ANNUAL REPORT 2020
for the year ended March 31, 2020

ANNUAL REPORT 2020

Foresight
Innovation
EngineeringFi n a n c i a l H i g h l i g ht s (Con s ol i date d)ProfileFinancial Highlights (Consolidated)
The Japan Steel Works, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2018, 2019, and 2020

In 1907, the Japanese government launched a joint venture for the purpose of domestic weapons production in Muroran, Hokkaido—later to become a major steel manufacturing center—
consisting of two British firms (W.G. Armstrong and Vickers) and one Japanese company. That
was the birth of The Japan Steel Works, Ltd. (JSW).
After World War II, the company turned its sophisticated technologies and considerable experience to meeting peacetime needs. Continuing to produce high-quality steel, it developed
machinery making use of this steel and endeavored to open up new business fields. In addition
to heavy and chemical industries such as electric power, steel, shipbuilding, and petrochemicals,
the company broadened into areas from automobiles to electrical machinery and informationequipment, earning a worldwide reputation as an integrated producer of steel materials andmachinery.
Today, having grown into a comprehensive materials provider and manufacturer of mechatronics products, JSW is meeting society’s needs at the forefront. In the steel and energy products
business, we are serving the needs of the energy industry in areas such as electrical power generation, oil refining and natural gas. In the industrial machinery products business, we supply
equipment for manufacturing and processing plastic materials, along with a diverse range of
products in areas from information technology to defense.

Thousands ofMillions of yen

U.S. dollars

FY2017FY2018FY2019FY2019¥211,700¥220,153¥217,527$1,998,778

Operating income

20,57824,29018,709171,910

Profit (loss) attributable to owners of parent

10,712

19,966

9,310

85,546

Total assets

297,365

305,471

297,1732,730,617

Total net assets

118,600

129,827

132,492

1,217,422

ROE

9.6%

16.3%

7.2%

11.0%

Equity ratio

39.4%

42.0%

44.0%

42.0%

¥145.77¥271.69¥126.66

$1.16

37.50

55.00

45.00

0.41

For the year
Net sales

At year-end

RatiosAmounts per share (yen and U.S. dollars)Contents

Profit (loss)
Cash dividends applicable to the year

01
02
04

Financial Highlights (Consolidated)

06
10
12
14
16
18
28
29
30
32

Our Business Domains

Value Creation Model of JSW,
”Yompo-Yoshi (Benefits in all 4 stakeholders)”
Progress of The Priority Measures in ”JGP2020”

Net Sales

Environmental Management

Millions of yen

Profit (loss) attributableto owners of parent

The performance forecasts included in thisreport are judgments based on the information

Notes to Consolidated Financial Statementsthat was available to the JSW Group at the time

Network

60,000−10,000

271.6919,966145.779,310

0126.660

150.0(67.61)

120,000

300.0

Forward-looking statements

Consolidated Statement of Cash Flows
Corporate DirectoryYen(226.62)

Consolidated Statement of Income

10,712

Consolidated Balance Sheet(4,968)10,000(16,600)

217,527

220,153

180,000

Financial Performance (consolidated)

211,700

Six-year Summary

212,469

Corporate Governance

20,000223,301

240,000

Research and Development

Consolidated Statement of Changes in Net Assets

Profit (loss)

Millions of yen

Environmental Topics

Consolidated Statement of Comprehensive Income

33
34
35
61
62

Note : Amounts in U.S. dollars are presented solely for convenience and based on the rate of ¥108.83 = US$1.00, the rate of exchange on March 31, 2020.

Message from the President−150.0this report was prepared and the actual results
may differ significantly from these forecasts due
to a variety of factors.

0−20,0002015 2016 2017 2018 2019 (FY)−300.02015 2016 2017 2018 2019 (FY)2015 2016 2017 2018 2019 (FY)01

M e s s a g e from t h e Pre s i de nt

Message from the President

Naotaka Miyauchi
Representative Director & President

Overview of Fiscal 2019
Business performance
In fiscal 2019, ended March 31, 2020, the trend toward
the deceleration of overseas economies continued to
grow amid Brexit and heightened geopolitical risks in
the Middle East in addition to a stagnation of the U.S.
manufacturing sector and a slowing Chinese economy,both of which arose mainly due to the impact of U.S.China trade frictions. The Japanese economy was alsoanemic, with weak exports due to the deceleration ofoverseas economies coupled with stagnant demandcaused by the consumption tax hike. Moreover, in the
fourth quarter, the global COVID-19 pandemic put thebrake on economic activities, forced the manufacturingsector to suspend operations, stagnated logistics, and02

restricted overseas travels, precipitating a drastic economic downturn worldwide.
With respect to the JSW Group’s operating environment, in the Industrial Machinery Products Business segment, demand for plastic products for the automobile
sector slowed while demand for materials for automobile-use lithium-ion batteries remained stagnant in
China. The Steel and Energy Products Business segment
continued to face difficult operating circumstances due
to an intensified price competition for clad steel plates
and pipes, for which a recovery was expected on theback of expanding demand for natural gas, in addition
to a contraction in the market for large cast and forgedsteel products.
Despite these conditions, the JSW Group formulated
a banner of “‘Growth’ in Industrial Machinery Products
Business, ‘Rebirth’ in Steel and Energy Products Business”

and promoted its business activities centered aroundthree basic policies in accordance with the medium-term
management plan entitled JGP2020, which was formulated in May 2018 to lay out strategies for the three years
until the fiscal year ending March 31, 2021. These threebasic policies are: 1) optimization of management
resources and strengthening of alliances; 2) strengthening after-sales services (stock-based business); and 3)
acceleration in exploration and development of new
businesses.
For fiscal 2019, total orders amounted to ¥211,571
million (US$1,944 million), down 2.1% from the previous
year, due to a decrease in orders in the Industrial Machinery Products Business segment offsetting an increase in
the Steel and Energy Products Business segment*. Net
sales fell 1.2% to ¥217,527 million (US$1,999 million),with both the Industrial Machinery Products Businessand Steel and Energy Products Business segments securing sales on par with the previous fiscal year. With regard
to profits, the JSW Group posted operating income of¥18,709 million (US$172 million), down 23.0%, and ordinary income of ¥19,907 million (US$183 million), down
28.7%. In the previous fiscal year, we posted an extraordinary gain arising from sales of property, plant andequipment while posting a valuation loss on investment
securities caused by a drop in stock prices throughout
the securities market. We also recorded an extraordinary
loss of provision for business restructuring as an additional cost in the maintenance and repair business forwind turbines during fiscal 2019. As a result, profit attributable to owners of parent was down 53.4% to ¥9,310
million (US$86 million).

Certain countries, including China, the United States andEurope, have restarted economic activities; however,with no end in sight to the pandemic, both the overseas
and Japanese economies continue to remain in a stateof uncertainty.
As for the JSW Group’s operating environment,
although the Industrial Machinery Products Businesssegment is expected to witness sluggish demand forplastic products for automobiles as well as anemic
market conditions for materials for automobile-use lithium-ion batteries for the short term, we aim to strengthen
product competitiveness by further reducing costs anddeveloping new products. We expect a difficult businessenvironment to continue in the Steel and Energy Products Business segment due to a contraction in themarket for large cast and forged steel products andintensifying competition for clad steel plates and pipes.
Nevertheless, we plan to steadily reinforce the businessfoundation with Japan Steel Works M&E, Inc., which wasestablished in April 2020, taking the lead.
To minimize the impact of the COVID-19 pandemic
on our business, we will carry out various measures suchas appropriately managing funds, monitoring production and inventory, and securing the supply chain. At thesame time, in anticipation of the post-COVID-19 market
trend, we will continue to push forward with initiatives
in accordance with the basic policies laid out in themedium-term management plan (JGP2020).

October 2020

*Effective from April 1, 2020, the Steel and Energy Products Business was
renamed the Material and Engineering Business.

For the fiscal year ended March 31, 2020, we paid ayear-end dividend of ¥17.50 per share. Coupled with aninterim dividend of ¥27.50 per share, the total dividends
per share were ¥45.00.
Looking ahead, the world economy is expected todecelerate for the foreseeable future, as the COVID-19
pandemic has left economic activities in suspension.

03

Valu e Cre at io n M o d e l o f JSW, ” Yo m p o -Yos h i ( B e n e fi t s i n a l l 4 s t a k e h ol de r s ) ”

Value Creation Model of JSW, “Yompo-Yoshi (Benefits in all 4 stakeholders)”

Social Issues“Yompo-Yoshi (Benefits in 4 stakeholders)”

Value offered to society

Climate change,
Environment load issue,
Destruction of nature

Social responsibility
Customer satisfaction

Steel andenergyCustomersatisfaction

Corporate ethics

Engineering

Foresight

Inovation

Work-life balance,
Aging and shrinking
population,Work style reforms

04

FPD
equipment

Eﬀective corporate governance andappropriate information disclosure system

Defenseequipment

Socialresponsibility

Molding
machines

Energy-saving measures,
Resource Depletion,
Nuclear power issue

Shareholders
satisfaction

Social responsibility

Stock Business | New Business

Manufacturing thatcreate market

Plastic
production
and processing

Employeesatisfaction

Products that contribute for
reduction of CO2● Injection Molding Machines(Promotion of light-weight vehicle)● Clad Steel Pipes(Spread of natural gas)

Customer satisfaction
Cutting-edge technologies andproducts that are indispensable forthe next generation● Film and sheet equipment(Separators for automotive batteries)● FPD equipment(Spread of OLED panels)

Social responsibility
Customer satisfaction
Products that help spread clean
energy● Clad steel pipes(Transport pipes for natural gas)
● Hydrogen station(Spread of hydrogen energy)

Employee satisfaction
Shareholder satisfaction
Accomplishment oftransformation into an attractive
firm and increase in stakeholders’satisfaction and corporate value05

O u r Bu s i n e s s D om a i n s

Our Business Domains

Polyolefin extruder/pelletizer

Sales

Millions of yen

Millions of yen

120,000

180,000

120,000

171,416

180,000

B usi n e ss Li n e s
Production, sale, and maintenance of plastic production and processing machinery (including pelletizers, compound extruders, film
and sheet equipment, etc.)

Orders Received

173,648

We manufacture and sell a variety of plastic production and processing machinery, which are highly
regarded by users around the world, for a wide range of applications and purposes. Our product lineup in
this field includes pelletizers that manufacture plastic pellets; twin-screw extruders for compounding,reactive processing, dewatering, and devolatilizing; film and sheet equipment; and spinning extruders forsynthetic fibers. With bases in Japan, South Korea, China, Thailand, Singapore, Germany, and the UnitedStates, we have established a structure to support customers around the world with our technologies. To
respond to a wide range of customer needs as a comprehensive manufacturer of plastic production andprocessing machinery, our lineup of extruders includes screws of 25 millimeters to 800 millimeters indiameter. By strengthening the planning function in the after-sales services business, we will promote theestablishment of a structure oriented toward the “stock-type” business (recurring revenue businessmodel) through concerted efforts between manufacturing and sales departments in the areas of productdelivery and regular maintenance services.

169,000

Plastic Production and Processing Machinery

159,378

Other Machinery

162,65178.8%

Orders totaled ¥162,651 million (US$1,495 million), down 7.5% from the previous
fiscal year, due mainly to decreases in plastic production and processing machinery
as well as molding machines.
Sales fell 1.3% to ¥171,416 million (US$1,575 million). The contributing factor
was decreases in sales of molding machines and FPD equipment, which offset
increases in sales of plastic production and processing machinery.
Operating income declined 18.3% to ¥19,272 million (US$177 million) due
mainly to a change in product sales composition.

175,757

Molding Machines

Sales
Composition

186,253

Plastic Production and Processing Machinery

Performance in Fiscal 2019

156,204

Industrial Machinery Products Business

2017

2018

2019 (FY)

Large-size all-electric injection molding
machineMolding Machines
All of our standard plastic injection molding machines are provided as an electric type to improvethe basic performance of the machines themselves, offer higher precision, and provide high productivity and energy saving. We also respond to diverse customer needs through proprietary technologies, including the new physical foam injection-molding technology called SOFIT, which ensureshigher added value of molded products; the FliP series of sub injection units for multi-color injection;
and J-WiSe IoT solutions.
In 2019, we started test operations of remote maintenance services. By remotely accessing themolding machines in customers’ factories, we confirm the operational status and perform malfunction diagnosis to support a wide spectrum of maintenance activities spanning from failure restoration to pre-emptive maintenance.

60,00060,000

0

0

2016

2017

2018

2019 (FY)2016

Magnesium alloy injection molding machine

B usi n e ss Li n e s
Production, sale, and maintenance of plastic injection molding machines, blow molders, magnesium thixomolding machines

Laser Application Products
We have been designing and manufacturing excimer laser annealing (ELA) systems, which are used formass production of high-quality liquid crystal displays (LCD), at the Yokohama Plant since 1995. We
continuously develop and commercialize machines that accommodate larger and higher definition
displays and deliver a number of products to leading display panel manufacturers around the world. In
addition, our subsidiary JSW IT Service Co. is expanding its business operations to encompass repair,modification, parts sales, and maintenance services for ELA systems and providing support to ensure
the high availability of delivered machines.
We also offer and market laser lift-off (LLO) systems for the production of flexible displays, which are
anticipated as promising next-generation displays. Leveraging laser application technology as our corecompetence, we aim to expand into the fields of FPDs and semiconductors.
B usi n e ss Li n e s

Topic
Absorption Merger of Meiki Co., Ltd.
As of April 1, 2020, we absorbed Meiki Co., Ltd., which joined the JSW Group in
the previous fiscal year, and renamed it as the Meiki Plant. The plant mainly
manufactures large injection molding machines for automobile parts. Throughthe merger, we intend to optimize our production structure for injection molding machines and improve Group-wide profitability.
Meiki Plant

Electronic components and displays (laser annealing systems, thin-film deposition systems, etc.)

06

07

O u r Bu s i n e s s D om a i n s

B u si n e ss Li n e sOrders Received

Sales

Millions of yen

Millions of yen

60,00060,000Clad steel plate

40,000

Production and sale of products for power generation; nuclear power-related equipment die materials; general cast and forgedsteel products such as rolled materials and dies; cast and forged steel materials such as functional materials; pressure vessels andrelated materials for oil refineries; and other areas

Clad Steel Plates and Pipes
The Muroran Plant possesses Japan’s largest quadruple reversible plate rolling machine and produces clad steel products, which are a metallurgically bonded composite material of various alloys.
We mainly produce high-quality clad steel plates and clad steel pipes using clad steel plates, andall of our products are used in a wide range of industrial applications in Japan and overseas, giving
this business a unique profile.

2018

2019 (FY)20,00019,50020,00040,00041,418In addition to being a leading global supplier of numerous extra-large cast and forged steel products,
the Muroran Plant produces a wide range of high-quality small and medium-sized cast and forged steel
products. Steel is manufactured in electric furnaces. In the process of forging ingots, which are thesource for cast and forged steel products, we not only have one of the world’s largest production
capacities of 670 tons but also strive to improve quality by utilizing the vacuum ingot-making method,ladle refinement method, vacuum melting method, and electro slag remelting method, thereby
responding to a trend toward high-value-added steel products. In the forging process, after forging
steel into specified shapes using two 14,000-ton presses, a 3,000-ton press, and hammers, the products
undergo heat treatment, machining, and finishing processes. In this way, we produce a diverse range of
products corresponding to the individual and varying needs of customers.
We apply technological capabilities nurtured by meeting stringent specification requirements from
customers in thermal, hydroelectric, and nuclear energy fields, and provide cast and forged steel products for a variety of applications not only in the existing energy fields but also in iron and steel, industrial machinery, and electronics industries while making proposals to customers as necessary.

Buck-up Roll for Plate Mill

41,251

Electric and Nuclear Power Products

36,287

Engineering Services

51,20719.0%

Orders totaled ¥44,991 million (US$413 million), up 31.8% year on year, due mainly
to increases in cast and forged steel products as well as clad steel plates and pipes.
Sales were on par with the previous fiscal year, increasing 0.4% to ¥41,418 million (US$381 million) as cast and forged steel products as well as clad steel plates
and pipes achieved almost the same level of sales compared with the previous
fiscal year.
Operating income amounted to ¥2,484 million (US$23 million), down 7.1%, due
mainly to an increase in depreciation and amortization.

44,991

Clad Steel Products

Sales
Composition

34,123

Steel Casting and Forgings

Performance in Fiscal 2019

43,053

Steel and Energy Products Business

0

0

2016

2017

2018

2019 (FY)

2016

2017

B u si n e ss Li n e s
Production and sale of clad steel plates, clad steel pipes, etc.

Total Engineering Services
This business provides comprehensive services ranging from civil engineering, construction, andgreening works to maintenance of wind power generators in addition to design, production, installation, inspection, repair, and maintenance of steel structures such as pressure vessels as well as forging
facilities. We also continuously provide materials for defense equipment, which has been one of JSW’s
founding businesses. Through these services, we seek to offer solutions to social issues and realize
engineering works that create new value.

Topic
Establishment of Japan Steel Works M&E, Inc.
On April 1, 2020, we established Japan Steel Works M&E, Inc. as a core subsidiary of the Material and Engineering Business. The Steel Business Division and
Muroran Plant, which were both spun off from JSW, were merged with subsidiaries engaging in the related business. The establishment of the new company
is aimed at restructuring the Material and Engineering Business for higher profitability throughout the Group.

08

Japan Steel Works M&E, Inc.

09

Pro gre s s of Th e Pr i or i t y M e a s u re s i n ”J G P 2 0 2 0 ”

Progress of Medium-Term Management Plan “JGP2020”
Developing Foundations for GrowthFiscal year ending March 31, 2021: Forecasts for orders received, net sales, and income
as well as plan for cash dividends

To establish the ground to realize our growth in the “Next 10 Years”
FY2030I n d u st r i al M a c h i n e r y Pro d u c t s B u s i n e s s
M ate r i al an d E n gi n e e r i n g B u s i n e s s

JGP2020
Apr. 2019
Absorption merger of
Nikko Information
System Co.

〜JGP2017

Expansion of the existing business

Apr. 2019
Making GM
Engineering Co. into
a subsidiary

Expansion of the business scales“Aggressive management”
Sowing and nurturing of seeds for

FY2020
Forecast(B)

Orders received
Net sales
Operating income(ratio)Ordinary income
Profit/Loss
Profit/Loss per share (yen)Dividends per share (yen)

211.5
217.5
18.7
8.6%
19.9
9.3
126.66
45.0

198.0
190.0
7.0
3.7%
7.0
4.0
54.38
35.0

Change fromyear-ago period(B)-(A)(13.5)(27.5)(11.7)(4.9%)(12.9)(5.3)(72.28)(10.0)

Ratio toyear-ago period(B)÷(A)
93.6%
87.4%
37.4%
–
35.2%
43.0%
42.9%
77.8%

Fostering new businessRestructuring of the

Securing profitability in the current scale

production system

Exploration of the new opportunities

Apr. 2019
Cooperation with
Tsukishima Kikai Co.

(in billions of yen)

FY2019Result(A)

New business, M&A
Oct. 2020
Absorption merger ofNichiyu Machinery Co.

expansion of our business fields

For the fiscal year ending March 31, 2021, we forecast orders received of ¥198.0 billion, a decrease of ¥13.5 billion year on year; net salesof ¥190.0 billion, a decrease of ¥27.5 billion; operating income of ¥7.0 billion, a decrease of ¥11.7 billion; and profit attributable toowners of parent of ¥4.0 billion, a decrease of ¥5.3 billion.
Our basic approach is to maintain and increase cash dividends on a stable and continuous basis.
We plan to pay an interim dividend per share of ¥17.5 for the fiscal year ending March 31, 2021, the same amount as the previous
fiscal year, for annual dividends per share of ¥35.0.

Apr. 2020
Absorption mergerof Meiki Co.

2018〜2020
Investment for greater production capacity
at Hiroshima plant

With restrictions on overseas travel and Japan’s declaration of a state of emergency due to COVID-19, we were unable to conduct business negotiations.
Since July, however, we have been steadily receiving inquiries and expect a recovery going forward.

