ¥15.3 billion.

Cement Business

At the Kyushu Plant (Kanda area), the Company installed bag filters for kiln exhaust gas treatment facilities and recycled oil receiving and feeding facilities. In addition, at the Kyushu Plant (Kurosaki area), the Company installed a CO2 separation and recovery test facility and a methanation test facility for demonstration research on CO2 reduction. Additionally, the Group carried out maintenance and repair work at existing facilities mainly in Japan and the U.S. Capital expenditures in this business segment amounted to ¥18.5 billion.

in Annual Securities Report for the consolidated financial year

ended March 31, 2022".

• Appended to the back of this document is English translations of

the Independent Auditor's Report on the Consolidated Financial

Statements and Internal Control Over Financial Reporting that

were attached to the Annual Securities Report.

• Mitsubishi Materials Corporation (hereinafter referred to as

the "Company") is a corporation domiciled in Japan. The

accompanying consolidated financial statements are composed

of the Company and its consolidated subsidiaries (hereinafter

referred to as the "Group"). The accompanying consolidated

financial statements have been prepared in accordance with the

provisions set forth in the Financial Instruments and Exchange

Law and its related accounting regulations, and in conformity

with accounting principles generally accepted in Japan

("Japanese GAAP"). Japanese GAAP are different in certain

Japan, using the prevailing exchange rate on March 31, 2022,

which was ¥122.39 to U.S.$1. The convenience translation

should not be construed as representation that the Japanese

yen amounts have been, could have been, or could in the

future be, converted into U.S. dollars at this or any other rate

of exchange. Fractions less than one million yen (one tenth

yen in respect to per share amount) are omitted. As a result,

the total amounts in Japanese yen and translated U.S. dollars

shown in the consolidated financial statements and notes to the

consolidated financial statements do not necessarily agree with

the sum of the individual amounts.

• The number of each note is added for the visibility.

Metalworking Solutions Business	Environment & Energy Business
In the Environment & Energy Business, in addition to the
The Group carried out facility expansion and rationalization	construction of a new Komatagawa Hydroelectric Power Plant,
work to respond to the increased production in this business	the Company conducted maintenance and repair work on existing
as a whole, as well as maintenance and repair work at existing	facilities. Capital expenditures in this business segment amounted
facilities. Capital expenditures in this business segment amounted	to ¥3.7 billion.
to ¥9.1 billion.
	Other Businesses
	The Group carried out maintenance and repair work at existing
	facilities. Capital expenditures in the Other Businesses segment
	amounted to ¥13.9 billion.

respects as to application and disclosure requirements from

International Financial Reporting Standards ("IFRS").

