Flash Report
Consolidated Basis
Results for the Third Quarter of Fiscal 2019
(April 1, 2019―December 31, 2019)＜under IFRS＞
February 7, 2020
Nippon Steel Corporation
Tokyo, Nagoya, Sapporo, Fukuoka stock exchanges
5401
https://www.nipponsteel.com/en/index.html
Eiji Hashimoto, Representative Director and President
Fumiaki Ohnishi, General Manager, Public Relations Center+81-3-6867-2135, 2146, 2977, 3419
February 13, 2020
Yes
Yes (for investment analysts)

Company name:
Stock listing:Code number:
URL:
Representative:
Contact:
Telephone:
Scheduled date to submit Securities Report:
Scheduled date to pay dividends:
Preparation of supplemental explanatory materials:
Holding of quarterly financial results meeting:（All amounts have been truncated to the nearest millions of Japanese yen.）

1. Consolidated Operating Results and Financial Position through the Third Quarter of Fiscal 2019
(April 1, 2019―December 31, 2019)(1) Consolidated Operating Results (Accumulated)（Percentage figures are changes from the same period of the previous fiscal year.）
Revenue

Third quarter of Fiscal 2019

Millions ofyen
4,476,014

Third quarter of Fiscal 2018

4,575,280

Business profit (*)
%

(2.2)

Millions ofyen(279,300)―

263,377%

Operating profit%―

Millions ofyen(372,502)―

241,028

Profit attributableto owners of theparentTotal comprehensive
incomeMillions ofyen%Millions ofyen

Third quarter of Fiscal 2019

(357,379)―

Third quarter of Fiscal 2018

206,633―

Profit before
income taxes

Profit%―Millions ofyen(385,629)%―

Millions ofyen(351,561)―

228,484―

208,151―

Basic earnings
per share

Diluted earnings
per share

%

Yen

Yen

(361,388)―(388.23)―

40,934―234.11――(*)Business Profit on Consolidated Statements of Profit or Loss indicates the results of sustainable business activities, and is an importantmeasure to compare and evaluate the Company’s consolidated performance continuously. It is defined as being deducted Cost of sales,
Selling general and administrative expenses and Other operating expenses from Revenue, and added Share of profit in investments
accounted for using the equity method and Other operating income. Other operating income and expenses is composed mainly of Dividend
income, Foreign exchange gains or losses, Losses on disposal of fixed assets.

(2) Consolidated Financial Position
Total assets

Total equity

Total equity attributable toowners of the parent

Ratio of total equity
attributable to owners of theparent to total assets

Millions of yen

Millions of yen

Millions of yen%

Third quarter of Fiscal 20197,759,638

3,179,062

2,819,003

36.3

Fiscal 2018

8,049,528

3,607,367

3,230,788

40.1

2. Dividends
Dividends per share
End of first quarterEnd of second quarterEnd of third quarterEnd of fiscal year

Fiscal year

Yen

Yen

Yen

Yen

Yen

Fiscal 2018

―

40.00

―

40.00

80.00

Fiscal 2019

―

10.00

―
0.00

10.00

Fiscal 2019 (Forecasts)

Notes: 1. Whether the dividends forecasts under review have been revised: Yes

3. Consolidated Financial Forecasts for Fiscal 2019 (April 1, 2019―March 31, 2020)
Revenue

Fiscal 2019

（Percentage figures are changes from the same period of the previous fiscal year.）
Profit attributable to
Basic earnings per shareowners of the parent
Millions of yen%
Millions of yen%
Yen
Business profit

Millions of yen%

5,900,000(4.5)(310,000)―(440,000)―(478.00)

