TIDMMBC
RNS Number : 5762M
Mitsubishi Corporation
08 May 2015
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FINANCIAL RESULTS FOR
THE YEAR ENDED MARCH 2015
----------------------------
Mitsubishi Corporation
2-3-1 Marunouchi, Chiyoda-ku, Tokyo, JAPAN 100-8086
http://www.mitsubishicorp.com/
May 8, 2015
Mitsubishi Corporation
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MARCH 31, 2015
(Based on IFRS) (Consolidated)
1. Consolidated operating results for the year ended March 31,
2015
(1) Revenues and income
Note:
Figures less
than one million
yen are rounded.
%: change
from the previous
year
Revenues Income before Net income Net income Comprehensive
income taxes attributable income
to
owners of
the Parent
-------------- --------------- --------------- -------------- --------------- ----------------
For the Millions Millions Millions Millions Millions
year ended of Yen % of Yen % of Yen % of Yen % of Yen %
March
31, 2015 7,669,489 0.4 574,722 8.0 406,391 5.2 400,574 10.9 714,825 4.6
March
31, 2014 7,635,168 27.0 531,954 20.2 386,359 12.4 361,359 11.7 683,323 (22.0)
-------------- --------- ---- --------- ---- -------- ---- --------- ---- -------- ------
Net income Net income Return on Pre-tax income
attributable attributable equity to
to owners to owners attributable total assets
of the of the to owners ratio
Parent per Parent per of the Parent
share (basic) share (diluted)
-------------- -------------- ---------------- -------------- --------------
For the
year ended Yen Yen % %
March
31, 2015 246.39 245.83 7.5 3.5
March
31, 2014 219.30 218.80 7.5 3.4
-------------- -------------- ---------------- -------------- --------------
Income from investments accounted for using the equity method
for the years ended March 31, 2015 and 2014 were Yen 203,818
million and Yen 168,356 million respectively.
(2) Financial position
Total assets Total equity Equity attributable Ratio of Equity per
to equity attributable share
owners of to attributable
the Parent owners of to owners
the Parent of the Parent
to total
assets
-------------- ------------ ------------ ------------------- -------------------- --------------
As of Millions Millions Millions
of Yen of Yen of Yen % Yen
March
31, 2015 16,774,366 6,055,555 5,570,477 33.2 3,437.75
March
31, 2014 15,901,125 5,539,370 5,067,666 31.9 3,074.03
-------------- ------------ ------------ ------------------- -------------------- --------------
(3) Cash Flows
Operating Investing Financing Cash and cash equivalents
activities activities activities at the end of year
-------------- ----------- ----------- ----------- -------------------------
For the Millions Millions Millions
year ended of Yen of Yen of Yen Millions of Yen
March
31, 2015 798,264 (154,852) (305,334) 1,725,189
March
31, 2014 381,576 (300,502) (118,845) 1,332,036
-------------- ----------- ----------- ----------- -------------------------
2. Dividends
Cash dividends per share (Yen) Cash Payout Dividends
dividends ratio on equity
(annual) (consolidated) attributable
to owners
of the
Parent
(consolidated)
----------------- --------------------------------------- ---------- --------------- ---------------
(Record 1Q end 2Q end 3Q end 4Q end Annual Millions % %
date) of Yen
----------------- ------- ------ ------ ------ ------ ---------- --------------- ---------------
March
31, 2014 _ 30.00 _ 38.00 68.00 112,089 25.2 2.3
----------------- ------- ------ ------ ------ ------ ---------- --------------- ---------------
March
31, 2015 _ 40.00 _ 30.00 70.00 113,404 28.4 2.1
----------------- ------- ------ ------ ------ ------ ---------- --------------- ---------------
March
31, 2016 _ 28.00 _ 28.00 56.00 _ 24.6 _
(Forecast)
-------------------------- ------ ------ ------ ------ ---------- --------------- ---------------
(1) Regarding the above dividend for the year ended March 31,
2015, please refer to page 7, "(2) Capital Structure Policy and
Dividend Policy" under "3. Basic Policy Regarding the Appropriation
of Profits" under "Operating Results and Financial Position" of the
consolidated financial statements.
(2) Payout ratio (consolidated) applicable for the year ended
March 31, 2014 are calculated by net income at the time of dividend
declaration based on U.S.GAAP.
(3) Breakdown of 2Q end dividend for the year ended March 31,
2015: Regular dividend 30.00Yen; commemorative dividend
10.00Yen
3. Outlook for the year ending March 31, 2016
Note:
%: change
from the previous
year.
Net income Net income
attributable attributable
to to
owners of owners of
the Parent the Parent
per share
-------------- ---------------- -------------
For the Millions
year ending of Yen % Yen
March
31, 2016 360,000 (10.1) 227.67
-------------- -------- ------ -------------
Consolidated forecasts for the six months ending September 30,
2015 have been omitted because MC tracks performance against
targets on an annual basis only.
4. Other
(1) Changes in significant subsidiaries during the period
(changes in specified subsidiaries causing changes in scope of
consolidation) : Yes
New companies : 0
Excluded companies : 1 (MCX GULF OF MEXICO, LLC)
For details, please see "(3) Significant Changes in Subsidiaries
During the Period (IFRS)" " under "7. Notes Concerning Consolidated
Financial Statements (IFRS)" of consolidated financial statements
on page 28.
(2) Changes in accounting principles, and accounting
estimate
-1- Changes in accounting principles required by IFRS: Yes
-2- Changes other than -1-: None
-3- Changes in accounting estimate: Yes
Regarding the number of shares that serve as the basis for
calculating consolidated net income attributable to Mitsubishi
Corporation per share, please refer to page 27, "(1) Changes in
Accounting Policies and Changes in Accounting Estimates (IFRS)"
under "7. Notes Concerning Consolidated Financial Statements
(IFRS)" of the consolidated financial statements.
(3) Number of shares issued (Common stock)
-1- Number of shares
issued at year-end
(including treasury (March (March 31,
stock) 31, 2015) 1,624,036,751 2014) 1,653,505,751
-2- Number of treasury (March (March 31,
stock at year-end 31, 2015) 3,653,124 2014) 4,964,444
-3- Average number
of shares during each
of the following fiscal (March (March 31,
years 31, 2015) 1,625,754,309 2014) 1,647,786,046
Please refer to "(5) Earnings Per Share (IFRS)" under "7. Notes
Concerning Consolidated Financial Statements (IFRS)" of the
consolidated financial statements on page 30regarding the number of
shares that serve as the basis for calculating consolidated net
income attributable to Mitsubishi Corporation per share.
Disclosure Regarding Audit Procedures
As of the date of disclosure of this earnings release, an audit
of the consolidated financial statements is being carried out in
accordance with the Financial Instruments and Corporate Exchange
Act.
Forward-looking Statements
Earnings forecasts and other forward-looking statements in this
release are based on data currently available to management and
certain assumptions that management believes are reasonable, and
there may be latent risks, uncertainties and other factors
embedded. Actual results may therefore differ materially from these
statements for various reasons. For cautionary notes concerning
assumptions for earnings forecasts and use of earnings forecasts,
please refer to "(3) Forecasts for the Year Ending March 2016"
under "2. Consolidated Results (IFRS)" of"Operating Results and
Financial Position" on page 5.
Contents
Operating Results and Financial Position
...................................................... 3
1. General Operating Environment
...............................................................
3
2. Consolidated Results .................................................................. 3
(1) Summary of the Year Ended March 2015 Results
......................................................... 3
(2) Segment Information
..........................................................................................
3
(3) Forecasts for the Year Ending March 2016
..................................................................5
(4) Changes in Assets, Liabilities and Equity
..................................................................6
(5) Cash Flows
......................................................................................................
6
3. Basic Policy Regarding the Appropriation of Profits
....................................... 7
(1) Investment Plans
................................................................................................
7
(2) Capital Structure Policy and Dividend Policy
...............................................................
7
4. Business Risks
....................................................................................
8
(1) Risks of Changes in Global Macroeconomic Conditions
................................................ 8
(2) Market Risks
...................................................................................................