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Consolidated Balance Sheets

Mitsubishi Materials Corporation and Consolidated Subsidiaries

As of March 31, 2022 and 2021

			Millions of yen			Thousands of U.S. dollars					Millions of yen				Thousands of U.S. dollars
		2022		2021			2022				2022		2021			2022
Assets											Liabilities
Current assets:											Current Liabilities:
Cash and deposits	¥	(*7)	159,221	¥	(*7)	153,086	$	1,300,934		Notes and accounts payable - trade	¥	(*7)	158,534	¥	(*7)	153,603	$	1,295,321
Notes receivable - trade			30,302			29,788			247,587		Short-term borrowings		(*7)	171,304		(*7)	175,686			1,399,659
Accounts receivable - trade		(*7)	219,543		(*7)	190,733			1,793,805		Current portion of bonds payable			10,000			20,000			81,706
Merchandise and finished goods		(*7)	133,600		(*7)	117,498			1,091,593		Commercial papers			30,000			40,000			245,118
Work in process		(*7)	159,508		(*7)	126,357			1,303,281		Income taxes payable			12,523			6,781			102,324
Raw materials and supplies		(*7)	161,487		(*7)	136,019			1,319,447		Provision for bonuses			11,831			12,852			96,670
Leased gold bullion		(*9)	195,379		(*9)	156,254			1,596,366		Provision for loss on disposal of inventories			1,024			756			8,371
Other			182,280			133,258			1,489,343		Provision for product compensation			58			578			476
Allowance for doubtful accounts			(2,390)			(3,103)			(19,534)		Deposited gold bullion		(*9)	392,364		(*9)	323,505			3,205,851
											Other						125,072
Total current assets			1,238,932			1,039,894			10,122,827				139,052					1,136,143
Non-current assets:											Total current liabilities			926,693			858,838			7,571,643
Property, plant and equipment:											Non-current liabilities:
Buildings and structures, net			148,092			158,343			1,210,004		Bonds payable			70,000			40,000			571,942
Machinery, equipment and vehicles, net			224,798			241,391			1,836,740		Long-term borrowings		(*7)	327,405		(*7)	353,795			2,675,101
Land, net		(*8)	194,039		(*8)	209,707			1,585,422		Deferred tax liabilities			31,163			36,162			254,624
Construction in progress			40,020			33,864			326,992		Deferred tax liabilities for land revaluation		(*8)	20,093		(*8)	21,094			164,179
Other, net			22,248			22,093			181,780		Provision for loss on business of subsidiaries and affiliates			882			2,525			7,206
Total property, plant and equipment, net	(*1), (*3), (*7) 629,199	(*1), (*3), (*7) 665,402			5,140,940		Provision for environmental measures			18,762			26,555			153,300
											Provision for directors' retirement benefits						1,677
Intangible assets:													811					6,631
Goodwill			29,371			31,670			239,986		Provision for share based compensation plan			443			220			3,622
Other			19,184			14,760			156,751		Retirement benefit liability			35,228			42,249			287,841
Total intangible assets			48,556			46,431			396,738		Other			37,795			38,033			308,810
Investments and other assets:											Total non-current liabilities			542,586			562,313			4,433,259
Investment securities						217,477
	(*2), (*7)	165,232		(*2), (*7)			1,350,045		Total liabilities			1,469,280			1,421,151			12,004,902
Retirement benefit asset			8,097			4,934			66,165
							Net assets
Deferred tax assets			12,618			14,801			103,103
							Shareholders' equity:
Other						50,996
	(*2)	26,862		(*2)			219,483		Share capital			119,457			119,457			976,043
Allowance for doubtful accounts			(4,468)			(4,392)			(36,507)		Capital surplus			79,407			79,439			648,807
Total investments and other assets			208,343			283,818			1,702,290		Retained earnings			328,864			294,814			2,687,022
Total non-current assets			886,099			995,651			7,239,969		Treasury shares			(2,892)			(2,868)			(23,636)
Total assets	¥		2,125,032	¥		2,035,546	$	17,362,796		Total shareholders' equity			524,837			490,843			4,288,237
											Accumulated other comprehensive income:
											Valuation difference on available-for-sale securities			26,110			42,940			213,336
											Deferred gains or losses on hedges			(5,328)			(1,119)			(43,540)
											Revaluation reserve for land		(*8)	26,369		(*8)	27,097			215,455
											Foreign currency translation adjustment			18,832			(8,057)			153,875
											Remeasurements of defined benefit plans			(6,003)			(6,470)			(49,055)
											Total accumulated other comprehensive income			59,979			54,390			490,072
											Non-controlling interests			70,935			69,161			579,584
											Total net assets			655,752			614,394			5,357,893
											Total liabilities and net assets	¥		2,125,032	¥		2,035,546	$	17,362,796

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Consolidated Statements of Profit or Loss

