FINANCIAL SECTION 2021
CONTENTS

1 TEN-YEAR SUMMARY
3 MANAGEMENT’S DISCUSSION AND ANALYSIS
3 ANALYSIS OF OPERATING RESULTS
5 ANALYSIS OF FINANCIAL POSITION
6 BASIC POLICY ON PROFIT ALLOCATION AND DIVIDENDS FOR
THE FISCAL YEAR ENDED MARCH 31, 2021 AND THE FISCAL YEAR ENDING MARCH 31, 2022
6 RISK INFORMATION
8 CONSOLIDATED FINANCIAL STATEMENTS
9 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
10 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
11 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
12 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
13 CONSOLIDATED STATEMENT OF CASH FLOWS
14 NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
71 INDEPENDENT AUDITOR’S REPORTTEN-YEAR SUMMARY
Millions of yen

JGAAP
For the year:

FY2011FY2012FY2013

FY2014FY2015FY2016

Results for the year
Net sales¥ 349,947¥ 371,487¥ 394,309¥ 404,073¥ 386,709¥ 390,599

Costs and expenses(313,982)(336,281)(358,247)(366,005)(352,301)(358,228)

35,96435,20636,06238,06834,40832,370Interest and dividends income

634

809

916

1,390

1,380

1,369

Interest expenses

(147)

(126)

(142)

(345)

(527)

(699)

Profit before income taxes

41,24542,84736,956

41,06927,36738,327

Profit attributable to owners of parent

26,40730,27825,17329,91924,06930,078

Capital expenditures

19,72827,60821,49935,157

24,276

31,785

Depreciation

17,784

19,14518,096

17,40718,508

14,676430,693482,935

501,320534,592

516,360

576,016

500

6,626

11,06920,38722,24938,381

Total liabilities

148,335

167,202

164,060

169,918

154,006

199,302

EquityOperating profit

Year-end financial position
Total assets
Long-term loans payable

280,955

308,641

331,284

358,303353,145

361,394

Current ratio (times)

2.3

2.3

2.5

2.5

2.7

2.5

Return on assets (%)

6.4

6.6

5.1

5.8

4.6

5.5

Return on equity (%)

9.7

10.3

7.9

8.7

6.8

8.4

Equity ratio (%)

65.2

63.9

66.1

67.0

68.4

62.7

¥ 109.46¥ 126.13¥ 106.10¥ 128.19¥ 105.87¥ 134.43

32.00

34.00

38.00

40.00

50.00

50.00

1,164.63

1,299.77

1,409.06

1,557.08

1,565.45

1,624.14

Per share of common stock(Yen and U.S. Dollars)Profit attributable to owners of parent
Cash dividends
Equity(Notes) 1. Amounts in U.S. dollars are translated from yen, provided for convenience only, at the exchange rate of 1.00 U.S. dollar = 110.71 Japanese yen;
the prevailing rate on March 31, 2021.
2. The Group has adopted International Financial Reporting Standards (IFRS) as from the fiscal year ended March 2018.
3. ROA = Under Japanese GAAP, return on total assets. Under IFRS, return on equity attributable to owners of parent.
4. ROE = Under Japanese GAAP, return on equity. Under IFRS, return on equity attributable to owners of parent.

Revenue/Profit (Loss) attributable toowners of parent

Operating Profit (loss)/
Operating Profit (loss) Margin(¥ billions)(¥ billions)(%)(¥ billions)

80

20

80

600

60

Total Assets/ROA
(%)

12
672.8

446.6
300

30

40

0

0

0

-300

-30

-40

-60

-80

△55.2

-600
(FY)

2017

2018

2019

2020

Revenue
Profit attributable to owners of parent

△61.6

△13.8

10

40

6

0

0

0

-10

-40

-6

-20

-80

△8.2

(FY)

2017

2018

Operating profit
Operating profit margin

2019

2020

-12

(FY)

2017

2018

2019

2020

Total assets
ROA

JSR Corporation Annual Report 2021

1

TEN-YEAR SUMMARY

Millions of yen Thousands of U.S. dollars

IFRS
For the year:

FY2016FY2017FY2018FY2019FY2020

FY2020Results for the year
Revenue¥ 388,455¥ 421,930¥ 495,354¥ 471,967¥ 446,609$ 4,034,041

Costs, other income and expenses(352,512)(378,360)(450,093)(439,083)(508,242)(4,590,752)

Operating profit (loss)

35,943

43,56945,261

32,884(61,633)(556,711)

Finance income

3,045

3,659

2,499

1,929

947

8,552

Finance costs(694)(1,022)(1,352)(2,184)(1,743)(15,748)

Profit (loss) before tax

38,294

46,206

46,40832,629(62,430)(563,906)

Profit (loss) attributable to owners of parent

30,24333,23031,116

22,604(55,155)(495,923)

Capital expenditures

31,37742,40835,98145,88053,669414,416

Depreciation

14,793

16,973

21,79026,34329,477266,254

Total assets

578,484

647,699

691,435

677,713672,773

6,076,891

Borrowings (non-current liabilities)

38,38153,45650,777

52,684

81,406735,304

Total liabilities

202,120

236,084

251,075

240,301

302,036

1,203,383

Total equity attributable to owners of parent

3,016,846

Year-end financial position

361,889

393,499

401,998

396,793

333,995

Current ratio (times)

2.5

2.3

1.97

2.05

1.95

1.95

Return on assets (%)

5.5

5.4

4.7

3.3

(8.2)

(8.2)

Return on equity (%)

8.5

8.8

7.8

5.7

(15.1)(15.1)

Equity ratio (%)

62.6

60.8

58.1

58.5

49.6

49.6

¥ 135.17¥ 149.32¥ 140.62¥ 104.38¥ (256.73)$ (2.32)

50.00

50.00

60.00

60.00

60.00

0.54

1,626.36

1,767.81

1,823.69

1,848.01

1,554.17

14.04

Per share of common stock(Yen and U.S. Dollars)Profit attributable to owners of parent
Cash dividends
Equity attributable to owners of parent

Equity/ROE

R&D Expenses/Capital Expenditures

Shareholder Return/
Dividend Payout Ratio(¥ billions)(%)(¥ billions)(¥ billions)

(%)

80

16

60

40

100

30

75

20

50

446.6
40

370.7

0

8

45

0

30
△55.2

12.9
-40

-8

△15.1

-80
(FY)

2017

Equity
ROE

2018

2019

2020

-16

15

10

0

25

0

(FY)

2017

2018

R&D expenses
Capital expenditures

2019

2020

0

(FY)

2017

2018

2019

2020

Dividend
Share buyback
Dividend payout ratio

JSR Corporation Annual Report 2021

2

MANAGEMENT’S DISCUSSION AND ANALYSIS
Analysis of Operating Results
Overview of FY ended March 2021
(April 1, 2020 to March 31, 2021)
In FY ended March 2021 (April 1, 2020 to March 31, 2021),
there were signs of a slowdown in the global economic
recovery due to the spread of COVID-19, intensifying trade
friction between the U.S. and China, the rise of protectionism,and other factors. As for trends among the Group’s main
customer industries, demand grew in the semiconductor market
from 5G mobile communications systems (5G), computers, anddata centers, and both memory and logic semiconductors
performed well. The flat-panel display market was strong due tothe promotion of telework and stay-at-home demand. Global
automobile production for the full year fell from the previous
year because of COVID-19 lockdowns and other restrictions,although production did recover in the second half of the year.
Global automobile tire production over the full term was also
down, due to the impact of falling automobile production andother factors, but a clear recovery trend was seen in the second
half of the year. As for the exchange rate, the yen appreciatedagainst the dollar year-on-year.
Amid these circumstances, JSR Group strived to expand
business in growth fields as well as take steps such as cutting
business costs to mitigate the risk of declining sales due toeconomic stagnation and weak demand. In the Elastomers
Business, the Group focused on lowering manufacturing costs
and other measures to guard against the risk of declining sales
due to sluggish demand. The Group has been promoting thestreamlining of raw materials and logistics and other cost-cutting
measures, the optimization of sales prices, and the retooling of
personnel structures with the implementation of an early
retirement incentive program. Additionally, the Group hasreorganized operations in the Display Materials Business bydownsizing operations in South Korea and Taiwan and shifting
operations to China, and in the Elastomers Business, the Grouphas implemented structural reforms throughout the organization,
including adjustments to business and product segments.
A one-time expense pertaining to these business structuralreforms was recorded in FY ended March 2021.
In addition, JSR Group issued 35,000 million yen in straightbonds in May 2020 to secure funds for future investments ingrowth areas such as semiconductors and life sciences, and todiversify fund procurement to improve the stability of theGroup’s financial base. The Group took definitive steps regarding
business expansion in growth areas, such as making Medical &Biological Laboratories Co., Ltd. (MBL) a wholly owned
subsidiary to bolster competitiveness in the therapeutic
discovery support field and in the development of newcompanion diagnostics, as well as commencing commercial
production operations at a new U.S. facility of functional

cleaning solutions intended for cutting-edge semiconductors.
As a result, the Group reported revenue of 446,609 million
yen (down 5.4% year-on-year), an increase compared to theforecast at the time the Second Quarter results wereannounced, but a decrease compared to the previous fiscal year.
Core operating profit was 25,963 million yen, up from theforecast at the time the Second Quarter results wereannounced, but down year-on-year. Although the Digital
Solutions Business grew, the Group’s business was affected byrevenue declines in the Elastomers Business and Plastics
Business, which were hit by the effects of COVID-19. The Group
posted an operating loss of 61,633 million yen, versus an
operating profit of 32,884 million yen in the previous fiscal year,
due to the recording of restructuring expenses. Loss attributableto owners of parent was 55,155 million yen, compared withprofit attributable to owners of parent of 22,604 million yen in
the previous fiscal year.
Business Segment Overview
The JSR Group’s business is classified into four reportablesegments: Digital Solutions, Life Sciences, Elastomers, andPlastics. The reportable segments are positioned as shown below.
Digital Solutions Business Segment
The Digital Solutions Business segment experienced bothincreased revenue and profit compared to the previous fiscal year.
In the Semiconductor Materials Business, demand for both
memory and logic semiconductors has been firm since theFirst Quarter of FY 2020. Sales of advanced photoresists wereparticularly strong, due in part to advanced device launches bymajor customers. In addition, smooth product launches wereachieved of cleaning solutions and packaging materials for
cutting-edge semiconductors destined for major customers,
which contributed to revenue gains from the previous fiscal
year. The sector secured higher core operating profit despite
Core Operating Profit (¥ millions)
Digital Solutions BusinessCore Operating Profit
Life Sciences BusinessCore Operating Profit
Elastomers BusinessCore Operating Profit
Plastics BusinessCore Operating Profit
Other Businesses & Adjustment
Core Operating Profit
RevenueCore Operating Profit

FY2019144,805
30,91750,496
3,945
178,794(1,758)95,0926,237
2,779(6,105)