8
(3) Credit Risk
......................................................................................................10
(4) Country Risk
...................................................................................................11
(5) Business Investment Risk
....................................................................................11
(6) Risks Related to Specific Investments
.....................................................................12
(7) Risks Related to Compliance
.................................................................................13
(8) Risks From Natural and Other Types of Disasters
.........................................................13
Subsidiaries and Affiliated Companies
............................................................14
Management Policies
.................................................................................16
Basic Concept Regarding Selection of Accounting Standards
..............................18
Consolidated Financial Statements
......................................................19
1. Consolidated Statement of Financial Position (IFRS)
.......................................19
2. Consolidated Statement of Income (IFRS)
...................................................21
3. Consolidated Statement of Comprehensive Income (IFRS)
..............................22
4. Consolidated Statement of Changes in Equity (IFRS)
.......................................23
5. Consolidated Statement of Cash Flows (IFRS)
................................................24
6. Notes Concerning Going Concern Assumption IFRS)
....................................26
7. Notes Concerning Consolidated Financial Statements (IFRS)
..............................27
(1) Changes in Accounting Policies and Changes in Accounting
Estimates (IFRS)........................27
(2) Scope of Consolidation and Application of the Equity Method
(IFRS).................................28
(3) Significant Changes in Subsidiaries During the Period
(IFRS)..........................................28
(4) Segment Information
(IFRS).................................................................................29
(5) Earnings Per Share
(IFRS)....................................................................................30
(6) Subsequent Events
(IFRS)....................................................................................30
Mitsubishi Corporation will hold an earnings conference in Tokyo
for the year ended March 2015 on May 11, 2015 (Monday) from 13:30
to 15:00 (Japan Time), inviting institutional investors and
analysts to join.
The conference material will be accessible in English from the
following URL:
http://www.mitsubishicorp.com/jp/en/ir/index.html
(English interpretation of the conference call will be posted on
our web site as soon as it becomes available.)
Operating Results and Financial Position
1. General Operating Environment
In the year ended March 2015, the U.S. economy continued to
experience a solid recovery, driven by consumer spending. In
Europe, there were continuing signs of an upturn in overall
economic conditions, albeit at a gradual pace of recovery. Certain
emerging nations experienced a slowdown in economic growth. The
Japanese economy followed a moderate recovery path, despite a
pull-back from last-minute demand ahead of the increase in the
consumption tax rate. In the latter half of 2014, resource prices
such as crude oil prices decreased, while the yen depreciated at a
faster pace.
2. Consolidated Results
(Consolidated net income, as used hereinafter, refers to
"Consolidated net income attributable to owners of the
Parent.")
(1) Summary of the Year Ended March 2015 Results
Revenues were 7,669.5 billion yen, nearly flat year over
year.
Gross profit increased 23.9 billion yen, or 2%, to 1,209.9
billion yen.
Selling, general and administrative expenses increased 45.9
billion yen, or 5%, to 998.8 billion yen, due mainly to the impact
of business expansion (new consolidations).
Reversal of impairment loss from investment accounted for using
the equity method was 94.2 billion yen in the year ended March 2015
due to a reversal of impairment losses recognized in prior years in
the Living Essentials Group and the Global Environmental &
Infrastructure Business Group.
In other P/L items, impairment losses on long-lived assets
increased mainly due to the recording of impairment losses in the
gas and oil development business in Oceania, North America and
Europe, while other (expense) income-net and finance income
increased mainly due to an improvement in foreign exchange gains
and losses, as well as to higher dividend income from
resource-related investees (non-ferrous metals).
Income from investments accounted for using the equity method
increased 35.4 billion yen, or 21%, to 203.8 billion yen.
As a result, consolidated net income for the year ended March
2015 increased 39.2 billion yen, or 11%, to 400.6 billion yen.
(2) Segment Information
1) Global Environmental & Infrastructure Business Group
The Global Environmental & Infrastructure Business Group
conducts infrastructure projects, related trading operations and
other activities in power generation, water, transportation and
other infrastructure fields that serve as a foundation for
industry.
The segment recorded consolidated net income of 20.4 billion
yen, an increase of 4.2 billion yen year over year.
The higher earnings mainly reflected increased earnings from
Asian and North American power generation businesses and the FPSO
business, in addition to earnings from a reversal of impairment
losses recognized in prior fiscal years. These factors were partly
offset by provision for losses on guarantee obligations in
connection with loans and guarantees for oil field production and
development businesses.
2) Industrial Finance, Logistics & Development Group
The Industrial Finance, Logistics & Development Group is
developing shosha-type industrial finance business. These
businesses range from asset management, infrastructure investment,
and buyout investment to leasing, real estate development and
logistics services.
The segment recorded consolidated net income of 40.1 billion
yen, an increase of 10.4 billion yen year over year.
The higher earnings mainly reflected increased earnings in the
fund investment business.
3) Energy Business Group
The Energy Business Group conducts a number of activities
including oil and gas exploration, development and production
(E&P) business; investment in natural gas liquefaction
projects; trading of crude oil, petroleum products, carbon
materials and products, LNG (Liquefied Natural Gas), and LPG
(Liquefied Petroleum Gas); and planning and development of new
energy business.
The segment recorded consolidated net income of 82.3 billion
yen, a decrease of 36.3 billion yen year over year.
This decrease mainly reflected the recording of impairment
losses in the gas and oil development business in Oceania, North
America and Europe in line with changes in the business environment
and other factors.
4) Metals Group
The Metals Group trades, develops business and invests in a
range of fields. These include steel products such as steel sheets
and thick plates, steel raw materials such as coking coal and iron
ore, and non-ferrous raw materials and products such as copper and
aluminum.
The segment recorded consolidated net income of 13.9 billion
yen, an increase of 5.9 billion yen year over year.
The increase mainly reflected higher dividend income and
equity-method earnings from resource-related investees (non-ferrous
metals), and lower impairment losses on resource-related
investments.
5) Machinery Group
The Machinery Group handles sales, finance and logistics across
many different sectors, in which it also invests. These fields
include machine tools, agricultural machinery, construction
machinery, mining machinery, elevators, escalators, ships,
aerospace-related equipment and motor vehicles.
The segment recorded consolidated net income of 91.3 billion
yen, a decrease of 7.5 yen billion year over year.
This decrease mainly reflected the rebound of a one-off gain
associated with the revaluation of assets recorded in the previous
fiscal year.
6) Chemicals Group
The Chemicals Group trades chemical products in a broad range of
fields, in which it also develops business and invests. These
fields extend from basic materials such as ethylene, methanol, and
salt produced from crude oil, natural gas, minerals, plants, marine
resources and so forth, to midstream and downstream products such
as plastics, electronic materials, food ingredients, fertilizer and
fine chemicals.
The segment recorded consolidated net income of 31.4 billion
yen, an increase of 9.7 billion yen year over year.
This increase mainly reflected higher earnings on transactions
at the Parent, as well as at methanol, plastics, food science and
other related business companies.
7) Living Essentials Group
The Living Essentials Group provides products and services,
develops businesses and invests in various fields closely linked
with people's lives, including food products and food, textiles,
essential supplies, healthcare, distribution and retail. These
fields extend from the procurement of raw materials to the consumer
market.
The segment recorded consolidated net income of 120.5 billion
yen, an increase of 61.3 billion yen year over year.
Earnings increased mainly due to a reversal of impairment losses
recognized in prior fiscal years.
(3) Forecasts for the Year Ending March 2016
For the year ending March 2016, we forecast the consolidated net
income of 360.0 billion yen. Please note that the basic assumptions
for this forecast are as follows.
Reference: Change of basic assumptions
Year Ended Year Ending Change
March 2015 March 2016
(Actual) (Forecasts)
----------------- ------------- ------------- -------------
Exchange rate 109.8 JPY/USD 120.0 JPY/USD 10.2 JPY/USD
----------------- ------------- ------------- -------------
Crude oil price 83.5 US$/BBL 65.0 US$/BBL -18.5 US$/BBL
----------------- ------------- ------------- -------------
Interest rate
(TIBOR) 0.20 % 0.20 % -
----------------- ------------- ------------- -------------
(4) Changes in Assets, Liabilities and Equity
Total assets at March 31, 2015 were 16,774.4 billion yen, an
increase of 873.2 billion yen from March 31, 2014. Total assets
rose mainly because of an increase in cash and cash equivalents due
to collection of working capital and an increase in investments
accounted for using the equity method due to the impact of the
yen's depreciation and reversal of impairment losses, as well as
increases in various asset items associated with the acquisition of
new subsidiaries.