Mitsubishi Materials Corporation and Consolidated Subsidiaries

For the years ended March 31, 2022 and 2021

			Millions of yen
		2022		2021
Net sales	¥	(*1)1,811,759	¥		1,485,121
Cost of sales		(*2), (*3)1,602,958		(*2), (*3)1,312,771
Gross profit			208,801			172,349
Selling, general and administrative expenses		(*4), (*5)	156,092		(*4), (*5)	145,781
Operating profit			52,708			26,567
Non-operating income:
Interest income			564			843
Dividend income			25,312			17,585
Share of profit of entities accounted for using equity method			5,078			4,692
Rental income from non-current assets			4,947			4,895
Other			7,057			10,260
Total non-operating income			42,960			38,278
Non-operating expenses:
Interest expenses			5,498			4,416
Expense for the maintenance and management of abandoned mines			4,051			3,782
Rental expenses on non-current assets			3,156			3,134
Loss on retirement of non-current assets			2,670			2,674
Other			4,211			6,309
Total non-operating expenses			19,588			20,318
Ordinary profit			76,080			44,527
Extraordinary income:
Gain on sales of investment securities			34,671			28,066
Other			3,938			810
Total extraordinary income			38,609			28,876
Extraordinary losses:
Loss on business restructuring		(*7)	25,116		(*7)	22,370
Loss on sales of investment securities			5,223			1,968
Impairment loss		(*6)	3,886		(*6)	3,532
Other			3,848			2,191
Total extraordinary losses			38,074			30,063
Profit before income taxes			76,616			43,341
Income taxes - current			22,151			13,944
Income taxes - deferred			1,850			(1,379)
Total income taxes			24,001			12,564
Profit			52,614			30,777
Profit attributable to non-controlling interests			7,599			6,369
Profit attributable to owners of parent	¥		45,015	¥		24,407

Thousands of U.S. dollars

2022

$ 14,803,164

13,097,133

1,706,030

1,275,371

430,659

4,609

206,816

41,498

40,424

57,667

351,016

44,922

33,107

25,791

21,823

34,406

160,051

621,624

283,284

32,181

315,466

205,213

42,675

31,758

31,443

311,091

625,999

180,988

15,116

196,104

429,894

62,093

$ 367,801

Consolidated Statements of Changes in Net Assets

Mitsubishi Materials Corporation and Consolidated Subsidiaries

For the years ended March 31, 2022 and 2021

									Millions of yen
							Shareholders' equity
															Total
															shareholders'
					Share capital	Capital surplus	Retained earnings	Treasury shares		equity
Balance as of March 31, 2020			¥	119,457	¥	92,393		¥	274,723	¥	(2,157)	¥	484,416
Cumulative effects of changes in accounting policies															-
Restated balance					119,457		92,393			274,723		(2,157)		484,416
Changes during period:
Cash dividends										(5,237)				(5,237)
Profit attributable to owners of parent										24,407				24,407
Reversal of revaluation reserve for land											962				962
Increase due to change in accounting period of consolidated subsidiaries													-
Decrease due to increase in the number of consolidated subsidiaries									(41)				(41)
Decrease due to decrease in the number of consolidated subsidiaries													-
Purchase of treasury shares													(713)		(713)
Disposal of treasury shares							(1)					3		2
Changes in ownership interest of parent due to transaction with						(12,952)							(12,952)
non-controlling interests
Net changes in items other than shareholders' equity
Total changes during period					-		(12,954)		20,090		(710)		6,426
Balance as of March 31, 2021			¥	119,457	¥	79,439		¥	294,814	¥	(2,868)	¥	490,843
Cumulative effects of changes in accounting policies											(38)				(38)
Restated balance					119,457		79,439			294,775		(2,868)		490,804
Changes during period:
Cash dividends										(11,783)				(11,783)
Profit attributable to owners of parent										45,015				45,015
Reversal of revaluation reserve for land											75				75
Increase due to change in accounting period of consolidated subsidiaries									855				855
Decrease due to increase in the number of consolidated subsidiaries													-
Decrease due to decrease in the number of consolidated subsidiaries									(73)				(73)
Purchase of treasury shares													(28)		(28)
Disposal of treasury shares							(1)					4		2
Changes in ownership interest of parent due to transaction with						(30)							(30)
non-controlling interests
Net changes in items other than shareholders' equity
Total changes during period					-		(31)		34,089		(24)		34,032
Balance as of March 31, 2022				¥	119,457	¥	79,407		¥	328,864	¥	(2,892)	¥	524,837
							Millions of yen
					Accumulated other comprehensive income
	Valuation										Total accumulated
	difference on	Deferred gains	Foreign currency Remeasurements	other
	available-for-sale	or losses on	Revaluation		translation		of defined	comprehensive	Non-controlling
	securities	hedges	reserve for land		adjustment	benefit plans	income	interests		Total net assets
Balance as of March 31, 2020	¥ 22,806	¥	708	¥ 28,059	¥	(12,212)	¥	(16,997)	¥ 22,364	¥ 79,252	¥ 586,034
Cumulative effects of changes in accounting policies															-
Restated balance	22,806		708	28,059		(12,212)		(16,997)	22,364	79,252	586,034
Changes during period:
Cash dividends															(5,237)
Profit attributable to owners of parent															24,407
Reversal of revaluation reserve for land															962