FY2020151,420
34,56855,1973,510
143,186(11,420)
79,123
4,430
17,682(5,125)471,967
33,236446,60925,963

JSR Corporation Annual Report 2021

3

MANAGEMENT’S DISCUSSION AND ANALYSIS

greater expenses incurred with expanded cleaning solutions
sales. Since the Semiconductor Materials Business is deemedan essential business for people’s livelihoods, global R&D,
production, and other business activities continued without
being impacted by the COVID-19 pandemic.
The Display Materials Business saw expanded sales
volume to China of alignment films for wide-screen TV LCD
panels, a focus point of the business. The sector posted lower
revenue on lower sales of color resist and photosensitive
spacers caused by some customers abandoning LCD production,amid the shift of LCD production from South Korea andTaiwan to China. Despite this, the Display Materials Businessboosted its core operating profit on the back of strongalignment film sales.
The Edge Computing Business suffered revenue and profit
declines because of a sales decrease in near-infrared (NIR) filters.
Consequently, the Digital Solutions Business segment
posted a core operating profit of 34,568 million yen (up 11.8%
year-on-year) on revenue of 151,420 million yen (up 4.6%
year-on-year).
Life Sciences Business Segment
In the Life Sciences Business, with the U.S. headquarters
guiding strategies for the entire business segment, the Grouphas worked to expand revenue primarily in the biomedical drug
discovery business and the biomedical drug contractdevelopment and manufacturing business, in addition to JSR
materials. Favorable progress was achieved by Contract
Research Organization (CRO) business provided by Group
company Crown Bioscience International (Crown). In the
biologics Contract Development and Manufacturing Organization(CDMO) business, led by Group companies Selexis SA (Selexis)
and KBI Biopharma, Inc. (KBI), Selexis posted solid revenue
growth, while KBI achieved higher revenue on lower profit due
to COVID-19-related supply-chain interruptions and a one-time
accounting adjustment recorded in the previous fiscal year.
Revenue from diagnostic reagent materials, bioprocessmaterials, and other products also climbed. The diagnostic
reagent business of Medical & Biological Laboratories Co., Ltd.
(MBL), which became a wholly owned subsidiary in the current
fiscal year, grew steadily, contributing to overall higher revenue
from the previous fiscal year.
As a result, the Life Sciences Business segment posted acore operating profit of 3,510 million yen (down 11.0% yearon-year) on revenue of 55,197 million yen (up 9.3%
year-on-year)
Elastomers Business Segment
The COVID-19 pandemic’s impact on production of automobile
tires, one of the segment’s main customer industries, wascompounded by temporary production stoppages or reductions

at tire-maker plants in Europe and elsewhere intended to curb
the spread of COVID-19. Consequently, yearly production was
down from the previous fiscal year, although production began
to recover in the second half of the year.
Amid these circumstances, the sales volume of Solution
Styrene-Butadiene Rubber (SSBR), positioned as a strategic
product, remained at the same level as the previous fiscal year,
despite a year-on-year decline in worldwide tire production.
Nevertheless, the Elastomers Business recorded lower revenue
compared to the previous fiscal year, as the segment’s overallsales volume was sluggish and sales prices slid because of adeterioration in raw-material market conditions. The segment
posted a core operating loss for the full term as a result of
revenue declines and narrower price spreads.
Consequently, the Elastomers Business segment’s core
operating loss expanded from 1,758 million yen to 11,420
million yen on revenue of 143,186 million yen (down 19.9%
year-on-year).
Plastics Business Segment
The Plastics Business segment saw a drop in sales volume
and revenue from the previous fiscal year, due to weaker
demand resulting from the COVID-19 pandemic. Core
operating profit fell due to the segment’s sales volume decline.
As a result, the Plastics Business segment posted a core
operating profit of 4,430 million yen (down 29.0% year-on-year)
on revenue of 79,123 million yen (down 16.8% year-on-year).
Business Outlook
The business landscape is anticipated to improve in FY 2021,
given the upward adjustment of the global economic growthrate and other factors, despite the rocky international situation
caused by the re-emergence of COVID-19 infections andongoing confrontations between the two major powers, theUnited States and China. While the economy is expected topick up on the back of additional support measures andvaccine roll-outs in major countries, the complication of various
risks, such as countries imposing stringent restrictions on
economic activities to control the pandemic, means future
prospects remain uncertain and geopolitical fluctuations must
continue to be addressed. The semiconductor market, driven
by digital infrastructure demand, is expected to see robust
growth as an essential industry, and continued growth ispredicted for display production as well. The solid demand
forecasts over the medium-to-long-term for the life sciences
field remain unchanged. As with automobile production, therecovery trend in automobile tire production is predicted tocontinue, although the industry’s prospects are not clear. The
semiconductor market, driven by digital infrastructure demand,is expected to see robust growth as an essential industry, andcontinued growth is predicted for display production as well.
JSR Corporation Annual Report 2021

4

MANAGEMENT’S DISCUSSION AND ANALYSISThe solid demand forecasts over the medium-to-long-term forthe life sciences field remain unchanged.
For the FY ending March 2022, JSR forecasts revenue of
468,000 million yen (up 4.8 percent year-on-year), core operating
profit of 53,000 million yen (up 104.1 percent year-on-year),
operating profit of 53,000 million yen (compared to an
operating loss of 61,600 million yen in the previous fiscal year),and profit for the year attributable to owners of parent of

32,000 million yen (compared to a loss of 55,200 million yen in
the previous fiscal year). The forecast assumes an exchange
rate of 106 yen per U.S. dollar. Actual business performance
may vary substantially due to future developments in social
conditions and economic conditions. JSR will promptly
disclose revisions to the earnings forecast, should they
become necessary.

Analysis of Financial Position
Overview of Financial Position for FY ended March 2021
Total assets as of March 31, 2021 amounted to 672,773 million
yen, down 4,941 million yen from a year earlier.
Current assets totaled 329,279 million yen, up 25,804
million yen, due to an increase in cash and cash equivalents
resulting from the issue of bonds.
Non-current assets totaled 343,494 million yen, down
30,744 million yen, due to the recording of impairment losses
for property, plant, and equipment.
Total liabilities amounted to 302,036 million yen, up 61,735
million yen, due to an increase in bonds and borrowings
resulting from the issue of bonds.
In terms of equity, total equity attributable to owners ofparent amounted to 333,995 million yen, down 62,798 million
yen from a year earlier, due to the recording of net loss
attributable to owners of parent. Total equity, including
noncontrolling interests, amounted to 370,736 million yen,down 66,675 million yen.
Overview of Cash Flows for FY ended March 2021
Cash and cash equivalents (“funds”) as of March 31, 2021 stoodat 85,377 million yen, up 23,445 million yen from a year earlier.
Net cash provided by operating activities amounted to 70,403
million yen, up 16,175 million yen from the previous year. The
main factors included impairment loss of 79,575 million yen, loss
before tax of 62,430 million yen, and depreciation expenses anddepreciation charges of 29,477 million yen.
Net cash used in investing activities totaled 52,687 million
yen, up 17,095 million yen from the previous year. The main
item was 55,205 million yen in payments for purchase ofproperty, plant and equipment.
Net cash provided by financing activities totaled 4,297
million yen, up 29,561 million yen from the previous year. The
main items were 34,836 million yen in proceeds from the issueof bonds, 12,887 million yen in dividends paid, and 11,717
million yen in payments for acquisition of shares of subsidiaries
not involving a change in the scope of consolidation.
The Group formulates a funding plan based on the annual
business plan and controls liquidity risk in consideration of an

appropriate balance of direct and indirect funding, as well as
short-term and long-term funding.
Financing and Capital Liquidity
The Group’s need for capital includes working capital such as
raw material costs; overhead costs; selling, general andadministrative expenses; capital investment, business
investment including M&As; and repayment of interest-bearing
debt related to manufacturing and sales. The Group meets suchneeds for capital mainly from operating cash flows and byborrowing from financial institutions.
The Group formulates a financial plan based on the annual
business plan, and manages liquidity risks by ensuring anappropriate balance between direct and indirect financing andbetween short-term and long-term financing to prepare forthese risks, while considering business expansion andenhancement of the financial position. The Group registered forthe issuance of up to 50 billion yen in corporate bonds. In thecurrent fiscal year under review, we will issue a total of 35 billion
yen in unsecured corporate bonds to further diversify our
methods for raising capital.
We are also introducing a cash management system for the
purpose of efficient use of capital, and are seeking to centralize
capital procurement and management within the Group.
Significant Accounting Policies
The Group’s consolidated financial statements are prepared inaccordance with IFRS. In preparing these statements, we makeaccounting estimates based on reasonable criteria fornecessary matters.
The significant accounting policies, accounting estimates,
and assumptions used in the estimates adopted in the Group’s
consolidated financial statements are described in “V. Financial
Information, 1. Consolidated Financial Statements, etc., A.
Consolidated Financial Statements Note 4 ‘Significant
Accounting Policies’ and Note 6 ‘Significant Accounting
Estimates and Assumptions for Estimates” in the securities
report published in Japanese.

JSR Corporation Annual Report 2021

5

MANAGEMENT’S DISCUSSION AND ANALYSIS

Basic Policy on Profit Allocation and Dividends for the Fiscal
Year ended March 31, 2021 and the Fiscal Year ending
March 31, 2022
With respect to profit appropriation, the Company regards
business growth over the long term as its top priority. To generate
sustainable long-term growth, JSR strives to increase its
competitiveness by developing new businesses through thereinforcement of research and development activities.
The Company determines returns to shareholders by taking
into account business performance and medium-term andlong-term demand for funds, while giving consideration to abalance between returning profits to shareholders andretaining earnings necessary for future business advancement.
Over the period of the management policy up to the FY
ending March 2025, we intend to maintain an overall return
ratio of about 50%, taking into consideration business
continuity and stability and the flexible buyback of shares. The
Company’s policy is to pay an interim and year-end dividend.
The decision-making bodies that determine dividend payments
is the General Meeting of Shareholders for year-end dividends
and the Board of Directors for interim dividends.
Based on this policy, the interim dividend for the fiscal
year under consideration was set at 30 yen per share. As
previously announced, the year-end dividend was also set at
30 yen per share, yielding a combined annual dividend of 60
yen per share.
Moreover, the Articles of Incorporation stipulate that theCompany may distribute dividends pursuant to Paragraph 5,
Article 454 of the Companies Act; a resolution to distribute aninterim dividend for the FY ended March 2021 was made by
the Board of Directors on October 27, 2020.
Risk Information
JSR Group believes that preventing a major crisis fromoccurring and minimizing the impacts on business activities
should such a crisis occur is an important management role.
Risks related to business strategy are managed by means ofdeliberation and resolution at important meetings such as theBoard of Directors. JSR Group is exposed to the following risks
that may impact on operating results, financial position, cash
flows, and other aspects of its business performance.
To manage risks associated with business operations, theGroup has formulated Risk Management Policies andestablished a Risk Management Committee. Since the FY ended
March 2010, we have operated our own risk management
system, and under the direction of the Risk Management
Committee, regularly identify risks in all departments in Japanand overseas, including Group companies. We have identified
risks using a risk map which shows degree of impact onmanagement and frequency of occurrence. Risks that may
significantly impact business continuity are positioned as JSRGroup Significant Risks, of which management is directly
cognizant. By monitoring risks and regularly reviewing them,
the Group is working to construct and maintain a system forprevention and crisis preparedness.
Forward-looking statements are based on the Group’s
judgments as of March 31, 2021, and the Group’s businessand other risks are not limited to the following matters.
(1) Changes in Demand due to Economic Trends
Major industries in which JSR Group’s products are sold, suchas automobiles and electronics, may be influenced by the
economic climate in countries or regions. An economic
slowdown could reduce demand in these industries andadversely affect JSR Group’s operating results.
(2) F luctuation in Prices for Crude Oil,
Naphtha and Other Major Raw Materials
Fluctuations in prices for crude oil and naphtha, or changes inmarket conditions for other major raw materials, couldchange procurement prices of raw materials or market
conditions for products and adversely affect JSR Group’s
operating results, especially in the Elastomers Business and
Plastics Business.
(3) Development of New Products
Large, unforeseen changes in the industry or market could
prevent the timely development of new products and adversely
affect JSR Group’s operating results.
(4) R&D Involving Next-Stage Growth Businesses
JSR Group actively invests in R&D to create next-stage growthbusinesses. However, there is no guarantee that all R&D
activities will yield worthwhile results. Depending on R&D
results, there could be an adverse effect on JSR Group’s
operating results.
(5) Protection of Intellectual Property
Disputes over intellectual property with other companies could
arise or infringements on JSR’s intellectual property by othercompanies could occur.
(6) Product Quality Assurance and Product Liability
Damage or injury caused by a product manufactured by JSRGroup could adversely affect JSR Group’s operating results.
(7) Procurement of Raw Materials
An interruption in the supply of raw materials due to an accident
at a raw materials manufacturer or a supply stoppage due toquality issues or bankruptcy could hinder production activities
and adversely affect JSR Group’s operating results.