Notes: 1. Whether the consolidated financial forecasts for fiscal 2019 under review have been revised: Yes
2. For further details, please refer to page 5, “1. Qualitative Information for the Third quarter of Fiscal 2019 (2) Explanation of Information on
Future Estimates, Including Consolidated Earnings Forecasts.”* Notes(1) Changes in significant subsidiaries during the period: None
(2) Changes in accounting policies and changes in accounting estimates(a) Changes in accounting policies required by IFRS: Yes(b) Changes other than those in (a) above: None(c) Changes in accounting estimates: None
Note: For further details, please refer to page 12, “2. Quarterly Condensed Consolidated Financial Statements and Major Notes(4) Notes to the Quarterly Condensed Consolidated Financial Statements (Changes in Accounting Policies Required by
IFRS).”(3) Number of shares outstanding (common shares)(a) Number of shares outstanding at the end of the period (including treasury stock)
Third quarter of Fiscal 2019
950,321,402 sharesFiscal 2018
950,321,402 shares(b) Number of treasury stock at the end of the period
Third quarter of Fiscal 2019
29,631,273 sharesFiscal 2018
29,797,955 shares(c) Weighted average number of shares outstanding
Third quarter of Fiscal 2019
920,536,633 shares
Third quarter of Fiscal 2018882,602,690 shares* This quarterly flash report is not subject to quarterly review procedures.
* Explanation of the appropriate use of performance forecasts and other related items(Explanation of the appropriate use of performance forecasts)
The forward-looking statements included in this flash report are based on the assumptions, forecasts, and plans of the Company as of thedate on which this document is made public. The Company’s actual results may differ substantially from such statements due to various
risks and uncertainties.

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019

Index of Attached Documents
1. Qualitative Information for the Third quarter of Fiscal 2019 ......................................................................................2(1) Explanation of Operating Results ...........................................................................................................................2(2) Explanation of Information on Future Estimates, Including Consolidated Earnings Forecasts ..............................5
2. Quarterly Condensed Consolidated Financial Statements and Major Notes................................................................7(1) Quarterly Condensed Consolidated Statements of Financial Position ....................................................................7(2) Quarterly Condensed Consolidated Statements of Profit or Loss andQuarterly Condensed Consolidated Statements of Comprehensive Income or Loss ..............................................9(3) Quarterly Condensed Consolidated Statements of Changes in Equity ..................................................................10(4) Notes to the Quarterly Condensed Consolidated Financial Statements ................................................................12(Going Concern Assumption) ............................................................................................................................12(Changes in Accounting Policies Required by IFRS) ........................................................................................121

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019

1. Qualitative Information for the Third Quarter of Fiscal 2019(1) Explanation of Operating Results
Global and Domestic Economic Conditions in the Third Quarter of Fiscal 2019
The global economy was characterized by ongoing solid consumer spending in the United States, but slower consumer
spending and overall economic growth in China, on the back of the U.S.-China trade friction, where the government
continued investment in infrastructure and other economic stimulus measures. In Japan, employment and income
conditions remained stable, but the trade friction and a slowdown in overseas demand worsened business conditions in
the manufacturing industry and the sense of economic stagnation intensified.

Operating Results by Business Segment in the Third Quarter Cumulative Period (Nine Months) of Fiscal 2019
The Nippon Steel Corporation Group’s business segments strived to respond to the changing business environment andto improve revenue and profit. An overview of operating results by business segment is shown below.
(Billions of yen)
Revenue
3Q FY2018

3Q FY2019
Steelmaking and Steel Fabrication
Engineering and Construction
Chemicals and Materials*
System Solutions
Total
Adjustments
Condensed consolidated total

Business Profit

3,988.8
239.4
169.3
198.9
4,596.5(120.5)
4,476.0

4,043.2
253.7
191.0
190.1
4,678.3(103.0)4,575.2

3Q FY2019

3Q FY2018(315.3)
8.3
17.3
20.2
(269.4)(9.8)(279.3)

220.4
5.7
19.7
18.4
264.4
(1.0)
263.3

* The Chemicals segment and New Materials segment were merged to form the Chemicals and Materials segment after Nippon Steel
Chemical & Material Co., Ltd. was established in October 2018 following the merger of Nippon Steel & Sumikin Chemical Co., Ltd. andNippon Steel & Sumikin Materials Co., Ltd.
The figures for the Chemicals and Materials segment in fiscal 2018 are calculated based on the new segmentation.