Aug. 2019
Establishment of
Muroran Copper Alloy
Co., Ltd.

Continuous profit making
from the existing business

Apr. 2020
Establishment of Japan SteelWorks M&E, Inc.

2018〜2021 Investment for clad steel businessBusiness overview by segment for fiscal year ending March 31, 2021
(1) Industrial Machinery Products Business
The Industrial Machinery Products Business plans to achieve orders received of ¥147.0 billion, net sales of ¥147.0 billion, and operating
income of ¥11.5 billion.
Regarding film and sheet manufacturing equipment, our customers are making plans for proactive capital investment up until 2023
as regulations on CO2 emissions become ever more stringent around the world. Amid this situation, exports for China and Europe inparticular have been brisk. As for molding machines, with people spending more time at home, demand has increased since July 2020
among container, game console, and home appliance manufacturers. Accordingly, in the second half of the fiscal year we expect orders
for the molding machines to be back at the same level as the previous year. There are also signs of recovery in demand for the automobile industry.

(2) Material and Engineering Business3 Basic Policies (Priority Issues) in “JGP2020”

GrowthIndustry Machinery
Products Business

RebirthMaterial andEngineering Business

Ⅰ. Optimization of Management Resources and Strengthening of Alliances
Optimization through rearrangement of the resources→ Active investment for industry machinery product business, Rebuild of cost structure in the material andengineering business that suits the current sales scale
Expansion of the businesses through alliance and M&A→ Breaking free of adherence toward self-sufficient policies
Ⅱ. Strengthening After-Sales Services (Stock-Based Business)
Enhancement of service force mainly in industrial machinery→ Securing stable profitability, improvement of customer satisfaction
Strengthening customer relationship through service business→ Development of foundations for the next business
Ⅲ. Acceleration in Exploration and Development of New Businesses
Exploration of new businesses from the view point of mega trends
Fostering and commercialization in the 4 fields (aircrafts, hydrogen, crystals and thin films) + α

The Material and Engineering Business plans to achieve orders received of ¥48.5 billion, net sales of ¥40.0 billion, and operating incomeof ¥1.5 billion.
For clad steel and pipes, we anticipate orders for large clad pipes, but due to a delay in project progress caused by COVID-19, theorders are expected to come in the fourth quarter.
Industrial Machinery Products Business(in billions of yen)

FY2019Result(A)

FY2020
Forecast(B)

Change fromyear-ago period(B)-(A)

Ratio toyear-ago period(B)÷(A)

Orders received
Net sales
Operating income(ratio)

162.6
171.4
19.2
11.2%

147.0
147.0
11.5
7.8%

(15.6)(24.4)(7.7)(3.4%)

90.4%
85.8%
59.9%
–

(in billions of yen)

FY2019Result(C)

FY2020
Forecast(D)

Change fromyear-ago period(D)-(C)

Ratio toyear-ago period(D)÷(C)

Orders received
Net sales
Operating income(ratio)

46.2
42.8
2.7
6.3%

48.5
40.0
1.5
3.8%

2.3
(2.8)
(1.2)
(2.6%)

105.0%
93.5%
55.6%
–

Material and Engineering Business*Effective from April 1, 2020, the Steel and Energy Products Business was renamed the Material and Engineering Business.

1011

E nv i ron m e nt a l M a n a g e m e nt

Environmental Management
As a responsible member of society, JSW regards operating in harmony with the environment as animportant corporate responsibility. In our pursuit of production activities and environmental technologies that respect environmental integrity, we engage in business activities that contribute to the ecologically sustainable development of society.
Ever since we formulated a medium-term environmental plan in fiscal 2001 for the first time, wehave been proactively promoting environmental management activities throughout the company. In
fiscal 2018, we formulated the Fifth Medium-Term Environmental Plan (fiscal 2018 to fiscal 2019) andwidened the scope of environmental activities to include the entire JSW Group. Accordingly, we
engaged in activities to achieve the goals set out in the plan.
We have also created the Sixth Medium-Term Environmental Plan (fiscal 2020 to fiscal 2024) andhave been stepping up our initiatives to achieve even higher goals.

Business activities and environmental impact
The following diagram shows the JSW Group’s environmental impact resulting from its manufacturing activities in the Material and Engineering Segment (Japan Steel Works M&E) and the Industrial Machinery Products Business (JSW).
We measure both inputs (consumption of energy, water, and the like) and outputs (such as waste, carbon dioxide, and water resulting
from manufacturing processes), and use the data in our environmental improvement activities.

Materials• Metals(including steel, non-ferrous metal)• Plastics

Action Plan

• Rubber, timber, etc.

1.	We aim to carry out environmental tasks in an organized way,
and to implement environmental preservation activities
continuously.
2.	We will set appropriate objectives and targets for reducing theburden our activities impose on the environment with conserving biodiversity.

3.	We aim to provide society with products and services that
contribute to the preservation of the environment.
(1)	We endeavor to increase the social value of our products interms of environmental protection, safety and hygiene.
(2)	We will provide products and services that reduce environmental loads by obtaining a clear grasp of environmental
needs and developing technologies.

Environmental Management Structure

ISO 14001 Certification Progress

Recognizing the importance of conducting business activities inharmony with both the international and local communities, JSW
has been promoting environmental management activities since1997 as a Group-wide initiative.
The Environmental Management Committee, headed by the
director in charge of environmental management, determines
matters such as annual environmental management policies andprograms of environmental activities for the whole company.
Each plant has its own Environmental Supervisory Committee,
which promotes environmental management activities andworks hand in hand with other Group companies including affiliates to reduce the environmental impact of the Company’s
activities.

The Company’s Hiroshima, Yokohama and Meiki plants and its
Group companies, Japan Steel Works M&E, Inc., Fine Crystal Precision (S.Z.) Co., Ltd., and NIKKO-YPK SHOJI CO., LTD. (Head Office,Saitama Office, Kansai Branch, Kansai Sales District Office, Chubu
Branch, Sendai Sales District Office, Nagano Sales District Office,Toyama Sales District Office, Kyushu Sales District Office), haveobtained certification under ISO 14001, an international standard for environmental management systems.
We conduct checks to ensure that ISO 14001-certified business sites are endeavoring to maintain and improve their environmental management systems.
The Company and Group companies have adhered strictly tolaws and ordinances, and there were again no violations in fiscal
2019.

INPUT
EnergyWater

Steel and energy products

Industrial machinery products• Forged steel components for nuclear power reactors• Twin-screw extruders• Monobloc rotor shafts• Single-screw extruders• Turbine casings for thermal power generation• Film and sheet equipment• Clad steel plates/clad steel pipes• Electric servo drive injection molding machines

2,993 TJ

MANUFACTURING• Magnesium alloy injection molding machines• Excimer laser annealing systems

79% of total waste volume is recycled

ISO 14001 Certifications of Business Sites

Chief Environmental Management Supervisor/
Environmental Management Committee Chairman(Director in charge of Environmental Management)

Business Site

JSW Group companies Environmental
Management Supervisors(Company presidents)

JSW plants Environmental
Management Plant Supervisors(General plant managers)

Environmental
Supervisory
Committees

Environmental
Supervisory
Committees

JSW Group companies Environmental
Management Supervisors

12

Departments

JSW plants Environmental
Management Supervisors

Affiliatedcompanies

Departments

Specializedcommittee

Current Certification Body

December 18, 1998

Japan Quality Assurance
Organization

Yokohama Plant

September 4, 2006

Japan Quality Assurance
Organization

Meiki Plant

March 4, 2005

ASR International Corporation

Japan Steel Works
M&E, Inc.

December 18, 1998

Lloyd’s Register Quality
Assurance

Fine Crystal Precision(S.Z.) Co., Ltd.

March 7, 2007

Intertek

NIKKO-YPK SHOJI
CO., LTD.

February 7, 2005

Japan Quality Assurance
Organization

Hiroshima Plant

Environmental
Management Committee

Certification Date

22.95 million m3• Blow molding machines

President

Affiliatedcompanies

Chemical
substances
5,881 tTotal waste volume
82,259 t

OUTPUT

Waste emission volume

17,032 t

Recycling volume

65,210 t

CO2 (from electric power and fuel)189,469 t-CO2

CO2 (from domestic transportation)
2,608 t-CO2

Chemical substances

Waste water
16.88 million m3(amounts emitted and transferred)

211 t

13

Environmental Topics
Environmentally Conscious Products

Pressure Vessels for Hydrogen Stations

In recent years, in the Industrial Machinery Products Business, to contribute to the reduction of energy
use we have been focusing on magnesium as a material that is lighter and more easily recyclable thanaluminum and supplying magnesium alloy injection molding machines, which are used to produce
notebook PC chassis, automobile parts, and other products, around the world. Meanwhile, hydrogen-derived energy has been gaining attention to curb global warming as exemplified in the gradual popularity in hydrogen fuel cell vehicles in the automobile industry. At JSW, we develop steel pressure vessels
for hydrogen stations that take advantage of our advanced steel technologies as our contribution to
the establishment of infrastructure for a hydrogen society. Some of the commercial hydrogen stations
have already adopted our pressure vessels.
Magnesium alloy injection molding machines

FCVs run on fuel cells which generate electricity by a chemical reaction between hydrogen and atmosphere-derived oxygen. After thereaction, the car only emits water. Since FCVs don’t emit CO2 like internal-combustion vehicles, they are drawing much attention as anultimate eco-car. Amid an environment in which curbing global warming has become an urgent task, it is essential to realize a hydrogenbased society by promoting the spread of FCVs and constructing more hydrogen stations around the world that supply hydrogen to FCVs.
To contribute to realizing a hydrogen-based society, we have been combining our long-accumulated technologies and expertise insteel materials and hydrogen to supply highly reliable steel pressure vessels for hydrogen stations. We remain committed to the development of a future hydrogen society by providing safe and secure products underpinned by dependable technologies and expertise.

RenewableenergyDispenser

Magnesium

Vehicle parts

Mobile device parts

Camera parts

Office equipment

LaptopHydrogen production
equipment

Compressor

Fuel cell vehicle

Pressure vessel

Magnesium has been drawing much attention as a material whose features include light weight, easy recyclability, and eco-friendliness.
As an example, magnesium alloy automobile parts are expected to improve fuel efficiency as a result of lighter body weight and prove
effective in curbing the emission of greenhouse gases.
When applied to the chassis of notebook PCs and cameras, magnesium contributes to reducing their overall weight to make it moreconvenient to carry around. Moreover, its superior recyclability makes it possible to repeatedly reuse the material to cut down on waste
generation.
Our magnesium alloy injection molding machines melt magnesium in a sealed cylinder. This renders it unnecessary to use non-flammable gas (mainly sulfur hexafluoride, a potent greenhouse gas that has a high global warming potential), which was needed in the conventional die casting method to prevent molten metal in the furnace from being exposed to the atmosphere. In this way, magnesium alloy
injection molding machines don’t emit greenhouse gases.
JSW will remain committed to the realization of a recycling-based society and the prevention of further global warming through thedevelopment of injection molding machines.

(70MPa)PrecoolingAt hydrogen stations that recharge hydrogen, which is the fuel for fuel cell vehicles (FCV), pressure vessels are essential for storing the hydrogen gas
at high pressure.
Some commercial hydrogen stations, for which construction began in 2013, use our steel hydrogen vessels.
In fiscal 2018, we developed a new pressure vessel featuring a longer product life at a more affordable price than the previous products.

©Iwatani Corporation

14

Hydrogen stations appearance©Iwatani Corporation

Hydrogen station

15

R e s e a rc h a n d D e ve l op m e nt

Research and Development

Activities by Business Segment

Research and development activities were almost entirely funded by the Company during fiscal 2019. Combined spending on research and development for

Industrial Machinery Products Businessthe Industrial Machinery Products Business, the Steel and Energy Products Busi-

In machine-related product development, we are working to develop

ness, and the Other Business amounted to ¥4,708 million (US$43 million). Aiming

advanced processing technology for plastic molding machines; enhance theto become a company that contributes to the prosperity of society by generating

performance of plastic extruders; improve the functionality and perfor-changes through our innovative technologies, we strive to develop new products
and production techniques using our proprietary technologies. To bring thesemance of film and sheet equipment; enhance the performance and lower
Muroran Research Laboratory

products and techniques to market as soon as possible, we actively promote mul-develop manufacturing equipment for fiber-reinforced plastic composite

tidisciplinary and technological tie-ups and joint development.

components and other products. R&D spending in this segment was ¥2,101

Business divisions and Group companies collaborate to 1) improve the capa-

million (US$19 million) in fiscal 2019.

bilities, performance, and reliability of core products; 2) develop and nurtureofferings in new business fields based on core and differentiated technologies;

Steel and Energy Products Businessand 3) promote the development and commercialization of new products

Product development centers on developing materials and manufacturing

through synergies with Group companies.

process technologies, notably for clad steel pipes for natural gas transportation pipelines as well as large steel castings and high alloys. Our technological

Basic Research and Development Policy

development focuses on improving materials and element technologies forexisting products. Segment R&D spending totaled ¥674 million (US$6 million)(1) In terms of the promotion and commercialization of new businesses, thein fiscal 2019.

New Business Promotion Headquarters collaborates with each business division and prioritizes R&D on new energy and energy savings, information andtelecommunications, nanotechnology and materials, aircraft components,
and new production technologies, all of which are related directly to JSW’s

the cost of magnesium injection molding equipment and compressors; andOther Business
Hiroshima Plant
Technical Development Department

businesses. Through these efforts, we aim to focus on expanding and upgrad-

In addition to commercializing and expanding businesses for aircraft components, various functional materials for the optical communication field suchas high-performance crystalline materials, and pressure accumulators foring core technologies while cultivating and growing existing businesses.

hydrogen fueling stations, we also promote development and commercialization of various functional materials including high-performance metal materi-(2) We engage in basic research for future technologies and contemporary

als and nanomaterials. Segment R&D spending totaled ¥1,932 million (US$18

social needs and in researching component technologies for existing prod-

million) in fiscal 2019.

ucts. We will build on these efforts to undertake R&D projects that create new
products and businesses and pursue innovations for existing products.
(3) The focuses in Machinery Products are to enhance plastics machinery, IT
equipment, and other industrial machinery. We will allocate significant
resources to such machinery by clarifying that our commercialization framework is open to mergers, acquisitions, and alliances. In Steel Products, we aim
for improving profitability of existing products while commercializing newareas.

16

Yokohama Plant
Technical Development Department

17

Cor p orate G ove r n a n ce

Corporate Governance
JSW recognizes that it must earn the trust of shareholders, customers, employees, and other stakeholders to aim to enhance enterprise value and thereby contribute to the economy and society as a whole.
We therefore created a corporate governance setup that encompasses a management organizationand framework to implement essential measures and pursues fair disclosure to ensure business
transparency.
On November 18, 2015, we formulated “Corporate Governance Policy of The Japan Steel Works, Ltd.”
based on a resolution of the Board of Directors. The aim of the Policy is to clarify our basic stance, initiatives, and approach with respect to corporate governance. The Policy can be found at the following
website: https://www.jsw.co.jp/en/ir/governance.html

Overview of Corporate Governance
Structure
We employ an audit & supervisor board member systemcomprising nine directors, three of whom are independent, and four audit & supervisory board members, twoof whom are external.
The term of office of directors is one year. We maintain an executive officer system: separate decision-making and oversight from the executive functions ofexecutive officers. The goal is to accelerate decision-making and enhance oversight and execution.
In principle, the Board of Directors convenes once
monthly to decide and report on basic operational policies, legally stipulated matters, and other importantmanagement issues. Managing executive officers andabove attend these meetings, positioning the Board as avehicle for mutual oversight of directors and executive
officers.
The Executive Board—consisting of two representative directors, executive officers nominated by the president, three outside directors, and an audit & supervisoryboard member (chosen by rotation)—meets once aweek to deliberate and decide on important management matters and important business execution decisions made by directors and executive officers in addition
to discussing, reporting on, and monitoring overall operational matters.
Our Management Council also convenes once
monthly, in principle. Members include directors, audit &supervisory board members, divisional heads, generalplant managers, headquarters managers, and executive
officers. This body’s tasks include assessing the businessenvironment and monitoring the progress of the18

Company’s business plan. Its goals are to share suchknowledge throughout management and reflect it intheir decisions as well as to ensure risk management andcompliance.
The Audit & Supervisory Board comprises four audit &supervisory board members, two of whom are external
as part-time. These members attend meetings of theBoard of Directors, the Executive Board, the Management Council, and other important gatherings. In principle, they visit the Company’s plants and offices as well as
major subsidiaries once every six months. The members
receive divisional reports as necessary and exchange
opinions with directors, executive officers, and key
employees. Based on these efforts, the members express
their views to management from an objective and neutral perspective, and exercise strict oversight with regard
to the execution of directors’ duties.
Seeking to ensure fairness and transparency of decision-making processes related to executive nomination
and remuneration, the Company established the Nomination Advisory Committee and the Remuneration Advisory Committee. Consisting of six members, including
several outside executives, the committees serve as advisory bodies to the Board of Directors. The Nomination
Advisory Committee deliberates on matters related toappointment and dismissal of directors, audit & supervisory board members, and executive officers and reports
to the Board of Directors. Likewise, the Remuneration
Advisory Committee deliberates on matters related torenumeration of directors and executive officers andreports to the Board of Directors.
The constituent members of each entity are as
follows.

Constituent members
Board ofDirectors

Executive
Board

Management
Council(Chairman)(Chairman)(Chairman)

Name

Title

Naotaka Miyauchi

Representative
Director &President

Toshio Matsuo

Representative
Director &Executive Vice
President

Takashi Shibata

Director,
Managing
Executive Officer

Junichiro Deguchi

Director,
Managing
Executive Officer

Takashi Iwamoto

Director,
Managing
Executive Officer

Hiroki Kikuchi

Director,
Executive Officer

Sadao Degawa

Director(Note 1)

(Notes 4)

Yoshiyuki Nakanishi

Director(Note 1)

(Notes 4)

Hisao Mitsui

Director(Note 1)

(Notes 4)

Kenji Watanabe

Audit &
Supervisory Board
Member(full-time)(Notes 3 & 4)

Toru Nishiyama

Audit &
Supervisory Board
Member(full-time)(Notes 3 & 4)

Fumihiko Tanizawa

Audit &
Supervisory Board
Member(Note 2)Hiroshi Misawa

Audit &
Supervisory Board
Member(Note 2)

Masao Oshita

Managing
Executive Officer

Toyohiko Kagawa

Managing
Executive Officer

Yoshitaka Sato

Executive Officer

Shingo Mito

Executive Officer

Shigeki Inoue

Executive Officer

Seiji Umamoto

Executive Officer

Shoji Nunoshita

Executive Officer

Other constituent members

Audit &
Supervisory
Board

Nomination
Advisory
Committee

Remuneration
Advisory
Committee(Chairman)(Chairman)(Chairman)(Notes 5)(Notes 5)

Divisional heads,
deputy director ofheads, generalplant managers,
headquarters
managers

Notes: 1. Sadao Degawa, Yoshiyuki Nakanishi, and Hisao Mitsui are outside directors. 2. Fumihiko Tanizawa and Hiroshi Misawa are outside audit & supervisory board members.
3. One audit & supervisory board member attends by rotation. 4. Attends as an observer. 5. Attends as an advisor.

19

Cor p orate G ove r n a n ce

Reason for Adopting the Corporate
Governance Structure
Each director reports on the business execution status atimportant meetings of the Board of Directors, the Executive Board, the Management Council, and other bodies,
which ensures mutual oversight of directors. Elevenexecutive officers, four of whom concurrently serve as
directors, are appointed at the meeting of the Board of
Directors. They execute business operations and makebusiness-related decisions to the extent delegated, andreport on the business execution status at meetings ofthe abovementioned Executive Board, Management
Council, and other bodies, thereby ensuring oversight ofexecutive officers by directors. Outside directors also
attend each of important meetings mentioned above,
participating in the decision-making process of management as well as expressing opinions to managementfrom an objective and neutral perspective.
In addition to attending aforementioned important meetings as well as other meetings, each audit &supervisory board member conducts audits of headquarters divisions, business divisions, subsidiaries, andother organizations on a regular basis. When deemednecessary, they receive reports on information related
to risk management, compliance, and other mattersfrom respective departments. By exchanging opinionswith directors, executive officers, and key employees,
they keep tabs on the business execution status of
directors and express opinions to management froman objective and neutral perspective.
The Company believes these measures ensure thecurrent corporate governance structure to fully exert theoversight function over management.