Total liabilities were 10,718.8 billion yen, an increase of
357.1 billion yen. This mainly reflected an increase in long-term
debt due to the impact of the yen's depreciation and the
procurement of funds for making new and additional investments, as
well as increases in various liabilities associated with the
acquisition of new subsidiaries.
Interest-bearing liabilities (net), which are interest-bearing
liabilities (gross) minus cash and cash equivalents and time
deposits, decreased 133.4 billion yen from March 31, 2014 to
4,467.7 billion yen. The net debt-to-equity ratio, which is net
interest-bearing liabilities divided by equity attributable to
owners of the Parent, was 0.8.
Equity attributable to owners of the Parent increased 502.8
billion yen to 5,570.5 billion yen. In addition to an increase in
retained earnings because of the consolidated net income, this
increase was mainly due to an increase in exchange differences on
translating foreign operations in line with the yen's depreciation,
despite the payment of dividends at the Parent.
(5) Cash Flows
Cash and cash equivalents at March 31, 2015 were 1,725.2 billion
yen, an increase of 393.2 billion yen from March 31, 2014.
(Operating activities)
Net cash provided by operating activities was 798.3 billion yen,
mainly due to cash flows from operating transactions and dividend
income, as well as the recovery of working capital, despite the
payment of income taxes.
(Investing activities)
Net cash used in investing activities was 154.9 billion yen.
Investing activities used net cash mainly due to an investment in a
salmon farming company and capital expenditures in the Australian
coal business, despite cash provided by the sale of aircraft, the
collection of loans receivable at subsidiaries, and proceeds from a
paid-in capital reduction at an affiliated company.
As a result, free cash flow, the sum of operating and investing
cash flows, was a positive 643.4 billion yen.
(Financing activities)
Net cash used in financing activities was 305.3 billion yen.
Financing activities used net cash mainly due to the purchase of
treasury stock and the payment of dividends at the Parent, in
addition to the repayment of debt in line with asset sales and the
recovery of working capital.
3. Basic Policy Regarding the Appropriation of Profits
(1) Investment Plans
We will accelerate divestments selectively and free up capital
for new investments, while continuing to invest at a rate in line
with the average of the three years under Midterm Corporate
Strategy 2012, in order to improve our earnings base.
(2) Capital Structure Policy and Dividend Policy
Our basic policy is to sustain growth and maximize corporate
value by balancing earnings growth, capital efficiency and
financial soundness. For this, we will continue to utilize retained
earnings for investments to drive growth, while maintaining our
financial soundness.
Moreover, under New Strategic Direction, we introduced a
two-staged dividend policy to ensure a certain amount of return to
shareholders regardless of changes in the external environment.
Accordingly, we plan to pay a yearly base dividend of 50 yen per
common share, regardless of our earnings level each year, as the
stable portion of this two-staged dividend. On top of that, we will
pay a performance based variable dividend at a consolidated
dividend payout ratio of at least 30% on consolidated net income
above 350.0 billion yen each year, while taking our capital demand
for investing in further growth into consideration.
In light of the 400.6 billion yen in consolidated net income we
recorded for the year ended March 2015, the Board of Directors
today passed a resolution setting a total dividend per common share
applicable to the fiscal year ended March 2015 of 60 yen (making
the year-end dividend 30 yen per common share, having paid an
interim dividend of 30 yen per common share). This is a base
dividend of 50 yen per common share, and a performance based
variable dividend of 10 yen per common share for a payout ratio of
32.0% on the 50.6 billion yen in excess of 350.0 billion yen. We
have paid the dividend commemorating the 60th anniversary of our
founding of 10 yen per common share, and therefore total dividend
for the year ended March 2015 will become 70 yen per share.
Furthermore, we plan to pay a total dividend of 56 yen per
common share for the year ending March 2016. This will consist of a
base dividend of 50 yen per common share, and a performance based
variable dividend of 6 yen per common share (for a payout ratio of
94.9% on the performance).
[For Reference: Annual Ordinary Dividend Per Common Share]
Year ended March 2008 = 56 yen
Year ended March 2009 = 52 yen
Year ended March 2010 = 38 yen
Year ended March 2011 = 65 yen
Year ended March 2012 = 65 yen
Year ended March 2013 = 55 yen
Year ended March 2014 = 68 yen
Year ended March 2015 = 70 yen
4. Business Risks
(1) Risks of Changes in Global Macroeconomic Conditions
As we conduct businesses on a global scale, our operating
results are impacted by economic trends in overseas countries as
well as those in Japan.
For instance, a decline in prices of energy and metal resources
could have a large impact on our resource-related import
transactions and earnings from business investments. Furthermore,
the worldwide economic slowdown could affect our entire
export-related business, including plants, construction machinery
parts, automobiles, steel products, ferrous raw materials, chemical
products, and other products.
In Thailand and Indonesia, we have various automobile
businesses, including automobile assembly plants, distribution and
sales companies and financial services companies jointly
established with Japanese automakers. Because automobile sales
volume reflects internal demand in each of these countries,
economic trends in both Thailand and Indonesia may have a
significant bearing on earnings from our automobile operations.
In the year ended March 2015, the global economy saw an increase
in volatility in the financial and commodity markets, mainly due to
concerns about the outlook for the Chinese economy and the Greek
debt crisis, along with rising geopolitical risk as a result of the
situation in Ukraine and the Middle East and other developments.
Volatility in the financial and commodity markets also increased
due to expectations of an interest rate hike in the U.S. In
emerging countries, the pace of economic growth has slowed even
among major countries such as China and Brazil, mainly due to
slower growth in investment and exports, compounded by structural
problems within these countries.
(2) Market Risks
Unless otherwise stated, calculations of effects on future
consolidated net income are based on consolidated net income for
the year ended March 2015.
1) Commodity Market Risk
In the course of our business activities, we are exposed to
various risks relating to movements in prices of commodities as a
trader, an owner of rights to natural and energy resources, and a
producer and seller of industrial products of our investees.
Product categories that may have a large impact on our operating
results are as follows:
(Energy Resources)
We hold upstream rights to LNG and crude oil, and/or
liquefaction facilities in Australia, Malaysia, Brunei, Sakhalin,
Indonesia, Gulf of Mexico (United States), Gabon, Angola and other
regions. Movements in LNG and crude oil prices may have a
significant impact on operating results in these businesses. From
the latter half of 2014, crude oil prices have decreased sharply.
The main reasons for the drastic decline in crude oil prices were a
decision by OPEC members, primarily Saudi Arabia, to maintain crude
oil production, and supply-side changes such as increased shale oil
production in the U.S. Another reason was economic slowdowns in
countries centered on China, as well as in developed countries.
Crude oil prices are forecast to gradually recover from the latter
half of 2015 to 2016 based on an anticipated recovery in demand
driven by the lower crude oil prices. However, considering that the
outlook for crude oil prices remains uncertain, future developments
must be watched closely.
Fundamentally, LNG prices are linked to crude oil prices. It is
estimated that a US$1/BBL fluctuation in the price of crude oil
would have an approximate 1.5 billion yen effect on consolidated
net income for LNG and crude oil combined in a given year, mainly
through a change in equity-method earnings. However, fluctuations
in the price of LNG and crude oil might not be immediately
reflected in our operating results because of timing
differences.
(Metal Resources)
Through wholly owned Australian subsidiary Mitsubishi
Development Pty Ltd (MDP), we sell coking coal, which is used for
steel manufacturing, and thermal coal, which is used for
electricity generation. Fluctuations in the price of coking coal
may affect our consolidated operating results through MDP's
earnings. MDP's operating results cannot be determined by the coal
price alone since MDP's results are also significantly affected by
fluctuations in exchange rates for the Australian dollar, U.S.
dollar and yen, as well as adverse weather and labor disputes.
In addition, as a producer, we are exposed to the risk of price
fluctuations in copper. A US$100 fluctuation in the price per MT of
copper would have a 1.4 billion yen effect on our consolidated net
income for the year. However, variables beside price fluctuations
can also have an impact. These include the grade of mined ore, the
status of production operations, and reinvestment plans (capital
expenditures). Therefore, the impact on earnings cannot be
determined by the copper price alone.
(Petrochemical Products)
We are engaged in a broad range of trading activities for
petrochemical products manufactured from raw materials such as
naphtha and natural gas. The prices of petrochemical products are
largely determined for each product on an individual basis based on
the prices of the above raw materials, supply-demand dynamics and
other factors. Fluctuations in the prices of these raw materials
may affect earnings from these trading transactions.