Steelmaking and Steel Fabrication
Steel demand in Japan and abroad lacked strength, particularly for flat steel products, partly due to a decline inproduction of consumer goods driven by concern about deteriorating economic conditions in China. The Steelmaking
and Steel Fabrication segment experienced a decline in the level of activities in Japan, compared to the previous fiscal
year, in areas related to exports and capital expenditures. Steel prices in Japan have softened somewhat, and steel prices
overseas, particularly in ASEAN, have weakened partly because steel products have flowed in from Russia and India
while demand has also slowed down.

In these conditions, profit declined year-on-year in the third quarter of fiscal 2019. There was a recovery from theimpacts of torrential rains, typhoons, and earthquakes in the previous fiscal year and improving costs and long-term
contractual prices were factors that boosted profit. Despite this, business profit was adversely affected by factors
including lower production and shipment volume, higher raw material prices, falling prices for steel products in overseas
markets, disasters that occurred in fiscal 2019 (a power outage at the Kimitsu Works due to lightning strikes in Chiba, afire at the Nippon Steel Nisshin Kure Works No. 1 steelmaking plant, and the impact of Typhoon 15 (Faxai) on the2

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019

Kimitsu Works again and other facilities), an inventory valuation difference, and deterioration of earnings at groupcompanies.

In addition, the Company booked impairment losses based on current business conditions and the ongoing losses being
reported by the Kashima Works, Nagoya Works, and Hirohata Works.

The Steelmaking and Steel Fabrication segment recorded revenue of ¥3,988.8 billion (¥4,043.2 billion in the same
period of the previous fiscal year) and business loss of ¥315.3 billion (business profit of ¥220.4 billion).

Engineering and Construction
Nippon Steel Engineering Co., Ltd. builds and operates plants in the steelworks, environmental, and energy fields andprovides services utilizing comprehensive engineering technology worldwide for various types of structures, including
large steel structure buildings, ultra-high-rise buildings, and pipeline facilities. In the third quarter cumulative period of
fiscal 2019, the company achieved steady progress in projects in various fields through strict project execution
management and recorded robust sales. In addition to favorable sales in line with the completion of a number of projects
in Japan, an improvement in earnings of its affiliated companies and other factors contributed to the third quarter results.

The Engineering and Construction segment recorded revenue of ¥239.4 billion (¥253.7 billion in the same period of theprevious fiscal year) and business profit of ¥8.3 billion (¥5.7 billion).

Chemicals and Materials
Nippon Steel Chemical & Material Co., Ltd. suffered from declining demand for needle coke used in graphite electrodes,
which had achieved strong sales, and experienced a continued sluggish market for styrene monomer. In the functional
materials business, sales growth slowed for circuit board materials for smartphones but the company started mass
production of a new grade of materials for 5G (fifth generation wireless technology) systems, demand for which is
expected to increase. Moreover, sales of metallic foils used in HDD suspensions grew thanks to an increase in demandfor hard disk drives accompanying a recovery in investment in data centers.

The Chemicals and Materials segment recorded revenue of ¥169.3 billion (¥191.0 billion in the same period of theprevious fiscal year) and business profit of ¥17.3 billion (¥19.7 billion).

System Solutions
Nippon Steel Solutions Co., Ltd. (NS Solutions) provides advanced solution services in the planning, configuration,
operation, and maintenance of IT systems for clients in a wide range of business fields to keep pace with changing
business environments. Business conditions remained favorable as customers continued to actively invest in IT in
pursuit of digital transformation (DX). The segment continued to aggressively promote sales of solutions incorporating
IoT and worked on development for sales of 5G-related solutions.

3

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019The System Solutions segment recorded revenue of ¥198.9 billion (¥190.1 billion in the same period of the previous
fiscal year) and business profit of ¥20.2 billion (¥18.4 billion).

