CORPORATE REPORT 2016

CONTENTS
Message2

Zeon's Philosophy

3Enterprise Blueprint for 2020

4

Business Profile

5

Interview with the President

9

Messages from Outside Directors

12

Information Disclosure at Zeon
Basic information on Zeon Corporation and the Zeon Group is available
on the "Company Information" section of our website.
The Corporate Report contains a wide range of information about
management and CSR, while the CSR website contains detailed
performance and site reports regarding CSR information.
More detailed management information is disclosed on the IR website
and in the Fact Book.

13 Business and Strategy

Website▶ http://www.zeon.co.jp/index_e.html

Elastomer Business

13

Specialty Materials Business

15

Research and Development (R&D)

17

Production Management and Safety

19

21 Highlights

WebsiteCompany Information

1 World-changing single-walled carbon nanotubes

21

2 Roundtable: Considering the strengths of Zeon

23

CSR Activities

Investor Relations

Printed brochure : Corporate Report

Fact Book

3 Creating corporate culture via Taimatsu (torchlight) 25
activities

27 Strengths Supporting our Businesses
Relationship with Employees

27

Environmental Initiatives

28

Social Contribution Initiatives

29

CSR Implementation Plan

31

Corporate Governance

33

Risk Management

33

Data Highlights

35

Major Sales & Production Bases

37

Zeon Group History

41

CORPORATE REPORT 2016

All about Zeon! Website (Japanese Only)
All about Zeon! is a
special website updated
yearly showcasing
employee interviews andalso featuring an online
video of the domesticallybroadcasted Zeon TV
commercial.

Report Policy
Since FY2013, Zeon Corporation and Zeon Group (below "Zeon") has been publishing an annual Corporate Report in a magazine format, which provides an overview ofgeneral business activities and corporate information functions. Previously, Zeon published the CSR Report so that our stakeholders could understand our approach to CSR
and environmental activities.
In FY2016, in addition to renewing our Business Profile, which summarizes Zeon's business, we strengthened the explanation of each business' strategy.
Further, as a highlight, we introduced our new material, single wall carbon nanotube, which has superior properties, and included follow-up reports on roundtables held to beconsidering the strengths of Zeon and Taimatsu (torchlight) activities on cultural innovation.
We ask for your honest feedback and opinions so that they may be used to improve our activities in the future.

Period Covered

Organizations Covered

April 2015 to March 2016
(also includes some new information from April 2016 and later)

The report covers Zeon Corporation and Group Companies in Japan and overseas.
Some data only covers Zeon Corporation.

1

ZEON GROUPCORPORATE REPORT 2016

Message

Zeon makes the future today
through the Power of Chemistry
Following our corporate philosophy, which states "Zeon iscontributing to the preservation of the Earth and the prosperityof the human race," we have consistently released new products
to the world using our pioneering, inimitable technology. Zeon's
products support society through their presence all around us.
In order to fulfill our responsibility as a company to society,
we are advancing our business activities under our Enterprise
Blueprint for 2020, titled "Zeon makes the future today throughthe Power of Chemistry."
In order to achieve our goals, it is important that every
employee at every field, from R&D to production, continues
to take on new challenges without the fear of making mistakes.
I truly believe that great results will come from this approach.
In 2015, after spending a long period of time developing
new production technology to overcome several difficulties, we
completed construction of a plant for single-walled carbon
nanotubes and are now in the commercialization stage.
By using new technology to reduce traditional production costs
by a factor of 1,000, we have successfully turned a material thatwas previously too expensive for practical use into an affordable
industrial material. Additionally, by combining single-walledcarbon nanotubes with other components, we can create newmaterials with unprecedented properties, opening up endlesspossibilities. This highlights that chemical companies have thepotential to significantly change the world through the powerof developing new, innovative materials.
This sums up the philosophy of Zeon - Contributing to theadvancement of society and solving problems by introducing
new products to the world through the creation of pioneering
technologies.
We deeply appreciate your ongoing support and encouragement.

Naozumi Furukawa
Chairman
Zeon Corporation

ZEON GROUPCORPORATE REPORT 2016

2

Zeon's Philosophy

Corporate Philosophy

Zeon is contributing to the preservation of
the Earth and the prosperity of the human race
Zeon, with its name drawn from words signifying the Earth (geo) and eternity (eon),is committed to responsible stewardship of the global environment as thefoundation for human prosperity through the development and application ofunique, world-leading technologies.

CSR Policy●

We will ensure compliance and meet society's needs for safety and security●

We will contribute to sustainably developing society and protecting
the global environment through our corporate activities●

We will ensure that each and every Zeon person is aware of CSR and acts accordinglyManagement Policy
Basic Business Strategy
Continually focus on creating new businesses in our Specialty
Materials Business by taking full advantage of steady revenue
generated by existing businesses in the Elastomer Business.
● Elastomer Business Strategy

To secure stable profits by achieving the world's highest quality
and cost competitiveness and optimizing our global supply system.
● Specialty Materials Business Strategy

Further enhance our unique technology platform by strengthening precision processing
technology which makes use of Zeon's proprietary materials.
Conduct user-oriented market deployment in order to dramatically expand business.

Z∑ Activities: Objectives
Z∑ Activities are part of a continuous improvement campaign and are pursued on a company-widebasis, focusing on strengthening cost-competitiveness to build a solid corporate structure.
The "Z" in "Z∑" signifies Zeon method, while "∑" stands for combination, concentration of resources
and company-wide participation. Zeon Corporation promotes its management reformby placing Z∑ Activities at the core of its management system.

3

ZEON GROUPCORPORATE REPORT 2016

Enterprise Blueprint for 2020
Based on its Corporate Philosophy and CSR Policy, Zeon announced its Enterprise Blueprint for
2020: "Zeon makes the future today through the Power of Chemistry" and "Zeon will continue tocontribute to the realization of customer dreams and a prosperous society."
The Mid-Term Management Plan to achieve this is SZ-20, and currently Zeon is at the second
stage, SZ-20 Phase II.
From fiscal 2014 to fiscal 2016, in the SZ-20 Phase II Mid-Term Management Plan, we are making
efforts to promote reforms and improvements and develop corporate culture with the concept of"Changing the company to realize the Enterprise Blueprint for 2020."

Business Strategy under SZ-20 Phase II
We will further strengthen our Elastomer Business (which includes synthetic rubber, synthetic latex
and C5 chemical products) and Specialty Materials Business (which includes specialty chemicals,
IT components, specialty plastic and components and medical equipment materials) to expand ouroperations toward achieving consolidated net sales of 500 billion yen and an overseas production
ratio of 50% in fiscal 2020.
■ Changing the company to realize the Enterprise Blueprint for 2020
Key sense of value
Dialogue

Speed

Socialcontribution

Treasured Zeon characteristics

Mutual trust and fellowshipEnterprise Blueprint for 2020

Zeon makes the
future today throughthe Power of Chemistry

During the three-year period, we will "change" the company through a fundamental
revision of past practices and approaches to attain our goals

Mid-Term Management Plan

SZ-20 PhaseⅡ■ Taking on challenges as a second step toward realizing the Enterprise Blueprint for 2020
Commence operations at overseas plants
Stabilize processes
Expand sales in Specialty Materials Business

Promote reform and improvement

Enterprise Blueprint for 2020

Zeon makes the
future today throughthe Power of Chemistry

Change management structure
Nurture business culture

FY2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

PhaseⅡ

SZ-20 SZ-20

Consolidated net sales:

500 billion yen

Key Concepts in SZ-20 Phase II
SZ-20 Phase II embodies Zeon's values of speed, dialogue (based on sincerity, frankness and honesty), and social contribution.
It also signifies the treasured Zeon characteristics which include mutual trust and fellowship (based on sincerity, frankness and honesty),safety, the 3S*, standardization and spiral up.
*The 3S: Seiri (sort), Seiton (straighten) and Seisou (scrub)

ZEON GROUPCORPORATE REPORT 2016

4

Business Profile
Zeon's main products are created from the raw materials butadiene and isoprene which are extracted from the C4 and C5
fractions of naphtha using Zeon's proprietary technology.
Business segments are divided into the Elastomer Business, Specialty Material Business and Other Businesses.

Ethylene C2 fraction
Propylene C3 fraction
Synthetic rubbers

C4 fraction

GPB
process*1

Butadiene
Synthetic latex

Synthetic rubbers
Isoprene

Crude oil Naphtha

Thermoplastic elastomer

Petroleum resin
Piperylene
Petroleum resin

C5 fraction

GPI
process*2

Dicyclopentadiene

High-performance resin

RIM formulation

2-butyne

Synthetic aroma chemicals

IT components
Energy components*1 GPB process: Zeon's proprietary butadiene extraction technology*2 GPI process: Zeon's proprietary isoprene extraction technology

Company name: Zeon Corporation

Consolidated net sales

Establishment: April 12, 1950

350,000

Capital: 24.211 billion yen (as of March 31, 2016)

300,000

Market capitalization: 172.5 billion yen (as of March 31, 2016)
Total number of shares outstanding: 237,075,556 shares
Employees: 3,164 (consolidated), 1,624 (non-consolidated)(as of March 31, 2016)(million yen)

ZEON GROUPCORPORATE REPORT 2016

262,842

250,763

2011

2012

250,000

296,427

307,524

295,647

2013

2014

2015

200,000
150,000
100,000
50,00005Medical devices

Applications
Elastomer Business

Automobile components, tires

In 1959, Zeon became Japan's first company tomass-produce synthetic rubbers. Even today the Elastomer

Gloves for medical and food processing
applications, powder puffs

Business is our core business, providing 60% of the total
net sales and operating income.
Main products
Synthetic rubbers, synthetic latex, chemical products

Automobile components, tires(thermoplastic elastomers, petroleum resins)

Adhesives

Specialty Materials BusinessSpecialty materials refer to materials and components with

Adhesives, traffic paints

high added value that use macromolecular design andprocessing technology. In the Specialty Materials Business
we place IT components, energy components and medical

Paints/coatings, ink

devices as the three main business areas.
Main products

Lenses, optical films, medical containers

Specialty plastics and components, electronic materials,
toner, battery materials, medical devices

Housing equipment and components,
large-size plastic products

Other Businesses
Engineering, packaging materials, construction materials,

Fragrances, food additives

deodorants, RIM formulation, single-walled carbon
nanotubes, paints/coatings, and trading, etc.

Electronic materials, toner
Binder for Lithium-ion rechargeable batteries
Medical catheters

Consolidated operating income

Segment net sales (outer) and operating income (inner)(million yen)

35,00032,12329,901

30,00028,24529,856

23,69625,000

Other Businesses

16%

Specialty Materials
Business

20,00015,00024%

10,0008%26%FY2015 66%

Elastomer Business

60%

5,000
0

2011

2012

2013

2014

2015

ZEON GROUPCORPORATE REPORT 2016

6

Zeon's Main Products

Elastomer Business❶ Synthetic Rubbers for Tires
Zeon has developed many kind of synthetic rubbers for tires using
its excellent molecular control technologies. In particular, S-SBR(solution-polymerized styrene-butadiene rubber) has contributed toboth the fuel efficiency of eco-tires and wet grip performance.
❷ Specialty Synthetic Rubbers
Zetpol® Hydrogenated nitrile rubber has excellent heat and oil
resistance, and is used in important safety components invehicles such as timing belts, gaskets, and fuel hoses.
❸ Synthetic Latex for Gloves
Synthetic latex is used in disposable gloves for medical and food1

processing applications. Synthetic latex gloves have better oiland chemical resistance than those made of natural rubber.
❹ Chemical Products●Petroleum resin
Petroleum resin is used in road marking paints, such aspedestrian crossings.
●Thermoplastic Elastomer SIS (Styrene Isoprene Block Copolymer)
Thermoplastic elastomer SIS has rubber-like elasticity andexcellent tackiness and adhesion. Used in elastic film fordisposable diapers.

2

3

4

Other Businesses
RIM Formulation
RIM (Reaction Injection Molding) refers to an injection molding
process whereby a two-component liquid system is injected intoa mold and undergoes a polymerization reaction to form a solid,
thermoset plastic part. Zeon's RIM products are based on
dicyclopentadiene (DCPD) chemistry. Large-size plastic productswith a good physical balance can be obtained by using RIM
formulation which uses dicyclopentadiene as a raw material.
⓫ Paints/Coatings
In 2013, Zeon integrated its business with the paints/coatings
manufacturer TOHPE. We develop and market paints andcoatings suitable for various applications.

7

ZEON GROUPCORPORATE REPORT 2016

⓬ Single-Walled Carbon Nanotubes
The world's first single-walled carbon nanotube production plant
was completed inside Zeon Corporation's Tokuyama Plant inNovember 2015, using the super-growth method developed by
the National Institute of Advanced Industrial Science andTechnology (AIST). We aim to assist in the development of newmaterials that contribute to technological innovation andconservation of the global environment with this dream material.

Specialty Materials Business❺ IT Components
ZeonorFilm™ is the world's first optical film manufactured using
a melt extrusion process. It is used in LCD TV and Smartphone
displays.
❻ Energy Components
Zeon Binder is a binder for the electrodes of lithium-ion
rechargeable batteries. Offering high strength and flexibility, thebinder limits expansion of the electrodes, dramatically improving
cell life. With excellent binder performance and electrochemical
stability, it is also suitable for high-capacity batteries.

synthesis technologies. Green Notes and Jasmine Notes
products are used very popular in the flavor and fragrance
markets all over the world.
❽ Polymerized Toner
ZEOGLOBULE™ is the world's first industrialized polymerized
toner. It has a uniform spherical capsule structure, andcontributes to improving the quality of page printers, print
speed, and energy efficiency.

❼ Synthetic Aroma Chemicals
Zeon manufactures synthetic aroma chemicals using unique❾ Medical Devices
Zeon manufactures and sells catheters for endovasculartreatment and digestive endoscopy. In particular, our catheters
for removal of bile duct stones are rated highly.

5

6

7

9

10

11

12

ZEON GROUPCORPORATE REPORT 20168

Interview with the President

Strengthening the Foundation to Achieve
the Enterprise Blueprint for 2020
President Kimiaki Tanaka explains the status of the Zeon Group andits future outlook in a Q&A format.