Status of Internal Control System
The Company recognizes the importance of its management responsibilities with respect to establishing andproperly managing the necessary systems to ensure
appropriate business operations. Based on thisShareholders’ meetings
Board of Directors

Audit & Supervisory Board
Monitoring

Executive Directors
Outside directors

Decisionmaking

Reporting

Audit & supervisory board members
Cooperation

Outside audit & supervisory board members

Oversight/
monitoring

Nomination Advisory Committee

Cooperation

Monitoring

Monitoring

Accounting
auditors

Cooperation

Remuneration Advisory Committee<Business execution>

Executive Board

20

Information Security
Committee

Business execution organizations
Headquarters divisions
Business divisions
Plants
Subsidiaries

General Safety andHygiene Council

Directors with business execution responsibilities/executive officers

Export Control Administration
Committee

Management Council

Environmental Management
Committee

Internal Auditors OfficeInternal Control Committee

President

recognition, it has set up a specialist unit to supervise
internal controls, and its Internal Control Committee also
meets as necessary. The Company is working to improve
its internal control system in line with its Basic Policy on
Internal Control Systems, adopted by the Board of Directors, as described below.
1.	Adhering to laws and regulations and the Articles
of Incorporation relating to the execution of duties
by directors and employees   • At the Company, compliance extends beyond preventing fraud and adhering to laws and regulations
and in-house rules. It also encompasses the fulfillment of broad social responsibilities and establishment of various compliance-related rules. The
essence of its compliance activities centers on directors and executive officers taking the lead and practicing integrity and raising employee awareness ofcompliance issues through education and training.
   • The Company established the Internal Audit Division
to ensure that all of its corporate operations comply
with all laws and regulations and in-house rules. The
Division conducts regular and spot audits and submits
the results of its audits to the president and to otherrelevant parties as appropriate, including the Board of
Directors, the Executive Board, the Management Council, and audit & supervisory board members.
   • The Company ensures multiple ways, including internal and external channels, for reporting and discussing compliance-related problems uncovered by
employees, based on a guarantee of protection for
whistleblowers.
   • The Company clearly stipulates in its Corporate Codeof Behavior the thorough enforcement of organizational crisis management against anti-social forces,
and firmly rejects unwarranted demands from themin accordance with the law and in collaboration with
relevant authorities.

information management rules and regulations, theCompany stores and manages important information
relating to the execution of duties by directors andexecutive officers as printed or digital records. This
information includes the minutes of important meetings and written requests for approvals. Further,
directors and audit & supervisory board members
may review or copy this information as needed.
   • The Company discloses financial and important management information in an appropriate and timely
manner.
3. Rules on managing risk of losses   • Directors, executive officers, and employees concurrently serving as general managers identify and evaluate risks arising in the course of business. They addressthese risks in keeping with regulations and the management approval system. The Board of Directors andthe Executive Board deliberate on key risks.
   • The Company maintains risk management rules anda Companywide risk management system. Divisions
overseeing risks in such areas as safety and hygiene,
environmental management, information security,and export control administration set up committees
and create and administer rules for properly managing such risks throughout the Company. The Company also appoints a director or an executive officer
as the person responsible for risk management. In
collaboration with the Internal Audit Division, that
person monitors the progress of risk management
and reports to the Board of Directors or the Executive
Board as appropriate.
   • At key headquarters divisions, business divisions, andplants, the Company has risk managers who evaluate
measures and identify daily risks. It also has a crisis
management headquarters to handle critical situations. Accordingly, the Company is prepared for bothordinary and emergency situations.

2.	Safeguarding and managing information relating
to the execution of duties by directors   • The Company appoints a director or an executive officer as the person responsible for safeguarding andmanaging information. Adhering to document and21

Cor p orate G ove r n a n ce

4. Ensuring the efficient execution of duties by directors   • The Company ensures rapid decision-making andflexible and efficient business execution by having
the president act as chief executive officer, with directors overseeing key headquarters divisions and business units. Under this command and management
structure, executive officers appointed by the Boardof Directors perform the duties assigned to them.
Directors and executive officers deliberate, decide,and report on important matters in meetings of theBoard of Directors and the Executive Board.
   • The Board of Directors formulates the medium-term
management plan and annual business plans as Companywide objectives for directors, executive officers,
and employees. Directors and executive officers planand implement specific policies for reaching goals,
segregating tasks in line with in-house rules. They also
evaluate the results, review progress, and submit periodic and spot reports to the Board of Directors, theExecutive Board, and the Management Council.
5. Ensuring appropriate conduct at Group companies   • The Company encourages Group subsidiaries to workto establish and build Companywide internal controls
according to JSW’s Vision, Management Philosophy,
and JSW Group Corporate Code of Behavior. The
Company also supports Group subsidiaries to strive
for efficient business execution and autonomous
management by ensuring proper division of duties
and clarification of decision-making authority basedon their own in-house rules.
   • The Company has formulated operational and management rules for subsidiaries and defined therelated management responsibilities and leadership
structures. The Company maintains a system forreporting, notifying, and gathering information
about subsidiary decisions on important matters andimportant facts.
   • In addition to dispatching directors and audit &supervisory board members to Group subsidiaries,
the Company ensures that subsidiaries comply withall laws and regulations and in-house rules by

22

mandating periodic and spot internal audits throughrelevant departments or the Internal Audit Division. It
also audits operations directly and instructs subsidiaries on internal control improvements.
   • The Company supports the efforts of Group subsidiaries to establish systems to identify and evaluate risks
according to division of duties determined independently based on rules concerning risk management.
6.	
Appointing audit & supervisory board member
assistants, securing their independence from directors, and ensuring the effectiveness of instructions
given to them   • On request from audit & supervisory board members,
the Company offers employees as assistants. The
Company seeks the opinions and consent of thesemembers for appointments, dismissals, evaluations,and other personnel treatment regarding these assistants to secure their independence from directors
and executive officers.
   • The Company ensures that employees assigned as
assistants can perform their duties according to thedirections and instructions of audit & supervisoryboard members.
7.	Reporting to audit & supervisory board membersby directors and employees of the Company and its
subsidiaries, other structures for reporting to audit& supervisory board members, and preventing
unfavorable treatment based on the content ofwhat is reported   • Audit & supervisory board members are guaranteed
the opportunity to attend meetings of the Board of
Directors, the Executive Board, the Management
Council, and other managerial meetings that deliberate, decide, and report on important matters.
   • Based on its management approval system, the Company presents approval records to audit & supervisoryboard members. Audit & supervisory board members
can at any time request reports from directors, executive
officers, and employees of the Company and Groupsubsidiaries. Also, persons who have received reports

from directors, executive officers, and employees of theCompany and Group subsidiaries can convey suchreports to audit & supervisory board members.
   • The Company guarantees that persons making reports
to audit & supervisory board members are not subject
to unfavorable treatment based on the content of suchreports.
8.	Policies on advance payment and compensation
pertaining to costs and obligations incurred in theexecution of duties by audit & supervisory board
members   • The Company assumes responsibility for any necessary costs incurred in the execution of duties by audit& supervisory board members.
9.	Ensuring the effectiveness of audits conducted byaudit & supervisory board members   • The Company encourages directors, executive officers, and employees to recognize the importance andvalue of audits conducted by audit & supervisoryboard members and to accord them their fullest
cooperation. These members can request assistancefrom the Internal Audit Division, headquarters divisions, and all other divisions for auditing tasks.
   • The Company enables audit & supervisory board
members to collaborate closely with the accounting
auditor and the Internal Audit Division.
   • Audit & supervisory board members have the discretion to employ the services of legal advisors andother outside experts.

Outline of Liability Limitation Agreement
In accordance with Article 427, Paragraph 1 of the Companies Act as well as Articles 28 and 36 of the Articles ofIncorporation, the Company has concluded a Liability
Limitation Agreement with three outside directors andfour audit & supervisory board members as stipulated in
Article 423, Paragraph 1 of the Companies Act. The liability limit based on this agreement shall be the amountstipulated in the act.
Liability limitation will be applicable only when theexecution of duties by outside directors and audit &supervisory board members giving rise to such liabilities
is recognized to have been carried out in good faith andwith no gross negligence.

Number of Directors
The Articles of Incorporation stipulates the number of
directors to be 10 or less.

Requirements for Resolution forElection of Directors
The Articles of Incorporation stipulates that the resolution for the election of directors shall require the presence of shareholders holding one-third or more of thevoting rights of shareholders who can exercise voting
rights as well as a majority vote of such shareholders, andthat no cumulative voting shall be accepted for the
resolution.

10. Ensuring reliable financial reporting   • The Company evaluates the effectiveness of internal
controls for financial reports in keeping with basic
policies for such controls. The Board of Directors andthe Executive Board deliberate and report on thefindings of such evaluations.

23

Cor p orate G ove r n a n ce

Special Resolution Requirements of the
Meeting of Shareholders
The Articles of Incorporation stipulates that the resolution stipulated by Article 309, Paragraph 2 of the Companies Act shall require the presence of shareholders
holding one-third or more of the voting rights of shareholders who can exercise voting rights as well as a twothirds majority of such voting rights. The aim for therequirement is to smoothly lead the meeting of shareholders by relaxing the quorum for special resolutions atshareholder meetings.

Shareholder Meeting Resolutions
That Can Be Resolved at Meetings of theBoard of Directors
1.	Acquisition of treasury stock   • To execute a flexible capital policy, the Articles of Incorporation allows the acquisition of treasury stock by aresolution of the Board of Directors in accordance with
Article 165, Paragraph 2 of the Companies Act.
2.	Interim dividends   • The Articles of Incorporation stipulates the payment
of interim dividends with September 30 as the record
date by a resolution of the Board of Directors in accordance with Article 454, Paragraph 5 of the Companies
Act. The aim is to enable the swift return of profits toshareholders.

Basic Policy on Control over the Company
I.	Basic Policy on the Nature of Persons Who Control
Decision-Making over the Company’s Financial andBusiness Policies
JSW believes that the decision on whether persons who
control decision-making over JSW’s financial and business policies will ensure and enhance JSW’s corporate
value and the common interests of JSW’s shareholders
should ultimately be made based on the general will of
JSW’s shareholders.

24

However, in the event that a takeover proposal ismade by a third party, it may not always be easy for JSW’s
shareholders to properly judge in a short space of timethe impact of the takeover on JSW’s corporate value andthe common interests of shareholders based on a sufficient understanding of JSW’s tangible and intangible
management resources, the potential effect of forward-looking policies, and other components of JSW’s
corporate value. Accordingly, JSW deems any persons
who propose a large-scale acquisition of JSW shares or
takeover without providing JSW’s shareholders with sufficient information or time to examine the content of the
takeover proposal to be inappropriate as persons who
control decision-making over JSW’s financial and business policies. Moreover, some takeover proposals may beintended to cause clear damage to JSW’s corporate valueor the common interests of JSW’s shareholders whileothers may effectively coerce JSW’s shareholders into
selling their JSW shares. JSW deems any persons whomake such a takeover proposal to be inappropriate aspersons who control decision-making over JSW’s financial and business policies.
II.	Measures to Prevent Decisions on the Company’s
Financial and Business Policies from Being Controlled by Persons Deemed Inappropriate under the
Basic Policy
JSW resolved to renew the Countermeasures to Large-Scale Acquisitions of JSW’s Stock (Takeover Defense Measures) at the meeting of its Board of Directors held on
May 15, 2017 and obtained shareholders’ approval forrenewal at the 91st Annual General Meeting of Shareholders held on June 27, 2017 (hereinafter the renewed
countermeasures are referred to as the “Plan”).
For further details of the Plan, please refer to “Renewalof Countermeasures to Large-Scale Acquisitions of JSW’s
Stock (Takeover Defense Measures)” dated May 15, 2017
in the News section of JSW’s website (https://www.jsw.
co.jp/) (in Japanese).

1.	Purpose of the Plan
The purpose of the Plan is to secure and enhance JSW’s
corporate value and, in turn, the common interests of its
shareholders by ensuring, in the event of a tender offer
for JSW’s shares, an act similar thereto or a proposal
thereof (hereinafter referred to as “Tender Offer, etc.”), theinformation and time necessary for shareholders todecide whether they should accept the Tender Offer, etc.
or for JSW’s Board of Directors to make an alternative
proposal or, in some cases, to enable negotiations to beheld with the tender offeror or the person proposing thetender offer (hereinafter referred to as the “Tender
Offeror, etc.”).
2.	Summary of the Plan(i) Establishment of Procedures for Triggering the Plan
The Plan sets out necessary procedures for realizing the“1. Purpose of the Plan” in the event of a Tender Offer, etc.
for JSW’s shares, including requirements for advance provision of information about the Tender Offer, etc. by theTender Offeror, etc.
(ii) Gratis Allotment of Stock Acquisition Rights and Useof Independent Committee
In the event that a Tender Offer, etc. by a Tender Offeror,
etc. is deemed potentially to seriously damage JSW’s corporate value and the common interests of its shareholders, for example, a Tender Offeror, etc. makes a Tender
Offer, etc., without following the procedures set forth in
the Plan, JSW shall allot, by means of the gratis allotmentof stock acquisition rights, to all shareholders, excluding
JSW, at such time stock acquisition rights (hereinafterreferred to as the “Stock Acquisition Rights”) with thecondition that exercise by the Tender Offeror, etc. is notallowed and provisions regarding acquisition stating that
JSW may acquire the Stock Acquisition Rights from holders other than the Tender Offeror, etc. in exchange for
JSW’s shares. JSW does not intend to deliver money as
consideration for acquisition of the Stock Acquisition
Rights held by the Tender Offeror, etc.

With respect to decisions on the implementation or
non-implementation of the gratis allotment of the Stock
Acquisition Rights and the acquisition thereof, the Plan
aims to eliminate arbitrary decisions by the Board of
Directors by formulating Independent Committee Rules,
by establishing in accordance with these rules an independent committee comprised of experts (experienced
corporate managers, former employees of government
agencies, parties with knowledge of the investmentbanking industry, lawyers, certified public accountants,
academics, etc.) who are independent from JSW management, and by seeking decision-making through thecommittee while at the same time aiming to ensuretransparency through proper information disclosure toshareholders in a timely manner.
(iii) Exercise of the Stock Acquisition Rights and Acquisition of the Stock Acquisition Rights by the Company
In the event that gratis allotment of the Stock Acquisition
Rights takes place in accordance with the Plan and allshareholders other than the Tender Offeror, etc. receive
shares in JSW as a result of those shareholders exercising
the Stock Acquisition Rights or the Company acquiring
the Stock Acquisition Rights, the ratio of voting rights in
JSW held by the Tender Offeror, etc. may be diluted by up
to a maximum of 50%.

25

Cor p orate G ove r n a n ce

III.	Decision of Board of Directors on Specific Measures
and Rationale for Decision
JSW’s medium-term management plan and measures tostrengthen corporate governance were formulated as
specific measures to ensure and enhance JSW’s corporate value and the common interests of its shareholders,and are, therefore, in line with JSW’s basic policy and do
not aim to maintain the position of the directors or executive officers of the Company.
The Plan is a framework in case of a Tender Offer, etc.
for JSW’s shares designed to ensure and enhance JSW’s
corporate value and, in turn, the common interests of its
shareholders and is in line with JSW’s basic policy. The
Plan’s fairness and objectivity is ensured primarily
because it was approved by shareholders at the 91st
Annual General Meeting of Shareholders of JSW; it is aframework which attaches importance to the wishes ofshareholders regarding implementation of a gratis allotment of the Stock Acquisition Rights; it requires theestablishment of an independent committee comprisedof independent outside experts and only allows implementation of gratis allotment of the Stock Acquisition
Rights based on a decision by the independent committee; and gratis allotment of the Stock Acquisition Rights
can only be implemented if reasonable and objective
conditions are satisfied. The Plan does not aim to maintain the position of the directors or executive officers of
the Company.
Notes:1. The Basic Policy on Control Over the Company is as of the end of the consolidated
fiscal year under review.
Notes:2. Non-renewal of the Plan:
The Plan was due to expire at the close of the 94th Annual General Meeting of
Shareholders held on June 24, 2020. Prior to expiry of the Plan, JSW had been
engaged in much discussion and examination of its handling based on recent
trends surrounding takeover defense measures and dialogue with shareholders
both in Japan and overseas, including institutional shareholders. As a result, basedon comprehensive consideration of the recent trend toward stronger corporate
governance and the status of JSW’s initiatives for stronger corporate governanceas well as changes in JSW’s operating environment, JSW decided at a meeting of its
Board of Directors held on May 25, 2020 not to renew the Plan.
JSW will strive even further to strengthen corporate governance, which has long
been a focus of its efforts, and will remain committed to sustainable growth andthe enhancement of its corporate value over the medium to long term. Moreover,even after expiry of the Plan, JSW will continue to take appropriate steps in accordance with the Financial Instruments and Exchange Act, the Companies Act, andother relevant laws and regulations in relation to persons who intend to makelarge-scale acquisitions of its shares. Such steps include demanding that they provide necessary and sufficient information for shareholders to properly determine
the pros and cons of the large-scale acquisition; disclosing the opinion of theBoard of Directors based on due respect for the opinions of independent outside
directors; and endeavoring to ensure that shareholders have the time and information necessary to examine any proposal.

26

Board of Directors, Audit & Supervisory
Board Members, and Executive Officers

Organization

General Meeting of Shareholders

Corporate Planning Office

Board of Directors
As of September 1, 2020

Representative Director &President

Naotaka Miyauchi

Representative Director &Executive Vice President

Toshio Matsuo

Directors, Managing
Executive Officers

Takashi Shibata
Junichiro Deguchi
Takashi Iwamoto

Board of Directors

Executive Board

President

Directors, Executive Officer

Hiroki Kikuchi

Directors

Sadao Degawa (Outside)
Yoshiyuki Nakanishi (Outside)
Hisao Mitsui (Outsaide)

Office of Information Technology

Business Development Office
Personnel Department
Secretary OfficeInternal Auditors Office
Audit & Supervisory Board

General Affairs Department

Finance & Accounting Department

New Business Promotion Headquarters

Audit & Supervisory Board Members

Plastics Machinery Business Division

Hiroshima Plant

As of September 1, 2020

Audit & Supervisory Board
Members

Kenji Watanabe
Toru Nishiyama
Fumihiko Tanizawa (Outside)
Hiroshi Misawa (Outside)

Injection Molding Machinery Business Division

Yokohama Plant
Meiki Plant

Industrial Machinery Business Division

Ordnance Business Headquarters

Executive Officers
As of September 1, 2020

Managing Executive
Officers

Masao Oshita
Toyohiko Kagawa

Executive Officers

Yoshitaka Sato
Shingo Mito
Shigeki Inoue
Seiji Umamoto
Shoji Nunoshita27

Si x-Yea r Su m m ar y

Six-Year Summary

Fi n a n c i a l Pe r for m a n ce (Con s ol i date d)Financial Performance (Consolidated)

Years ended March 31

Millions of yen

2016

2017

2018

2020

2019

Consolidated¥194,674¥223,301¥212,469¥211,700¥220,153¥217,527(5,327)(16,600)(4,968)

10,712

19,966

9,310

Cash Flow from Operating Activities

Net Sales

Net sales totaled ¥217,527 million (US$1,999 million), down ¥2,626
million, or 1.2%, year on year. This was because sales of both theIndustrial Machinery Products Business and the Steel and Energy
Products Business were virtually on par with those in the previous
fiscal year.

