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zum Geschäftsjahr vom 01.04.2020 bis zum 31.03.2021

JFE Holdings, Inc.

Tokio/Japan

Business Report for the 19th Term

(From April 1, 2020 to March 31, 2021)

1. Overview of the Corporate Group

(1) Business progress and results, and tasks requiring attention

[Performance of the Group]

The JFE Group, guided by its corporate mission of contributing to society with the world's most innovative technology, continued its effort to achieve sustainable growth and to improve corporate value for its shareholders and all other stakeholders.

Economic conditions during the reporting period were affected by the worldwide COVID-19 pandemic; in particular, business activities were severely restricted in the first half of the fiscal year. Recovery was seen in exports and personal consumption in the second half. Overseas, business rebounded fastest in China and recovered or at least bottomed out in the U.S. and the rest of Asia.

Under the circumstances, the JFE Group, particularly in its steel business, steadily strengthened the manufacturing capabilities of its domestic steel works and steadily improved productivity through digital transformation. The company also took emergency measures to reduce costs by 100.0 billion yen, restricted capital investment and made efforts to improve cash flow.

Business profit and profit attributable to owners of parent were in the black in the second half due primarily to recovered production of automobiles, the major source of demand for steel. The first-half slump was so great, however, that the fiscal year ended in the red.

<Performance of JFE Steel Corporation>

JFE Steel Corporation experienced significantly lower demand for iron and steel in the first half. In response, JFE Steel implemented emergency measures such as temporarily shutting down two blast furnaces. Consolidated annual crude steel production amounted to 23.96 million tons, down significantly from the previous fiscal year. Revenue fell significantly to 2,255.2 billion yen as sales dropped dramatically. A profit was earned in the second half thanks to efforts to thoroughly minimize operational costs by optimizing production. Also, JFE Steel captured recovered demand by using data science technology to swiftly restart blast furnaces. In addition, sales prices rose as demand recovered and export conditions improved. Nevertheless, poor profitability in the first half was too large to overcome, so the segment ended the year with a loss of 65.4 billion yen, much worse than in the previous fiscal year.

<Performance of JFE Engineering Corporation>

Corporate acquisitions helped to boost JFE Engineering Corporation's revenue, but the COVID-19 pandemic caused delays in construction that held down revenue to 485.7 billion yen, a decrease from the prior fiscal year. Despite decreased revenue, however, efforts to cut costs and maintain profitability resulted in a profit of 24.0 billion yen, up from the previous fiscal year.

<Performance of JFE Shoji Corporation>

In JFE Shoji Corporation, demand recovered in the second half and market conditions improved in the U.S. and worldwide by the end of the fiscal year, enabling profitability to rebound significantly against the first half. However, decreased demand for steel materials in the first half was huge, so revenue for the full fiscal year came to 932.5 billion yen and segment profit ended at 20.0 billion yen, both down from the prior fiscal year.

<Consolidated business results of the Group>

Japan Marine United Corporation, which is accounted for using the equity method, suffered a loss due to low prices amid a sluggish recovery in the new-ship market as well as delays in business negotiations due to COVID-19. Due to such factors, JFE recorded an equity-method loss of 4.1 billion yen.

The above results and earnings of JFE Holdings, Inc. combined for consolidated revenue of 3,227.2 billion yen, down from the prior year. The business loss came to 12.9 billion yen, also worse than the previous fiscal year. Furthermore, exceptional items totaling 20.4 billion yen, such as profit on sales of fixed assets, were realized. JFE recorded a loss before tax of 4.9 billion yen and a loss attributable to owners of parent of 21.8 billion yen.

<Non-consolidated business results>

During the 19th term, JFE Holdings, Inc. received total management fee income of 2.5 billion yen from three operating companies. JFE Holdings also received total dividend income of 8.8 billion yen from JFE Engineering Corporation and JFE Shoji Corporation. As a result, on a nonconsolidated basis, JFE Holdings recorded operating income of 9.3 billion yen and ordinary income of 9.3 billion yen.

With regard to distribution of surplus, although we did not pay interim dividends, we have decided to propose a year-end dividend of 10 yen per share to the General Meeting of Shareholders in light of the significant improvement in earnings in the second half, mainly in the steel business. We appreciate your understanding.

(Notes)

1. Business profit (business loss): Profit before tax excluding financial income and exceptional items. It is a benchmark indicator of the consolidated earnings of JFE.

2. Segment profit: Business profit including financial income. It is a performance indicator of each segment.

3. Exceptional items: Items with a transitory nature that are material in terms of amount.

4. JFE Holdings uses JGAAP for its non-consolidated operating results.

[Tasks requiring attention]

The JFE Group has been implementing measures under the sixth Medium-Term Business Plan, which started in FY 2018. However, due to rapid changes in the business environment caused by intensifying trade friction between the U.S. and China and the global spread of COVID-19, which were not envisioned when the plan was formulated, the performance of the steel business in particular has been sluggish, resulting in a net loss for second consecutive year, and the Group has failed to achieve the major financial and earnings targets it set as its targets.

In March last year, in view of trends in steel demand over the medium to long term as well as the harsh business circumstances, we decided to implement structural reforms in our steel business that include fundamental measures such as the suspension of blast-furnace operations at the East Japan Works (Keihin), and is working on accomplishing the reforms.

<Seventh Medium-Term Business Plan>

This fiscal year, the JFE Group has formulated its seventh Medium-Term Business Plan, aiming to establish itself as an essential entity for the sustainable development of society and the safe and comfortable lives of people, as well as to achieve economic sustainability. We will boldly tackle reforms in order to establish a strong management foundation and leap to a new stage. The Plan covers the period up to FY2024, when the structural reforms of the steel business will be completed. In FY2021, the first year of the Plan, we will work to achieve the consolidated business profit of 200 billion yen, the forecast announced on May 7, 2021.

The main initiatives will be as follows.

1) Steel business

Shifting focus from quantity to quality

The domestic steel market is expected to shrink going forward due to a declining population. Meanwhile, overseas, in addition to intensifying price competition for commodity products, there is a growing trend toward local production of steel products for local use, which likely constrains the expansion of exports from Japan.

In response to this situation, JFE Steel Corporation will shift its domestic production as the source of revenue from expanding volume to pursuing quality. In the Medium-Term Business Plan, based on the premise of an annual non-consolidated crude steel production volume of 26 million tons, in addition to reducing fixed costs through structural reforms, JFE Steel will achieve significant cost reductions by improving labor productivity and yields through the promotion of DX. Furthermore, JFE Steel will raise the ratio of high value-added products to improve the product mix, and promote a fundamental review of the sales price system to pursue the world's top level of profit per ton of steel.

―	Labor productivity: +20% (from 1,670 to 2,000 tons per person per year)
―	Cost reductions: 120 billion yen
―	Ratio of high value-added products: 50% or more
―	Profit per ton of steel: 10,000 yen/ton

- Promotion of growth strategies

JFE Steel Corporation has been working with local partners such as JSW Steel Ltd. (JSW) in India and Formosa Ha Tinh Steel Corporation in Vietnam to implement integrated local production from iron sources, working to capture demand in growing markets as an insider. JFE Steel will expand its earnings by strengthening these alliances and deepening its business strategy through local production.

In India, in particular, demand for grain-oriented electrical steel sheets used in transformers is expected to grow along with the significant increase in demand for electric power. In order to seize this opportunity with its advanced technological capabilities, JFE Steel and JSW will discuss the establishment of a joint venture for manufacturing and selling grain-oriented electrical steel sheets in India.

In addition, JFE Steel will aim to expand its earnings by developing a solutions business in which it earns continuous revenues by providing overseas manufacturers and others with a platform built on its technological, operational, and research know-how related to the manufacture of high value-added products and the reduction of environmental impacts.

2) Engineering business

JFE Engineering Corporation will expand the scale of its business by utilizing its unique technologies and services and at the same time contribute to solving social issues. In the medium to long term, JFE Engineering will focus on the following core businesses: the Waste to Resources business, which includes recycling and waste power generation; the Carbon Neutral business, which includes renewable energy and carbon recycling; the Combined Utility Services business, which involves the interlinking and integration of water, sewage, gas, electric power, recycling, and other operational businesses; and the Core Infrastructure business, which includes bridge and pipeline construction. JFE Engineering aims to achieve revenue of 1 trillion yen by FY2030 by utilizing M&A and business alliances.

3) Trading business

JFE Shoji Corporation will establish the world's No. 1 global distribution and processing system for high-function electrical steel sheets. In addition, JFE Shoji will work to strengthen its distribution and processing systems for automotive steel composite materials through Group collaboration and establish a basis for the building materials business through collaboration with local companies overseas. At the same time, JFE Shoji will strive to increase the Group's presence in the domestic market and expand earnings by further strengthening distribution and processing functions in Japan.

4) Promotion of DX strategies

We will apply cutting-edge digital technology to the vast amount of data, know-how, and other intangible assets that we have accumulated through our business operations over the years to optimize our overall business operations, improve productivity, increase the efficiency of our supply chain, and create new businesses, such as solution businesses, to increase our competitiveness and expand our revenue. In addition, as the development of digital technology is accompanied by concerns about the expansion of risks such as cyberattacks and unauthorized use of systems, we will simultaneously work on security measures.

5) Promotion of the JFE Group Environmental Vision for 2050

We have positioned efforts to address climate change issues as a top priority management issue and formulated the JFE Group Environmental Vision for 2050. The entire JFE Group will steadily work toward the realization of carbon neutrality.

[JFE Group Environmental Vision for 2050]

―	Climate change is an extremely important business concern for JFE, based on which we aim to become carbon neutral by 2050.
―	We will accelerate R&D in new technologies and strive to create super-innovative technologies.
―	We also will contribute to the reduction of CO ₂ emissions in society and use this as a business opportunity to increase corporate value.
―	Under the TCFD philosophy, JFE will work systematically to combat climate change.

<Key environmental initiative in the Seventh Medium-Term Business Plan>

―	Reduce JFE Steel's CO ₂ emissions by 18% vs. FY2013 by the end of FY2024

^* FY2030 targets will be examined and announced during the medium-term plan based on progress in technology development.

< Carbon neutrality by 2050 >

a. Reduce CO ₂ emissions at JFE Steel

―	Pursue super-innovative technology for carbon-recycling blast furnaces and CCU (Carbon Capture and Utilization).
―	Develop hydrogen-based ironmaking (direct reduction) technology.
―	Leverage top-in-class electric arc furnace technology for high-grade steel manufacturing, high efficiency, etc.
―	Develop transitional technologies for carbon neutrality, including ferro coke, increased use of steel scrap in converters, energy savings and low-carbon energy transformations.

b. Expand contributions to CO ₂ emissions reduction in society

―	JFE Engineering: Expand and develop renewable-energy power generation and carbon-recycling technologies.

Reduce CO ₂ emissions by 12 million tons in FY2024 & and 25 million tons in FY2030.

―	JFE Steel: Develop and market eco-products and eco-solutions.
―	JFE Shoji: Increase trading in biomass fuels, steel scrap, etc. and strengthen business in supply chain management (SCM) for eco products.

c. Accelerate group-wide commercialization of offshore wind-power business

―

Promoting the commercialization of the offshore wind-power business on a group-wide basis JFE Engineering: Manufacture and market monopile and other seabed-fixed structures for offshore wind-power generation.

JFE Steel: Use new continuous casting machine in Kurashiki to produce large heavy plates.

JFE Shoji: Carry out SCM for steel materials and processed products.

Japan Marine United: Manufacture power-generation floating structures and construct work vessels.

Group as a whole: Operation and maintenance making maximum use of group resources

(Notes)

1. Carbon recycling blast-furnace: A technology in which CO ₂ emitted from a blast-furnace is converted to methane and blown into the blast furnace as a reducing agent.

2. CCU: This refers to the capture and reuse of CO ₂.

3. Transitional technology: A technology that advances the transition to low carbon or decarbonization.

4. Ferro coke: An innovative blast-furnace raw material that improves the reduction efficiency of iron ore and reduces CO ₂.

6) Implementation of Effective Investment Based on Selection and Concentration, and Assurance of Financial Soundness

The balance of interest-bearing liabilities (bonds payable, borrowings, and lease obligations) increased by 475.2 billion yen (including a 166.0 billion yen increase in lease obligations at the beginning of the period due to the expansion of liability scope with the introduction of IFRS and the application of a new accounting standard for leases) compared to the start of the sixth Medium-Term Business Plan (as of March 31, 2018) to 1,806.1 billion yen. As a result, the Debt/EBITDA ratio as of the end of the period was 8.1x, with the D/E ratio of 93.2%.

Under these circumstances, we will promote both a sound financial position and growth strategies under the Medium-Term Business Plan. Investments to maintain functions will be reduced due to the results of our efforts to strengthen facilities in the steel business and the effects of structural reforms. In addition to thorough asset downsizing by reviewing businesses and assets that contribute little to earnings, we will work to secure necessary funds by improving the cash conversion cycle (CCC) through inventory reduction and other measures.

At the same time, we will also promote investments necessary for growth strategies in each of our businesses, as well as investments in carbon neutrality (GX investment) and DX investment, in order to strengthen our competitiveness and aggressively pursue growth strategies.

< Seventh Medium-Term Business Plan: Investment Plan and Asset Downsizing Plan (Four-Year Total)>

		Seventh Medium-Term Business Plan
Consolidated Investment	Equipment Investment	About 1,200 billion yen
	Business Investment and Financing	About 250 billion yen
(Of above)	GX Investment	About 340 billion yen
	DX Investment	About 120 billion yen
Asset Downsizing		About 200 billion yen

Note: GX investment is an abbreviation for Green Transformation Investment.

As for the utilization of land in the Keihin area after the structural reforms of the steel business, we will study the land use change from the perspective of maximizing economic efficiency and contributing to the sustainable development of the region and society, in cooperation with Kawasaki City and other administrative bodies. For the Ohgishima area, we will announce the development policy in FY2023, and work to put part of the land into service by FY2030.

7) Performance and Profitability Targets and Dividend Policy

For the final year of the Medium-Term Business Plan, we have set performance and profitability targets of 10% ROE, 320 billion yen in consolidated business profit, and 220 billion yen in profit attributable to owners of parent, and we will steadily implement each of the measures.

In addition, we have positioned the return of profits to shareholders as one of the most important matters, and will continue to pursue a dividend payout ratio of approximately 30%.

		Seventh Medium-Term Business Plan
Consolidated	Consolidated business profit	320 billion yen
	Profit attributable to owners of parent	220 billion yen
	ROE	10%
	Debt/EBITDA ratio	About 3 times
	D/E ratio	About 70%
Operating companies	Steel business
	• Profit per ton	10,000 yen/ton
	• Segment profit	230 billion yen
	Engineering business
	• Segment profit	35 billion yen
	• Revenue	650 billion yen
	Trading business
	• Segment profit	40 billion yen

Notes: 1. D/E ratio: For liabilities with equity subject to credit ratings, these equities reflect the evaluations of rating agencies.

2. Steel business profit per ton: (consolidated segment profit non-consolidated sales volume)

As for the impact of the spread of COVID-19, the future remains unpredictable. We will continue to monitor the situation closely and take prompt and appropriate measures according to the characteristics of each business, while giving due consideration to the prevention of infections among employees and other related parties. On the other hand, remote work, which was introduced as a countermeasure to prevent infections, has led to the promotion of work-life balance as a system that enables a variety of work styles, including balancing work with childcare and nursing care. Strengthening employee safety and health management and maximizing the abilities and motivation of human resources with diverse backgrounds are essential for sustainable growth in an increasingly globalized and complex business environment. The JFE Group will continue to enhance its efforts for diversity and inclusion and workstyle reforms.

The JFE Group is determined to continue its group-wide efforts for adherence to thorough compliance, a further commitment to environmental issues and enhanced safety, all of which help strengthen our relationships with society.

In the Seventh Medium-Term Business Plan, we will consider the use of non-financial indicators related to the environment and society as management targets, and applying them to investment decisions, executive compensation, and various other indicators, in order to further enhance corporate governance.

The JFE Group will continue to promote the sustainable development of the Group and maximize corporate value for every stakeholder including shareholders. We appreciate the continued understanding, support and encouragement of our shareholders.

(2) Production, order received and sales

The production, order received and sales of JFE Holdings, Inc. and its consolidated subsidiaries, etc. (including joint operations) during the 19th term were as follows. Revenue of joint operations included in Sales is an amount corresponding to equity of the JFE Group.

1) Production

(Thousand tons)

Business	18th term FY2019	19th term FY2020	Change (%)
Steel business (crude steel output)	28,089	23,965	(14.7)

2) Order received

(Millions of yen)

Business	18th term FY2019	19th term FY2020	Change (%)
Engineering business	413,089	501,110	21.3

3) Sales

(Millions of yen)

Business	18th term FY2019	19th term FY2020	Change (%)
Steel business	2,681,350	2,255,216	(15.9)
Engineering business	512,295	485,750	(5.2)
Trading business	1,084,137	932,510	(14.0)
Eliminations or corporate	(548,065)	(446,192)	-
Total	3,729,717	3,227,285	(13.5)

(3) Capital expenditure

Total amount of capital expenditure of JFE Holdings, Inc. and its consolidated subsidiaries, etc. (including joint operations) during the 19th term was 342.3 billion yen and the major expenditure was as follows. Amount of capital expenditure of joint operations included in the amount above is an amount corresponding to equity of the JFE Group.

1) Major facility completed during the 19th term

Steel Business

JFE Steel Corporation

West Japan Works (Fukuyama)

Construction of Ferro coke pilot plant

2) Major ongoing facility during the 19th term

Steel Business

JFE Steel Corporation

East Japan Works (Chiba)	Repair of No. 6 blast furnace
West Japan Works (Kurashiki)	Construction of continuous-casting machine
West Japan Works (Kurashiki)	Repair of No. 4 blast furnace
West Japan Works (Kurashiki)	Renewal of blast boiler for blast furnace STEP 1
West Japan Works (Kurashiki)	Enhancement of steelmaking capability
West Japan Works (Fukuyama)	Renovation of No. 3 Coke oven (Battery A and B)
Corporate	Renewal of steelworks systems (Phase 2)

(4) Fund procurement

JFE Holdings, Inc. and its consolidated subsidiaries, etc. (including joint operations) raised necessary funds through long-term loans and issuance of straight bonds. The total amount is 284.0 billion yen. The amount for joint operations included in the amount above is an amount corresponding to equity of the JFE Group.

(5) Assets and operating results

1) Consolidated assets and operating results of JFE Holdings, Inc.

JGAAP

(Millions of yen)

Item	16th term FY2017	17th term FY2018	18th term FY2019	19th term FY2020
Net sales	3,678,612
Operating income	246,669
Ordinary income	216,339
Profit attributable to owners of parent	144,638
Profit per share (yen)	250.86
Net assets	2,009,911
Total assets	4,440,910

International Financial Reporting Standards (IFRS)

(Millions of yen)

Item	16th term FY2017	17th term FY2018	18th term FY2019	19th term FY2020
Revenue	3,627,248	3,873,662	3,729,717	3,227,285
Business profit	218,378	232,070	37,899	(12,911)
Profit attributable to owners of parent	97,635	163,509	(197,744)	(21,868)
Basic earnings per share (yen)	169.34	283.81	(343.39)	(37.98)
Total equity	1,922,065	1,991,759	1,706,552	1,760,154
Total assets	4,487,173	4,709,201	4,646,120	4,654,972

Note:

The JFE Group adopted the International Financial Reporting Standards (IFRS) from the 17th term, in place of JGAAP.

2) Assets and operating results of JFE Holdings, Inc.

JGAAP

(Millions of yen)

Item	16th term FY2017	17th term FY2018	18th term FY2019	19th term FY2020
Operating revenue	34,572	116,518	61,228	21,918
Operating income	18,010	104,233	48,548	9,334
Ordinary income	18,010	104,233	48,548	9,334
Profit	(42,180)	104,128	25,866	9,182
Profit per share (yen)	(73.14)	180.69	44.91	15.94
Net assets	981,063	1,028,332	1,014,114	1,023,456
Total assets	2,366,306	2,479,150	2,676,515	2,745,823

(6) Major lines of business (As of March 31, 2021)

1) JFE Holdings, Inc.

Control and administration of operating companies engaged in the steel, engineering, trading and other businesses by holding shares thereof.

2) Steel business (JFE Steel Corporation and its affiliated companies)

Manufacture and sales of various steel products, steel processed products, raw materials, etc., as well as transportation business and peripheral businesses such as the equipment maintenance and equipment work businesses.

(Major products and services)

Steel products and semi-finished products (hot-rolled steel sheets, cold-rolled steel sheets, surface-treated steel sheets, steel plates, steel shapes, H-shapes, sheet piles, rails, seamless steel pipes, forge welded steel pipes, electric resistance welded steel pipes, rectangular steel pipes, arc-welded steel pipes, electrical steel sheets, stainless sheets, steel bars, wire rods, iron powder, slabs); titanium products; steel processed products; chemical products; formed and fabricated products; various containers; mining and mineral products; iron and steel slag products; functional materials; ferroalloy; various refractories; furnace construction works; various transportation and warehousing; civil engineering and construction works; equipment management and construction works; electric works; telecommunications works; thermal power generation; gas; temporary construction materials; real estate; insurance agency business; various service businesses; various computer systems; material analysis; environmental research; technical information surveys; support for intellectual properties, etc.

3) Engineering business (JFE Engineering Corporation and its affiliated companies)

Engineering business regarding energy, urban environment, steel structures, industrial machineries, recycling business and electricity retailing business

(Major products and services)

Gas, oil, and water pipelines; various tanks such as LNG/LPG; solar, geothermal, biomass and other renewable energy generation systems; municipal waste incinerator; water treatment systems; recycling services for waste plastics, etc.; bridges, port and harbor structures; industrial machineries such as logistic systems, engines, shield tunneling machine and ballast water treatment system; pig iron making, steelmaking and mini-mill related plants; quick chargers for electric vehicles; agricultural production facilities

4) Trading business (JFE Shoji Corporation and its affiliated companies)

Purchasing, processing and sales of steel products, raw materials for ironmaking/steelmaking, non-ferrous metal products, foods, etc.

(Major products and services)

Steel products (steel plates, checkered steel plates, hot-rolled steel sheets, cold-rolled steel sheets, electrical steel sheets, surface-treated steel sheets, galvanized steel sheets, tin plates, steel pipes, specialty steel pipes, steel bars, H-shapes, lightweight shaped steel plates, regular shaped steel plates, columns, wire rods, stainless steels, specialty steels, slabs); flux; iron powder; steel processed products; raw materials, other materials and equipment for ironmaking/steelmaking; non-ferrous metal products; chemical products; petroleum products; paper products; vessels; biomass fuels; civil engineering and construction works; the Terre Armee method; canned products; agricultural and livestock products; marine products; semiconductor products; real estate and so forth.

(7) Major sales offices, works and overseas offices (As of March 31, 2021)

1) JFE Holdings, Inc.

Head office

Head office (Chiyoda, Tokyo)

2) Steel business (JFE Steel Corporation)

Head office	Head office (Chiyoda, Tokyo)
Domestic sales offices	Osaka, Nagoya, Hokkaido (Sapporo), Tohoku (Sendai), Niigata, Hokuriku (Toyama), Chugoku (Hiroshima), Shikoku (Takamatsu), Kyusyu (Fukuoka), Chiba, Kanagawa (Yokohama), Shizuoka, Okayama and Okinawa (Naha)
Steel works	Sendai Works, East Japan Works (Chiba and Kawasaki), West Japan Works (Kurashiki and Fukuyama) and Chita Works (Handa)
Research laboratories	Steel Research Laboratories (Chiba, Kawasaki, Handa, Kurashiki and Fukuyama)
Overseas offices	New York, Houston, Brisbane, Brazil, Dubai, New Delhi, Mumbai, Singapore, Bangkok, Vietnam, Jakarta, Manila, Seoul, Beijing, Shanghai and Guangzhou

3) Engineering business (JFE Engineering Corporation)

Head offices	Tokyo head office (Chiyoda, Tokyo) and Yokohama head office
Domestic sales offices	Hokkaido (Sapporo), Doto (Kushiro), Tomakomai, Tohoku (Sendai), Aomori (Hachinohe), Fukko Saisei (Fukushima), Yokohama, Kawasaki, Niigata, Toyama, Shizuoka, Nagoya, Mie (Tsu), Osaka, Nara (Kashiba), Wakayama, Kobe, Shikoku (Takamatsu), Kurashiki, Chugoku (Hiroshima), Fukuyama, Yamaguchi (Hofu), Kyusyu (Fukuoka), Kumamoto, Minamikyushu (Kagoshima) and Okinawa (Naha)
Production bases	Tsurumi Engineering and Manufacturing Center (Yokohama) and Tsu Works
Research laboratory	Technical Research Center (Yokohama)
Overseas offices	Beijing, Shanghai, Philippines, Hanoi, Ho Chi Minh, Bangkok, Singapore, Malaysia, Indonesia, Yangon, India, Duisburg, U.S.A.

4) Trading business (JFE Shoji Corporation)

Head office	Head office (Chiyoda, Tokyo)
Domestic sales offices	Osaka, Nagoya, Hokkaido (Sapporo), Tohoku (Sendai), Niigata, Shizuoka, Hokuriku (Toyama), Okayama, Hiroshima, Shikoku (Takamatsu), Kyusyu (Fukuoka), Chibaminami (Chiba), Keihin (Kawasaki), Hamamatsu, Chita (Handa), Okayama (Kurashiki), Kurashiki, Fukuyama, Kagoshima and Naha
Overseas offices	Taipei, Singapore, Dusseldorf, Dubai, Kaohsing, Istanbul, U.S.A., Brazil, Hong Kong, Australia, South Korea, Beijing, Shanghai, Guangzhou, Thailand, Indonesia, Philippines, Malaysia, India and Vietnam

Note:

Overseas offices include overseas subsidiaries.

Major affiliated companies and their head office locations are listed in (9) Significant subsidiaries and affiliates (pages 35-38).

(8) Employees (As of March 31, 2021)

Numbers of employees of JFE Holdings, Inc., operating companies and its consolidated subsidiaries are as follows.

1) Employees of JFE Holdings, Inc. and its consolidated subsidiaries

	Number of employees
JFE Holdings, Inc.	52
Steel business (JFE Steel Corporation and its consolidated subsidiaries)	45,797
Engineering business (JFE Engineering Corporation and its consolidated subsidiaries)	10,612
Trading business (JFE Shoji Corporation and its consolidated subsidiaries)	7,910
Total	64,371

2) Employees of JFE Holdings, Inc. and operating companies (JFE Steel Corporation, JFE Engineering Corporation and JFE Shoji Corporation)

	Number of employees	Year-on-year increase	Average age (years old)	Average years of service
JFE Holdings, Inc.	52	(Increase by 7)	45.1	21.2
JFE Steel Corporation	16,089	(Increase by 91)	38.3	15.8
JFE Engineering Corporation	3,866	(Increase by 25)	44.3	14.4
JFE Shoji Corporation	1,003	(Increase by 16)	39.9	14.0

Note:

For those dispatched from operating companies to JFE Holdings, Inc., the aggregated years of service for the respective companies are adapted to the calculation of the Average years of service.

(9) Significant subsidiaries and affiliates (As of March 31, 2021)

1) Significant subsidiaries

^* Stocks indirectly held by subsidiary companies are included.)