We have made investments in manufacturing and sales companies
for petrochemicals such as ethylene glycol, paraxylene and methanol
in Saudi Arabia, Malaysia and Venezuela. Our equity-method earnings
would be affected by changes in the operating results of these
companies due to price movements.
2) Foreign Currency Risk
We bear risk of fluctuations in foreign currency rates relative
to the yen in the course of our trading activities, such as export,
import and offshore trading. While we use forward contracts and
other hedging strategies, there is no assurance that we can
completely avoid foreign currency risk.
In addition, dividends received from overseas businesses and
equity in earnings of overseas consolidated subsidiaries and
affiliates are relatively high in proportion to our consolidated
net income. Because most of these earnings are denominated in
foreign currencies, which are converted to yen solely for reporting
purposes, an appreciation in the yen relative to foreign currencies
has a negative impact on consolidated net income. In terms of
sensitivity, a 1 yen change relative to the U.S. dollar would have
an approximate 2.5 billion yen effect on consolidated net
income.
Regarding our investments in overseas businesses, an
appreciation in the yen poses the risk of lowering shareholders'
equity through a negative effect on exchange differences on
translating foreign operations. Consequently, we implement various
measures to prevent increased exposure to foreign currency risk on
investments, such as by hedging foreign currency risks with respect
to new large investments. However, there is no assurance that we
can completely avoid these risks.
3) Stock Price Risk
As of March 31, 2015, we owned approximately 1,470.0 billion yen
(market value basis) of marketable securities, mostly equity issues
of customers, suppliers and affiliated companies. These investments
expose us to the risk of fluctuations in stock prices. The
valuation above represented net unrealized gains of approximately
510.0 billion yen based on market prices, a figure that could
change depending on future trends in stock prices. In our corporate
pension fund, some of the pension assets managed are marketable
stocks. Accordingly, a fall in stock prices could cause an increase
in pension expenses by reducing pension assets.
4) Interest Rate Risk
As of March 31, 2015, we had gross interest-bearing liabilities
of 6,349.0 billion yen. Because almost all of these liabilities
bear floating interest rates, there is a risk of an increase in
interest expenses caused by a rise in interest rates.
The vast majority of these interest-bearing liabilities are
corresponding to trade receivables, loans receivable and other
operating assets that are positively affected by changes in
interest rates. Because a rise in interest rates produces an
increase in income from these assets, while there is a timing
difference, interest rate risk is offset. For the remaining
interest-bearing liabilities exposed to interest rate risk without
such offsets, commensurate asset holdings such as investment
securities, property and equipment generate trading income as well
as other income streams such as dividends that are strongly
correlated with economic cycles. Accordingly, even if interest
rates increase as the economy improves, leading to higher interest
expenses, we believe that these expenses would be offset by an
increase in income from the corresponding asset holdings. However,
our operating results may be negatively affected temporarily if
there is a rapid rise in interest rates because increased income
from commensurate asset holdings would fail to offset the effects
of a preceding increase in interest expenses.
To monitor market movements in interest rates and respond
flexibly to market risks, we established the ALM (Asset Liability
Management) Committee. This committee establishes fund procurement
strategy and manages the risk of interest rate fluctuations.
(3) Credit Risk
We extend credit to customers in the form of trade credit,
including accounts receivables and advance payments, finance,
guarantees and investments due to our various operating
transactions. We are therefore exposed to credit risk in the form
of losses arising from deterioration in the credit of or bankruptcy
of customers. Furthermore, we utilize derivative instruments,
primarily swaps, options and futures, for the purpose of hedging
risks. In this case, we are exposed to the credit risk of the
counterparties to these derivative instruments.
To manage this risk, we have established credit and transaction
limits for each customer as well as introduced an internal rating
system. Based on internal rules determined by internal ratings and
the amount of credit, we also require collateral or a guarantee
depending on the credit profile of the counterparty. There is no
guarantee that we will be able to completely avoid credit risk with
these risk hedging strategies. We reduce transactions and take
measures to protect our receivables when there is deterioration in
the credit condition of customers. We also have a policy for
dealing with bankrupt customers and work to collect receivables.
However, failure to collect receivables and other credit could
affect our operating results.
(4) Country Risk
We bear country risk in relation to transactions and investments
with overseas companies in the form of delays or inability to
collect cash or conduct business activities due to political and
socioeconomic conditions in the countries where they are
domiciled.
We take appropriate risk hedging measures that involve, in
principle, hedges via third parties through such means as taking
out insurance, depending on the nature of the project. Furthermore,
we have established a Country Risk Committee, under which country
risk is managed through a country risk countermeasure system. The
country risk countermeasure system classifies countries with which
we conduct business into six categories based on risk money in
terms of the sum total of the amount of investments, advances, and
guarantees, and the amount of trade receivables, net of hedges, as
well as creditworthiness by country (country rating). Country risk
is controlled through the establishment of risk limits for each
category.
However, even with these risk hedging measures, it is difficult
to completely avoid risks caused by deterioration in the political,
economic, or social conditions in the countries or regions where
our customers, portfolio companies or we have ongoing projects.
Such eventualities may have an impact on our operating results.
(5) Business Investment Risk
We participate in the management of various companies by
acquiring equity and other types of interests. These business
investment activities are carried out with the aim of increasing
our commercial rights and deriving capital gains. However, we bear
various risks related to business investments, such as the possible
inability to recover our investments and exit losses and being
unable to earn the planned profits. Regarding the management of
business investment risk, in the case of new business investments,
we clarify the investment meaning and purpose, quantitatively grasp
the downside risk of investments and evaluate whether the return on
our investments made based on the characteristics of a business
exceeds the minimum expected rate of return. After investing, we
manage risk on an individual basis with respect to business
investments to achieve the investment goals set forth in the
Business Plan formulated every year. Furthermore, we apply Exit
Rules for the early sale of our equity interest or the liquidation
of the investee in order to efficiently replace assets in our
portfolio.
Notwithstanding these initiatives, although we follow strict
standards for the selection and management of investments, it is
difficult to completely avoid the risk of investments not
delivering the expected profits. Therefore, our operating results
could be affected by such actions as the withdrawal from an
investment.
(6) Risks Related to Specific Investments
(Investment in and Operations with Mitsubishi Motors
Corporation)
Following requests from Mitsubishi Motors Corporation (MMC), we
injected equity totaling 140.0 billion yen in MMC from June 2004
through January 2006 by subscribing to ordinary and preferred MMC
shares. Based on the Mitsubishi Motors Capital Restructuring Plan
announced by MMC on November 6, 2013, we invested part of MMC's
preferred shares that we own in an anonymous association, and
converted all the remaining shares into MMC's common shares on
March 5, 2014. Furthermore, we cooperate with MMC developing
business at sales companies mainly outside of Japan and across the
related value chain. Our risk exposure to MMC proper was
approximately 160.0 billion yen as of March 31, 2015. Our risk
exposure in connection with investments in businesses, finance,
trade receivables and other related business was approximately
190.0 billion yen as of March 31, 2015 (of which, risk exposure in
connection with the sales finance business was approximately 95.0
billion yen). Our total MMC-related risk exposure, including both
the aforementioned risk exposure to MMC proper and our risk
exposure to related business, was thus around 350.0 billion yen as
of March 31, 2015.
For the year ended March 2015, MMC posted consolidated sales of
2,180.7 billion yen, operating profit of 135.9 billion yen and a
net profit of 118.2 billion yen.
(Acquisition of Interest in Chilean Copper Asset)
On November 10, 2011, we completed the acquisition of 24.5% of
Anglo American Sur, S.A. (AAS) for US$5.39 billion (approximately
420.0 billion yen). AAS is a Chilean copper mining and smelting
company, wholly owned by Anglo American plc (AAC). The acquisition
is the result of a sales process initiated by AAC.
Thereafter, on August 23, 2012, we agreed to transfer 4.1% of
its 24.5% shareholding in AAS to AAC for the sum of US$895 million.
As a result of this deal, our risk exposure to this project on
March 31, 2015 was approximately 350.0 billion yen.
AAC sold a 29.5% shareholding in AAS to a joint venture between
Chile's state-run copper producer Corporación Nacional del Cobre de
Chile and Mitsui & Co., Ltd., comprising this 4.1% share from
us and 25.4% owned by AAC. Following completion of these
transactions, AAC has a 50.1% shareholding in AAS, the
aforementioned joint venture has a 29.5% shareholding, and we have
a 20.4% shareholding, thereby forming a strong 4-company
partnership.