JSR Corporation Annual Report 2021

6

MANAGEMENT’S DISCUSSION AND ANALYSIS(8) Natural Disasters and Accidents
Constraints on economic activity caused by prolonged
COVID-19 infections or a major natural disaster or accident at a
manufacturing facility that damages the manufacturing facility
or disrupts production could adversely affect JSR Group’s
operating results.
(9) Environmental Issues
In the event that a spill of any type of chemical occurs or thatenvironmental regulations become more stringent, the Group’sbusiness activities could be constrained, the Group may haveto pay compensation and other costs, or the Group may haveto make new substantial capital expenditures. Any of these
events could adversely affect JSR Group’s operating results.
(10) Laws and Regulations
In the countries where it operates, JSR Group is subject tovarious laws and regulations involving business and investment
permits, import and export activities, trade, labor relations,
intellectual property, taxes, foreign exchange, and other matters.
In the event that a law or regulation is violated, or a law or
regulation becomes stricter or is significantly altered, there
could be limitations to the Group’s business activities oradditional compliance costs. Any of these events could
adversely affect JSR Group’s operating results.

(11) Fluctuation in Exchange Rates
JSR Group is susceptible to the effects of exchange rate
fluctuations. Operating results of consolidated subsidiaries andequity-method affiliates located in other countries are converted
into Japanese yen amounts for the purposes of preparing
consolidated financial statements. Accordingly, yen appreciation
could adversely affect JSR Group’s operating results.
(12) Overseas Operations
Overseas operations are exposed to a number of risks that
include, but are not limited to, an unfavorable politicalenvironment or economic trends; labor disputes and otherproblems due to differences in labor laws and other working
conditions; difficulty in recruiting and retaining employees; anadverse impact on business activities due to inadequate social
infrastructure; and the impact of wars, terrorism, and othersocial instability. Any of these events could adversely affectJSR Group’s operating results.
(13) Litigation
JSR Group may be sued or be involved in other litigation
concerning a dispute with a supplier, customer, or otherexternal party. The outcome of significant litigation could
adversely affect JSR Group’s operating results.

JSR Corporation Annual Report 2021

7

CONSOLIDATED FINANCIAL STATEMENTS
Financial Section
1.	Preparation Policy of the Consolidated Financial
Statements
The consolidated financial statements of the Company areprepared in accordance with International Financial ReportingStandards (hereinafter “IFRS”) pursuant to the provisions ofArticle 93 of the Regulation on Terminology, Forms andPreparation Methods of Consolidated Financial Statements(Ministry of Finance Order No. 28 of 1976; hereinafter the“Regulation on Consolidated Financial Statements”).
2. Audit Certification
In accordance with the provisions of Article 193-2, paragraph 1of the Financial Instruments and Exchange Act of Japan, theconsolidated financial statements for the fiscal year ended
March 31, 2021 were audited by KPMG AZSA LLC.

3.	Special Efforts to Ensure the Appropriateness ofConsolidated Financial Statements, etc., andDevelopment of a System for Fair Preparation ofConsolidated Financial Statements, etc., in Accordancewith IFRS(1) T he Company has implemented special efforts to ensure theappropriateness of consolidated financial statements, etc.,
Specifically, the Company has become a member of the
Financial Accounting Standards Foundation and obtains
information including the latest accounting standards in orderto develop a system that enables it to properly understandthe contents of accounting standards, etc., or respond
appropriately to changes in accounting standards, etc. In
addition, the Company’s staff members have attended
seminars, lectures and other events held by the AccountingStandards Board of Japan.
(2) F or the adoption of IFRS, the Company keeps up with thelatest accounting standards by obtaining press releases andstandards published by the International AccountingStandards Board as needed. To prepare appropriate
consolidated financial statements under IFRS, the Company
has developed accounting policies, etc., of the Group inaccordance with IFRS and performs accounting procedures
based on these policies.

JSR Corporation Annual Report 2021

8

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2020 and 2021
Millions of yen

Thousands of U.S. dollars

Note

As of March 31, 2020

As of March 31, 2021

As of March 31, 2021

Cash and cash equivalents

9¥ 61,931¥ 85,377$  771,173

Trade and other receivables

10, 35110,506

125,292

1,131,712

12

112,840

104,862

947,180

Other financial assets

11, 35

4,064

1,933

17,461Other current assets

14

11,487

11,815

106,718

300,829

329,279

2,974,245

2,646

—

—

303,475

329,279

2,974,245
1,539,406

AssetsCurrent assets

Inventories

Subtotal
Assets associated with disposal group classified as held for sale

13

Total current assets
Non-current assets
15, 16, 18

215,664

170,428

Goodwill

Property, plant and equipment

17, 1858,28358,633529,611

Other intangible assets

17, 1815,891

15,014

135,615

Investments accounted for using equity method

19

25,38521,015

189,820

Retirement benefit asset

23

2,560

4,905

44,30311, 3544,65649,751

449,383

Other financial assets
Other non-current assets

14

2,469

3,598

32,499Deferred tax assets

20

9,331

20,150

182,009

Total non-current assets
Total assets

374,238

343,494

3,102,645

677,713672,773

6,076,891

92,839100,797

910,460

8,489

9,368

84,61430,04337,872342,080

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables

22, 35Contract liabilities
Borrowings

21, 35

Income taxes payable
Provisions

24

1,757

4,866

43,957—

1,837

16,594

Other financial liabilities

21, 35

3,138

3,874

34,990

Other current liabilities

25

9,486

10,196

92,097

145,752

168,810

1,524,790

2,646

—

—

148,398

168,810

1,524,790

Subtotal
Liabilities associated with disposal group classified as held for sale

13

Total current liabilities
Non-current liabilities
Contract liabilities
Bonds and borrowings

21, 35—

7,861

71,002

52,684

81,406735,304
174,458

Retirement benefit liability

23

16,216

16,434

Other financial liabilities

21, 35

16,19819,314

46,392Other non-current liabilities

25

3,667

5,136

148,438

Deferred tax liabilities

20

Total non-current liabilities
Total liabilities

3,139

3,077

27,79091,903

133,227

1,203,383

240,301

302,036

2,728,174

EquityEquity attributable to owners of parent
Share capital

26

23,37023,370211,095

Capital surplus

26

18,242

11,562

104,438

Retained earnings

26

369,102

302,916

2,736,120

Treasury shares

26(19,547)(19,202)(173,442)

Other components of equity

26

5,626

15,348

138,634

396,793

333,995

3,016,846

Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity

40,61936,741331,871437,412370,736

3,348,717¥677,713¥672,773$6,076,891

See accompanying notes.

JSR Corporation Annual Report 2021

9

CONSOLIDATED STATEMENT OF PROFIT OR LOSSJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2020 and 2021
Millions of yen

Thousands of U.S. dollars

Note

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

7, 28Continuing operations¥ 471,967¥ 446,609$ 4,034,041

Cost of sales

Revenue(331,228)(313,200)(2,829,015)

Gross profit

140,739

133,408

1,205,026(949,481)

Selling, general and administrative expenses

29(104,343)(105,117)

Other operating income

30

1,304

1,790

16,172Other operating expenses

18, 30(4,879)(87,584)(791,108)64(4,132)(37,319)7

32,884(61,633)(556,711)

Share of profit (loss) of investments accounted for using equity
methodOperating profit (loss)
Finance income

7, 31

1,929

947

8,552

Finance costs

7, 31(2,184)(1,743)(15,748)

Profit (loss) before tax

7

32,629(62,430)(563,906)

Income tax expenses

20(6,859)7,900

71,357

25,770(54,530)(492,549)

Profit (loss) from continuing operations
Discontinued operations
Profit from discontinued operations

13

252

—

—

¥ 26,022¥ (54,530)$  (492,549)

Owners of parent

22,604(55,155)(498,197)

Non-controlling interests

3,418

625

5,648

¥ 26,022¥ (54,530)$  (492,549)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Profit (loss) for the period
Profit (loss) attributable to:

Total

Yen

Note

U.S. dollars

Earnings (loss) per share
Basic earnings (loss) per share¥104.38¥(256.73)$(2.32)

Continuing operations

33

103.22(256.73)(2.32)

Discontinued operations

33

1.16

—

—

104.19(256.73)(2.32)

Diluted earnings (loss) per share
Continuing operations

33

103.03(256.73)(2.32)

Discontinued operations

33

1.16

—

—

See accompanying notes.

JSR Corporation Annual Report 2021

10

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2020 and 2021
Millions of yen

NoteProfit (loss)

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥26,022¥(54,530)$(492,549)

Other comprehensive income
Items that will not be reclassified to profit or loss
Net change in financial assets measured at fair value through othercomprehensive income

32(1,377)

5,101

46,076

Remeasurements of defined benefit plans

32

661

1,438

12,986

Share of other comprehensive income of investments accounted forusing equity method

32

(31)

68

615

Items that may be reclassified to profit or loss
Net change in fair value of cash flow hedges

32

(124)

28

251

Exchange differences on translation of foreign operations

32(4,111)

6,167

55,709

Share of other comprehensive income of investments accounted forusing equity method

32

(904)

65

585

Total other comprehensive income, net of tax(5,886)

12,867116,222

Total comprehensive income

20,136(41,663)(376,327)

17,486(43,458)(392,542)

2,650

1,795

16,214¥20,136¥(41,663)$(376,327)

Comprehensive income attributable to:
Owners of parent
Non-controlling interests
Total
See accompanying notes.