Name	Head office location	Description of business	Capital (Millions of yen)	Voting rights ratio (%)
[Steel business]
JFE Steel Corporation	Chiyoda, Tokyo	Manufacture and sales of steel products	239,644	100.0
JFE Bars & Shapes Corporation	Minato, Tokyo	Manufacture and sales of steel shapes and reinforcing steel bars	30,000	^* 100.0
JFE Chemical Corporation	Taito, Tokyo	Manufacture and sales of chemical products	6,000	^* 100.0
JFE Metal Products & Engineering Inc.	Minato, Tokyo	Manufacture, processing and sales of secondary steel products	5,000	^* 97.4
JFE Galvanizing & Coating Co., Ltd	Shinagawa, Tokyo	Manufacture, processing and sales of secondary steel products	5,000	^* 100.0
Gecoss Corporation	Chuo, Tokyo	Rental and sales of temporary construction materials	4,397	^* 62.0
JFE Logistics Corporation	Chiyoda, Tokyo	Various transportation and warehousing businesses	4,000	^* 89.2
JFE Container Co., Ltd.	Chiyoda, Tokyo	Manufacture and sales of various containers	2,365	^* 59.6
JFE Civil Engineering & Construction Corp.	Taito, Tokyo	Contracting for civil engineering and construction works	2,300	^* 100.0
JFE Mineral Company, Ltd.	Minato, Tokyo	Mining and manufacture, processing and sales of mineral products, and manufacture and sales of iron and steel slag and functional materials	2,000	^* 100.0
JFE Life Corporation	Taito, Tokyo	Real estate, insurance agency and various service businesses	2,000	^* 100.0
JFE Plant Engineering Co., Ltd.	Taito, Tokyo	Manufacture and sales of machinery and equipment, contracting for electric works, telecommunications works, and equipment management and construction works	1,700	^* 100.0
JFE Systems, Inc.	Minato, Tokyo	Development and sales of various computer systems	1,390	^* 67.7
Mizushima Ferroalloy Co., Ltd.	Kurashiki, Okayama	Manufacture and sales of ferroalloy	1,257	^* 100.0
JFE Pipe Fitting Mfg. Co., Ltd.	Kishiwada, Osaka	Manufacture and sales of steel pipe joints	958	^* 86.6
JFE Kozai Corporation	Chuo, Tokyo	Shearing and fusing of steel plates/sheets, and sales of steel materials	488	^* 100.0
JFE Welded Pipe Manufacturing Co., Ltd.	Chuo, Tokyo	Manufacture and sales of electric resistance welded steel pipes	450	^* 100.0
JFE Steel Australia Resources Pty Ltd.	Brisbane, Australia	Investments in coal mines and the iron ore mining business in Australia	AUD	^* 100.0
			460 mil
Philippine Sinter Corporation	Manila, Philippines	Manufacture and sales of sintered ore	PHP	^* 100.0
			1,881 mil
JFE Steel Galvanizing (Thailand) Ltd.	Rayong, Thailand	Manufacture and sales of hot-dip galvanized steel products	THB	^* 100.0
			4,362 mil
[Engineering business]
JFE Engineering Corporation	Chiyoda, Tokyo	Engineering business	10,000	100.0
J&T Recycling Corporation	Yokohama	Total recycling business	650	^* 64.0
[Trading business]
JFE Shoji Corporation	Chiyoda, Tokyo	Domestic and export/import trade of steel products, raw materials for ironmaking/steelmaking, nonferrous metal products, chemical products, petroleum products, various equipment and materials, etc.	14,539	100.0
JFE Shoji Steel Construction Materials Corporation	Chiyoda, Tokyo	Sales of construction material products and equipment and materials for civil engineering/construction; metallic processing business; civil engineering/construction works; various works	1,500	^* 100.0
JFE Shoji Pipe & Fitting Corporation	Chiyoda, Tokyo	Sales of steel pipe and pipe material products	500	^* 100.0
JFE Shoji Thailand Ltd.	Bangkok, Thailand	Export/import and domestic trade of steel products, raw materials for ironmaking/steelmaking, various equipment and materials, etc.	THB	^* 100.0
			20 mil
JFE Shoji America Holdings Inc.	L.A., U.S.A.	Management of subsidiaries in Americas, etc.	USD	^* 100.0
			0 mil
JFE Shoji America LLC	L.A., U.S.A.	Export/import and domestic trade of steel products, raw materials for ironmaking/steelmaking, etc.	-	^* 100.0
Kelly Pipe Co., LLC	Santa Fe Springs, U.S.A.	Sales of steel pipe	-	^* 100.0

―	JFE Shoji Usuitakenzai Corporation, which was listed in the 18th term, merged with JFE Shoji Steel Construction Materials Corporation on April 1, 2020, with JFE Shoji Steel Construction Materials Corporation as the surviving company.
―	JFE Shoji Trade America LLC, which was listed in the 18th term, changed its corporate name to JFE Shoji America LLC on April 1, 2020.
―	JFE Shoji Trade Thailand Ltd., which was listed in the 18th term, changed its corporate name to JFE Shoji Thailand Ltd. on May 5, 2020.
―	The consolidated subsidiaries totaled 327, including the companies stated above, during the 19th term.

2) Significant affiliates

^* Stocks indirectly held by subsidiary companies are included.)

Name	Head office location	Description of business	Capital (Millions of yen)	Voting rights ratio (%)
[Steel business]
Japan-Brazil Niobium Corporation	Chiyoda, Tokyo	Investment in the niobium mining business in Brazil	37,272	^* 25.0
Setouchi Joint Thermal Power Co., Ltd.	Fukuyama, Hiroshima	Thermal power generation business	5,000	^* 50.0
Shinagawa Refractories Co., Ltd.	Chiyoda, Tokyo	Manufacture and sales of various refractories, and contracting for furnace construction works	3,300	^* 34.1
Nippon Chuzo K.K.	Kawasaki	Manufacture and sales of cast steel products, etc.	2,627	^* 34.0
Nippon Chutetsukan K.K.	Kuki, Saitama	Manufacture and sales of cast-iron pipes, etc.	1,855	^* 30.0
NKK Tubes K. K.	Kawasaki	Manufacture and sales of seamless steel pipes	1,595	^* 49.0
Exa Corporation	Yokohama	Development and sales of various computer systems	1,250	^* 49.0
K.K. JFE Sanso Center	Fukuyama, Hiroshima	Manufacture and sales of oxygen gas, nitrogen gas and argon gas, etc.	90	^* 40.0
Guangzhou JFE Steel Sheet Co., Ltd.	Guangzhou, China	Manufacture and sales of cold-rolled and hot-dip zinc galvanized steel sheets	CNY 3,191 mil	^* 50.0
Nucor-JFE Steel Mexico, S. de R.L. de C.V.	Silao, Mexico	Manufacture and sales of hot-dip zinc galvanized steel sheets	USD 361 mil	^* 50.0
BaoWu JFE Special Steel Co., Ltd.	Shaoguan, China	Manufacture and sales of specialty bar steel	CNY 1,372 mil	^* 50.0
Thai Cold Rolled Steel Sheet Public Co., Ltd.	Bangkok, Thailand	Manufacture and sales of cold-rolled steel sheets	THB 4,816 mil	^* 36.0
California Steel Industries, Inc.	Fontana, U.S.A	Manufacture and sales of steel products	USD 40 mil	^* 50.0
JSW Steel Ltd.	Mumbai, India	Manufacture and sales of steel products	INR 3,010 mil	^* 15.0
[Engineering business]
JP Steel Plantech Co.	Yokohama	Design, manufacture and installation of ironmaking machinery, etc.	1,995	^* 34.0
[Trading business]
Hanwa Kozai Co., Ltd.	Osaka	Processing and sales of stainless products	1,076	^* 47.9
[Other business]
Japan Marine United Corporation	Yokohama	Design, manufacture, sales, installation, repair and maintenance of ships, naval vessels and marine structures, etc.	57,500	35.0

―	Baosteel Special Steel Shaoguan Co., Ltd., which was listed in the 18th term, changed its corporate name to BaoWu JFE Special Steel Co., Ltd. on December 10, 2020.
―	The equity method affiliates (including joint operations) totaled 76, including the companies stated above, during the 19th term.

3) Matters regarding designated wholly owned subsidiaries (As of March 31, 2021)

Name	Address	Total book value (Millions of yen)	Total assets of the Company (Millions of yen)
JFE Steel Corporation	2-3 Uchisaiwai-cho 2-chome, Chiyodaku, Tokyo	721,736	2,745,823

(10) Major lenders (As of March 31, 2021)

The major lenders of JFE Holdings, Inc. and consolidated subsidiaries are as follows.

Name	Loan balance (Millions of yen)
Mizuho Bank, Ltd.	258,943
Sumitomo Mitsui Banking Corporation	135,487
MUFG Bank, Ltd.	122,226
Development Bank of Japan Inc.	113,016

2. JFE Holdings, Inc.'s Share (As of March 31, 2021)

(1) Number of shares

Total number of shares authorized to be issued	2,298,000,000
Total number of shares issued	614,438,399
(Number of shares of treasury shares included	37,915,070)

(2) Total number of shareholders

215,592

(3) Major shareholders

Name	Number of shares held (Thousand shares)	Shareholding ratio (%)
The Master Trust Bank of Japan, Ltd. (trust account)	53,606	9.3
Custody Bank of Japan, Ltd. (trust account)	31,127	5.4
Nippon Life Insurance Company	20,821	3.6
The Dai-ichi Life Insurance Company, Limited	13,127	2.3
Mizuho Bank, Ltd.	12,138	2.1
JFE Employees Stock Ownership Plan	10,266	1.8
Custody Bank of Japan, Ltd. (trust account 5)	8,774	1.5
STATE STREET BANK WEST CLIENT - TREATY 505234	8,471	1.5
JFE Business Partners Stock Ownership Plan	8,144	1.4
Tokio Marine & Nichido Fire Insurance Co., Ltd.	7,827	1.4

Note:

In addition to the above, JFE Holdings, Inc. retains 37,915,070 treasury shares. The treasury shares are not included in the shareholding ratio calculation.

3. Subscription Rights to Shares

Not applicable

4. Directors and Audit & Supervisory Board Members

(1) Directors and Audit & Supervisory Board Members

(As of March 31, 2021)

Position	Name	Significant concurrent post
Representative Director, President and CEO	Koji Kakigi	Chairman of the Board of Directors, JFE 21st Century Foundation (Public Interest Incorporated Foundation)
Representative Director	Yoshihisa Kitano	Representative Director, President and CEO, JFE Steel Corporation
Representative Director	Masashi Terahata	Director, JFE Steel Corporation Representative Director, JFE 21st Century Foundation (Public Interest Incorporated Foundation)
Director	Naosuke Oda	Representative Director, President and CEO, JFE Shoji Corporation
Director	Hajime Oshita	Representative Director, President and CEO, JFE Engineering Corporation
Director	Masami Yamamoto	Director and Senior Advisor, Fujitsu
		Limited
		Outside Member of the Board of Directors, Mizuho Financial Group, Inc.
Director	Nobumasa Kemori	Executive Advisor, Sumitomo Metal Mining Co., Ltd.
		Outside Director, NAGASE & CO., LTD.
		Outside Director, Sumitomo Realty & Development Co., Ltd.
Director	Yoshiko Ando	Audit & Supervisory Board Member, Kirin Holdings Company, Limited
		Outside Director, Sansei Technologies, Inc.
Audit & Supervisory Board Member (Fulltime)	Nobuya Hara	Audit & Supervisory Board Member, JFE Steel Corporation
Audit & Supervisory Board Member (Fulltime)	Kumiko Baba	Audit & Supervisory Board Member, JFE Engineering Corporation
		Audit & Supervisory Board Member, JFE Shoji Corporation
Audit & Supervisory Board Member	Shigeo Ohyagi	Advisor, Teijin Limited
		Outside Director, KDDI CORPORATION
		Outside Member of the Board of Directors, MUFG Bank, Ltd.
		Outside Director, Tokyo Electric Power
		Company Holdings, Incorporated
Audit & Supervisory Board Member	Isao Saiki	Partner Lawyer, Abe, Ikubo & Katayama Law Firm
Audit & Supervisory Board Member	Tsuyoshi Numagami	Professor, Graduate School of Business Administration, HITOTSUBASHI UNIVERSITY

Notes:

1. Naosuke Oda, Director of JFE Holdings, Inc., retired as Representative Director, President and CEO of JFE Shoji Corporation and became Senior Adviser of JFE Shoji Corporation as of April 1, 2021.

2. Masami Yamamoto, Nobumasa Kemori and Yoshiko Ando serve as Outside Directors of JFE Holdings, Inc.

3. Directors retired during the 19th term are as follows.

Position	Name	Retirement date
Director	Masao Yoshida	June 19,2020

4. Shigeo Ohyagi, Audit & Supervisory Board Member of JFE Holdings, Inc., became Outside Director of Tokyo Electric Power Holdings, Incorporated as of June 25, 2020.

5. Tsuyoshi Numagami, Audit & Supervisory Board Member of JFE Holdings, Inc., retired as Board Member and Executive Vice President of Hitotsubashi University as of August 31, 2020.

6. Nobuya Hara, Audit & Supervisory Board Member of JFE Holdings, Inc., has extensive knowledge of and insight into finance and accounting, which he accumulated through work in corporate planning, accounting and finance at JFE Steel Corporation, and through accounting work at JFE Holdings, Inc.

Kumiko Baba, Audit & Supervisory Board Member of JFE Holdings, Inc., has extensive knowledge of and insight into finance and accounting, which she accumulated through experience in execution of duties as Corporate Officer in addition to supervision of overseas businesses and accounting and finance related operations at JFE Engineering Corporation. Tsuyoshi Numagami, Audit & Supervisory Board Member of JFE Holdings, Inc., has been engaged in extensive research on overall corporate management, including business strategy, and has extensive knowledge of and insight into finance and accounting based on his expertise.

7. Shigeo Ohyagi, Isao Saiki and Tsuyoshi Numagami serve as Outside Audit & Supervisory Board Members of JFE Holdings, Inc.

8. Directors Masami Yamamoto, Nobumasa Kemori and Yoshiko Ando and Audit & Supervisory Board Members Shigeo Ohyagi, Isao Saiki and Tsuyoshi Numagami satisfy the requirements of Independent Director/Audit & Supervisory Board Member as stipulated in the regulations of Tokyo Stock Exchange, Inc., etc., and the "Standards for Independence of Outside Directors/Audit & Supervisory Board Members" stipulated by JFE Holdings, Inc. JFE Holdings, Inc. designated these six persons as independent Director/Audit & Supervisory Board Member as stipulated under the regulations of Tokyo Stock Exchange, Inc., etc. and registered them as such with the Tokyo Stock Exchange, etc.

9. Corporate Officers as of March 31, 2021, are as follows.

Position	Name	Responsibility(ies)
President	Koji Kakigi	Chief Executive Officer (CEO)
Executive Vice President	Masashi Terahata	Chief Financial Officer (CFO)
		Supervision of General Administration Dept., Corporate Planning Dept., Investor Relations Dept. Finance Dept. and Keihin Area Land Development Dept.
Senior Vice President	Hiroyuki Fujiwara	In charge of General Administration Dept. and Corporate Planning Dept.
Senior Vice President	Toshihiro Tanaka	In charge of Investor Relations Dept. and Finance Dept.
Vice President	Makoto Iwayama	In charge of Keihin Area Land Development Dept.

10. Positions and responsibilities of Corporate Officers have been changed on April 1, 2021 as follows.

Position	Name	Responsibility(ies)
President	Koji Kakigi	Chief Executive Officer (CEO)
Executive Vice President	Masashi Terahata	Chief Financial Officer (CFO)
		Supervision of General Administration Dept., Corporate Planning Dept., Investor Relations Dept. Finance Dept. and Keihin Area Land Development Dept.
Senior Vice President	Toshihiro Tanaka	In charge of Investor Relations Dept. and Finance Dept.
Vice President	Makoto Iwayama	In charge of Keihin Area Land Development Dept.
Vice President	Seiya Kitajima	In charge of General Administration Dept. and Corporate Planning Dept.

(2) Outline of the contracts for limitation of liability

JFE Holdings, Inc. has entered into agreements, in accordance with the provision of Article 427, Paragraph 1, of the Companies Act, with all the Outside Directors and Audit & Supervisory Board Members of JFE Holdings, Inc. to limit their liability to compensate damages under Article 423, Paragraph 1, of the Companies Act. The limitation on indemnity liability of each Outside Director and Audit & Supervisory Board Member to compensate damages under such agreements is set out to the amount set forth in the relevant laws and regulations.

(3) Remuneration for Directors and Audit & Supervisory Board Members

1) Remuneration for Directors and Audit & Supervisory Board Members during the 19th term

Category	Total amount	Total amount by type (thousands of yen)				Number of eligible Directors and Audit & Supervisory Board Members
	(thousands of yen)	Basic remuneration	Bonus	Stock remuneration
				Performance-linked portion	Service-length portion
Director	247,766	234,102	0	0	13,664	9
Audit & Supervisory Board Member	121,583	121,583	-	-	-	5

Notes:

1. The above includes one Director retired during the 19th term.

2. The total amount of remuneration paid to seven Outside Directors/Audit & Supervisory Board Members is 91,847 thousand yen and consists only of basic remuneration.

3. The Company has established a bonus and a performance-linked portion of stock remuneration as performance-linked remuneration for Directors, but no performance-linked remuneration payment was made during the 19th term.

4. Above-stated stock remuneration is non-monetary remuneration and the total nonmonetary remuneration for Directors recorded as an expense for the 19th term is 13,664 thousand yen.

2) Basic concept of remuneration plan for Directors and Corporate Officers

The Company has designed and operates a remuneration plan for Directors and Corporate Officers in accordance with the Basic Policy on Remuneration for Directors and Corporate Officers (hereinafter referred to as the "Basic Policy"), which was resolved by the Board of Directors on April 26, 2018, and the Policy for Deciding the Individual Remuneration for Directors and Corporate Officers (hereinafter referred to as the "Decision Policy"), which was resolved by the Board of Directors on February 9, 2021 pursuant to the Basic Policy, based on deliberations by and reports from the Remuneration Committee.

The content of remuneration, etc. for individual Directors is determined by the Board of Directors, respecting reports made to the Board of Directors following multifaceted reviews, including reviews of consistency with the Basic Policy, etc., by the Remuneration Committee. Therefore, the Board of Directors believes that the content of remuneration, etc. for individual Directors is in line with the Basic Policy and Decision Policy.

The Basic Policy and Decision Policy established by the Company are outlined below.

<Basic Policy>

―	The Board of Directors shall determine remuneration for Directors and Corporate Officers based on deliberations regarding its appropriateness by the Remuneration Committee to ensure fairness, objectiveness and transparency.
―	The remuneration levels for Directors and Corporate Officers shall be determined to secure excellent human resources who are able to put the Group's corporate vision into practice, taking into consideration the business environment of the Group and remuneration levels at other companies in the same industry or of the same scale.
―	The ratios between basic remuneration and performance-linked remuneration (annual bonus and stock remuneration) shall be properly established according to the roles and responsibilities, etc. of each Director and Corporate Officer so as to function as sound incentives toward the sustainable growth of the Group.

<Outline of Decision Policy>

―	Remuneration for Directors and Corporate Officers shall be determined by a resolution of the Board of Directors in accordance with the Basic Policy and the Decision Policy, based on reports from the Remuneration Committee.
―	Remuneration for the Company's Directors and Corporate Officers is comprised of basic remuneration and performance-linked remuneration (annual bonus and stock remuneration).
―	Basic remuneration is paid as a fixed amount, in cash, each month according to position.
―	Annual bonus is linked to the Company's single-year performance and is paid in cash once a year.
―	Stock remuneration is granted as the Company's shares and cash equivalent to the amount of the Company's shares converted to market value (hereinafter referred to as the "Company's Shares") through the trust upon retirement.
―	The ratios of remuneration by type are structured so that the higher the position, the greater the weight of performance-linked remuneration, and the ratio for the Company's President has been set so that when performance targets are achieved the ratio is "basic remuneration : annual bonus : stock remuneration = 60% : 20% : 20%."

3) Basic remuneration and annual bonus

Based on a resolution of the 16th Ordinary General Meeting of Shareholders held on June 21, 2018, the Company set Directors' remuneration at 700 million yen per year (of which 80 million yen per year is for Outside Directors), and in addition to the basic remuneration, an annual bonus shall be paid within the scope of limit on remuneration. The number of Directors involved in the resolution is eight (including three Outside Directors).

Annual bonuses are calculated by taking the total segment profit for a single fiscal year as the performance-linked indicator and multiplying the level of achievement of such indicator by a certain coefficient for each position.

The Company selected this indicator as it believes that it is important to steadily implement each measure to achieve the profit target of 280 billion yen per year in total in terms of segment profit which was set for the sixth Medium-Term Business Plan.

Total segment profit, including profit for the 19th term, is as shown in the table below.

(Unit: millions of yen)	16th term (FY2017)	17th term (FY2018)	18th term (FY2019)	19th term (FY2020)
Total segment profit	203,898	219,566	25,353	(25,408)

Note:

The JFE Group adopted the International Financial Reporting Standards (IFRS) from the 17th term, in place of JGAAP. The amount for the 16th term has been reclassified in accordance with IFRS.

4) Stock remuneration

The Company introduced a stock remuneration plan based on a resolution of the 16th Ordinary General Meeting of Shareholders held on June 21, 2018, in order to further enhance the incentive for Directors to improve medium-to long-term corporate value.

Under the plan, points are granted to Directors in the form of performance-linked points and service-length points for each fiscal year, in accordance with the Stock Grant Regulations for Officers established by the Company. The performance-linked portion of points are calculated by multiplying the base points specified for each position by an adjustment rate for profit attributable to owners of parent. The service-length portion of points are calculated by multiplying the base points specified for each position by an adjustment rate based on the length of the term of office for the relevant position. Upon retirement as a Director, the Company's Shares will be granted by calculating the number of points obtained by multiplying the accumulated number of points by a prescribed coefficient established based on the reason for their retirement and converting this number to the number of the Company's common shares by converting one point to one share of common stock of the Company.

The Company's shares to be granted to Directors shall be acquired through a trust funded by money contributed by the Company. Based on the resolution of the General Meeting of Shareholders, the maximum amount of money to be contributed to the trust and the maximum number of the Company's shares to be acquired by the trust as the Directors' portion was set at 600 million yen and 660 thousand shares, respectively, for the three fiscal years starting from FY2018. The number of Directors involved in the resolution is two.

The Company selected this performance indicator as the basis for calculating the performance-linked portion of stock remuneration in the belief that it is important to steadily implement each measure to achieve the profit target of 200 billion yen per year of profit attributable to owners of parent, which links directly to return to shareholders, as set during the sixth Medium-Term Business Plan period.

Changes in profit attributable to owners of parent, including the 19th term, are described in 1. (5) Assets and operating results (page 31) above.

The Company did not provide the Company's Shares to Directors during the fiscal year ended March 31, 2021.

Directors who have been dismissed and Directors who have committed any misconduct may lose the right to receive benefits for Directors based on a resolution of the Board of Directors. Directors who have already received benefits may be asked to return the economic value equivalent to the Company's Shares already received, based on a resolution of the Board of Directors if they engage in any misconduct.

5) Policy on remuneration for Audit & Supervisory Board Members

Under the Decision Policy, the Company only pays basic remuneration to Audit & Supervisory Board Members in consideration of their role of auditing management from an independent and objective standpoint, and the amount for each individual is determined through consultation between Audit & Supervisory Board Members within the scope of limit on remuneration set at the General Meeting of Shareholders. Based on a resolution of the 16th Ordinary General Meeting of Shareholders held on June 21, 2018, the Company set remuneration for Audit & Supervisory Board Members at 200 million yen per year and the number of Audit & Supervisory Board Members involved in the resolution is five.

(4) Outside Directors/Audit & Supervisory Board Members

1) Significant entities where Outside Directors/Audit & Supervisory Board Members concurrently hold positions are listed on page 40.

There is no special relationship between those entities and JFE Holdings, Inc.

2) Activities during the 19th term

―	Masami Yamamoto, Director

Masami Yamamoto attended all of the 15 meetings of the Board of Directors. Having a wealth of knowledge related to ICT and a broad knowledge in corporate management in a global setting, he spoke appropriately at the meetings.

―	Nobumasa Kemori, Director

Nobumasa Kemori attended all of the 15 meetings of the Board of Directors. Having experience in a broad range of businesses and corporate management and deep academic knowledge about metallic materials, he spoke appropriately at the meetings.

―	Yoshiko Ando, Director

Yoshiko Ando attended all of the 12 meetings of the Board of Directors since her appointment on June 19, 2020. Having a wealth of experience as an administrative official and a high level of expertise in the fields of employment and labor, she spoke appropriately at the meetings.

―	Shigeo Ohyagi, Audit & Supervisory Board Member

Shigeo Ohyagi attended all of the 15 meetings of the Board of Directors and attended all of the 18 meetings of the Audit & Supervisory Board. Having a wealth of experience in a variety of businesses and corporate management in a global setting, as well as experience in having addressed the reinforcement of corporate governance, he spoke appropriately at the meetings.

―	Isao Saiki, Audit & Supervisory Board Member

Isao Saiki attended all of the 15 meetings of the Board of Directors and all of the 18 meetings of the Audit & Supervisory Board. Having a wealth of experience and impressive knowledge in corporate legal affairs and other matters as a lawyer, he spoke appropriately at the meetings.

―	Tsuyoshi Numagami, Audit & Supervisory Board Member

Tsuyoshi Numagami attended all of the 15 meetings of the Board of Directors and all of the 18 meetings of the Audit & Supervisory Board. Having deep academic knowledge about a management strategy and ideal organization of companies and experience in university management, he spoke appropriately at the meetings.

3) Overview of duties performed by Outside Directors in relation to the roles they are expected to fulfill

Directors Masami Yamamoto, Nobumasa Kemori and Yoshiko Ando spoke appropriately at meetings of the Board of Directors in regard to corporate management from their independent standpoint as Outside Directors and, during the 19th term in particular, they expressed many opinions based on their knowledge when the Company implemented profit measures under the circumstance influenced by COVID-19 and formulated the seventh Medium-Term Business Plan. In addition, they adequately fulfilled their role of strengthening governance expected by the Company as members of the Nomination Committee and Remuneration Committee, by speaking appropriately, etc.

The activities and structure of the Nomination Committee and the Remuneration Committee are described in the Corporate Governance Initiatives section below (pages 51-55).

5. Accounting Auditor

(1) Designation of Accounting Auditor:

Ernst & Young ShinNihon LLC

(2) Amount of remuneration for the Accounting Auditor pertaining to the 19th term

1) Amount of remuneration paid by JFE Holdings, Inc. to the Accounting Auditor pertaining to the 19th term: 19,000 thousand yen

2) Total amount of money and other financial profits paid by JFE Holdings, Inc. and its subsidiaries to the Accounting Auditor: 558,634 thousand yen

3) Amount of payments described in 2) above, which fall under the business set forth in Article 2, Paragraph 1, of the Certified Public Accountants Act: 556,690 thousand yen

Notes:

1. Of the significant subsidiaries of JFE Holdings, Inc., the overseas subsidiaries are subject to audits of accounts by a certified public accountant or incorporated accounting firm other than the Accounting Auditor of JFE Holdings, Inc.

2. The audit agreement between the Accounting Auditor and JFE Holdings, Inc. does not separately stipulate audit remunerations based on the Companies Act or the Financial Instruments and Exchange Act, and such a distinction is for all intents and purposes impossible to execute. Hence, the remuneration in 1) above contains these two types of payment.

3. The Audit & Supervisory Board examined the appropriateness of the audit performance for the prior fiscal year, the content of the audit plan for the 19th term and the adequacy of the amount of remuneration for the Accounting Auditor, and, as a result, agreed upon the amount of remuneration to be paid to the Accounting Auditor.

(3) Non-audit work

JFE Holdings, Inc. pays the Accounting Auditor for non-audit work such as advice on accounting at consolidated subsidiaries, which is outside the scope of work (non-audit duties) stipulated under Article 2, Paragraph 1, of the Certified Public Accountants Act.

(4) Policy on decisions of dismissal or non-reappointment of the Accounting Auditor

At JFE Holdings, Inc., the Audit & Supervisory Board shall, upon consent of all the Audit & Supervisory Board Members, dismiss the Accounting Auditor after reviewing a case if it determines a circumstance falling under any of the items set forth in Article 340, Paragraph 1, of the Companies Act, to have occurred. In case any similar circumstance occurs, or if the Audit & Supervisory Board judges it necessary to do so, a proposal for the dismissal or non-reappointment of the Accounting Auditor shall be submitted to a General Meeting of Shareholders.

6. Basic Policy Regarding the Control of the Company

(1) Basic policy regarding persons who control decisions on JFE Holdings' financial and business policies

JFE Holdings, Inc. believes that a change of control is an effective means of revitalizing corporate activities and economy, and JFE Holdings, Inc. believes that when a large-scale purchase is commenced, the shareholders of JFE Holdings, Inc. should, in principle, make decisions as to whether or not the large-scale purchase is acceptable.

However, with respect to a large-scale purchase or a proposal related to a large-scale purchase, JFE Holdings, Inc. recognizes that the shareholders of JFE Holdings, Inc. need to precisely evaluate the effects of the large-scale purchase or the proposal on the corporate value of JFE Holdings, Inc. and the common interests of the shareholders. For this purpose, JFE Holdings, Inc. believes that both the large-scale purchaser and JFE Holdings, Inc.'s Board of Directors should promptly provide the shareholders with necessary and sufficient information, opinions and suggestions, and that the shareholders should be given necessary and enough time to review them.

(2) Special initiatives that contribute to the realization of the basic policy

The JFE Group's basic management stance is to endeavor to increase, in good faith, the corporate value and achieve the common interests of the shareholders from a long-term perspective by committing to the corporate vision of contributing to society with the world's most innovative technology.

JFE Holdings, a pure holding company at the core of the Group's integrated governance system, guides Group-wide strategy, risk management and public accountability. Under the policy that one-third or more of Directors should be Independent Outside Directors for the purpose of realizing highly transparent management, three of eight Directors are Independent Outside Directors. Also, three of five Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. Moreover, by appointing one female Director and one female Audit & Supervisory Board Member, we strive to increase diversity in addition to ensuring independence. JFE Holdings, Inc. has endeavored to strengthen governance through, for example, formulation of the Basic Policy on Corporate Governance, establishment of the Nomination Committee and the Remuneration Committee, evaluation of effectiveness of the Board of Directors, introduction of medium-to long-term performance-linked stock remuneration system for executives, and formulation of basic policies for appointing and dismissing its President and their process.

Under JFE Holdings, Inc., three operating companies, namely, JFE Steel Corporation which is a world-leading integrated steel manufacturer, JFE Engineering Corporation, and JFE Shoji Corporation conduct optimal business operations in accordance with the characteristics of their respective businesses to strengthen competitiveness and expand earnings power. JFE Holdings, Inc. believes that an increase in its corporate value and sustainable growth are supported by steady implementation of various measures based on a long-term perspective including development of technologies for preservation of the global environment and by fully utilizing the source of our corporate value accumulated through long-term management efforts and ongoing investments, such as world-leading manufacturing capabilities in the steel industry, cost competitiveness, development utilizing Group-wide synergy, and excellent human capital. This fiscal year, the JFE Group has formulated its seventh Medium-Term Business Plan, aiming to establish itself as an essential entity for the sustainable development of society and the safe and comfortable lives of people, as well as to achieve economic sustainability. The JFE Group will establish a strong management foundation and boldly tackle reforms, in order to achieve the sustainable medium- to long-term growth of the Group and improve corporate value.

Furthermore, the JFE Group continues to make diverse efforts to obtain the support and cooperation of each and every stakeholder including customers, shareholders, business partners, employees and local communities.