Kimiaki Tanaka
President
Zeon Corporation

Q.1 Please tell us about the recent business environment and the status of Zeon Group.
A.1 [Summary] Due to the weak natural rubber market and LCD panel film market, combined with thestrong yen, net sales and operating income for fiscal 2016 are expected to be lower thanthe previous year.
The Elastomer Business and the Specialty Materials
Business are the two main business areas that we areadvancing. In particular, the Elastomer Business has sufferedsignificantly due to the strong yen. With the exception of the
US market, the overseas rubber market continues to slump.
Additionally, naphtha prices are slowly decreasing, meaning that
we had to use up our stock which was bought at a higher price.
For the Specialty Materials Business, the key point is thestatus of the film business for LCD panels, as it makes up a large
share of net sales. The market for films for large-size TVs is weak
due to inventory adjustments by manufacturers, but we expect tosee a slow recovery going forward. For medium-size films used
for tablets and smartphones, demand changes significantly withsales trends of final products, so the situation is very sensitive.
Overall, the strong yen is a large factor, and net sales andoperating income for fiscal 2016 are expected to be lower thanthe previous year. Unfortunately fiscal 2016 is the last year of
the SZ-20 Phase II Mid-Term Management Plan which started
in 2014, and is the overall finishing year for establishing afoundation toward achieving the Enterprise Blueprint for 2020. As
such, we are making strong efforts to expand globally, accelerate
research and development, and reform production and culture.

Q.2 What is your view looking back at the Elastomer Business in SZ-20 Phase II, and how do you see
efforts toward the next mid-term plan from fiscal 2017?

A.2 [Summary] We will advance our global business presence, continuing to expand production
and sales around the world.
Looking back at the Elastomer Business in the Phase II
period, there were several advances. First, a synthetic rubber
plant for fuel-efficient tires was established in Singapore, andthe second line began operations in April 2016. Additionally, in
Mexico we are constructing a plant for powder slush, a material

9

ZEON GROUPCORPORATE REPORT 2016

Related▶Page 13

which is used in applications such as vehicle dashboards.
We also made efforts to increase our global operations by
establishing a sales and marketing base for vehicle materials in
India, among other initiatives.
Looking at R&D, we also made efforts in research anddevelopment for proprietary products, and increased investment

are considering the establishment of overseas bases, including

in equipment for thermoplastic elastomer used in disposable

looking at raw material procurement. Going forward, we will

diapers at our Mizushima Plant.

fully utilize our operations worldwide and strengthen our global

With regards to our C5 specialty chemicals businesses, webusiness.

SZ-20 Phase II Basic Strategy and Progress

Enhancing the strengths of the Elastomer Businessand Specialty Materials Businessto expand business globally

Strategy by Business Segment
Elastomer BusinessSpecialty Materials Business

Further strengthen competitive
businesses by responding
globally to growth markets

Expand operations
by accelerating R&D in thethree main business areas●Expanding global production sites andsales offices●Research and development ofdifferentiated products

The three main business areas for the Specialty Materials BusinessIT components(optical applications)(packaging applications)(electronic applications)

Energycomponents

Medicaldevices●Optical applications: Production expansion of ZeonorFilm™
●Energy components: Growth exceeding market expansion●Medical devices: Bringing new products to market●Specialty materials: Development of applications for single-walledcarbon nanotubes (SWCNTs)

Q.3 What is your view looking back at the Specialty Materials Business in SZ-20 Phase II, and how doyou see efforts toward the next mid-term plan?

A.3 [Summary] We increased our production capacity in the film business, and are also expanding
operations in the energy components business. We also brought new medical device
Related▶Page 15
products to market.
The three main business areas of the Specialty Materials
Business are IT components (for optical, packaging andelectronic applications), energy components, and medical
devices.
In the IT component business area where optical film makes
up a significant part of volume, we started operations of a fifthline in order to expand production capacity for LCD panel films,
and made the decision to invest in the sixth line.
Regarding components for electronics and packaging
applications, we are beginning to see potential for new products
and applications in etching gas, electron beam resist andinsulation materials for nitride films, so we have high hopes forthe future.
In energy components, we are expanding operations whichstarted from anode sealing materials in lithium-ion batteries. We
have attained a market share in anode binders of approximately
60%, and cathode binders are also increasing. We have achieved
growth in operations exceeding the growth rate of the lithium-ion
battery market, and the business has grown to be one we canhave high expectations for in the future.
In medical devices, we released a new Fractional Flow
Reserve device which measures coronary artery pressure in
March 2016. The launch was well received, and we expect
significant growth in the future.
Moreover, in fall 2015 we completed the world's first mass
production plant for revolutionary single-walled carbon
nanotubes (SWCNTs). We are now shipping product samples
for application development. The three main properties of

ZEON GROUPCORPORATE REPORT 201610

Interview with the President
materials that incorporate SWCNTs are high thermal conductivity,

capacitor electrodes. Since we are developing applications overhigh electrical conductivity and high tensional strength.

the long term, business results are not included in the fiscal 2020

Development of applications to make use of these properties

mid-term plan, but we expect growth in the future.

is advancing. It is expected that SWCNTs will first be used in

Related▶Page 21

Q.4 Could you tell us Zeon's research and development strategy?
A.4 [Summary] We are always reviewing our research and development environment in order to produce
more results and accelerate the rate at which we bring products to market.
We will respond quickly and accurately to customer needs by combining research andRelated▶Page 17
production.
Zeon Group's CSR Policy states that we will contributeto sustainably developing society and protecting the global
environment. We believe that we can continue this by increasing
research and development output and bringing new products
to market.
In fiscal 2016, we improved our monthly research hearings
that top management participate in by including other operating

wisdom both inside and outside the company, we allow external
parties to see our research laboratories as much as possible.
Regarding organization, we have multiple research anddevelopment units, and researchers are stationed at plants.
We can more efficiently solve production issues and develop
products through the joint efforts of the production floor andresearch. Also, by inviting customers to visit us, we can now

divisions to enable deeper discussions. Also, in order to poolmore accurately know their needs and respond more quickly.

Q.5 What were the background and aims of "production innovation" and "healthy operations" which are
the top internal policies?

A.5 [Summary] We will go back, review and strengthen production technology and employee health,which are important sources of competitiveness for Zeon.
Zeon's decision to introduce Daicel's method of production
innovation 11 years ago was in order to survive in a rapidlychanging era by reforming our culture through production
innovation so that employees can think and act on their own
initiative. We achieved many results, but we believe that further
cultural reform is necessary to achieve the Enterprise Blueprintfor 2020. Therefore, we set fiscal 2016 as the starting point, andwill thoroughly implement production innovation going forward.
Related▶Page 19

11

ZEON GROUPCORPORATE REPORT 2016

The health of every employee is a source of power for Zeon,and we are promoting efforts for all employees to stay healthy
and improve their health as necessary. I myself will take the leadand improve my diet first, and inform employees of the results.
We have begun providing an information system where healthcheck results can be checked across the company together
with the health insurance society. We are also conducting stresschecks. I would like to continue supporting the health of every
employee.

Messages from Outside Directors
Zeon's Outside Directors, who advise the company on the basis of extensive experience and deep knowledge in their respective fields,
have provided the following messages on Zeon and its corporate governance.

As a result of our activities on the theme of "change," aiming to achieve the Enterprise Blueprint for 2020, wewere able to deliver strong business results in fiscal 2015. On the other hand, with factors such as the politicaland economic uncertainty due to the UK's exit from the EU, the changing automotive industry due to artificial
intelligence (AI), an IT industry where Amazon is beating IBM as the cloud evolves, and the industrial revolution in
manufacturing due to the IoT, the environment in which we operate is changing dramatically.
In order to survive and prosper in the midst of these changes, we all must work together and succeed ininnovation. Through open innovation (joint R&D with multiple companies and offices) we can see results quickly indiverse markets and needs. In addition to our strong businesses, Zeon has businesses with strong potential for the
future such as carbon nanotubes and energy materials, and I believe they can quickly create new businesses. I
hope that the employees who advance this will carefully develop their own brand of individuality rather than being
model students. I will continue to contribute to building a company that is resilient to changes in the environment
together with everyone at Zeon.

Haruo Itoh
Adviser
FUJI ELECTRIC CO., LTD.

Most listed companies have implemented rules to comply with the Corporate Governance Code. This is aWestern Corporate Governance approach that focuses on processes, form, official announcements, and the
responsibility to explain. From the perspective of Japanese companies, which normally promote top executives fromwithin the firm, considering the balance of shareholders, customers and employees carefully and focusing on
long-term growth, some say that scandals cannot be prevented and growth cannot be assured simply by arranging
the form. But I think we should take it as a "common language" which enables foreign shareholders to know thecompany. I believe it is important to respond with "Japanese spirit with Western learning" that combines thebenefits of Japanese business with Western Corporate Governance approaches. The role of outside directors has
become even more important. I truly hope to contribute to the development of Zeon Corporation by giving advice
and recommendations from a different viewpoint to internal directors.

Takao Kitabata
Chairman of Board
Sanda Gakuen
Junior High School & High School

I worked as the Zeon outside corporate auditor for four years, and have been an outside director since fiscal
2015, but I have seen and known Zeon's activities as a member of a tire manufacturer even long before I worked
for Zeon.
I feel that the world's automotive and automobile component industries are at a turning point. There is rapid
progress in strengthening environmental regulations and initiatives around the world as well as in driving
technologies involving newcomers from other industries.
With these major trends, I believe that Zeon's major mission is to contribute to the world's consumers throughthe latest products with our technology as a Japanese chemical materials manufacturer.
Being in the position of an outside director, I will deepen discussions with people concerned not only in my role
as a business observer but also to contribute to the sustainable development of Zeon's business activities for all
stakeholders.

Tadanobu Nagumo
Chairman and Representative
Member of the Board
The Yokohama Rubber Co., Ltd.

ZEON GROUPCORPORATE REPORT 201612

Business and Strategy

Elastomer BusinessTransition in Sales (last five years)(100 million yen)In elastomer materials, our core business is the three fields of

2,000

1,775

synthetic rubbers, synthetic latex and chemical products, themain materials of which are C4 and C5 fractions derived from

1,844

1,888

1,789

2013

2014

2015 (FY)

1,640

1,500

naphtha. In 1959, Zeon became Japan's first company tomass-produce synthetic rubbers. Even today, the Elastomer

1,000

Business is a core Zeon business, providing 60% of the total
net sales and operating income.

500

0

2011

2012

Business Outlook and Future Strategy
In fiscal 2015, stagnation in synthetic rubber and natural rubber markets
and the rapid rise in the yen lasting to the end of the fiscal year resulted in adecrease in net sales in the Elastomer Business versus the previous fiscal year.
However, due to factors such as favorable progress with the transfer tooverseas production of general rubber, the firming up of demand for chemical
products, and strong export sales of synthetic latex, operating income
increased 23% versus the previous year.
For synthetic rubber, our Enterprise Blueprint for 2020 calls for "taking afront-runner position globally in synthetic rubbers." To us, being a "frontrunner" means to be a supplier that can propose the highest number of values
that customers can firmly emphasize with. Aiming for a leading market share
where we can leverage our strengths, we will establish Zeon's presence inemerging markets focused on Asia.
Within general rubbers, demand is increasing for S-SBR* used as a special
rubber in fuel-efficient tires. Our Tokuyama Plant is positioned as a production
site for the development of new products and proprietary products, while
mass-produced products are manufactured in our Singapore Plant.
Development is proceeding in collaboration with our tire manufacturer

customers, and I would like to strengthen our business by delivering productswith high added-value. Zetpol®, our main specialty rubber product extends
product lifetime by 2 to 3 times by increasing heat-resistance by 20ºC,
contributing to raising product performance. I believe that the focus of the
future specialty rubber market will shift to emerging markets particularly in Asia
where automobile production is expanding. In order to achieve differentiationfrom other companies in new markets, we will upgrade the technical support
system that supports our formulation and processing technologies.
I want to technically support and contribute to regional development inemerging markets where the rubber processing industry is immature.
* S-SBR: Solution-polymerized styrene-butadiene rubber

There is strong demand for synthetic latex in surgical gloves. In addition
to medical applications, food processing uses are also expanding. I expect
stable demand in emerging markets in the future as awareness of health andsafety increases. Our NBR latex for powder puffs is an extremely strong productwith a 90% world market share (Zeon estimate). Since more people are
wearing cosmetics using high grade powder puffs as economies grow in Asia,

Our NBR latex for
powder puffs has a 90%
world market share.

Hiroyuki Hirakawa
Director & Senior Corporate Officer
Elastomers and Chemicals Business

13

ZEON GROUPCORPORATE REPORT 2016

we can expect continued growth. In addition, we will search for possibilities forrespond to future strong demand. C5 petroleum resin is produced at theinter-departmental collaboration to determine whether latex can be used as a

Mizushima and Thai Plants and both are running at full capacity. In 2015, theformulation material for products in other business divisions.
In the area of chemical products, demand for our main thermoplastic
elastomer SIS (Quintac®) and C5 petroleum resin (Quintone®) is strong. The

Thai Plant recorded its highest production level and profit since it began
operations in 1996. Additionally, we plan to construct a plant to manufacturehydrogenated petroleum resin at the Mizushima Plant in 2017.
Currently, both products are No. 2 in terms of global market share, but weplan to strengthen and expand the business in future, offering value to satisfy
customers through the development of new products.

market for adhesive tapes and disposable diapers, the major application forthese products, is growing 3-5% per year, and similar growth is expected in
the future. We completed production capacity expansion for the thermoplastic
elastomer SIS at our Mizushima Plant in 2016, establishing a structure to

Product Introduction

Solution-polymerized styrene-butadiene rubber (S-SBR)
Zeon's solution-polymerized SBR that has achieved a variety of molecular structures for customer needs
through batch polymerization, has enabled both the low fuel consumption performance of eco-tires
around the world and wet grip performance, contributing to global CO2 reductions.

Synthetic Latex
NBR latex is used widely in applications such as disposable surgical gloves and powder puffs since it
combines low levels of impurities and allergens and high resistance to oil and chemicals.

Thermoplastic Elastomer Asymmetric SIS
For our thermoplastic elastomer, we are developing materials that possess asymmetric SIS structures toreplace conventional SIS with demand expanding in elastic film applications for disposable diapers. We
are pioneering new applications that take advantage of its high strength and flexibility. As a higher
performance elastic film and a higher-definition and more durable flexographic printing material, we can
expect adoption in protective films and hot melt pressure-sensitive adhesives as well.

Product Topics

Biosynthetic Hydrin Rubber
By changing the raw material from epichlorohydrin to plant-derived bio-material, it has become possible
to reduce CO2 emissions in the life cycle of automotive parts. This material has been used in automotive
vacuum sensing hoses since fiscal 2016, and is expected to be used in brake and fuel hoses in future.

US Mississippi Plant manufacturing hydrin rubber

ZEON GROUPCORPORATE REPORT 201614

Business and Strategy

Specialty Materials BusinessSpecialty materials refer to materials and components with highTransition in Sales (last five years)(100 million yen)

1,000

added value that use macromolecular design and processing
technology.