Revenue and Profit for the Third Quarter (Nine Months) of Fiscal 2019
In the third quarter cumulative period (nine months) of fiscal 2019, Nippon Steel recorded revenue of ¥4,476.0 billion(¥4,575.2 billion in the same period of the previous fiscal year), business loss of ¥279.3 billion (business profit of¥263.3 billion). In addition, due to the posting of losses on reorganization, the partial reversal of deferred tax assets, andother factors, the Company recorded loss attributable to owners of the parent of ¥357.3 billion (profit attributable toowners of the parent of ¥206.6 billion).

4

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019(2) Explanation of Information on Future Estimates, Including Consolidated Earnings Forecasts
Consolidated Earnings Forecasts
Nippon Steel expects the global economy to continue slowing amid increased uncertainty stemming from protectionist
measures and other factors. The outlook for the Japanese economy is also very uncertain, reflecting the potential impact
of global economic conditions and concerns over the deteriorating consumer mindset accompanying the consumption
tax hike.

Domestic and overseas steel demand is experiencing heightened downside risk in all fields associated with the uncertain
global economic outlook. Global steel demand and prices continue to require monitoring, together with domestic
conditions, because of uncertainties in the overseas outlook.

Concerning consolidated earnings for fiscal 2019, while Nippon Steel has continued to advance measures to enhance theoverall stability of its facilities and operations and to ensure steady improvements in costs and long-term contractual
prices, it has substantially lowered its forecasts compared to the previous forecasts announced at the release of its firsthalf earnings results (on November 1, 2019) to business loss of ¥310.0 billion, mainly due to lower production andshipment volume, deteriorating earnings at group companies, and the recording of impairment losses on operating assets.
In addition, due to the posting of losses on reorganization, the partial reversal of deferred tax assets, and other factors,
loss attributable to owners of the parent of ¥440.0 billion is expected. .

Basic Profit Distribution Policy and the Year-End Dividend Distribution
Nippon Steel’s basic profit distribution policy is to pay dividends from distributable funds at the end of the first half
(interim) and second half (year-end) of the fiscal year, in consideration of the consolidated operating results and suchfactors as capital requirements for investment and other activities aimed at raising corporate value and performanceprospects while also considering the financial structure of the Company on both consolidated and non-consolidatedbases. The Company has adopted a consolidated annual dividend payout ratio target of around 30% as the benchmark
for the “payment of dividends from distributable funds in consideration of the consolidated operating results.” The levelof the first half dividend is determined based on consideration of interim performance figures and forecasts for the full
fiscal year performance.

Regarding the dividend distribution from retained earnings for the end of the fiscal year, while a year-end dividend
distribution plan had not been determined at the first half earnings announcement (November 1, 2019), the Company has
decided that, in accordance with the policy described above and after giving due consideration to full-year forecasts, itplans to forgo a year-end dividend payment (the dividend for the full year will therefore be ¥10 per share).

In the medium- to long-term, Nippon Steel has to expect a decline in steel demand, associated with factors such as
Japan’s declining and aging population and expanded overseas production by our Japanese customers, as well as
intensified competition in the overseas market. In the meantime, Nippon Steel Group’s major steelworks have been
operating for over 50 years since construction and are in need of large-scale investment for renewal in order to maintain5

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019

their current production capacity. In light of such a difficult environment, the Company decided and announced today
the “Implementation of Production Facility Structural Measures and Management Reform Measures”.

Based on the production facility structure decided at this time, the Company will build up synergy effects fromsteelworks integration and effects of improvement in labor productivity and variable cost through rationalization.
Moreover, regarding the new production facility structure as the first step, it will continue to consider establishing amore competitive optimal production structure, and at the same time carry out the selection and concentration in capitalspending, ascertain factors such as future supply-demand balance in Japan and overseas, and our potential profit trend
under that balance, and implement measures according to changing business environment.

Nippon Steel will concurrently make strategic investments in growing business fields and regions. This includes
investments in the enhancement of the supply network for ultra-high-tensile steel sheets, the expansion of production
capacity and enhancement of the quality of electrical steel sheet, and the acquisition of Essar Steel India Limited. The
Company also intends to accelerate the reorganization of or withdrawal from unprofitable overseas businesses with noprospects of a future profit recovery. These are some of the various measures to enhance the profit base which are
determined to be implemented.
Nippon Steel will continue efforts to rebuild its “strength in manufacturing” and improve its long-term contractual prices.
At the same time, through implementation of the various measures, which were decided today, the Company will strive
to quickly reestablish the profit base and improve the financial position in order to return profits to shareholders.

6Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019

2. Quarterly Condensed Consolidated Financial Statements and Major Notes(1) Quarterly Condensed Consolidated Statements of Financial Position

March 31, 2019ASSETS
Current assets :Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets(Millions of Yen)
December 31, 2019

163,176
968,333
1,567,116
16,915
143,669

260,184
755,555
1,586,117
208,443
136,476

2,859,211

2,946,777

3,246,669―
52,803
106,131
793,146
812,668
82,24788,357
8,292

2,787,292
81,28947,83793,885890,258
665,549
72,331
166,991
7,424

Total non-current assets

5,190,316

4,812,861

Total assets

8,049,528

7,759,638

Total current assets
Non-current assets :Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Investments accounted for using the equity method
Other financial assets
Defined benefit assets
Deferred tax assets
Other non-current assets

7

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019

(Millions of Yen)
March 31, 2019

LIABILITIES

December 31, 2019

Current liabilities :Trade and other payables
Bonds, borrowings and lease liabilities
Other financial liabilities
Income taxes payable
Other current liabilities

1,611,403
515,355
1,017
38,71934,042

1,407,128
590,575
1,602
18,06542,701

Total current liabilities

2,200,538

2,060,074

Non-current liabilities :Bonds, borrowings and lease liabilities
Other financial liabilities
Defined benefit liabilities
Deferred tax liabilities
Other non-current liabilities

1,853,876
6,501
186,755
28,253
166,235

2,142,886
4,809
169,30231,531
171,972

Total non-current liabilities

2,241,622

2,520,502

Total liabilities

4,442,160

4,580,576

419,524
393,9172,300,175(58,831)
176,000

419,524
394,308
1,964,629(58,487)
99,0273,230,788

2,819,003

376,579

360,059

Total equity

3,607,367

3,179,062

Total liabilities and equity

8,049,528

7,759,638

EQUITY
Common stock
Capital surplus
Retained earnings
Treasury stock
Other components of equity
Total equity attributable to owners of the parent
Non-controlling interests

8

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019(2) Quarterly Condensed Consolidated Statements of Profit or Loss andQuarterly Condensed Consolidated Statements of Comprehensive Income or Loss
Quarterly Condensed Consolidated Statements of Profit or Loss
Third quarter of
Fiscal 2018
Revenue
Cost of sales
Gross profit(Millions of Yen)
Third quarter of
Fiscal 2019

4,575,280(3,976,280)
599,000

4,476,014(4,023,034)
452,980

Selling, general and administrative expenses
Share of profit in investments accounted for using the equity method
Other operating income
Other operating expenses
Business profit(loss)(421,620)
67,04758,569(39,619)
263,377(430,973)
37,91863,855(403,080)(279,300)

Losses on natural disaster
Losses on reorganization
Operating profit(loss)(22,349)―
241,028―(93,202)(372,502)

Finance income
Finance costs
Profit(loss) before income taxes

4,481(17,024)
228,484

4,885(18,013)(385,629)

Income tax expense
Profit(loss)(20,333)
208,151

34,068(351,561)

Profit(loss) attributable to :Owners of the parent
Non-controlling interests

206,633
1,518(357,379)
5,818

Earnings(loss) per share
Basic earnings(loss) per share (Yen)234.11(388.23)

Quarterly Condensed Consolidated Statements of Comprehensive Income or Loss
Third quarter of
Fiscal 2018
Profit(loss)
208,151
Other comprehensive income
Items that cannot be reclassified to profit or loss
Changes in fair value of financial assets measured at fair value(111,935)
through other comprehensive income
Remeasurements of defined benefit plans(8,210)Share of other comprehensive income of investments accounted(2,653)for using the equity method
Subtotal(122,798)(Millions of Yen)
Third quarter of
Fiscal 2019
(351,561)