(3) Initiatives to prevent decisions on financial and business policies from being controlled by non-qualified parties that are against the Group's basic policies

JFE Holdings, Inc., at the meeting of the Board of Directors held on March 1, 2007, made the decision to adopt the "Policy Toward Large-scale Purchases of JFE Shares" (the "Former Policy"), and given the approval of shareholders at the Ordinary General Meetings of Shareholders held in the same year and thereafter every two years, which is the effective term of the Former Policy, has continued to operate the Former Policy. At the Ordinary General Meetings of Shareholders held on June 23, 2017 and on June 21, 2019, JFE Holdings, Inc. received shareholders' approval for the continuation of the Policy with certain amendments (hereinafter, the "Policy" shall be used to refer to the policy toward large-scale purchases of JFE shares after the changes).

Specifically, the Policy requires any large-scale purchaser that has the intent to hold 20% or more in the voting rights ratio to present in advance its management policies and business plans after the completion of the intended large-scale purchase. For a certain period thereafter, JFE Holdings, Inc.'s Board of Directors evaluates and examines the proposal from the following viewpoints: whether the large-scale purchaser has complied with the rules according to the Policy; whether the content of the proposal would irretrievably harm JFE Holdings, Inc.; or whether the proposal would seriously impair the corporate value of JFE Holdings, Inc. or the common interests of the shareholders. The Board of Directors may also disclose its opinion externally, negotiate with the large-scale purchaser and submit any alternative plans to the shareholders. The Company will invoke countermeasures if gratis allotment of stock acquisition rights as countermeasures is approved after implementing the process for confirming shareholder intent of such. However, only if the large-scale purchaser does not follow the above mentioned Large-scale Purchase Rules, or if certain requirements are met (four situations in which defensive measures were ruled by the Tokyo High Court to be acceptable as countermeasures in hostile takeovers; hereinafter referred to the "Four Situations"), the Board of Directors may invoke countermeasures without implementing the process for confirming shareholder intent.

JFE Holdings, Inc.'s Board of Directors will consult the Special Committee, which is composed mainly of Outside Directors, and obtain recommendations from the Special Committee in deciding whether or not it should take countermeasures. The Board of Directors will respect such recommendations to the maximum extent possible in making a decision on whether or not the Board of Directors will take countermeasures.

(4) The confirmation that the above initiatives are compliant with the basic policy and do not impair the common interests of the shareholders or intend to improperly protect any executive positions, as well as the reasons thereof

The Policy provides that if a large-scale purchase of the JFE Holdings, Inc.'s shares is begun, necessary and adequate information, opinions, proposals, and so on will be promptly provided to shareholders and necessary and adequate time to investigate that information will be secured to ensure that shareholders can make accurate assessments regarding the impact of the large-scale purchase on the corporate value and the common interests of shareholders. In addition, the Special Committee, which consists of three members who are Outside Directors and Outside Audit & Supervisory Board Members, as an organization independent from JFE Holdings, Inc.'s Board of Directors, was established to ensure that the decisions of the Board of Directors relative to a large-scale purchase are made in a transparent, objective, fair and reasonable manner. Furthermore, the Policy prescribes that for all cases, excluding cases where rules are violated or the Four Situations are applicable, the process of confirming shareholder intent is required in order to invoke countermeasures, and the Company's Board of Directors will take action according to the decision. Therefore, it is designed so that no one in a management position can arbitrarily misuse the Policy for self-protection. In addition, the continuation of the Policy was approved at the Ordinary General Meeting of Shareholders held in 2019.

Consequently, the content of the Policy is based on the above basic policy and does not harm the common interests of shareholders nor intend to improperly protect any executive positions of JFE Holdings, Inc.

The Company has resolved to abolish and discontinue the Policy at the meeting of the Board of Directors on May 7, 2021, effective from the conclusion of this General Meeting of Shareholders.

Note:

As for fractions less than the respective units in the Business Report, the amounts and the number of shares are rounded down, whereas ratios and other values are rounded off.

(Reference) Corporate Governance Initiatives

JFE Holdings, Inc. has been striving to promote sustainable growth of JFE Holdings, Inc. (the "Company") and the JFE Group (the "Group") and medium to long-term corporate value, and achieving and hence further enhancing the best corporate governance to embody the Corporate Vision. In October 2015 the Company established the "JFE Holdings, Inc. Basic Policy on Corporate Governance" (the "Policy"). A summary of the Policy and the Company's corporate governance system may be found below. Moreover, the entire text of the Policy is available on the Company's website at: https://www.jfe-holdings.co.jp/en/.

The Corporate Governance Systems of the Company and the Group

[The Group's System]

―	The JFE Group has adopted a group system that treats the Company as the core pure holding company of the Group.
―	The Company, the core of the Group's integrated governance system, is responsible for Group-wide strategy, risk management, and public accountability.
―	Each Operating Company has developed its own system suited to its respective industry, ensuring the best course of action for competitiveness and profitability.
―	The holding company and operating companies separately and collectively strive to maximize medium to long-term corporate value for shareholders and other stakeholders.

[The Company's System]

―	The Company makes significant decisions on management and supervises the execution of duties at the Board of Directors.
―	As a company with an Audit & Supervisory Board, the Audit & Supervisory Board and its Members implement the auditing of the status of the execution of duties.
―	The Company separates material decision-making on management and supervision from business execution, and has adopted the Corporate Officer System to enhance prompt decision-making of matters pertaining to business execution.
―	As consultative bodies of the Board of Directors, the Company has established the Nomination Committee and the Remuneration Committee.

Corporate Governance System

Board of Directors

[Functions and Roles]

―	In accordance with laws and regulations, the Articles of Incorporation and regulations of the Company such as the regulations of the Board of Directors, the Board of Directors makes material decisions on management including formulation of management plans of the Group and basic policies on management.
―	The Board of Directors supervises the overall management including business execution by the Company executives.
―	According to the internal rules of the Company, the Company has established clear standards that clarify the authority of decision-making and the decision-making procedures concerning the matters pertaining to the Company and each company within the JFE Group.
―	Significant matters are subject to deliberation at the JFE Group Management Strategy Committee, Management Committee and resolution of the Company's Board of Directors.
―	For the purpose of facilitating prompt decision-making, the authority of making decisions other than those related to significant business execution set forth in the Rules of the Board of Directors is, in principle, granted to Corporate Officers in charge of the corresponding business.

Structure of the Board of Directors / Policy on Election of Candidates for Director

[Basic Philosophy Regarding Structure]

―	The Company's Board of Directors comprises members who possess diversified knowledge, experience, and abilities. The number of the Directors shall not exceed 12, with the aim of composing one-third or more of the Directors by Independent Outside Directors.

[Election Policy]

―	With regard to inside Directors, persons with appropriate insight to bear decision-making of management of the whole Group and supervision of business execution will be elected from those possessing profound understanding and knowledge of the business by way of processes such as engagement in management of the Company or at each Operating Company.
―	Several Independent Outside Directors will be elected from among persons who possess abundant experience in the management of global enterprises, or experts with profound knowledge in their fields and who also satisfy the Company's standards for independence, as they will bear the responsibility for strengthening governance.

Audit & Supervisory Board Members / Audit & Supervisory Board

[Functions and Roles]

―	Audit & Supervisory Board Members of the Company, as members of an independent entity, endeavor to ensure the sound and sustainable growth and the enhancement of social trust of the Company through auditing of the execution of duties by Directors.
―	Audit & Supervisory Board Members of the Company, with the aim of appropriately executing their duties, communicate with Directors, etc. and express their opinions as necessary.
―	Audit & Supervisory Board Members communicate with Directors, etc. of subsidiaries and endeavor to collect information and improve the auditing environment.
―	Audit & Supervisory Board Members, through the Audit & Supervisory Board, endeavor to share the significant information obtained from their duties, and aim for appropriate auditing through exchange of opinions with other Audit & Supervisory Board Members.
―	Full-time Audit & Supervisory Board Members endeavor to collect information through examination of the state of business and assets in addition to attending important meetings, and actively contribute to the improvement of the auditing environment.
―	Outside Audit & Supervisory Board Members of the Company aim for the further enhancement of the neutrality and independence of the auditing system and functions, and carry out auditing operations from a broader perspective.
―	Audit & Supervisory Board Members and the Audit & Supervisory Board of the Company endeavor to improve the effectiveness of auditing by appropriately executing their authority as stipulated by laws and regulations.

Structure of the Audit & Supervisory Board / Policy on Election of Candidates for Audit & Supervisory Board Members

[Basic Philosophy Regarding Structure]

―	The Audit & Supervisory Board comprises members who possess adequate knowledge concerning finance and accounting. The number of Audit & Supervisory Board Members shall not exceed six (6), of whom at least half shall be Outside Audit & Supervisory Board Members.

[Election Policy]

―

With regard to inside Audit & Supervisory Board Members, persons with knowledge and experience enabling the auditing of execution of duties by Directors in an accurate and fair manner, who deliver insight appropriate to supervisory functions, shall be elected from those possessing profound understanding and knowledge of the business by way of processes such as engagement in management or auditing of the Company or each Operating Company.

―

Several Independent Outside Audit & Supervisory Board Members will be elected from among persons who possess abundant experience in the management of global enterprises, or experts with profound knowledge in their fields, and must also be individuals who satisfy the Company's standards for independence, as they will bear the responsibility for enhancing the audit function.

Group CSR Council Initiatives

―

The Group CSR Council, chaired by the CEO (President), deliberates and decides group-wide policies, supervises the penetration of policies and shares information on issues that arise on topics relating to the Group's management philosophy, risk management, responsibilities to stakeholders and society, and other corporate stances, from the perspective of preventing damage to and enhancing corporate value.

―

Topics discussed by the Council include the Group's basic policies, activity plans, details of important measures, and responses to important situations. These topics are regularly reported to and discussed by the Board of Directors, and thereby the Council receives instructions from and is supervised by the Board of Directors.

Nomination Committee and Remuneration Committee

―	In October 2015 the Company established the Nomination Committee and the Remuneration Committee which act as consultative bodies of the Board of Directors to ensure the fairness, objectiveness and transparency of personnel affairs and remuneration of the Board of Directors.
―	The Nomination Committee and the Remuneration Committee comprise of a majority of Outside Directors/Audit & Supervisory Board Members, respectively, and the chairpersons are determined from Outside Directors/Audit & Supervisory Board Members.
―	In FY2020, the Nomination Committee was convened four times and the Remuneration Committee was convened five times.

The composition of each Committee is as follows and the Company plans to retain this composition after the 19th Ordinary General Meeting of Shareholders.

Nomination Committee

As of March 31, 2021

Chairman	Masami Yamamoto	Outside Director
Committee Member	Yoshiko Ando	Outside Director
Committee Member	Shigeo Ohyagi	Outside Audit & Supervisory Board Member
Committee Member	Tsuyoshi Numagami	Outside Audit & Supervisory Board Member
Committee Member	Koji Kakigi	Board of Director
Committee Member	Yoshihisa Kitano	Board of Director

Remuneration Committee

As of March 31, 2021

Chairman	Nobumasa Kemori	Outside Director
Committee Member	Masami Yamamoto	Outside Director
Committee Member	Isao Saiki	Outside Audit & Supervisory Board Member
Committee Member	Tsuyoshi Numagami	Outside Audit & Supervisory Board Member
Committee Member	Koji Kakigi	Board of Director
Committee Member	Masashi Terahata	Board of Director

Consolidated Financial Statements

<International Financial Reporting Standards (IFRS)>

Consolidated Statement of Financial Position

As of March 31, 2021

(Millions of yen)

ASSETS

Items	Amount
Current assets	1,888,694
Cash and cash equivalents	142,416
Trade and other receivables	751,824
Contract assets	101,282
Inventories	785,632
Income taxes receivable	14,748
Other financial assets	13,359
Other current assets	79,430
Non-current assets	2,766,278
Property, plant and equipment	1,772,303
Goodwill	6,200
Intangible assets	95,055
Right-of-use asset	111,938
Investment property	58,310
Investments accounted for using equity method	355,242
Retirement benefit asset	22,159
Deferred tax assets	86,014
Other financial assets	244,505
Other non-current assets	14,547
Total assets	4,654,972

LIABILITIES

Items	Amount
Current liabilities	1,139,017
Trade and other payables	496,995
Bonds payable, borrowings, and lease obligations	277,027
Contract liabilities	43,038
Income taxes payable, etc.	15,090
Provisions	11,518
Other financial liabilities	86,836
Other current liabilities	208,510
Non-current liabilities	1,755,800
Bonds payable, borrowings, and lease obligations	1,529,112
Retirement benefit liability	141,186
Provisions	24,105
Deferred tax liabilities	7,591
Other financial liabilities	45,417
Other non-current liabilities	8,387
Total liabilities	2,894,818
(EQUITY)
Equity attributable to owners of parent	1,679,223
Share capital	147,143
Capital surplus	652,465
Retained earnings	1,029,976
Treasury shares	(180,639)
Other components of equity	30,278
Non-controlling interests	80,930
Total equity	1,760,154
Total liabilities and equity	4,654,972

Note: Amounts are rounded down to the nearest million yen.

Consolidated Statement of Profit or Loss

From April 1, 2020 to March 31, 2021

(Millions of yen)

Items	Amount
Revenue	3,227,285
Cost of sales	(2,912,766)
Gross profit	314,519
Selling, general and administrative expenses	(324,057)
Share of profit of entities accounted for using equity method	14,239
Other income	25,782
Other expenses	(43,394)
Business loss	(12,911)
Profit on sales of fixed assets	28,021
Impairment losses	(7,544)
Operating profit	7,566
Finance income	1,686
Finance costs	(14,184)
Loss before tax	(4,930)
Income tax expense	(14,133)
Loss	(19,063)
Loss attributable to
Owners of parent	(21,868)
Non-controlling interests	2,804
Loss	(19,063)

Note: Amounts are rounded down to the nearest million yen.

Consolidated Statement of Cash Flow

From April 1, 2020 to March 31, 2021

(Millions of yen)

Items	Amount
I. Cash flows from operating activities
Loss before tax	(4,930)
Depreciation and amortization	236,353
Changes in allowance	(2,696)
Interest and dividend income	(7,179)
Interest expenses	13,844
Decrease (increase) in trade and other receivables	(71,111)
Decrease (increase) in inventories	86,569
Increase (decrease) in trade and other payables	(42,479)
Other	47,381
Subtotal	255,751
Interest and dividends received	14,857
Interest paid	(12,362)
Income taxes refund (paid)	(10,972)
Cash flows from operating activities	247,274
II. Cash flows from investing activities
Purchase of property, plant and equipment, intangible assets, and investment property	(308,123)
Proceeds from sale of property, plant and equipment, intangible assets, and investment property	29,547
Purchase of investments	(5,731)
Proceeds from sale of investments	128,898
Other	(8,812)
Cash flows from investing activities	(164,221)
III. Cash flows from financing activities
Net increase (decrease) in short-term borrowings	3,396
Increase (decrease) in commercial papers	(88,999)
Proceeds from long-term borrowings	224,077
Repayments of long-term borrowings	(214,826)
Proceeds from issuance of bonds	60,000
Payments for purchase of treasury shares	(65)
Other	(13,674)
Cash flows from financing activities	(30,092)
Effect of exchange rate change on cash and cash equivalents	2,752
Net increase (decrease) in cash and cash equivalents	55,712
Cash and cash equivalents at beginning of period	86,704
Cash and cash equivalents at end of period	142,416

Note: Amounts are rounded down to the nearest million yen.

Segment Information

(From April 1, 2020 to March 31, 2021)

1. Overview of reportable segments

The Group organized under JFE Holdings executed commercial activities through three operating companies-JFE Steel Corporation, JFE Engineering Corporation and JFE Shoji Corporation-in accordance with the characteristics of their respective businesses. Consolidated reporting segments, one for each operating company, were characterized by their constituent products and services.

Each segment had its own respective products and services. The steel business produced and sold various steel products, processed steel products and raw materials, and provided transportation and other related businesses, such as facility maintenance and construction. The engineering business handled engineering for energy, urban environments, steel structures and industrial machines, recycling and electricity retailing. The trading business purchased, processed and distributed steel products, raw materials for steel production, nonferrous metal products, and food, etc.

2. Information about reportable segment

The Group assesses segment performance on the basis of segment profit. Segment profit is profit before tax excluding one-time items of a materially significant value.

Intersegment transactions are based on market prices and the like.

(Millions of yen)

	Reportable segment
	Steel	Engineering	Trading	Total	Adjustments	Amount recorded on consolidated financial statements
Revenue
Revenue from external customers	1,938,933	474,908	813,443	3,227,285	-	3,227,285
Intersegment revenue	316,283	10,842	119,066	446,192	(446,192)	-
Total	2,255,216	485,750	932,510	3,673,477	(446,192)	3,227,285
Segment profit	(65,461)	24,073	20,098	(21,289)	(4,118)	(25,408)
Profit on sales of fixed assets						28,021
Impairment losses						(7,544)
Loss before tax						(4,930)
Segment assets	3,864,262	478,146	717,270	5,059,679	(404,707)	4,654,972
Other items
Depreciation and amortization	211,645	14,629	11,065	237,340	(987)	236,353
Impairment losses	(6,351)	(59)	(1,133)	(7,544)	-	(7,544)
Finance income	689	171	1,000	1,861	(174)	1,686
Finance costs	(11,880)	(838)	(2,053)	(14,772)	588	(14,184)
Share of profit of entities accounted for using equity method	16,873	277	671	17,822	(3,582)	14,239
Investments accounted for using equity method	312,476	11,903	17,144	341,525	13,717	355,242
Capital expenditures	308,384	22,358	12,798	343,540	(1,145)	342,395

Non-consolidated Financial Statements <JGAAP>

Non-consolidated Balance Sheet

As of March 31, 2021

(Millions of yen)

(ASSETS)

Items	Amount
Current assets	504,998
Cash and deposits	55,328
Operating accounts receivable	1,052
Short-term loans receivable	416,588
Other	32,029
Non-current assets	2,240,825
Property, plant and equipment	1
Tools, furniture and fixtures	1
Intangible assets	8
Trademark right	8
Investments and other assets	2,240,815
Shares of subsidiaries and associates	904,392
Investments in capital	3
Long-term loans receivable	1,335,775
Long-term prepaid expenses	7
Deferred tax assets	242
Other	393
Total assets	2,745,823

(LIABILITIES)

Items	Amount
Current liabilities	353,181
Short-term loans payable	82,097
Current portion of bonds	30,000
Accounts payable -other	30,443
Accrued expenses	1,300
Income taxes payable	22
Deposits received	209,317
Unearned revenue	1
Non-current liabilities	1,369,185
Bonds payable	260,000
Long-term loans payable Provision for share-based	1,108,663
remuneration for directors and corporate officers	30
Allowance for corporate officers' retirement benefits	36
Other	455
Total liabilities	1,722,367
(NET ASSETS)
Shareholders' equity	1,023,750
Capital stock	147,143
Capital surplus	772,574
Legal capital surplus	772,574
Retained earnings	189,163
Other retained earnings	189,163
Retained earnings brought forward	189,163
Treasury shares	(85,130)
Valuation and translation adjustments	(293)
Deferred gains or losses on hedges	(293)
Total net assets	1,023,456
Total liabilities and net assets	2,745,823

Note: Amounts are rounded down to the nearest million yen.

Non-consolidated Statement of Income

From April 1, 2020 to March 31, 2021

(Millions of yen)

Items	Amount
Operating revenue
Dividend income	8,847
Financial revenue	10,565
Management fee income	2,505	21,918
Operating expenses
Financial expenses	10,383
General and administrative expenses	2,200	12,583
Operating income		9,334
Ordinary income		9,334
Profit before income taxes		9,334
Income taxes -current		155
Income taxes -deferred		(3)
Profit		9,182

Note: Amounts are rounded down to the nearest million yen.

Independent Auditor's Report

May 17, 2021

Mr. Koji Kakigi

Representative Director, President and CEO

JFE Holdings, Inc.

Ernst & Young ShinNihon LLC

Tokyo Office

Yusuke Nakamura

Certified Public Accountant

Designated and Engagement Partner

Yoshihiro Shibata

Certified Public Accountant

Designated and Engagement Partner

Tetsuya Yoshida

Certified Public Accountant

Designated and Engagement Partner

Keiichi Wakimoto

Certified Public Accountant

Designated and Engagement Partner

Opinion

Pursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying consolidated financial statements, which comprise the consolidated statement of financial position, the consolidated statement of profit or loss, the consolidated statement of changes in equity and the notes to the consolidated financial statements of JFE Holdings, Inc. (the "Company") for the fiscal year from April 1, 2020 through March 31, 2021.

In our opinion, the above consolidated financial statements, prepared with the omission of some disclosure items required under the International Financial Reporting Standards in accordance with the provisions of the latter part of Article 120, Paragraph 1 of the Regulation on Corporate Accounting, present fairly, in all material respects, the financial position and results of operations of the corporate group, which consists of the Company and its consolidated subsidiaries, for the period covered by the consolidated financial statements.

Basis for the Opinion

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility under the auditing standards is stated in "Auditor's Responsibility for the Audit of the Consolidated Financial Statements." We are independent of the Company and its consolidated subsidiaries in accordance with the provisions related to professional ethics in Japan, and are fulfilling other ethical responsibilities as an auditor. We believe that we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the provisions of the latter part of Article 120, Paragraph 1 of the Regulation on Corporate Accounting which allows companies to prepare consolidated financial statements with the omission of some disclosure items required under International Financial Reporting Standards, and for designing and operating such internal control as management determines is necessary to enable the preparation and fair presentation of the 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 whether it is appropriate to prepare the consolidated financial statements in accordance with the premise of a going concern, and for disclosing matters relating to going concern when it is required to do so in accordance with the provisions of the latter part of Article 120, Paragraph 1 of the Regulation on Corporate Accounting which allows companies to prepare consolidated financial statements with the omission of some disclosure items required under International Financial Reporting Standards.

Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for monitoring the execution of Directors' duties related to designing and operating the financial reporting process.

Auditor's Responsibility for the Audit of the Consolidated Financial Statements

Our responsibility is 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 express an opinion on the consolidated financial statements from an independent standpoint in an audit report, based on our audit. Misstatements can occur as a result of fraud or error, and are deemed material if they can be reasonably expected to, either individually or collectively, influence the decisions of users taken on the basis of the consolidated financial statements.

We make professional judgment in the audit process in accordance with auditing standards generally accepted in Japan, and perform the following while maintaining professional skepticism.

―	Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement audit procedures to address the risks of material misstatement. The audit procedures shall be selected and applied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained to provide a basis for the audit opinion.
―	In making those risk assessments, the auditor considers internal control relevant to the entity's audit in order to design audit procedures that are appropriate in the circumstances, although the purpose of the audit of the consolidated financial statements is not to express an opinion on the effectiveness of the entity's internal control.
―	Assess the appropriateness of accounting policies adopted by management and the method of their application, as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.
―	Determine whether it is appropriate for management to prepare the consolidated financial statements on the premise of a going concern and, based on the audit evidence obtained, determine whether there is a significant uncertainty in regard to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor is required to call attention to the notes to the consolidated financial statements in the audit report, or if the notes to the consolidated financial statements pertaining to the significant uncertainty are inappropriate, issue a modified opinion on the consolidated financial statements. While the conclusions of the auditor are based on the audit evidence obtained up to the date of the audit report, depending on future events or conditions, an entity may be unable to continue as a going concern.
―	Besides assessing whether the presentation of and notes to the consolidated financial statements are in accordance with the provisions of the latter part of Article 120, Paragraph 1 of the Regulation on Corporate Accounting which allows companies to prepare consolidated financial statements with the omission of some disclosure items required under International Financial Reporting Standards, assess the presentation, structure, and content of the consolidated financial statements including related notes, and whether the consolidated financial statements fairly present the transactions and accounting events on which they are based.
―	Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The auditor is responsible for instructing, supervising, and implementing the audit of the consolidated financial statements, and is solely responsible for the audit opinion.

The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the scope and timing of implementation of the planned audit, material audit findings including material weaknesses in internal control identified in the course of the audit, and other matters required under the auditing standards. The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the observance of provisions related to professional ethics in Japan as well as matters that are reasonably considered to have an impact on the auditor's independence and any safeguards that are in place to reduce or eliminate obstacles.

Interest

Our firm and engagement partners have no interests in the Company or its consolidated subsidiaries requiring disclosure under the provisions of the Certified Public Accountants Act of Japan.

The Audit Report of Audit & Supervisory Board

The Audit Report

Regarding the performance of duties by Directors for the 19th term from April 1, 2020 to March 31, 2021, Audit & Supervisory Board of JFE Holdings, Inc., hereby submits its audit report, which has been prepared through discussions based on the audit reports prepared by the respective Audit & Supervisory Board Members.

1. Auditing Methods Employed by the Audit & Supervisory Board Members and Audit & Supervisory Board and the Substance Thereof

(1) In compliance with the Auditing Rules of the Audit & Supervisory Board Members and auditing plans specified by Audit & Supervisory Board and based on the assigned tasks and others, each Audit & Supervisory Board Member has communicated with the Directors, the Corporate Officers and other relevant personnel to collect necessary information and improve the auditing environment. Each Audit & Supervisory Board Member has audited in the following manner.

1) Each Audit & Supervisory Board Member has attended the meetings of the Board of Directors and other important meetings; heard about the execution of their duties from the Directors, the Corporate Officers and other relevant personnel; requested explanations therefrom, as required; examined important kessaisho and associated information; and studied the operations and financial position of JFE Holdings, Inc.

Moreover, each Audit & Supervisory Board Member has communicated and exchanged information with the Directors, the Audit & Supervisory Board Members and other relevant personnel of the subsidiaries, received reports on operations therefrom and studied the operations and financial position of the subsidiaries, as required.

2) Each Audit & Supervisory Board Member has supervised and verified the substance of the resolution adopted by the Board of Directors with regard to the improvement of the systems stipulated in Article 100, Paragraphs 1 and 3, of the Ordinance for Enforcement of the Companies Act as the systems to ensure compliance of the execution of Directors' duties described in the Business Report with laws, regulations, and the Articles of Incorporation and other requirements to ensure the propriety of business operations of the corporate group consisting of a stock company and its subsidiaries, as well as the current situation of in-house systems (internal control systems) that have been improved and operated pursuant to the resolution concerned.

Moreover, each Audit & Supervisory Board Member has heard about the internal control relative to financial reporting from the Directors, the Corporate Officers and Ernst & Young ShinNihon LLC at the proper time and requested explanations therefrom, as required.

3) Each Audit & Supervisory Board Member has confirmed the substance of the Basic Policy Regarding Control of a Company (matters set forth in Article 118, Items 3 (a) and (b), of the Ordinance for Enforcement of the Companies Act), which is described in the Business Report.

4) Each Audit & Supervisory Board Member has supervised and verified whether the Accounting Auditor maintains independence and has done appropriate audits, and has received reports on the execution of their duties and requested explanations, as required, from the Accounting Auditor. In addition, each Audit & Supervisory Board Member has been notified that "Systems to Ensure Appropriate Execution of Duties" (matters set forth in the respective items of Article 131 of the Company Accounting Ordinance) have been improved in accordance with the "Quality Control Standards for Audits" (Business Accounting Council on October 28, 2005) and others, and requested explanations therefrom, as required.

(2) Audit & Supervisory Board determined auditing plans, assigned tasks and others; received reports about the progress and results of audits from each Audit & Supervisory Board Member; received reports on the execution of their duties; and requested explanations, as required, from the Directors, the Corporate Officers and the Accounting Auditor.

In the manner explained above, each Audit & Supervisory Board Member and Audit & Supervisory Board have examined the Business Report and supplementary schedule thereof, the consolidated financial statements (Consolidated Statement of Financial Position, Consolidated Statement of Income, Consolidated Statement of Changes in Equity and Notes to the Consolidated Financial Statements), as well as the non-consolidated financial statements (Non-Consolidated Balance Sheet, Non-Consolidated Statement of Income, Non-Consolidated Statement of Changes in Net Assets and Notes to the Non-Consolidated Financial Statements) and the related supplementary schedules thereof of JFE Holdings, Inc., pertaining to the fiscal year ended March 31, 2021.

2. Audit Results

(1) Audit results regarding the Business Report, etc.

1) In our opinion, the Business Report and the supplementary schedules thereof fairly represent JFE Holdings, Inc.'s conditions in accordance with the related laws and regulations and the Articles of Incorporation.

2) We have found no evidence of wrongful action or material violation of laws, regulations or the Articles of Incorporation by any Directors with regard to the execution of their duties.

3) In our opinion, the substance of the resolution regarding the internal control systems is fair and reasonable. We have found no matters to remark with regard to the execution of duties by the Directors concerning the internal control systems, including internal control relative to financial reporting.

4) We have found no matters to remark with regard to the Basic Policies Regarding Control of a Company. In our opinion, each initiative taken under the policies complies with said policies. Accordingly, they do not impair the common interests of JFE Holdings, Inc.'s shareholders or have the intention of improperly protecting any executive positions at JFE Holdings, Inc.

(2) Audit results regarding the consolidated financial statements

In our opinion, the audit methods and results employed and rendered by the Accounting Auditor, Ernst & Young ShinNihon LLC, are fair and reasonable.

(3) Audit results regarding the non-consolidated financial statements and the supplementary schedules thereof

In our opinion, the audit methods and results employed and rendered by the Accounting Auditor, Ernst & Young ShinNihon LLC, are fair and reasonable.

May 18, 2021

Audit & Supervisory Board of JFE Holdings, Inc.