Consolidated Statements of Comprehensive Income

Mitsubishi Materials Corporation and Consolidated Subsidiaries

For the years ended March 31, 2022 and 2021

Millions of yen

Thousands of U.S. dollars

Increase due to change in accounting period of consolidated subsidiaries								-
Decrease due to increase in the number of consolidated subsidiaries								(41)
Decrease due to decrease in the number of consolidated subsidiaries								-
Purchase of treasury shares								(713)
Disposal of treasury shares								2
Changes in ownership interest of parent due to transaction with non-controlling interests								(12,952)
Net changes in items other than shareholders' equity	20,133	(1,827)	(962)	4,155	10,526	32,025	(10,091)	21,934

	2022		2021
Profit	¥	52,614	¥	30,777
Other comprehensive income:
Valuation difference on available-for-sale securities		(16,872)		19,613
Deferred gains or losses on hedges		(1,000)		(2,843)
Foreign currency translation adjustment		27,558		5,758
Remeasurements of defined benefit plans		848		10,369
Share of other comprehensive income of entities accounted		70		1,152
for using equity method
Total other comprehensive income	(*)	10,603		(*) 34,050
Comprehensive income	¥	63,218	¥	64,827
(Break down)
Comprehensive income attributable to:
Owners of parent		49,666		57,567
Non-controlling interests		13,551		7,259

2022

$ 429,894

(137,858)

(8,176)

225,167

6,931

572

86,637

$ 516,531

405,807

110,724

Total changes during period		20,133		(1,827)		(962)		4,155		10,526		32,025		(10,091)	28,360
Balance as of March 31, 2021	¥	42,940	¥	(1,119)	¥	27,097	¥	(8,057)	¥	(6,470)	¥	54,390	¥	69,161	¥ 614,394
Cumulative effects of changes in accounting policies															(38)
Restated balance		42,940		(1,119)		27,097		(8,057)		(6,470)		54,390		69,161	614,356
Changes during period:
Cash dividends															(11,783)
Profit attributable to owners of parent															45,015
Reversal of revaluation reserve for land															75
Increase due to change in accounting period of consolidated subsidiaries															855
Decrease due to increase in the number of consolidated subsidiaries															-
Decrease due to decrease in the number of consolidated subsidiaries															(73)
Purchase of treasury shares															(28)
Disposal of treasury shares															2
Changes in ownership interest of parent due to transaction with non-controlling interests															(30)
Net changes in items other than shareholders' equity		(16,829)		(4,209)		(727)		26,890		467		5,589		1,773	7,363
Total changes during period		(16,829)		(4,209)		(727)		26,890		467		5,589		1,773	41,396
Balance as of March 31, 2022	¥	26,110	¥	(5,328)	¥	26,369	¥	18,832	¥	(6,003)	¥	59,979	¥	70,935	¥ 655,752

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