750

642

Focusing on future growth areas, we are positioning IT
components (optical, packaging, and electronics), energy

500

481

709

710

2014

2015 (FY)514

components, and medical devices as three key businessdomains.

250

0

2011

2012

2013

Business Outlook and Future Strategy
In the Specialty Materials Business, we are using unique product concepts
based on innovative original technology to produce various high added-value
products without being overly influenced by the conditions of the materials
market. We will strive to expand the business further toward the Enterprise
Blueprint for 2020.
The optical film business is the core of the Specialty Materials Business. With
the growth of large-screen LCD televisions, we expect the film market tocontinue growing. Since ZeonorFilm™ performs excellently in large-screen
LCD televisions, we can expect continued stable growth. We are increasing
production equipment to respond to this demand. For small and medium-sized
devices such as smartphones, since sales trends are impacted by the final
product, we aim for a structure that can rapidly respond to customer demands.
In addition, Organic EL panel (OLED) film is a highly profitable product, andalthough the volume is still small, we are putting effort into its development.
In the optical resin business, since the market for lenses is contracting, weare putting effort into the development of alternative applications such as
pharmaceutical packaging materials. In packaging and electronics components,
we are continuing research and development on etching gas for nitride film thatwill enable the further miniaturization of semiconductors.
For energy components, we are expanding products such as cathode binders
and separator materials, focusing on anode binders for lithium-ion batteries
and sealing materials. Due to growth in hybrid cars and electric vehicles inparticular, we see strong growth in components that are used in automotive
lithium-ion batteries. Zeon leads in the anode binder field that uses elastomer
as a material with a 60 to 70% share. The use of cathode binders together withanodes is growing, and we can expect further growth in sales volume of bothbinders in the future.
In chemicals, the main aromatic chemical is well regarded for its high quality
and safety. In particular, demand for green aroma chemicals is growing stably.
In addition, we see stable demand for solvents used in chemical synthesis.
Furthermore, we expect demand expansion of the plant growth regulator
Prohydrojasmon developed by Zeon as an agent to increase plant quality andyield.
Regarding toners, printing itself is contracting, but by gaining full trust by
carefully dealing with customer demands, we expect to maintain a certain levelof net sales.

World No. 1 share ofgreen aroma chemicals

Noboru Yanagida
Director & Corporate Officer
Specialty Materials BusinessPresident of Zeon Medical Inc.

15

ZEON GROUPCORPORATE REPORT 2016

In medical devices, in March 2016 we brought two new circulatory system

We started operating the production equipment for single-walled carbon

devices to market, IABP*1 drive unit and FFR*2. In particular, because the FFR

nanotubes (SWCNTs) at our Tokuyama Plant in fall 2015 and have started

device is the world's first guide wire type to use a light sensor, it can passthrough blood vessels more easily than conventional products and can reduce
variations in measured values.
In gastrointestinal system devices, we started selling an improved biliary
stent product at the end of 2015.
In addition, we offer many products for removing bile duct stones and have a
top tier industry market share. We can expect growth of both circulatory andgastrointestinal systems.

manufacturing samples. We will continue developing in order to maximize
added-value sales, for example by combining SWCNTs with Zeon's core
Elastomer Business. Additionally, expanding applications also leads to reductionof production cost, so we will aim to further reduce costs and improve
production volume through the collaborative research lab with the National
Institute of Advanced Industrial Science and Technology (AIST).

*1 IABP : Intra-aortic Balloon Pumping*2 FFR : Fractional Flow Reserve

Product Introduction

Optical Film "ZeonorFilm™"
The world's first optical film successfully
manufactured using a melt extrusion process.
Excellent optical properties, low moisture absorption
and low permeability, high heat resistance, lowoutgassing, and dimensional stability, and usedmainly as a phase contrast film for LCD panels.

LCD TVs

Digital signage

Smartphones

Tablets

Rechargeable Battery Materials "Battery Binder (Adhesive)"
Cathode and anode binders used in lithium-ion batteries for mobile and automotive applications.
By reviewing the molecular design utilizing the polymer design technology that Zeon has developed overmany years, we have been able to restrict the swelling of electrodes, and increased lifetime and capacity.
We are contributing to improvement of the safety and performance of batteries.

Product Topics
OptoMonitor®

FFR Devices "'OptoMonitor®' Invasive Intravascular Pressure Measurement Monitor""'OptoWire®' Guide Wire with Sensor for Intravascular Pressure Measurement"
FFR (Fractional Flow Reserve) uses an index to understand the state of coronary artery stenosis tofind the internal coronary artery pressure.
OptoWire® is the world's first guide wire-type product to use an optical fiber sensor. Additionally,by using the touch panel-type small display OptoMonitor®, FFR measurement can be conductedeasily regardless of the installation location.
OptoWire®

ZEON GROUPCORPORATE REPORT 201616

Business and Strategy

Research and Development (R&D)

R&D Expenses(100 million yen)

The R&D Center conducts Zeon Group's R&D activities and is the company's largest

150

operational sector with over 400 researchers. In addition to the R&D Center's ten
111

research buildings located adjacent to the Kawasaki Plant, we have a Precision Optics

119

127

136

141

100

Laboratory and Medical Laboratory next to the Takaoka Plant, a Toner Laboratory and
CNT Laboratory in the Tokuyama Plant, and a Chemical Products Laboratory in the
Mizushima Plant. Through close collaboration with business units, we develop new

50

products and improve existing products to meet the needs of customers. Additionally
we are advancing the search for new materials at our New Materials Development
Laboratory, developing and using new analytical and simulation techniques at our0Foundation Technology Laboratory, and developing and improving production processes

2011

2012

2013

2014

2015 (FY)and equipment at our Production Technology Laboratory.

Research and Development (R&D) Strategy
Toward the achievement of the SZ-20 Phase II Mid-Term Management Plan,in which the field of research and development plays an important role, we are
employing policies to raise research outputs and connect to social contribution.
Regarding the single-walled carbon nanotubes (SWCNTs) for which welaunched full-scale production in FY2015 with our new CNT Laboratory as acenter, we have strengthened existing collaboration with the National Institute ofAdvanced Industrial Science and Technology (AIST) and also with other externalorganizations.
While also carrying out similar collaboration in other areas, we work tostrengthen cooperation across the boundaries of individual research laboratories
to accelerate research and improve the output of the R&D Center overall.
We will continue to secure a stable investment into research anddevelopment of around 13 billion yen per year.
In order to create the new business seeds that will follow SWCNTs, we areworking to spark each individual researcher's motivation and foster a corporate
culture that will generate ideas for new themes.

Our newly established lounge for example is taking an important role toexchange information and to promote research without boundaries of R&D
Center. To create such a corporate culture, personnel transfers that generate
new perspectives and ideas are critical. We will regularly perform personnel
transfers not only among research laboratories but also among the business
units where customer interaction takes place and the plants where we engage
in production.
At research and technology presentations, individual researchers present
their research themes and discuss with our top executives directly to makethemes' strategic position clear.
Also, we have been providing support for the "Polymer Journal Zeon
Corporation Award" which recognizes young researchers with outstanding
papers for ten years together with The Society of Polymer Science in Japan.
Each year, we hold an exchange event with previous winners and university
teachers, making efforts to contribute to future science and technology.

■R&D System
New Materials Development Laboratory

Research & Development Center

CNT Laboratory (Tokuyama)
Precision Optics Laboratory (Takaoka)
Specialty Materials Laboratory
Advanced Performance Material Laboratory
Specialty Plastics Laboratory
Toner Laboratory (Tokuyama)
Chemical Products Laboratory (Mizushima)
Elastomer Laboratory
Production Technology Laboratory
Foundation Technology Laboratory
Medical Laboratory (Takaoka)

R&D Center

Yoshiyuki Mitsuhira
Director & Senior Corporate Officer
Research & Development

17

ZEON GROUPCORPORATE REPORT 2016

Manufactured Product Development Laboratory

Recent Zeon Research Results

Thermoplastic elastomer newly developed products "Asymmetric SIS"
Chemical Products Laboratory
The styrene portion of Zeon's thermoplastic elastomer SIS (styrene-isoprene block copolymer) hardens like glass at room temperature, and supports theisoprene portion physically, but when heat is applied, the chains are broken and the substance becomes a liquid. Since it can be formed freely like plastic,
it is used widely in applications such as protective films, tapes and labels.
If the amount of styrene in SIS is reduced restorability (flexibility) improves andstress (tensile strength) reduces, while if the amount of styrene is increased the
opposite phenomenon occurs.
However, in recent years, we have succeeded in achieving both flexibility andstrength. The newly developed products are used in adhesive tapes for disposable
diapers and adhesive for labels. There are high expectations for this newtechnology which controls morphology structure to be used in new applications.
Symmetric SIS

Asymmetric SIS

Newly developed product of powder slush compound
Manufactured Product Development Laboratory
Zeon's powder slush compounds are powdered molding materials that areused as coverings for automotive interiors (instrument panels, doors etc.). Withthe trend in recent years of improved design in interiors, there is now demandfor coverings in which sewing with real thread is possible and that have more
luxurious textures.
Since there is a trade-off between customer demands for covering properties
and ability to mold, it was hard to achieve both with traditional coverings. But, asa result of research and development, we have succeeded in establishingtechnology that can deliver both the desired covering properties and ability tomold, and this technology has been adopted by major automotive manufacturers.
Our Mexico plant will start operations in 2017, and we will develop operations
globally in order to respond to the growing world automotive industry.

Powder slush
compoundZeon Kasei Mexico S.A. de C.V. operational in 2017

Sewing with real thread is possible

Development of FFR Guidewire
Medical Laboratory
Myocardial infarction and angina pectoris are caused by blockage (narrowing)of the blood vessels surrounding the heart (coronary arteries). In recent years,
there has been focus on FFR (Fractional Flow Reserve), a technique in which theblood pressure of the distal and proximal side of a blockage in a blood vessel
can be measured. The difference of those blood pressures is used toquantitatively diagnose the degree of blockage of blood flow, and objectively
determine the treatment.
The medical laboratory collaborates with a Canadian optical sensor
manufacturer for development of superior products with higher measurement
accuracy and higher operability. As a result of discussing and working beyond
the research laboratory in our company, we have developed a ground-breaking,world first FFR guidewire using an optical sensor that has low pressure
fluctuation. This technology helps with objective diagnosis, and assists doctors
in determining whether treatment is needed or not.

Guidewire

Measurement monitor

ZEON GROUPCORPORATE REPORT 201618

Business and Strategy

Production Management and Safety

Figure 1 Production Innovation and Process Innovation

In order to implement the Enterprise Blueprint for 2020, "Zeon makes the
future today through the Power of Chemistry," it is essential that we bothdevelop groundbreaking new materials and improve production in terms ofgreater cost competitiveness and stabilized production quality.

Production
innovation

Processstabilization

Process
innovation

Improved quality

SafetyCost reduction

Accidents occurring at chemical plants not only affect employees working at
the plants, but also they have a strong effect on society, with regard toenvironmental pollution within the local community, as well negatively
influencing customers if the supply of products is interrupted. Therefore,
Zeon places safe and secure production as themes of particular importancefor management.

Improving Stability and Safety along with
Cost Competitiveness through Production
Innovation and Process Innovation
Zeon engages in production management innovation primarily from two
approaches (as shown on the figure 1), Production Innovation and Process
Innovation. Production innovation (Daicel's method of production innovation) is
the activity by which we consider every task caused by various changes on the
production sites to be a load, considering the cause of the workload and how it
can be prevented in order to standardize the solutions.
On the other hand, process innovation is to completely change a part of ourmanufacturing processes to something new, so that we can achieve great
results in a short period of time which could not have been done otherwise( refer to figure 2 ).
Production innovation finds and eliminates the causes of existing loads froman on-site perspective. Process innovation rethinks and changes current
processes in light of the latest technology. Zeon uses both of these approaches
to tackle the challenges of improving quality, safety, and cost competitiveness.
This know-how will be extended to the global production system, and will be
used to achieve the Enterprise Blueprint for 2020.

Returning to First Principles to Tackle 3S
Currently, we are returning to first principles to strongly promote 3S (sort,straighten and scrub) based on the President's policy, "Thoroughly implement
production innovation." Four domestic plants in Japan have improved step bystep from 3S and three plants have achieved the stage of systemization, while
the Kawasaki Plant has reached the stage of standardization (refer to figure 3).
However, while spending time on production innovation, we came to realizethat we may be losing focus on our initiatives. So we made teams comprising
new and experienced staff and returned to first principles to investigate theinitiatives again. With these actions we aim to continue to improve the situation
by encouraging new and experienced staff to exchange information in the
production sites, passing on technology traditions and an improvement
mindset.
Further, following production innovation at plants, the head office■Figure 2 The relationship between production innovation andprocess innovation
Cost

Production innovation
Process innovation
Production innovation

Time■Figure 3 Image of production innovation steps

Supply chain innovation
Systemization
Standardization
Reducing on-site loads
Infrastructure development and destination display

Toru Nishijima
Director & Senior Corporate Officer
Production and Engineering Technology
Division Manager - Production Center

19

ZEON GROUPCORPORATE REPORT 2016

3S
Greetings

Timeorganization is also undertaking 3S in order to improve the entire supply chain.
Although manufacturing is carried out in the plants, planning and execution
including business planning, purchase planning, shipping planning and sales
activities are done at many locations other than the plants. In order to improvethe entire supply chain, it is important that the head office organization also
has a mindset of work improvement.
The key point here is to share information. By organizing and sharing
information through 3S and sharing and passing on know-how that is kept
within departments and individuals, we will increase the overall efficiency ofthe company.

Process innovation keyword"Elemental technology"
For example, if three types of events, A, B and C cause a loss cost, thenormal approach would be to try to eliminate the largest event A (refer to figure4). However, after carefully analyzing the three events, it was discovered that
an elemental technology "X" was common to a certain degree in A, B and C.
Elemental technologies refer to each of the diverse technologies that make up
manufacturing processes.
If the elemental technology X, that is partially responsible for losses in
multiple events, can be eliminated (stabilized) by some method, the ripple
effect will have more benefits than simply undertaking production innovation
on event A.
We think improving multiple processes simultaneously by improving anelemental technology X is also one type of process innovation. Therefore, atZeon, the head office, research laboratories and plants work on issues together
as a project team.