Audit & Supervisory Board Member (Full-time) Nobuya Hara

Audit & Supervisory Board Member (Full-time) Kumiko Baba

Outside Audit & Supervisory Board Member Shigeo Ohyagi

Outside Audit & Supervisory Board Member Isao Saiki

Outside Audit & Supervisory Board Member Tsuyoshi Numagami

(English Translation of the Japanese original)

This translation has been prepared for reference only. The Japanese language version will control if any discrepancy arises.

FINANCIAL INFORMATION

1. Preparation Policy of the Consolidated Financial Statements

The consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards (hereinafter referred to as "IFRS") pursuant to the provisions of Article 93 of the Ordinance on Terminology Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976; hereinafter referred to as the "Ordinance on Consolidated Financial Statements").

2. Audit Certification

In accordance with the provisions of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, the consolidated financial statements of the Company for the fiscal year ended March 31,2021 were audited by Ernst & Young ShinNihon LLC.

3. Particular Efforts to Secure the Appropriateness of Consolidated Financial Statements, etc.

The Company is making particular efforts to ensure the appropriateness of consolidated financial statements, etc. Specifically, in order to establish a system for gaining proper understanding of the details and revisions of accounting standards and relevant guidance and responding accordingly, the Company has joined the Financial Accounting Standards Foundation and attends seminars and workshops held by the foundation.

4. Development of a System for Fair Preparation of Consolidated Financial Statements, etc., in Accordance with IFRS

In order to prepare appropriate consolidated financial statements under IFRS, the Company keeps up to date with the latest accounting standards and assesses their impact by obtaining press releases and standards issued by the International Accounting Standards Board as necessary. The Company has also formulated the Group Accounting Policies in compliance with IFRS and conducts its accounting based on those policies. In addition, the Company attends seminars and workshops held by the Financial Accounting Standards Foundation, audit firms, and other organizations, thereby accumulating expertise within the Company.

Consolidated Financial Statements

Consolidated Statement of Financial Position

(million yen)

Assets

	Notes	As of March 31,2020	As of March 31,2021
Current assets
Cash and cash equivalents	7, 21	86,704	142,416
Trade and other receivables	8, 21,38	678,098	751,824
Contract assets	27	142,075	101,282
Inventories	9	872,602	785,632
Income taxes receivable		20,946	14,748
Other financial assets	10,38	6,307	13,359
Other current assets	1 1	108,410	79,430
Total current assets		1,915,146	1,888,694
Non-current assets
Property, plant and equipment	12,21	1,717,751	1,772,303
Goodwill	13	6,497	6,200
Intangible assets	13	88,802	95,055
Right-of-use asset	14, 21	102,322	111,938
Investment property	15	58,158	58,310
Investments accounted for using equity method	6, 18, 21	336,040	355,242
Retirement benefit asset	24	15,520	22,159
Deferred tax assets	19	94,930	86,014
Other financial assets	10, 21,38	296,004	244,505
Other non-current assets	11,21	14,946	14,547
Total non-current assets		2,730,974	2,766,278
Total assets	6	4,646,120	4,654,972

Liabilities and equity

(million yen)

	Notes	As of March 31,2020	As of March 31,2021
Liabilities
Current liabilities
Trade and other payables	20, 21,38	557,252	496,995
Bonds payable, borrowings, and lease liabilities	21,37,38	376,473	277,027
Contract liabilities	27	44,813	43,038
Income taxes payable, etc.		13,249	15,090
Provisions	23	12,507	11,518
Other financial liabilities	22, 38	89,465	86,836
Other current liabilities	11	210,543	208,510
Total current liabilities		1,304,306	1,139,017
Non-current liabilities
Bonds payable, borrowings, and lease liabilities	21,37,38	1,437,835	1,529,112
Retirement benefit liability	24	143,316	141,186
Provisions	23	25,740	24,105
Deferred tax liabilities	19	3,723	7,591
Other financial liabilities	22, 38	16,246	45,417
Other non-current liabilities	11	8,398	8,387
Total non-current liabilities		1,635,261	1,755,800
Total liabilities		2,939,568	2,894,818
Equity
Share capital	25	147,143	147,143
Capital surplus	25	652,430	652,465
Retained earnings	25	1,002,076	1,029,976
Treasury shares	25	(180,637)	(180,639)
Other components of equity		6,012	30,278
Equity attributable to owners of parent		1,627,026	1,679,223
Non-controlling interests		79,526	80,930
Total equity		1,706,552	1,760,154
Total liabilities and equity		4,646,120	4,654,972

Consolidated Statement of Profit or Loss

(million yen)

	Notes	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Revenue	27	3,729,717	3,227,285
Cost of sales	12, 13, 29	(3,334,103)	(2,912,766)
Gross profit		395,614	314,519
Selling, general and administrative expenses	12, 13, 28, 29, 30	(356,992)	(324,057)
Share of profit of investments accounted for using equity method	6, 18	8,782	14,239
Other income	31	30,818	25,782
Other expenses	32	(40,323)	(43,394)
Business profit (loss)		37,899	(12,911)
Profit on sales of fixed assets	6, 33	-	28,021
Impairment losses	6, 16	(238,826)	(7,544)
Operating profit (loss)		(200,927)	7,566
Finance income	6, 34	2,727	1,686
Finance costs	6, 34	(15,273)	(14,184)
Loss before tax		(213,473)	(4,930)
Income tax expense	19	20,183	(14,133)
Net loss		(193,290)	(19,063)
Loss attributable to
Owners of parent		(197,744)	(21,868)
Non-controlling interests		4,454	2,804
Net loss		(193,290)	(19,063)
Earnings per share
Basic losses per share (yen)	36	(343.39)	(37.98)
Diluted losses per share (yen)	36	(343.39)	(37.98)

Consolidated Statement of Comprehensive Income

(million yen)

	Notes	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Net loss		(193,290)	(19,063)
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans	24, 35	(4,975)	12,020
Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income	35, 38	(49,143)	46,751
Share of other comprehensive income of investments accounted for using equity method	18, 35	3,148	13,284
Total of items that will not be reclassified to profit or loss		(50,971)	72,056
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations	35	(3,080)	(609)
Effective portion of cash flow hedges	35	(44)	11,673
Share of other comprehensive income of investments accounted for using equity method	18, 35	(11,786)	(825)
Total of items that may be reclassified to profit or loss		(14,911)	10,238
Total other comprehensive income		(65,882)	82,295
Comprehensive income		(259,172)	63,231
Comprehensive income attributable to
Owners of parent		(263,243)	60,036
Non-controlling interests		4,070	3,195
Comprehensive income		(259,172)	63,231

Consolidated Statement of Changes in Equity

(million yen)

		Equity attributable to owners of parent
						Other components of equity
	Notes	Share capital	Capital surplus	Retained earnings	Treasuryshares	Remeasurements of defined benefit plans
Balance as of April 1,2019		147,143	646,793	1,241,420	(180,670)	-
Cumulative effects of changes in accounting policies		-	-	(1,302)	-	-
Retroactively adjusted balance		147,143	646,793	1,240,117	(180,670)	-
Net loss		-	-	(197,744)	-	-
Other comprehensive income		-	-	-	-	(4,765)
Comprehensive income		-	-	(197,744)	-	(4,765)
Purchase of treasury shares		-	-	-	(73)	-
Disposal of treasury shares		-	(12)	-	17	-
Dividends	26	-	-	(40,363)	-	-
Share-based payment transactions	30	-	(34)	-	88	-
Changes in ownership interest in subsidiaries		-	5,684	-	-	-
Transfer from other components of equity to retained earnings		-	-	67	-	4,765
Transfer to non-financial assets	38	-	-	-	-	-
Other		-	-	-	-	-
Total transactions with owners		-	5,637	(40,296)	33	4,765
Balance as of March 31,2020		147,143	652,430	1,002,076	(180,637)	-

	Equity attributable to owners of parent
	Other components of equity
	Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income
Balance as of April 1,2019	90,730
Cumulative effects of changes in accounting policies	-
Retroactively adjusted balance	90,730
Net loss	-
Other comprehensive income	(46,129)
Comprehensive income	(46,129)
Purchase of treasury shares	-
Disposal of treasury shares	-
Dividends	-
Share-based payment transactions	-
Changes in ownership interest in subsidiaries	-
Transfer from other components of equity to retained earnings	(4,832)
Transfer to non-financial assets	-
Other	-
Total transactions with owners	(4,832)
Balance as of March 31,2020	39,768

		Equity attributable to owners of parent
		Other components of equity
	Notes	Exchange differences on translation of foreign operations	Effective portion of cashflow hedges	Total	Total	Non-controlling interests
Balance as of April 1,2019		(16,547)	(2,532)	71,650	1,926,337	65,422
Cumulative effects of changes in accounting policies		-	-	-	(1,302)	-
Retroactively adjusted balance		(16,547)	(2,532)	71,650	1,925,034	65,422
Net loss		-	-	-	(197,744)	4,454
Other comprehensive income		(15,393)	790	(65,498)	(65,498)	(384)
Comprehensive income		(15,393)	790	(65,498)	(263,243)	4,070
Purchase of treasury shares		-	-	-	(73)	-
Disposal of treasury shares		-	-	-	5	-
Dividends	26	-	-	-	(40,363)	(2,559)
Share-based payment transactions	30	-	-	-	54	-
Changes in ownership interest in subsidiaries		-	-	-	5,684	12,287
Transfer from other components of equity to retained earnings		-	-	(67)	-	-
Transfer to non-financial assets	38	-	(71)	(71)	(71)	-
Other		-	-	-	-	306
Total transactions with owners		-	(71)	(138)	(34,764)	10,034
Balance as of March 31,2020		(31,941)	(1,813)	6,012	1,627,026	79,526

	Total equity
Balance as of April 1,2019	1,991,759
Cumulative effects of changes in accounting policies	(1,302)
Retroactively adjusted balance	1,990,456
Net loss	(193,290)
Other comprehensive income	(65,882)
Comprehensive income	(259,172)
Purchase of treasury shares	(73)
Disposal of treasury shares	5
Dividends	(42,922)
Share-based payment transactions	54
Changes in ownership interest in subsidiaries	17,971
Transfer from other components of equity to retained earnings	-
Transfer to non-financial assets	(71)
Other	306
Total transactions with owners	(24,730)
Balance as of March 31,2020	1,706,552

(million yen)

		Equity attributable to owners of parent
						Other components of equity
	Notes	Share capital	Capital surplus	Retained earnings	Treasury shares	Remeasurements of defined benefit plans
Balance as of April 1,2020		147,143	652,430	1,002,076	(180,637)	-
Net loss		-	-	(21,868)	-	-
Other comprehensive income		-	-	-	-	12,186
Comprehensive income		-	-	(21,868)	-	12,186
Purchase of treasury shares		-	-	-	(65)	-
Disposal of treasury shares		-	(22)	-	26	-
Dividends	26	-	-	-	-	-
Share-based payment transactions	30	-	(23)	-	37	-
Change in scope of consolidation		-	-	-	-	-
Changes in ownership interest in subsidiaries		-	80	-	-	-
Transfer from other components of equity to retained earnings		-	-	49,768	-	(12,186)
Transfer to non-financial assets	38	-	-	-	-	-
Other		-	-	-	-	-
Total transactions with owners		-	34	49,768	(1)	(12,186)
Balance as of March 31,2021		147,143	652,465	1,029,976	(180,639)	-

	Equity attributable to owners of parent
	Other components of equity
	Net change In fair value of equity Instruments designated as measured at fair value through other comprehensive Income
Balance as of April 1,2020	39,768
Net loss	-
Other comprehensive income	59,433
Comprehensive income	59,433
Purchase of treasury shares	-
Disposal of treasury shares	-
Dividends	-
Share-based payment transactions	-
Change in scope of consolidation	-
Changes in ownership interest in subsidiaries	-
Transfer from other
components of equity to retained earnings	(37,581)
Transfer to non-financial assets	-
Other	-
Total transactions with owners	(37,581)
Balance as of March 31,2021	61,620

		Equity attributable to owners of parent
		Other components of equity
	Notes	Exchange differences on translation of foreign operations	Effective portion of cash flow hedges	Total	Total	Non-controlling interests
Balance as of April 1,2020		(31,941)	(1,813)	6,012	1,627,026	79,526
Net loss		-	-	-	(21,868)	2,804
Other comprehensive income		(314)	10,599	81,904	81,904	390
Comprehensive income		(314)	10,599	81,904	60,036	3,195
Purchase of treasury shares		-	-	-	(65)	-
Disposal of treasury shares		-	-	-	4	-
Dividends	26	-	-	-	-	(1,743)
Share-based payment transactions	30	-	-	-	13	-
Change in scope of consolidation		-	-	-	-	694
Changes in ownership interest in subsidiaries		-	-	-	80	(854)
Transfer from other
components of equity to retained earnings		-	-	(49,768)	-	-
Transfer to non-financial assets	38	-	(7,871)	(7,871)	(7,871)	-
Other		-	-	-	-	112
Total transactions with owners		-	(7,871)	(57,639)	(7,838)	(1,791)
Balance as of March 31,2021		(32,256)	914	30,278	1,679,223	80,930

	Total equity
Balance as of April 1,2020	1,706,552
Net loss	(19,063)
Other comprehensive income	82,295
Comprehensive income	63,231
Purchase of treasury shares	(65)
Disposal of treasury shares	4
Dividends	(1,743)
Share-based payment transactions	13
Change in scope of consolidation	694
Changes in ownership interest in subsidiaries	(774)
Transfer from other components of equity to retained earnings	-
Transfer to non-financial assets	(7,871)
Other	112
Total transactions with owners	(9,629)
Balance as of March 31,2021	1,760,154

Consolidated Statement of Cash Flow

(million yen)

	Notes	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Cash flows from operating activities
Loss before tax		(213,473)	(4,930)
Depreciation and amortization		231,577	236,353
Changes in allowance		(6,601)	(2,696)
Interest and dividend income		(12,205)	(7,179)
Interest expenses		14,486	13,844
Changes in trade and other receivables		86,357	(71,111)
Change in inventories		42,559	86,569
Change in trade and other payables		(52,338)	(42,479)
Other		184,494	47,381
Subtotal		274,856	255,751
Interest and dividends received		24,192	14,857
Interest paid		(13,241)	(12,362)
Income taxes paid		(24,736)	(10,972)
Net cash from operating activities		261,070	247,274
Cash flows from investing activities
Purchase of property plant and equipment, intangible assets, and investment property		(352,842)	(308,123)
Proceeds from sale of property plant and equipment, intangible assets, and investment property		3,357	29,547
Purchase of investments		(35,299)	(5,731)
Proceeds from sale of investments		23,530	128,898
Other		2,875	(8,812)
Net cash from investing activities		(358,378)	(164,221)
Cash flows from financing activities
Change in short-term borrowings	37	(11,500)	3,396
Change in commercial papers	37	5,999	(88,999)
Proceeds from long-term borrowings	37	183,529	224,077
Repayments of long-term borrowings	37	(104,825)	(214,826)
Proceeds from issuance of bonds	37	120,000	60,000
Payments for purchase of treasury shares		(73)	(65)
Dividends paid to owners of parent	26	(40,363)	-
Other	37	(48,865)	(13,674)
Net cash provided from financing activities		103,900	(30,092)
Effect of exchange rate change on cash and cash equivalents		(2,176)	2,752
Changes in cash and cash equivalents		4,416	55,712
Cash and cash equivalents at beginning of period		82,288	86,704
Cash and cash equivalents at end of period	7	86,704	142,416

Notes to Consolidated Financial Statements

1. Reporting Entity

JFE Holdings, Inc. (the "Company") is an incorporated company established under Japan's Companies Act and is located in Japan. The consolidated financial statements of the Company as of March 31,2021, encompass the Company and its subsidiaries (the "Group") and its interests in affiliates and joint arrangements of the Company.

Details of the Group's business are described in Note "6. Segment Information."

2. Basis of Presentation

(1) Statement of compliance with IFRS

The Company meets the requirements of a "specified company complying with designated international accounting standards" as stipulated in Article 1 -2 of the Ordinance on Consolidated Financial Statements, and the Company therefore prepares its consolidated financial statements in accordance with IFRS, in accordance with Article 93 of the Ordinance on Consolidated Financial Statements.

The Group's consolidated financial statements for the fiscal year ended March 31,2021 were authorized for issue on June 25, 2021 by the Board of Directors.

(2) Basis of measurement

The Group's consolidated financial statements have been prepared on a historical cost basis, with the exception of financial instruments, etc., described in Note "3. Significant Accounting Policies."

(3) Functional currency and reporting currency

The Group's consolidated financial statements are presented in Japanese yen, which is the Company's functional currency. Amounts less than one million yen are rounded down.

3. Significant Accounting Policies

(1) Basis of consolidation

(i) Subsidiaries

Subsidiaries are those companies over which the Company has control. If the Group has an exposure or right to variable returns from involvement in the investee, and has the ability to use its power over the investee to affect the amount of returns, then it is regarded as controlling the investee.

The financial statements of subsidiaries are included in the consolidated financial statements of the Group from the date of acquisition of control to the date of loss of control.

If there is a change in equity interest in a subsidiary without loss of control, it is accounted for as a capital transaction. If there is a change in equity interest in a subsidiary accompanied by a loss of control, the subsidiary's assets and liabilities, non-controlling interests related to the subsidiary, and other components of equity are derecognized, with any gain or loss resulting therefrom recognized in profit or loss.

For subsidiaries whose reporting periods end on a date that differs from that of the parent entity, provisional financial statements as of the consolidated reporting date are used.

(ii) Associates and joint arrangements

Associates: An entity in which the Group owns at least 20% and at most 50% of the voting rights is considered an associate unless it can be clearly demonstrated that the Company cannot exercise influence over financial and operating policy decisions of the entity. An entity in which the Group owns less than 20% of the voting rights is considered an associate if the Company can exercise influence over financial and operating policy decisions of the entity. Investments in associates are accounted for using the equity accounting method.

A joint arrangement is an arrangement in which two or more parties have joint control such that decisions about the relevant activities of the arrangement require the unanimous consent of the parties sharing control. If the parties that share joint control have rights to the assets and obligations for the liabilities relating to the arrangement, it is called a joint operation. If the parties that share joint control have rights to the net assets of the arrangement, it is ca I led a joint venture. In relation to its interest in a joint operation, the Group recognizes its share of assets, liabilities, revenue, and expenses. Joint ventures are accounted for using the equity accounting method.

For associates whose reporting periods end on a date that differs from that of the parent entity, provisional financial statements as of the consolidated reporting date are prepared.

For JSW Steel Limited provisional financial statements are prepared based on December 31 as the reporting date because local legislation imposes restrictions on when certain information becomes available to the Company. Necessary adjustments have been made for material transactions or events disclosed between JSW Steel's provisional reporting date and the consolidated reporting date.

(iii) Consolidation eliminations

The balances of receivables and payables and transactions within the Group, and unrealized gains and losses arising from transactions within the Group, have been eliminated when preparing consolidated financial statements.

(2) Business combinations

Business combinations are accounted for using the acquisition method.

Identifiable assets acquired through business combinations, liabilities assumed, non-controlling interests of the acquiree, and goodwill are recognized on the acquisition date (the date on which the acquirer obtains control of the acquiree). Asa general rule, identifiable assets acquired and liabilities assumed are measured at fair value.

If the total value ofthe fair value of consideration (including contingent consideration) transferred in the business combination, the amount of any noncontrolling interests of the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree ("Value A") exceeds the net value (usually the fair value) of the acquiree's identifiable assets and labilities assumed ("Value B"), the excess is recognized as goodwill. If, on the other hand, Value A is less than Value B, the difference is recognized in profit or loss as of the acquisition date.

Acquisition costs incurred are recognized as expenses when incurred.

For each individual transaction, the Company chooses to measure non-controlling interests at fair value or as a proportionate share of the fair value of identifiable net assets of the acquiree.

(3) Foreign currency translation

(i) Translation of foreign currency transactions

Foreign currency transactions are translated into the functional currency of each company using the exchange rate or similar rate prevailing on the transaction date. Monetary items denominated in foreign currencies at the end of the reporting period are translated into the functional currency at the exchange rate prevailing at the end of the reporting period, and the resulting exchange differences are recognized in profit or loss. When the valuation difference of a non-monetary item is recognized in other comprehensive income, any exchange component is recognized in other comprehensive income, and when a non-monetary item is recognized in profit or loss, any exchange component is recognized in profit or loss.

(ii) Translation of foreign operations

Assets and liabilities of foreign operations are translated at the exchange rates prevailing at the end of the reporting period. In addition, revenues and expenses of foreign operations are translated at the average exchange rates for the reporting period unless exchange rates fluctuated significantly during the period. Exchange differences arising from translation are recognized in other comprehensive income, and the accumulated amount is included in other components of equity

When disposing of foreign operations, the cumulative amount of exchange differences related to the foreign operations is recognized in profit or loss at the time of disposal.

(4) Financial instruments

(i) Financial assets

a. Initial recognition and measurement

Financial assets are classified either as financial assets measured at amortized cost or as financial assets measured at fair value at the time of initial recognition. The Group recognizes a financial asset on the transaction date on which it becomes a party to the contractual provisions of the financial asset.

Financial assets that meet the following conditions are classified as financial assets measured at amortized cost:

―	The asset is held in a business model of which the objective is to hold the asset in order to collect its contractual cash flows
―	The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Financial assets other than financial assets measured at amortized cost are classified as financial assets measured at fair value.

With the exception of equity financial assets held for trading purposes that must be measured at fair value through profit or loss, equity financial assets measured at fair value are individually classified either as measured at fair value through profit or loss or as measured at fair value through other comprehensive income, with that classification being made when the asset is initially recognized and applying continuously thereafter.

With the exception of financial assets measured at fair value through profit or loss, financial assets are measured at fair value at initial recognition plus transaction costs directly attributable to the acquisition. Financial assets measured at fair value through profit or loss are measured at fair value at initial recognition, and transaction costs directly attributable to the transaction are recognized in profit or loss.

b. Measurement subsequent to initial recognition

(a) Financial assets measured at amortized cost

After initial recognition, measurement is the amortized cost using the effective interest method.

(b) Financial assets measured at fair value through profit or loss

After initial recognition, measurement is the fair value with subsequent changes recognized in profit or loss.

(c) Equity financial assets measured at fair value through other comprehensive income

After initial recognition, measurement is the fair value with subsequent changes recognized in other comprehensive income.

Amounts recognized in other comprehensive income are transferred to retained earnings when an asset is derecognized or its fair value declines significantly (except when recovery is deemed probable); they are not transferred to profit or loss. Dividends derived from such financial assets are recognized as profit or loss.

c. Derecognition

Financial assets are derecognized when the contractual rights to receive cash flows have extinguished or when the contractual rights to receive cash flows have been transferred and substantially all risks and rewards of ownership of the financial asset are transferred to another entity.

d. Impairment

For financial assets measured at amortized cost, the Company recognizes allowances for doubtful accounts based on expected credit losses.

Allowances for doubtful accounts are calculated as the present value ofthe difference between the contractual cash flows due to the Group and the cash flows that the Group expects to receive.

The Group determines whether the credit risk on each financial asset has increased significantly since initial recognition on each reporting date, and if the credit risk has not increased significantly since initial recognition, the amount of the allowance for doubtful accounts is assessed based on the expected credit losses (expected credit losses over 12 months) resulting from default events that may occur within 12 months. If, on the reporting date, credit risk on a financial asset has increased significantly since initial recognition, the amount of the allowance for doubtful accounts is assessed based on the expected credit losses arising from all possible default events over the expected lifetime of the financial asset (expected credit losses over full lifetime). However, in the case of trade receivables, contract assets, and lease receivables that do not contain a significant financing component, regardless of the above, the amount of the allowance for doubtful accounts is always measured using the expected credit losses for the instrument's full lifetime.

A receivable is determined to be credit-impaired when a fact such as the commencement of legal liquidation proceedings due to the obligor's bankruptcy, etc., or the significant deterioration ofthe obligor's financial condition occurs. When it becomes apparent that a receivable will be unrecoverable in the future due to a write-off under the provisions of the Corporate Reorganization Act, etc., the carrying amount ofthe receivable is directly reduced.

Provisions of allowances for doubtful accounts on financial assets are recognized in profit or loss. In the case of events that reduce the allowance for doubtful accounts, reversals of allowances for doubtful accounts are recognized in profit or loss.

Estimates of allowances for doubtful accounts relating to financial assets reflect the following.

―	Unbiased probability-weighted amounts calculated by evaluating a range of possible outcomes
―	Time value of money
―	Rational and supportable information about past events, current conditions, and forecasts of future economic conditions, available at the reporting date without undue cost or effort

(ii) Financial liabilities

a. Initial recognition and measurement

Financial liabilities are classified either as financial liabilities measured at amortized cost or as financial liabilities measured at fair value through profit or loss at the time of initial recognition. The Group initially recognizes issued debt securities on the date of issue, and other financial liabilities are initially recognized on the transaction date on which the Group becomes a party to the contractual provisions of the financial liability.

Financial liabilities measured at amortized cost are measured at fair value minus transaction costs directly attributable to the issue ofthe instruments at the time of initial recognition. However, financial liabilities measured at fair value through profit or loss are measured at fair value at the time of initial recognition.

b. Measurement subsequent to initial recognition

(a) Financial liabilities measured at amortized cost After initial recognition, measurement is the amortized cost using the effective interest method.

(b) Financial liabilities measured at fair value through profit or loss

After initial recognition, measurement is the fair value with subsequent changes recognized in profit or loss.

c. Derecognition

Financial liabilities are derecognized when the financial liabilities extinguish; that is, when the liabilities are discharged, are canceled, or expire.

(iii) Derivative and hedge accounting

The Group enters into derivative transactions such as forward exchange contracts and interest rate swaps in order to hedge foreign exchange risk, interest rate risk, and the like.

At the inception of the hedge, the Group formally designates and documents the risk management purpose and strategy for the hedging relationship and the implementation of the hedge. This documentation identifies the hedging instrument, the item or transaction being hedged, the nature of the risk being hedged, and the method of evaluating the effectiveness of the hedging instrument in offsetting the exposure to changes in the fair value or cash flows of the hedged item due to the risk being hedged. Moreover, the Group assesses at the inception of the hedging relationship, and on an ongoing basis, whether a hedging relationship meets the hedge effectiveness requirements.

Derivatives are initially recognized at fair value. After initial recognition, fair value is measured and subsequent changes are treated as shown immediately below.

a. Fair value hedges

Changes in the fair value of derivatives used as hedging instruments are recognized in profit or loss or other comprehensive income. Changes in the fair value of the hedged item corresponding to the hedged risk are recognized in profit or loss or other comprehensive income, with the carrying amount of the hedged item being adjusted.

b. Cash flow hedges

The portion of the change in the fair value of derivatives used as hedging instruments that is determined to be an effective hedge is recognized in other comprehensive income, and the cumulative amount is included in other components of equity. The portion of hedges that is ineffective is recognized in profit or loss. Amounts accumulated in other components of equity are reclassified from other components of equity to profit or loss in the accounting period in which the transaction being hedged affects profit or loss. However, if the forecast transaction being hedged subsequently results in the recognition of a non-financial asset or non-financial liability, the amount accumulated n other components of equity is treated as an adjustment to the initial book value of that non-financial asset or non-financial liability.

Hedge accounting is discontinued prospectively when the hedging instrument expires, is sold, or is terminated or exercised, or if the derivative no longer meets the requirements for hedge accounting. When the forecast transaction is no longer expected to occur, the amount accumulated in other components of equity is immediately reclassified from other components of equity to profit or loss.

c. Derivatives not designated as hedges

Changes in the fair value of such derivatives are recognized in profit or loss.

(iv) Offsetting financial assets and financial liabilities

Financial assets and financial liabilities are offset and presented at net when the Group has a legally enforceable right to offset the recognized amounts and intends to settle on a net basis or intends to realize the asset and settle the liability simultaneously.

(5) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, readily available deposits, and short-term investments maturing within three months that are readily convertible to cash and subject to an insignificant risk of changes in value.

(6) Inventories

Inventories are measured at the lower of cost and net realizable value. Cost consists of material costs, direct labor costs, other direct costs, and an appropriate allocation of related manufacturing overhead costs. Net realizable value is calculated by deducting the estimated selling costs from the estimated selling price. Cost is mainly calculated based on the weighted average method.

(7) Property, plant and equipment

The Group uses the cost model to measure the carrying value of property, plant and equipment subsequent to its recognition. Under this model, property, plant and equipment are carried at their cost less any accumulated depreciation and any accumulated impairment losses.

Property, plant and equipment other than land and construction in progress are mainly depreciated using the straight-line method.

The estimated useful lives of major asset items are as follows:

―	Buildings and structures: 2-75 years
―	Machinery and vehicles: 2-27 years

The estimated useful lives, depreciation methods, and residual values of property, plant and equipment are reviewed at the end of each fiscal year.

(8) Goodwill and intangible assets

(i) Goodwill

Goodwill is not amortized; it is tested for impairment annually or whenever an indication of impairment exists. Impairment losses on goodwill are recognized in the consolidated statement of profit or loss and are not subsequently reversed.

Goodwill is carried at book value less accumulated impairment losses.

(ii) Intangible assets

Intangible assets acquired separately are measured at cost at the time of initial recognition. Intangible assets acquired in business combinations are measured at fair value as of the acquisition date.

The Group uses the cost model to measure the carrying value of intangible assets subsequent to their recognition. Under this model, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets whose useful lives can be determined are amortized using the straight-line method over their estimated useful lives. Intangible assets mainly comprise software for internal use and have estimated useful lives of 2-10 years.