JSR Corporation Annual Report 2021

11

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2020 and 2021
Fiscal year ended March 31, 2020

Millions of yen

Equity attributable to owners of parent
Note

Balance at April 1, 2019

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesOther
componentsof equity¥23,370¥18,436¥351,476¥(10,042)¥18,758

Effect of changes in accounting policies

133

Restated balance at April 1, 201923,37018,436

Profit351,609(10,042)

18,75822,604—

Share-based remuneration transactions
Dividends—

22,604(174)
27

Changes in treasury shares(31)¥401,998¥38,361¥440,360

402,131

38,361

440,493
26,022

133

22,604

3,418(5,118)(5,118)(768)(5,886)—(5,118)17,486

2,650

20,136292(47)(1,453)(14,507)(13,054)

Transfer from other components of equity
to retained earnings

Total
equity133

Other comprehensive income
Total comprehensive income

Total

Noncontrollinginterests

71(13,054)(9,798)71(9,829)7,968(7,968)(9,829)——Changes by sale of shares of subsidiaries

—

(361)

(361)

Changes in equity due to capital increaseof subsidiary

—

1,422

1,422

Other movements
Total transactions with owners, etc.
Balance at March 31, 2020

10

(24)

—

(194)

(5,110)(9,506)(8,014)(22,825)(392)(23,217)¥23,370¥18,242¥369,102¥(19,547)¥ 5,626¥396,793¥40,619¥437,412

Fiscal year ended March 31, 2021

(13)

Millions of yen

Equity attributable to owners of parent
Note

Balance at April 1, 2020

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesOther
componentsof equity

Total

Noncontrollinginterests

Total
equity¥23,370¥18,242¥369,102¥(19,547)¥ 5,626¥396,793¥40,619¥437,412(55,155)625(54,530)

11,697

11,697

1,170

12,867—

11,697(43,458)

1,795(41,663)

266

(9)

(479)

(13,368)

Profit (loss)(55,155)

Other comprehensive income
Total comprehensive income—

Share-based remuneration transactions
Dividends—(55,155)(6)
27(12,888)

Changes in treasury shares(18)

Transfer from other components of equity
to retained earnings

80

Other movements(541)

Balance at March 31, 2021

(2,399)—(27)(6,682)62—(5,198)(11,881)

460

(82)

5

(77)

—

(6,679)(11,031)346(1,975)(19,339)(5,673)(25,012)¥23,370¥11,562¥302,916¥(19,202)¥15,348¥333,995¥36,741¥370,736

Fiscal year ended March 31, 2021

Thousands of U.S. dollars

Equity attributable to owners of parent
Note

Balance at April 1, 2020

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesOther
componentsof equity

Total

Noncontrollinginterests

Total
equity$211,095$164,768$3,333,957$(176,564)$ 50,816$3,584,073$366,897$3,950,970(498,197)

5,648(492,549)

105,655

105,655

10,566116,222—

105,655(392,542)

16,214(376,327)

2,400

(80)

(116,416)(4,328)(120,744)

562

(1)

561

(46,954)(107,315)

Profit (loss)(498,197)

Other comprehensive income
Total comprehensive income—

Share-based remuneration transactions—(498,197)(53)
27(116,416)

Changes in treasury shares(160)

Transfer from other components ofequity to retained earnings

722
21,665

Changes in non-controling interests(60,117)

Other movements(4,889)Total transactions with owners, etc.
Balance at March 31, 2021

251

62

(6,656)

Total transactions with owners, etc.

251
(12,888)2,399

Changes in non-controling interests

Dividends(13)$211,095

2,267(21,665)—(243)(60,360)

2,267

—

4,151

(738)

43

(695)

(60,330)(99,640)

3,122(17,837)(174,685)(51,240)(225,926)$104,438$2,736,120$(173,442)$138,634$3,016,846$331,871$3,348,717

See accompanying notes.

JSR Corporation Annual Report 2021

12

CONSOLIDATED STATEMENT OF CASH FLOWSJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2020 and 2021
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥ 32,629¥(62,430)$(563,906)(3,208)—0Depreciation and amortization

26,35929,477266,254

Interest and dividend income(1,369)(903)(8,153)

Interest expenses

1,825

1,743

15,744

Note
Cash flows from operating activities
Profit (loss) before tax
Loss before tax from discontinued operations

13

Share of loss (profit) of investments accounted for using equity
method

(64)

4,132

37,3191,801

79,575

718,771

Decrease (increase) in trade and other receivables

23,317(13,009)(117,502)

Decrease (increase) in inventories

1,446

9,807

88,586

Increase (decrease) in trade and other payables(27,721)

11,772

106,336
135,501

Impairment loss

18

Other

11,912

15,001Dividends received

1,591

1,076

9,720

Interest received

216

201

1,812

(1,732)(1,605)(14,496)

—

958

8,653

Income taxes paid

(12,773)(5,393)(48,712)Net cash provided by (used in) operating activities

54,22870,403635,927

Interest paid
Income taxes refund

Cash flows from investing activities
Net decrease (increase) in time deposits

1,036

2,145

19,371

Purchase of property, plant and equipment(43,951)(55,205)(498,647)

913

284

2,565

Purchase of investments

Proceeds from sale of property, plant and equipment(4,426)(1,606)(14,510)Proceeds from sale of investments

15,4492,016

18,210

(749)

—

—
4,503

Payments for sale of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from sales of shares of subsidiaries resulting in change inscope of consolidation—

498

Purchase of shares in associates(1,928)——

Payments for loans receivable(1,441)(567)(5,123)

Collection of loans receivable

309

627

5,666

Other

(804)

(878)

(7,934)(35,592)(52,687)(475,897)

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings

21

2,547

(2,424)(21,892)

Repayments of long-term borrowings

21(7,839)(11,428)(103,224)

Proceeds from long-term borrowings

21

5,846

11,320102,252—

34,836314,656

Proceeds from issuance of bonds
Payments for purchase of treasury shares(10,002)

(3)

(27)

(13,052)(12,887)(116,404)

Dividends paid to non-controlling interests(1,453)(464)(4,190)Capital contribution from non-controlling interests

1,422

—

—

Dividends paid

27

Purchase of shares of subsidiaries not resulting in change in scope of
consolidation
Repayments of lease liabilities

21

Other
Net cash provided by (used in) financing activities—(11,717)(105,836)(3,025)(3,264)(29,479)

292

327

2,957

(25,264)

4,297

38,812

Effect of exchange rate changes on cash and cash equivalents(1,049)1,432

12,931

Net increase (decrease) in cash and cash equivalents(7,677)23,445

211,773

Cash and cash equivalents at beginning of period

70,78561,931

559,401

Cash and cash equivalents included in assets associated with disposalgroups classified as held for sale13

(1,176)——

Cash and cash equivalents at end of period

9¥ 61,931¥ 85,377$ 771,173

See accompanying notes.

JSR Corporation Annual Report 2021

13

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS
JSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2020 and 2021

(1) Reporting Entity
JSR Corporation (the “Company”) is incorporated in Japan. The
consolidated financial statements comprise the financial
statements of the Company and its subsidiaries (collectively, the“Group”) together with the Group’s attributable share of theresults of associates and joint ventures. The Group is primarily

engaged in the Digital Solutions Business, the Life Sciences
Business, the Elastomers Business and the Plastics Business aswell as businesses related to these. The products of thesebusinesses are wide ranging. See the note “(7) Segment
Information” for further details.

(2) Basis of Preparation
1) Compliance with Accounting Standards
The Group meets the requirements of a “specified company”
set forth in Article 1-2 of the “Ordinance on Consolidated
Financial Statements.” Accordingly, the Group prepares
consolidated financial statements in accordance with IFRS
pursuant to the provisions of Article 93 of the said Ordinance.
2) Basis for Measurement
The Group’s consolidated financial statements, with the
exception of assets pertaining to post-employment benefit
plans, financial instruments measured at fair value, etc., statedon “(4) Significant Accounting Policies,” are prepared on ahistorical cost model.
3) Presentation Currency and Units
The Group’s consolidated financial statements are presented inJapanese yen, the currency of the primary economic

environment in which the Company performs business activities(the “functional currency”), with amounts rounded to thenearest million yen.
The translation of the amounts in Japanese yen into US
dollars is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate on March 31, 2021,
which was ¥110.71 to $1.00. The amounts translated should not
be construed as representations that the amounts in Japanese
yen have been, could have been, or could in the future be,converted into US dollars at this or any other rates of exchange.
4) Authorization of Consolidated Financial Statements
The consolidated financial statements have been authorized by
Nobuo Kawahashi, the Company’s representative director andpresident and COO, and Hideki Miyazaki, the Company’s CFO,
on June 17, 2021.

(3) Explanation of New Standards and Interpretations Not Applied
The major new or revised standards and interpretations
published prior to the date of authorization of the consolidated

financial statements have no significant impact.

(4) Significant Accounting Policies
The significant accounting policies that have been applied to theconsolidated financial statements are as follows and are

identical to those applied to all periods stated in the
consolidated financial statements.

1) Basis of Consolidation

adjustments are made to the subsidiary’s financial statements, if
necessary. All intergroup balances of payables and receivables,internal transactions and unrealized gains or losses arising fromtransactions within the Group are eliminated in preparing theconsolidated financial statements.
When the Company retains control when there has been
partial disposal of ownership interest in a subsidiary, the partial
disposal is accounted for as an equity transaction. Any
difference between the amount by which the non-controllinginterests are adjusted and the fair value of the consideration
paid or received is recognized directly in equity attributable to
Owners of the parent company.

(i) Subsidiaries
Subsidiaries refer to all entities controlled by the Group. The
Group is deemed to have control over an entity if it has
exposure or rights to variable returns from its involvement in theentity and has the ability to use its power over an entity to affectsuch returns. The financial statements of subsidiaries areincluded in the Group’s consolidated financial statements fromthe date the Company gains control until the date it loses
control of the subsidiary.
In cases where the accounting policies applied by a
subsidiary are different from those applied by the Group,

JSR Corporation Annual Report 2021

14

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

If the Company loses control over the subsidiary, gains orlosses derived from such loss are recognized as profit or loss.
When the fiscal year-end of a subsidiary is different from theend of the reporting period of the Group, the Company uses
financial statements of the subsidiary based on the provisional
accounting as of the end of the reporting period of the Group.
(ii) Associates
Associates are entities over which the Group has significant
influence but does not have control over the financial andoperating policies. The equity method is applied to all associatesfrom the date on which the Group acquires significant influence
to the date on which it loses the significant influence.
Goodwill recognized on acquisition (less accumulated
impairment losses) is included in investments in associates.
In cases where the accounting policies applied by anassociate are different from those applied by the Group,
adjustments are made to the associate’s financial statements,
if necessary.
(iii) Joint Ventures
A joint venture is an entity jointly controlled by two or moreparties including the Group under the contractually agreed
sharing of control over economic activities of the joint venture,
which exists only when decisions for strategic financial andoperating decisions related to relevant activities require
unanimous consent of the parties sharing control.
Joint ventures of the Group are accounted for using theequity method.
In cases where the accounting policies applied by a joint
venture are different from those applied by the Group,
adjustments are made to the joint venture’s financial
statements, if necessary.
2) Business Combinations
The Group takes in account business combinations using theacquisition method.
The aggregate of the consideration paid for a businesscombination measured at fair value on the acquisition date andthe amount of non-controlling interests in the acquired entity aretaken as the acquisition costs based on the acquisition method.
Non-controlling interests are measured at equivalentamount for the fair price of the acquired entity’s identifiable
net assets and liabilities in proportion to the share of the noncontrolling interest.
Ancillary costs incurred relating to business combinationsuch as brokerage fees, attorney’s fees, due diligence costs,
other professional fees, consulting fees, as well as otheracquisition-related costs are recognized as expenses in the
periods in which such costs are incurred.