Ensure safety of all people
who enter the premises
Following multiple major accidents that happened in around 2012 at
chemical companies, Zeon thoroughly checked to see if plant emergency stop
procedures could actually be carried out as prescribed. As a result, problems
were found such as valves not being located in positions where they could beclosed rapidly in an emergency situation. Although solving such problems
would require changing the piping route to change the height of the valve athigh cost, from 2015 a project was started to solve these issues and it isprogressing with completion planned for 2017.
Moreover, in recent years, construction company worker accidents (light
injuries) have increased. We have always communicated with resident partnercompanies regarding safety management, and there are almost no accidents.
However, construction companies responsible for infrequent works sometimes
have workers who have never entered a chemical plant before, and this canlead to injuries from working in unfamiliar environments.
With a sense of urgency about this situation, we have started new activities
based on determination of top management to ensure the safety of all people
who enter Zeon premises. "All people" includes not only employees but also
people who are involved in manufacturing such as employees of construction
companies. With this initiative, we have clarified that safety will be dealt with
under Zeon's responsibility, and have also implemented another risk
assessment.
Zeon and subcontractor workers will check the work site together toevaluate possible risks and work together to improve work procedures andpoints with high risk.

TopicsConducting experiential safety
education at four plants■Figure 4 Image of loss reduction effect through stabilization ofelemental technologies
Loss related to elemental
technology X

Loss

Xa

Xb

A

B

Xc
C

Total of losses related to elemental
technology X

LossExperiential safety equipment which allows workers toexperience possible accidents in the plant such as being
entrapped has been installed in four domestic plants.
In fiscal 2015, we expanded the target for education toemployees at research laboratories, resident partnercompanies, and neighboring group companies.

More effective than simply eliminating A

Xc

Xb

Xa
A

A'

B'

C'

ZEON GROUPCORPORATE REPORT 201620

Highlight 1

World-changing single-walled carbon nanotubes
Key points of single-walled carbon nanotube business
1. Zeon is the first company in the world to commercialize single-walled carbon nanotubes.
2. We have enabled unprecedented properties by mixing with other materials such as rubber and metals.
3. There are wide applications, and the technology holds the promise of changing the world.

The 45th Japan Industrial
Technology Grand Prize
Joint winners with AIST of the
Reviewer's Prize

Joint winners with AIST of the2016 Minister of MEXT Award,
Department of Science andTechnology in the field of
science and technology

Development Background
Carbon nanotubes, discovered by Sumio Iijima in 1991, are categorized into
single-walled nanotubes (SWCNTs) and multi-walled nanotubes (MWCNTs).
MWCNTs are relatively easy to produce and have been developed in many
applications both in Japan and overseas. On the other hand, there has been
little development of SWCNTs since they are difficult to mass produce.
Zeon Corporation has developed the SWCNTs "Super Growth Method"
discovered by Dr. Kenji Hata's team at the National Institute of Advanced
Industrial Science and Technology (AIST), and has set up mass production
technology and commercialized ZEONANO™. This work has been supported by
the New Energy and Industrial Technology Development Organization (NEDO).

Features of SWCNT➊ Length
Up to mm range. Easy to combine with other substances, making them stronger❷ Large Surface Area
Large surface areas allow a greater quantity of electric charge to be stored❸ High Purity
Chemically stable since the material contains very few residues of metal
catalysts
The three features of materials with SWCNT added➊ High strength❷ High thermal conductivity❸ High electrical conductivity

Using SWCNTs to benefit society
SWCNTs are innovative materials with superior properties that are sure to form a wide range of major industries.
Zeon's mission is to use SWCNT technology effectively and supply it to as many customers as possible. In concreteterms, in addition to application development, we are progressing with cost reduction to enable use in mass-produced
products such as cars.
Rather than using them on their own, SWCNTs exhibit various properties when combined with other materials suchas rubber or metal. Rubber is Zeon's core technology, and we possess advanced technology in rubber based on many
years of experience. We will utilize this to efficiently develop applications and bring to market various products in a wide

21

Kohei Arakawa

range of fields in future. SWCNTs have the potential to overturn traditional thought in science so please keep an eye on

President
Zeon Nano Technology Co., Ltd.

our future research and development.

ZEON GROUPCORPORATE REPORT 2016

Possible Applications
SWCNTs made with the Super Growth Method exhibit many superior properties. We will research diverse applications in various fields utilizing these properties.

Super Capacitors

Non-volatile memory

Realizing more compact
capacitors with larger capacity
and longer life by combining
with electrode materials andutilizing the length, large
surface area and high purityof SWCNTs

Next-generation memory withlower power consumption andhigh capacity exceeding flash
memory and DRAM utilizing
the high electricalconductivity of SWCNTs

Rechargeable Battery
Electrodes
Use in battery electrodes andactive materials utilizing thelarge surface area andelectrical conductivity of
SWCNTsPower Cables
Combine with metals.
Manufacture high-efficiency
power cables utilizing the highelectrical conductivity of
SWCNTsEnergyElectronics
Super Capacitor Electrodes
Alternative for Silicon Semiconductors

Rechargeable Battery Electrodes
Highly Functional Heat Exchangers

Interface thermal
conductivity materials

Flexible Electric Circuits

Solar Thermal Collector Heat Absorbers

Use in heat sources and heatsink connecting materials in ICs
utilizing the high thermal
conductivity of SWCNTs

Heat dissipators for Power Semiconductors

Power Cables

ZEONANOTM
SG101
Reinforcement Materials for Aircraft
and Automotive Body Parts

Transparent Electric-Conductive Films
Actuators

Blades for Wind Turbines
Electric- Conductive Rubber Rolls
Heat-resistant, Seismic Isolation
Rubber Bearings for Buildings

High Temperature Viscoelastic Materials

Highly Functional Materials

Structural Materials
Housing materials
Use of materials combined with rubber or metal in seismic
isolation rubber and wires utilizing the high strength of
SWCNTsOffer products that can be easily handled as construction materials
SWCNTs are a powder form, but as a result of Zeon's■Paints/coatings■Sheet form

■Dispersants

proprietary technology, can be uniformly combined withrubber, water or paints/coatings. We will offer products in aform that is easy to handle according to the application.

Low
concentration

High
concentration

Safety Evaluations and Independent Safety Management
Zeon has evaluated the impact of SWCNTs on people and the environment
together with internal and external research institutions as we have worked
towards mass production.
1) Safety confirmation
We conducted various safety tests for known health problems. To test formesothelioma, we applied SWCNTs directly to mesothelial cells in mouse
lungs and confirmed that there is no occurrence of mesothelioma. In addition,
multiple tests indicated no occurrence of cancer.
Further, we will continue to investigate to ensure that we take appropriate
measures against health problems that are not yet known.

2) Newly created environmental standards
We have created new environmental standards (allowable concentration inwork environments) to ensure safe working practices based on various tests. We
have provided our environmental test data to organizations such as the OECDand ISO, and they are using it.
In addition, we are constantly providing the latest safety data and proceedingwith independent safety management initiatives together with customers,
government institutions and regional authorities.

ZEON GROUPCORPORATE REPORT 201622

Highlight 2 Roundtable

Toward the Enterprise Blueprint for 2020

Considering the strengths of Zeon

We set out Zeon's strong points and challenges toward the Enterprise Blueprint for 2020 and held a roundtable to explore areas that must
be worked from now on. Here we present a digest of opinions of eight junior to mid-career staff from various Zeon Corporation operating
departments and the Zeon Group.
Roundtable date: June 24, 2016 (Friday) *Their departments are as of the time of the roundtable● Zeon's strengths◆ Zeon's challenges●◆ Zeon's name recognition for special rubbers is particularly high both in Japan and overseas. I think
our future challenge is to use that name recognition while increasing the recognition for other products.
● I think our company values communication. I have a long experience of sales in China. While there aresome differences in business practices in Japan and China, the most important thing in the end is theconnection between people, so I place strong importance on dialogue with customers.
Zeon Corporation
Synthetic Latex Department● I think we communicate well with a lot of dialogue in this company and I feel connected with people.
There is no gap between my impression of the company when I was job hunting and the one after I started
working here. The fact that I can still talk freely with the staff who spoke to me when I was a student is agood point. It is not always so with other companies.
Zeon Corporation
Specialty Plastics & Components Department● Zeon is quick to start and acts on new challenges that look interesting.
◆ I think that we are a little weak in making use of our know-how, technology and failure analysis toefficiently lead to sales. I think it would be a good idea to share personal expertise more.

Zeon Corporation
Energy Material Business Promotion Department

23

ZEON GROUPCORPORATE REPORT 2016

● I think that the company proactively creates opportunities for communication that go beyond group or
operating division boundaries through "Taimatsu (torchlight) activities" and various clubs, not only business.
● I feel that the top management has a hands-on management style with a clear attitude of listening to theworkers on site.
◆ I felt from my experience of working overseas that we need to improve in sharing our policy with thehead office.
Zeon Corporation
Synthetic Rubber Department● I was a member of the union for two years. Compared to other unions, Zeon has less distance between
the company and the union, and they maintain a very good relationship. Of course, labor relations are notsimply better the closer the relationship, but it is good that there are many opportunities for dialogue and I
think that both sides respect each other.
Zeon Corporation
Raw Material & Logistics Department Raw Material Unit

● I think that while we have a stable base of creative technology, we are continuing to take on challenges in areas such ascarbon nanotubes.
◆ I think that it is urgent to develop staff who can proactively find new businesses in response to globalization.
◆ We believe that in order to fully demonstrate the synergy of the Zeon Group it is essential that we intensify sharing of
information between work sites and respond to the globalization of users.
Tokyo Zairyo
Basic Materials Department Rubber Sales Unit 1● I think we have a culture with a short distance between managers and workers with an open
atmosphere. Also, I can proactively take on whatever challenges I want.
◆ I think that promoting standardization of work across the whole company and even further horizontal
development of effective initiatives will become a base for advancing Zeon in the future and will lead tothe achievement of the Enterprise Blueprint for 2020.
Zeon Corporation
Production Research and Development Center Facilities Management Department●◆ I feel that more employees are taking care of their health since we employed "Improving Employees'
Health" as a key company theme. How about creating a system such as providing incentives? If everyone
is healthy it will reduce health care costs, leading to company profits.
◆ I work with many departments and feel that the great technologies and expertise are not fully shared
among them. From a management perspective I think that we should provide opportunities for sharing.
Zeon Corporation
Raw Material & Logistics Department, Logistics Division

Closing Remarks
We were able to confirm characteristics of Zeon Group that staff have felt up to now, such as active internal communication and placing importance on
the connection between people in the roundtable. Also, we shared the recognition on the needs for cooperation between organizations in global businessactivities, making rules consistent, sharing knowledge and know-how, and focusing more on employees' health. Through this roundtable we realized theimportance of using good communication to find strong points, and by further improvement we can push forward to achieve the Enterprise Blueprint for2020. (CSR Promotion Department)

ZEON GROUPCORPORATE REPORT 201624

Highlight 3

Creating corporate culture via Taimatsu(torchlight) activities- Entering the Fifth Year (Term V) We believe that it will not be easy to achieve the goals in our Enterprise Blueprint for 2020 by relying on our current
operations. It is our belief that each individual employee must have the initiative to take action to respond to changes andcontinue to engage in challenges to meet high goals, even in a rapidly changing environment where the outlook is unclear.
As an initiative to nurture and strengthen the treasured Zeon characteristics (mutual trust and fellowship) and the key
sense of value (speed, dialogue, and social contribution) shared by all persons in the Group, all departments and groupcompanies have engaged in the Taimatsu activities since July 2012, and in July 2016 we entered the fifth year (Term V).

Impetus for attaining theEnterprise Blueprint for 2020

Taimatsu activities
Taimatsu means torchlight, and the Taimatsu activities are aimed at achieving the mid-term goal through "Awareness," "Aim" and "Acts," expressed
through the words, "What do I want to place importance on?" "What do I want to do?" and "What do I want to be?" We named the initiative "Taimatsu(torchlight)" based on our passion, using an analogy where each member of staff changes and lights a torch, causing the flames to increase and expand.

An overview of Taimatsu activities– Passing on the torch of change in an upward spiral –Taimatsu activities have reached their fifth year (Term V), with 412 persons (about 13% of all employees)
from all departments and Group companies active as Taimatsu members.

Enterprise Blueprint for 2020
❺ Reflection: Toward the next step
- expanding anddeepening one's own
Taimatsu activities.

❶ Selection of

Taimatsu members

rtme

❹

ntal activi

TermⅤ: 87 persons

De❷ Joint workshop withmembers from the previous
TermⅣ: 89 persons and current year
TermⅢ: 86 persons❹ Practical action: Widening the activities

TermⅡ: 81 persons

The current-year members undertake various
activities while engaging in dialogue within
their departments.

TermⅠ: 69 persons❸ Workshop conductedby current-year members❸ First step: Just get started
The current-year members gather to gain
insights from each other throughdialogue, and to connect these insights
to actions.

25

ZEON GROUPCORPORATE REPORT 2016

Taimatsu members for the year are
selected from each department. In thisselection, we place importance on thethoughts of departmental heads andeach individual.

❺

s
tie

pa

By looking back on the year and taking
stock, current-year members consider
activities for the next year and their own
involvement in these.

❶S election: T he thoughts of eachindividual❷ Sharing: Awareness and uncertainties
Members from the previous year share theirinsights and ideas with members in thecurrent year.
The latter members also share the anxieties,
points of confusion, and other uncertainties
they hold.

Voices of Taimatsu members (Terms I to V)
Taimatsu members from Term I engaged in activities under the slogan "Just get started!"
Term V departmental Taimatsu members will indeed "Just get started" from now.
Below is a look at the thoughts and realizations of some Term I - V members (the torchlight flame is steadily
expanding from Term I to V).

By changing myself, the workplace
and the company change too

The importance of personalconnections

TermⅢ/Ⅳmember Chemicals business division

Term Ⅳ/Ⅴmember Tokuyama Plant

I was active as a Term Ⅲ and Term Ⅳ member.
I think that Taimatsu is a bottom up approach
where you change yourself, and in doing sochange your workplace and the company.
While there is nothing concrete that I can boast
about, having exchanges with other departmental
Taimatsu members links to increased motivation
for working at Zeon Group, and I feel that I became
more positive about taking things on than before
over the two years. I have now passed on to mysuccessor Taimatsu members, but I will work sothat they can continue to support handing on the
flame in future.

What I learned from
Taimatsu activities is
the importance of
personal connections.
The reason I became a
Taimatsu member was
because I wanted toknow other people atthe plant better, andreally wished to speak proactively with people that I
didn't normally interact with. By deepening our
exchanges we got to know each other, and I
personally felt that by building better relationships,
an environment where work naturally went moresmoothly was created.
In term IV I mainly worked on supporting theestablishment of a new association and talking withcolleagues with the same interests. I think that we
can spread the flame of Taimatsu as each person's
personal network expands. I will continue to serve
as a member in Term V so I am looking forward toworking with colleagues.