(9) Leases

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. If the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration, the contract is, or contains, a lease.

(i) Leases as a lessee

At the commencement date, the Group recognizes right-of-use assets and lease liabilities. At the commencement date, right-of-use assets are initially measured at the amount of the initial measurement of lease liabilities adjusted for any initial direct costs, costs for restoration as required pursuant to the contract, and other costs. After the commencement date, the Group uses the cost model to measure right-of-use assets. Under this model, right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses. Right-of-use assets are depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term, unless it is reasonably certain that the Group will acquire ownership of the leased assets at the end of the lease term. The lease term is determined as the non-cancelable period of leased assets, together with periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option, and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option.

Lease liabilities are measured at the present value of the lease payments that are not paid at the commencement date, discounted using the lessee's incremental borrowing rate. After the commencement date, the Group measures the lease liability by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made. In case of lease modifications, the Group remeasures the lease liability. For a lease modification that is not accounted for as a separate lease and decreases the scope of the lease, the Group decreases the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognizes in profit or loss any gain or loss relating to the partial or full termination of the lease. The Group makes a corresponding adjustment to the right-of-use asset for all other lease modifications.

However, the Group uses the exemption for short-term leases and leases of low-value assets; instead of recognizing right-of-use assets and lease liabilities for such leases, it expenses the lease payments on a straight-line basis over the lease term.

(ii) Leases as a lessor

Leases entered into as a lessor are classified as either finance leases or operating leases according to the substance of the transaction rather than the form of the contract. Assets held under finance leases are presented as receivables in an amount equal to the net investment in the lease.

In the case of subleases, the intermediate lessor classifies the sublease with reference to the right-of-use asset arising from the head lease.

In the case of operating leases, the Group records the leased assets on the consolidated statement of financial position and recognizes lease payments as income on a straight-line basis over the lease term.

(10) Investment property

Investment property is real estate held for the purpose of earning rental income, capital gains, or both.

The Group uses the cost model to measure the carrying value of investment property subsequent to its recognition. Under this model, investment property is carried at cost less any accumulated depreciation and any accumulated impairment losses.

Investment property other than land is depreciated mainly using the straight-line method over the estimated useful life. The estimated useful life of the Company's main investment properties is 26 years.

The estimated useful lives, depreciation methods, and residual values of investment properties are reviewed at the end of each fiscal year.

(11) Impairment of non-financial assets

For property, plant and equipment and intangible assets, if there is any indication at the end of each reporting period that an asset may be impaired, the asset is assessed based on its recoverable value, being the higher of fair value less costs to sell and its value in use; if the carrying value of the asset exceeds its recoverable value, then the asset is impaired and is written down to its recoverable value.

Goodwill, intangible assets with indefinite useful lives, and intangible assets not yet available for use are tested for impairment annually or whenever an indication of impairment exists.

Impairment losses recognized on assets other than goodwill in previous years are assessed at the end of each reporting period to determine whether there is any indication that the recognized impairment loss may no longer exist or may have decreased. If any such indication exists, the recoverable amount is estimated, and if the recoverable amount exceeds the carrying amount of the asset or the cash-generating unit to which the asset belongs, an impairment reversal is recognized and the carrying amount is increased to the recoverable amount subject to the condition that the carrying amount of the asset may not exceed the carrying amount (net of accumulated depreciation or accumulated amortization) that would have been determined had no impairment loss been previously recognized. Impairment losses recognized on goodwill are not reversed in subsequent periods.

(12) Post-employment benefits

(i) Defined benefit plans

Defined benefit plans are any retirement benefit plans other than defined contribution plans. For each separate plan, the defined benefit obligation is calculated by estimating the future benefits earned as compensation for services provided by employees in previous and current fiscal years, and discounting that amount to the present value. The fair value of plan assets is deducted from the result of that calculation. The discount rate is determined with reference to the market yields of high-quality corporate bonds that are denominated in the same currency as the expected benefit payment and that have approximately the same maturity as the Group's defined benefit obligation.

If a retirement benefit plan is revised, costs related to the variable portion of benefits related to employees' past service are immediately recognized in profit or loss.

The Group recognizes changes in net defined benefit liability (asset) due to remeasurement in other comprehensive income and immediately transfers the amounts to retained earnings.

(ii) Defined contribution plans

Expenses related to defined contribution plans are recognized as expenses in the period in which the employees provide the services.

(13) Share-based payment

The Company has instituted share-based payment plans through which a portion of the compensation of directors (excluding outside directors) and executive officers (excluding non-residents under income tax law) of the Company and its operating companies is provided in the form of cash-settled share-based payments and equity-settled share-based payments through employee stockownership plans. The Group's objective is to establish a clear link between compensation and the Group's operating performance and equity value and encourage the sharing of value with shareholders, thereby creating a greater incentive to contribute toward enhancing shareholder value over the medium and long term.

For equity-settled share-based payments, compensation for services received is measured with reference to the fair value of Company shares granted. The calculated consideration for services is recognized as an expense, and the same amount is recognized as an increase in equity.

For cash-settled share-based payments, the fair value of the amount paid is recognized as a liability, and changes in the fair value of the liability are recognized in profit or loss over the period up until an unconditional right to compensation is established.

(14) Provisions

Provisions are recognized when the Company has a present obligation (legal obligation or constructive obligation) resulting from past events, it is likely that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

If the impact of the time value of money is material, provisions are measured at a discounted amount calculated using a discount rate that reflects the risks specific to the liability.

(15) Revenue

With the exception of interest, dividend income, etc., under IFRS 9 Financial Instruments, the Group uses the following five-step approach in recognizing revenue that reflects the amount of consideration to which the Company expects to be entitled in exchange for the transfer of goods and services to customers:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to a distinct performance obligation of the contract

Step 5: Recognize revenue when the performance obligation is fulfilled (or as it is fulfilled).

With respect to sales of steel products, etc., in the steel business, revenues are mainly recognized at the point of shipment, when the customer assumes the significant risk and economic value of ownership of the product being physically transferred and the right to receive payment is confirmed. Consideration for transactions is received mainly within one year from the fulfillment of performance obligations and includes no significant financing components.

With regard to construction contracts, etc., in the engineering business, the Group mainly estimates the progress of fulfilling performance obligations, and revenue is recognized over a fixed period based on the degree of progress. Consideration for transactions is mainly received in phases during the contract term separately from the fulfillment of performance obligations, and the remaining amount is received after a fixed period from the fulfillment of all performance obligations. Consideration for certain transactions includes significant financing components. A cost-based input method is used for performance obligations fulfilled overtime in order to recognize revenue. The cost-based input method excludes the effects of any inputs that do not depict the Group's performance in transferring control of goods or services to the customer. When a cost incurred is not proportionate to progress, the Group's performance is faithfully depicted by adjusting the input method to recognize revenue only to the extent of that cost incurred.

With respect to sales of steel products, etc., in the trading business, revenues are mainly recognized at the point of delivery to the customer, when ownership rights and physical ownership of the product are physically transferred to the customer and the significant risk and economic value associated with ownership and the right to receive payment is confirmed. In addition, for certain transactions in the trading business, the Company has the responsibility to carry out work as an agent. Consideration for transactions is received mainly within one year from the fulfillment of performance obligations and includes no significant financing components.

Revenue is measured at the amount that deducts price reduction and rebates, etc., from the promised value in the contract with the customer.

When the Group is engaged in a transaction as a party to the transaction, revenue is presented as the total consideration received from the customer. When the Group is engaged in transactions as an agent for a third party, revenue is presented as a fee, calculated as the total amount of consideration received from the customer minus the amount collected for the third party.

(16) Business profit

Business profit is profit before income taxes excluding financial income and one-time items of materially significant value. It is a benchmark indicator of the Company's consolidated earnings.

(17) Finance income and costs

Finance income consists mainly of interest income, and finance costs consist mainly of interest expenses. Interest income is recognized as income when incurred using the effective interest method. Interest expense is recognized as an expense when incurred using the effective interest method.

(18) Dividend income

Dividend income is recognized in profit or loss when the right to receive the dividend is established.

Of the shares and investments held by the Group, dividends received on those held for the purpose of facilitating business transactions are included in other income.

(19) Income taxes

Income tax expense consists of current tax expense and deferred tax expense. These items are recognized in profit or loss except when they arise from items that are directly recognized in other comprehensive income or equity and when they arise from business combinations.

Current tax expense is measured in an amount that reflects the amount the Company expects the tax authorities to refund or expects to pay to the tax authorities. The tax rate and tax law used to calculate the amount of tax are those that are enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and deferred tax liabilities are recognized for temporary differences, which are the differences between the carrying amounts and tax bases of assets and liabilities, and for unused tax losses carryforwards and unused tax credits. They are determined at the tax rate estimated for the period when the asset is realized or the liability is settled, based on the tax rate and tax law that are enacted or substantively enacted at the end of the reporting period.

Deferred tax liabilities are recognized for taxable temporary differences excluding the following:

―	Temporary differences arising from initial recognition of goodwill
―	Temporary differences resulting from the initial recognition of an asset or liability in a transaction that is not a business combination and does not affect accounting income or taxable income at the time of the transaction
―	Taxable temporary differences arising from investments in subsidiaries and associates, and interests in joint arrangements, when the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognized for deductible temporary differences, unused tax losses carryforwards, and unused tax credits, but only to the extent that it is probable that future taxable income will be available against which the deductible temporary difference, etc., can be utilized, except when the deductible temporary difference, etc., results from the initial recognition of an asset or liability in a transaction that is not a business combination and does not affect accounting income or taxable income at the time of the transaction.

Deferred tax assets are recognized for deductible temporary differences arising from investments in subsidiaries and associates, and interests in joint arrangements, only when it is probable that the temporary difference will reverse in the foreseeable future and it is probable that taxable income will be available against which the deductible temporary difference can be utilized.

Deferred tax assets and deferred tax liabilities are offset only when there is a legally enforceable right to offset income taxes payable and income taxes receivable and either of the following criteria is met:

―	The deferred tax assets and the deferred tax liabilities relate to income tax levied on the same taxable entity by the same tax authority
―	The deferred tax assets and deferred tax liabilities relate to income tax levied on separate taxable entities by the same tax authority, and the taxable entities intend to settle income taxes receivable and income taxes payable on a net basis or realize the assets and settle the liabilities simultaneously.

The Company has applied consolidated tax reporting.

(20) Equity

(i) Share capital and capital surplus

Capital paid in by shareholders is recognized in share capital or capital surplus.

(ii) Treasury shares

When treasury shares are acquired, the consideration paid, including direct transaction costs, is recognized as contra equity.

(21) Earnings per share

Basic earnings per share are calculated by dividing profit attributable to owners of parent by the weighted average number of common shares on issue during the fiscal year.

Diluted earnings per share are calculated by adjusting for the impact of all dilutive potential shares.

4. Significant Judgements, Accounting Estimates, and Assumptions

In preparing the consolidated financial statements, the Group makes judgments, accounting estimates, and assumptions that affect the application of accounting policies and the amounts of assets, liabilities, income, and expenses. These estimates and assumptions are based on management's best judgments reflecting historical experiences and various factors that are believed to be reasonable under the circumstances. By their nature, however, actual results may differ from the estimates and assumptions.

The estimates and underlying assumptions are reviewed on an ongoing basis. The effects resulting from revisions of these estimates are recognized in the period in which the estimates are revised and in future periods affected by the revision.

Additionally, while performance for the fiscal year ended March 31,2021 was affected by COVID-19, accounting estimates were made on the assumption that impact on the fiscal year ending March 31,2022 will be limited.

Judgments made in applying accounting policies that have a significant effect on the consolidated financial statements are mainly as follows:

―	Scope of subsidiaries, associates, and joint arrangements (Note "3. Significant Accounting Policies")
―	Revenue recognition (Note "3. Significant Accounting Policies")
―	Leases (Note "3. Significant Accounting Policies')

Information on accounting estimates and assumptions that may have a significant effect on the consolidated financial statements is as follows:

―	Valuation of inventories (Note "3. Significant Accounting Policies" and Note "9. Inventories")

Inventories are measured at cost. However, if net realizable value is lower than cost at the end of the reporting period, inventories are measured at the net realizable value and the difference between cost is recognized in cost of sales in principle. Furthermore, for idle inventories outside the operating cycle, net realizable value and other items are determined by reflecting future demand

and market trends. A significant decline in net realizable value due to worse-than-forecast market environment may cause losses.

―	Impairment of non-financial assets (Note "3. Significant Accounting Policies" and Note "16. Impairment of Non-financial Assets")

The Group tests property plant and equipment, goodwill, and intangible assets for impairment in accordance with Note "3. Significant Accounting Policies.' In determining recoverable amounts in impairment tests, assumptions are made for future cash flows, discount rates, and other items. Although these assumptions are determined based on management's best estimates and judgments, they may be affected by uncertain changes in economic conditions in the future and other factors. If a revision is necessary, it may have a significant effect on the consolidated financial statements.

―	Recoverability of deferred tax assets (Note "3. Significant Accounting Policies" and Note "19. Income Taxes")

Deferred tax assets are recognized only to the extent that it is probable that future taxable income will be available against which the deductible temporary differences can be utilized. In judging the probability of taxable income, the timing and amount of taxable income are estimated based on the business plan. Although such estimates are made based on management's best estimates, they may differ from actual results due to uncertain changes in economic conditions in the future and other factors.

―	Valuation and accounting for provisions (Note "3. Significant Accounting Policies" and Note "23. Provisions")

Provisions are measured based on the best estimates of the expenditures expected to be required to settle the obligations in the future on the reporting date. The expenditures expected to be required to settle the obligations in the future are determined by comprehensively taking into account future possible results. Since assumptions which are used for measuring these provisions may be affected by uncertain changes in economic conditions in the future and other factors, they involve the risk of causing a significant modification on the measurement of provisions prospectively.

―	Measurement of defined benefit obligations (Note "3. Significant Accounting Policies" and Note "24. Postemployment Benefits")

With respect to defined benefit corporate pension plans, the net amount of defined benefit obligations and fair values of plan assets are recognized as liabilities or assets. Defined benefit obligations are determined based on actuarial assumptions which include the estimates of discount, retirement, mortality, and salary increase rates. These assumptions are determined by comprehensively taking into account all available information, such as market trends in interest rate fluctuations. Since these actuarial assumptions may be affected by uncertain changes in the economic environment in the future, social trends, and other factors, they involve the risk of causing a significant modification on the measurement of defined benefit obligations prospectively.

―	Matters related to financial instruments (Note "3. Significant Accounting Policies" and Note "38. Financial Instruments")

The Group uses significant unobservable inputs for measuring the fair values of specified financial instruments. Unobservable inputs may be affected by future uncertain changes in economic conditions and other factors. If a revision is necessary, it may have a significant effect on the consolidated financial statements.

―	Contingencies (Note "41 .Contingent Liabilities")

For contingencies, items that may have a significant effect on future businesses are disclosed after taking into account all available evidence as of the reporting date and considering the possibility and financial effect of the contingencies.

5. New IFRS Standards Not Yet Adopted

There are no IFRS standards and interpretations newly established or amended by the approval date of the consolidated financial statements that the Group has not yet adopted and that have a significant effect.

6. Segment Information

(1) Overview of reportable segments

The Group organized under JFE Holdings executes commercial activities through three operating companies-JFE Steel Corporation, JFE Engineering Corporation, and JFE Shoji Trade Corporation-in accordance with the characteristics of their respective businesses.

Consolidated reportable segments, one for each operating company, are characterized by their constituent products and services. There are no business segments which were consolidated for reporting.

Each segment has its own respective products and services. The steel business produces and sells various steel products, processed steel products, and raw materials, and provides transportation and other related businesses such as facility maintenance and construction. The engineering business handles engineering for energy, urban environment, steel structuresand industrial machines, recycling, and electricity retailing. The trading business purchases, processes, and distributes steel products, raw materials for steel production, nonferrous metal products, and food, etc.

(2) Information on reportable segments

The accounting treatments for the Group's reportable segments are the same as those described in Note "3. Significant Accounting Policies."

The Group assesses segment performance on the basis of segment profit. Segment profit is profit before tax excluding one-time items of a materially significant value.

intersegment transactions are based on market prices and the like.

Fiscal year ended March 31,2020

(million yen)

	Steel	Engineering	Trading	Total	Adjustments (Note)	Amount recorded in consolidated financial statements
Revenue
Revenue from external customers	2,311,251	498,629	919,836	3,729,717	-	3,729,717
Intersegment revenue	370,098	13,666	164,301	548,065	(548,065)	-
Total	2,681,350	512,295	1,084,137	4,277,783	(548,065)	3,729,717
Segment profit (loss)	(8,783)	23,118	27,016	41,351	(15,998)	25,353
Impairment losses						(238,826)
Profit before tax						(213,473)
Segment assets	3,836,847	465,734	756,141	5,058,723	(412,602)	4,646,120
Other items
Depreciation and amortization	209,031	13,302	10,244	232,578	(1,000)	231,577
Impairment losses	(233,144)	(356)	(5,325)	(238,826)	-	(238,826)
Finance income	1,437	140	1,354	2,932	(205)	2,727
Finance costs	(11,721)	(697)	(3,492)	(15,910)	636	(15,273)
Share of profit of investments accounted for using equity method	25,518	477	558	26,554	(17,772)	8,782
Investments accounted for using equity method	289,406	11,562	14,909	315,878	20,162	336,040
Capital expenditures	362,741	11,892	17,986	392,621	(1,265)	391,356

Note: Adjustments are as follows:

―

Adjustments to segment profit (loss) include corporate profit not allocated to a reportable segment: 48,548 million yen, elimination of dividend income from each reportable segment: (48,365) million yen, and share of profit of investments accounted for using equity method related to Japan Marine United Corporation: (1 7,995) million yen; elimination of other intersegment transactions: 1,813 million yen. Corporate profit is profit of the Company.

―

Adjustments to segment assets: Corporate assets not allocated to a reportable segment: 49,450 million yen and elimination of intersegment receivables and payables, etc.: (462,053) million yen. Corporate assets are assets of the Company.

Fiscal year ended March 31,2021

(million yen)

	Steel	Engineering	Trading	Total	Adjustments (Note)	Amount recorded in consolidated financial statements
Revenue
Revenue from external customers	1,938,933	474,908	813,443	3,227,285	-	3,227,285
Intersegment revenue	316,283	10,842	119,066	446,192	(446,192)	-
Total	2,255,216	485,750	932,510	3,673,477	(446,192)	3,227,285
Segment profit (loss)	(65,461)	24,073	20,098	(21,289)	(4,118)	(25,408)
Profit on sales of fixed assets						28,021
Impairment losses						(7,544)
Loss before tax						(4,930)
Segment assets	3,864,262	478,146	717,270	5,059,679	(404,707)	4,654,972
Other items
Depreciation and amortization	211,645	14,629	11,065	237,340	(987)	236,353
Impairment losses	(6,351)	(59)	(1,133)	(7,544)	-	(7,544)
Finance income	689	171	1,000	1,861	(174)	1,686
Finance costs	(11,880)	(838)	(2,053)	(14,772)	588	(14,184)
Share of profit of investments accounted for using equity method	16,873	277	671	17,822	(3,582)	14,239
Investments accounted for using equity method	312,476	11,903	17,144	341,525	13,717	355,242
Capital expenditures	308,384	22,358	12,798	343,540	(1,145)	342,395

Note: Adjustments are as follows:

―

Adjustments to segment profit (loss) include corporate profit not allocated to a reportable segment: 9,334 million yen, elimination of dividend income from each reportable segment: (8,847) million yen, and share of loss of investments accounted for using equity method related to Japan Marine United Corporation: (4,1 36) million yen; elimination of other intersegment transactions: (469) million yen. Corporate profit is profit of the Company

―

Adjustments to segment assets: Corporate assets not allocated to a reportable segment: 1 03,726 million yen and elimination of intersegment receivables and payables, etc.: (508,433) million yen. Corporate assets are assets of the Company.

(3) Information about the categories of products and services

The information is the same as information on reportable segments.

(4) Information about revenue from external customers by geographical areas

The information is provided in Note "27. Revenue."

(5) Information about non-current assets (excluding financial assets, retirement benefit asset, and deferred tax assets) by geographical areas

(million yen)

	As of March 31,2020	As of March 31,2021
Japan	1,828,061	1,898,718
Other	160,416	159,636
Total	1,988,478	2,058,355

Note: Non-current assets are based on the geographical location of each company of the Group.

(6) Information about major customers

The information is not provided as there is no external customer that accounts for 10%or more of consolidated revenue of the Group.

7. Cash and Cash Equivalents

The breakdown of cash and cash equivalents is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Cash and bank deposits with maturities of three months or less	86,679	142,404
Deposits paid	25	12
Total	86,704	142,416

Cash and cash equivalents are classified as financial assets measured at amortized cost.

The balance of cash and cash equivalents reported in the consolidated statement of financial position as of March 31, 2020 and 2021 is consistent with that reported in the consolidated statement of cash flows.

8. Trade and Other Receivables

The breakdown of trade and other receivables is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Notes and accounts receivable-trade	639,997	716,893
Other	39,672	37,012
Allowance for doubtful accounts	(1,570)	(2,080)
Total	678,098	751,824

Trade and other receivables are stated as net of allowance for doubtful accounts in the consolidated statement of financial position.

Trade and other receivables are classified as financial assets measured at amortized cost.

9. Inventories

The breakdown of inventories is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Merchandise and finished goods	442,257	378,785
Work in progress	47,419	39,436
Raw materials and supplies	382,925	367,409
Total	872,602	785,632

Inventories recognized as an expense in cost of sales for the fiscal years ended March 31,2020 and 2021 amounted to 2,800,612 million yen and 2,396,972 million yen, respectively.

10. Other Financial Assets

(1) The breakdown of other financial assets is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Financial assets measured at amortized cost
Lease receivables (non-current)	25,021	24,135
Other	21,068	35,580
Allowance for doubtful accounts	(552)	(655)
Subtotal	45,537	59,059
Financial assets measured at fair value through profit or loss
Derivative assets	26,843	28,238
Other	3,874	3,871
Subtotal	30,718	32,109
Equity financial assets measured at fair value through other comprehensive income
Equity securities	219,561	160,405
Investments in capital	6,494	6,290
Subtotal	226,055	166,696
Total	302,311	257,865
Current assets	6,307	13,359
Non-current assets	296,004	244,505
Total	302,311	257,865

Other financial assets are stated as net of allowance for doubtful accounts in the consolidated statement of financial position.

(2) Equity financial assets measured at fair value through other comprehensive income

The issuers and fair values of major equity financial assets measured at fair value through other comprehensive income are as follows:

(million yen)

Issuers	As of March 31,2020
TAIYO NIPPON SANSO CORPORATION	17,814
Central Japan Railway Company	14,316
Toyota Motor Corporation	11,193
Isuzu Motors Limited	10,325
Formosa Ha Tinh (Cayman) Limited	9,213

(million yen)

Issuers	As of March 31,2021
Formosa Ha Tinh (Cayman) Limited	17,218
Central Japan Railway Company	13,680
Dongkuk Steel Mill Co., Ltd.	11,124
Isuzu Motors Limited	10,297
Sumitomo Realty & Development Co., Ltd.	6,210

Equity securities and investments in capital are held mainly for the purpose of maintaining and developing the Group's business. Therefore, they are designated as equity financial assets measured at fair value through other comprehensive income.

In order to promote the efficiency of held assets and to use them effectively the Group has sold (derecognized) equity financial assets measured at fair value through other comprehensive income.

The fair value and accumulated gains or losses recognized in other comprehensive income at the time of sale are as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Fair value	23,502	128,281
Accumulated gains or losses recognized in other comprehensive income	8,188	38,010

11. Other Assets and Liabilities

The breakdown of other current assets, other non-current assets, other current liabilities, and other non-current liabilities is as follows:

(1) Other current assets and other non-current assets

(million yen)

	As of March 31,2020	As of March 31,2021
Construction scaffolding materials	22,676	21,964
Other	100,680	72,012
Total	123,357	93,977
Current assets	108,410	79,430
Non-current assets	14,946	14,547
Total	123,357	93,977

(2) Other current liabilities and other non-current liabilities

(million yen)

	As of March 31,2020	As of March 31,2021
Accrued expenses	156,906	153,613
Other	62,035	63,284
Total	218,941	216,897
Current liabilities	210,543	208,510
Non-current liabilities	8,398	8,387
Total	218,941	216,897

12. Property, Plant and Equipment

The movement of carrying amount for property plant and equipment during the year is as follows:

Fiscal year ended March 31,2020

(million yen)

	Buildings and structures	Machinery and vehicles	Tools, furniture and fixtures	Land	Construction in progress	Other
Balance at the beginning of the year	385.098	843,715	49,209	380,524	122,185	54,496
Adjustments due to application of IFRS 16	-	-	-	-	-	(47,819)
Balance at the beginning of the year (modified)	385.098	843,715	49,209	380,524	122,185	6,676
Acquisition	48,308	250,184	19,537	5,569	10,480	2,559
Sale or disposal	(1,125)	(3,959)	(148)	(1,298)	(2,645)	(3)
Depreciation	(27,040)	(136,832)	(17,559)	(24)	-	(1,877)
Impairment losses	(67,196)	(145,517)	(5,453)	(37)	(10,055)	(76)
Exchange differences on translation of foreign operations, etc.	688	5,758	555	3,925	3,604	22
Balance at the end of the year	338,734	813,348	46,141	388,658	123,568	7,300

	Total
Balance at the beginning of the year	1,835,229
Adjustments due to application of IFRS 16	(47,819)
Balance at the beginning of the year (modified)	1,787,409
Acquisition	336,639
Sale or disposal	(9,181)
Depreciation	(183,334)
Impairment losses	(228,336)
Exchange differences on translation of foreign operations, etc.	14,553
Balance at the end of the year	1,717,751

Fiscal year ended March 31,2021

(million yen)

	Buildings and structures	Machinery and vehicles	Tools, furniture and fixtures	Land	Construction in progress	Other
Balance at the beginning of the year	338,734	813,348	46,141	388,658	123,568	7,300
Acquisition	38,611	219,469	16,827	1,174	(2,341)	1,872
Sale or disposal	(642)	(2,477)	(221)	(964)	(1,798)	(13)
Depreciation	(27,346)	(139,298)	(16,487)	(25)	-	(1,894)
Impairment losses	(1,434)	(5,232)	(220)	(526)	(29)	-
Exchange differences on translation of foreign operations, etc.	(3,107)	(16,599)	503	(726)	(1,917)	(600)
Balance at the end of the year	344,815	869,209	46,542	387,590	117,481	6,663

	Total
Balance at the beginning of the year	1,717,751
Acquisition	275,612
Sale or disposal	(6,118)
Depreciation	(185,051)
Impairment losses	(7,442)
Exchange differences on translation of foreign operations, etc.	(22,447)
Balance at the end of the year	1,772,303

Notes: 1. Depreciation of property, plant and equipment is included in "Cost of sales" and "Selling, general and administrative expenses" in the consolidated statement of profit or loss.

2. Acquisition of construction in progress represents an increase due to new acquisition, net of transfers to each item of property, plant and equipment.

The cost, accumulated depredation, accumulated impairment losses, and carrying amount of property, plant and equipment are as follows:

(million yen)

	Buildings and structures	Machinery and vehicles	Tools, furniture and fixtures	Land	Construction in progress	Other
As of March 31,2020
Cost	1,861,064	6,177,132	198,409	412,364	135,450	16,950
Accumulated depreciation and accumulated impairment losses	(1,522,330)	(5,363,784)	(152,268)	(23,706)	(11,882)	(9,649)
Carrying amount	338,734	813,348	46,141	388,658	123,568	7,300
As of March 31,2021
Cost	1,890,019	6,286,086	202,399	410,263	122,588	17,901
Accumulated depreciation and accumulated impairment losses	(1,545,203)	(5,416,876)	(155,857)	(22,672)	(5,106)	(11,238)
Carrying amount	344,815	869,209	46,542	387,590	117,481	6,663

	Total
As of March 31,2020
Cost	8,801,372
Accumulated depreciation and accumulated impairment losses	(7,083,621)
Carrying amount	1,717,751
As of March 31,2021
Cost	8,929,258
Accumulated depreciation and accumulated impairment losses	(7,156,954)
Carrying amount	1,772,303

13. Goodwill and Intangible Assets

(1) Movement of goodwill and intangible assets

The movement of carrying amount for goodwill and intangible assets during the year is as follows:

Fiscal year ended March 31,2020

(million yen)

	Goodwill	Software	Other	Total
Balance at the beginning of the year	4,445	74,052	8,514	87,012
Adjustments due to application of IFRS 16	-	-	(30)	(30)
Balance at the beginning of the year (modified)	4,445	74,052	8,484	86,982
Acquisition	6,209	32,427	1,073	39,711
Sale or disposal	-	(1,475)	(5)	(1,481)
Amortization	-	(20,281)	(355)	(20,636)
Impairment losses	(4,043)	(4,946)	(1,302)	(10,292)
Exchange differences on translation of foreign operations, etc.	(114)	1,276	(146)	1,016
Balance at the end of the year	6,497	81,054	7,747	95,299

Fiscal year ended March 31,2021

(million yen)

	Goodwill	Software	Other	Total
Balance at the beginning of the year	6,497	81,054	7,747	95,299
Acquisition	-	29,048	414	29,463
Sale or disposal	-	(1,300)	(3)	(1,303)
Amortization	-	(21,866)	(355)	(22,221)
Impairment losses	-	(34)	(61)	(95)
Exchange differences on translation of foreign operations, etc.	(296)	442	(31)	114
Balance at the end of the year	6,200	87,344	7,711	101,256

Note: Amortization of intangible assets is included in "Cost of sales" and "Selling, general and administrative expenses" in the consolidated statement of profit or loss.