AAS holds a significant portfolio of copper assets in Chile,
including the Los Bronces mine, the El Soldado mine, the Chagres
smelter and large-scale prospective exploration properties. (AAS'
total copper production was approximately 440,000 tonnes in
2014.)
We have designated the expansion of high-quality resource
investments and the expansion of its resource portfolio with
sustainable growth as an important area. We will continue to grow
its business in this area.
(7) Risks Related to Compliance
We are engaged in businesses in all industries through our many
offices around the world. These activities subject us to a wide
variety of laws and regulations. Specifically, we must comply with
the Companies Act, tax laws, Financial Instruments and Exchange
Act, anti-monopoly laws, international trade-related laws,
environmental laws and various business laws in Japan. In addition,
in the course of conducting business overseas, we must abide by the
laws and regulations in the countries and regions where we
operate.
We have established a Compliance Committee, which is headed by a
Chief Compliance Officer, who is at the forefront of our efforts to
raise awareness of compliance. This officer also directs and
supervises compliance with laws and regulations on a consolidated
basis.
Notwithstanding these initiatives, compliance risks cannot be
completely avoided. Failure to fulfill our obligations under
related laws and regulations could affect our businesses and
operating results.
(8) Risks From Natural and Other Types of Disasters
An unforeseeable event, such as a natural disaster like an
earthquake, heavy rain or flood, or infectious diseases such as a
new strain of influenza or a large-scale accident, that affects our
employees and damages our offices, facilities or systems could
hinder sales and production activities.
We have established adequate countermeasures, having implemented
an employee safety check system; formulated a disaster contingency
manual and a business contingency plan (BCP); implemented
earthquake-proof measures for buildings, facilities or systems
(including backup of data); introduced a program of disaster
prevention drills; prepared stocks of necessary goods; and
collaborated and shared information with offices, subsidiaries and
related companies both in Japan and overseas. However, no amount of
preparation of this sort can completely avoid the risk of damage
caused by a natural disaster. Accordingly, damage from a natural
disaster could affect our businesses and operating results.
Note:
Earnings forecasts and other forward-looking statements in this
release are based on data currently available to management and
certain assumptions that management believes are reasonable. Actual
results may therefore differ materially from these statements for
various reasons.
Subsidiaries and Affiliated Companies
Mitsubishi Corporation's subsidiaries and affiliates are diverse
organizations engaged in a wide variety of activities on a global
scale. We manufacture and market a wide range of products,
including energy, metals, machinery, chemicals and living
essentials through our domestic and overseas network. We are also
involved in diverse businesses by actively investing in areas such
as natural resources development and infrastructure, and we are
engaged in finance businesses. We are also engaged in diversified
businesses such as creating new business models in the fields of
new energy and the environment, and new technology-related
businesses. Some of our basic functions enhance the above
activities and enable us to provide various services to
customers.
Mitsubishi Corporation organizes business groups according to
products and services. Products and services are managed through
the business groups of the Parent company, subsidiaries, and
Affiliated companies (Subsidiaries: 398; Affiliated companies,etc.:
216).
The following table shows products and services by business
groups and major subsidiaries and affiliated companies.
PRODUCTS OR MAJOR SUBSIDIARIES MAJOR EQUITY-METHOD
SERVICES AFFILIATED COMPANIES
----------------------- ----------------------- ---------------------
GLOBAL New Energy, Diamond Generating Chiyoda Corporation
ENVIRONMENTAL Power Generation, Asia, Limited Guara Norte
& INFRASTRUCTURE Water, Transportation, Diamond Generating S.A.R.L
BUSINESS Plants, Corporation
Engineering, Diamond Generating
etc. Europe Limited
Diamond Transmission
Corporation
Limited
Mitsubishi Corporation
Machinery, Inc.
----------------- ----------------------- ----------------------- ---------------------
INDUSTRIAL Asset Management, Diamond Realty Mitsubishi Auto
FINANCE, Buyout Investments, Leasing Holdings
LOGISTICS Investment, Inc. Corporation
& DEVELOPMENT Leasing, Real MC Aviation Mitsubishi UFJ
Estate (Development Partners Inc. Lease & Finance
& Mitsubishi Corp.-UBS Company Ltd.
Finance), Logistics, Realty Inc.
etc. Mitsubishi Corporation
LT, Inc.
Mitsubishi Corporation
Urban
Development,
Inc.
----------------- ----------------------- ----------------------- ---------------------
ENERGY Petroleum Products, Cutbank Dawson Brunei LNG Sendirian
BUSINESS Carbon, Gas Resources Berhad
Crude Oil, Ltd. Japan Australia
LPG, LNG, etc. Diamond Gas LNG (MIMI) Pty
Sakharin B.V. Ltd
Diamond Gas MI Berau B.V.
Netherlands B.V.
Mitsubishi Shoji
Sekiyu Co., Ltd.
Petro-Diamond
Inc.
----------------- ----------------------- ----------------------- ---------------------
METALS Steel Products, JECO Corporation Anglo American
Coals, Iron Metal One Corporation Sur S.A.
Ore, Mitsubishi Corporation Compania Minera
Non-Ferrous RtM Japan Ltd. Del Pacifico
Metals & Minerals, Mitsubishi Development S.A.
Non-Ferrous Pty Ltd Iron Ore Company
Metal Products, of Canada
etc. Mozal S.A.R.L.
----------------- ----------------------- ----------------------- ---------------------
MACHINERY Industrial Machinery, Diamond Star FF Sheffe B.V.
Ships, Satellite Shipping Pte. GUARA MV23 B.V.
& Aerospace, Ltd. P.T. Krama Yudha
Automobiles, Isuzu UTE Australia Tiga Berlian
etc. Pty Ltd. Motors
Nikken Corporation
P.T. Dipo Star
Finance
Tri Petch Isuzu
Sales Co., Ltd.
The Colt Car
Company Ltd.
----------------- ----------------------- ----------------------- ---------------------
CHEMICALS Petrochemical Chuo Kagaku Co., Exportadora de
Products, Ltd. Sal, S.A de C.V.
Raw Material MC Ferticom Metanol de Oriente,
for Synthetic Co., Ltd. METOR, S.A.
Fiber, Mitsubishi Corporation Petronas Chemicals
Fertilizer, Life Science Aromatics Sdn.
Functional Chemicals, Limited Bhd.
Synthetic Raw Mitsubishi Shoji SPDC Ltd.
Materials and Chemical Corporation
Plastics, Mitsubishi Corporation
Food Additives, Plastics Ltd.
Feed Additives,
Pharmaceuticals
and Agricultural
Chemicals,
Electronic Materials,
etc.
----------------- ----------------------- ----------------------- ---------------------
LIVING Foods, Textiles, Cermaq Group Lawson, Inc.
ESSENTIALS Daily Necessities, AS Life Corporation
Healthcare, Indiana Packers MCC Development
Distribution, Corporation Corporation
Retail, etc. MC Healthcare,Inc.
Mitsubishi Shokuhin
Co., Ltd.
Princes Limited
----------------- ----------------------- ----------------------- ---------------------
OTHER Finance, Accounting, MC Finance Australia SIGMAXYZ Inc.
Human Resources Pty Ltd. Tata Consultancy
Management, MC Finance & Services Japan,Ltd.
General Affairs, Consulting Asia
IT, Insurance, Pte. Ltd.
etc. Mitsubishi Corporation
Financial &
Management Services
(Japan) Ltd.
Mitsubishi Corporation
Finance PLC
----------------- ----------------------- ----------------------- ---------------------
REGIONAL Handling of Mitsubishi Corporation
SUBSIDIARIES a broad range (Americas)
of Mitsubishi Corporation
products, similar International
to the Parent (Europe) Plc.
company in Mitsubishi Corporation
Japan (Shanghai) Ltd.
----------------- ----------------------- -----------------------
Note:
1. The total number of consolidated subsidiaries and
equity-method affiliates represents companies which the Company
directly consolidates or to which it applies the equity method. 617
companies directly consolidated by subsidiaries as of March 31,
2015 are excluded from this total.
2. Affiliated companies, etc. include joint ventures (jointly
controlled companies) and joint operations (jointly controlled
businesses).