Operating Income

Total assets

319,667

293,138

275,315

297,365

305,471

297,173

Total net assets

138,234

111,340

107,587

118,600

129,827

132,492

Operating income decreased ¥5,581 million, or 23.0%, to ¥18,709
million (US$172 million), and the operating income margindecreased 2.4 percentage points to 8.6%.

¥(71.94)¥(226.62)¥(67.61)¥145.77¥271.69¥126.66

Profit Attributable to Owners of Parent

Amounts per share (yen):

Non-Consolidated¥153,455¥176,116¥166,722¥160,787¥165,624¥162,073

Profit (loss)(5,658)(18,719)(8,260)8,559

17,1296,594

Total assets

291,793

263,112242,353259,342

263,005

253,298

Total net assets

124,381

97,107

88,83796,596

106,055

106,432¥(76.41)¥(255.55)¥(112.40)¥116.48¥233.08¥89.71

¥4.00

¥5.00

¥15.00¥37.50¥55.00¥45.00

Amounts per share (yen):

Cash FlowAt year-end, cash and cash equivalents stood at ¥74,477 million(US$684 million), an increase of ¥657 million from a year earlier.

Note: The Company conducted a 1-for-5 reverse common stock split effective on October 1, 2016. For the sake of simplicity, the profit (loss) per share in thetable above are calculated using the number of shares after the reverse stock split.

Net Cash Provided byOperating Activities% of total sales

Millions of yen

ROE

%

%

18,95940,000

30

0

15

−10

7.2

10

16.3

38.6

37.5

45

20

1,092

15

80,000118,600

120,000

20,00030

60

132,492

160,000

19,721

114,277

116,254

Equity Ratio

129,827

30,00010,00040,000Total Net Assets

107,587

60

26,712

52.5

52.8

51.3

50.8
108,199

80,000

As of March 31, 2020, total assets amounted to ¥297,173 million(US$2,731 million), down ¥8,298 million from a year earlier. Thiswas due primarily to a decline in investment securities arising froma drop in stock prices in addition to a decrease in such current
assets as notes and accounts receivable.
Total liabilities stood at ¥164,680 million (US$1,513 million),
down ¥10,963 million from a year earlier. This was due mainly to adecrease in current liabilities, including notes and accounts
payable.
Net assets amounted to ¥132,492 million (US$1,217 million),up ¥2,665 million, due mainly to an increase in retained earnings.

Millions of yen

45

108,893

18,709120,000

12,3407,000

14,42314,00020,57821,00024,290160,000

122,996

28,000

55.1%

Financial Position

Millions of yen

111,340

Overseas Sales

Millions of yen

12,023Operating Income

Net cash used in financing activities was ¥6,164 million (US$57 million) compared with ¥3,758 million in the previous fiscal year. This
was attributable primarily to cash dividends paid and net decreasein short-term borrowings.

9.6

Cash dividends applicable to the year

The Japanese market accounted for sales of ¥103,249 million(US$949 million) and the Chinese market for ¥44,126 million(US$405 million), with all other markets accounting for ¥70,151
million (US$645 million).

Cash Flow from Financing Activities(4.6)

Profit (loss)

Sales by Region

Net cash used in investing activities totaled ¥13,172 million(US$121 million) compared with ¥1,334 million in the previous
fiscal year. This was due mainly to an increase in tangible andintangible assets.

(13.5)Net sales

Profit attributable to owners of parent was ¥9,310 million (US$86
million), down ¥10,655 million, or 53.4%, from the previous fiscal
year. This equates to profit per share of ¥126.66 for the year.

Cash Flow from Investing Activities

44.0

Profit (loss)

Net cash provided by operating activities amounted to ¥18,959
million (US$174 million) compared with ¥1,092 million in the previous fiscal year. The primary contributing factors for the increase
included profit before income taxes as well as a decrease in operating funds.

42.0

Net sales
Profit (loss) attributable toowners of parent

Operating Results

39.4

2015

0

0

2016 2017 2018 2019 202028

02016 2017 2018 2019 202000

2016 2017 2018 2019 202002016 2017 2018 2019 2020−20

2016 2017 2018 2019 20202016 2017 2018 2019 202029

Con s ol i date d Ba l a n ce S h e e t

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet
March 31, 2019 and 2020

AssetsCurrent assets:
Cash on hand and in banks (Notes 6 and 18)
Notes and accounts receivable:   Unconsolidated subsidiaries and affiliates   Trade (Note 18)  Other   Less allowance for doubtful accounts
Inventories (Note 5)
Other current assets    Total current assets

Property, plant and equipment, at cost (Notes 7 and 9):Land
Buildings and structures
Machinery and equipment
Leased assets
Construction in progress
Less accumulated depreciation    Property, plant and equipment, net

Intangible assets

Investments and other assets:
Investments in unconsolidated subsidiaries and affiliates
Investment securities (Notes 18 and 19)
Long-term loans receivable
Retirement benefit asset (Note 21)
Deferred tax assets (Note 22)
Other assets
Less allowance for doubtful accounts    Total investments and other assets   Total assets

2019

Millions of yen

Thousands of
U.S. dollars(Note 4)

2020

2020

¥ 74,304¥ 75,525$   693,972

1,009
63,916223(137)
69,447
6,316
215,080

161
51,141689(156)
72,363
10,789210,515

1,479
469,916
6,331(1,433)664,918
99,136
1,934,347

8,250
70,519135,423
2,458
1,764
218,416(183,901)
34,514

7,984
74,440137,407
2,500
2,397
224,729(185,583)
39,14673,362684,003
1,262,584
22,972
22,0252,064,955(1,705,256)
359,699

2,226

2,968

27,272

1,268
28,412333
2,374
18,5663,091(397)
53,650¥ 305,471

1,012
20,836323
1,588
18,2902,929(438)
44,542¥ 297,173

9,299
191,455
2,968
14,592
168,060
26,914(4,025)409,281$ 2,730,617

Liabilities and net assets
Current liabilities:
Short-term borrowings (Notes 11 and 18)
Current portion of long-term debt (Notes 11 and 18)
Notes and accounts payable:   Unconsolidated subsidiaries and affiliates   Trade (Note 18)  Other
Advances received for products
Accrued income taxes (Note 22)
Provision for loss on wind power generator business
Provision for business restructuring
Other current liabilities    Total current liabilities
Long-term liabilities:
Long-term debt (Notes 11 and 18)
Accrued retirement benefits   For directors and corporate auditors
Retirement benefit liability (Note 21)
Deferred tax liabilities (Note 22)
Other long-term liabilities    Total long-term liabilities
Net assets:
Shareholders’ equity (Note 15)
Common stock:  Authorized — 200,000,000 shares  Issued— 74,332,356 shares
Capital surplus
Retained earnings
Treasury stock, at cost(803,339 shares in 2020 and 803,082 shares in 2019)    Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Remeasurement of retirement benefit plans    Total accumulated other comprehensive income
Non-controlling interests    Total net assets    Total liabilities and net assets

2019

Millions of yen

Thousands of
U.S. dollars(Note 4)

2020

2020

¥ 12,088
696¥ 10,048
5,590$   92,327
51,365

205
55,374
3,685
16,619
3,326
1,887
5,295
13,290112,469523
47,886815
19,012
1,143
1,421
5,596
13,436
105,475

4,806
440,007
7,489
174,694
10,503
13,05751,420123,459
969,172

40,00436,425

334,69673
10,49490
12,511
63,17457
11,172371
11,17859,205

524
102,656
3,409
102,711544,014

19,716
5,362
102,915

19,737
5,383
108,454

181,356
49,462996,545(2,312)
125,682(2,312)
131,262(21,244)
1,206,120

3,290
(226)
(222)
(115)
2,725
1,419
129,827¥305,471

1,017
(69)
(356)
(1,049)(458)
1,688
132,492¥297,173

9,345
(634)
(3,271)(9,639)(4,208)15,5101,217,422$2,730,617

See notes to consolidated financial statements.

30

31

Co n s o l id ated Statement of I ncome

Co n so lid ate d St ate m e nt of C h a n g e s i n N e t As s e t s

Consoli d ated Statement of Comprehensive I n co m e

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

For the years ended March 31, 2019 and 2020

For the years ended March 31, 2019 and 2020

Consolidated Statement of Income

Consolidated Statement of Changes in Net Assets
Millions of yen

2019

Net sales
Cost of sales (Note 12)
Gross profit
Selling, general and administrative expenses (Note 12)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Impairment loss (Note 9)
Other, net (Note 13)
Income before income taxes
Income taxes (Note 22):
Current
DeferredIncome (Note 28)
Profit attributable to non-controlling interests
Income attributable to shareholders of The Japan Steel Works, Ltd.

2020

Millions of yen

Thousands of
U.S. dollars(Note 4)

Shareholders’ equity

2020¥220,153
166,62253,531
29,24024,290¥217,527
167,251
50,27531,566
18,709$1,998,778
1,536,810
461,959
290,049
171,910903(246)(1,623)
5,992
5,027
29,317846(249)—(5,151)(4,554)
14,154

7,774(2,288)—(47,331)(41,845)130,056

5,335
3,791
20,190223¥ 19,966

2,646
1,974
9,534
223
¥  9,310

24,313
18,13887,6052,049$   85,546

See notes to consolidated financial statements.

Commonstock

CapitalsurplusRetainedearnings

Balance at April 1, 2018
Changes during the year
Issuance of new shares
Cash dividends paid
Income attributable to shareholdersof The Japan Steel Works, Ltd.
Purchase of shares of consolidated
subsidiaries
Purchases of treasury stock
Net changes in items other thanthose in shareholders’ equity
Total changes during the year
Balance at March 31, 2019¥19,694¥5,467¥ 86,256

22

22

22
¥19,716(104)¥5,362

Balance at April 1, 2019
Changes during the year
Issuance of new shares
Cash dividends paid
Income attributable to shareholdersof The Japan Steel Works, Ltd.
Purchases of treasury stock
Change in scope of consolidation
Net changes in items other thanthose in shareholders’ equity
Total changes during the year
Balance at March 31, 2020

¥19,716¥5,36220

20

Accumulated other comprehensive income

Treasury stock(Note 15)

Total
shareholders’equityUnrealized
holding gain
(loss) on
securities¥(2,310)¥109,107¥ 7,269

Translation
adjustments¥ 305¥ (21)

Total
Remeasurement accumulated
otherbenefit plansadjustments comprehensive Non-­controllingincomeinterest(Note 21)¥   370¥ 7,923¥1,569Total
net assets¥118,600(3,307)44(3,307)44(3,307)

19,966

19,966

19,966

(1)

(127)
(1)

(127)
(1)

16,659¥102,915(1)¥(2,312)

16,575¥125,682(3,978)(3,978)¥ 3,290

(532)
(532)
¥(226)(200)(200)¥(222)(486)(486)¥  (115)(5,197)(5,197)¥ 2,725

(150)
(150)
¥1,419(5,348)
11,227¥129,827¥102,915¥(2,312)¥125,682¥ 3,290¥(226)¥(222)¥  (115)¥ 2,725¥1,419¥129,827(127)(4,227)
9,310
(0)

20
¥19,737

Unrealized gain
(loss) fromhedging
instruments

0

454

21
¥5,383

5,538¥108,454(0)¥(2,312)41(4,227)41(4,227)

9,310
(0)
455

9,310
(0)
455

—
5,579
¥131,262(2,273)(2,273)¥ 1,017

157
157¥ (69)(133)(133)¥(356)(933)(933)¥(1,049)(3,184)(3,184)¥  (458)

269
269¥1,688(2,914)
2,665¥132,492

Thousands of U.S. dollars (Note 4)

Shareholders’ equity

Accumulated other comprehensive income

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Comprehensive Income
For the years ended March 31, 2019 and 20202019

IncomeOther comprehensive income:Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Remeasurement of retirement benefit plans
Total other comprehensive income (Note 14)
Comprehensive income
Total comprehensive income attributable to:Shareholders of The Japan Steel Works, Ltd.
Non-controlling interests¥20,190

Millions of yen

Thousands of
U.S. dollars(Note 4)

2020

2020

¥ 9,534$ 87,605(3,978)
(532)
(232)
(478)
(5,221)¥14,968(2,273)
157
(122)
(927)
(3,166)¥ 6,368(20,886)
1,443(1,121)(8,518)(29,091)$ 58,513¥14,768¥   200¥ 6,126¥   241$ 56,290$ 2,214

Balance at April 1, 2019
Changes during the year
Issuance of new shares
Cash dividends paid
Income attributable to shareholdersof The Japan Steel Works, Ltd.
Purchases of treasury stock
Change in scope of consolidation
Net changes in items other thanthose in shareholders’ equity
Total changes during the year
Balance at March 31, 2020

Treasury stock(Note 15)

Total
shareholders’equityUnrealized
holding gain
(loss) on
securities

Unrealized gain
(loss) fromhedging
instruments

Translation
adjustments$ 30,231$(2,077)$(2,040)

Total
Remeasurement accumulated
otherbenefit plansadjustments comprehensive Non-­controllingincomeinterest(Note 21)Total
net assets

Commonstock

CapitalsurplusRetainedearnings$181,163$49,270$945,649$(21,244) $1,154,847

184

184
(38,840)

377(38,840)

377(38,840)
85,546(0)4,181

85,5460

4,172

85,546
(0)
4,181

193
$49,462

50,887$996,545—(0)51,263$(21,244) $1,206,120

(0)

184
$181,356(20,886)(20,886)$   9,345

1,443
1,443
$  (634)(1,222)(1,222)$(3,271)$(1,057)(8,573)(8,573)$(9,639)$ 25,039(29,257)(29,257)$ (4,208)$13,039

2,472
2,472
$15,510$1,192,934(26,776)
24,488$1,217,422

See notes to consolidated financial statements.

See notes to consolidated financial statements.

32

33

Consoli d ated Statement of Cash Flows

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

For the years ended March 31, 2019 and 2020

Operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Interest and dividend income
Interest expense
Equity in losses (gains) of affiliates(Gain) loss on valuation of investment securities(Gain) loss on sales of investment securities
Loss on disposal of tangible and intangible assets
Gain on sales of property, plant and equipment and intangible assets
Gain on bargain purchase
Loss (gain) on step acquisitions
Decrease/increase in consumption taxes receivable/payable
Decrease in provision for loss on wind power generator business
Increase (decrease) in provision for business restructure
Changes in operating assets and liabilities:   Trade assets (Note 18)   Trade liabilities   Inventories (Note 5)  Other   Subtotal
Interest and dividends received
Interest paid
Income taxes paid    Net cash provided by operating activities
Investing activities
Investments into time deposits
Proceeds from withdrawal of time deposits
Increase in tangible and intangible assets
Decrease in tangible and intangible assets
Proceeds from sale of investment securities
Purchases of investment securities
Reimbursement of long-term deposits on contracts
Collection of long-term loans receivable
Payments for investments in capital of subsidiaries and associates
Proceeds from purchase of shares of subsidiaries resulting in change
in scope of consolidation
Payments for purchase of shares of subsidiaries resulting in change
in scope of consolidation
Purchase of investments in subsidiaries
Other    Net cash used in investing activities
Financing activities (Notes 11 and 18)
Net increase (decrease) in short-term borrowings
Increase in long-term debt
Decrease in long-term debt
Cash dividends paid
Acquisition of treasury stock
Repayments of finance lease obligations
Proceeds from share issuance to non-controlling shareholders
Other    Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents resulting from inclusion ofsubsidiaries in consolidation
Cash and cash equivalents at end of the year (Notes 16 and 18)

Millions of yen

Thousands of
U.S. dollars(Note 4)

2019

2020

2020

¥ 29,317
4,639
1,623
(903)
246
(89)
51
(263)
228
(3,900)——(443)(1,478)(1,093)¥ 14,154
6,017
—
(846)
249
3
3,589
990
483
(1,295)
(361)
95
(484)
(465)
300

$ 130,056
55,288—(7,774)2,288
2832,978
9,097
4,438(11,899)(3,317)873(4,447)(4,273)
2,757(13,217)(1,155)(7,618)
1,143
4,797
893
(265)
(4,334)
1,092

15,059(10,436)(1,865)(695)
24,493843(275)(6,102)
18,959138,372(95,893)(17,137)(6,386)225,057
7,746(2,527)(56,069)
174,207(56)
544(7,347)
6,057
272
(43)
(177)
10
—

(533)
193
(12,824)
1,650
1,763
(2,016)
(628)
10
(384)

(4,898)
1,773(117,835)
15,161
16,200(18,524)(5,770)92(3,528)

—

240

2,205

—
(497)
(97)
(1,334)

(896)
—
253
(13,172)(8,233)—
2,325(121,033)

83
250
(242)
(3,307)
(1)
(550)
—
9
(3,758)(58)(4,059)77,879(2,140)1,200(315)(4,227)
(0)
(737)
49
7
(6,164)(65)(443)
73,820(19,664)
11,026(2,894)(38,840)(0)(6,772)450
64(56,639)(597)(4,071)
678,306—¥ 73,820

1,100¥ 74,477

10,108$ 684,343

1. Basis of Presentation
The Japan Steel Works, Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account in conformity with thefinancial accounting standards of Japan, and its foreign subsidiaries maintain their books of account in conformity with those of
their respective countries of domicile.
The accompanying consolidated financial statements havebeen prepared in accordance with accounting principles generally
accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of IFRS, and have been
compiled from the consolidated financial statements prepared by
the Company as required by the Financial Instruments andExchange Law of Japan.
As permitted by the Financial Instruments and Exchange Law
of Japan, amounts of less than one million yen have been omitted.
As a result, the totals shown in the accompanying consolidated
financial statements (both in yen and in U.S. dollars) do not­necessarily agree with the sums of the individual amounts.
Certain amounts in the prior year’s consolidated financial
statements have been reclassified to conform to the current year’s
presentation.
2. Summary of Significant Accounting Policies(a)	Principles of consolidation and accounting for investments
in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include theaccounts of the Company and any significant companies­controlled directly or indirectly by the Company.
Companies over which the Company exercises significant
influence in terms of their operating and financial policies havebeen accounted for by the equity method. All significant intercompany balances and transactions have been eliminated inconsolidation.
As of March 31, 2020, the numbers of consolidated subsidiaries, and subsidiaries and affiliates accounted for by the equity
method were 36 and 2 (31 and 2 in 2019), respectively. Nikko
Information Systems Co., Ltd., which was a consolidated subsidiaryin the previous consolidated fiscal year, has been merged with theCompany, and as a result, the company has been excluded fromconsolidated subsidiaries from this consolidated fiscal year. Since
the Company acquired additional shares of GM Engineering Co.,
Ltd., which was an affiliate accounted for by the equity method in
the previous consolidated fiscal year, the company has been
included as a consolidated subsidiary from the current consolidated fiscal year. JSW Plastics Machinery (Shenzhen) Co., Ltd., JSW
Machinery Trading (Shanghai) Co., Ltd., and JSW Machinery(Ningbo) Co., Ltd., which were non-consolidated subsidiaries in theprevious consolidated fiscal year, have been included in the consolidation as consolidated subsidiaries due to materiality. Muroran
Copper Alloy Co., Ltd. was newly established in the current consolidated fiscal year and has been included in consolidated subsidiaries. The Company acquired all shares of Nichiyu Machinery Co., Ltd.
in the current consolidated fiscal year and has been included in
the consolidated subsidiaries.