The cost, accumulated amortization, accumulated impairment losses, and carrying amount of goodwill and intangible assets are as follows:

(million yen)

	Goodwill	Software	Other	Total
As of March 31,2020
Cost	10,540	364,810	23,970	399,321
Accumulated amortization and accumulated impairment losses	(4,043)	(283,756)	(16,222)	(304,022)
Carrying amount	6,497	81,054	7,747	95,299
As of March 31,2021
Cost	10,244	389,962	25,051	425,258
Accumulated amortization and accumulated impairment losses	(4,043)	(302,618)	(17,340)	(324,002)
Carrying amount	6,200	87,344	7,711	101,256

(2) Research and development expenses

Research and development expenses recorded in "Cost of sales' and "Selling, general and administrative expenses' for the fiscal years ended March 31,2020 and 2021 amounted to 38,716 million yen and 36,205 million yen, respectively

14. Lease Transactions

(1) Lease transactions as a lessee

The Group leases machinery, ships, buildings, and other assets as a lessee. Certain lease arrangements include renewal options, but no significant lease arrangements include escalation clauses. In addition, there are no material restrictions (such as restrictions related to additional borrowings and additional leases) imposed by the lease arrangements.

(i) Disclosure on profit or loss and cash outflow for leases

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Depreciation of right-of-use assets Buildings and structures	10,848	11,174
Machinery and vehicles	11,577	11,999
Tools, furniture and fixtures	2,105	2,631
Land	1,155	1,256
Other	948	1,029
Total	26,635	28,090
Interest on lease liabilities	639	583
Expense relating to short-term leases	4,034	4,316
Expense relating to leases of low-value assets	835	769
Income from subleasing right-of-use assets	1,388	1,587
Total cash outflow for leases	48,113	50,597

(ii) Disclosure on the breakdown of the carrying amounts of right-of-use assets

(million yen)

	As of March 31,2020	As of March 31,2021
Buildings and structures	32,775	40,711
Machinery and vehicles	52,139	51,824
Tools, furniture and fixtures	3,528	5,554
Land	11,145	11,271
Other	2,732	2,576
Total	102,322	111,938

Right-of-use assets for the fiscal years ended March 31,2020 and 2021 increased by 20,944 million yen and 36,591 million yen, respectively.

(2) Lease transactions as a lessor

The Group leases buildings and other assets as a lessor and receives security deposits as a risk management strategy.

(i) Income from operating leases

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Lease income	10,698	11,355

(ii) Maturity analysis of non-cancelable operating lease payments

(million yen)

	As of March 31,2020	As of March 31,2021
Within one year	1,179	1,238
Later than one year and within two years	976	1,225
Later than two years and within three years	963	1,225
Later than three years and within four years	963	1,159
Later than four years and within five years	896	961
Later than five years	2,658	1,828
Total	7,636	7,638

(iii) Income from finance leases

(million yen)

	Fiscal year ended March 31.2020	Fiscal year ended March 31,2021
Finance income on the net investment in the lease	984	919

(iv) Maturity analysis of lease payments receivable

(million yen)

	As of March 31.2020	As of March 31,2021
Within one year	7,565	6,951
Later than one year and within two years	5,622	5,885
Later than two years and within three years	3,749	4,111
Later than three years and within four years	3,364	5,276
Later than four years and within five years	4,832	7,839
Later than five years	16,404	10,389
Total	41,538	40,453
Unearned finance income	5,813	6,407
Net investment in the lease	35,724	34,045

15. Investment Properties

(1) Movement of investment properties

The movement of carrying amount for investment properties is as follows:

(million yen)

	Fiscal year ended March 31.2020	Fiscal year ended March 31,2021
Balance at the beginning of the year	59.425	58,158
Acquisition	251	728
Reclassification from property plant and equipment	451	982
Reclassification to property plant and equipment	(265)	(155)
Depreciation	(971)	(989)
Impairment losses	(4)	(5)
Sale or disposal	(728)	(409)
Balance at the end of the year	58,158	58,310
Cost (balance at the beginning of the year)	132,849	127,821
Accumulated depreciation and accumulated impairment losses (balance at the beginning of the year)	(73,424)	(69,662)
Cost (balance at the end of the year)	127,821	128,205
Accumulated depreciation and accumulated impairment losses (balance at the end of the year)	(69,662)	(69,894)

(2) Fair values

The carrying amount and fair value of investment properties are as follows:

(million yen)

	As of March 31.2020		As of March 31,2021
	Carrying amount	Fair value	Carrying amount	Fair value
Investment properties	58,158	136,545	58,310	137,251

The fair value of investment properties is principally based on the real estate appraisal values provided by independent licensed real estate appraisers.

The fair value hierarchy of investment properties is categorized within Level 3 because unobservable inputs are included.

Fair value hierarchy is described in Note "38. Financial Instruments."

(3) Income and expenses arising from investment properties

Rental income and direct sales expenses arising from investment properties are as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Rental income	10,698	11,355
Direct sales expenses arising from investment properties which generated income	3,223	3,104
Direct sales expenses arising from investment properties which did not generate income	40	20

16. Impairment of Non-financial Assets

When the Group assesses whether there is an indication that non-financial assets maybe impaired, in principle, the assets are classified as idle assets, leased assets, assets for various projects and assets for business use, and then those classified assets are grouped by the smallest unit that generates independent cash flows.

Fiscal year ended March 31,2020

Major impairment losses are as follows:

JFE Steel Corporation, a consolidated subsidiary of the Company engaged in the steel business, faces an unprecedented difficult business environment including a decline in demand for steel primarily in the manufacturing sector caused by the U.S-China trade friction, soaring material prices due to China's growing crude steel output, and increases in auxiliary and other materials and logistics costs. Over the medium to longterm, a decline in demand is anticipated in the Japanese market against the backdrop of the decreasing population. Moreover, overseas markets will become increasingly competitive due to expansion in steel production capacity in emerging nations and an increase in exports from China given a decline in domestic demand. In such a climate, JFE Steel has endeavored to improve its works and manufacturing bases in Japan and strengthen manufacturing capabilities by positioning them as key measures under the Medium-Term Business Plan. However, it is expected that a significant amount of investment must be made to renovate aged facilities over a long period.

In consideration of these structural changes in the environment, JFE Steel strives to focus business resources thoroughly and selectively on products and areas that are competitive with a view to maintaining and increasing its competitive advantage in the global market and aiming to become a streamlined, resilient company. For that purpose, JFE Steel decided to shut down a blast furnace at the East Japan Works which is heavily burdened with fixed costs and implement structural reforms toward establishing an optimal production system in Japan. On the premise of the structural reforms to be implemented at Chiba and Keihin under the East Japan Works, JFE Steel calculated future cash flows of both sites in light of the current difficult business climate. As a result, the recoverable amounts were lower than the carrying amount of business assets owned by the East Japan Works. Therefore, the carrying amount was reduced to the present value of future cash flows of 350,983 million yen (Chiba: 131,151 million yen, Keihin: 219,831 million yen), and the amount of decrease of 232,418 million yen (Chiba: 146,652 million yen, Keihin: 85,766 million yen) was recorded as impairment losses.

Major assets for which impairment losses were recognized are as follows:

(million yen)

Segment	Cash-generating unit	Type	Amount
Steel business	East Japan Works (Chiba)	Machinery and vehicles	90,243
		Buildings and structures	42,813
		Construction in progress and other	13,595
		Total	146,652
	East Japan Works (Keihin)	Machinery and vehicles	55,565
		Buildings and structures	24,260
		Construction in progress and other	5,941
		Total	85,766

The recoverable amount is determined at value in use, and the value in use is determined by discounting future cash flows based on a management-approved five-year-or-less business plan and a subsequent growth rate to the present value at a pre-tax discount rate. Major assumptions used for calculating the value in use include crude steel production, shipments, selling price, iron ore and coking coal prices, future capital expenditures, pre-tax discount rate, and growth rate. The crude steel production, shipments, selling price, iron ore and coking coal prices, future capital expenditures, and other items are estimated based on observable market prices, past trends, and management's forecasts, and reflect the risks specific to the cash-generating unit. The growth rate is determined at 0.0% by taking into account the long-term average growth rate of the market or country to which the cash-generating unit belongs. Moreover, the pre-tax discount rate is determined at 4.6% and 4.3% for Chiba and Keihin under the East Japan Works, respectively, based on the weighted-average cost of capital of the cash-generating unit.

Additionally, due to an economic slowdown caused by COVID-19, a significant decline in demand for steel materials was anticipated in Japan and overseas at the end of the fiscal year ended March 31,2020. Accordingly, future cash flows were calculated on the assumption that such effect will continue for approximately six months.

Fiscal year ended March 31,2021

The carrying amount was reduced to the recoverable amount mainly for idle assets, and the reduction was recorded as an impairment loss. Impairment losses in the consolidated statement of profit or loss totaled 7,544 million yen, consisting of 5,232 million yen of machinery and vehicles and 2,311 million yen of buildings and structures. The recoverable amount of the business assets was primarily determined at their expected disposal price.

17. Subsidiaries

					Details of Relationship
Name	Address	Paid-In Capital (Millions of yen)	Main Business Operations	Voting shares (%)	Concurrent holding of director position, etc.	Business loans
(Consolidated subsidiaries)
[Steel business]
JFE Steel Corporation ^{* 13}	Chiyodaku, Tokyo	239,644	Manufacture and sale of steel products	100.8	Yes	Yes
JEE Bars & Shapes Corporation ^{* 1}	Minato-ku, Tokyo	30,000	Manufacture and sale of shaped steel and rebar products	100.0	-	-
				(100.0)
JFE Chemical Corporation	Taito-ku, Tokyo	6,000	Manufacture and sale of chemical products	100.0	Yes	-
				(100.0)
JFE Metal Products & Engineering, Inc.	Minato-ku, Tokyo	5,000	Manufacture, processing, and sale of secondary steel products	97.4	-	-
				(97.4)
JFE Galvanizing & Coating Co., Ltd.	Shinagawaku, Tokyo	5,000	Manufacture, processing, and sale of secondary steel products	100.0	-	-
				(100.0)
GECOSS Corporation ^{* 2}	Chuo-ku, Tokyo	4,397	Rental and sale of temporary construction materials	62.0	-	-
				(62.0)
JFE Logistics Corporation	Chiyodaku, Tokyo	4,000	Various transportation and warehousing businesses	89.2	-	-
				(89.2)
JFE Container Co., Ltd ^{* 2}	Chiyodaku, Tokyo	2,365	Various transportation and warehousing businesses	59.6	-	-
				(59.6)
JFE Civil Engineering & Construction Corporation	Taito-ku, Tokyo	2,300	Contracting for civil engineering and construction works	100.0	Yes	-
				(100.0)
JFE Mineral Company, Ltd.	Minato-ku, Tokyo	2,000	Manufacture, processing, and sale of mineral products, and manufacture and sale of iron and steel slag and functional materials	100.0	-	-
				(100.0)
JFE Life Corporation	Taito-ku, Tokyo	2,000	Real estate, insurance agency and various service businesses	100.0	-	Yes
				(100.0)
JFE Plant Engineering Co., Ltd.	Taito-ku, Tokyo	1,700	Manufacture and sale of machinery and equipment, and contracting for electrical construction, telecommunications construction, equipment management, and construction works	100.0	-	-
				(100.0)
JFESystems, Inc. ^{* 2}	Minato-ku, Tokyo	1,390	Development and sale of various computer systems	67.7	-	-
				(67.7)
Mizushima Ferroalloy Co., Ltd.	Kurashiki, Okayama	1,257	Manufacture and sale of ferroalloy	100.0	-	-
				(100.0)
JFE Pipe Fitting Mfg. Co., Ltd.	Kishiwada, Osaka	958	Manufacture and sale of steel pipe joints	86.6	-	Yes
				(86.6)
JFE Kozai Corporation	Chuo-ku, Tokyo	488	Shearing and fusing of steel plates/sheets, and sale of steel materials	100.0	-	Yes
				(100.0)
JFE Welded Pipe Manufacturing Co., Ltd.	Chuo-ku, Tokyo	450	Manufacture and sales of electric resistance welded steel pipes	100.0	-	Yes
				(100.0)
JFE Material Co., Ltd.	Imizu, Toyama	450	Manufacture and sale of ferroalloy	100.0	-	Yes
				(100.0)
JFE Precisions Co., Ltd.	Higashi-ku, Niigata	450	Manufacture and sale of formed and fabricated materials	100.0	-	Yes
				(100.0)
JFE Techno-Research Corporation	Chiyodaku, Tokyo	100	Material analysis, environmental research, technical information surveys and support for intellectual properties	100.0	-	-
				(100.0)
JFE East Japan GS Co., Ltd.	Kawasaki-ku, Kawasaki	50	Various service businesses	100.0	-	-
				(100.0)
JFE Steel Australia Resources Pty. Ltd. ^{* 1}	Brisbane, Australia	Millions of AUD 460	Investments in coal mines and the iron ore mining business in Australia	100.0	-	-
				(100.0)
Philippine Sinter Corporation ^{* 1}	Manila, The Philippines	Millions of PHP 1,881	Manufacture and sale of sintered ore	100.0	-	-
				(100.0)
PT. JFE Steel Galvanizing Indonesia	Bekasi, Indonesia	Millions of USD 139	Manufacture and sale of cold-rolled and hot-clip zinc galvanized steel products	100.0	-	-
				(100.0)
JFE Steel Galvanizing (Thailand) Ltd.	Rayong, Thailand	Millions of THB 4,362	Manufacture and sale of hot-clip zinc galvanized steel products	100.0	-	-
				(100.0)
Thai Coated Steel Sheet Co., Ltd.	Bangkok, Thailand	Millions of THB 2,206	Manufacture and sales of electrogalvanized steel products	81.4	-	-
				(81.4)
Nova Era Silicon S.A.	Belo Horizonte, Brazil	Millions of BRL 137	Manufacture and sale of ferroalloy	100.0	-	-
				(100.0)
126 other companies
[Engineering business]
JFE Engineering Corporation ^{* 1}	Chiyodaku, Tokyo	10,000	Engineering business	100.0	Yes	Yes
J&T Recycling Corporation	Tsurumi-ku, Yokohama	650	Total recycling business	64.0	-	-
				(64.0)
JFE Project One Co., Ltd.	Mihamaku, Chiba	450	Design, construction, and maintenance of oil refining, petrochemical, and energy-related plants	100.0	-	-
				(100.0)
Asukasoken Co., Ltd.	Shinagawaku, Tokyo	356	Gas pipe burial and gas facility construction works	57.2	-	-
				(57.2)
JFE Technos Co., Ltd.	Tsurumi-ku, Yokohama	301	Machinery and facility maintenance	100.0	-	-
				(100.0)
JFE Environmental Service Corporation	Tsurumi-ku, Yokohama	97	Operation, maintenance, and management of waste processing facilities, water treatment facilities, etc.	100.0	-	-
				(100.0)
Urban Energy Corporation AnyTech	Tsurumi-ku, Yokohama	50	Electricity retailing business	100.0	-	-
				(100.0)
Standardkessel Baumgarte Holding GmbH	Duisburg, Germany	Thousands of EUR 1,300	Construction and maintenance of waste power plants, biomass power plants, waste heat recovery power plants, etc.	100.0	-	-
				(100.0)
64 other companies
[Trading business]
JFE Shoji Corporation ^{* 1} ' ⁴	Chiyodaku, Tokyo	14,539	Domestic and export/import trade of steel products, raw materials for ironmaking/steeImaking; non-ferrous metal products; chemical products; petroleum products; and various equipment and materials, etc.	100.0	Yes	Yes
JFE Shoji Steel Construction Materials Corporation	Chiyodaku, Tokyo	1,500	Sale of construction material products and equipment and materials for civil engineering; metallic processing business; civil engineering/construction works; and various other works	100.0	-	-
				(100.0)
JFE Shoji Electronics Corporation	Chiyodaku, Tokyo	1,000	Sale of semiconductor products and sale, installation, and maintenance of device assembling and inspection equipment for electronic components, etc.	100.0	-	Yes
				(100.0)
Kawasho Foods Corporation	Chiyodaku, Tokyo	1,000	Domestic and import/export trade of various foods	100.0	-	-
				(100.0)
JFE Shoji Pipe & Fitting Corporation	Chiyodaku, Tokyo	500	Sale of steel pipe and pipe material products	100.0	-	Yes
				(100.0)
JFE Shoji Electrical Steel Co., Ltd.	Kita-ku, Osaka	400	Processing and sale of electromagnetic steel sheets	100.0	-	-
				(100.0)
JFE Shoji Kohnan Steel Center Co., Ltd.	Higashinada-ku, kobe	250	Processing and sale of steel sheets	100.0	-	-
				(100.0)
JFE Shoji Coil Center Corporation	Kanazawa-ku, Yokohama	230	Processing and sale of steel sheets	85.7	-	Yes
				(85.7)
K&l Tubular Corporation	Chiyodaku, Tokyo	50	Export/overseas trade of specialty pipes/tubes	60.0	-	-
				(60.0)
Zhejiang JFE Shoji Steel Products Co., Ltd.	Pinghu, China	Millions of CNY 181	Processing and sale of steel sheets	97.9	-	-
				(97.9)
VEST Inc.	Los Angeles, United States	Millions of USD 5	Sale and manufacture of welded steel pipes	100.0	-	-
				(100.0)
Dongguan JFE Shoji Steel Products Co., Ltd.	Dongguan, China	Millions of CNY 90	Processing and sale of steel sheets	100.0	-	-
				(100.0)
JFE Shoji Steel America, Inc.	Los Angeles, United States	Millions of USD 6	Processing and sale of steel sheets	100.0	-	-
				(100.0)
Central Metals (Thailand) Ltd.	Samut Prakan, Thailand	Millions ofTHB 240	Processing and sale of steel sheets	100.0	-	-
				(100.0)
JFE Shoji (Hong Kong) Ltd.	Hong Kong, China	Millions of USD 1	Export/import and domestic trade of steel products, chemical products, etc.	100.0	-	-
				(100.0)
JFE Shoji (Thailand) Ltd.	Bangkok, Thailand	Millions of THB 20	Export/import and domestic trade of steel products, raw materials for iron making/steel making, various equipment and materials, etc.	100.0	-	-
				(100.0)
JFE Shoji (Shanghai) Co., Ltd.	Shanghai, China	Millions of CNY 3	Export/import and domestic trade of steel products, raw materials for ironmaking/steelmaking, nonferrous metal products, chemical products, etc.	100.0	-	-
				(100.0)
Cogent Power Inc.	Burlington, Canada	Millions of CAD 0	Processing and sale of electromagnetic steel sheets	100.0	-	-
				(100.0)
JFE Shoji America Holdings Inc.	Los Angeles, United States	Millions of USD 0	Business management, etc. of subsidiaries in the United States	100.0	-	-
				(100.0)
JFE Shoji America, LLC	Los Angeles, United States	-	Export/import and domestic trade of steel products and raw materials for ironmaking/steelmaking	100.0	-	-
				(100.0)
Kelly Pipe Co., LLC	San Francisco, United States	-	Sale of steel pipes	100.0	-	-
				(100.0)
81 other companies
(Equity-method affiliates, etc.)
[Steel business]
Japan-Brazil Niobium Corporation	Chiyodaku, Tokyo	37,272	Investment in niobium mining in Brazil	25.0	-	-
				(25.0)
Setouchi Joint Thermal Power Co., Ltd.	Fukuyama, Hiroshima	5,000	Thermal power generation business	50.0	-	-
				(50.0)
Shinagawa Refractories Co., Ltd. ^{* 2}	Chiyodaku, Tokyo	3,300	Manufacture and sale of various refractories, and contracting for furnace construction work	34.1	-	-
				(34.1)
Nippon Chuzo K.K. ^{* 2}	Kawasaki-ku, Kawasaki	2,627	Manufacture and sale of cast steel products, etc.	34.0	-	-
				(34.0)
Nippon Chutetsukan K.K. ^{* 2}	Kuki, Saitama	1,855	Manufacture and sale of cast-iron pipes, etc.	30.0	Yes	-
				(30.0)
NKK Seamless Steel Pipe K.K.	Kawasaki-ku, Kawasaki	1,595	Manufacture and sale of seamless steel pipes	49.0	Yes	-
				(49.0)
EXA Corporation	Nishi-ku, Yokohama	1,250	Development and sales of various computer systems	49.0	-	-
				(49.0)
K.K. JFE Sanso Center	Fukuyama, Hiroshima	90	Manufacture and sale of oxygen gas, nitrogen gas, argon gas, etc.	40.0	-	-
				(40.0)
Guangzhou JFE Steel Sheet Co., Ltd.	Guangzhou, China	Millions of CNY 3,191	Manufacture and sale of cold-rolled and hot-clip zinc galvanized steel sheets	50.0	-	-
				(50.0)
Nucor-JFE Steel Mexico, S. Der. L. Dec.V.	Silao, Mexico	Millions of USD 361	Manufacture and sale of hot-clip zinc galvanized steel sheets	50.0	-	-
				(50.0)
BaoWu JFE Special Steel Co., Ltd.	Shaoguan, China	Millions of CNY 1,372	Manufacture and sale of specialty steel rods	50.0	-	-
				(50.0)
Thai Cold Rolled Steel Sheet Public Company Limited.	Bangkok, Thailand	Millions of THB 4,816	Manufacture and sale of cold-rolled steel sheets	36.0	-	-
				(36.0)
California Steel Industries, Inc.	Fontana, United States	Millions of USD 40	Manufacture and sale of steel products	50.0	-	-
				(50.0)
JSW Steel Ltd.	Mumbai, India	Ten millions of INR 301	Manufacture and sale of steel products	15.0	-	-
				(15.0)
Inner Mongolia Erdos EJM Manganese Alloys Co., Ltd.	Ordos, China	Millions of CNY 232	Manufacture and sale of ferroalloy	24.5	-	-
				(24.5)
Bohai NKK Drill Pipe Co., Ltd.	Cangzhou, China	Millions of CNY 129	Processing, manufacture, and sale of drill pipes and drill pipe accessories	28.3	-	-
				(28.3)
28 other companies
[Engineering business]
Iwate Geothermal Power Co., Ltd.	Hachimandaira, Iwate	2,626	Geothermal power generation business	29.9	-	-
				(29.9)
JP Steel Plantech Co.	Kohoku-ku, Yokohama	1,995	Design, manufacture, and installation of steelmaking machinery, etc.	34.0	-	-
				(34.0)
9 other companies
[Trading business]
Hanwa Kozai Co., Ltd.	Yodogawa-ku, Osaka	1,076	Processing and sale of stainless [steel] products	47.9	-	-
				(47.9)
MOBY Corporation	Ichikawa, Chiba	211	Processing and sale steel plates for containers	20.0	-	-
				(20.0)
Ohmi sangyo Co., Ltd.	Taisho-ku, Osaka	100	Processing and sale of steel sheets	35.7	-	-
				(35.7)
OSAKA KOWAZ Inc.	Taisho-ku, Osaka	60	Processing and sale of steel sheets	30.7	-	-
				(30.7)
20 other companies ^{* 5}
[Other business]
Japan Marine United	Nishi-ku, Yokohama	57,500	Design, manufacture, sale, installation, repair, and maintenance of ships, naval vessels, and marine structures, etc.	35.0	Yes	-

	Details of Relationship
Name	Other
(Consolidated subsidiaries)
[Steel business]
JFE Steel Corporation ^{* 13}	Conclusion of contract related to business management. Lease of buildings from the company
JEE Bars & Shapes Corporation ^{* 1}	-
JFE Chemical Corporation	-
JFE Metal Products & Engineering, Inc.	-
JFE Galvanizing & Coating Co., Ltd.	-
GECOSS Corporation ^{* 2}	-
JFE Logistics Corporation	-
JFE Container Co., Ltd ^{* 2}	-
JFE Civil Engineering & Construction Corporation	-
JFE Mineral Company, Ltd.	-
JFE Life Corporation	-
JFE Plant Engineering Co., Ltd.	-
JFE Systems, Inc. ^{* 2}	-
Mizushima Ferroalloy Co., Ltd.	-
JFE Pipe Fitting Mfg. Co., Ltd.	-
JFE Kozai Corporation	-
JFE Welded Pipe Manufacturing Co., Ltd.	-
JFE Material Co., Ltd.	-
JFE Precisions Co., Ltd.	-
JFE Techno-Research Corporation	-
JFE East Japan GS Co., Ltd.	-
JFE Steel Australia Resources Pty. Ltd. ^{* 1}	-
Philippine Sinter Corporation ^{* 1}	-
PT. JFE Steel Galvanizing Indonesia	-
JFE Steel Galvanizing (Thailand) Ltd.	-
Thai Coated Steel Sheet Co., Ltd.	-
Nova Era Silicon S.A.	-
126 other companies
[Engineering business]
JFE Engineering Corporation ^{* 1}	Conclusion of contract related to business management
J&T Recycling Corporation	-
JFE Project One Co., Ltd.	-
Asukasoken Co., Ltd.	-
JFE Technos Co., Ltd.	-
JFE Environmental Service Corporation	-
Urban Energy Corporation AnyTech	-
Standardkessel Baumgarte Holding GmbH	-
64 other companies
[Trading business]
JFE Shoji Corporation ^{* 1} ' ⁴	Conclusion of contract related to business management
JFE Shoji Steel Construction Materials Corporation	-
JFE Shoji Electronics Corporation	-
Kawasho Foods Corporation	-
JFE Shoji Pipe & Fitting Corporation	-
JFE Shoji Electrical Steel Co., Ltd.	-
JFE Shoji Kohnan Steel Center Co., Ltd.	-
JFE Shoji Coil Center Corporation	-
K&l Tubular Corporation	-
Zhejiang JFE Shoji Steel Products Co., Ltd.	-
VEST Inc.	-
Dongguan JFE Shoji Steel Products Co., Ltd.	-
JFE Shoji Steel America, Inc.	-
Central Metals (Thailand) Ltd.	-
JFE Shoji (Hong Kong) Ltd.	-
JFE Shoji (Thailand) Ltd.	-
JFE Shoji (Shanghai) Co., Ltd.	-
Cogent Power Inc.	-
JFE Shoji America Holdings Inc.	-
JFE Shoji America, LLC	-
Kelly Pipe Co., LLC	-
81 other companies
(Equity-method affiliates, etc.)
[Steel business]
Japan-Brazil Niobium Corporation	-
Setouchi Joint Thermal Power Co., Ltd.	-
Shinagawa Refractories Co., Ltd. ^{* 2}	-
Nippon Chuzo K.K. ^{* 2}	-
Nippon Chutetsukan K.K. ^{* 2}	-
NKK Seamless Steel Pipe K.K.	-
EXA Corporation	-
K.K. JFE Sanso Center	-
Guangzhou JFE Steel Sheet Co., Ltd.	-
Nucor-JFE Steel Mexico, S. Der. L. Dec.V.	-
BaoWu JFE Special Steel Co., Ltd.	-
Thai Cold Rolled Steel Sheet Public Company Limited.	-
California Steel Industries, Inc.	-
JSW Steel Ltd.	-
Inner Mongolia Erdos EJM Manganese Alloys Co., Ltd.	-
Bohai NKK Drill Pipe Co., Ltd.	-
28 other companies
[Engineering business]
Iwate Geothermal Power Co., Ltd.	-
JP Steel Plantech Co.	-
9 other companies
[Trading business]
Hanwa Kozai Co., Ltd.	-
MOBY Corporation	-
Oh mi sangyo Co., Ltd.	-
OSAKA KOWAZ Inc.	-
20 other companies ^{* 5}
[Other business]
Japan Marine United	-

Notes:

^1. ^* 1 Falls under category of a specified subsidiary
^2. ^* 2 A securities report has been submitted
^3. The figures in parentheses of "voting shares" are voting shares that are indirectly held and are included in the percentage of voting rights.
^4. ^* 3 Net sales of JFE Steel Corporation account for over 10% of the Group's consolidated revenue.
Principal information on profits and losses, etc. (JGAAP)
Net sales: ¥1,557,031 million
Ordinary loss: ¥94,209 million
Net loss: ¥33,130 million
Net assets: ¥741,454 million
Total assets: ¥2,875,872 million
^5. ^* 4 Net sales of JFE Shoji Corporation account for over 10% of the Group's consolidated revenue.
Principal information on profits and losses, etc. (JGAAP)
Net sales: ¥1,024,895 million
Ordinary income: ¥1 2,763 million
Net income: ¥11,653 million
Net assets: ¥130,747 million
Total assets: ¥365,543 million
^6. equity-method affiliates includes joint operations.
• Baosteel Special Steel Shaoguan Co., Ltd. changed its corporate name to Baosteel Special Steel Shaoguan Co., LTD. on December 10, 2020.
• Iwate Geothermal Power Co., Ltd. is listed as an important equity-method affiliate from the consolidated fiscal year under review.
• JFE Shoji Usuitakenzai Corporation merged with JFE Shoji Steel Construction Materials Corporation on April 1,2020, with JFE Shoji Steel Construction Materials Corporation as the surviving company.ss
• JFE Shoji Trade (Hong Kong) Ltd., changed its corporate name to JFE Shoji (Hong Kong) Ltd. on April 1, 2020.
• JFE Shoji Trade America LLC changed its corporate name to JFE Shoji America LLC on April 1, 2020.
• JFE Shoji Trade Thailand Ltd. changed its corporate name to JFE Thailand Ltd. on May 5, 2020.
• VEST Inc. is listed as an important subsidiary from the consolidated fiscal year under review.
• Mitsui ESS Plant Engineering Inc. became a consolidated subsidiary of JEE Engineering Corporation via the acquisition of shares on April 1, 2021. On the same date,
• Mitsui ESS Plant Engineering Inc. changed its corporate name to JEE Environment Technology Co., Ltd.
^7. Changes in affiliate companies
^8. ^* 5 The other 20 equity-method affiliates in the trading business include three consolidated subsidiaries and one equity-method affiliate of the steel business.