3. The Global Environmental & Infrastructure Business
includes only the infrastructure-related businesses in the Global
Environmental & Infrastructure Business Group that are managed
and controlled as an independent business segment.
4. On July 1, 2014, IT Frontier Corporation (ITF) merged with
Tata Consultancy Services Japan Limited and Nippon TCS Solution
Center Limited,
with ITF as the surviving company. ITF was subsequently renamed
as Tata Consultancy Services Japan Limited.
Management Policies
New Strategic Direction
In May 2013, Mitsubishi Corporation developed its new management
strategy, entitled New Strategic Direction (charting a new path
toward sustainable growth). It went into effect in the year ended
March 2014. Amidst major changes in Mitsubishi Corporation's
business models and the external environment, we have abolished our
traditional "midterm management plan" concept of committing to
fixed financial targets three years in the future, in favor of a
long-term, circa 2020 growth vision. To realize this vision we have
set down our "New Strategic Direction," which consists of basic
concepts on management policy together with our business and market
strategies. New Strategic Direction seeks to recognize our value
and upside potential as a sogo shosha capable of "providing stable
earnings throughout business cycles by managing a portfolio
diversified by business model, industry, market and geography." As
we continuously optimize our portfolio, we will strive to realize
our growth vision and enhance the Mitsubishi Corporation's overall
corporate value.
-- Mitsubishi Corporation circa 2020: Double Business
Mitsubishi Corporation's ability to maintain stable earnings is
based on its improved concept of portfolio management.
Acknowledging both this strength and our company's upside
potential, we have set down our circa 2020 growth vision as
follows:
Resource (LNG, coking Double Equity Production
coal, copper): (compared to the year
ended March 2013)
Non-Resource: Double Earnings Level
(compared to the year
ended March 2013)
-- Mitsubishi Corporation circa 2020 Portfolio Vision:
Optimal Diversification & Winning Businesses
To intensively allocate management resources to current and
future "winning businesses" while ensuring optimal diversification,
we envision reducing the number of business sub-segments from the
current total of 47 to between 35 and 40.
To strengthen these "winning businesses," we also envision
reshaping the portfolio to consist of at least 10 business
sub-segments earning more than 20 billion yen in net income, and
between 10 and 15 business sub-segments earning between 10 and 20
billion yen in net income.
-- Management Policies
Our basic management policy is to create sustainable corporate
value through business activities and strengthen "winning
businesses" through the proactive reshaping of the portfolio in
order to win competition at a global scale.
Our investment policy is to accelerate divestments selectively
and free up capital for new investments, while continuing to invest
at a rate in line with the average of the 3 years under Midterm
Corporate Strategy 2012, in order to improve our earnings base.
Our financial policy is to increase our focus on financial
discipline including funding our investments within our own cash
flow assuming a base earnings level of 350.0 billion yen per annum.
Furthermore, we will strive to deliver a return on equity of 12-15%
in the medium to long term.
With regard to dividend policy, we will introduce a two-staged
dividend policy with a base dividend and a performance based
variable dividend in order to provide a stable return to
shareholders, regardless of changes in the external
environment.
-- Market Strategy / Business Strategy
In terms of our market strategy, we will accelerate our global
business development by leveraging our shift towards Asian markets,
which are gaining greater international presence not only as
resource and industrial markets, but as consumer markets as well.
Our objective will be to ensure sustainable growth by capturing
growth in Asia. This will entail securing global supply sources to
meet the increasing demand for raw materials and other commodities
in Asia, and establishing a local presence within the region,
through M&As, strategic alliances, and other proactive
initiatives.
In terms of our business strategy, our resources business will
be transitioning to the project development stage toward full
operation, which will primarily entail upgrading and expanding our
existing asset base (coking coal, copper, LNG and other core
assets). At the same time, we will refocus on productivity and
cost, be it capital or operational, to make more efficient use of
our management resources.
In non-resource fields, we will accelerate the shift of
management resources to current and future "winning businesses" to
realize our growth vision circa 2020, which aims to build multiple
robust and large-scale earnings drivers. While selectively growing
businesses (automotive, foods, retail, power generation and life
sciences), we will be transforming our business models, such as
developing downstream shale gas operations in North America and
shifting to industrial finance's asset management business.
Looking at the outlook for the global business environment, the
global economy is expected to remain shrouded in uncertainty, with
the economies of developed countries still on a path to recovery,
and signs of a slowdown in economic growth evident even in emerging
countries such as China, India and Brazil.
Conscious of these conditions, we will forge ahead with New
Strategic
Direction as we work to create an even stronger earnings base
and financial position. In tandem, through our diverse businesses,
we aim to create sustainable corporate value while helping solve
global problems. Moreover, guided by the spirit of the Three
Corporate Principles, which form our corporate philosophy, we are
determined to support economic activities and contribute to society
through our businesses.
Basic Concept Regarding Selection of Accounting Standards
Mitsubishi Corporation has applied IFRS from the fiscal year
ending March 31, 2014.
Consolidated Financial Statements
Mitsubishi Corporation and subsidiaries
1. CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS)
March 31, 2014 and 2015
ASSETS Millions of Yen
---------------------------------------- ----------------------
March 31, March 31,
2014 2015
---------------------------------------- ---------- ----------
Current assets
Cash and cash equivalents 1,332,036 1,725,189
Time deposits 142,705 156,090
Short-term investments 23,533 31,913
Trade and other receivables 3,751,865 3,473,352
Other financial assets 136,398 203,348
Inventories 1,287,959 1,301,547
Biological assets 18,059 69,600
Advance payments to suppliers 236,493 243,939
Assets classified as held for sale 55,874 77,045
Other current assets 285,121 326,667
---------- ----------
Total current assets 7,270,043 7,608,690
Non-current assets
Investments accounted for using the
equity method 2,833,576 3,220,455
Other investments 2,122,444 2,243,344
Trade and other receivables 623,686 603,908
Other financial assets 93,174 112,434
Property and equipment 2,509,918 2,395,261
Investment property 103,725 80,524
Intangible assets and goodwill 213,729 329,081
Deferred tax assets 45,822 38,728
Other non-current assets 85,008 141,941
---------- ----------
Total non-current assets 8,631,082 9,165,676
---------------------------------------- ---------- ----------
Total 15,901,125 16,774,366
---------------------------------------- ---------- ----------
Mitsubishi Corporation and subsidiaries
1. CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS)
March 31, 2014 and 2015
LIABILITIES AND EQUITY Millions of Yen
--------------------------------------------- ----------------------
March 31, March 31,
2014 2015
--------------------------------------------- ---------- ----------
Current liabilities
Borrowings 1,381,980 1,513,876
Trade and other payables 2,680,954 2,511,142
Other financial liabilities 110,557 161,916
Advances from customers 220,041 232,165
Income tax payables 86,251 41,204
Liabilities directly associated with
assets classified as held for sale 9,043 9,071
Other current liabilities 363,765 509,611
---------- ----------
Total current liabilities 4,852,591 4,978,985
Non-current liabilities
Borrowings 4,693,855 4,835,117
Trade and other payables 91,361 74,123
Other financial liabilities 32,966 25,851
Accrued pension and retirement benefits 65,452 69,482
Provisions 128,913 153,596
Deferred tax liabilities 462,391 544,483
Other non-current liabilities 34,226 37,174
---------- ----------
Total non-current liabilities 5,509,164 5,739,826
---------- ----------
Total liabilities 10,361,755 10,718,811
Equity
Common stock 204,447 204,447
Additional paid-in capital 265,356 266,688
Treasury stock (14,081) (7,796)
Other components of equity
Other investments designated as FVTOCI 625,151 677,672
Cash flow hedges (4,119) (18,609)
Exchange differences on translating
foreign operations 638,220 856,628
---------- ----------
Total other components of equity 1,259,252 1,515,691
Retained earnings 3,352,692 3,591,447
---------- ----------
Equity attributable to owners of
the Parent 5,067,666 5,570,477
Non-controlling interest 471,704 485,078
---------- ----------
Total equity 5,539,370 6,055,555