Certain foreign subsidiaries are consolidated on the basis of
fiscal years ended December 31, which differ from that of theCompany. However, the necessary adjustments have been made if
the effect of the difference is material.
Investments in subsidiaries and affiliates which are neither
consolidated nor accounted for by the equity method are carriedat cost or less. Where there has been a permanent decline in thevalue of such investments, the Company has written them down.
Differences between the cost and the underlying net equity atfair value of investments in consolidated subsidiaries and in companies accounted for by the equity method have been amortizedby the straight-line method over five years after acquisition andare included in selling, general and administrative expenses.
(b) Foreign currency translation
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets
excluding Non-controlling interests which are translated at their
historical exchange rates. Revenue and expense accounts aretranslated at the average rates of exchange in effect during theyear. Differences arising from the translation are presented astranslation adjustments and Non-controlling interests in the consolidated financial statements.
Revenue and expense items arising from transactions denominated in foreign currencies are generally translated into yen at therates of exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effect atthe balance sheet date and differences arising from the translation
are included in the consolidated statements of income.
(c) Cash equivalents
Short-term investments with a maturity of three months or lesswhen purchased which can easily be converted to cash and are
subject to little risk of change in value are considered to be cash
equivalents.
(d) Inventories
Finished products and work in process are stated at the lower ofcost or net realizable value determined principally by the specificidentification method. Raw materials are stated at the lower ofcost or replacement cost determined principally by the moving
average method.
(e) Investment securities
Marketable securities classified as other securities are carried atfair value with changes in unrealized holding gain or loss, net ofthe applicable income taxes, included directly in net assets. Nonmarketable securities classified as other securities are carried atcost. Cost of securities sold is determined by the moving averagemethod.

See notes to consolidated financial statements.

34

35

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided for possible bad
debts at an amount estimated based on the historical experience
with bad debts on normal receivables plus an additional allowance for specific uncollectible amounts determined by reference
to the collectability of individual doubtful accounts.
(g) Provision for warranties for completed construction
The Company provides a provision for warranties for completed
construction by estimating losses on possible future claims.
(h) Provision for loss on construction contracts
The Company provides a provision for loss on construction contracts, which has not been delivered by the fiscal year end, by estimating the amount of total losses anticipated in the following
fiscal year and thereafter to be incurred, when the amounts can bereasonably estimated.
(i) Provision for loss on wind power generator business
The Company provides a provision for loss on wind power generator business by estimating the amount of total losses caused by
the defects of certain parts used in wind power generators.
(j) Provision for business restructuring
The Company provides a provision for the anticipated losses onwind power generators sold in previous years in order to­restructure the wind power generator business.
(k) Property, plant and equipment and depreciation
Depreciation of property, plant and equipment is calculated by the
declining-balance method based on the estimated useful lives andthe residual value determined by the Company, except for certain
buildings which are depreciated by the straight-line method.
Significant renewals and additions are capitalized at cost.
Maintenance and repairs are charged to profit. The estimate useful
lives of the assets are as follows:
Buildings and structures:
6 to 65 years
Machinery, equipment and vehicles: 3 to 20 years(l) Intangible fixed assets
Amortization of intangible fixed assets is calculated using thestraight-line method.
Software products for internal use are amortized mainly overthe estimated useful lives of five years.
(m) Leases and depreciation
Finance lease transactions which do not stipulate the transfer ofownership of the leased assets to the lessee are accounted for aspurchase and sales transactions.
With regard to the depreciation method of leased assets, thestraight-line method is applied using the lease period as the­estimated useful life and a residual value of zero.

36(n) Retirement benefit
The retirement benefit obligation for employees is attributed toeach period by the benefit formula method.
Prior service cost is being amortized as incurred by thestraight-line method over ten years, which is shorter than the­average remaining years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following the year
in which the gain or loss is recognized by the straight-line method
over ten years, which is shorter than the average r­emaining yearsof service of the employees participating in the plans.
Certain subsidiaries use a simplified method in the calculationof their retirement benefit obligation.

(u) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided based on
estimated amounts determined by internal rules.

(o) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated balance sheets with respect to the differences between
financial reporting and the tax bases of the assets and liabilities,
and are measured using the enacted tax rates and laws which will
be in effect when the differences are expected to reverse.

(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, the accounting standard establishes thefollowing five-step model that will apply to revenue from
customers:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price4. 	Allocate the transaction price to the performance­obligations in the contract
5. 	Recognize revenue when(or as)the entity satisfies a­performance obligation(p) Research and development expenses
Research and development expenses are charged to income whenincurred.
(q) Revenue and cost recognition
Revenues on sales of products are generally recognized at thetime of shipment.
Revenues and costs, of which the percentage of completioncan be reliably estimated, are recognized by the percentageof-completion method. The percentage of completion is calculated at the cost incurred as a percentage of the estimated total
cost. The completed-contract method is applied to contracts forwhich the percentage of completion cannot be reliably estimated.
(r) Derivative financial instruments
Derivative financial instruments are carried at fair value. Gain orloss on derivatives designated as hedging instruments is deferred
as a component of net assets until the loss or gain on the underlying hedged items is recognized. Foreign currency receivables andpayables are translated at the applicable forward foreign exchange
rates when certain conditions are met. In addition, the related
interest differential paid or received under interest-rate swaps utilized as hedging instruments is recognized over the terms of theswap agreements as an adjustment to the interest expense of theunderlying hedged items when certain conditions are met.
(s) Consumption tax
Accounting treatment of consumption tax is the tax exclusion
method.
(t) Provision for directors’ bonuses
Provision for directors’ bonuses is provided based on estimatedamounts to be paid in the subsequent period that are applicableto the current year.

(v) Standards issued but not yet effective
Accounting Standard and Implementation Guidance on Revenue
Recognition
On March 30, 2018, The Accounting Standards Board of Japan(ASBJ) issued “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29) and “Implementation Guidance on
Accounting Standard for Revenue Recognition” (ASBJ Guidance
No. 30).

(2) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal
year ending March 31, 2022.
(3)	Impact of adoption of accounting standard and­implementation guidance
The Company is currently evaluating the effect of the a­ doptionof this accounting standard and implementation guidance on
its consolidated financial statements.
Accounting Standards for Fair Value Measurement and­Implementation Guidance
Accounting Standards for Financial Instruments
Implementation guidance on disclosures about Fair Value of
Financial Instruments Accounting Standard for Measurement of
Inventories (Corporate Accounting Standard No. 9)
On July 4, 2019, the ASBJ issued “Accounting Standards for Fair
Value Measurement” (ASBJ Statement No. 30), Implementation
Guidance on Accounting Standard for Fair Value Measurement(ASBJ Guidance No. 31), Accounting Standards for Financial
Instruments (ASBJ Statement No. 10), and Implementation guidance on disclosures about Fair Value of Financial Instruments (ASBJ
Guidance No. 19), Accounting Standard for Measurement of
Inventories (ASBJ Statement No. 9)(1) Overview
This is accounting standards for Fair Value Measurement and
Implementation Guidance for applying accounting standards
for Fair Value Measurement (hereinafter referred to as “market
price accounting standards”) have been developed.
Accounting standards for Fair Value Measurement are applied
to the market prices of the following items.
・Financial instruments in “Accounting Standards for Financial
Instruments” and “Implementation guidance on disclosuresabout Fair Value of Financial Instruments” have been revised to
stipulate notes such as a breakdown of the fair value of financial instruments by level.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal
year ending March 31, 2022.
(3)	Impact of the adoption of the accounting standard and­implementation guidance.
The Company is currently evaluating the effect of the adoption of the accounting standard and implementation guidanceon its consolidated financial statements.
Accounting Standard for Disclosure of Accounting Estimates
On March 31, 2020, the ASBJ issued Accounting Standard forDisclosure of Accounting Estimates (ASBJ Statement No. 31)(1) Overview
This accounting standard has been released to provide guidance on disclosure of information that deepens the understanding of users of the financial statements about estimatesthat embody a risk of a significant impact on the financial
statements of the ­following accounting period.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standard fromthe of the fiscal year ending March 31, 2021.
Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections
On March 31, 2020, the ASBJ issued “Accounting Standard for
Accounting Policy Disclosures, Accounting Changes and Error
Corrections” (ASBJ Statement No. 24)(1) Overview
This accounting standard has been released to provide an outline of the applicable accounting principles and procedures incases where directly relevant accounting standards are notavailable.
(2) Scheduled date of application
The Company expects to adopt the accounting standard fromthe ending of the fiscal year ending March 31, 2021.

37

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

3. Accounting Changes[Disclosure for the year ended March 31, 2020](a) Consolidated cash flow statement
The amount of “Decrease/increase in consumption taxes receivable/payable”, which was displayed in “Other” of “Cash flow fromoperating activities” in the previous consolidated fiscal year, hasbeen separately reported in the current consolidated fiscal year
due to increase in its materiality.
“Increase (decrease) in provision for warranties for completed
construction,” and “Increase (decrease) in provision for loss on construction contracts” which were included in the Operating activities section of the statement of cashflows, along with “Collectionof long-terms receivable” and “Payments for asset retirement obligations” which were included in the Investing activities section of
the statement of cashflows were reclassified into “Others” within
their respective sections due to its less significance in materiality.
The consolidated financial statements for the previous consolidated fiscal year have been reclassified to reflect this change inpresentation method.
As a result, in the cash flow statement for the previous consolidated fiscal year, “Increase (decrease) in provision for warranties forcompleted construction” of “Cash flow from operating activities”¥(1,409) million, “Increase (decrease) in provision for loss on construction contracts” ¥(553) million and “Other” ¥376 million havebeen reclassified as “Decrease/increase in consumption taxes
receivable/payable “ of ¥(443) million and “Other” of ¥(1,143) million. In “Cash flow from investing activities,” “Collection of longterm loans receivable” of ¥(50) million, “Payments for asset
retirement obligations” of ¥(71) million, and “others” of ¥25 million
are “others”. It has been reclassified as ¥(97) million.
4. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollars is included solely
for convenience, as a matter of arithmetic computation only, at¥108.83 = U.S.$1.00, the approximate rate of exchange prevailingon March 31, 2020. This translation should not be construed as arepresentation that all amounts shown could be converted into
U.S. dollars at such rate.
5. Inventories
Inventories at March 31, 2020 and 2019 consisted of the following:

Finished products
Work in process
Raw materials andsupplies
Total

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥ 2,767
61,004¥ 3,792
62,927$ 34,843
578,214

5,675¥69,447

5,643¥72,364

51,852$664,927

Work in process related to construction contracts of which aloss is anticipated to be incurred was offset with a provision forloss on construction contracts of ¥223 million ($2,049 thousand) at
March 31, 2020 and ¥852 million at March 31, 2019.

38

6. Assets Pledged as Collateral
The assets pledged as collateral for derivative transactions etc., at
March 31, 2020 and 2019 were as follows:

Time deposit

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥99

¥194

$1,783

Note: The assets posted for derivative transactions were 99 million yen on March
31, 2019 and 94 million yen on March 31, 2020, and there are no corresponding liabilities as of the end of the current consolidated fiscal year.

7. Advanced Depreciation
Accumulated advanced depreciation related to government
grants received has been deducted directly from the acquisition
costs of certain tangible fixed assets (plant, machinery and equipment). Such accumulated depreciation at March 31, 2020 and2019 are summarized as follows:

Accumulated advanced
depreciation expense

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥1,455¥1,445$13,278

8.	Notes Receivable and Notes Payable Maturing at Fiscal
Year-End
Although March 31, 2019 was a bank holiday, notes maturing onthat date were accounted for as if they were settled on their maturity date. The corresponding amounts of notes receivable andnotes payable maturing on March 31, 2020 were as follows:

Trade notes and accounts
receivable
Trade notes and accounts
payableOther current
liabilities
Endorsed trade notes
receivable

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥  435¥—$—¥1,836¥—$—¥  941¥—$—¥    1¥—$—

9. Impairment Loss
Current fiscal year (From April 1, 2019 to March 31, 2020)
Not applicable
Prior fiscal year (From April 1, 2018 to March 31, 2019)
The Company and its consolidated subsidiaries (hereinafter collectively known as the “Group”) recorded an impairment loss on thefollowing groups of assets in the prior fiscal year:
Use

Asset type

Property for rent
Land
Other Businesses:
Machinery, equipment andBusiness assets at
vehicles, etc.
investee subsidiary

Location

Fuchu, Tokyo
Muroran,
Hokkaido andGuangdong,China(1) Grouping of assets
The Group determine whether to recognize an impairment
loss and measure the loss by grouping assets based on thesmallest units used in management accounting that generatecash flows which are largely independent and whose revenue
and expenditures are identified on an ongoing basis. Property
for rent is grouped by the individual properties. However, theGroup determines whether to recognize impairment and measures the impairment on an individual asset basis if the asset isidle and not expected to be used in the future.
(2)	Circumstances that led to the recognition of
the impairment loss
Carrying amounts of non-current assets were reduced torecoverable amounts and the reduced amounts were recognized in extraordinary losses as impairment loss because
investment amounts were no longer expected to be recovered
due to a decrease in profitability.
Breakdown of the impairment loss is as follows:
Machinery, equipment andvehicles
Land
Other
Total

¥   19 million
1,597
6¥1,623(3) Calculation method for recoverable amounts
The property for lease is measured by the net selling price andis evaluated by the real estate appraisal value. For business-use
assets, the recoverable value is measured based on the value
in use, and is assessed based on the memorandum value.

10. Contingent Liabilities
Contingent liabilities at March 31, 2020 and 2019 consisted of thefollowing:

As endorsers of trade notes
receivable:
Endorsed to otherAs guarantors of loans:
Muroran Environmental
Plant Service Co., Ltd.
Gotsu Wind Power
Co., Ltd
Employees and other

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥ 68

¥ 49

$  450

243

193

1,773

720
4

586
1

5,385
9

11. Short-Term Borrowings and Long-Term Debt
All short-term borrowings, with interest at annual rates ranging
from 0.2690% to 0.9900% at March 31, 2020 and 0.2690% to
1.4750% at March 31, 2019, were unsecured.
Long-term debt at March 31, 2020 and 2019 were as follows:

Loans from banks andinsurance companies withinterest at annual rates
ranging from 0.1600% to
0.7450%Less those maturing within
one yearLease obligations
Less those maturing within
one yearLong-term indebtedness
reflected in the
consolidated balance
sheetsMillions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥39,408¥40,847$375,328

(199)
1,292

(5,155)
1,168(47,367)
10,732

(496)

(434)

(3,988)¥40,004¥42,016$386,070

The aggregate annual maturities of long-term debt and leaseobligations subsequent to March 31, 2020 are summarized asfollows:
Millions of yen

Thousands of
U.S. dollars Millions of yen

Year ending March 31,

Long-term loans

2021
2022
2023
2024
2025
2026 and thereafter¥ 5,155
1,950
15,8892,398
4,689
10,765$ 47,367
17,918145,998
22,03443,086
98,916

Thousands of
U.S. dollars

Lease obligations

¥434
329
224
133
41
5

$3,988
3,023
2,058
1,222
377
46

39

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

12. Research and Development Expenses
Research and development expenses included in manufacturingcosts, and selling, general and administrative expenses for theyears ended March 31, 2020 and 2019 were as follows:

14. Other Comprehensive Income
The following table presents reclassification adjustments and tax
effects allocated to each component of other comprehensive
income for the years ended March 31, 2020 and 2019:

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

2020

2020

¥4,506¥4,708

Research and ­development
expenses$43,260

13. Other Income (Expenses)—Other, Net
The details of “Other, net” in “Other income (expenses)” for theyears ended March 31, 2020 and 2019 were as follows:

Foreign exchange
gain (loss)
Equity in gains (losses) ofaffiliates
Gain on sales of property,
plant and equipment
Gain on sales ofinvestment securities
Rent income on
non-current assets
Cancellation fee received
Loss on sales or disposal ofproperty, plant andequipment
Loss on valuation of
investment securities
Loss on sales of investment
securities
Provision for businessrestructuring
Other, net
Total

40

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥   38¥  (173)$ (1,590)

89

(3)

(28)

3,933

1,296

11,908

263

379

3,482

786
1,186

757
6

6,956
55

(260)

(484)

(4,447)(51)(3,589)(32,978)—(1,369)(12,579)(711)
717¥5,992(2,244)276¥(5,151)(20,619)2,536$(47,331)

2019

Unrealized holding gain
(loss) on securities:
Amount arising during
the year
Reclassification
adjustments for gains
and losses realized in
net income
The amount of
unrealized holding gain
(loss) on securities
before tax effectTax effectUnrealized holding gain
(loss) on securities
Unrealized gain (loss) fromhedging instruments:
Amount arising during
the yearTax effectUnrealized gain (loss) fromhedging instruments
Translation adjustments:
Amount arising during
the yearTranslation adjustments
Remeasurement benefits
plans adjustments:
Amount arising during
the year
Reclassification
adjustments for gains
and losses realized in
net income
The amount of
unrealized holding gain
(loss) on securities
before tax effectTax effectRemeasurement benefits
plans adjustments
Total other comprehensive
income15.	Supplementary Information for Consolidated Statementof Changes in Net Assets
Year ended March 31, 2020(a)	Information regarding the number and type of sharesissued and treasury stock:51¥(7,837)

4,578$(72,011)

Increaseduringthe year

Decreaseduringthe yearYear ended
March 31,2020

42,066

Shares issued:
Common stock
Treasury stock:
Common stock(Notes 1 and 2)

Notes: 1.	The increase in shares issued – common stock of 23,248 was due toissuance of new shares as restricted stock.
2.	The increase in treasury stock – common stock of 257 was due to theacquisition of fractional shares of less than one unit.

(5,699)1,720(3,258)985(29,937)
9,051(3,978)(2,273)(20,886)

(765)
233

226
(68)

2,077
(625)

(532)

157

1,443

(232)
(232)

(122)
(122)

(1,121)(1,121)(951)(1,228)(11,284)

261

(132)

(689)
210

Number of sharesYear ended
March 31,2018

Number of sharesYear ended
March 31,2019¥(5,750)

Year ended March 31, 2019(a)	Information regarding the number and type of sharesissued and treasury stock:74,309,108

23,248—74,332,356

803,082257—

803,339(b) Dividends(i) Dividends paid to shareholders

Shares issued:
Common stock
Treasury stock:
Common stock(Notes 1 and 2)

Increaseduringthe year

Decreaseduringthe yearYear ended
March 31,
2019

74,292,607

16,501—

74,309,108

802,503

579—

803,082

Notes: 1.	The increase in shares issued – common stock of 16,501 was due toissuance of new shares as restricted stock.
2.	The increase in treasury stock – common stock of 579 was due to theacquisition of fractional shares of less than one unit.

(b) Dividends(i) Dividends paid to shareholders
Resolution:	Annual general meeting ofshareholders held on June 26, 2018
Type of shares:
Common stock
Total amount ofdividends:¥1,469 million
Dividends per share: ¥20.0
Cut-off date:
March 31, 2018
Effective date:June 27, 2018

Resolution:	Annual general meeting ofshareholders held on June 21, 2019
Type of shares:
Common stock
Total amount ofdividends:¥2,205 million ($20,261 thousand)
Dividends per share: ¥30.0 ($0.276)
Cut-off date:
March 31, 2019
Effective date:June 24, 2019

Note: Dividends per share include ¥2.5 of commemorative 110th anniversary
dividend.