18. Investments Accounted for Using Equity Method

(1) Material associates

JSW Steel Limited

JSW Steel, located in Mumbai, India, engages primarily in manufacture and sales of steel products.

The condensed consolidated financial statements of JSW Steel are as follows.

For JSW Steel, provisional financial statements are prepared based on December 31 as the reporting date because local legislation imposes restrictions on when certain information becomes available to the Company.

However, in the accompanying notes, the condensed consolidated financial statements of JSW Steel that were already released at the end of each fiscal year are disclosed. Accordingly, financial information as of September 30 is stated in the statement of financial position, and financial information for the first nine months of the reporting period ended December 31 is stated in the statement of profit or loss and the statement of comprehensive income.

(million yen)

	As of March 31,2020	As of March 31,2021
Current assets	572,156	426,411
Non-current assets	1,362,946	1,393,517
Total assets	1,935,102	1,819,928
Current liabilities	773,634	576,718
Non-current liabilities	600,415	717,355
Total liabilities	1,374,049	1,294,074
Total equity	561,052	525,854
equity attributable to owners of parent	568,768	534,047
Non-controlling interests	(7,715)	(8,193)

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Revenue	864,848	767,122
Profit	58,203	53,389
Other comprehensive income	(4,071)	8,859
Comprehensive income	54,132	62,248

An adjustment between the amount of equity attributable to owners of parent in the above condensed consolidated financial statements and the carrying amount of interests in JSW Steel Limited and the fair value of interests in JSW Steel Limited are as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Equity attributable to owners of parent	568,768	534,047
Ownership interest (%)	15.0	15.0
equity attributable to the Group	85,315	80,107
Consolidation adjustment	1,920	6,408
Carrying amount of interests in JSW Steel Limited	87,235	86,515
Fair value of interests in JSW Steel Limited	77,420	258,175

Dividends received from JSW Steel for the fiscal years ended March 31,2020 and 2021 were 2,335 million yen and 1,062 million yen, respectively.

(2) Immaterial associates and joint ventures

The carrying amount of investments in immaterial associates and joint ventures is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Associates	114,017	128,887
Joint ventures	134,787	139,840

Financial information on immaterial associates and joint ventures is as follows, which represents the amounts attributable to the Group based on the Group's interest in those associates and joint ventures.

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Associates
Profit	(9,193)	(45)
Other comprehensive income	4,110	13,750
Comprehensive income	(5,083)	13,705
Joint ventures
Profit	4,725	4,963
Other comprehensive income	(17)	46
Comprehensive income	4,707	5,009

19. Income Taxes

(1) Deferred tax assets and deferred tax liabilities

The breakdown of deferred tax assets and deferred tax liabilities by major cause of accrual is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Deferred tax assets
Impairment losses	37,137	36,676
Retirement benefit liability	38,510	36,295
Unused tax loss carryforwards	11,942	13,878
Accrued bonuses	13,454	13,426
Accrued expenses	10,326	9,989
Other	47,431	36,441
Total deferred tax assets	158,803	146,708
Deferred tax liabilities
Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income	28,921	23,403
Retained earnings of subsidiaries and associates	14,223	18,670
Reserve for tax purpose reduction entry of non-current assets	6,605	6,526
Other	17,846	19,684
Total deferred tax liabilities	67,596	68,285
Net deferred tax assets	91,207	78,422

The breakdown of changes in net deferred tax assets (liabilities) is as follows:

(million yen)

	Fiscal year ended March 31.2020	Fiscal year ended March 31,2021
Balance at the beginning of the year	33,059	91,207
Adjustments due to application of IFRS 16	558	-
Balance at the beginning of the year (modified)	33,617	91,207
Deferred tax expense	39,747	4,552
Deferred taxes on items of other comprehensive income
Effective portion of cash flow hedges	19	(1,316)
Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income	13,799	(11,470)
Remeasurements of defined benefit plans	2,070	(5,089)
Other	1,953	538
Balance at the end of the year	91,207	78,422

Deductible temporary differences and unused tax loss carryforwards for which deferred tax assets are not recognized in the consolidated statement of financial position are as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Deductible temporary differences	340,667	347,458
Unused tax loss carryforwards	366,250	414,328

Unrecognized deferred tax assets for the above deductible temporary differences were 104,328 million yen and 106,425 million yen as of March 31,2020 and 2021, respectively Unrecognized deferred tax assets for the above unused tax loss carryforwards were 16,243 million yen and 21,709 million yen as of March 31,2020 and 2021, respectively

The breakdown by expiration date of unused tax loss carryforwards for which deferred tax assets are not recognized in the consolidated statement of financial position is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Year one	109,540	108,151
Year two to year five	115,379	76,886
Later than five years	140,447	226,774
No specified expiration date	882	2,515
Total	366,250	414,328

Taxable temporary differences arising from investments in subsidiaries and associates for which deferred tax liabilities were not recognized as of March 31,2020 and 2021 amounted to 50,023 million yen and 62,727 million yen, respectively

Deferred tax liabilities are not recognized for such temporary differences, where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets of 131,818 million yen and 124,021 million yen were recognized as of March 31,2020 and 2021, respectively, for taxable entities that incurred net loss in the current or previous period, and whose recoverability of deferred tax assets depends on future taxable income.

In assessing the recoverability of deferred tax assets, the Group considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.

(2) Income tax expense

The breakdown of income tax expense is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Current tax expense	19,564	18,685
Deferred tax expense	(39,747)	(4,552)
Total	(20,183)	14,133

(3) Reconciliation of effective tax rate

The breakdown by major cause of a difference between the effective statutory tax rate and the burden ratio of corporation tax, etc., after application of tax effect accounting is as follows:

(%)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Effective statutory tax rate	30.0	30.0
(Reconciliation)
Items permanently not tax-deductible, such as entertainment expenses	(0.6)	(9.9)
Items permanently not taxable, such as dividend income	0.3	6.7
Changes in valuation allowance	(21.8)	(242.7)
Share of profit (loss) of investments accounted for using equity method	1.2	86.6
Retained earnings of subsidiaries and associates	(1.4)	(90.2)
Other	1.8	(67.2)
Burden ratio of corporation tax, etc, after application of tax effect accounting	9.5	(286.6)

20. Trade and Other Payables

The breakdown of trade and other payables is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Notes and accounts payable-trade	477,048	436,211
Accounts payable-other	80,204	60,784
Total	557,252	496,995

Trade and other payables are classified as financial liabilities measured at amortized cost.

21. Bonds Payable, Borrowings, and Lease Liabilities

(1) The breakdown of bonds payable, borrowings, and lease liabilities is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Short-term borrowings (Note 1)	123,505	125,816
Current portion of long-term borrowings (Note 1)	122,846	72,151
Bonds due within one year (Note 2)	-	30,183
Commercial papers	88,999	-
Bonds payable (Note 2)	230,066	259,401
Long-term borrowings (Note 1)	1,097,012	1,159,012
Lease liabilities	151,877	159,573
Total	1,814,308	1,806,139
Current liabilities	376,473	277,027
Non-current Ilabilities	1,437,835	1,529,112
Total	1,814,308	1,806,139

Bonds payable, borrowings, and lease liabilities are classified as financial liabilities measured at amortized cost.

Bonds payable and borrowings are not subject to financial covenants that have significant effects on the financing activities of the Group.

(Note 1) The weighted average interest rate and repayment date for the balance of borrowings as of March 31,2021 are as follows:

	(%)	Repayment date
Short-term borrowings	1.30	-
Current portion of long-term borrowings	0.54	-
Long-term borrowings	0.71	April 2, 2022 to March 22, 2078

(Note 2) Terms and conditions of issuance of bonds are summarized as follows:

(million yen)

Company name	Issue	Date of issuance	As of March 31,2020	As of March 31, 2021	Interest rate (%)	Collateral
The Company	The 17th unsecured bond	June 8, 2011	30,524	30,183	1.326	None
The Company	The 21st unsecured bond	March 13, 2014	9,978	9,983	0.804	None
The Company	The 22nd unsecured bond	September 19, 2014	19,955	19,965	0.703	None
The Company	The 23rd unsecured bond	May 23, 2017	9,980	9,989	0.090	None
The Company	The 24th unsecured bond	March 1,2018	9,972	9,982	0.110	None
The Company	The 25th unsecured bond	May 21,2018	20,168	20,117	0.260	None
The Company	The 26th unsecured bond	November 22, 2018	9,966	9,975	0.150	None
The Company	The 27th unsecured bond	May 27, 2019	29,899	29,923	0.170	None
The Company	The 28th unsecured bond	May 27, 2019	9,959	9,965	0.260	None
The Company	The 29th unsecured bond	May 27, 2019	19,909	19,919	0.365	None
The Company	The 30th unsecured bond	September 20, 2019	9,959	9,968	0.120	None
The Company	The 31st unsecured bond	September 20, 2019	29,886	29,904	0.250	None
The Company	The 32nd unsecured bond	September 20, 2019	19,906	19,916	0.320	None
The Company	The 33rd unsecured bond	July 14, 2020	-	19,943	0.050	None
The Company	The 34th unsecured bond	July 14, 2020	-	29,895	0.250	None
The Company	The 35th unsecured bond	July 14, 2020	-	9,950	0.470	None
Total	-	-	230,066	289,584	-	-

Company name	Redemption date
The Company	June 8, 2021
The Company	March 13, 2024
The Company	September 19, 2024
The Company	May 23, 2022
The Company	March 1, 2023
The Company	May 21, 2025
The Company	November 22, 2023
The Company	May 27, 2024
The Company	May 27, 2026
The Company	May 25, 2029
The Company	September 20, 2024
The Company	September 18, 2026
The Company	September 20, 2029
The Company	July 14, 2023
The Company	July 14, 2025
The Company	July 12, 2030
Total	-

(2) Assets pledged as collateral and corresponding secured obligations

Assets pledged as collateral

(million yen)

	As of March 31,2020	As of March 31,2021
Cash and cash equivalents	852	842
Trade and other receivables	10,300	7,921
Property, plant and equipment	12,644	10,783
Right-of-use assets	161	159
Investments accounted for using equity method	2,332	2,307
Other financial assets (non-current)	679	802
Total	26,970	22,815

Note: Industrial foundation's assets of property, plant and equipment as mortgage

(million yen)

	As of March 31,2020	As of March 31,2021
Property, plant and equipment	10,351	9,434

In addition, shares of consolidated subsidiaries have been pledged as collateral.

(million yen)

	As of March 31,2020	As of March 31,2021
Shares of consolidated subsidiaries (book value posted on the non-consolidated financial statements of the consolidated subsidiaries)	553	649

Corresponding secured obligations

(million yen)

	As of March 31,2020	As of March 31,2021
Trade and other payables	164	128
Bonds payable, borrowings, and lease liabilities (current)	960	1,006
Bonds payable, borrowings, and lease liabilities (non-current)	12,427	12,309
Total	13,552	13,444

Note: Those corresponding to the industrial foundation's assets in the above obligations

(million yen)

	As of March 31,2020	As of March 31,2021
Bonds payable, borrowings, and lease liabilities (current)	559	559
Bonds payable, borrowings, and lease liabilities (non-current)	5,574	5,014
Total	6,133	5,574

22. Other Financial Liabilities

The breakdown of other financial liabilities is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Financial liabilities measured at amortized cost
Deposits received	85,377	81,320
Other	14,713	48,218
Subtotal	100,090	129,538
Financial liabilities measured at fair value through profit or loss
Derivative liabilities	5,621	2,715
Total	105,712	132,253
Current liabilities	89,465	86,836
Non-current Ilabilities	16,246	45,417
Total	105,712	132,253

23. Provisions

The breakdown and movement of provisions are as follows:

Fiscal year ended March 31,2021

(million yen)

	Provision for loss on specified business	Other provisions	Total
Balance at the beginning of the year	10,161	28,087	38,248
Increase during the year	604	10,808	11,412
Interest expense incurred over the discount period	144	(0)	143
Decrease due to intended use	(2,729)	(8,431)	(11,160)
Decrease due to reversal	-	(3,078)	(3,078)
Exchange differences on translation of foreign operations, etc.	-	59	59
Balance at the end of the year	8,180	27,444	35,624
Current liabilities	-	11,518	11,518
Non-current liabilities	8,180	15,925	24,105
Total	8,180	27,444	35,624

Provision for loss on specified business

A provision for loss on specified business is provided for possible losses on a certain specific business of industrial waste disposal at an estimated amount of losses to be incurred from the following fiscal year onwards.

These expenses are expected to be paid primarily after one year; however, the timing of the payment is subject to change due to future business plans and other factors.

24. Post-employment Benefits

The Group has adopted mainly retirement lump-sum payment plans, defined benefit pension plans, and defined contribution pension plans. Retirement lump-sum payment plans and defined benefit pension plans are exposed to general investment risk, interest rate risk, inflation risk, and other risks. However, the Group determines that those risks are immaterial.

The defined benefit pension plans are operated by corporate pension funds legally separated from the Group. The corporate pension funds and pension fund trustees are required by laws and regulations to act in the best interests of the plan participants, and are responsible for managing the plan assets in accordance with the designated policies.

(1) Reconciliation of defined benefit obligations and plan assets

The reconciliation of the defined benefit obligations and plan assets to the retirement benefit liability and asset recognized in the consolidated statement of financial position is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Funded defined benefit obligations	197,765	190,721
Plan assets	(125,241)	(133,600)
Subtotal	72,524	57,120
Unfunded defined benefit obligations	55,272	61,906
Total	127,796	119,027
Amounts recognized in the consolidated statement of financial position
Retirement benefit liability	143,316	141,186
Retirement benefit asset	(15,520)	(22,159)
Net defined benefit liability (asset) recognized in the consolidated statement of financial position	127,796	119,027

(2) Reconciliation of defined benefit obligations

The movement of defined benefit obligations is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Balance at the beginning of the year	254,878	253,037
Current service cost	14,842	15,344
Interest expense	1,502	1,545
Remeasurements
Actuarial losses arising from changes in demographic assumptions	615	(1,311)
Actuarial losses arising from changes in financial assumptions	(2,215)	(2,240)
Experience adjustments	540	3,808
Past service cost	70	(1,228)
Benefits paid	(18,605)	(16,309)
Exchange differences on translation of foreign operations, etc.	1,408	(19)
Balance at the end of the year	253,037	252,627

The weighted average duration of defined benefit obligations is as follows:

(years)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Weighted average duration	11.0	10.9

(3) Reconciliation of plan assets

The movement of plan assets is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Balance at the beginning of the year	137,259	125,241
Interest income	758	747
Remeasurements
Return on plan assets (excluding interest income)	(8,055)	17,467
Contribution to the plan by employer	2,201	2,297
Benefits paid	(8,809)	(12,010)
Effects of business combinations and disposals	2,025	-
Exchange differences on translation of foreign operations, etc.	(138)	(143)
Balance at the end of the year	125,241	133,600

The Group expects to contribute 2,221 million yen to its defined benefit plans in the fiscal year ending March 31,2022.

(4) Major breakdown of plan assets

The breakdown of the total plan assets by major category is as follows:

(million yen)

	As of March 31,2020			As of March 31,2021
	With quoted market price in an active market	With no quoted market price in an active market	Total	With quoted market price in an active market	With no quoted market price in an active market	Total
Equity instruments
Domestic stocks	47,741	268	48,009	53,241	378	53,620
Foreign stocks	6,017	698	6,715	8,490	1,024	9,515
Debt instruments
Domestic bonds	16,043	3,003	19,047	13,610	3,685	17,295
Foreign bonds	2,965	2,218	5,184	3,082	2,265	5,347
Cash and deposits	5,185	-	5,185	9,356	-	9,356
Life insurance general accounts	-	39,431	39,431	-	36,759	36,759
Other	-	1,667	1,667	-	1,705	1,705
Total	77,953	47,288	125,241	87,781	45,818	133,600

The Group's management policy for the plan assets is to secure stable returns in the medium and long term for ensuring future payments of defined benefit obligations pursuant to internal regulations. Specifically, the target rate of returns and the asset mix ratio by investment asset class are determined within the acceptable risk range every fiscal year, and the plan assets are managed with the asset mix ratio maintained.

(5) Actuarial assumptions

Major actuarial assumptions are as follows:

(%)

	As of March 31,2020	As of March 31,2021
Discount rate	Mainly 0.6	Mainly 0.6
Anticipated rate of salary increase	Mainly 0.9 to 3.0	Mainly 0.8 to 2.8

Note: The sensitivities of defined benefit obligations due to changes in the discount rate as of each fiscal year are as follows. Each of these sensitivities assumes that other variables are held constant; however, they do not always change independently Negative figures indicate a decrease in defined benefit obligations, while positive figures indicate an increase.

The Group does not expect any significant changes in the anticipated rate of salary increase.

(%)

	Change in assumptions	As of March 31,2020	As of March 31,2021
Discount rate	Increase by 0.5%	(12,580)	(11,827)
	Decrease by 0.5%	13,616	12,769

(6) Defined contribution pension plans

Contributions to the defined contribution pension plans are as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Contributions to the defined contribution pension plans	36,203	35,998

The above amounts include contributions to employees' pension insurance based on Japan's Employees' Pension Insurance Act.

25. Equity and Other Equity Items

(1) Share capital

(i) Authorized shares

The number of authorized shares as of April 1,2019, March 31,2020, and March 31,2021 was 2,298,000 thousand common shares.

(ii) Fully paid and issued shares

The movement of the number of issued shares is as follows:

	Number of issued common shares (thousand shares)
As of April 1,2019	614,438
Increase (decrease)	-
As of March 31,2020	614,438
Increase (decrease)	-
As of March 31,2021	614,438

Note: All the shares issued by the Company are non-par value common shares that have no restrictions on the rights.

(2) Treasury shares

The movement of the number of treasury shares is as follows:

	Number of shares (thousand shares)
As of April 1,2019	38,590
As of March 31,2020	38,601
As of March 31,2021	38,646

Note: Treasury shares as of March 31,2020 and 2021 include the Company shares held intrust accounts for employee stock ownership plans.

(3) Capital surplus and retained earnings

Under the Companies Act of Japan, at least one-half of the proceeds from issuance of shares shall be credited to share capital, while the remainder of the proceeds shall be credited to capital reserves included in capital surplus. In addition, the Companies Act of Japan provides that one-tenth of the dividends of retained earnings shall be appropriated as capital reserves or as retained earnings reserves until their aggregate amount equals one-quarter of share capital.

26. Dividends

(1) Amounts of dividends paid

Fiscal year ended March 31,2020

Date of resolution	Type of share	Total amount of dividends (million yen)	Dividend per share (yen)	Record date	Effective date
Ordinary General Meeting of Shareholders held on June 21, 2019	Common stock	28,831	50	March 31, 2019	June 24, 2019

Note: The total amount of dividends of 28,831 million yen includes dividends of the Company shares held in trust accounts for employee stock ownership plans of 30 million yen.

Date of resolution	Type of share	Total amount of dividends (million yen)	Dividend per share (yen)	Record date	Effective date
Board of Directors' Meeting held on November 12, 2019	Common stock	11,532	20	September 30, 2019	Decembers, 2019

Note: The total amount of dividends of 1 1,532 million yen includes dividends of the Company shares held in trust accounts for employee stock ownership plans of 1 1 million yen.

Fiscal year ended March 31,2021

There is no applicable item.

(2) Of the dividends for which the record date belongs to the fiscal year, those dividends for which the effective date will be after the end of the fiscal year

Fiscal year ended March 31,2020

There is no applicable item.

Fiscal year ended March 31,2021

Date of resolution	Type of share	Total amount of dividends (million yen)	Source of funds for dividends	Dividend per share (yen)	Record date	Effective date
Ordinary General Meeting of Shareholders held on June 25, 2021	Common stock	5,765	Retained earnings	10	March 31, 2021	June 28, 2021

Note: The total amount of dividends of 5,765 million yen includes dividends of the Company shares held in trust accounts for employee stock ownership plans of 5 million yen.

27. Revenue

(1) Disaggregation of revenue

Fiscal year ended March 31,2020

(million yen)

	Steel Business	Engineering Business	Trading Business	Elimination of intersegment revenue	Total
Region
Japan	1,780,582	473,539	504,159	(231,157)	2,527,123
Other	900,767	38,756	579,977	(316,908)	1,202,594
Total	2,681,350	512,295	1,084,137	(548,065)	3,729,717
Transfer of goods or services
At a point in time	2,456,287	4,205	1,084,075	(521,463)	3,023,105
Over time	225,062	508,090	62	(26,602)	706,612
Total	2,681,350	512,295	1,084,137	(548,065)	3,729,717

Fiscal year ended March 31, 2021

(million yen)

	Steel Business	Engineering Business	Trading Business	Elimination of intersegment revenue	Total
Region
Japan	1,500,177	439,083	424,070	(193,350)	2,169,980
Other	755,039	46,667	508,440	(252,842)	1,057,304
Total	2,255,216	485,750	932,510	(446,192)	3,227,285
Transfer of goods or services
At a point in time	2,050,372	4,046	932,477	(426,091)	2,560,804
Over time	204,844	481,704	32	(20,100)	666,480
Total	2,255,216	485,750	932,510	(446,192)	3,227,285

(2) Contract balances

(million yen)

	As of March 31,2019	As of March 31,2020	As of March 31,2021
Receivables from contracts with customers	718,931	639,997	716,893
Contract assets	124,039	142,075	101,282
Contract liabilities	59,060	44,813	43,038

The amount recognized as receivables that was included in the opening balance of contract assets was 85,824 million yen and 110,985 million yen as of March 31,2020 and 2021, respectively.

The amount recognized as revenue that was included in the opening balance of contract liabilities was 45,878 million yen and 37,770 million yen as of March 31,2020 and 2021, respectively.

(3) Remaining performance obligations

(million yen)

	As of March 31,2020	As of March 31,2021
Transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the fiscal year	932,447	959,342
Expected timing of revenue recognition
Within one year	377,370	345,029
Over one year	555,076	614,313

28. Selling, General and Administrative Expenses

The breakdown of selling, general and administrative expenses is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31, 2021
Employee benefit expenses	136,824	133,846
Product shipping-related expenses	92,056	75,387
Provision of allowance for doubtful accounts	120	463
Other	127,991	114,359
Total	356,992	324,057

29. Employee Benefit Expenses

Employee benefit expenses are as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Employee benefit expenses	492,785	480,417

Employee benefit expenses include salaries, bonuses, legal welfare expenses, and retirement benefit expenses, and are recorded in "Cost of sales" and "Selling, general and administrative expenses."

30. Share-based Payment

The Company has instituted a share-based payment plan through which a portion of the compensation of directors (excluding outside directors) and executive officers (excluding non-residents under income tax law) (hereinafter referred to collectively as the "Directors/Officers") of the Company and its operating companies is provided in the form of employee stock ownership plans. The Group's objective is to establish a clear link between compensation and the Group's operating performance and equity value and encourage the sharing of value with shareholders, thereby creating a greater incentive to contribute toward enhancing shareholder value over the medium and long term.

The plan is a compensation plan whereby shares in the Company are acquired through a trust funded by cash contributed by the Company, and the Company's shares and an amount of cash equivalent to the market price of the Company's shares (hereinafter referred to as the "Company's Shares") are provided through the trust to the Directors/Officers, pursuant to the Stock Grant Regulations for Officers established by the Company and its operating companies.

The Company's Shares are granted to the Directors/Officers, in principle, upon their retirement.

Compensation under the plan is granted to the Directors/Officers as consideration for their execution period of duties, provided the Directors/Officers have been in office for at least a month during the period specified as follows (the "Execution Period"):

―	Directors ofthe Company: From the date of the Ordinary General Meeting of Shareholders of the Company for the respective year to the date of the Ordinary General Meeting of Shareholders of the Company for the following year
―	Others: From April 1 of the respective year to March 31 of the following year

The Company and its operating companies calculate points equivalent to the performance-linked portion and the service length portion for each Execution Period and grant them to the Directors/Officers.

The points granted for each Execution Period are accumulated until retirement, and the number of the Company's Shares is calculated by converting the accumulated points as "one point = one share."

Part ofthe plan that provides the Company's Shares is accounted for an equity-settled share-based payment transaction while part ofthe plan that provides cash is accounted for a cash-settled share-based payment transaction.

Expenses recognized for the plan as "Selling, general and administrative expenses" in the consolidated statement of profit or loss are as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal ear ended March 31,2021
Equity-settled	54	13
Cash-settled	(16)	28
Total	37	41

The carrying amount of liabilities for the plan is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Other non-current liabilities	21	44

The number of points granted and the weighted-average fair value of points at the grant date for the equity-settled portion of the plan are as follows:

	Fiscal year ended March 31,2020	Fiscal ear ended March 31,2021
Number of points granted (points)	29,880	18,900
Weighted average fair value of points at the grant date (yen)	1,867	743

Note: The fair value of points granted approximates the share price at the grant date, and thus represents the share price at the grant date.

31. Other Income

The breakdown of other income is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal ear ended March 31,2021
Dividend income
Equity financial assets measured at fair value through other comprehensive income	9,478	5,492
Rental income	6,765	6,727
Gain on sale of investments in subsidiaries	80	-
Other	14,493	13,562
Total	30,818	25,782

The breakdown of dividend income from equity financial assets measured at fair value through other comprehensive income is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal ear ended March 31,2021
Financial assets derecognized during the year	650	2,976
Financial assets held as of the reporting date	8,828	2,515

32. Other Expenses

The breakdown of other expenses is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Loss on retirement of fixed assets	20,251	20,760
Other	20,072	22,633
Total	40,323	43,394

33. Profit on Sales of Fixed Assets

Fiscal year ended March 31,2021

Profit on sales of fixed assets resulted primarily from the sale of land and buildings in Aiko-gun, Kanagawa Prefecture.

34. Finance Income and Finance Costs

(1) Finance income

The breakdown of finance income is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Interest income
Financial assets measured at amortized cost	2,727	1,686
Total	2,727	1,686

(2) Finance costs

The breakdown of finance costs is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Interest expenses
Financial liabilities measured at amortized cost	14,325	13,701
Other	161	143
Other	786	339
Total	15,273	14,184

35. Other Comprehensive Income

The amount arising during the year, reclassification adjustments to profit or loss, and tax effects for each component of other comprehensive income are as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Remeasurements of defined benefit plans
Amount arising during the year	(7,045)	17,109
Before tax effects	(7,045)	17,109
Tax effects	2,070	(5,089)
Remeasurements of defined benefit plans	(4,975)	12,020
Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income
Amount arising during the year	(62,943)	58,221
Before tax effects	(62,943)	58,221
Tax effects	13,799	(11,470)
Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income	(49,143)	46,751
Exchange differences on translation of foreign operations
Amount arising during the year	(3,080)	(607)
Reclassification adjustments	-	(1)
Before tax effects	(3,080)	(609)
Tax effects	-	-
Exchange differences on translation of foreign operations	(3,080)	(609)
Effective portion of cash flow hedges
Amount arising during the year	286	15,966
Reclassification adjustments	(350)	(2,977)
Before tax effects	(63)	12,989
Tax effects	19	(1,316)
Effective portion of cash flow hedges	(44)	11,673
Share of other comprehensive income of investments accounted for using equity method
Amount arising during the year	(8,659)	13,773
Reclassification adjustments	20	(1,314)
Share of other comprehensive income of investments accounted for using equity method	(8,638)	12,459
Total other comprehensive income	(65,882)	82,295

36. Earnings per Share

(1) Basic earnings per share and diluted earnings per share

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Basic losses per share (yen)	(343.39)	(37.98)
Diluted losses per share (yen)	(343.39)	(37.98)

(2) Basis for calculation of basic earnings per share and diluted earnings per share

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Loss attributable to owners of parent (million yen)	(197,744)	(21,868)
Amount not attributable to common shareholders of parent (million yen)	-	-
Loss used in calculation of basic earnings per share (million yen)	(197,744)	(21,868)
Profit adjustments (million yen)	-	-
Loss used in calculation of diluted earnings per share (million yen)	(197,744)	(21,868)
Weighted average number of common shares used in calculation of basic earnings per share (thousand shares)	575,854	575,829
Impact of dilutive potential common shares
Share-based payments (thousand shares)	-	-
Weighted average number of common shares used in calculation of diluted earnings per share (thousand shares)	575,854	575,829

Notes: 1. The Company shares held in trust accounts for employee stock ownership plans are included in treasury shares, which are excluded from the calculation of the weighted average number of shares used in the calculation of basic earnings per share. The weighted average number of treasury shares excluded from the calculation of basic earnings per share for the fiscal years ended March 31, 2020 and 2021 is 589,000 and 567,000, respectively.

2. Share-based payments for the fiscal years ended March 31,2020 and 2021 (118,000 and 107,000 shares, respectively) have a reverse dilution effect and are not included in the calculation of diluted earnings per share for these fiscal years.