If the initial accounting for the business combination has notbeen completed by the closing date of the reporting period inwhich the business combination took place, such incomplete
items are measured at provisional amounts based on thebest estimate.
If the new information obtained during the measurement
period, which lasts for a year from the acquisition date, affects
the measurement of the amount recognized on the acquisitiondate, the provisional amount recognized on the acquisition dateis retrospectively revised.
In the event that the aggregate amount of fair value of theconsideration paid in relation to the business combination, theamount of non-controlling interests in the acquired entity, andthe fair value of equity interests on the control commencement
date in the acquired entity previously held by the acquiring entity
exceeds the net value of identifiable assets and liabilities at theacquisition date, the excess amount is recognized as goodwill.
If, on the other hand, such aggregate amount does notexceed the net value of identifiable assets and liabilities at theacquisition date, the difference is recognized in profit or loss.
Additional acquisitions of non-controlling interests after thecontrolling acquisition are accounted for as capital transactions
and are not recognized as goodwill from the original transaction.
3) Foreign Currency Translation(i) Functional Currency and Presentation Currency
The Group’s consolidated financial statements are presented inJapanese yen, which is the Company’s functional currency. The
Group’s foreign operations generally use the local currency as
their functional currency, but if any currency other than the local
currency is primarily used in the economic environment in which
the entity operates, such currency is used as the entity’sfunctional currency.
(ii) Foreign Currency Transactions
Foreign currency transactions, meaning transactions conductedin a currency other than the respective entity’s functional
currency, are translated into the functional currency either byusing the exchange rates prevailing at the date of thetransaction or using an average rate when there are no material
fluctuations in exchange rates. Monetary assets and liabilities
denominated in foreign currencies are translated into thefunctional currency at the exchange rates prevailing at thereporting date, and exchange differences are recognized in profit
or loss in principle.
(iii) Foreign Operations
The assets and liabilities (including goodwill arising fromacquisitions and adjustments of fair value) of foreign operations
that use a currency other than Japanese yen as their functional

JSR Corporation Annual Report 2021

15

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

currency are translated into Japanese yen at the exchange rates
prevailing at the reporting date. The revenues and expenses offoreign operations are translated into Japanese yen at the
average rates of exchange over the reporting period, unlessthere are material fluctuations in exchange rates. Exchange
differences arising from such translations in foreign operations’financial statements are recognized in other comprehensive
income, and are included and accounted for in othercomponents of equity.
4) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, deposits
that can be withdrawn as needed, and short-term investmentsthat are easily converted into cash with minimal risk of changes
in value.
5) Inventories
Inventories are measured at the lower of cost or net realizablevalue. Cost of inventories is calculated based on the weightedaverage cost formula. Net realizable value is the estimatedselling price of inventories in the ordinary course of business,less the estimated costs of completion and estimated selling
expenses. Inventories and work in process manufactured by theCompany include the amounts of manufacturing overhead
appropriately allocated based on the ordinary operating rate.
6) Property, Plant and Equipment(Excluding Right-of-use Assets)
The cost model has been adopted, and all property, plant andequipment are measured at cost less any accumulated
depreciation and accumulated impairment losses. Cost includes
costs directly attributable to the acquisition of the assets, andthe present value of the estimated costs of removal of theassets and site restoration. Furthermore, borrowing costs thatsatisfy certain conditions directly attributable to the acquisition,
construction, etc., of the assets are recognized as part of thecost of the assets.
Depreciation expenses are recognized using the straight-line
method over the estimated useful life of each asset todepreciate the cost less the residual value of the asset. The
estimated useful lives, residual values, and depreciation
methods are reviewed at the end of the reporting period. In theevent of the modification in estimates, impacts therefrom arerecognized in the accounting period in which the estimates
were modified and in the future accounting periods.
The estimated useful lives of major assets are as follows:		 • Buildings and structures: 10 to 50 years		 • Machinery, equipment, and vehicles: 5 to 25 years		 • Tools, furniture, and fixtures: 3 to 10 years7) Intangible Assets(i) R&D Expenses
Research-related expenditures are recognized as expenses
when they are incurred. Development-related expenditures arecapitalized as intangible assets only when all of the following
conditions are satisfied: the amount for such expenditures canbe reliably measured; the products or the processes to be
developed therefrom are technically and commercially viable;
there is a high probability of generating future economic
benefits; and the Group intends to complete the development
and use the process or the products therefrom as well as
sufficient resources to make them feasible. All otherexpenditures are recognized as expenses when they are
incurred.
(ii) Goodwill
The measurement of goodwill at initial recognition is stated in“2) Business combinations.” The Group does not amortize
goodwill, but tests for impairment every fiscal year. Impairmentof goodwill is stated in “8) Impairment of non-financial assets.”
Impairment losses of goodwill are recognized as profit or loss
and not reversed subsequently.
After the initial recognition, goodwill is presented at costless accumulated impairment losses.
(iii) Intangible Assets Acquired as a Result of a Business
Combination
Cost of intangible assets acquired as a result of a businesscombination is measured at fair value on the acquisition date.
Intangible assets acquired as a result of a businesscombination are accounted after initial recognition at cost lessany accumulated amortization and accumulated impairment
losses, which are amortized using the straight-line method overthe estimated useful life of each asset.
The estimated useful life of major assets is as follows:		 • Technology-based intangible assets: 5 years(iv) Intangible Assets Acquired Individually
Other intangible assets acquired individually inclusive ofsoftware, etc., are accounted at cost less any accumulated
amortization and accumulated impairment losses, which areamortized using the straight-line method over the estimateduseful life of each asset.
The estimated useful life of a major asset is as follows:		 • Software: 5 years8) Impairment of Non-financial Assets
The Group assesses its non-financial assets, excluding
inventories and deferred tax assets at the end of each reporting
period to identify any indications of a potential inability torecover the carrying amount due to changes in such assets orcircumstances. If any such indication exists, impairment testingis conducted.

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NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

If the carrying amount of an asset exceeds its recoverable
amount, the difference is recognized as impairment loss.
The recoverable amount of an asset is the higher of the fairvalue less costs of disposal and the value in use. In calculating
the value in use, the estimated future cash flows from the asset
are discounted to the present value using a discount rate thatreflects the time value of money and the inherent risks of theasset. For the purposes of determining impairment, assets aregrouped into an individual asset or the smallest asset group(cash-generating unit) generating cash inflows that are largely
independent of the cash flows of other assets.
Goodwill is tested for impairment once a year periodically,
regardless of whether any indications of impairment exist, andthe cost at the time of acquisition less any accumulated
impairment losses is recognized as the carrying amount.
In the case of property, plant and equipment and intangible
assets, excluding goodwill, for which impairment losses havebeen recognized in prior years, an assessment is conducted at
the end of each reporting period to determine if there are any
possibilities of reversal of such impairment losses.
9) Financial Instruments(9.1) Financial Assets(i) Initial Recognition and Measurement
The Group initially recognizes financial assets on the date when
it becomes a party to the contract on the financial instruments
concerned. Financial assets bought or sold by ordinary methods
are initially recognized on the transaction date. Financial assets
are subsequently classified into those measured at amortizedcost or those measured at fair value.
Financial assets measured at fair value through profit or loss
are initially measured at fair value. Financial assets measured atfair value through other comprehensive income and financial
assets measured at amortized cost are initially measured at fairvalue plus transaction costs that are directly attributable to theacquisition of the financial asset. Additionally, trade receivables
that do not include significant financing components are initiallymeasured at the transaction price.
(a) Financial assets measured at amortized cost
Financial assets are classified as those measured atamortized cost only when both of the following conditions
are satisfied; the asset is held within a business model
whose objective is to hold assets in order to collectcontractual cash flows; and the contractual terms of thefinancial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on theprincipal amount outstanding.
(b) Financial assets measured at fair value
Financial assets are classified as those measured at fairvalue if they fail to meet either of the two requirements
given above.

Of these assets, financial assets that generate, on
specified dates, cash flows that are solely payments ofprincipal and interest on the principal amount outstanding
and are held within a business model whose objective isachieved both by collecting contractual cash flows and by
selling the assets are classified as debt financial assets
measured at fair value through other comprehensive income.
Moreover, for certain equity financial assets, the Grouphas made an irrevocable election to present subsequentchanges in fair value in other comprehensive income and toclassify these assets as equity financial assets measured atfair value through other comprehensive income.
Financial assets such as derivative assets, other than
the above assets, are classified as financial assets
measured at fair value through profit or loss.
(ii) Subsequent Measurement
After initial recognition, financial assets are measured according
to their classification as follows:(a) Financial assets measured at amortized cost
Measured at amortized cost using the effective interest
method(b) Financial assets measured at fair value
Measured at fair value on the reporting date
Any changes in the fair value of financial assets arerecognized in profit or loss or in other comprehensive
income according to their respective classification of thefinancial asset. Dividends received from designated equity
instruments measured at fair value through othercomprehensive income are recognized in profit or loss. If
the fair value of the equity instrument depreciates
materially or if the equity instrument is disposed of, any
accumulated other comprehensive income or loss isreclassified to retained earnings.
(iii) Derecognition
Financial assets are derecognized when the contractual rights tothe cash flows from the investment expire or when thecontractual rights to the cash flows from the investment areassigned and substantially all the risks and rewards of theGroup’s ownership of such financial assets are transferred.
(9.2) Financial Liabilities(i) Initial Recognition and Measurement
The Group initially recognizes financial liabilities on the contract
date. Financial liabilities are initially measured at fair value lesstransaction costs that are directly attributable to the acquisitionof the financial liability.

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NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(ii) Subsequent Measurement
After initial recognition, financial liabilities are measured
according to their classification as follows:(a) Financial liabilities measured at amortized cost
Measured at amortized cost using the effective interest
method(b)	Financial liabilities measured at fair value through profit
or loss
Financial liabilities measured at fair value through profit orloss, which include those designated financial liabilities
measured at fair value through profit or loss, are measured
at fair value.
(iii) Derecognition
Financial liabilities are derecognized when contractual
obligations are discharged, cancelled, or expired.

treats any financial asset as a credit-impaired financial asset incases where the financial asset is considered to have defaulted,
including cases where the financial asset is significantly pastdue even after enforcement activities for the performance ofobligations are taken and where the debtor files legal
proceedings for bankruptcy, corporate reorganization, civil
rehabilitation or special liquidation. The Group presents thefinancial assets measured at amortized cost at the net amountthat the loss allowance is deducted from the carrying amount in
the consolidated statement of financial position and recognizes
the loss as profit or loss.
When the Group has no reasonable expectations ofrecovering all or part of a financial asset, the carrying amount of
the asset is directly written off by that amount.

(9.3) Offsetting Financial Instruments
Financial assets and liabilities are offset if and only if: there is alegally enforceable right to set off the recognized amount offinancial assets against the recognized amount of financial
liabilities; there is the intent either to settle on a net basis or to
realize assets and settle liabilities simultaneously.