Resolution:	Meeting of Board of Directors held on
November 11, 2019
Type of shares:
Common stock
Total amount ofdividends:¥2,022 million ($18,579 thousand)
Dividends per share: ¥27.5 ($0.253)
Cut-off date:
September 30, 2019
Effective date:
December 11, 2019

Resolution:
Meeting of Board of Directors held on		November 5, 2018
Type of shares:
Common stock
Total amount ofdividends:¥1,837 million
Dividends per share: ¥25.0
Cut-off date:
September 30, 2018
Effective date:
December 5, 2018

(1,213)(ii)	Dividends of which the cut-off date was in the year ended
March 31, 2020, but the effective date is in the following fiscal
year(ii)	Dividends of which the cut-off date was in the year ended
March 31, 2019, but the effective date is in the following fiscal
year(1,361)
434(12,506)
3,988

(478)

(927)

(8,518)¥(5,221)¥(3,166)$(29,091)

Resolution:
Annual general meeting of		shareholders held on June 24, 2020
Type of shares:
Common stock
Total amount ofdividends:¥1,286 million ($11,817 thousand)
Dividends per share: ¥17.5 ($0.161)
Cut-off date:
March 31, 2020
Effective date:June 25, 2020
Source of dividends: Retained earnings

Resolution:
Annual general meeting of		shareholders held on June 21, 2019
Type of shares:
Common stock
Total amount ofdividends:¥2,205 million
Dividends per share: ¥30.0
Cut-off date:
March 31, 2019
Effective date:June 24, 2019
Source of dividends: Retained earnings

41

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

16. Cash Flow Information(a) Cash and cash equivalents
The reconciliation between cash and cash equivalents in theaccompanying consolidated statements of cash flows and cash on
hand and in banks in the accompanying consolidated balance
sheets at March 31, 2020 and 2019 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2020

2020

2019

Cash on hand and in banks
in the consolidatedbalance sheet
Other current assets
Time deposits withmaturities of more than
three months
Cash and cash equivalentsin the consolidated
statement of cash flows¥75,525
199¥74,304
283$693,972
1,829

(768)

(1,247)(11,458)¥73,820¥74,477$684,343(b) Significant transactions without cash flows
Assets and liabilities corresponding to finance lease transactions
that have been recorded by the Company and its domestic­consolidated subsidiaries at March 31, 2020 and 2019 were as
follows:

Lease assets
Lease obligations

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥557
601

¥385
604

$3,5385,550

17. Leases
Year ended March 31, 2020
Future minimum lease payments subsequent to March 31, 2020
under non-cancelable operating leases are summarized asfollows:
Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2021
2022 and thereafter
Total

¥118
121
¥239

$1,084
1,112$2,196

Year ended March 31, 2019
Future minimum lease payments subsequent to March 31, 2019
under non-cancelable operating leases are summarized asfollows:
Year ending March 31,
20202021 and thereafter
Total

42

Millions of yen

¥110
179
¥289

18. Financial Instruments
Overview(a) Policy for financial instruments
In consideration of plans for operations and capital investment,
the Group utilizes funds provided by operating cash flows first. The
Group uses bond issuances and bank borrowings in order to raise
additional funds, if needed. The Company manages temporary
cash surpluses through low-risk financial assets. The Company
uses derivatives for the purpose of reducing risks and does notenter into derivative contracts for speculative or trading purposes.
(b) Types of financial instruments and related risk
Trade receivables – trade notes and accounts receivable – areexposed to credit risk in relation to customers. In addition, theCompany is exposed to foreign currency exchange risk arisingfrom receivables denominated in foreign currencies. The foreign
currency exchange risks deriving from the trade receivables
denominated in foreign currencies are hedged by forward foreignexchange contracts, if needed.
Investment securities are exposed to market risk. These­securities are mainly composed of the shares of common stock ofcompanies with which the Company has business relationships.
Trade payables – trade notes and accounts payable – havepayment due dates within one year. Since the Company is exposed
to foreign currency exchange risk arising from those payables
denominated in foreign currencies, forward foreign exchange contracts are arranged to reduce the risk, if needed.
Loans payable are used to raise funds mainly in connection
with capital investments. The repayment dates of the long-term
debts extend up to nine years from the balance sheet date. Longterm debt with variable interest rates is exposed to interest rate
fluctuation risk and foreign currency exchange risk. However, toreduce such risk and fix the interest payments for long-term debt
with variable rates, the Company utilizes interest rate swap
transactions and interest-rate currency swaps as hedging­
instruments.
Regarding derivatives, the Company enters into forward
foreign exchange contracts to reduce the foreign currency­
exchange risk arising from the receivables and payables denominated in foreign currencies. The Company also enters into interest
rate swap transactions and interest-rate currency swaps to reduce
the fluctuation risk of interest payments for long-term debt withvariable rates.
Information regarding the method of hedge accounting,hedging instruments and hedged items, hedging policy, and theassessment of the effectiveness of hedging activities is found in
Note 2 (p).

(c) Risk management for financial instruments(i)	Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies of the Company for
managing credit risk arising from receivables, each related
division monitors credit worthiness of their main customers
periodically, and monitors due dates and outstanding balances by individual customer. In addition, the Company ismaking efforts to identify and mitigate risks of bad debts from
customers who are having financial difficulties. The consolidated subsidiaries also manage credit risk using the C­ ompany’s
internal policies and methods.
The Company also believes that the credit risk of derivatives is insignificant as it enters into derivative transactions
only with financial institutions which have a high ­credit-rating.
(ii)	Monitoring of market risk (the risk arising from fluctuations inforeign exchange rates, interest rates and others)
For trade receivables and payables denominated in foreign
currencies, the Company identifies the foreign currency
exchange risk for each currency on a monthly basis and enters
into forward foreign exchange contracts to hedge such risk. In
order to mitigate the interest rate risk for loans payable bearing interest at variable rates, the Company may also enter into
interest rate swap transactions and interest-rate currency
swaps.
For investment securities, the Company periodicallyreviews the fair values of such financial instruments and thefinancial position of the issuers. In addition, the Company continuously evaluates whether securities should be maintained
taking into account their fair values and relationships with theissuers.
In conducting derivative transactions, the division in
charge of each derivative transaction follows the internal policies, which set forth delegation of authority. Monthly reports
including actual transaction data are submitted to top management for their review. The consolidated subsidiaries also
conduct derivative transactions using the Company’s internal
policies.
(iii)	Monitoring of liquidity risk (the risk that the Company may
not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Company preparesand updates its cash flow plans on a timely basis to manage
liquidity risk. The consolidated subsidiaries manage the liquidity risk using cash flow plans and report to the Company
periodically.
(d)	Supplementary explanation of the estimated fair value offinancial instruments
The fair value of financial instruments is based on their quoted
market price, if available. When there is no available quoted market price, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in Note 20 Derivative
Transactions are not necessarily indicative of the actual market risk
involved in derivative transactions.

Estimated Fair Value of Financial Instruments
Carrying values and estimated fair values of financial instrumentson the consolidated balance sheets as of March 31, 2020 and 2019are shown in the following tables. The following tables do notinclude financial instruments for which it is extremely difficult todetermine the fair value (Please refer to Note (ii) below).
Year ended March 31, 2020
Millions of yen

AssetsCash on hand and inbanks
Trade notes andaccounts receivable
Securities:  Other securities
Total assets
Liabilities
Trade notes andaccounts payable
Short-term borrowings
Current portion of
long-term debt
Long-term debt
Total liabilities
Derivatives (*)

Carrying
amountEstimated
fair value

Difference¥ 75,525¥ 75,525¥ —51,29751,296(0)

19,268¥146,091

19,268¥146,090—¥  (0)¥ 48,409
10,048¥ 48,409
10,048

¥ —
—

5,155
35,691¥ 99,305¥    (98)5,155
36,142¥ 99,756¥    (98)

(0)
450
¥450
—

Carrying
amountEstimated
fair value$  693,972$  693,972

471,350

471,341

177,047$1,342,378

177,047$1,342,369$  444,813
92,327$  444,813
92,327

Thousands of U.S. dollars

AssetsCash on hand and inbanks
Trade notes andaccounts receivable
Securities:
Other securities
Total assets
Liabilities
Trade notes andaccounts payable
Short-term borrowings
Current portion of
long-term debt
Long-term debt
Total liabilities
Derivatives (*)

47,36747,367
327,952
332,096$  912,478 $  916,622$     (900) $     (900)Difference

$

—
(0)

$

$

—
(0)

—
—

(0)
4,135
$4,135—(*) The value of assets and liabilities arising from derivatives is shown at net value,with the amount in parentheses representing net liability position.

43

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

Year ended March 31, 2019
Millions of yen

Carrying
amountAssetsCash on hand and inbanks
Trade notes andaccounts receivable
Securities:  Other securities
Total assets
Liabilities
Trade notes andaccounts payable
Short-term borrowings
Current portion of
long-term debt
Long-term debt
Total liabilities
Derivatives (*)

Estimated
fair value

Difference¥ 74,304¥ 74,304¥ —64,92164,921(0)26,852¥166,078

26,852¥166,077—¥  (0)¥ 55,579
12,088¥ 55,579
12,088¥ ——199
39,208¥107,076¥   (326)

199
39,723¥107,590¥   (326)

0
514
¥514
—

(*) The value of assets and liabilities arising from derivatives is shown at net value,with the amount in parentheses representing net liability position.

(i)	Method to determine the estimated fair value of financial
instruments and other matters related to securities and­derivative transactions
AssetsCash on hand and in banks
The carrying amount is used for bank deposits without maturities, because the fair value approximates the carrying value.
The fair value of time deposits in banks with maturities is calculated based on the present value of the total principal andinterest discounted at a rate supposing a newly made deposit.
Trade notes and accounts receivables
The fair value is calculated by categories of the remaining­periods of the receivables based on the present value using
discount rates determined by the period to maturity and credit
risk.
Securities
The carrying amount is used for other securities with maturities, because the fair value approximates the carrying amount.
Quoted market price is used for other securities.
Liabilities
Trade notes and accounts payable and short-termborrowings
The carrying amount is used for these items because the fairvalue approximates the carrying amount.

44

Current portion of long-term debt and long-term debt
The fair values are calculated by applying a discount rate,
based on the assumed interest rate if new debt is issued, to thetotal of the principal and interest. The current portion of longterm debt and long-term debt with variable interest rates are
subject to the special treatment of interest rate swaps or the
integral treatment of interest rate currency swaps and is calculated by applying a discount rate, based on the assumed interest rate if a similar new debt is issued, to the total of theprincipal and interest including that of the interest rate swap.
Derivative transactions
Please refer to Note 20 Derivative Transactions, of the notes tothe consolidated financial statements.
(ii)	
Financial instruments for which it is extremely difficult todetermine the fair value

2019

Unlisted stocks¥2,226

Millions of yen

Thousands of
U.S. dollars

2020

2020

¥2,027$18,625

Because the fair values of these financial instruments are
extremely difficult to determine, given that they do not havequoted market prices and future cash flows cannot be estimated, they are not included in “Securities” in the precedingtable.

Year ended March 31, 2019
Millions of yen

Due after
one yearthroughfive years

Due after
five years¥ 74,304¥ ——64,593¥138,898

327
¥327

—
—

Due inone yearor less

Cash on hand andin banks
Trade notes andaccounts receivable
Total

Year ended March 31, 2020

Due after
one yearthroughfive years

Due after
five years

Cash on hand andin banks
Trade notes andaccounts receivable
Total¥ 75,525¥ ——50,905¥126,431

391
¥391

—
—

Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years

Cash on hand andin banks
Trade notes andaccounts receivable
Total

Due inone yearor less$  693,972

$

—

—

467,748$1,161,729

3,593$3,593——Due after
five years

Long-term
loans

Lease
obligations¥ 5,155
1,950
15,8892,398
4,689
10,765

¥434
329
224
133
41
5

Thousands of U.S. dollars

Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years

Long-term
loans

Lease
obligations$ 47,367
17,918145,998
22,03443,086
98,916$3,988
3,023
2,058
1,222
377
46

Year ended March 31, 2019
Millions of yen

Thousands of U.S. dollars

Due after
one yearthroughfive years

Millions of yen

Carrying amountexceeding theacquisition cost:
		 Stocks
Carrying amount notexceeding theacquisition cost:
		 Stocks
Total

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥ 7,413¥11,596¥ 4,182

10,389¥17,802

7,672¥19,268(2,716)¥ 1,466

Acquisition
cost

Carrying
amountUnrealized
gain (loss)$68,115$106,552$ 38,427

95,461$163,576

70,495$177,047(24,956)$ 13,471

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥14,079¥21,598¥ 7,519

8,041¥22,120

5,253¥26,852(2,787)¥ 4,731

Thousands of U.S. dollars

Millions of yen

Year ended March 31, 2020

Due inone yearor less

March 31, 2020(iv) The redemption schedule for long-term debt(iii)	Redemption schedule for receivables and securities withmaturities at March 31, 2020 and 2019

Millions of yen

19. Securities(a) Other securities

Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years

Long-term
loans

Lease
obligations¥   199
5,000
1,800
15,7002,208
14,500

¥496
346
234
148
63
2

Carrying amountexceeding theacquisition cost:
		 Stocks
Carrying amount notexceeding theacquisition cost:
		 Stocks
Total
March 31, 2019

Millions of yen

Carrying amountexceeding theacquisition cost:
		 Stocks
Carrying amount notexceeding theacquisition cost:
		 Stocks
Total

When their fair values have declined by 50% or more, impairment
losses are recorded on those securities. When their fair values havedeclined by 30% up to 50%, impairment losses are recorded on
those securities on an individual basis to the values considered tobe recoverable.
(b) Impairment of investment securities
Millions of yen

Thousands of
U.S. dollars

2020

2020

For the year ended March 31, 20192019

Other securities
Stock¥51 ¥3,589 $32,97845

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

20. Derivative Transactions(a) Derivatives not subject to hedge accounting

Year ended March 31, 2019
Millions of yen

Year ended March 31, 2020
None applicableYear ended March 31, 2019
None applicable

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
JPY
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound

Accounts receivable(b) Derivatives subject to hedge accounting
The contract amounts or the amount corresponding to principal as specified by the contract as of the date of the closing of the consolidated
accounts is shown below by type of hedge accounting method.
(i) Currency-related transactions
Year ended March 31, 2020

Contract
amountOver
one year

Fair value¥17,161
1,557
41¥2,670131—¥(266)
30(0)¥   853
2,661
124

¥

¥   8
(84)
(14)

Accounts payable—682—

Note: Calculation of fair value is based on the forward exchange rates.
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
Canadian dollars
JPY
Thai baht
Chinese Yuan
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros

Accounts receivable(ii) Interest-related transactions

Contract
amountOver
one year

Fair value¥14,045
2,534
15
28
57
1

¥589
716
—
—
—
—

¥(100)
29
1
1
(0)
0

¥ 2,052
2,321

¥ —
218

¥   14(43)

Accounts payableYear ended March 31, 2020
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment forinterest rate swaps
Integral treatment forinterest rate currency swaps:(Special treatment andallocation method)

Receive/floating and pay/fixedLong-term borrowings

Receivable USD and floating rate/
payable JPY and fixed rateLong-term borrowings

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
Canadian dollars
JPY
Thai baht
Chinese Yuan
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros

Accounts receivable

Contract
amountOver oneyear

Fair value$129,054
23,284
138
257
524
9

$5,412
6,579
—
—
—
—

$(919)
266
9
9
(0)
0

$ 18,855
21,327

$ —
2,003

$ 129
(395)

Accounts payableOver
one year

Fair value¥25,000¥25,000

(*)

708

708

(*)

Contract
amountOver
one year

Fair value$229,716$229,716

(*)

6,506

6,506

(*)

Thousands of U.S. dollars

Thousands of U.S. dollars

Hedge accounting method

Contract
amountHedge accounting method

Type of derivative

Principal items hedged

Special treatment forinterest rate swaps
Integral treatment forinterest rate currency swaps:(Special treatment andallocation method)

Receive/floating and pay/fixedLong-term borrowings

Receivable USD and floating rate/
payable JPY and fixed rateLong-term borrowings(*) Interest rate swaps subject to the special treatment for interest rate swaps and interest rate currency swaps subject to integral treatment for interest rate currency swaps
are accounted for together with the long-term debt, accordingly the fair value of the interest rate swaps is included in the fair value of the corresponding long-term debt.
Note: Calculation of fair value is based on the stated price by financial institutions.

Note: Calculation of fair value is based on the forward exchange rates.

46

47

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

Year ended March 31, 2019
Millions of yen

Hedge accounting method

Special treatment forinterest rate swaps
Integral treatment forinterest rate currency swaps:(Special treatment andallocation method)Type of derivative

Principal items hedged

Receive/floating and pay/fixedLong-term borrowings

Receivable USD and floating rate/
payable JPY and fixed rateLong-term borrowings

Contract
amount¥25,000

708

Over
one year¥25,000

708

Fair value(*)

Note: Calculation of fair value is based on the stated price by financial institutions.

The changes in the retirement benefit obligation for the years
ended March 31, 2020 and 2019 are as follows:

Balance at the beginningof the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefit paid
Prior service cost
Increase by merger
Other
Balance at the endof the year

48

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥19,792
996
112
438(1,328)20——¥20,031
1,110
97
60
(947)
—
404
8

$184,058
10,199891
551(8,702)—
3,712
74¥20,031¥20,764$190,793

The changes in plan assets for the years ended March 31, 2020 and2019 are as follows:

2019

Balance at the beginningof the year
Expected return on plan
assetsActuarial gain and loss
Contributions by theCompany
Retirement benefits paid
Balance at the end
the year

Millions of yen

Thousands of
U.S. dollars

2020

2020

¥15,517¥14,924$137,131

310
(493)

298
(1,168)

2,738(10,732)

475
(885)

562
(659)

5,164
(6,055)¥14,924¥13,956$128,237

The changes in retirement benefit liability accounted for using thesimplified method for the years ended March 31, 2020 and 2019are as follows:

Balance at the beginningof the year
Retirement benefit
expenses
Retirement benefits paid
Contributions
Transfer amountdue to change from
Simplified method
to principle method
Contributions
Balance at the end
the year

2019

(*)

(*) Interest rate swaps subject to the special treatment for interest rate swaps and interest rate currency swaps subject to integral treatment for interest rate currency swaps
are accounted for together with the long-term debt, accordingly the fair value of the interest rate swaps is included in the fair value of the corresponding long-term debt.

21. Retirement Benefit Plans
The Company and its consolidated subsidiaries have either fundedor unfunded defined benefit plans and/or defined contributionplans.
The Company and its domestic consolidated subsidiaries havedefined benefit plans, i.e. lump-sum payment plans, defined benefit plans, welfare pension fund and tax-qualified pension plans,
covering substantially all employees who are entitled to lump-sum
or annuity payments, the amounts of which are determined by reference to their basic rates of pay, length of service, and the conditions under which termination occurs.

The following table sets forth the funded status of the plans andthe amounts recognized in the consolidated balance sheets as ofMarch 31, 2020 and 2019 for the Company’s and the consolidated
subsidiaries’ defined benefit plans:Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥3,034¥3,012$27,676

642
(473)
(191)

589
(390)
(192)

5,412
(3,584)(1,764)

Funded retirement benefit
obligation
Plan assets at the value
Unfunded retirement
benefit obligation
Net liability for retirement
benefits in the balance
sheet
Retirement benefit liability
Retirement benefit assets
Net liability for retirement
benefits in the balance
sheet¥ 19,804(16,180)
3,623

Millions of yen

Thousands of
U.S. dollars

2020

2020

¥ 20,559 $ 178,430(15,215) (145,779)
5,343
32,643

4,496

4,239

40,508

8,119
10,494(2,374)

9,583
11,172(1,588)88,055
102,656(14,592)¥   8,119¥   9,583$   88,055

The components of retirement benefit expense for the years
ended March 31, 2020 and 2019 are as follows:

Service cost
Interest cost
Expected return on plan
assetsAmortization of actuarial
gain and loss
Amortization of priorservice cost
Simplified method for
retirement benefit
expenses
Transfer amountdue to change from
Simplified method
to principle method
Other
Retirement benefit
expenseMillions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥  996112¥1,110
97$10,199
891

(310)

(298)

(2,738)

261

(134)

(1,231)

2

2

18

642

589

5,412

—
42

156
2

1,433
18

¥1,747¥1,524$14,003

The components of retirement benefits plans adjustments
included in other comprehensive income (before tax effect) for theyears ended March 31, 2020 and 2019 are as follows:

Prior service costs
Actuarial gain and loss
Total

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥ (18)(670)¥(689)¥     2
(1,363)¥(1,361)$     18
(12,524)$(12,506)

The components of retirement benefits plans adjustments
included in accumulated other comprehensive income (before tax
effect) as of March 31, 2020 and 2019 are as follows:

Unrecognized prior service
costs
Unrecognized actuarial
gain and loss
Total

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥ (18)¥   (16)$   (147)(138)¥(157)(1,501)¥(1,518)(13,792)$(13,948)

The fair value of plan assets, by major category, as a percentage of
total plan as of March 31, 2020 and 2019 is as follows:
March 31,

Bonds
StocksCash on hand and in banks
General account
Other
Total

(247)
6

(2,270)55¥3,012¥2,776$25,508

2020

30%
44
0
17
9
100%

33%
40
0
18
9
100%

Retirement benefit trust set for the lump-sum and corporate pension plans accounts for 17% and 20% of the total plan assets, forthe years ended March 31, 2020 and 2019, respectively.
The expected return on assets has been estimated based on
the anticipated allocation to each asset class and the expectedlong-term returns on assets held in each category.
The assumptions used in accounting for the above plans are as
follows:
March 31,

—
—

2019

Discount rates
Expected rates of return on plan assets

2019

2020

0.51%
2.00

0.58%
2.00

Contributions made to defined contribution plans for the years
ended March 31, 2020 and 2019 were ¥56 million ($515 thousand)and ¥64 million, respectively.