Remember the thought of "Just get started"

Term Ⅱ member Kawasaki Plant
Be safe! I worked as a Term II member on visualizing
activities through the "Taimatsu news," promoting
exchange of views through "Taimatsu Networking Events"
and raising awareness of what Taimatsu is all about acrossthe plant. Through my Taimatsu member activities I wasable to talk with other Kawasaki Plant staff, and this mademe more aware of the importance of conversation. I think it
was a good experience for me to share many ideas andthoughts.
As the Taimatsu activities enter Term V, I personally feel that the flame of Taimatsu issteadily expanding. I myself would like to enjoy changing to become an even bigger
flame, remembering the thought of "Just get started."

I will start from what I can do myself

TermⅤmember TFC Inc.
Be safe! I was chosen as a new Taimatsu member.
I have taken part in Taimatsu activities in the past,
but this was in a passive role without taking theinitiative myself, so when I was nominated I wasvery nervous about how to proceed and whether I
would produce results. However, I found out at theTerm IV and Term V joint meeting that other Term
V members feel the same, and Term IV members
told me many stories and advised me about what
they enjoyed and what was tough, so while I am
still unsure, I will start from what I can do myself.
And I will be happy if I can light the Taimatsu flamefor even one extra colleague.

The role of a Taimatsu member
is useful in childcare?!

Term Ⅳmember R&D Center
Taimatsu activities are for each person to proactively
take action to achieve the Enterprise Blueprint for 2020,and I think that the role of Taimatsu members is tosupport people so that they can each take proactive
action.
Before I became a Taimatsu member, I had never thought about Taimatsu activities.
I feel it was good that I had the opportunity to seriously think about Taimatsu by
becoming a member.
The role of a Taimatsu member can also help with childcare. I am the father of threeboys and one girl, and I make great efforts to encourage them to proactively takeaction. I would like to make use of the results of my Taimatsu activities in bothbusiness and childcare, and create environments where both I and people around me
can take proactive action.

I must do the same!

TermⅠ member Tokuyama Plant
It is four years since I was active as a Term I member. At
the time I was working on designing the new plant at the
Head Office Production Department, but currently I am
involved in making improvements and reforms to existing
plant in the Plant Manufacturing Department.
Many departments are involved at the front line of the
manufacturing site, and work cannot proceed unless you say your own thoughts andgain cooperation while understanding the other person. I personally feel again what I
learned in Taimatsu. I checked up on who the other Tokuyama Plant Term I members
were. I found out that they are the current key players at the plant as section
managers, foremen and group leaders. They were all the people that we rely on.
"I must do the same!" I thought, receiving a good shock to the system.
ZEON GROUPCORPORATE REPORT 2016

26

Strengths Supporting our Businesses

Relationship with Employees
For details on our
activities, click thefollowing URL.

Relationship with Employees

http://www.zeon.co.jp/csr_e/employee/index.html

In the CSR Code of Conduct, Zeon demands respect for human rights and prohibits discrimination. We
strive to be a business that is understanding and accepts diverse values and where no person is discriminatedagainst based on gender, age, nationality, or other attributes.
Based on this policy and the following three activities, Zeon aims to be a company where every employee
can work with pride; "Cultivate employees* who can think through by themselves with high goals and keep
improving," "Create a human resources system in which employees want to keep challenging in their jobs andfeel a sense of accomplishment when they achieve their goals," and "Create a comfortable work environment
where dialogue is highly valued."* In Zeon, when we say "employees," it refers to all workers
including full-time workers and part-time workers.

■Basic Information on
Zeon Corporation's Employment Conditions(unconsolidated, does not include non-permanent employees)(No. of employees)"A company of which each and every one of its employees can be proud"

Male

Female

Total

1,450

174

1,624

Newly graduated

32

13

45

Mid-year

10

1

11

Employees
No. of new hires

Encourage employees tocontinually evolve by
pursuing high goals basedon independent thinking

Human resources systemallows a sense ofchallenge and achievement

A comfortable working
environment that values
dialogue

A wide variety of human resources
Respecting human rights, Prohibition of discrimination

Employment Conditions

Percentage of disabled recruits

2.23%

Rehiring of retired employees

75 (80.6%)

Of which, there is a total of 12 foreign employees (6 male employees and 6
female employees).
Newly graduated: Employees that joined the company in April 2016
Mid-year: Employees that joined the company in April 2015 to March 2016

Topics Establishing an easy-to-workenvironment for single parents

As of March 31, 2016, employees of Zeon Corporation alone numbered 1,624, while employees of theconsolidated Zeon Group numbered 3,164. Zeon Corporation's employment ratio of workers with disabilities
increased over the fiscal year and was 2.23%.
We have also adopted a re-employment system that is shared across the Group in which retired employees
are given opportunities to stay active, passing on skills and training their successors. With respect, we callthose re-employed workers "(Zeon) master employees." In fiscal 2015, 75 people became master employees.
We implement diversity training for all employees as a foundation for diversity understanding. We also
support employees for balancing work with child care and have acquired the Kurumin mark that indicatesa "company that supports childcare" under the Act on Advancement of Measures to Support Raising NextGeneration Children.

Human Resource Development
Zeon's concept of "being the employee you want to be" refers to "being an employee who thoroughly thinksby themselves and continually improves themselves to achieve high goals." Employees at Zeon are encouraged
to imagine what they want to be, while Zeon tailors its education and training practices to help remove thegap between their current selves and visualized selves in order to move forward toward that vision. By fairly
evaluating what employees have accomplished and rewarding them accordingly, we aim to have them set evenhigher goals. With every employee continuing to improve and make progress where they can, we can create aneven more vital workforce across the company.

Over 40% of all employees at River Xemex, wheredevelopment and manufacturing of medical products isbeing conducted, are single mothers (as of June 2016).
An easy-to-work environment even while bringing up
children has been established through hiring policies that
do not depend on the home situation, multi-skilling andpair working to ensure that work is covered, and noovertime. In 2014, River Xemex was selected as a"Company that supports working single parent families"
from the Ministry of Health, Labour and Welfare.

■Resource Development Flow
Change employment
conditions

The employee
I want to be
Evaluation

Education andtraining
Tasks andperformance

27

ZEON GROUPCORPORATE REPORT 2016

The employee
I want to be(higher goals)

Education andtraining

Environmental Initiatives
For details on our
activities, click thefollowing URL.

Environment

http://www.zeon.co.jp/csr_e/environment/index.html

Environmental Philosophy (Established August 2001)
1. Environmental protection is a mission of a socially responsible organization
2. Our basic belief is that environmental protection can be achieved with innovative technology
3. E nvironmental protection will be achieved when all employees work together with a sense of
mission to overcome challenges

Zeon established its 'Responsible Care Policy' which embodies the principles of responsible care in
1998, and established its 'Environment Philosophy' in 2001. We have set a goal for the group concerning
environmental protection with two major pillars, "Eradication of Environmental Irregularities" and "Reduction ofEnvironmental Impacts" through which each worksite plans and executes these plans.

Eradication of Environmental Irregularities
Zeon has set zero environment irregularities* as a goal to be achieved every year. We had one minor
infraction on environmental standards in 2012 but we have kept zero infractions after that.

Reduction of Environmental Impacts
Regarding the reduction of environmental impacts, we have set targets on reducing environmental impact
with initiatives in three areas: 1) promotion of a voluntary management plan for air-polluting toxic substances,
2) promotion of a zero-emission plan for industrial wastes, and 3) strengthening of our company-wide project
for energy conservation.

*Environmental irregularities set by Zeon Corporation: To fail tomeet environment related rules and regulations or voluntarystandards. An environmental irregularity also refers to a situationin which standards were met but may not have been met if
regular measures had been taken. It also refers to a situation inwhich we received a complaint with no applicable standard set
or a situation in which we could have received complaints if we
did not take proper measures.

1) Promotion of a voluntary management plan for air-polluting toxic substances
Acrylonitrile is the substance subject to PRTR with the highest volume raw material processed by Zeon, andis also specified as a substance requiring priority action in measures under the Air Pollution Control Law. As
we have worked on reducing emissions according to the plan, the emission volume in 2015 was 5.5 tons, 52%
less than the previous fiscal year. With acrylonitrile recovery equipment to be still implemented, we will keep
working on reducing emissions.

Topics Boiler upgrade and new installation ofheat storage combustion equipment

2) Promotion of a zero-emission plan for industrial wastes
Zeon Corporation's worksites continue to have 5 tons or less industrial waste landfill. The group companies
in Japan achieved the goal of less than 0.3 % (7.5 tons) of the amount generated in fiscal 2007.
3) Strengthening of our company-wide project for energy conservation
Zeon has set a long-term goal of reducing our emission volume of CO2 from fuels as defined by Japan's
Law Concerning the Rational Use of Energy (the Energy Conservation Law) to 80% of our fiscal 1990 level by
fiscal 2020. To achieve this, we have set a target of reducing CO2 emissions by 1% per year. In fiscal 2015, ourCO2 emissions increased compared to fiscal 2014 due to increase in production volume. We will continue toproceed with our plan to improve our emissions per unit of energy by an average of 1% per year.

The Mizushima Plant increased its thermal efficiency byrenewing boilers and installing heat storage combustion
equipment in 2015.

ZEON GROUPCORPORATE REPORT 2016

28

Strengths Supporting our Businesses

Social Contribution Initiatives
Relationship with Society

http://www.zeon.co.jp/csr_e/community/index.html
For details on our
activities, click thefollowing URLs.

Site Reports

http://www.zeon.co.jp/csr_e/site/index.html
Response to Great East Japan Earthquake and Tsunami Disaster

http://www.zeon.co.jp/csr_e/introduction/earthquake.html

We believe it is very important to contribute to the development of the local community, build strong relationships of trust to operate stable business activities, andproduce improved products and services.

Zeon's Basic Policies on Social Contributions
We believe that traditionally, social contributions are essentially carriedout through core businesses. As long as a company is a member of society,the complex set of issues society is facing and corporate activities are notindependent of one another. Zeon is embarking on social contribution activities
outside the realm of its core businesses to have a broader perspective forengaging with society.
In 2012, we launched CSR Core Projects, which are initiatives we selectedfrom proposals submitted by group companies. The CSR Core Projects areactivities that focus on social contributions outside the scope of core business
operations and provide employees with an opportunity to turn their attention
toward social issues.
The head office has planned various activities related to supporting
reconstruction after the Great East Japan Earthquake and projects mutually
implemented by different offices and group companies. Further, there are social
contribution activities that are performed independently by each office and groupcompany. We are developing activities in three categories while also focusing on
synergistic benefits.

■Image of Zeon's Social Contribution

CSR Core Projects

Great East Japan
Earthquake restoration
Mutualprojects

Independent
projects

Fiscal 2015 initiatives❶ Great East Japan Earthquake Reconstruction Volunteering❷ Cooperating in Tree Planting in Disaster-Stricken Areas

We continue to send employees to areas affected by the Great
East Japan Earthquake by looking for employees to sign up fora regular restoration volunteer tour. The company covers theentire cost to actively promote employee participation. We turn"support" into "encouragement," and "encouragement" into
"exchange." Given the risk that the memory of the devastation
will be forgotten, we believe that it is now even more important tocontinue to undertake these activities.

From 2012, the town of Otsuchi Town (Iwate Prefecture) andYokohama Rubber Co., Ltd. held a tree planting campaign,
Heisei-no-mori, in Otsuchi Town as a model case to create aforest embankment to protect the lives of the local community.
Zeon has cooperated with this tree planting campaign since 2013.
We completed the fourth tree planting campaign in 2015, andcontinue to participate through maintenance of the tree plantingsite and tree planting education for local elementary school
children via extracurricular lessons.

In September 2015, we participated in earthquake reconstruction
volunteering in Rikuzentakata-shi, Miyagi Prefecture

29

ZEON GROUPCORPORATE REPORT 2016

April 2016, extracurricular tree planting lessons

❸ Chemistry Classroom❹ Educational Support

Based on our motto of "nurturing future Nobel Prize winners inchemistry," we are conducting chemistry experiment classrooms invarious regions to teach children that chemistry is fun.

Our offices and group companies implement exchanges with and offer
assistance to various educational institutions. Zeon offers internships
for high school, vocational high school, and university students andactively give tours of our plants to school children. We also provide
support to schools, such as dispatching part-time lecturers.

We held an exhibition and workshop called "Make a car and run it!
Which tire will run the best?" at the "Dream Chemistry 21 Summer
Holiday Children's Chemical Experiment Show 2016."

Acceptance of interns and on-site practical training at the Mizushima
Plant❺ Events❻ Clean-up Activities

Zeon places great importance on connections with local
communities. Zeon offices and group companies hold various
events, including summer festivals and actively participate innumerous local events.

With the goal of implementing activities that are helpful andwhich will make local residents happy, our offices and groupcompanies are embarking on clean-up activities in local
communities, not only in areas around our offices and plants.

The Tokuyama Plant sponsors the Zeon Waraku Odori Dance Festival,
which is a regular summer event that was first held in 1974. Every
year, more than 2,000 people participate in the festivities.

Optes and TFC employees who participated in the "Kehi no Matsubara
Clean-up Fukui Major Strategy" held by Tsuruga-shi, Fukui Prefecture❼ Activities with the Local Community❽ Activities with the Local Community

We are carrying out activities with local communities in various
regions. The US company Zeon Chemicals L.P. has conductedvolunteer and contribution activities for many years.

The Thai companies Zeon Advanced Polymix Co., Ltd. andZeon Chemicals (Thailand) Co., Ltd. have conducting clean-up
volunteering and contribution activities for many years.

Employees contributed $16,000 as well as toys and books to Kosair
Charities, who help underprivileged children in Kentucky and South
Indiana.

Contribution to schools (contributions are made to nearby temples,
hospitals and education facilities)

ZEON GROUPCORPORATE REPORT 2016

30

Strengths Supporting our Businesses

CSR Implementation Plan
The following includes various initiatives in the Enterprise Blueprint for 2020 for each category and other specific initiatives we implemented.

Category

Enterprise Blueprint for 2020

Specific Efforts (FY2015 goals are shown in blue)●Mid-Term Management Plan goals have been achieved, and dividend●Implement stable distribution of dividends Annual dividend 15.00 yen (forecast)
distribution is stable and continuous

Corporate
governance●A world-class risk management system has been built, is being
operated throughout the Zeon Group, and has gained the trust ofsociety●Implement risk management activities in accordance with ISO 31000●A business continuity management system is being deployed●Formulate business continuity plans (BCPs) and switch to business continuity
throughout the group (various types of business continuity plans (BCPs)
management (BCM) systemhave been formed and are revised regularly through training, etc.)