--------------------------------------------- ---------- ----------
Total 15,901,125 16,774,366
--------------------------------------------- ---------- ----------
Mitsubishi Corporation and subsidiaries
2. CONSOLIDATED STATEMENT OF INCOME (IFRS)
Years ended March 31, 2014 and 2015
Millions of Yen
------------------------------------------ ------------------------
Year ended Year ended
March 31, March 31,
2014 2015
------------------------------------------ ----------- -----------
Revenues 7,635,168 7,669,489
Costs of revenues (6,449,163) (6,459,595)
----------- -----------
Gross profit 1,186,005 1,209,894
Selling, general and administrative
expenses (952,898) (998,751)
Gains on investments 46,335 45,351
Reversal of impairment loss from
investment accounted for using the
equity method 94,247
Gains on sale and disposal of long-lived
assets 5,964 21,937
Impairment losses on long-lived assets (20,517) (115,208)
Other (expense) income -net (66,794) (45,411)
Finance income 197,231 204,920
Finance costs (31,728) (46,075)
Income from investments accounted
for using the equity method 168,356 203,818
----------- -----------
Income before income taxes 531,954 574,722
Income taxes (145,595) (168,331)
----------- -----------
Net income 386,359 406,391
Net income attributable to:
Owners of the Parent 361,359 400,574
Non-controlling interest 25,000 5,817
----------- -----------
386,359 406,391
Mitsubishi Corporation and subsidiaries
3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)
Years ended March 31, 2014 and 2015
Millions of Yen
-------------------------------------------- ------------------------------
Year ended Year ended
March 31,2014 March 31,2015
-------------------------------------------- -------------- --------------
Net income 386,359 406,391
Other comprehensive income (loss),
net of tax
Items that will not be reclassified
to net income:
Gains (losses) on other investments
designated as FVTOCI (7,177) 62,063
Remeasurement of defined benefit
pension plans 14,640 28,447
Share of other comprehensive income
of investments accounted for using
the equity method 7,969 (2,498)
-------------- --------------
Total 15,432 88,012
Items that may be reclassified to
net income:
Cash flow hedges (3,856) (6,588)
Exchange differences on translating
foreign operations 197,043 180,211
Share of other comprehensive income
of investments accounted for using
the equity method 88,345 46,799
-------------- --------------
Total 281,532 220,422
-------------- --------------
Total other comprehensive income,
net of tax 296,964 308,434
-------------- --------------
Total comprehensive income 683,323 714,825
Comprehensive income attributable
to:
Owners of the Parent 643,850 686,900
Non-controlling interest 39,473 27,925
-------------- --------------
683,323 714,825
-------------------------------------------- -------------- --------------
Mitsubishi Corporation and subsidiaries
4. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS)
Years ended March 31, 2014 and 2015
Millions of Yen
----------------------------------------------- ------------------------------
Year ended Year ended
March 31,2014 March 31,2015
----------------------------------------------- -------------- --------------
Common stock:
Balance, beginning of year 204,447 204,447
-------------- --------------
Balance, end of year 204,447 204,447
Additional paid-in capital:
Balance, beginning of year 261,987 265,356
Compensation costs related to stock
options 1,322 1,346
Sales of treasury stock upon exercise
of stock options (1,412) (1,379)
Equity transactions with non-controlling
interests and others 3,459 1,365
-------------- --------------
Balance, end of year 265,356 266,688
Treasury stock:
Balance, beginning of year (17,970) (14,081)
Sales of treasury stock upon exercise
of stock options 3,628 2,989
Purchases and sales-net 261 (60,013)
Cancellation _ 63,309
-------------- --------------
Balance, end of year (14,081) (7,796)
Other components of equity:
Balance, beginning of year 1,046,595 1,259,252
Other comprehensive income attributable
to owners of the Parent 282,491 286,326
Transfer to retained earnings (69,834) (29,887)
-------------- --------------
Balance, end of year 1,259,252 1,515,691
Retained earnings:
Balance, beginning of year 3,022,048 3,352,692
Net income attributable to owners
of the Parent 361,359 400,574
Cash dividends paid to owners of
the Parent (98,862) (127,437)
Sales of treasury stock upon exercise
of stock options (1,687) (960)
Cancellation of treasury stock _ (63,309)
Transfer from other components of
equity 69,834 29,887
-------------- --------------
Balance, end of year 3,352,692 3,591,447
-------------- --------------
Equity attributable to owners of
the Parent 5,067,666 5,570,477
Non-controlling interest:
Balance, beginning of year 414,668 471,704
Cash dividends paid to non-controlling
interest (23,328) (24,212)
Equity transactions with non-controlling
interest and others 40,891 9,661
Net income attributable to non-controlling
interest 25,000 5,817
Other comprehensive income attributable
to non-controlling interest 14,473 22,108
-------------- --------------
Balance, end of year 471,704 485,078
-------------- --------------
Total equity 5,539,370 6,055,555
----------------------------------------------- -------------- --------------
Mitsubishi Corporation and subsidiaries
5. CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS)
Years ended March 31, 2014 and 2015
Millions of Yen
----------------------------------------------------- ------------------------------
Year ended Year ended
March 31,2014 March 31,2015
----------------------------------------------------- -------------- --------------
Operating activities:
Net income 386,359 406,391
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 184,726 206,559
Gains on investments (46,335) (45,351)
Reversal of impairment loss from
investment accounted for using the
equity method _ (94,247)
Losses on long-lived assets 14,553 93,271
Finance income _net of finance costs (165,503) (158,845)
Income from investments accounted
for using the equity method (168,356) (203,818)
Income taxes 145,595 168,331
Changes in notes and accounts receivable_trade (62,304) 249,283
Changes in inventories (67,397) 71,875
Changes in notes, acceptance and
accounts payable_trade (95,022) (156,622)
Other_net 48,653 57,860
Dividends received 314,067 383,007
Interest received 77,398 79,706
Interest paid (48,360) (67,683)
Income taxes paid (136,498) (191,453)
-------------- --------------
Net cash provided by operating activities 381,576 798,264
-------------- --------------
Investing activities:
Expenditures for property and equipment (496,108) (307,539)
Proceeds from sales of property and
equipment 84,857 147,181
Expenditures for investment property (1,571) (17,586)
Proceeds from sales of investment
property 31,021 38,135
Purchases of investments accounted
for using the equity method (194,220) (167,203)
Proceeds from sales of investments
accounted for using the equity method 89,788 164,642
Acquisitions of businesses_net of
cash acquired (36,627) (154,449)
Proceeds from sales of businesses_net
of cash divested 10,264 8,889
Purchases of other investments (98,148) (76,359)
Proceeds from sales of other investments 299,232 79,448
Increase in loans receivable (93,441) (72,913)
Collection of loans receivable 124,890 213,007
Net increase in time deposits (20,439) (10,105)
-------------- --------------
Net cash used in investing activities (300,502) (154,852)
----------------------------------------------------- -------------- --------------
Millions of Yen
------------------------------
Year ended Year ended
March 31,2014 March 31,2015
------------------------------------------------ -------------- --------------
Proceeds from long-term debts_net
of issuance costs 845,112 1,080,358
Repayment of long-term debts (745,558) (1,097,693)
Payment of dividends (98,862) (127,437)
Payment of dividends to the non-controlling
interest (23,328) (24,212)
Payment for acquisition of subsidiary's
interests from the non-controlling
interest (5,556) (12,873)
Proceeds from sales of subsidiary's
interests to the non-controlling
interest 35,472 9,762
Net decrease (increase) in treasury
stock 790 (59,363)
-------------- --------------
Net cash used in financing activities (118,845) (305,334)
Effect of exchange rate changes on
cash and cash equivalents 23,887 55,075
-------------- --------------
Net (decrease) increase in cash and
cash equivalents (13,884) 393,153
-------------- --------------
Cash and cash equivalents, beginning
of year 1,345,920 1,332,036
-------------- --------------
Cash and cash equivalents, end of
year 1,332,036 1,725,189
------------------------------------------------ -------------- --------------
6. Notes Concerning Going Concern Assumption (IFRS)
None
7. Notes Concerning Consolidated Financial Statements (IFRS)
(1) Changes in Accounting Policies and Changes in Accounting
Estimates (IFRS)
The important accounting policies applied to the consolidated
financial statements for the year ended March 2015 are identical to
the accounting policies applied to the consolidated financial
statements for the previous fiscal year, except for the
following:
The adoption of new standards and interpretation guidelines,
including those below, had no significant impact on the
consolidated financial statements for the year ended March
2015.