Derivatives are initially recognized at fair value at the date on
which the derivative contract is entered into and aresubsequently remeasured at their fair value at the end of eachreporting period after initial recognition. The method ofrecognizing the resulting gain or loss depends on whether or not
the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged.
The Group designates certain derivatives as hedging
instruments of cash flow hedges (hedges of a particular risk
associated with a recognized asset or liability, or a highly
probable forecast transaction), and certain foreign currency
borrowings as hedging instruments of net investment inforeign operations.
The Group documents, at the start of the transaction, therelationship between hedging instruments and hedged items aswell as the objectives and strategies for managing risk regarding
the execution of their hedging transactions. Furthermore, theGroup documents at the start of the hedge, and on a continuingbasis, assessments of whether or not the derivatives used in
the hedging transaction are effective in offsetting changes in thehedged items’ cash flow.
Hedge effectiveness is assessed on a continuing basis, anda hedge is deemed effective when it satisfies all of the following
conditions: an economic relationship exists between hedged
items and hedging instruments; the effect of credit risk is not
such that it materially dominates value changes arising from theeconomic relationship; and the hedge ratio of the hedging
relationship is equivalent to the ratio arising from the volumeof hedging instruments and hedged items that are actually
being hedged.
The effective portions of change in the fair values ofderivatives designated as hedging instruments of cash flow
hedges and satisfying the conditions thereof are recognized in10) Impairment of Financial Assets
The Group estimates expected credit losses as of the reporting
date for financial assets measured at amortized cost.
If the credit risk has not increased materially from initialrecognition, the 12-month expected credit loss is recognized asa loss allowance. In the case of trade receivables that do notinclude significant financial components, however, the loss
allowance is always measured at lifetime expected credit loss. If
the credit risk has increased materially from initial recognition,
the lifetime expected credit loss is recognized as a loss
allowance. Judgment as to whether or not a material increase incredit risk has occurred from the initial recognition is based on
the degree of changes in default risk. When the Group judges
whether or not there are material changes in default risk, it
reviews the information on the past due status as well as thefollowing factors:• External credit grades of the financial asset• Internal credit grades• Results of operations of the borrower• Financial assistance from the parent company, etc., ofthe borrower
Expected credit losses are measured as weighted averageof the present value of the difference between all contractual
cash flows that are due to the entity in accordance with thecontract and all cash flows that the entity expects to receive,
weighted by respective risks of default occurring. The Group11) Derivatives and Hedge Accounting

JSR Corporation Annual Report 2021

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NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

other comprehensive income. Gains or losses arising fromineffective portions are recognized immediately as profit or loss.
Accumulated gains or losses recognized through othercomprehensive income are reclassified to profit or loss in the
period when the cash flow originating from the hedged items
has an effect on profit or loss.
When hedge accounting conditions are no longer satisfied
due to forfeit, sale, etc., of hedging instruments, hedge
accounting will no longer be applied prospectively. When
hedged future cash flow is expected to occur again, theaccumulated gains or losses recognized in other comprehensive
income will continue to be recognized as other components ofequity. In cases where forecast transactions are no longer
expected to occur, the accumulated gains or losses recognizedin other comprehensive income are reclassified immediately to
profit or loss.
With regard to certain foreign currency borrowings that are
retained for the purpose of hedging exposure to exchange rate
fluctuation risks for net investments in foreign operations, theportion of foreign exchange differences deemed effective as ahedge is recognized in other comprehensive income as hedgesof net investment in foreign operations. Of exchange
differences in the hedging instruments, any ineffective portionof the hedge or any portion of the hedge not subject to theassessment of hedge effectiveness is recognized in profit
or loss.
Through net investment hedges, the cumulative amount ofgain or loss recognized in other comprehensive income isreclassified to profit or loss on the disposal of foreign operations.
12) Leases
At inception of a contract, the Group assesses whether thecontract is, or contains, a lease based on whether the contract
conveys the right to control the use of an identified asset for aperiod of time in exchange for consideration. The Group elects
not to recognize right-of-use assets and lease liabilities for shortterm leases within 12 months and leases of low-value assets.
Apart from short-term leases or leases of low-value assets,
the group records right-of-use assets and lease liabilities in
the consolidated statement of profit or loss at the leasecommencement date when a contract is, or contains a lease.
The lease payments associated with short-term leases andleases of low-value assets are recognized as an expense on astraight-line basis over the lease term.
Right-of-use assets are measured under the cost modeland are stated at cost less accumulated depreciation andaccumulated impairment losses.
The cost of right-of-use assets is initially measured based on
the initial measurement amount of the lease liability adjusted forany initial direct costs incurred or any lease payments made ator before the commencement date, plus any costs to restore
the underlying asset or the site at which it is located and otherrelated costs required in the lease contract. Right-of-use assets
are depreciated over the lease term on a straight-line basis.
Right-of-use assets are recorded in property, plant andequipment on the current Consolidated Statement of Financial
Position. Lease liability is measured at the present value of
unpaid lease payments at the calculated interest rate of thelease or when the calculated interest rate cannot be easily
calculated, discounted by the incremental borrowing rate.
Generally, the Group uses the incremental borrowing rate as thediscount rate. Lease payments are apportioned between financecosts and repayments of lease liability under the effective
interest rate method. Finance costs are recognized in the
consolidated statement of profit or loss.
13) Employee Benefits(i) Short-term Employee Benefits
Short-term employee benefits are recognized as an expense in
the period in which the employee renders the related service
without discounting. Bonus payments are recognized asliabilities in the amount estimated to be paid based on theapplicable bonus payment system when there is a legal orconstructive obligation to pay and the obligation can be
estimated reliably.
(ii) Long-Term Employee Benefits
The Group has adopted defined contribution plans and defined
benefit plans as post-employment benefit plans for employees.
Liabilities (assets) recognized in connection to defined
benefit pension plans are calculated at the present value of
defined benefit obligations under such plans at the end of thereporting period less the fair value of the plan assets. An
independent specialist calculates the defined benefit obligations
for each reporting period using the projected unit credit method.
Any amount recognized as assets from this calculation is limited
to the present value of any future economic benefit available in
the form of refunds from the plans or reductions in futurecontributions to the plans when there is a possibility for theassets to generate these to the Group. Calculations of thepresent value of economic benefits take into consideration theminimum funding requirement. The present value of defined
benefit obligations is calculated by discounting the estimatedfuture cash flows in reference to market yields on high-quality
corporate bonds that pay benefits and with maturities similar to
the estimated timing of payment of the obligations.
Changes due to remeasurements of net defined benefit
liabilities (assets) that were recognized in other comprehensive
income in the period they occurred are immediately reclassified
from other comprehensive income to retained earnings.

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NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Defined contribution plans are post-employment benefit
plans under which an employer pays fixed contributions to anindependent entity and has no legal or constructive obligation to
pay further contributions. Contribution obligations under thedefined contribution plans are recognized as an expense in the
period in which the employee renders the related service.
(iii) Termination benefits
The Group pays termination benefits when the Group ends anemployee's employment before the normal retirement date, or
when the employee accepts an offer of benefits in exchange forthe termination of employment. The group recognise a liability
and expense for termination benefits at the earlier of thefollowing dates: (a) when the group cannot withdraw the offer
of those benefits; and (b) when the group recognises costs for a
restructuring that involves the payment of termination benefits.
14) Non-current Assets Held for Sale and Discontinued
Operations
A non-current asset or disposal group is classified as held forsale if its carrying amount will be recovered principally through asale transaction rather than through continued use.
The conditions for classifying an asset or disposal group as
held for sale are that it must be available for immediate sale inits present condition and the sale must be highly probable. The
classification is also limited to when management of the Groupis committed to executing the sale plan and the sale is generally
expected to complete within one year. After classification asheld for sale, an asset or disposal group is measured at thelower of the carrying amount and the fair value less costs to sell,and is not depreciated or amortized.
A discontinued operation includes a component of the Group
that either has been disposed of or is classified as held for sale,
represents a line of business or geographical area of the Group,
and is recognized when there is a plan to dispose of that line ofbusiness or geographical area.
15) Provisions
Provisions are recognized if the Group has a present legal orconstructive obligation as a result of a past event that can be
estimated reliably and it is probable that an outflow of resources
will be required to settle the obligation.
When the time value of money is significant, the estimatedfuture cash flow is discounted by the present value using a
before-tax discount rate that reflects the time value of money
and inherent risks of the liability. Transfer-backs of the
discounted amount over time are recognized as finance costs.

16) Share Capital
The issue price of equity instruments issued by the Company isrecognized in share capital and capital surplus, and direct issue
costs (net of tax effects) are deducted from capital surplus.
On the purchase of treasury shares, costs net of tax effects
including direct transaction costs are recognized as an equity
deduction. On the sale of treasury shares, including disposal oftreasury shares with the exercise of stock options, the balanceof disposals is recognized as capital surplus. Common sharesare classified to equity.
17) Share-based Remuneration Plans(i) Stock Options
The Group operated an equity-settled share-based remuneration
plan where the Group received services from directors,
executive officers, and employees as well as paid equity
instruments (options) as consideration thereof until June 2018.
The fair value on the date the option was granted under theplan is recognized as an expense over the option’s vesting
period and the same amount is recorded as an increase inequity. The plan was terminated in June 2018 (however, of
share acquisition rights as share-based stock options that werealready granted to directors, etc., those share acquisition rights
which have not been exercised will be continued).
(ii) Restricted Share-based Remuneration Plan
The Company has adopted the restricted share-based
remuneration plan for its directors and others as a performancelinked remuneration plan and applied the accounting treatment
for equity-settled share-based plans under this plan.
Fair value of the share-based remuneration is determinedusing the fair value of ordinary shares on the grant date. The fairvalue is recognized as an expense over the share’s vesting
period, and the same amount is recorded as an increasein equity.
18) Revenue Recognition
The Group recognizes revenue by applying the following five
steps, apart from interest and dividend income accounted for inaccordance with IFRS 9 — Financial Instruments.
Step 1: Identify the contract with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: A llocate the transaction price to performanceobligations.
Step 5: R ecognize revenue when (or as) the Group satisfies
a performance obligation.

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NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

In case of sales contracts with customers for products andmerchandise, the Group recognizes the sale as revenue when
the products and merchandise are delivered to the customer,
considering that control of the products and merchandise istransferred to the customer and the performance obligation is
fulfilled. For rendering of services, the Group recognizes
revenue over time with fulfillment of performance obligation
based on the contract between the Group and the customer.
19) Government Grants
Government grants are recognized when there is reasonableassurance that the Group will comply with the conditions
attached to the grant and that the grant will be received.
Government grants are recognized in profit or loss on asystematic basis over the period the associated costs,
which the grant is intended to compensate, are recognized
as expenses.
For government grants associated with acquiring assets, theamounts of the grants are deducted directly when calculating
the carrying amounts of the assets. Grants are recognized in
profit or loss over the useful lives of the depreciated assets aschanges in depreciation expense.
20) Finance Income and Finance Cost
Finance income comprises interest received, dividends
received, etc. Interest received is recognized when it incurred
using the effective interest method. Dividends received arerecognized when the Group’s rights to receive dividends havebeen established; there is a high probability that the economic
benefits associated with the dividends will flow into the Group;
the amounts can be measured reliably.
Finance cost comprises interest paid, etc.
With respect to an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale,borrowing costs that are directly attributable to the acquisition,
construction or manufacture of the asset form part of the costof that asset. All other borrowing costs are recognized as an
expense in the period in which they are incurred.
21) Income Taxes
Income taxes comprise current taxes and deferred taxes. They
are recognized in profit or loss, with the exception of income
taxes associated with items recognized in other comprehensive
income or items that are directly recognized in equity.
(i) Current Taxes
The Group recognizes current taxes based on taxable profits forthe reporting period. Current tax amounts are calculated using
the tax rates that are in force or substantially in force on the final
day of the reporting period. Income taxes receivable and payable
are measured at the estimated refund from or payment to thetax authorities.