Compliance

Information●Revise company rules regularly (in accordance with the revision of laws andregulations)●Hold workshops on legal and regulatory compliance●Compliance awareness is widespread and allows Zeon to respond to●Simultaneously inspect legal complianceenvironmental changes●Consolidate and establish clear and concrete company rules among overseas groupcompanies●Support the establishment of compliance systems at overseas group companies●Hold financial results briefings●Publish various reports●Information is disclosed quickly and appropriately (including negative●Disseminate information via the company website
information regarding business conditions, CSR, risks, etc.)●Hold briefings for individual investors and analysts in Japan and overseas andrespond to media inquiries●Information on trade secrets is managed appropriately●Appropriately enforce company rules (information management regulations, personal
information protection management rules, etc.)●Provide e-learning courses●Construct and operate information management systems●Eradicate security irregularities
Implement plant safety evaluation (100%)
Implement RC audits (more than once per year for all four plants)
Training to boost accident prevention awareness (implement at four plants andone group company)●All worksites continue to have zero incidents and zero accidents, andZero security irregularities●Eradicate security irregularities
are trusted by society●Achieve eradication of industrial accidents
Zero occupational accidents resulting in lost workdays and serious accidents
without lost workdays●Promote logistics safety

Zero logistics accidents●Eradicate environmental irregularities

Environment
safetyand quality ●All worksites have reduced their environmental impact and gainedsocial appraisal*The numbers to the right are the goals and results for the four domestic
plants, unless otherwise specified

Zero environmental irregularities●Reduce environmental impact (promote voluntary control plans for air pollution andtoxic substances)
Acrylonitrile emissions in FY2014 of 11.9 tons ⇒ reduce to 10 tons
●Reduce environmental impact (promote zero emission plan for industrial waste)
Target amount lower than FY2014 actual of 6.5 tons
●Reduce environmental impact (promote zero emission plan for industrial waste)
Final disposal of domestic group company industrial waste for landfill under 7.5 tons
(Final landfill disposal rate: FY2007 emissions standard) 0.3%
●Reduce environmental impact (fortify companywide energy-saving project)
Reduce unit energy consumption to 64.5% versus the level in FY1990
Reduce unit CO2 emissions to under 67.5% versus FY1990●Levels of both quality and cost are the best in the world●Implement a quality management system based on ISO 9001
●Management of quality assurance risks (product liability lawsuits, supply obligation
risk, product recall risk, and the risk of credibility loss due to rumors)●Improving processes (reducing losses and improving consistency)●Procurement is being promoted that includes considerations to●Determine and understand the state of the CSR procurement guidelines and share
reduce environmental impacts based on the CSR procurement policy
with business partners

Human rights
andlabor practices●Appropriately operate a system to promote childcare●Implement a program for reinstatement in workplace for employees taking childcare
or nursing care leave●Promote work-life balance (harmony between work and life) to enablepeople to work and raise children or care for sick parents●Introduce flexible work hours, employ discretionary working systems for managementrelated work
●Appropriately enforce sexual harassment prevention regulations●Appropriately operate human resource systems (individual report and evaluation
systems, etc.)●The workplace has been revitalized by the promotion of diversity and ●Hire non-Japanese employees (mid-career applicants and students studying in
the fair and equitable treatment of personnel
Japan)*Committee comprised solely of female employees to promote cost cutting●Expand rehiring program of retired employees●Support development of employee skills and career●Implement MD Committee* activities by female members●An organization has been established to promote volunteer activities
for employees including retirees that allows employees to actively
volunteer in various ways

●Raise employee social contribution awareness (includes CSR training)●Upgrade and enhance CSR promotion system●Introduce volunteer activities and promote and support participation

Socialis understanding and appraisal for Zeon's social contributions●Materialize and implement CSR activities being promoted by the entire Zeon Group
contribution ●There(Zeon actively participates in and supports environmental protection●Materialize and implement CSR activities being promoted by all worksites
and social welfare programs being promoted in each country andregion)31

ZEON GROUPCORPORATE REPORT 2016

●Implement CSR activities unique to individual worksites

In FY2015, we achieved our goals in the categories of management and human rights and labor practices, but in the category of environment and safety there are still
issues that require further attention. We will continue to work as a unified group to implement these initiatives in FY2016.
Evaluation: ★★★Target reached ★★Target almost reached ★Improvement needed
FY2015 Results

Evaluation●Annual dividend 15.00 yen

FY2016 Goals★★★

●Annual dividend 16.00 yen (forecast)●Improved risk management activities in accordance with ISO 31000 (Reviewed FY2015 risk list to reflect thehorizontal development of actualized risks at other departments)★★★

●Improve risk management activities in accordance withISO 31000 (Review list of risks in FY2016 which reflects
the horizontal development of actualized risks at otherdepartments, and instill and make risk management
activities a permanent feature in overseas associatedcompanies)●Instilled and made BCM structure a permanent feature★★★

●Instill and make BCM structure a permanent feature●Revised company rules regularly (in response to revisions to laws, etc.)●Held workshops on legal and regulatory compliance●Simultaneous inspection of legal compliance●Head of CSR deparment continued internal CSR briefings★★★

●Revise company rules regularly (in response torevisions to laws, etc.)●Hold workshops on legal and regulatory compliance●Simultaneous inspection of legal compliance●Revise CSR Code of Conduct and CSR text, andconduct activities to instill contents of revisions●Support the establishment of compliance systems atoverseas group companies●Financial results briefing: Held quarterly●Published annual, semiannual and corporate reports●Disseminated appropriate information via the company website●Held briefings for individual investors and analysts in Japan and overseas and responded to media inquiries★★★

●Financial results briefing●Publish various reports●Disseminate information via the company website●Information security training (e-learning): Enrollment rate 99%●Information security audit (information security voluntary diagnosis): Response rate 99%★★★

●Appropriately enforce company rules (information
management regulations, personal information
protection management rules, etc.)●Improve enrollment and response rates for e-learning●Implemented plant safety evaluation (100%)●Implemented RC audits (more than once per year for all four plants)●Provided training to boost accident prevention awareness (implemented at four plants and one groupcompany)★★★

●Implement plant safety evaluation (100%)●Implement RC audits (more than once per year for all
four plants)●Training to boost accident prevention awareness(implement at four plants and one group company)●Three security irregularities★☆☆

●Zero security irregularities●Two occupational accident that resulted in lost workdays★☆☆

●Zero occupational accidents resulting in lost workdays
and serious accidents without lost workdays★★★

●Zero logistics accidents★★★

●Zero environmental irregularities●Acrylonitrile emissions totaled 5.5 tons★★★

●Acrylonitrile emissions under 5 tons

●Final landfill disposal was 3.5 tons★★★

●Lower than 5 tons

●Final landfill disposal for domestic group companies: 5.9 tons★★★

●Final landfill disposal for domestic group companies ofless than 7.5 tons

●Unit energy consumption 68.0% versus level in FY1990●Unit CO2 emissions 68.0% versus level in FY1990★☆☆

●Unit energy consumption 64.0% or lower versus level
in FY1990●Unit CO2 emissions 67.0% or lower versus level in FY1990●Underwent ISO 9001 renewal screening and retained certification●Implemented various initiatives to enhance product safety and quality(Details are on our website: Home > CSR > Quality Assurance (Relationship with Customers))★★★

●Using quality assurance risk management as afoundation, aim to build a quality assurance structurethat satisfies all stakeholders, including customers, thepublic, and employees, through the supply of products●Shared information with business partners(through discussions, etc.)★☆☆

●Summarize the approach to supply chain management
and establish a framework for sharing CSR policy●Established "Rules concerning maternal health care measures"●Regulated special extension of childcare leave period (up to 2 years 6 months old)
●Implemented research on introduction of diversity and prevention of harassment. Set up harassment
consultation service system●Created Action Plan for Employers in General based on the Act to Advance Women's Success in their Working
Life●100% of female employees that gave birth in FY2015 took childcare leave●One male employee took childcare leave in FY2015★★★

(Handled as a daily management activity)●Ratio of employees with disabilities (non-consolidated) 2.23% (FY2014 2.04%)●Rehiring of retired employees 75 out of 93 retirees (80.6%)(Details are on our website: Home > CSR > Relationship with Employees > Employment and Diversity)★★★

(Handled as a daily management activity)●CSR briefings held at each office and domestic group companies●Number of employees that participated in restoration volunteer tours
6 times and 34 employees★★☆

●Continue to hold CSR briefings●Continue to support restoration volunteer work

●Implemented CSR core projects in each region★☆☆

●Continue to implement CSR core projects●Zero logistics accidents●Zero environmental irregularities

Education on examples ofaccidents (Kawasaki Plant)

Supporting fishing in
Karakuwa, Kesennuma
Town, Miyagi Prefecture

ZEON GROUPCORPORATE REPORT 201632

Strengths Supporting our Businesses

Corporate GovernanceZeon aims to increase profits and achieve ongoing corporate value enhancement while respecting and balancing the various interests of its shareholders andother diverse stakeholders. To this end, we are making ongoing efforts to establish a system that enables efficient and sound corporate management throughcorporate governance.
Putting into place a corporate governance system allows us to clarify the functions and roles of each organizational entity within the company and to carry out
quick decision-making and execution. We are also improving business transparency through appropriate monitoring and disclosure of activities and their effects.
We are determined to further enhance our corporate governance system in order to carry out these functions effectively.

■Corporate Governance System■Board of Directors

General Meeting of Shareholders
Decisions / Supervision(Appointment / Dismissal)(Appointment / Dismissal)

Board of Directors

Auditing

Corporate Auditors

Decisions / Supervision
sion(Selection / Dismissal)
Collaboration(Appointment / Dismissal)

Collaboration(Assistance)

Auditing(Dismissal)
C
Collaboration

Independent Auditor Auditing
PPersonnel
Financial
Auditing

Business Execution andInternal Controls System

Representative Director

Executive Committee
Internal Auditing■Executive Committee

Information

CSR Conference

Internal auditing

CSR Basic
PolicyCommittee

Information(External)

Risk Management Committee
Compliance Committee

External
LawyerEnvironmental and Safety Committee
PL Committee
Quality Assurance Committee

Information(Internal)

Public Relations Committee

Information(External)

Operating division, indirect departments, research laboratories, plants
CControlt l / monitoring
it i

The Board of Directors meets, in principle, every monthwith corporate auditors in attendance to ensurecompliance with applicable laws and the articles ofincorporation in the execution of business. The role of
the Board of Directors besides statutory duties is tomake important decisions about basic management
policy and strategy and other aspects of businessexecution. As of October 2016, the Board of Directors
consists of 12 directors, including three outside
directors.

Information(Internal)

Subsidiaries and affiliates

The Executive Committee, in accordance with Executive
Committee regulations, comprises the President andexecutive officers ranked senior corporate officer orabove and meets, in principle, twice a month to examineand make decisions on important business matters afterdue deliberation involving consultation with attending
full-time corporate auditors. Important agenda items, as
stipulated in regulations for the Board of Directors, areexamined and decided by the Board of Directors.
■Board of Corporate Auditors
The Board of Corporate Auditors comprises fivemembers, including three outside corporate auditors.
The board reports, discusses and resolves importantmatters. In accordance with auditing guidelines
established by the Board of Corporate Auditors, eachcorporate auditor audits the duties executed by directors
through various means, such as attendance at Board of
Directors meetings and monitoring of business
operations, including subsidiaries' operations.

Risk Management
The Risk Management Committee and the Compliance Committee, along with the Compliance
Committee's subcommittees–the Antitrust Law Regulatory Subcommittee, the Export Security Control
Subcommittee, the Corporate Governance Subcommittee, and the Information Security Subcommittee–areadvancing Zeon's risk management and compliance efforts.

■Risk Management and Compliance System

CSR Conference
Compliance
Committee

Risk Management
Committee

Prevention of law violations
Education and training incompliance with laws

Prevention and control of
Risks;
Dealing with crises

Antitrust Law Regulatory Subcommittee
Export Security Control Subcommittee
Corporate Governance Subcommittee
Information Security Subcommittee

33

ZEON GROUPCORPORATE REPORT 2016

Directors and Officers (as of October 1, 2016)
Directors

Naozumi Furukawa

Kimiaki Tanaka

Yoshiyuki Mitsuhira

Hiroyuki Hirakawa

ChairmanPresident

Director & Senior Corporate Officer

Director & Senior Corporate Officer

Research & Development
Division Manager - Research & Development
CenterElastomers and Chemicals Business
Division Manager - Synthetic Rubber

Chairman of Tohpe Corporation

Toru Nishijima

Hirofumi ImaiKei Itoh

Takeo Furuya

Director & Senior Corporate Officer

Director & Senior Corporate Officer

Director & Corporate Officer

Director & Corporate Officer

Production and Engineering Technology
Division Manager - Production Center

Administration
Division Manager - Corporate Planning
Division Manager - Raw Material
General Manager - Department of China Business Administration

CSR
Division Manager - CSR
Division Manager - Logistics

Division Manager - Corporate
Administration
General Manager - Accounting & FinanceNoboru Yanagida

Haruo Itoh

Takao Kitabata

Tadanobu Nagumo

Director & Corporate Officer

Outside director

Outside director

Outside director

Specialty Materials BusinessPresident of Zeon Medical Inc.

Adviser - FUJI ELECTRIC CO., LTD.

Chairman of Board - Sanda Gakuen
Junior High School & High School

Chairman and Representative Memberof the Board - The Yokohama RubberCo., Ltd.

Corporate Auditors

Corporate Executive Officers

Tadayuki Minami

Hiroshi Fujisawa

Tetsuya Toyoshima

Audit & Supervisory Board Member

Corporate Officer

Corporate Officer

Division Manager - Specialty Chemicals

Division Manager - Specialty Plastics & Components

Toshihiro Inoue

Makoto Yokota

Corporate Officer

Corporate Officer

Division Manager - Synthetic Latex

General Manager - Business Innovation Promotion

Tomoyuki Kose

Makoto Watanabe

Corporate Officer

Corporate Officer

Plant Manager - Mizushima Plant

Plant Manager - Takaoka Plant

Jun Hasegawa
Audit & Supervisory Board Member

Yuzuru Fujita
Audit & Supervisory Board Member (External)
Supreme advisor of Asahi Mutual Life Insurance Company

Akio Kohri
Audit & Supervisory Board Member (External)
President - ADEKA CORPORATION

Nobutake Nishijima

Sachio Hayashi
Corporate Officer
Plant Manager - Tokuyama Plant

Audit & Supervisory Board Member (External)
Vice Chairman - Total Insurance Service Limited

ZEON GROUPCORPORATE REPORT 201634

Data Highlights

Herein, we disclose a portion of our earnings data.
For more details on our financial data, please see Fact Book 2016 in the IR section of our website:
http://www.zeon.co.jp/ir_e/library/factbook.html
Graphs illustrating our consolidated net sales, operating income, and segment net sales/operating
income can be found on pages 5-6.
A graph outlining our R&D expenses is on page 17.