New standards and interpretation guidelines applied
Standard and interpretation Outline
guideline
------------------------------ ------------------------------------
IFRIC 21 Levies Accounting treatment of liabilities
related to levies
------------------------------ ------------------------------------
IAS 36 Impairment Disclosure requirements for
of Assets the recoverable amount of impaired
(Amended) assets
------------------------------ ------------------------------------
IFRS 9 Financial Insutruments Accounting treatment and disclosure
(Hedge) requirements of hedge accounting
------------------------------ ------------------------------------
IAS 1 Presentation Clarification of presentation
of financial statements methods of financial statements,
(Amended) etc.
------------------------------ ------------------------------------
Significant changes in accounting estimates in the consolidated
financial statements for the year ended March 2015 are as
follows:
(Reversal of impairment losses on investments accounted for
using the equity method)
In the year ended March 2015, the Company recognized a gain from
reversal of the full amount of the accumulated impairment losses of
84,517 million yen on the Company's investment in Lawson, Inc., in
which the Company holds a 32.4% equity interest, reflecting the
strong quoted market prices of the shares and other factors.
The Company considered the investment in Lawson, Inc. to be an
independent cash-generating unit in the assessment of the reversal
and recognized the gain because the fair value less costs of
disposal based on quoted market prices (Level 1) exceeded the gross
carrying amount including the reversal of all accumulated
impairment losses. The gain from reversal was included in "reversal
of impairment losses from investment accounted for using the equity
method" in the Living Essentials Segment.
(Impairment losses on long-lived assets)
In the year ended March 2015, the Company recorded impairment
losses of 115,208 million yen in line with changes in the business
environment as "impairment losses on long-lived assets."
In the course of recognizing and measuring impairment losses,
the Company measured the recoverable amount primarily using value
in use. For the discount rate, the Company used a rate that
reasonably reflects the rate of return that is considered to be the
market-average rate that incorporates the risks specific to the
cash-generating units.
These impairment losses included impairment losses of 38,309
million yen on shale gas development assets in Canada held by
Cordova Gas Resources Ltd., impairment losses of 27,722 million yen
on gas exploration and development assets in Papua New Guinea held
by Diamond Gas Niugini B.V. and other entities, and impairment
losses of 15,787 million yen on assets held by MCX DUNLIN (UK)
Limited and MCX OSPREY (UK) Limited in connection with North Sea
oil field projects, which are consolidated subsidiaries in the
Energy Business Segment.
(2) Scope of Consolidation and Application of the Equity Method
(IFRS)
1) Number of consolidated subsidiaries and equity-method
affiliates
As of March As of March Change
31,2014 31,2015
--------------- ------------ ------------ -------
Consolidated
subsidiaries 409 398 -11
--------------- ------------ ------------ -------
Equity-method
affiliates 217 216 -1
--------------- ------------ ------------ -------
Total 626 614 -12
--------------- ------------ ------------ -------
Note: The total number of consolidated subsidiaries and
equity-method affiliates represents companies which the Company
directly consolidates or to which it applies the equity method. 602
companies and 617 companies directly consolidated by subsidiaries
as of March 31, 2014 and March 31, 2015, respectively, are excluded
from this total.
2) Main changes in the scope of consolidation and application of
the equity method
[Consolidated subsidiaries]
New: CERMAQ GROUP
(3) Significant Changes in Subsidiaries During the Period
(Changes in Specified Subsidiaries Causing Changes in Scope of
Consolidation) (IFRS)
From the year ended March 2015, MCX GULF OF MEXICO, LLC is
excluded from the scope of consolidation due to its extinguishment
following the execution of an absorption-type merger in which MCX
EXPLORATION (USA), LLC, a group company of Mitsubishi International
Corporation (U.S.A.), was the surviving company and MCX GULF OF
MEXICO, LLC was the extinguished company. Mitsubishi International
Corporation (U.S.A.) is a U.S. subsidiary of Mitsubishi
Corporation.
(4) Segment Information (IFRS)
Year ended March 31, 2014
Millions of Yen
-------------- --------------------------------------------------------------------------------------------------------------------------------------
Global Industrial Energy Metals Machinery Chemicals Living Total Other Adjustments Consolidated
Environmental Finance, Business Essentials and
& Logistics Eliminations
Infrastructure &
Business Development
-------------- -------------- ----------- --------- --------- --------- --------- ---------- ---------- --------- ------------ ------------
Gross
profit 28,493 67,168 62,150 241,898 186,680 102,589 480,928 1,169,906 22,846 (6,747) 1,186,005
Income
(loss)
from
investments
accounted
for
using
the
equity
method 18,433 16,189 65,743 1,193 30,026 17,290 22,649 171,523 (3,516) 349 168,356
Net
income
attributable
to
owners
of the
Parent 16,156 29,674 118,574 8,047 98,835 21,689 59,155 352,130 10,005 (776) 361,359
Total
assets 866,996 1,031,393 2,464,014 4,703,943 1,891,157 1,008,397 2,662,090 14,627,990 3,143,721 (1,870,586) 15,901,125
-------------- -------------- ----------- --------- --------- --------- --------- ---------- ---------- --------- ------------ ------------
Year ended March 31, 2015
Millions of Yen
-------------- --------------------------------------------------------------------------------------------------------------------------------------
Global Industrial Energy Metals Machinery Chemicals Living Total Other Adjustments Consolidated
Environmental Finance, Business Essentials and
& Logistics Eliminations
Infrastructure &
Business Development
-------------- -------------- ----------- --------- --------- --------- --------- ---------- ---------- --------- ------------ ------------
Gross
profit 31,608 75,692 59,155 199,347 197,280 110,870 525,354 1,199,306 13,710 (3,122) 1,209,894
Income
(loss)
from
investments
accounted
for
using
the
equity
method 28,910 33,096 71,598 2,704 32,244 18,756 20,566 207,874 (3,729) (327) 203,818
Net
income
attributable
to
owners
of the
Parent 20,448 40,126 82,262 13,856 91,301 31,360 120,514 399,867 (14,931) 15,638 400,574
Total
assets 996,202 895,759 2,253,567 4,796,811 1,999,106 975,467 3,144,562 15,061,474 3,555,574 (1,842,682) 16,774,366
-------------- -------------- ----------- --------- --------- --------- --------- ---------- ---------- --------- ------------ ------------
NOTES:
*1. "Other" represents the corporate departments which primarily
provide services and operational support to the Company and
Affiliated companies.
This column also includes certain revenues and expenses from
business activities related to financing and human resource
services that are not allocated to reportable operating
segments.
Unallocated corporate assets categorized in "Other" consist
primarily of cash, time deposits and securities for financial and
investment activities.
*2. "Adjustments and Eliminations" includes certain income and
expense items that are not allocated to reportable operating
segments and intersegment eliminations.
*3. The Company determines the infrastructure-related business
of the "Global Environmental & Infrastructure Business Group"
as an operating segment and is thus presented as the Global
Environmental & Infrastructure Business. The
environment-related business categorized in the "Other."
*4. Effective from April 1 and July 1, 2014 the part of
environment-related business in the "Other" was transferred to the
"Global Environment & Infrastructure Business." With this
change, the consolidated financial position and the results of
operations of related reportable operating segments for the year
ended March 31, 2014 have also been reclassified accordingly.
(5) Earnings Per Share (IFRS)
Reconciliations of the basic and diluted net income attributable
to owners of the Parent per share are as follows:
Year ended Year ended
March 31,2014 March 31,2015
----------------------------------------- -------------- --------------
Net income attributable to owners
of the Parent per share (Yen)
Basic 219.30 246.39
Diluted 218.80 245.83
Numerator (Millions of Yen):
Net income attributable to owners
of the Parent 361,359 400,574
Denominator (Thousands of shares):
Basic weighted average common shares
outstanding 1,647,786 1,625,754
Effect of dilutive securities:
Stock options 3,794 3,720
-------------- --------------
Diluted outstanding shares 1,651,581 1,629,474
----------------------------------------- -------------- --------------
(6) Subsequent Events (IFRS)
The Company resolved at the Board of Directors meeting held on
May 8, 2015 that it would acquire its own shares of stock based on
the provisions of Article 156 of the Companies Act that is applied
in an alternative interpretation of Article 165, Section 3 of the
Companies Act.
The repurchases of shares are to be executed as describe
below;
Type of shares: Ordinary shares of the Company
No. of shares to be repurchased: Up to 45 million shares (2.8%
of the common shares outstanding)
Total value of stock repurchased: Up to 100,000 million of yen
Period of acquisitions: May 11, 2015 - August 31, 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GSGDUSXGBGUI
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