Items that might be reclassified to profit or loss
Changes in fair value of cash flow hedges
Foreign exchange differences on translation of foreign operations
Share of other comprehensive income of investments accounted
for using the equity method
Subtotal
Total other comprehensive income, net of tax
Total comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

913,48016,511
2,487
32,480(535)(23,949)(515)(26,536)(19,933)(15,255)(44,418)(42,306)(167,217)
40,934(9,826)(361,388)

44,818(3,884)(366,418)
5,030

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019(3) Quarterly Condensed Consolidated Statements of Changes in Equity
Third quarter of Fiscal 2018

(Millions of Yen)
Equity attributable to owners of the parent

Balance at beginning of the year

CommonCapitalRetainedstock

surplusearnings

419,524

386,867

Other components of equity
Changes in fairvalue of financial
Treasury
assets measured at Remeasurements offair value throughdefined benefit
stock
other
plans
comprehensive
income(132,162)
334,701―

2,141,658

Changes of the year
Comprehensive income
Profit(loss)

206,633

Other comprehensive income
Total comprehensive income

―

―

―

206,633(110,268)(8,535)(110,268)(8,535)(10,469)

8,535

Transactions with owners and others
Cash dividends(70,710)Purchases of treasury stock(41)

Disposals of treasury stock0

Changes in ownership interests in subsidiaries

4(3,077)

Transfer from other components of equity
to retained earnings

1,933

Changes in scope of consolidation
Subtotal
Balance as of December 31, 2018(3)―

(3,076)(68,777)(40)(10,469)8,535

419,524

383,791

2,279,515(132,202)

213,963―

Equity attributable to owners of the parent
Other components of equity

Changes in fairvalue of cash
flow hedges

Foreignexchangedifferences ontranslation offoreign
operations(6,600)(6,998)321,101―

206,633

1,518

208,151

Other comprehensive income(211)(42,798)(161,815)(161,815)(5,402)(167,217)

Total comprehensive income(211)(42,798)(161,815)

44,818(3,884)40,934(7,480)(78,190)

Balance at beginning of the year

Total equity
attributable toowners of theparentTotal

Non-controllinginterests

3,136,991

387,905

Total equity

3,524,896

Changes of the year
Comprehensive income
Profit(loss)

Transactions with owners and others
Cash dividends―(70,710)Purchases of treasury stock

―

(41)

Disposals of treasury stock―

4

Changes in ownership interests in subsidiaries―(3,077)(1,933)―

Transfer from other components of equity
to retained earnings

Balance as of December 31, 20184
(6,498)(9,576)
―

―

(3)

(182)

(185)

―

―

(1,933)(73,827)(14,161)(87,988)(6,811)(49,797)

157,353

3,107,982

369,859

3,477,842

Changes in scope of consolidation
Subtotal(41)

10Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019

Third Quarter of Fiscal 2019

(Millions of Yen)
Equity attributable to owners of the parent

Balance at beginning of the year

CommonCapitalRetainedstock

surplusearnings

419,524

393,917

Other components of equity
Changes in fairvalue of financial
Treasury
assets measured at Remeasurements offair value throughdefined benefit
stock
other
plans
comprehensive
income(58,831)
248,020―2,300,175

Changes of the year
Comprehensive income
Profit(loss)(357,379)

Other comprehensive income
Total comprehensive income

―

―

―

(357,379)

12,893

17,392

12,893

17,392(50,541)(17,392)

Transactions with owners and others
Cash dividends(46,101)

Purchases of treasury stock(38)

Disposals of treasury stock(104)

Changes in ownership interests in subsidiaries

494

Transfer from other components of equity
to retained earnings

623

67,934

Changes in scope of consolidation
Subtotal
Balance as of December 31, 2019

(241)
―

390

21,833

344(50,541)(17,392)

419,524

394,308

1,964,629(58,487)