Five-year summarized financial data

(million yen)

2011

2012

2013

2014

2015

Net sales

262,842

250,763296,427

307,524

295,647

Operating income

32,123

23,69629,901

28,24529,856

Ordinary income

31,48725,21232,56131,09832,153

Net income

19,127

14,75019,65019,08018,079Total assets

311,925

350,508

370,872

399,512384,753

Net assets

135,480

162,057

181,414215,631

215,586

Capital expenditures

22,99523,48927,111

28,51627,650Depreciation & amortization

19,885

18,122

17,06819,43920,904R&D expenses

11,106

11,895

12,661

13,627

14,148Environmental and Safety Investment*

2,670

2,160

3,470

3,649

5,468

101

70

98

98

72

Operating margin

12.2%

9.4%

10.1%

9.2%

10.1%

Return on Equity (ROE)

15.5%

10.1%

11.7%

9.8%

8.6%

Equity ratio

42.5%

45.2%

47.9%

52.9%

54.8%

BPS

572.96685.64783.11

931.34949.91

Interest-bearing debt

67,58567,58565,60058,90057,100Cash flows(1,595)(1,803)(5,222)(4,780)3,742

Net cash provided by (used in) operating activities

32,00933,061

36,39634,00647,599Net cash provided by (used in) investing activities(27,644)(24,858)(31,513)(26,767)(34,847)

Net cash provided by (used in) financing activities(5,960)(10,006)(10,105)(12,019)(9,010)

Dividend per share (yen)

11.0

12.0

13.0

14.0

15.0

Employees (people)

2,857

3,163

3,186

3,216

3,164

Lost-time accident rates

0.47

0.46

0.46

0.46

0.00

Energy usage (crude oil equivalent, 1,000 kL)

256

237

244

261

282

CO2 emissions (1,000 tons)

670

601

640

675

724

Social Contribution Investment**Zeon Corporation only

35

ZEON GROUPCORPORATE REPORT 2016

Stock information
Zeon's shares are listed on the 1st section of the Tokyo Stock Exchange. The company has a total number of common shares outstanding of 237,075,000. As of
March 31, 2016, there were 11,328 shareholders (increase of 1,521 registered shareholders at the end of the previous fiscal year). In accordance with our basic policy toconsistently and stably distribute surplus earnings to our shareholders, in FY2015 we paid out a per-share annual dividend of 15 yen, an increase of one yen higher thanthe previous fiscal year.
■Shareholder information (as of March 31, 2016)■Dividends
(yen)
15

Treasury stock

15,179,000 shares(6.4％)

Financial institutions &securities companies
95,721,000 shares(40.4％)

Individuals & others
28,642,000 shares(12.1％)
Foreign investors
38,875,000 shares(16.4％)

13

12

11
10

5
Other domestic
institutional investors
58,652,000 shares(24.7％)

0

2011

2012

2013

2014

■Share price trends (last day of March)■Market capitalization trends (last day of March)

(yen)
1,500

(100 million yen)
3,000

1,000

2,358

974

728

934

2,261

1,857

2,000

2015 (FY)

2,687

1,110
767

15

14

0.95

1,725

1,000

500

0

2011

2012

2013

2014

2015 (FY)

0

2011

2012

2013

2014

2015 (FY)

Environmental information
Each year, we set goals and work to alleviate our burden on the environment. We are moving forward with large-scale investment for a clean fuel conversion program
to switch from heavy oils to LNG at our plants to reduce our greenhouse gas emissions and to conserve energy consumption. In FY2009, we achieved the goals for theenergy consumption unit, which is a yardstick for energy conservation, set by the Japan Chemical Industry Association (JCIA) (80% of levels in FY1990 by sometime
between FY2008-FY2012). Since then, we have set our own independent goals and have been making an average improvement of 1% annually.
■Energy usage per net sales■CO2 emissions(crude oil equivalent, kL/million yen)
1.00

(1,000 tons)
900

1.00

800

0.95

0.97

0.95

0.95

0.95

700

0.90
0.85

0.82

600

0.85

500

0.80

400

670
670

0.90

601

640

675

724

0.85
0.80

0.75

300

0.75

0.70

200

0.70

100
0

2011

2012

2013

2014

2015 (FY)

0

2011

2012

2013

2014

2015 (FY)ZEON GROUPCORPORATE REPORT 201636

Major Sales & Production Bases

GLOBAL BASES

as of April 1, 2016

EuropeChina

Zeon Europe GmbH

Zeon (Shanghai) Co., Ltd.

Zeon Kasei (Changshu) Co.,Ltd.

Business focus: Sale, export, and import of synthetic rubbers and resins

Room 1502, Hongwell International Plaza, No.1600 ZhongshanWest Road, Xuhui District, Shanghai, 200235, China
TEL:+86-21-6167-5776 FAX:+86-21-6040-7258

Zeon Europe GmbH - Branch in France

Business focus: Provide assistance to and exercise control over the Zeon
Corporation Group companies in China with regard to such functions as
accounting, finance, personnel management, legal, etc.

Business focus: Manufacture and sale of PVC powder slush
compoundHansaallee 249, 40549 Dusseldorf, Germany
TEL:+49-211-52670 FAX:+49-211-5267160

22, rue Guynemer 78600 MAISONS LAFFITTE, France
TEL:+33-1-39-12-75-20 FAX:+33-1-39-12-75-26

Zeon Europe GmbH - Branch in Spain
C/Beethoven, 15, 4O08021 Barcelona, Spain
TEL:+34-93-183-87-08 FAX:+34-93-183-87-58

Zeon Europe GmbH - Branch in Italy
Via Mauro Macchi, 27, 20124 Milano, Italia
TEL:+39-02-36680101 FAX:+39-02-36680124

Telene S.A.S.

Shanghai Zeon Co., Ltd.

No.380, Shennan Road, Xinzhuang Industry District, Minhang,
Shanghai, 201108, China
TEL:+86-21-6489-6160 FAX:+86-21-6442-0569(Push "0" after announcements)
Business focus: Manufacture and sale of rubber compounds

Zeon Trading (Shanghai) Co., Ltd.

Room 1501, Hongwell International Plaza, No.1600 ZhongshanWest Road, Xuhui District, Shanghai, 200235, China
TEL:+86-21-6040-7255 FAX:+86-21-6040-7258

2, rue Marie Curie - 59910 Bondues, France
TEL:+33-3-20-69-57-10 FAX:+33-3-20-69-57-11

Business focus: Sale export and import of synthetic rubbers
and chemicals and related products

Business focus: Development and distribution of Telene DCP-RIM resin

Zeon Polymix (Guangzhou) Co., Ltd.

®

Jing Quan 1st Road, Yong He Economic Zone, Guangzhou,
511356, China
TEL:+86-20-3222-1171 FAX:+86-20-3222-1820

Huangpujiang Road 96, Dongnankaifa District, Changshu
City, Jiangsu Province, 215500, China
TEL:+86-512-5235-7000 FAX:+86-512-5235-7308

Zeon Medical (Guangzhou) Inc.

Room 1706A, Goldlion Digital Network Center, No.138 Ti Yu
Dong Road, Tianhe District, Guangzhou, Guangdong,
510620, China
TEL:+86-20-2283-6788 FAX:+86-20-2283-6789
Business focus: Sale, export and import of medical devices

Takehara Zeon (Shanghai) Co., Ltd.

No.380 Shennan Road, Xinzhuang Industrial Zone, Minhang
District, Shanghai, 201108, China
Business focus: Manufacture and sale of silicon rubber compound

Tokyo Zairyo (Shanghai) Co.,Ltd.

Room 1503, Hongwell International Plaza West Zhongshan
Road 1600, Xuhui District, Shanghai, 200235, China
TEL:+86-21-6119-9400 FAX:+86-21-6119-9401
Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

Business focus: Manufacture and sale of rubber compounds

India

VietnamZeon India Private Limited

Zeon Manufacturing Vietnam Co., Ltd.

Business focus: Sales and import of synthetic rubbers and other Zeon
products and marketing

Business focus: Manufacturing and sale of packing containers

Time Tower, Unit No.507, Sector-28, M.G Road,
Gurgaon-122002, Haryana, India
TEL:+91-124-4229461 FAX:+91-124-4229462

Tokyo Zairyo (India) Pvt. Ltd.

Time Tower, Unit No.507, 5th floor, Sector-28, M.G Road,
Gurgaon-122002, Haryana, India
TEL:+91-124-424-9011 FAX:+91-124-424-9005
Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

ThailandZeon Chemicals (Thailand) Co., Ltd.

3 Soi G-14, Pakorn-Songkhrorad Road, Tambol Huaypong,
Amphur Muangrayong, Rayong 21150, Thailand
TEL:+66-3-868-5973-5 FAX:+66-3-868-5972

No.109, Road No.10, VSIP Haiphong Township, Industrial andService Park, Dinh Vu-Cat Hai Economic Zone, Thuy Nguyen
District, Haiphong City, Vietnam
TEL:+84-225-3797-027 FAX:+84-225-3797-028

Zeon Research Vietnam Co., Ltd.

6th Floor, Building 85 Nguyen Du Str., Hai Ba Trung District,Hanoi, Vietnam 100000
TEL:+84-4-3632-0557 FAX:+84-4-3632-0557
Business focus: Design simulation of optical materials and molding
products, and market research for Zeon products in Southeast Asia

Tokyo Zairyo (Vietnam) LLC.

4th Floor, Building 85 Nguyen Du Str., Hai Ba Trung District,Hanoi, Vietnam 100000
TEL:+84-4-3941-3825 FAX:+84-4-3941-3826
Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

Zeon Advanced Polymix Co., Ltd.

Business focus: Manufacture and sale of rubber compounds

Tokyo Zairyo (Thailand) Co., Ltd.

29th Floor Room 2903, Empire Tower 1 South Sathorn Rd.,
Yannawa, Sathorn, Bangkok 10120, Thailand
TEL:+66-2-670-0285 FAX:+66-2-670-0283
Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade37

ZEON GROUPCORPORATE REPORT 2016

Zeon Chemicals Singapore Pte. Ltd.
100 Banyan Drive, Jurong Island, Singapore 627571
TEL:+65-6933-4400 FAX:+65-6933-4413
Business focus: Manufacture and sale of synthetic rubbers

Zeon Asia Pte. Ltd.

Business focus: Manufacture and sale of hydrocarbon resins

591 UBCII BLDG, Office No.2206, 22thFL, Sukhumvit 33rd,
Klongton Nua, Wattana, Bangkok 10110, Thailand
TEL:+66-2-261-0175 FAX:+66-2-261-0172

Singapore

Malaysia
Zeon Asia Malaysia Sdn. Bhd.

Unit 208, Block B, Phileo Damansara II, No.15, Jalan16/11, Off
Jalan Damansara, 46350 Petaling Jaya, Selangor, Malaysia
TEL:+603-7956-7069 FAX:+603-7957-1758
Business focus: Sales of Synthetic latexes

331 North Bridge Road, #20-01/02, Odeon Towers,
Singapore 188720
TEL:+65-6332-2338 FAX:+65-6332-2339
Business focus: Sale, export, and import of synthetic rubbers, synthetic
latex and hydrocarbon resins

Tokyo Zairyo (Singapore) Pte. Ltd.

331 North Bridge Road, #20-01/02, Odeon Towers,
Singapore 188720
TEL:+65-6337-5053 FAX:+65-6337-4557
Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international tradeZeon is continuing with the globalization of its business operations, having first turned its attention to overseas markets in the 1970s.
We are setting up sales networks in major markets around the world and establishing a production system for rubber and resin products. In addition, we have R&D
facilities in the US and Europe. We are also building an R&D and sales base in China, a market which is growing rapidly. We are aiming to become a company that,through its local production systems, builds close ties with local communities and contributes to the global society.

North America
Tokyo Zairyo (Tianjin) Co.,Ltd.

Zeon Chemicals L.P.

Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

Business focus: Manufacture and sale of synthetic rubbers

Room 1805, The Exchange Tower 1, 189 Nanjing Road,
Heping District, Tianjin, 300051, China
TEL:+86-22-2302-1268 FAX:+86-22-2302-1278

Tokyo Zairyo (Hong Kong) Co.,Ltd.

Unit 701, 7th Floor, Tower 2, Silvercord, 30 Canton Road,
Tsimshatsui, Kowloon, Hong Kong
TEL:+852-2162-7362 FAX:+852-2162-7616
Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international tradeTokyo Zairyo (Guangzhou) Co.,Ltd.

Room 1208, Goldlion Digital Network Center, No.138 Ti yu
Dong Road, Tianhe District, Guangzhou, Guangdong,
510620, China
TEL:+86-20-3878-0671 FAX:+86-20-3878-1336

4111 Bells Lane, Louisville, Kentucky 40211, U.S.A.
TEL:+1-800-735-3388 FAX:+1-502-775-2055
TEL:+1-502-775-2000

Zeon Chemicals L.P. - West Coast Office

5 Centerpointe Drive 4th Floor Suite 401 Lake Oswego, OR,
97035, U.S.A.
TEL:+1-971-204-0245 FAX:+1-971-204-0240

Zeon Chemicals L.P. - R&D Center

4111 Bells Lane, Louisville, Kentucky 40211, U.S.A.
TEL:+1-502-775-7765 FAX:+1-502-775-7783

Zeon Chemicals L.P. - Mississippi Plant

1301 West Seventh Street, Hattiesburg, Mississippi 39401,
U.S.A.
TEL:+1-601-583-6020 FAX:+1-601-583-6032

Zeon Chemicals L.P. - Texas Plant

11235 Choate Road, Pasadena, Texas 77507, U.S.A.
TEL:+1-281-474-9693 FAX:+1-281-474-0966

Tokyo Zairyo (U.S.A.) Inc.

50 Main Street, White Plains, New York 10606, U.S.A.
TEL:+1-914-285-9070 FAX:+1-914-285-9072
Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

Zeon Chemicals L.P. - Kentucky Plant
4100 Bells Lane, Louisville, Kentucky 40211, U.S.A.
TEL:+1-502-775-7600 FAX:+1-502-775-7614

Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

Indonesia

MexicoPT. Tokyo Zairyo Indonesia

TOKYO ZAIRYO MÉXICO, S.A. DE C.V.

Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

Business focus: Purchase and sale of synthetic rubbers, chemical
products and various products including international trade

Gedung MidPlaza 2, Lantai 12, Jl. Jend. Sudirman Kav.
10-11, Jakarta 10220
TEL:+62-21-574-6454 FAX:+62-21-573-5661

Korea
Zeon Korea Co., Ltd.

Boulevard Bernardo Quintana 7001 Torre II Suite 807 Colonia
Centro Sur, C.P. 76090 Querétaro; Querétaro, México
TEL:+52-442-229-3242 FAX:+52-442-229-3244

Brazil

No.403, 4Fl., 36, Teheran-ro 87-gil, Gangnam-gu, Seoul,06164, Korea（City Air Tower, Samseong-dong）
TEL:+82-2-539-8565 FAX:+82-2-538-5190

Zeon do Brasil Ltda

Business focus: Sales and import of optical materials, electronicmaterials, synthetic resins, synthetic rubbers

Business focus: Sale of synthetic rubbers and resins

Rua Arandu, 57/cj 23, Sao Paulo-SP, Brazil
TEL:+55-11-5501-2120 FAX:+55-11-5501-2122

Zeon Shinhwa (Zeshin) Inc.

No.502 CALT B/D (City Airport）
22, Teheran-ro 87-gil,Gangnam-gu, Seoul, 06164, Korea
TEL:+82-2-761-7030 FAX:+82-2-786-7221
Business focus: Sale of electronic materials

TaiwanZeon CSC Corporation

3rd Fl. 266, Sec. 1, Wen Hwa 2 Road, Linkou District, New
Taipei City 24448, Taiwan, R.O.C.
TEL:+886-2-2609-2156 FAX:+886-2-2600-6413
Business focus: Sale of optical materials

ZEON GROUPCORPORATE REPORT 201638

Major Sales & Production BasesJAPAN

as of April 1, 2016

Zeon Corporation - Head Office

Shin Marunouchi Center Building, 1-6-2 Marunouchi,
Chiyoda-ku, Tokyo 100-8246, Japan
TEL:+81-3-3216-1772 FAX:+81-3-3216-0501

Tokyo Zairyo Co., Ltd.

Shin Marunouchi Center Building, 1-6-2 Marunouchi,
Chiyoda-ku, Tokyo 100-0005, Japan
TEL:+81-3-5219-2171 FAX:+81-3-5219-2201

Zeon Corporation - Kawasaki Plant

1-2-1 Yako, Kawasaki-ku, Kawasaki, Kanagawa 210-9507,
Japan
TEL:+81-44-276-3700 (Direct)
FAX:+81-44-276-3701

Zeon Corporation - R&D Center

TEL:+81-44-276-3700 FAX:+81-44-276-3701

Zeon Kasei Co., Ltd.

TEL:+81-3-4808-5111 FAX:+81-3-4808-5290

Zeon F&B Co., Ltd.

TEL:+81-3-3216-1410 FAX:+81-3-3216-1421
Business focus: Agency business for life and nonlife insurance; loan
and factoring business to each group company

RIMTEC Corporation

TEL:+81-3-5220-8581 FAX:+81-3-5220-8584

R&D Center: Mizushima

Business focus: Sales of RIM formulation and the cast products

ZIS Information Technology Co., Ltd.
TEL:+81-3-3216-6500 FAX:+81-3-3216-6534

Business focus: Consulting about data processing systems; sales andmaintenance of computer and office automation equipment

Zeon Corporation - Takaoka Plant

630 Ogino, Takaoka-shi, Toyama 933-8516, Japan
TEL:+81-766-21-0252 (Direct)
FAX:+81-766-21-7265

Zeon North Co., Ltd.

351 Ejiri, Takaoka-shi, Toyama 933-0062, Japan
TEL:+81-766-25-1111 FAX:+81-766-25-4059
Business focus: Contracting, design, construction and management forvarious facilities; sale of industrial materials and equipment; purchaseand sale of petrochemical products; Testifying environmental
measurement, measuring working environment; conducting various
analysis

Optes Inc.

Zeon Nano Technology Co., Ltd.

422-1, Futagamishin, Takaoka-shi, Toyama 933-0981,
Japan
TEL:+81-766-32-1590 FAX:+81-766-32-1591

Business focus: Processing and sale of Carbon Nanotubes and related
products

Business focus: Manufacturing of optical film and optical parts; design
and manufacturing of metallic molding

TEL:+81-3-3216-1766 FAX:+81-3-3216-1767

Zeon Medical Inc.

Shiba Park Building, 2-4-1 Shiba Kohen, Minato-ku, Tokyo
105-0011, Japan
TEL:+81-3-3578-7727 FAX:+81-3-3578-7751

Plant: Takaoka

Business focus: Manufacture and sale of medical equipment

Okayama Butadiene Co., Ltd.

Sen-i Kaikan 2F 3-1-11, Nihonbashi-Honcho, Chuo-ku, Tokyo
103-0023, Japan
TEL:+81-3-3278-0721 FAX:+81-3-3278-0722
Business focus: Manufacturing of butadiene monomer

39

ZEON GROUPCORPORATE REPORT 2016

2-1 Nachi-cho, Shunan-shi, Yamaguchi 745-0023, Japan
TEL:+81-834-21-8501 (Direct)
FAX:+81-834-21-8793

Zeon Yamaguchi Co., Ltd.

2-1 Nachi-cho, Shunan-shi, Yamaguchi 745-0023, Japan
TEL:+81-834-21-8482 FAX:+81-834-21-8663
Business focus: Purchase and sale of civil engineering materials,
packing materials, and various facilities; design and construction,
contracting for various plants; environment analysis

Business focus: trading

Business focus: Manufacture and sale of packing materials, packing
containers and distribution equipment

Zeon Corporation - Tokuyama Plant

Plants: Toyama, Fukui and Sano

Zeon Corporation - Mizushima Plant

Zeon Corporation - Osaka OfficeZeon RIM Co., Ltd.

Tohpe Corporation

Business focus: Manufacturing, processing and sale of plastic molding
products

Plants: Ibaraki, Mie, Kurashiki

Zeon Corporation - Nagoya OfficeZeon Polymix Inc.

2767-1 Kojima Shionasu Aza Niihama, Kurashiki-shi,
Okayama 711-8511, Japan
TEL:+81-86-475-0021 FAX:+81-86-475-1169

2767-22 Kojima Shionasu Aza Niihama, Kurashiki-shi,
Okayama 711-0934, Japan
TEL:+81-86-475-0621 FAX:+81-86-475-0620

7F HF Fushimi Bldg., 1-18-24 Nishiki, Naka-ku, Nagoya, Aichi
Pref. 460-0003 Japan
TEL:+81-52-209-9145 FAX:+81-52-209-9147

4F Furukawa Osaka Bldg., West, 2-1-9 Dojimahama, Kita-ku,
Osaka, Osaka Pref. 530-0004 Japan
TEL:+81-6-4797-8220 FAX:+81-6-4797-8225

1-5-11 Chikkoshinmachi, Nishi-ku, Sakai-shi, Osaka
592-8331, Japan
TEL:+81-72-243-6411 FAX:+81-72-243-6415
Business focus: Manufacturing and sale of paints and chemical
products

1-11-1 Ishizue, Ohtsu-shi, Shiga 520-2272, Japan
TEL:+81-77-546-1223 FAX:+81-77-546-0338

Plants: Ohtsu

Business focus: Manufacture of rubber compounds (CM)

Zeon Chemicals Yonezawa Co., Ltd.
3-446-13 Hachimanpara, Yonezawa-shi, Yamagata
992-1128, Japan
TEL:+81-238-29-0055 FAX:+81-238-29-0053

Business focus: Manufacturing, processing and sale of aromatic
chemicals, the middle objects of medicine and agricultural chemicals,
and RIM combination liquid

Ibaraki Zeon Kasei Co., Ltd.

1175 Kamiizushima, bando-shi, Ibaraki 306-0654, Japan
TEL:+81-297-34-2111 FAX:+81-297-34-2316
Business focus: Manufacturing of processed plastic products (PVC
compounds), powdered rubbers and molding products with resin sheet

River Xemex Co., Ltd.

TFC Inc.

Business focus: Manufacture of medical equipment

Business focus: Manufacturing of optical films

2-11-17 Osachigosho, Okaya-shi, Nagano 394-0082, Japan
TEL:+81-266-21-2131 FAX:+81-266-21-1550

34-23-2 Azono, Tsuruga-shi, Fukui 914-0141, Japan
TEL:+81-770-21-1711 FAX:+81-770-21-1775

ZEON GROUPCORPORATE REPORT 201640

Zeon Group History

Launched PVC and Synthetic Rubber ProductionF undamental Leadership in C4 and C5 Chemistry with GPB and
GPI Technologies

Zeon Corporation was founded as a PVC manufacturer in 1950, establishedthrough capital from three Furukawa group companies – Furukawa Electric Co.,
Ltd., Yokohama Rubber Co., Ltd., and Nippon Light Metal Co., Ltd. The company
acquired its PVC manufacturing technologies from BF Goodrich Chemicals Co. in
the United States, which at the time was the global leader in the industry. The
PVC business was the company's original business pursuit until its withdrawal
from the business in 2000.
Furthermore, in 1959, Zeon acquired technologies from BF Goodrich
Chemicals to start up a special synthetic rubber (NBR) plant. This was Japan's
first domestic synthetic rubber plant. Following this, the company embarked on
the production of general-purpose synthetic rubber(SBR). Zeon thus establishedits synthetic rubber business, which produces synthetic rubber for tires andengine components, and which it continues to manufacture today.

Overview of our Main Businesses
and Product Development

In the petrochemical industry, which uses crude oil as a raw material,
technological capabilities are a key element impacting the competitive strengthof a company. Zeon, aiming to secure butadiene, which is the raw material used
for producing PVC and synthetic rubber, developed the GPB process in 1965 toefficiently extract high-grade butadiene from C4 fractions. Moreover, in 1971,
the company developed the GPI process to efficiently extract isoprene, the raw
material for isoprene rubber (IR) and other useful components, from C5 fractions.
The company licences its GPB process technology to countries around theworld. This contributes substantially to the company's competitive edge andpromotes the Zeon brand globally.

1960

1970

1980

Processed
Products
Polyvinyl chloride resins

1990

Powder Slush Compounds

MedicalSupplementary artificial heartLatex(paper manufacturing)&

VP Latex(footwear)

Specialty synthetic rubber(NBR & ACM for automotive parts)

Hydrogenated nitrile rubber (Zetpol®)

Toner

General-purpose
synthetic rubber(SBR & BR for tires)

Hollow latex(paper manufacturing)

Polymerized toner

General-purpose
synthetic rubberwith modified terminals&ChemicalsC5 petroleum resin(roadmarking paints)

Isoprene rubber (IR)(tires)Specialty
Chemicals

Synthetic aroma chemicals(green notes)

Thermoplastic elastomer SIS(adhesives)

Synthetic aroma chemicals(jasmine notes)
C5 fluorine

Electronic
Materials

GPB process

Specialty
Plastics

Cyclo olefin polymers(lenses, prisms)

Dicyclopentadiene

RIM
RIM molded items
and formulation(large-scale plastic products)

GPI process

Developing Comprehensive Uses for C5 FractionR olling out Higher-Grade Materials and Establishing Top-Notch

Isoprene rubber is a useful material which has the same chemical stability as

Manufacturing Technologies

natural rubber. In the process of extracting feedstock isoprene from C5 fractions,many byproducts are derived. The GPI process also has advanced functionality
for the separation of these byproducts at a high degree of purity. Zeon has
focused on the effective use of these various substances.The process wasdeveloped and applied to the production of petroleum resins and thermoplastic
elastomer SIS in the 1980s, synthetic aroma chemicals and RIM molded items in
the 1990s, and cyclo olefin polymers since the 2000s. As a result, we havegrown to be a business that accounts for a large share of the global market.
Moreover, the technologies fostered during this development process are being
used in areas other than C5 fraction.

In recent years, there have been calls for sophisticated products to improveenergy efficiency in response to environmental problems and similar expectations
are growing for chemical materials. To answer these expectations, Zeondeveloped Zetpol®, a hydrogenated nitrile rubber, which provides highfunctionality at a competitive cost and is used in automobile engine components
and other applications with strict requirements. In addition, cyclo olefin polymers,
developed from a comprehensive use of C5 fraction, are high-performancematerials used in optical films, such as for LCD panels and lenses and also as amaterial for electrical insulation.

2000

2010

Enhanced low temperature PVC Powder Slush Compound(used as an automobile instrument panel material)

Termination of PVC production
and divestment
Balloon catheter (IABP)

Energymaterials

Four core catheter products

Stents (bile duct sheath)

NBR latex(rubber gloves)*LIB:
lithium-ion batteries

Water-based binder
for mobile LIB anode

Solvent-based binder
for mobile LIB cathode

Binder for the mobile
LIB functional layer

Binder for a car LIB anode
Water-based binder for anodeand functional layer
in large-capacity smartphone battery

Water-based binder
for battery cathodeHeat-resistant hydrogenated nitrile rubber (Zetpol®)Polymerized color toner

Low-temperature fixing toner(high-speed printers)

Solution-polymerized SBR(fuel-efficient tires)Light color petroleum resin(disposable diaper adhesives)

Asymmetric SIS(disposable diaper film)

Cyclopentanone(solvent and fine chemical raw material)

ResistCyclopentyl methyl ether (CPME)(eco-friendly solvent)Insulation materials

Cyclo olefin polymers(commodity use)

LCD resist for large substrate sizes

Cyclo olefin polymers(blue laser)

Optical films
Films made using
the melt extrusion process

Retardation film made using
the successive stretching process

Retardation film made using
the diagonal stretching process

Film with high thermostability madeusing the diagonal stretching process(touch panels)

ZEON GROUPCORPORATE REPORT 201642

Zeon, Zetpol, Nipol, Quintone, Quintac, ZEONEX andZEONOR are registered trademarks of Zeon Corporation,in the United States and other countries.
ZeonorFilm, ZEOGLOBULE and STEC are trademarks ofZeon Corporation.

Zeon Corporation
CSR Promotion Department
Shin Marunouchi Center Building, 1-6-2 Marunouchi, Chiyoda-ku, Tokyo 100-8246, Japan
Tel: +81-3-3216-0603 Fax: +81-3-3216-0604 http://www.zeon.co.jp/index_e.html

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