37. Supplemental Information to the Consolidated Statement of Cash Flows

Movement of liabilities arising from financing activities

Fiscal year ended March 31,2020

(million yen)

			Non-cash changes
Liabilities arising from financing activities	Opening balance	Changes from financing cash flows	Increase due to new leases	Other	Closing balance
Short-term borrowings	135,601	(11,500)	-	(595)	123,505
Current portion of long-term borrowings	103,371	(102,865)	-	122,340	122,846
Commercial papers	83,000	5,999	-	-	88,999
Bonds payable	109,706	120,000	-	360	230,066
Long-term borrowings	1,040,824	181,569	-	(125,380)	1,097,012
Lease liabilities	157,087	(42,603)	36,377	1,016	151,877
Total	1,629,591	150,599	36,377	(2,259)	1,814,308

Note: "Other" in non-cash changes mainly includes the transfer of long-term borrowings due within one year to current portion of long-term borrowings due within one year to current portion of bonds.

Fiscal year ended March 31,2021

(million yen)

			Non-cash changes
Liabilities arising from financing activities	Opening balance	Changes from financing cash flows	Increase due to new leases	Other	Closing balance
Short-term borrowings	123,505	3,396	-	(1,084)	125,816
Current portion of long-term borrowings	122,846	(123,234)	-	72,539	72,151
Current portion of bonds	-	-	-	30,183	30,183
Commercial papers	88,999	(88,999)	-	-	-
Bonds payable	230,066	60,000	-	(30,665)	259,401
Long-term borrowings	1,097,012	132,486	-	(70,486)	1,159,012
Lease liabilities	151,877	(44,927)	51,942	681	159,573
Total	1,814,308	(61,279)	51,942	1,168	1,806,139

Note: "Other" in non-cash changes mainly includes the transfer of long-term borrowings due within one year to current portion of long-term borrowings and the transfer of bonds payable due within one year to current portion of bonds.

38. Financial Instruments

(1) Capital management

The Group's capital management principle is to enhance capital efficiency and ensure sound financial conditions in order to achieve sustainable growth and the medium-to long-term improvement of corporate value.

The Group's major indicators for capital management are as follows:

	As of March 31,2020	As of March 31,2021
ROE ^{* 1}	(11.1)%	(1.3)%
D/E ratio ^{* 2}	96.4%	93.2%
Debt / EBITDA multiple ^{* 4}	6.7x	8.1x

Notes:

^*1 ROE = Profit attributable to owners of parent / Equity attributable to owners of parent
^*2 D/E ratio = Bonds payable, borrowings, and lease liabilities / Equity attributable to owners of parent For debt with an equity component ^*3 , a portion of its issue price is deemed to be equity attributable to owners of parent, as assessed by rating agencies.
^*3 Debt with an equity component (subordinated loans)

(million yen)

Borrowing date	Amount borrowed	Assessment of equity content	Amount deemed to be equity
June 30, 2016	200,000	25%	50,000
March 19, 2018	300,000	25%	75,000

^*4 Debt / EBITDA multiple = Bonds payable, borrowings, and lease liabilities / EBITDA EBITDA: Business income + Depreciation and amortization

These indicators are monitored as necessary and appropriate.

The Group is not subject to material capital regulation.

(2) Basic policy on financial risk management

The Group is exposed to financial risks (credit risk, liquidity risk, foreign exchange risk, interest rate risk, and market price fluctuation risk) in the course of business activities. In order to mitigate these risks, the Group conducts risk management under certain policies. The Group uses derivative transactions to avoid or mitigate the risks described later and does not use them for speculative purposes.

(3) Credit risk

(i) Credit risk management

Trade receivables held by the Group are exposed to the credit risks of customers. To manage such risks, each company of the Group conducts regular reassessments of the financial standing of business partners.

The Group does not have excessive concentration of credit risk on any particular counterparty.

(ii) Maximum exposure to credit risk

Other than undrawn loan commitments and guaranteed obligations, the Group's maximum exposure to credit risk is the carrying amount of financial assets less impairment losses in the consolidated statement of financial position.

The maximum exposure to the credit risk of loan commitments and financial guarantee contracts is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Loan commitments	1,456	3,215
Financial guarantee contracts	52,275	53,061

(iii) Movement of allowance for doubtful accounts

(million yen)

	Fiscal year ended March 31,2020
		Lifetime expected credit losses
	Allowance for doubtful accounts measured at an amount equal to 12-month expected credit losses	Allowance for doubtful accounts for trade receivables, contract assets, and lease receivables	Allowance for doubtful accounts for credit-impaired financial assets
Balance at the beginning of the year	81	894	1,089
Increase during the year	46	282	229
Decrease during the year (intended use)	(0)	(2)	(102)
Decrease during the year (reversal)	(58)	(328)	(76)
Other	(6)	52	22
Balance at the end of the year	62	898	1,161

(million yen)

	Fiscal year ended March 31,2021
	Allowance for doubtful accounts	Lifetime expected credit losses
	measured at an amount equal to 12-month expected credit losses	Allowance for doubtful accounts for trade receivables, contract assets, and lease receivables	Allowance for doubtful accounts for credit-impaired financial assets
Balance at the beginning of the year	62	898	1,161
Increase during the year	82	270	1,421
Decrease during the year (intended use)	-	(17)	(105)
Decrease during the year (reversal)	(48)	(340)	(652)
Other	0	(0)	3
Balance at the end of the year	96	810	1,828

Note: An increase during the year and decrease during the year (reversal) in allowance for doubtful accounts for trade receivables, contract assets, and lease receivables (lifetime expected credit losses) resulted from an increase and decrease in trade and other receivables mainly due to sale and collection.

(iv) Carrying amounts (before deducting allowance for doubtful accounts) of financial assets and receivables for which allowance for doubtful accounts is provided

(million yen)

	As of March 31,2020	As of March 31,2021
Financial assets with allowance for doubtful accounts measured at an amount equal to 12-month expected credit losses	33,649	40,427
Trade receivables, contract assets, and lease receivables	817,203	851,091
Credit-impaired financial assets	1,180	1,840

(v) Analysis of credit risk

Credit risk ratings are almost similar among financial assets with allowance for doubtful accounts measured at an amount equal to 12-month expected credit losses.

Past due information on trade receivables, contract assets, and lease receivables is as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Not past due	800,830	842,435
Past due within 30 days	8,351	5,674
Past due between 30 days and 90 days	3,703	1,356
Past due over 90 days	4,318	1,625
Total	817,203	851,091

(4) Liquidity risk

(i) Liquidity risk management

Liquidity risk is the risk that the Group may become unable to meet its payment obligations on their due date, including for trade payables and borrowings, owing to deterioration in the financing environment and other factors.

The Group raises the necessary funds mainly through bank loans and the issuance of commercial papers and bonds, taking into consideration the stability and cost of funds, while the due dates of those obligations are managed so as to avoid concentration of payments in view of the liquidity risk. In addition, the Group manages the funds of the domestic Group companies intensively and efficiently in an attempt to mitigate the liquidity risk.

The Group is also maintaining sufficient liquidity by setting commitment lines with financial institutions (500,000 million yen at the end of the fiscal year ended March 31,2021).

(ii) Financial liabilities (including derivative financial instruments) by maturity date

As of March 31,2020

(million yen)

	Carrying amount	Contractual cash flows	Within one year	Between one year and two years	Between two years and three years	Between three years and four years
Non-derivative financial liabilities
Trade and other payables	557,252	557,252	557,252	-	-	-
Bonds payable and borrowings	1,662,431	1,740,217	368,367	195,499	315,113	92,323
Installment payables	4,000	4,018	1,509	1,506	1,002	-
Lease liabilities	151,877	157,373	41,914	39,226	17,286	11,413
Subtotal	2,375,561	2,458,862	969,045	236,232	333,401	103,736
Derivative financial liabilities	5,621	(125)	1,590	(319)	(308)	(336)
Total	2,381,183	2,458,736	970,635	235,913	333,093	103,399

	Between four years and five years	Over five years
Non-derivative financial liabilities
Trade and other payables	-	-
Bonds payable and borrowings	133,332	635,581
Installment payables	-	-
Lease liabilities	10,745	36,787
Subtotal	144,077	672,368
Derivative financial liabilities	(386)	(365)
Total	143,691	672,003

As of March 31,2021

(million yen)

	Carrying amount	Contractual cashflows	Within one year	Between one year and two years	Between two years and three years	Between three years and four years
Non-derivative financial liabilities
Trade and other payables	496,995	496,995	496,995	-	-	-
Bonds payable and borrowings	1,646,565	1,694,217	271,388	353,890	137,342	145,019
Installment payables	37,500	38,048	4,199	3,716	15,991	2,072
Lease liabilities	159,573	162,465	49,484	33,043	21,209	16,668
Subtotal	2,340,635	2,391,727	822,068	390,650	174,544	163,760
Derivative financial liabilities	2,715	2,104	1,376	291	70	143
Total	2,343,351	2,393,831	823,445	390,942	174,614	163,903

	Between four years and five years	Over five years
Non-derivative financial liabilities
Trade and other payables	-	-
Bonds payable and borrowings	117,459	669,117
Installment payables	12,067	-
Lease liabilities	16,790	25,268
Subtotal	146,316	694,386
Derivative financial liabilities	221	1
Total	146,538	694,387

(5) Foreign exchange risk

(i) Foreign exchange risk management

Financial instruments denominated in foreign currencies held by the Group are exposed to foreign exchange rate fluctuation risk. Hedge transactions, including forward exchange contracts, are entered into as necessary for the net balance of foreign currencies received from exports of products, etc., and foreign currencies paid for imports of raw materials, etc., under transactions denominated in the relevant foreign currencies.

(ii) Foreign exchange sensitivity analysis

The financial impact on profit before tax in the case of a 1 % appreciation of Japanese yen against foreign currencies for financial instruments held by the Group at the end of each fiscal year is as follows. The analysis is based on the assumption that all other variables are held constant.

The sensitivity does not include the effects of translating financial instruments and the assets and liabilities of foreign operations denominated in the functional currency into the presentation currency.

(million yen)

	Currency	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Impact on profit before tax	U.S. dollar	(496)	(462)

(6) Interest rate risk

(i) Interest rate risk management

Bonds payable and borrowings with floating interest rates held by the Group are exposed to interest rate fluctuation risk. Hedge transactions, including interest rate swaps, are entered into for certain bonds payable and borrowings to cope with interest rate fluctuations and to reduce interest rate payments.

(ii) Interest rate sensitivity analysis

The financial impact on profit before tax in the case of a 1 % increase in interest rate for financial liabilities with floating interest rates held by the Group at the end of each fiscal year is as follows. The analysis is based on the assumption that all other variables are held constant.

The sensitivity does not include borrowings with floating interest rates which are converted to fixed rates by derivative transactions, including interest rate swap agreements.

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Impact on profit before tax	(6,783)	(6,435)

(7) Share price fluctuation risk

(i) Share price fluctuation risk management

Equity instruments (stock) held by the Group are exposed to market price fluctuation risk. Most of the equity instruments are equities of the companies with which business relationships are maintained, and the fair values of such equities are regularly monitored.

(ii) Share price fluctuation sensitivity analysis

The financial impact on other comprehensive income (before tax) in the case of a 1 % decrease in quoted price for each financial instrument (stock) with an active market held by the Group at the end of each fiscal year is as follows.

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Impact on other comprehensive income (before tax)	(1,694)	(974)

(8) Carrying amounts and fair values of financial instruments

(million yen)

	As of March 31,2020		As of March 31,2021
	Carrying amount	Fair value	Carrying amount	Fair value
Long-term borrowings	1,097,012	1,104,809	1,159,012	1,164,546
Bonds due within one year	-	-	30,183	30,069
Bonds payable	230,066	229,226	259,401	259,748

The fair value of financial assets and financial liabilities measured at amortized cost excluding long-term borrowings, bonds due within one year, and bonds payable are not included as they are close to their carrying amount.

Financial instruments measured at fair value on a recurring basis are also not included as the fair value and the carrying amount are equal.

The fair value of long-term borrowings is determined by discounting the total of principal and interest to present value with the estimated interest rate on a similar new loan.

The fair value of bonds due within one year and bonds payable is based on market prices.

Long-term borrowings, bonds due within one year, and bonds payable are categorized as Level 2 within the fair value hierarchy.

(9) Fair value hierarchy of financial instruments

The fair value hierarchy of financial instruments measured at fair value on a recurring basis after initial recognition is categorized into the following three levels depending on the observability and materiality of inputs used in the measurement.

Level 1: Fair value measured using market prices in active markets for identical assets or liabilities

Level 2: Fair value measured using observable inputs other than those categorized within Level 1, either directly or indirectly

Level 3: Fair value measured using significant unobservable inputs.

When two or more inputs are used for the measurement of fair value, the level of fair value measurement is determined based on the lowest level input that is significant to the entire measurement.

Transfers between levels of the fair value hierarchy are determined at the end of each fiscal year.

There were no transfers between Level 1 and Level 2 for the fiscal years ended March 31,2020 and 2021.

As of March 31,2020

(million yen)

	Level 1	Level 2	Level 3	Total
Financial assets
Financial assets measured at fair value through profit or loss
Derivative assets	-	26,843	-	26,843
Other	-	3,874	-	3,874
Equity financial assets measured at fair value through other comprehensive income
Equity securities	169,472	-	50,089	219,561
Investments	-	-	6,494	6,494
Total	169,472	30,718	56,583	256,774
Financial liabilities
Financial liabilities measured at fair value through profit or loss
Derivative liabilities	-	5,621	-	5,621
Total	-	5,621	-	5,621

As of March 31,2021

	Level 1	Level 2	Level 3	Total
Financial assets
Financial assets measured at fair value through profit or loss
Derivative assets	-	28,238	-	28,238
Other	-	3,871	-	3,871
Equity financial assets measured at fair value through other comprehensive income
Equity securities	97,475	-	62,929	160,405
Investments	-	-	6,290	6,290
Total	97,475	32,109	69,220	198,805
Financial liabilities
Financial liabilities measured at fair value through profit or loss
Derivative liabilities	-	2,715	-	2,715
Total	-	2,715	-	2,715

―	Equity securities and investments

Listed equity securities are categorized within Level 1 as their fair value is determined based on the market price.

Unlisted equity securities and investments in capital are categorized within Level 3 as their fair value is determined using the comparable peer company analysis or other appropriate valuation techniques, where one or more significant inputs are not based on observable market data. The major significant unobservable input is a discount for illiquidity. The fair value decreases as a discount for illiquidity due to unlisted nature increases. A 30% illiquidity discount has been applied.

―	Derivative assets and derivative liabilities

Derivative transactions, such as forward exchange contracts and interest rate swaps, are categorized within Level 2 as their fair value is determined based on the quoted prices from counterparty financial institutions.

The fair value of financial instruments categorized within Level 3 is determined by each Group company which directly holds the relevant equity securities and other instruments, in accordance with the valuation policy and procedures for fair value measurements established by the Group. The results of fair value measurements are approved by an appropriate responsible person.

The movement of financial instruments measured at fair value on a recurring basis that are categorized within Level 3 for the fiscal years ended March 31,2020 and 2021 is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Balance at the beginning of the year	64,201	56,583
Other comprehensive income (Note)	(8,229)	10,043
Acquisition	1,722	2,733
Sale	(79)	(68)
Other	(1,031)	(72)
Balance at the end of the year	56,583	69,220

Note: The amount is included in "Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income" in the consolidated statement of comprehensive income.

(10) Derivative transactions and hedging activities

Derivative transactions used by the Group carry risks of market price fluctuations in the future, including that of currencies, interest rates, etc. The Group uses derivatives that are only based on actual demand, such as export and import transactions, and bonds payable and borrowings. Accordingly, these risks are limited within the scope of loss of opportunity gains. Furthermore, as the Group only conducts derivative transactions primarily with financial institutions with high credit ratings, the risk of failure to perform contracts due to bankruptcy of the counterparty, etc., is considered to be close to non-existent. The Company has established the internal rule on derivative transactions, and conducts transactions related to derivatives pursuant to the rule. On each actual transaction, the Company conducts a transaction upon authority by the Corporate Officer for Finance pursuant to the rule stated above. Balances, market prices, and losses/ gains on valuation of derivatives are to be reported to the management council regularly. The consolidated subsidiaries also conduct derivative transactions pursuant to the respective internal rules.

If the risk management objective for a hedging relationship is altered, the application of hedge accounting is discontinued.

(i) Fair value hedges

The Group uses interest rate swaps primarily to hedge the fluctuation risk of the fair value of bonds payable and borrowings, and designates those interest rate swaps as fair value hedges.

The amount recognized in profit or loss for the hedge ineffectiveness portion and the portion excluded from the assessment of hedge effectiveness was immaterial for the fiscal years ended March 31,2020 and 2021.

(ii) Cashflow hedges

The Group uses forward exchange contracts and interest rate swaps primarily to hedge the fluctuation risk of the cash flows associated with foreign exchange fluctuations in foreign currency-denominated transactions and interest rate fluctuations in borrowings, and designates such derivative transactions as cash flow hedges.

The amount recognized in profit or loss for the hedge ineffectiveness portion and the portion excluded from the assessment of hedge effectiveness was immaterial for the fiscal years ended March 31,2020 and 2021.

(iii) Fair value of hedging instruments to which hedge accounting is applied

(million yen)

	As of March 31,2020		As of March 31,2021
	Assets	Liabilities	Assets	Liabilities
Fair value hedges
Interest rate swap transactions	1,035	-	355	-
Option contracts	15,265	-	9,702	-
Subtotal	16,301	-	10,058	-
Cash flow hedges
Forward exchange transactions	516	1,198	2,944	318
Interest rate swap transactions	-	1,341	389	850
Cross-currency interest rate swap transactions	9,348	2,965	9,535	802
Commodity futures transactions	215	43	5,088	-
Subtotal	10,081	5,549	17,958	1,971
Total	26,382	5,549	28,016	1,971

The fair value of the hedging instrument as an asset is recognized in "Other financial assets (current assets)" and "Other financial assets (non-current assets)" in the consolidated statement of financial position. The fair value of the hedging instrument as a liability is recognized in 'Other financial liabilities (current liabilities)" and "Other financial liabilities (non-current liabilities)" in the consolidated statement of financial position.

(iv) Notional amount and average price of hedging instruments to which hedge accounting is applied

The notional amount of hedging instruments to which hedge accounting is applied

(million yen)

	As of March 31,2020		As of March 31,2021
	Within one year	Over one year	Within one year	Over one year
Fair value hedges
Interest rate swap transactions	20,000	50,000	30,000	20,000
Option contracts	-	27,265	-	27,265
Cash flow hedges
Forward exchange transactions	99,028	7,366	119,626	3,121
Interest rate swap transactions	12,993	123,734	11,987	117,749
Cross-currency interest rate swap transactions	22,868	89,626	7,727	81,899
Commodity futures transactions	6,066	-	23,908	-

The average forward exchange rate of major currencies under forward exchange transactions and the average paid interest rate under interest rate swap transactions and cross-currency interest rate swap transactions are as follows:

	As of March 31,2020	As of March 31,2021
Cash flow hedges
Forward exchange transactions
U.S. dollar	109.02 yen	107.75 yen
Euro	124.09 yen	123.55 yen
Interest rate swap transactions
Receive floating / pay fixed	0.29%	0.25%
Cross-currency interest rate swap transactions
U.S. dollar	101.88 yen	100.94 yen
Receive floating / pay fixed	0.28%	0.38%

(v) Carrying amount of hedged items in fair value hedges and accumulated amount of fair value hedge adjustments

As of March 31,2020

(million yen)

		Carrying amount		Including accumulated amount of fair value hedge adjustments
	Line item of the consolidated statement of financial position	Assets	Liabilities	Assets	Liabilities
Interest rate swap transactions	Bonds payable, borrowings, and lease liabilities	-	71,035	-	1,035
Option contracts	Other financial assets	9,213	-	(18,052)	-

As of March 31,2021

(million yen)

		Carrying amount		Including accumulated amount of fair value hedge adjustments
	Line item of the consolidated statement of financial position	Assets	Liabilities	Assets	Liabilities
Interest rate swap transactions	Bonds payable, borrowings, and lease liabilities	-	50,355	-	355
Option contracts	Other financial assets	17,218	-	(10,047)	-

(vi) Other components of equity and gains or losses on hedging instruments of cash flow hedges

Fiscal year ended March 31,2020

(million yen)

	Forward exchange transactions	Interest rate swap transactions	Cross-currency interest rate swap transactions	Commodity futures transactions	Commodity collar transactions	Total
Balance at the beginning of the year	58	(1,424)	(386)	-	(2)	(1,755)
Hedging gains or losses recognized in other comprehensive income	(104)	331	48	(73)	(1)	200
Reclassification adjustments to profit (Note)	162	154	(562)	-	-	(245)
Reclassification amount to cost of non-financial assets	(118)	-	-	43	3	(71)
Balance at the end of the year	(2)	(938)	(900)	(30)	-	(1,871)

Fiscal year ended March 31,2021

(million yen)

	Forward exchange transactions	Interest rate swap transactions	Cross-currency interest rate swap transactions	Commodity futures transactions	Commodity collar transactions	Total
Balance at the beginning of the year	(2)	(938)	(900)	(30)	-	(1,871)
Hedging gains or losses recognized in other comprehensive income	2,429	226	2,499	8,602	-	13,757
Reclassification adjustments to profit (Note)	(647)	118	(1,555)	-	-	(2,084)
Reclassification amount to cost of non-financial assets	(619)	-	-	(7,251)	-	(7,871)
Balance at the end of the year	1,160	(592)	42	1,319	-	1,930

Note: Major line items for reclassification adjustments in the consolidated statement of profit or loss for the fiscal year ended March 31,2020 are "Other expenses" for forward exchange transactions and "Finance costs" for interest rate swap transactions and cross-currency interest rate swap transactions.

Major line items for reclassification adjustments in the consolidated statement of profit or loss for the fiscal year ended March 31,2021 are "Other income" for forward exchange transactions and "Finance costs" for interest rate swap transactions and cross-currency interest rate swap transactions.

(11) Transfer of financial assets

As of March 31,2020 and 2021, trade receivables transferred without satisfying conditions for derecognition of financial assets of 6,241 million yen and 6,150 million yen were recognized in "Trade and other receivables," respectively, and the amounts received due to the transfer of 6,241 million yen and 6,150 million yen were recognized in "Bonds payable, borrowings, and lease liabilities," respectively.

With regard to these trade and other receivables, the Group will assume the payment obligations in case the drawer of the notes or the debtor fails to make payment. For this reason, it has been determined that the Group holds almost al of the risks and rewards related to ownership of the transferred assets.

39. Related Parties

Compensation for key management personnel is as follows:

(million yen)

	Fiscal year ended March 31,2020	Fiscal year ended March 31,2021
Compensation and bonuses	1,523	1,452
Share-based payment	41	24
Post-employment benefits	3	-
Total	1,569	1,476

40. Commitments

Commitments for the acquisition of assets after the reporting date are as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Acquisition of property, plant and equipment	239,716	209,761

41. Contingent Liabilities

(1) Guarantees of obligations

Guarantees for borrowings from financial institutions to companies other than subsidiaries are as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Joint ventures	15,146	18,274
Associates	938	900
Other	26,869	23,673
Total	42,953	42,848

In addition to the above, guarantees of obligations that may arise in the future for associates are as follows:

(million yen)

	As of March 31,2020	As of March 31,2021
Guarantee limit for associates	9,322	10,213

(2) Litigation, etc.

There is no applicable item.

42. Subsequent Events

There is no applicable item.

Other

(Significant lawsuits, etc.)

There is no applicable item.

(Quarterly information for the fiscal year ended March 31,2021)

(Cumulative period)	Three months ended June 30, 2020	Six months ended September 30, 2020	Nine months ended December 31, 2020	Fiscal year ended March 31, 2021
Revenue (million yen)	743,900	1,492,294	2,318,467	3,227,285
Loss before taxes (million yen)	(50,440)	(120,788)	(70,655)	(4,930)
Loss attributable to owners of parent (million yen)	(39,197)	(105,712)	(69,677)	(21,868)
Basic losses per share (million yen)	(68.07)	(183.58)	(121.00)	(37.98)

(Accounting period)	Three months ended June 30, 2020	Three months ended September 30, 2020	Three months ended December 31, 2020	Three months ended March 31, 2021
Basic earnings (losses) per share (yen)	(68.07)	(115.51)	62.58	83.03

Independent Auditor's Report

The Board of Directors

JFE Holdings, Inc.

Opinion

We have audited the accompanying consolidated financial statements of JFE Holdings, Inc. and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at March 31,2021, and the consolidated statements of income, comprehensive income, changes in equity, 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 31.2021. and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).

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.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of non-financial assets in the Steel Business segment

Description of Key Audit Matter	Auditor's Response
JFE Steel Corporation, a consolidated subsidiary in the Steel Business segment, recognized property, plant and equipment of 1,192,220 million yen.	We performed following audit procedures to assess the appropriateness of the Company's judgement regarding indications of impairment on non-financial assets of JFE Steel Corporation, among others.
In the event the Company determines that any indications of impairment exist on an asset or cash-generating unit related to non-financial assets as of the end of each reporting period, the Company measures the recoverable amount of the cash-generating unit at the higher of its fair value less costs of disposal or its value in use. Furthermore, the Company reduces the carrying amount of the asset to its recoverable amount, if the carrying amount exceeds the recoverable amount.	In order to assess the effectiveness of the estimation process by the management, we compared business plans in the past years with actual results. In addition, we reviewed relevant documents and materials including analysis of actual results of executed capital investments.
In the Steel Business, the Company supplies various industries with steel products with sales volumes and selling prices highly affected by supply and demand conditions in domestic and overseas markets, especially the Asian steel market. The prices of key raw materials such as iron ore and coking coal are highly volatile, due to global market dynamics including crude steel production in China, as well as possible natural disasters or accidents in sourcing countries. Moreover, the Company's projected cost reduction or sales promotion may not be achieved due to potential delay of a facility launch or unexpected changes in demand for steel products, while the Company executes significant capital investments.	In order to understand the business environment and analysis of financial impact due to temporary' factors, such as large-scale refurbishment of a manufacturing facility, we discussed with the management and examined the management response by reviewing relevant documents and materials, and by comparing it with available external data.
In order to determine whether indications of impairment exist on non-financial assets, the Company needs to consider not only its past performance results, but also multiple factors such as the current business environment, analysis of financial impact due to temporary' factors such as large-scale refurbishment of manufacturing facilities, crude steel production, shipment volume, selling prices, iron ore and coking coal prices. Given that these arc subject to significant uncertainty and require management's judgement, we determined the Company's judgement regarding indications of impairment on non-financial assets to be a key audit matter.	In order to examine whether any significant changes that could decrease the recoverable amount of the assets arc expected to occur, we performed following procedures.
	• We discussed crude steel production and shipment volume with the management and examined the management response by reviewing relevant documents and materials, and by comparing it with available external data.
	• We inquired of the management regarding metal spreads (selling prices of steel products minus costs of key raw materials) and compared the management response with historical market data in the past years.
	• We inquired of the management regarding analysis of expecting effects from planned or capital investments in progress. In addition, we examined the management response by reviewing relevant documents and materials.

Valuation of deferred tax assets

Description of Key Audit Matter	Auditor's Response
As described in Note 19, "Income Taxes' to the consolidated financial statements, the Company recognized deferred tax assets of 146.708 million yen as of March 31. 2021. which includes 13,878 million yen with respect to its unused tax loss carryforwards. In addition to deductible temporary differences, the deferred tax assets pertaining to the unused tax loss carry forward, mainly comprised of those from JFE Steel Corporation, were recognized to the extent that it is probable that future taxable income will be available.	We performed following audit procedures to assess the valuation of deferred tax assets, among others.
The valuation of deferred tax assets is primarily based on the estimate of future taxable income by the management. The estimate of future taxable income is based on the business plan including significant assumptions such as crude steel production, shipment volume, selling prices, iron orc and coking coal prices, and cost reductions. They are affected by the management judgement involving uncertainties such as changes in the market conditions caused by domestic and overseas demand trends, and volatile prices of iron ore and coking coal. Therefore, we determined this to be a key audit matter.	We recalculated the balance of temporary differences and evaluated its consistency with relevant documents and materials, by involving our tax specialists from our network firm. In addition, we examined the temporary differences reversal and expiration schedule by evaluating its consistency with relevant documents and materials, and by also performing recalculations. With regard to temporary differences of depreciable assets, which were subject to impairment in the previous year, we evaluated the consistency with the calculation results for tax depreciation.
	In order to assess the management's estimate of future taxable income, we obtained an understanding of policies and procedures for the design and approval of the business plan, which is basis of future taxable income. Furthermore. we evaluated operating effectiveness of the controls.
	We discussed with the management significant assumptions used in the business plan such as crude steel production, shipment volume, selling prices, iron orc and coking coal prices, and cost reductions. We then reviewed relevant documents and materials, as well as comparing these significant assumptions with market trends and available external data.
	In order to evaluate the management's assessment of estimation uncertainties in the business plan, we compared business plans in the past years with actual results, as well as considering the current business environment.

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 with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that arc 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 a going concern and disclosing, as required by IFRSs, matters related to going concern.

The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing the Group's financial reporting process.

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 from fraud 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 our risk 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 to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw' attention in our auditor's report to 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.
―	Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation in accordance with IFRSs.
―	Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the 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 ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Corporate Auditor and the Board of Corporate Auditors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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. 2021 arc 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 3 to the consolidated financial statements.

Tokyo, Japan, June 25, 2021

Ernst & Young ShinNihon LLC

Yusuke Nakamura, Designated Engagement Partner Certified Public Accountant

Yoshihiro Shibata, Designated Engagement Partner Certified Public Accountant

Tetsuya Yoshida, Designated Engagement Partner Certified Public Accountant

Keiichi Wakimoto, Designated Engagement Partner Certified Public Accountant