(ii) Deferred Taxes
The Group recognizes deferred taxes using the asset and liability
approach for temporary differences between the amounts ofassets and liabilities for accounting purposes and their tax
bases. In principle, deferred tax liabilities are all recognized intaxable temporary differences, and deferred tax assets arerecognized only to the extent it is probable that there will betaxable profits against which deductible temporary differences,
tax losses, etc., may be utilized. Deferred tax assets andliabilities, however, are not recognized for the following
temporary differences:•T axable temporary differences arising from initialrecognition of goodwill;•T emporary differences arising from initial recognition ofassets or liabilities in transactions (excluding businesscombinations) that do not affect taxable profits (tax losses)
in profit or loss for accounting purposes; and•T axable temporary differences pertaining to investments in
subsidiaries and associates where the timing of thereversal of the temporary differences can be controlled by
the Group and it is probable that the temporary differences
will not reverse in the foreseeable future.
Deferred tax assets pertaining to deductible temporary
differences associated with investments in subsidiaries andassociates are recognized only to the extent that the temporary
difference will reverse in the foreseeable future and that it isprobable that there will be adequate taxable profits against
which benefits from the temporary difference can be utilized.
Deferred tax assets and liabilities are calculated at the tax
rates expected to apply to the period when the associateddeferred tax assets will be realized or the period when thedeferred tax liabilities will be settled, based on the tax rates
that are in force or substantially in force at the end of thereporting period.
Deferred tax assets and liabilities are offset when there is alegally enforceable right to set off current tax assets against
current tax liabilities and when the deferred tax assets andliabilities are associated with the income taxes levied on thesame taxable entity, or the equivalent or different taxable entity
intended to be settled on a net basis, by the same tax authority.
22) Earnings per Share
Basic quarterly earnings per share are calculated by dividing
profit for the quarter attributable to ordinary shareholders by theweighted-average number of common stock outstanding during
the reporting period. Diluted quarterly earnings per share arecalculated through adjustments for the effect of all potentiallydilutive common stock.

JSR Corporation Annual Report 2021

21

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(5) Changes in Presentation(Consolidated statements of financial position)“Contract liabilities” included in “Other current liabilities” in theprevious fiscal year have been reclassified as a separate item inthe current fiscal year, because the amounts have become
significant.

The amounts of “Contract liabilities” were ¥8,489 million in
the previous fiscal year.

(6) Significant Accounting Estimates and Judgments Involving Estimates
In the preparation of consolidated financial statements,
management is required to make judgments, estimates,
and assumptions.
The estimates and the underlying assumptions are reviewed
on an ongoing basis, and the effects of the review arerecognized in the period in which the review was conducted andin future periods.
Actual results may differ from these estimates.
Estimates and judgments that have significant effects on
amounts recognized in the Group’s consolidated financial
statements are as follows. These assumptions have been
determined based on management’s best estimates andjudgments. However, the assumptions may be affected byresults of uncertain changes in economic conditions in the future
and amendment or promulgation of related laws and regulations,and if a review is necessary, this may have significant effects on
amounts recognized in consolidated financial statements in thefollowing fiscal years.

1) Impairment of Non-Financial Assets
In the calculation of recoverable amount in impairment test,
certain assumptions have been made for future cash flows,
discount rate reflecting risks inherent to the asset, long-term
growth rate and others. Details of the method for calculating
recoverable amount, etc., are provided in the note “(18)Impairment of Non-Financial Assets.”
2) Recoverability of Deferred Tax Assets
For the recognition of deferred tax assets, the amount isdetermined, assuming the probability that there will be taxable
profits, by estimating the timing when taxable profits that canbe obtained in the future are available and the amount of these
profits based on the business plan. The relevant content andamount of deferred tax assets are provided in the note “(20)Income Taxes.”(7) Segment Information
1) Overview of Reportable Segments
JSR Group’s reportable segments are based on its businesssegments for which separate financial information is available
and which the Board of Directors determines the basis that are
subject to regular reviews for decisions on the allocation ofmanagerial resources and the evaluation of business results.
The Group has established divisions by product at its head
office. Each division formulates comprehensive domestic andoverseas strategies for its products and conducts businessactivities according to the strategies. Core Group companies also
take the initiative in working out comprehensive domestic andoverseas strategies and conduct business activities according
to the strategies. Thus, JSR Group’s businesses consist of
business segments by product based on divisions and core
Group companies.
JSR Group has four reportable segments: Digital Solutions
Business, which is engaged mainly in the manufacture and saleof semiconductor materials, display materials, and products
related to edge computing; and Life Sciences Business;
Elastomers Business, which is engaged mainly in the
manufacture and sale of general-purpose synthetic rubber
products for automobile tires, functional special synthetic rubber
for automobile components, thermoplastic elastomers formodifying plastics, and synthetic rubber latex for coated paper;
Plastics Business, which is engaged mainly in the manufactureand sale of ABS and other resins for automobiles, officeequipment, and amusement applications. The Digital Solutions
Business is a reportable segment comprising multiple segments
based on the nature of the products and services, the nature of
production processes, and similarity in markets and othereconomic characteristics.
The accounting methods for reportable segments are thesame as the methods adopted for the preparation of consolidated
financial statements.

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NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Energy Corporation (*) became an equity method affiliate of JSR.
The profit or loss using the equity method from JM Energy
Corporation (*) in the fiscal year is included in the other segment.

JSR has classified the lithium-ion capacitor business as
discontinued operations from the previous fiscal year, andsegment information presents only amounts for continuing
operations excluding the lithium-ion capacitor business. JSR lost
control over JM Energy Corporation (*) on April 1, 2020, and JM(*) JM Energy changed company name to “Musashi Energy Solutions Co., Ltd.” on
November 1, 2020.

Main Products in Each Business Segment
Business segments

Main products

Digital Solutions
Business<Semiconductor Materials> Lithography materials (photoresists, multilayer materials); CMP materials;
mounting materials; etc.
<Display Materials> Materials for color LCDs; functional coating materials; etc.
<Edge Computing Materials> Heat-resistant transparent resins and functional films; photo fabrication andphoto molding systems; etc.

Life Sciences Business

Diagnostic and research reagents and similar materials; bio-process materials; drug discovery anddevelopment services, etc.

Elastomers Business

Synthetic rubbers, such as styrene-butadiene rubber, poly-butadiene rubber, ethylene and propylene rubberand compounded products; thermoplastic elastomers and compounded products; latex for paper
processing; general industrial-use latex; acrylic emulsions; high-functional dispersants; industrial particles;
materials for heat insulation paints; materials for batteries; butadiene monomers; etc.

Plastics Business

Synthetic resins including ABS resins, AES resins, AS resins, and ASA resins

2) Segment Revenues, Profits or Losses, Assets and Other Material Items
The following information pertains to the Group’s reportable segments.
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen

The Reportable Segment

Revenue from external customers

DigitalSolutionsLife Sciences

Elastomers

Plastics

Other[Note 1]

Total

¥144,805¥ 50,496¥178,794¥95,092¥ 2,779¥471,967

AmountRecorded in theConsolidated
Adjustment
Financial[Note 2]
Statements¥     0¥471,967

Segment profit (loss)(core operating profit) [Note 3]

30,917

3,945(1,758)

6,237

(250)

39,091(5,855)32,236

Segment assets

145,736

129,485

260,488

69,035

11,485616,230

58,837675,068

6,627

5,420

9,925

2,372

221

24,565

1,778

26,343

—

60

1,454

—

—

1,514

—

1,514

18,341

8,613

15,5602,891—

45,405475

45,880

Other items
Depreciation and amortization
Impairment losses
Capital expenditures

Note 1: The Other segment is a business segment not contained in the reportable segments. It includes the purchase and sale of chemicals and other businesses.
Note 2: The segment profit (loss) downward adjustment of ¥(5,855) million contains company-wide profits and losses not allocated to the reportable segments. The adjustment amounts inthe segment assets line are corporate assets not allocated to any reportable segment. Corporate assets mainly include investment of surplus funds (deposits, cash equivalents,
securities (debt instruments)) and long-term investment funds (securities (equity instruments)) owned by the parent company.
Note 3: The Segment profit (loss) is presented as core operating profit after deducting non-recurring profit (loss) arising from business restructuring and other non-recurring factors fromoperating profit.

JSR Corporation Annual Report 2021

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NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Millions of yen

The Reportable Segment

Revenue from external customers

DigitalSolutionsLife Sciences

Elastomers

Plastics

Other[Note 1]

Total

¥151,420¥ 55,197¥143,186¥79,123¥17,682¥446,609

AmountRecorded in theConsolidated
Adjustment
Financial[Note 2]
Statements¥     0¥446,609

Segment profit (loss)(core operating profit) [Note 3]

34,5683,510(11,420)

4,430

1,108

32,196(6,233)25,963

Segment assets

164,777

158,393

183,747

76,56910,778594,263

78,509672,773

Depreciation and amortization

7,525

6,236

11,1692,631

238

27,8001,677

29,477

Impairment losses

1,408

940

77,227——

79,575—79,575

Capital expenditures

13,542

18,566

16,5933,511

479

52,691

979

53,669Other items

Note 1: The Other segment is a business segment not contained in the reportable segments. It includes the purchase and sale of chemicals and other businesses.
Note 2: The Segment profit (loss) downward adjustment of ¥(6,233) million contains company-wide profits and losses not allocated to the reportable segments. The adjustment amount in
the segment assets line is corporate assets not allocated to any reportable segment. Corporate assets mainly include investment of surplus funds (deposits, cash equivalents, andsecurities (debt instruments)) and long-term investment funds (securities (equity instruments)) by the parent company.
Note 3: The Segment profit (loss) has been changed from “Operating profit (loss)” to “Core operating profit” from the current fiscal year. “Core operating profit” is presented as a profit(loss) after deducting non-recurring profit (loss) arising from business restructuring and other non-recurring factors from operating profit. The Company is undertaking businessrestructuring to achieve medium-to-long-term growth and increase corporate value. The change was made in response to the restructuring of the Display Solutions Business during
the current fiscal year, because it was deemed to be useful for the management of each segment and for users of consolidated financial statements to determine the Company’srecurring segment profit or loss.

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Thousands of U.S. dollars

The Reportable Segment

Revenue from external customers
Segment profit (loss)(core operating profit) [Note 3]
Segment assets

DigitalSolutionsLife Sciences

Elastomers

Plastics

Other[Note 1]

Total

$1,367,721$  498,570$1,293,342$714,689$159,719$4,034,041

AmountRecorded in theConsolidated
Adjustment
Financial[Note 2]
Statements$      0$4,034,041

312,237

31,703(103,150)

40,016

10,011

290,817(56,302)

234,515

1,488,364

1,430,706

1,659,715

691,614

97,3495,367,749

709,1426,076,891

Other items
Depreciation and amortization

67,971

56,324

100,889

23,7692,153

251,107

15,147266,254

Impairment losses

12,722

8,491

697,558——

718,771—

718,771

Capital expenditures

122,322

167,703

149,874

31,713—475,937

8,838

484,775

Note 1: The Other segment is a business segment not contained in the reportable segments. It includes the purchase and sale of chemicals and other businesses.
Note 2: The Segment profit (loss) downward adjustment of $(56,032) thousand contains company-wide profits and losses not allocated to the reportable segments. The adjustment
amount in the segment assets line are corporate assets not allocated to any reportable segment. Corporate assets mainly include investment of surplus funds (deposits, cash
equivalents, and securities (debt instruments)) and long-term investment funds (securities (equity instruments)) by the parent company.
Note 3: The Segment profit (loss) has been changed from “Operating profit (loss)” to “Core operating profit” from the current fiscal year. “Core operating profit” is presented as a profit(loss) after deducting non-recurring profit (loss) arising from business restructuring and other non-recurring factors from operating profit. The Company is undertaking businessrestructuring to achieve medium-to-long-term growth and increase corporate value. The change was made in response to the restructuring of the Display Solutions Business during
the current fiscal year, because it was deemed to be useful for the management of each segment and for users of consolidated financial statements to determine the Company’srecurring segment profit or loss.