4922. Income Taxes
The significant components of the Company’s deferred tax assets
and liabilities at March 31, 2020 and 2019 were as follows:

2019

Deferred tax assets:
Accrued enterprise taxes
Accrued bonuses
Depreciation
Amortization of long-term
prepaid expenses
Loss on revaluation of
inventory items
Loss on revaluation offinancial instruments
Impairment loss
Retirement benefit liability
Provision for warranties forcompleted construction
Provision for loss on
construction contracts
Provision for loss on wind
power generator business
Provision for businessrestructuring
Less allowance for doubtful
accounts
Asset retirement obligations
Percentage-of-completion
methodTax loss carry forwards
Unrealized loss on
investment securities
Deferred loss on hedges
Unrealized gain on
intercompany transactions
Other   Gross deferred tax assets
Valuation allowance for tax
loss carryforwards
Valuation allowance for the
total of future deductible
temporary differences etc.
Total valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced
depreciation
Net defined benefit asset
Disposal cost with asset
retirement obligations
Unrealized gain on
investment securities
Deferred gain on hedges
Other
Total deferred tax liabilities
Net deferred tax assets

50¥   245
1,105
890

Millions of yen

Thousands of
U.S. dollars

2020

2020

¥    61 $    5611,10910,190
881
8,095

105

105

965

1,216

692

6,359

184
12,383
4,468

184
11,0294,821

1,691
101,342
44,298

137

61

561

86

168

1,544

575

433

3,979

1,615

1,706

15,676

131
397

149
397

1,369
3,648

280
1,630

423
1,473

3,887
13,535

849
120

814
56

7,480
515

624
1,113
28,163542
1,063
26,1784,980
9,768
240,540(1,465)(1,461)(13,425)(2,584)(4,049)24,113(2,517)(3,978)22,199(23,128)(36,552)
203,979

2,051
712

1,828
530

16,797
4,870

230

230

2,113

2,296
20
326
5,637
¥18,475

1,276
11,725
26
239
387
3,556
4,280
39,327¥17,919 $164,651

Tax loss carry forward and its deferred tax asset carry forward due
date at March 31, 2020 and 2019 were as follows:

Change in deferred tax assets and deferred tax liabilities due toreduction in corporate income tax rate
2019

2020

Notes are omitted
because the difference
between the statutory
effective tax rate andthe tax burden rate after
application of tax effectaccounting is less than
5% of the statutory
effective tax rate.

30.5%

Year ended March 31, 2020
Millions of yen

Tax losscarryforwards¥

Due in 1 year or lessDue after 1 year through2 years
Due after 2 years through3 years
Due after 3 years through4 years
Due after 4 years through5 years
Due after 5 years
Total

Valuation Deferred tax
allowance
assets

—

¥

—

¥—

28

(28)

—

329

(329)

—

464

(464)

—

208
443
¥1,473(208)(431)¥(1,461)—12¥12

Thousands of U.S. dollars

Due in 1 year or lessDue after 1 year through2 years
Due after 2 years through3 years
Due after 3 years through4 years
Due after 4 years through5 years
Due after 5 years
Total

Tax losscarryforwards

Valuation Deferred tax
allowance
assets

$

$

—

—

$ —

257

(257)

—

3,023

(3,023)—

4,264(4,264)

—

1,911
4,071
$13,535(1,911)(3,960)$(13,425)

—
110
$110

Year ended March 31, 2019
Millions of yen

Tax losscarryforwards

Due in 1 year or lessDue after 1 year through2 years
Due after 2 years through3 years
Due after 3 years through4 years
Due after 4 years through5 years
Due after 5 years
Total

Valuation Deferred tax
allowance
assets¥  234¥   (74)

¥159

—

—

—

33

(33)

—

358

(357)

0

569
434
¥1,630(569)(430)¥(1,465)—
3¥164

Statutory tax rates
Effect of:Permanent differences(Expense)
Expired loss carryforwards
Other
Effective tax rates

1.0
1.0
0.1
32.6%

23. Business Combinations
1. Transactions under common control(Nikko Information Systems Co., Ltd.)
Based on a resolution of the Board of Directors meeting held on
January 29, 2019, the Company absorbed Nikko Information­Systems Co., Ltd. On April 1, 2019.
(1) Transaction overview(a)	The names and business details of the company subject
to business combination
		 Name of the Company	Nikko Information Systems
Co., Ltd.
		 Business details	Computer system ­consulting,contract ­development, ­technicalguidance, etc.
(b) Date of business combination
		 April 1, 2019(c) Legal form of business combination
		 An absorption-type merger where the Company becomes
the surviving company and Nikko Information Systems
Co., Ltd. becomes the Merged company(d) The name of the Combined Enterprise		 The Japan Steel Works, Ltd.
(e) Matters concerning the outline of other transactions
		 Since its establishment in April 1990 as a wholly-owned
subsidiary of the Company, Nikko Information Systems
Co., Ltd. has been in charge of the Company’s information
system operation and management as well as theentrusted development business. However, given that
advanced information technology (Machine learning, etc.)
is an important element for the enhancement of theCompany’s product and service values, Nikko Information
Systems Co., Ltd. has decided to merge with the Company
to strengthen its functions.
(2) Overview of accounting
In accordance with “Accounting Standards for Business Combinations” (Corporate Accounting Standards No. 21, January 16,2019) and “Implementation Guidance for Accounting Standards for Business Combinations and Accounting Standards
for Business Separation” (Corporate Accounting Standards
Implementation Guidance No. 10, January 16, 2019) the
accounting treatment has been made as a transaction undercommon control .

2. Business combination by acquisition(GM Engineering Co., Ltd.)At the meeting of the Board of Directors held on March 19, 2019,
The Company resolved to acquire additional shares of GM
Engineering Co., Ltd, a former affiliate and became its subsidiaryon April 1, 2019.
(1) Transaction overview(a) The name of the acquired enterprise and the nature of its
business		 Name of recipient company: GM Engineering Co., Ltd.
		 Nature of business: 	Design, manufacture, andsale of plastic sheet equipment, extruders, etc.;
design, manufacture, andsale of dies and auxiliary
equipment(b) The main reasons for the business combination
		 Strengthen and expand sheet equipment business(c) Date of business combination
		 April 1, 2019(d) Legal form of business combination
		 Stock acquisition in exchange for cash(e) The name of the Combined Enterprise		 There is no change in the name of the combined
company.
(f ) Percentage of voting rights acquired
		 21.75% of the voting rights held immediately before thebusiness combination
		 60.5% of the voting rights additionally acquired on thedate of the business combination
		 82.25% of total voting rights after acquisition(g) Main basis for determining acquiring companies
		 The Company acquired the shares in exchange for cash.
(2)	The period of performance of the acquired company
included in the consolidated income statement of theCompany for the consolidated cumulative period
From April 1, 2019 to March 31, 2020(3)	Acquisition costs of acquired enterprises and their­breakdown type
	Market value of shares heldon business combination date:¥ 34 million
Cash spent for additional acquisition:¥ 96 million
Acquisition cost: 		¥131 million(4) Details and amounts of major acquisition-related expenses¥5 million for advisory expenses(5)	The difference between the acquisition cost of the AcquiredEnterprise and the total amount of the acquisition cost foreach transaction leading to the acquisition
Loss on phased acquisition:		
¥89 million

51

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s(6)	The amount of negative goodwill that occurred, and thecause for the occurrence(a) The amount of negative goodwill that occurred		¥361 million(b) Cause of occurrence		This was because the net assets at market value of GM
Engineering Co., Ltd. exceeded the acquisition cost.
(7)	The amount of assets accepted and liabilities assumed on
the date of the Business Combination, and the major­b­reakdown thereof
Current assets:¥1,722 million
Fixed assets:¥  654 million
Total assets:		
¥2,377 million(4) Details and amounts of major acquisition-related expenses¥1 million for advisory expenses¥1,275 million¥  503 million¥1,778 million(5)	The amount of goodwill that occurred, and the cause for theoccurrence(a) The amount of goodwill that occurred		¥809 million(b) Cause of occurrence		This was mainly due to the excess earning power
expected from future business development.
(c) Amortization method and period
		 Straight-line depreciation over 5 years(Nichiyu Machinery Co., Ltd.)At the meeting of the Board of Directors held on June 18, 2019,
The Company resolved to acquire the shares of Nichiyu MachineryCo., Ltd. and make it a subsidiary. Based on the resolution, theCompany entered into a stock purchase agreement on September
17, 2019, and acquired the shares on November 1, 2019.

(6)	The amount of assets accepted and liabilities assumed on
the date of the Business Combination, and the major­breakdown thereof
Current assets:¥957 million
Fixed assets:¥ 30 million
Total assets:¥987 million

Current liabilities:
Fixed liabilities:
Total liabilities:(1) Transaction overview(a)	The name of the acquired enterprise and the nature of its
business		 Name of acquired company: Nichiyu Machinery Co., Ltd.
		 Nature of business: 	Manufacture, sales, parts
sales, maintenance serviceof various unwinders andwinders(b) The main reasons for the business combination
		 To further expand business in the film sheet manufacturing equipment business by incorporating the winder business, which is indispensable for providing a full line
product(c) Date of business combination
		 November 1, 2019(d) Legal form of business combination
		 Share acquisition in exchange for cash(e) The name of the Combined Enterprise		 There is no change in the name of the combined
company.
(f ) Percentage of voting rights acquired		 100% of total voting rights after acquisition(g) Main basis for determining acquiring companies
		 Our Company acquired the shares in exchange for cash.
(2)	The period of performance of the acquired company
included in the consolidated income statement of theCompany for the consolidated cumulative period
From November 1, 2019 to March 31, 202052(3)	Acquisition costs of acquired enterprises and their­breakdown type
Cash spent on acquisition:		
¥950 million
Settlement payment confirmed after acquisition: ¥ (2) million
Acquisition cost:		¥948 million

Current liabilities:
Fixed liabilities:
Total liabilities:¥845 million¥   3 million¥849 million

Millions of yen

Reportable segments
Year ended March 31, 2020

Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation,and capital expenditures:
Total assets
Depreciation and amortization
Capital expenditures

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥1,364¥1,308$12,019

2
22
(71)
(9)
¥1,308—23(2)—¥1,329

—
211
(18)
—
$12,212

Industrial
Machinery
Products

Steel andEnergyProducts

Other
Businesses

Total

AdjustmentsandEliminations

Consolidated¥171,416
1,499
172,916¥ 19,272¥41,418
5,320
46,739¥ 2,484¥4,691
2,152
6,844¥ (146)¥217,527
8,972
226,499¥ 21,610¥—(8,972)(8,972)¥ (2,901)¥217,527—
217,527¥ 18,709¥147,703
4,022
5,813

¥39,036866
3,234¥9,946681
1,226¥196,686
5,570
10,275¥100,486
163
309¥297,173
5,733
10,585
Thousands of U.S. dollars

Reportable segments
Year ended March 31, 2020

24. Asset Retirement Obligations
The following table presents the changes in asset retirement­obligations for the years ended March 31, 2020 and 2019:

Balance at beginningof yearLiabilities incurred dueto the acquisition of­property, plant andequipment
Accretion expense
Liabilities settled
Other
Balance at end of year

26. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are
regularly reviewed by the Executive Committee to make decisions about resource allocation and to assess performance.
The Industrial Machinery Products segment includes injection molding machines, film and sheet machinery, other. The Steel and Energy
Products segment includes steel castings and forgings, steel plates and pipes. The Other Businesses segment includes deposition business,
crystal business and wind power generation equipment.

Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation,and capital expenditures:
Total assets
Depreciation and amortization
Capital expenditures

Industrial
Machinery
Products

Steel andEnergyProducts$1,575,080
13,774
1,588,863$  177,084$380,575
48,884429,468$ 22,825$43,104
19,77462,887$ (1,342)$1,998,778
82,441
2,081,218$  198,567$—(82,441)(82,441)$ (26,656)$1,998,778—
1,998,778$  171,910$1,357,190
36,95753,414$358,688
7,957
29,716$91,390
6,257
11,265$1,807,277
51,181
94,413$923,330
1,498
2,839

$2,730,617
52,67897,262

Other
Businesses

Total

AdjustmentsandEliminations

Consolidated

Notes: 1.	Adjustments and eliminations for segment profit of ¥2,901 million ($26,656 thousand) include elimination of inter-segment profit on inventories and corporate
general administration expense which are not allocable to a reportable segment.
2.	Adjustments and eliminations for segment assets of ¥100,486 million ($923,330 thousand) include offset of inter-segment debt and credit, and corporate assets
which are not allocable to a reportable segment.
3.	Adjustments and eliminations for depreciation and amortization of ¥163 million ($1,498 thousand) include depreciation and amortization for corporate assets.
		 Adjustments and eliminations for capital expenditures of ¥309 million ($2,839 thousand) include capital expenditures for corporate assets.

25. Investment and Rental Properties
The Company has omitted the disclosure of investment and rental
properties due to immateriality for the years ended March 31,
2020 and 2019.

53

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s

Millions of yen

Reportable segments
Industrial
Machinery
Products

Year ended March 31, 2019

Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation,and capital expenditures
Total assets
Depreciation and amortization
Capital expenditures

Steel andEnergyProducts¥173,648
1,038
174,687¥ 23,599¥149,979
3,450
7,171

Other
Businesses¥41,251
4,159
45,410¥ 2,676¥39,347
239
2,033¥5,252
3,740
8,993¥  343¥8,041
477
520

AdjustmentsandEliminations

Total¥220,153
8,938
229,091¥ 26,618

Millions of yen

Consolidated¥—(8,938)(8,938)¥ (2,328)¥197,369
4,166
9,725

¥108,102257
219¥220,153—
220,153¥ 24,290¥305,471
4,424
9,945

Notes: 1.	Adjustments and eliminations for segment profit of ¥2,328 million include elimination of inter-segment profit on inventories and corporate general administration
expense which are not allocable to a reportable segment.
2.	Adjustments and eliminations for segment assets of ¥108,102 million include offset of inter-segment debt and credit, and corporate assets which are not allocable
to a reportable segment.
3.	Adjustments and eliminations for depreciation and amortization of ¥257 million include depreciation and amortization for corporate assets.
		Adjustments and eliminations for capital expenditures of ¥219 million include capital expenditures for corporate assets.

(a) Product and service information
Millions of yen

Year ended
March 31,2020

Industrial
Machinery
Products

Steel andEnergyProducts

Other
Businesses

Sales tothird parties¥171,416¥41,418¥4,691

Year ended
March 31,2020

Industrial
Machinery
Products

Steel andEnergyProducts

Sales tothird parties $1,575,080$380,575¥217,527

Thousands of U.S. dollars

Other
Businesses

Total$43,104 $1,998,778
Millions of yen

Year ended
March 31,2019

Industrial
Machinery
Products

Steel andEnergyProducts

Other
Businesses

Sales tothird parties¥173,648¥41,251¥5,252(b) Geographical information(i) Sales

Total

Total

¥220,153

2019

Japan
China
OthersConsolidated¥103,898
54,31861,936¥220,153(d) Information on loss on impairment of fixed assets
Impairment losses on fixed assets by reportable segment for theyears ended March 31, 2020 and 2019 are summarized as follows:

Millions of yen

Thousands of
U.S. dollars

2020

2020

¥103,249 $  948,718
44,126405,458
70,151
644,592¥217,527 $1,998,778

Note: Net sales information above is based on customer location.

(ii) Tangible assets
The Company has omitted the disclosure of tangible assets bycountry or region as of March 31, 2020 and 2019 because theamount of tangible assets in Japan accounted for more than
90% of the carrying amount in the consolidated balance sheet.
(c) Significant customer information
The Company has omitted the disclosure of significant customer
information for the years ended March 31, 2020 and 2019 because
no individual customer accounted for more than 10% of net sales
in the consolidated statement of income.

Year ended
March 31,2020

Impairment
loss—

Steel andEnergyProducts—

Adjustments
Other
and
Businesses Eliminations

—

—

Total

—

Thousands of U.S. dollars

Year ended
March 31,2020

Industrial
Machinery
Products

Steel andEnergyProducts

Impairment
loss

—

—

Year ended
March 31,2019

Industrial
Machinery
Products

Steel andEnergyProducts

Impairment
loss

—

—

Adjustments
Other
and
Businesses Eliminations

—

—

Total

—
Millions of yen

Adjustments
Other
and
Businesses Eliminations¥25¥1,597

Total¥1,623(e) Amortization and balance of goodwill
The following table presents the amortization and balance of negative goodwill arising from business combinations on or prior to
March 31, 2010 as of and for the years ended March 31, 2020 and2019 by reportable segment:

Year ended March 31, 2020
In the Industrial Machinery segment, we recorded a negative
goodwill gain of ¥361 million ($3,317 thousand). This is because
GM Engineering Co., Ltd. became a consolidated subsidiary.
Year ended March 31, 2019
None applicable
27. Shareholders’ Equity
The Corporation Law of Japan provides that an amount equal to
10% of the amount to be disbursed as distributions of capital­surplus (other than the capital reserve) and retained earnings(other than the legal reserve) be transferred to the capital reserveand the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the capital stock
account. Such distributions can be made at any time by resolutionof the meeting of shareholders, or by the Board of Directors if­certain conditions are met.
28. Amounts per ShareProfit (loss) attributable to owners of parent per share is calculated
based on the profit (loss) attributable to owners of parent available
for distribution to shareholders of common stock and the weighted-average number of shares of common stock outstanding during the year. Net assets per share are calculated based on thenumber of shares of common stock outstanding at year end.
Amounts per share at March 31, 2020 and 2019 and for the years
then ended were as follows:

Millions of yen

Year ended
March 31,2020

Industrial
Machinery
Products

Steel andEnergyProducts

¥283

—

—

—

¥283

782

—

—

—

782

Year ended
March 31,2020

Industrial
Machinery
Products

Steel andEnergyProducts

Amortization
Balance as ofMarch 31$2,600———$2,600

7,186

—

—

—

7,186

Year ended
March 31,2020

Industrial
Machinery
Products

Steel andEnergyProducts

¥215

—

—

—

¥215

268

—

—

—

268

Amortization
Balance as ofMarch 31

Adjustments
Other
and
Businesses Eliminations

Total

Thousands of U.S. dollars

Adjustments
Other
and
Businesses Eliminations

Total

Millions of yen

Amortization
Balance as ofMarch 31

54

Industrial
Machinery
Products(f) Information on gain on negative goodwill

Adjustments
Other
and
Businesses Eliminations

Total

Profit (loss) attributableto owners of parent
Net assets

Yen

U.S. dollars

2019

2020

2020

¥  271.69
1,746.91¥  126.66
1,778.94$ 1.16
16.35

29. Subsequent Events(Absorption-type split of steel business and absorption-typemerger of 4 four subsidiaries)
Based on a resolution of the Board of Directors meeting held on
January 28, 2020, the Company split the technical departments ofour material and energy business and wind power generationequipment maintenance service with April 1, 2020 as the effectivedate(Simplified absorption-type split). These departments weresucceeded to a consolidated subsidiary, Nikko MEC Co., Ltd.
(hereinafter, Nikko MEC). Nikko MEC has also merged Nikko­
Machine Center Co., Ltd. (hereinafter Nikko Machine Center), Nikko
Inspection Service Co., Ltd. (hereinafter, Nikko Inspection Service)and J-Win Co., Ltd. (hereinafter, J-Win), all a non-consolidated­subsidiary of the Company.