210,371―

Equity attributable to owners of the parent
Other components of equity

Changes in fairvalue of cash
flow hedges

Foreignexchangedifferences ontranslation offoreign
operations(4,433)(67,585)

176,000

3,230,788

376,579

3,607,367―(357,379)

5,818(351,561)

Other comprehensive income

631(39,956)(9,038)(9,038)(788)(9,826)

Total comprehensive income

631(39,956)(9,038)(366,418)

5,030(361,388)(8,035)(54,136)

Balance at beginning of the year

Total equity
attributable toowners of theparentTotal

Non-controllinginterests

Total equity

Changes of the year
Comprehensive income
Profit(loss)

Transactions with owners and others
Cash dividends―(46,101)

Purchases of treasury stock

―

(38)

Disposals of treasury stock―

519

Changes in ownership interests in subsidiaries―

494(67,934)―

Transfer from other components of equity
to retained earnings

Balance as of December 31, 2019

519
(320)

173
―

―

(241)

(13,194)――(67,934)(45,366)(21,550)(66,916)(3,802)(107,541)

99,0272,819,003

360,059

3,179,062

Changes in scope of consolidation
Subtotal(38)

11(13,435)

Nippon Steel Corporation (5401)
The Third Quarter of Fiscal 2019（4）Notes to the Quarterly Condensed Consolidated Financial Statements（Going Concern Assumption）
None（Changes in Accounting Policies Required by IFRS）
From the beginning of the first quarter of Fiscal 2019 (April 1, 2019－June 30, 2019), the Group has adopted IFRS 16“Leases” (Issued in January 2016)(“IFRS 16”). In adopting IFRS 16, the Group has applied an approach of recognizing the
cumulative effect of applying the standard as an adjustment to the beginning balance at the date of initial application, which
is approved as a transitional measure.
In adopting IFRS 16, the Group has elected to apply the practical expedient detailed in paragraph C3 of IFRS 16 in
determining whether a contract is, or contains, a lease by maintaining its previous assessment under IAS 17 “Leases” (“IAS17”) and IFRIC 4 “Determining whether an Arrangement Contains a Lease”. On and after the date of initial application, theGroup has determined whether a contract is, or contains, a lease in accordance with IFRS 16.
For leases previously classified as finance leases under IAS 17 and in which the Group is a lessee, the carrying amounts of
the right-of-use assets and lease obligations as of the date of initial application have been respectively measured at thecarrying amounts of the leased assets and lease liabilities under IAS 17 immediately before the date of initial application.
For leases previously classified as operating leases under IAS 17 and in which the Group is a lessee, the Group hasrecognized the right-of-use assets and lease liabilities as of the date of initial application. The lease liabilities are measured
at the present value of the minimum lease payments as of the date of initial application discounted by the lessee’s
incremental borrowing rate. The weighted average of the incremental borrowing rate is 0.5%. The right-of-use assets aremeasured at the carrying amounts computed under the assumption of applying the standard at the commencement date of
the contract. The discount rate applied is the lessee’s incremental borrowing rate as of the date of initial application.
The breakdown of difference between the amount of non-cancellable operating lease contracts under IAS 17 as of the endof the Fiscal 2018 and the amount of lease liabilities recognized in the Quarterly Condensed Consolidated Statements ofFinancial Position as of the date of initial application is as follows.
(Millions of Yen)

Non-cancellable operating lease contracts as of March 31, 2019
Finance lease liabilities as of March 31, 2019Non-cancellable lease contracts effective on or after the date of initial application
Lease liabilities as of the date of initial application (April 1, 2019)45,80046,754(12,226)
80,328The right-of-use assets recognized at the date of initial application in the Quarterly Condensed Statements of Financial
Position is ¥79,770 million.
In adopting IFRS 16, the Group has applied the following practical expedients.
-As an alternative of performing an impairment review, the Group relies on a previous assessment of whether leases areonerous in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” immediately before thedate of initial application.
- Exclusion of initial direct costs from the measurement of the right-of-use assets as of the date of initial application.
- Use of hindsight in determining the lease term if the contract contains options to extend or terminate the lease.

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