55

N o te s to Con s ol i date d Fi n a n c i a l St ate m e nt s(1)	Transaction overview including the purpose of thetransaction	Since the Great East Japan Earthquake in March 2011, the market for materials for nuclear power plants and thermal power
plants, which had been the main source of profits for our raw
materials/energy business, had shrinked and as a result thecompetition intensified.
We have been proceeding with a study on reorganization
centered on the Muroran manufacturing plant.
We have reorganized the material and energy business of
the Company, three subsidiaries responsible for its manufacturing function, the technical department and one subsidiary
responsible for the maintenance service function of wind
power generation equipment to optimize the organization for
aim to establish a stable profitable structure at the current
scale of this business by improving profitability through­construction and integrated operation.
(2) Summary of reorganization(a) Absorption-type split		 1.	Name of the company involved in the combination or
the target business and the content of the business			The Company:
				Engineering department of the raw material/
energy business and m­ aintenance service of wind
power g­ eneration equipment
			Nikko MEC:				
Installation/maintenance/­
maintenance of factoryequipment, manufacturing­processing/sales ofvarious cast steel products/steel plates/pipes
		 2. Business combination date
			April 1, 2020
		 3. Legal form of business combination
			An absorption-type company split (simplified­absorption-type company split) in which the­Company is the splitting company and Nikko MEC isthe succeeding company.
(b) Absorption merger
		 1.	Name of the company involved or the business to be
combined and the content of the business.
			Nikko MEC
				Installation/maintenance/maintenance of factoryequipment, manufacture/processing/sales of­various cast steel products/steel plates/pipes, etc.
			Nikko Machine Center				Machining of large cast and forged steel products,
welded structures and dies, finish assembly, etc.
Nikko Steel inspection service Intermediate andshipment inspection business of various cast andforged steel products, steel plates, welded­structures and industrial machines, etc.
			J-Win				Wind generator monitoring, maintenance,­inspection and repair work, etc.

56		 2. Business combination date
			April 1, 2020
		 3. Legal form of business combination
			Nikko MEC is the surviving company, Nikko Machinery
Center, Nikko Inspection Service and J-Win are­absorption-type mergers. J-Win is disbanded.
		 4. Name of the combined company
			Nikko MEC changed its trade name to Japan Steel
M&E Co., Ltd. as of April 1, 2020.
(3) Overview of accounting
In accordance with “Accounting Standards for Business Combinations” (Corporate Accounting Standards No. 21, January 16, 2019)
and “Implementation Guidance for Accounting Standards for Business Combinations and Accounting Standards for Business Separation” (Corporate Accounting Standards Implementation
Guidance No. 10, January 16, 2019) the accounting treatment will
be made as a transaction under common control.
(Absorption of consolidated subsidiary)
Following the resolution of the Board of Directors meeting held on
December 18, 2019, the Company merged with its consolidated
subsidiary Meiki Co., Ltd. on April 1, 2020.
(1) Transaction overview
1. Name and business content of the company
		 Name of the company involved in the merger
			Meiki Co., Ltd.
		Business description
			Manufacture and sale of injection molding machines,
etc.
2. Business combination date
		 April 1, 2020
3. Legal form of business combination
		Absorption-type merger with our company as the surviving company and Meiki Co., Ltd. as the merged company.
4. Name of the combined company
		 Japan Steel Works, Ltd.
5. Other matters regarding the outline of transactions
		Meiki Co., Ltd., as a pioneer in developing injection molding machines for the first time in Japan, has manufactured
and sold various products adapted to each era. In March
2016, we made Meiki Co., Ltd. a wholly owned subsidiarythrough a stock exchange method.
		The merger aims at further improving production capacityand production efficiency, strengthening new productdevelopment, and expanding sales and service systems.

(Important business transfer)
At the Board of Directors meeting held on February 18, 2020, theCompany resolved to transfer its compressor business to­Burckhardt Compression (Japan) Ltd. and transferred them on
April 17, 2020.
(1) Overview of business transfer
1. Name of company to be separated
		 Burckhardt Compression (Japan) Ltd.
2. Content of the separated business		Compressor business
3. Main reason for business separation		This is done to expand the business by putting theresources of the compressor business into a business thatis expected to grow.
4. Business separation date
		 April 17, 2020
5.	Matters concerning the outline of other transactions
including legal form		Business transfer where the consideration received is only
cash and other assets(2) Outline of accounting
1. Transfer amount
		 Gain on business transfer ¥2,537 million
2.	Appropriate book value of assets and liabilities related tothe transferred business and its main breakdown
		 Current assets¥112 million yen
		 Total assets		
¥112 million yen
3 Accounting		In accordance with “Accounting Standards for BusinessSeparation” (Corporate Accounting Standard No. 7,­September 13, 2017) and “Implementation Guidance for
Business Combination Accounting Standards andAccounting Standards for Business Separation” (Corporate
Accounting Standard Implementation Guidance No. 10,
January 16, 2019) the accounting treatment will be madeas a business transfer.

(Significant borrowings)
Based on a resolution of the Board of Directors meeting held on
January 28, 2020, the Company entered into a syndicate loan
agreement with Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Trust Bank, Limited as arrangers on March 31, 2020 as
follows and borrowed on April 7, 2020.
(1) Use of funds
Repayment of debt, investment and loan funds(2) Borrowing amount
10,000 million yen(3) Borrowing rate
Fixed interest rate(4) Borrowing date
April 7, 2020
(5) Repayment deadline
April 7, 2027
(6) Repayment method
Lump sum repayment(7) Provision of collateralNone(3)	Segment classification that includes the transferredbusiness
Industrial machinery business(4) Approximate amount of sales related to the separated­business recorded in the income statement for the current
consolidated fiscal year.
Net sales ¥3,552 million yen(2) Overview of accounting
In accordance with “Accounting Standards for Business Combinations” (Corporate Accounting Standards No. 21, January 16, 2019)
and “Implementation Guidance for Accounting Standards for Business Combinations and Accounting Standards for Business Separation” (Corporate Accounting Standards Implementation
Guidance No. 10, January 16, 2019) the accounting treatment will
be made as a transaction under common control.

57

I n de p e n de nt Au di tor ’s R e p or t

Independent Auditor’s Report
The Board of Directors
The Japan Steel Works, Ltd.
OpinionWe have audited the accompanying consolidated financial statements of The Japan Steel Works, Ltd. and its consolidated subsidiaries(the Group), which comprise the consolidated balance sheet as at March 31, 2020, and the consolidated statements of income, comprehensive income, changes in net assets, and cash flows for the year then ended, and notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Group as at March 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year thenended in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate Auditors for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as agoing concern and disclosing, as required by accounting principles generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing the Group’s financial reporting process.

・Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation in accordance with accounting principles generally accepted in Japan.
・Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Groupto express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements in Japan, and to communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to
the provisions of the Certified Public Accountants Act of Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2020 are presented solely for convenience. Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 4 to the consolidated financial statements.
Ernst & Young ShinNihon LLC
Tokyo, Japan
June 30, 2020

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Misstatements can arise fromfraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:・Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for ourrisk assessments, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on the effectiveness of the Group’s internal control.
・Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
・Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.

58

Yoshiyuki Nomizu
Designated Engagement Partner
Certified Public Accountant

Kazuki Hayashi
Designated Engagement Partner
Certified Public Accountant

Shingo Arai
Designated Engagement Partner
Certified Public Accountant

59Cor porate Dire c to r y

N e t wor k

Düsseldorf

Corporate Directory

Network

Ansan (near Seoul)
Gurugram(near Delhi)
Hanoi
Bangkok

Shanghai
ShenzhenTaipeiHong Kong

California

Illinois

Michigan
New York
New Jersey
Georgia

Guanajuato

ManilaKuala Lumpur
Singapore
JakartaDomestic

Corporate Data
Trade Name

The Japan Steel Works, Ltd.

Head Office

Gate City Ohsaki-West Tower, 11-1, Osaki 1-chome,Shinagawa-ku, Tokyo, JapanFoundation

November 1, 1907

Paid-in Capital¥19,737 million

Employees

2,342 (Consolidated 5,334)

AuditorErnst & Young ShinNihon LLC Hibiya Mitsui Tower, 1-1-2 Yurakucho, Chiyoda-ku, Tokyo, Japan

Hiroshima Sales Office6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602, Japan
Phone: +81-82-822-0991 Facsimile: +81-82-822-0997

Hiroshima Plant
6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602, Japan
Phone: +81-82-822-3181 Facsimile: +81-82-285-2038

Nagoya Business Office
Mitsui Sumitomo Kaijo Nagoya Shirakawa Bldg. 7F, 9-15,
Sakae 2-chome, Naka-ku, Nagoya-shi, Aichi 460-0008, Japan
Phone: +81-52-222-1271 Facsimile: +81-52-222-1275

Fukuoka Sales Office23-2, Sakuragaoka 1-chome, Kasuga-shi, Fukuoka 816-0872, Japan
Phone: +81-92-582-8111 Facsimile: +81-92-582-8124

Yokohama Plant
2-1, Fukuura 2-chome, Kanazawa-ku,
Yokohama-shi, Kanagawa 236-0004, Japan
Phone: +81-45-781-1111 Facsimile: +81-45-787-7200

Osaka Business Office
Shinanobashi Mitsui Bldg., 11-7, Utsubohonmachi 1-chome,
Nishi-ku, Osaka-shi, Osaka 550-0004, Japan
Phone: +81-6-6446-2480 Facsimile: +81-6-6446-2488



Meiki Plant
2, One, Kitasaki-cho, Obu-shi, Aichi 474-8666, Japan
Phone : +81-562-48-2111 Facsimili: +81-562-47-2316

Overseas(as of March 31, 2020)

Stock Information
Authorized Shares

200,000,000 shares

Issued and Outstanding Shares

74,332,356 shares

Shareholders

21,662

Stock Listings

Tokyo

Transfer Agent and Registrar

Sumitomo Mitsui Trust Bank, Ltd. 4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan

Major Shareholders(shareholding ratio)(as of March 31, 2020)

Classification of Shareholders by Percentage ofShares Held (As of March 31, 2020)

The Master Trust Bank of Japan, Ltd. (Trust Account)

11.59%

Japan Trustee Services Bank, Ltd. (Trust Account)

8.40%

TAIJU LIFE INSURANCE COMPANY LIMITED

3.85%

Sumitomo Mitsui Banking Corp.

2.99%

Sumitomo Mitsui Trust Bank, Ltd.

2.22%

Mitsui Sumitomo Insurance Co., Ltd.

2.13%

Japan Trustee Services Bank, Ltd. (Trust Account 5)

1.66%

JP MORGAN CHASE BANK 385151

1.55%

SSBTC CLIENT OMNIBUS ACCOUNT

1.38%

Mitsubishi Heavy Industries, Ltd.

1.37%



Securities
Companies

1.53%

Foreign Corporations
and Foreign
Individuals

25.60%

General Companies
and Other
Corporations

Individuals andOthers15.69%

Number of
Shares Issued

74,332,356

13.53%(as of March 31, 2020)

Notes 1: The shareholding ratios are calculated after deducting 803,339 treasury shares from the total number of shares issued.

60

Head Office
Gate City Ohsaki-West Tower, 11-1, Osaki 1-chome,
Shinagawa-ku, Tokyo 141-0032, Japan
Phone: +81-3-5745-2001 Facsimile: +81-3-5745-2025

sharesFinancial
Institutions

43.65%

Japan Steel Works America, Inc.
Head Office1251 Avenue of the Americas, Suite 2390, New York, NY 10020,
U.S.A.
Phone: +1-212-490-2630 Facsimile: +1-212-490-2575
New Jersey Technical and Distribution Center
1881 Route46, Ledgewood, NJ 07852, U.S.A.
Phone: +1-732-285-1952 Facsimile: +1-732-285-1953
Illinois Office
201 Hansen Court, Suite 121, Wood Dale, IL 609191, U.S.A.
Phone: +1-630-716-3400 Facsimile: +1-630-686-4911
California Office
1890 S Carlos Avenue, Building 15, Unit 6, Ontario, CA, 91761
Phone: +1-909-740-3808 Facsimile: +1-909-906-6015
Michigan Office24387 Halsted Road Unit B, Farmington Hills, MI 48335, U.S.A.
Phone: +1-248-536-0288 Facsimile: +1-212-490-2575
Georgia Office1395 S. Marietta Pkwy, Bldg. 200, Suite 201, Marietta, GA 30067,
U.S.A.
Phone: +1-770-575-0383 Facsimile: +1-678-403-1846
Japan Steel Works Europe GmbH
Head OfficeFriedrichstr. 19, 40217 Düsseldorf, Germany
Phone: +49-211-3116660 Facsimile:+49-211-31166640
Technical Center
Bonnerstr. 243 40589 Düsseldorf, Germany
The Japan Steel Works (Singapore) Pte. Ltd.
17, Gul Lane, Singapore 629413
Phone: +65-6861-4511 Facsimile: +65-6862-3166
Japan Steel Works India Private Limited
611 Time Tower, MG Road, Sector 28, Gurugram,
Haryana 122002, India
Phone: +91-124-469-4444 Facsimile: +91-124-469-4433
SM Platek Co., Ltd.
687-2, Seonggok-dong, Ansan-si, Kyeonggi-do, Korea
Phone: +82-31-488-3401 Facsimile: +82-31-488-9982
JSW IT Korea Co., Ltd.
1805, 6, Samseong-ro 96-gil, Gangnam-gu, Seoul 06168, Korea
Phone: +82-2-2191-5294 Facsimile: +82-2-2191-5296
JSW Plastics Machinery (Philippines) Inc.
Unit 2205, 22nd floor, Asian Star Building, Asean Drive, Filinvest
Corporate City, Muntinlupa City, 1781 Metro Manila, Philippines
Phone: +63-2-8478-2533 Facsimile: +63-2-8809-6221
PT. JSW Plastics Machinery Indonesia
Head OfficeGajah Building Unit AP, Jl. Dr. Saharjo Raya No.111 Tebet
Jakarta Selatan 12810, Indonesia
Phone: +62-21-8370-2536 Facsimile: +62-21-829-8264
Cikarang Branch
APT Trivium Terrace, Unit Trivium Terrace The Hall SGF-15 Jl. Utama
Biie Kav 02-05, Lippo Cikarang, Kab. Bekasi 17750, Indonesia

JSW Plastics Machinery (M) SDN. BHD.
Head Office
D12-3A, Pusat Perdagangan Dana 1, Jalan PJU 1A/46, 47301 		
Petaling Jaya, Selangor, Malaysia
Phone: +60-3-7842-6076 Facsimile: +60-3-7842-6078
Johor Office
No.207, Ground Floor Industry Center, Technovation Park UTM,
KM20, Jalan Pontian Lama, 81300 Skudai, Johor Bahru, Malaysia
Phone: +60-7-554-3637 Facsimile: +60-7-554-3711
The Japan Steel Works (Thailand) Co., Ltd.
78/6 JST Building 4th Floor, Moo 7, King Kaew Road, Rachatewa,
Bangplee, Samutprakarn 10540, Thailand
Phone: +66-2-738-5272 Facsimile: +66-2-738-5277
JSW Plastics Machinery Vietnam Ltd.
Head Office
Room 103, Techno Center Thang Long Industrial Park,
Kim Chung Commune, Dong Anh District, Hanoi, Vietnam
Phone: +84-24-3951-6381 Facsimile: +84-24-3951-6384
Ho Chi Minh Office
G–Floor, DC Tower-111D Ly Chinh Thang Street, Ward 7, District 3,
Ho chi minh City, Vietnam
Phone: +84-28-3526-1295 Facsimile: +84-28-3526-1296
JSW Plastics Machinery (H.K.) Co., Ltd.
ROOM 907, CORPORATION PARK, 11 ON LAI STREET, SHA TIN, N.T.
Hong Kong
Phone: +852-2648-0720 Facsimile:+852-2686-8204
JSW Plastics Machinery (TAIWAN) Corp.
Head Office
1F., No. 21, Dahu 1st Road., Guishan Shiang, Dist., Taoyuan
City 33373, Taiwan, R.O.C.
Phone: +886-3-396-2102/2103 Facsimile: +886-3-396-2104
Tainan Branch
15F-7, No.689-78, Xiaodong Road., Yongkang Dist.,
Tainan City 71052, Taiwan, R.O.C.
Phone: +886-6-311-4192 Facsimile: +886-6-311-4193
JSW Plastics Machinery Mexico S. de R.L. de C.V.
Avenida Mineral de Valenciana 202 A-1, Parque Industrial Santa Fe,
Silao De La Victria, Guanajuato C. P: 36275
Phone: +52-472-748-9412
JSW Machinery Trading (Shanghai) Co., Ltd.
Head Office301-304, Metro Plaza, 555 Loushanguan Road, Changning District,
Shanghai, China
Phone: +86-21-5206-7031 Facsimile: +86-21-5206-7032
Dalian Branch
Room1055, Development Bldg, Rong Hui Road, Area No.9, DalianDevelopment District, Dalian, Liaoning, China
Phone: +86-411-8761-0339 Facsimile: +86-411-8750-9182
Tianjin Branch
Room 609, HaiHe Creative Center No.5, JuXing Road No.9, 		
XianShuiGu Town, JinNan District, Tianjin, China
Phone: +86-22-8538-5432 Facsimile: +86-22-8538-5431

Suzhou Branch
C-219, Dong Chuang Technical Park, No.216 Jinfeng Road, Mudu,
Wuzhong District, Suzhou, Jiangsu, China
Phone: +86-512-6831-6246 Facsimile: +86-512-6831-6249
Chengdu Branch
2-1-5, Wanda plaza, No.978 Riyue Road, Chengdu, China
Wuhan Branch
Room 8505, Block B, Huayuan Business Plaza, No.16, ChuangyeRoad, Economic-Tech Development Zone, Wuhan, China
JSW Plastic Machinery (Shenzhen) Co., Ltd.
1F, YiBen Electronic & Business Industrial Park,
NO.1063 Chaguang Road, Xili Town, Nanshan District, Shenzhen
City, Guangdong Province, 518055, China
Phone: +86-755-8602-0930
NINGBO TONGYONG PLASTIC MACHINERYMANUFACTURING Co., Ltd.
No.1 Zhuhan Industrial Zone, Hengzhang Village, Shiqi
Street, Haishu District, Ningbo, 315155, China
Phone: +86-574-8821-7538 Facsimile: +86-574-8821-4801
JSW Machinery (Ningbo) Co., Ltd.
No.1 Zhuhan Industrial Zone, Hengzhang Village Shiqi
Street, Haishu District, Ningbo, 315155, China
Phone: +86-574-8823-6758 Facsimile: +86-574-8308-1589
YPK TRADING (HONG KONG) Co., Ltd.
Unit A2, 4/F, Blk. A, Po Yip Bldg., 62-70 Texaco Rd., Tsuen Wan, Hong
Kong
Phone: +852-3521-0437 Facsimile: +852-3905-7216
YPK Machine Trading (Shenzhen) Co., Ltd.
Flat C, 10/F, Laifu Bldg., Fuyong Road, Baoan Shenzhen, Guangdong,
518103, China
Phone: +86-755-2733-2114 Facsimile: +86-755-2733-2106
Fine Crystal (H.K.) Co., Ltd.
Room 903, 9/F Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong,
Kowloon, Hong Kong
Phone: +852-2345-7485 Facsimile: +852-2357-9104
Fine Crystal Precision (S.Z.) Co., Ltd.
No.14, Tongfuyu Industrial Estate, Longtian Community,
Longtian Sub-District, Pingshan District, Shenzhen City, Guangdong
Province, P. R. China
Phone: +86-755-8411-6005 Facsimile: +86-755-8411-5009
JMF(Zhejiang)Opto-Electronics Co., Ltd.
Chunchao Rd(N), Xinchao Rd(E), (High-tech Zone), Changan Town,
Haining City, Jiaxing Ctiy, Zhejiang, China
Phone: +86-573-8923-7680

61

ANNUAL REPORT 2020
for the year ended March 31, 2020

ANNUAL REPORT 2020

Foresight
Innovation
Engineering