Adjustments to reconcile segment profit to quarterly profit (loss) before tax are as follows:
Millions of yen

Segment profit
Loss from sales of shares of subsidiaries and affiliated companies
Business restructuring expenses
Special retirement benefits
Operating profit (loss)

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020
(April 1, 2019 toMarch 31, 2020)

Fiscal year ended
March 31, 2021
(April 1, 2020 toMarch 31, 2021)

Fiscal year ended
March 31, 2021
(April 1, 2020 toMarch 31, 2021)¥33,236¥ 25,963$ 234,515

(352)

—

—

—

(87,436)(789,778)

—

(160)

(1,448)32,884(61,633)(556,711)

Finance income

1,929

947

8,552

Finance costs(2,184)(1,743)(15,748)

Profit before tax (loss)

32,629(62,430)(563,906)(*) Business restructuring expenses consisted of other operating expenses of ¥84,021 million ($758,928 thousand) and Share of loss of investments accounted for using equity method of¥3,415 million ($30,851 thousand). Please refer to “Note 30. Other Operating Income and Expenses” for details on the business restructuring expenses.

JSR Corporation Annual Report 2021

24

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

3) Information on Products and Services
Information on products and services is stated on “1) Overview of reportable segments.”
4) Information by Region
The following is a breakdown of revenue and non-current assets by region.
Revenue from External Customers
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021
$1,667,758

Japan¥198,238¥184,637

China

67,02273,317662,240

U.S.

60,40359,616

538,489

Other regions
Total

146,304

129,039

1,165,554¥471,967¥446,609$4,034,041

Note: Revenue is divided into countries or regions based on the locations of customers.

Property, Plant and Equipment
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021$  837,482

Japan¥111,160¥ 92,718

U.S.

23,76940,319364,189

Other regions

80,73537,391

337,735¥215,664¥170,428$1,539,406

Total

Note: We confine items presented to property, plant and equipment considering cost of the preparation.
The presentation of amounts for some regions has been omitted for the fiscal year ended March 31, 2021 because the amounts have become materially insignificant. Figures for the
fiscal year ended March 31, 2020 have been reclassified.

5) Information on Major Customers
Information on major customers is omitted, since no single external customer accounts for more than 10 percent of the Group’s
revenue in terms of revenue through transactions with a single external customer.

(8) Business Combination and Acquisition of Non-controlling Interest
1) Business Combination
Fiscal year ended March 31, 2019 (April 1, 2019 to March 31,
2020)
Not Applicable
Fiscal year ended March 31, 2021 (April 1, 2020 to March 31,
2021)
Not Applicable2) Acquisition of Non-controlling Interest
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31,
2020)
Not Applicable

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31,
2021)
From October 28, 2020 to January 15, 2021, to improve theenterprise value, the Group additionally acquired 40.18% of theshares in MEDICAL & BIOLOGICAL LABORATORIES CO., LTD.
from non-controlling-interest shareholders, and as a result, thevoting rights ratio increased to 100% from 50.82%.
As the consideration for additional acquisition, cash of¥11,415 million ($103,104 thousand) was paid to the noncontrolling-interest shareholders, and the group accounted for¥6,398 million ($57,792 thousand) as the decreasing capitalsurplus,which is the difference between the consideration for
the additional acquisition and ¥5,016 million ($45,312 thousand),
which is the total amount of Non-controlling interest reduced
because of the additional acquisition and the exchange
differences on translation of foreign operations.

JSR Corporation Annual Report 2021

25

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(9) Cash and Cash Equivalents
Cash and cash equivalents comprise cash, short-term deposits (not later than three months) and short-term investments (e.g.,securities redeemable not later than three months from the date of acquisition).
Cash and cash equivalents on the indicated dates consisted of the following items.
The total amount of cash and cash equivalents corresponds to cash and cash equivalents at the end of the period in the
consolidated statement of cash flows.
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021

Cash and deposit¥48,931¥73,372$662,740

Short-term investment

13,001

12,005

108,434¥61,931¥85,377$771,173

Cash and cash equivalents

Total(10) Trade and Other Receivables
Trade and other receivables are classified as financial assets measured at amortized cost.
Trade and other receivables include the following items.
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021¥ 97,758¥108,615$  981,081

12,43016,410148,223

317

267

2,408

¥110,506¥125,292$1,131,712

Trade receivables
Notes and account receivable-trade
Other receivables
Account receivables-other
Other
Total

(11) Other Financial Assets
1) Breakdown of Other Financial Assets
The breakdown of other financial assets is as follows:
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021

Derivative asset¥     3¥     1$      7

Investments (equity financial assets)

39,95546,186417,176

Term deposits

3,297

1,412

12,753

Other

5,466

4,086

36,90948,721

51,684

466,845

Total
Current assets

4,064

1,933

17,461

Non-current assets

44,65649,751

449,383

Total¥48,721¥51,684$466,845

Derivative assets are classified as financial assets measured at fair value through profit or loss. Investments (equity financial assets) areclassified as financial assets measured at fair value through other comprehensive income, or those through profit or loss. Time deposits
are classified as financial assets measured at amortized cost.

JSR Corporation Annual Report 2021

26

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

2) Financial Assets Measured at Fair Value through Other Comprehensive Income
Major stocks classified as financial assets measured at fair value through other comprehensive income and their fair values are
as follows:
Millions of yen

Name of Stock
BRIDGESTONE Corporation

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021$ 79,993¥ 6,576¥ 8,856

Optorun Co., Ltd.

5,941

6,336

57,234

Carbon, Inc.

5,775

5,230

47,245

Cambridge Quantum Computing

1,464

3,060

27,637OSAKA ORGANIC CHEMICAL INDUSTRY LTD.

1,051

2,597

23,458Vedanta Biosciences Inc

1,088

1,882

17,000Mitsubishi Chemical Holdings Corporation

1,030

1,330

12,016

Tosoh Corporation

1,456

835

7,544

Other

11,992

12,254

110,686¥36,373¥42,380$382,802

Total

Amounts of dividends received recognized related to financial assets measured at fair value through other comprehensive income areas follows:
Millions of yen

Fiscal year ended
March 31, 2020
Dividends received¥1,139Thousands of U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥715

$6,4583) Derecognition of Financial Assets Measured at Fair Value through Other Comprehensive Income
The Group has derecognized certain financial assets measured at fair value through other comprehensive income by disposing of such
assets for the purpose of improving the asset efficiency. Fair value and accumulated gains or losses (net of tax) recognized as othercomprehensive income at the time of disposal in each fiscal year are as follows:
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Fair Value

Accumulated
gains or losses

Fair Value

Accumulated
gains or losses

Fair Value

Accumulated
gains or losses¥15,449¥7,338¥2,016¥808$18,210$7,300For financial assets measured at fair value through other comprehensive income, accumulated gains or losses recognized as othercomprehensive income are transferred to retained earnings when the assets are derecognized.

JSR Corporation Annual Report 2021

27

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(12) Inventories
Inventories consist of the following items.
Millions of yen

Finished goods and merchandise

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021$554,545¥ 73,823¥ 61,394

Work in process

3,613

3,156

28,510Raw materials and supplies

35,40440,312

364,126¥112,840¥104,862$947,180

Total

The amount of valuation losses on inventories recognized as expenses was ¥497 million as of March 31, 2020 and ¥662 million ($5,980
thousand) as of March 31, 2021. The write-off amount is included in “cost of sales” in the consolidated statement of profit or loss. The
amount included in cost of sales was ¥308,487 million as of March 31, 2020 and ¥287,563 million ($2,597,440 thousand) as of March
31, 2021.

(13) Notes on Disposal Groups Classified as Held for Sale and Discontinued Operations
The Group classifies as discontinued operations businesssegments that have been disposed of or are classified as held
for sale.
1) Disposal Groups Classified as Held for Sale
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31,
2020)
As part of JSR’s business portfolio management efforts, JSR
entered into an agreement with Musashi Seimitsu Industry Co.,

Ltd. (Musashi Seimitsu Industry), for the transfer of 80% of theshares of JM Energy Corporation (JM Energy)(*), a consolidated
subsidiary of JSR, in January, 2020. As a result, JSR lost control
of JM Energy(*) in, April 2020 so from the previous fiscal year,
the assets and liabilities of JM energy(*) were classified as
disposal groups classified as held for sale, and, as of April 1,
2020, the stock transfer was carried out as scheduled.

The following are the assets and liabilities related to disposal groups classified as held for sale.
Millions of yen

Fiscal year ended
March 31, 2020

Thousands of U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Assets associated with disposal groups classified as held for sale
Cash and cash equivalents¥1,176¥—

Trade and other receivables

216

—

—

1,207

—

—

Inventories$—

Other current assets

47

—

—

Property, plant and equipment

0

—

—

¥2,646¥—$—

Total assets
Liabilities associated with disposal groups classified as held for sale
Trade and other payables

659

—

—

Income taxes payable

222

—

—

Other current liabilities

1,016

—

—

254

—

—

Retirement benefit liability
Deferred tax liabilities

496

—

—

Total liabilities¥2,646¥—$—(*) JM Energy changed its company name to Musashi Energy Solutions Co., Ltd. on November 1, 2020.

JSR Corporation Annual Report 2021

28

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

2) Discontinued Operations
As described in “1) Disposal Groups Classified as Held for Sale”, JSR has classified the lithium-ion capacitor business as discontinued
operations from the previous fiscal year because JSR lost control over JM Energy Corporation (*). Because JSR transferred 80% of
shares to JM Energy Corporation on April 1, 2020, JM Energy Corporation became an equity method affiliate of JSR, and the profit orloss using the equity method from JM Energy Corporation (*) in the fiscal year ended March 31, 2021 is included in the “Other”
segment in “Note 7: Segment information”.
(i) Profit or Loss from Discontinued Operations
The following are the profit or loss from discontinued operations.
Millions of yen

Fiscal year ended
March 31, 2020

Thousands of U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Revenue¥   590¥—

Cost of sales and expenses(3,798)——Loss before tax from discontinued operations(3,208)——

Income tax expenses
Profit from discontinued operations

$—

3,460

—

—

¥   252——

There is no profit or loss recognized by disposing of the assets or disposal groups that make up the discontinued business. Please referto the consolidated statement of profit or loss for basic and diluted earnings per share for discontinued operations.
(ii) Cash Flows Arising from Discontinued Operations
The following are cash flows from discontinued operations.
Millions of yen

Fiscal year ended
March 31, 2020
Cash flows from operating activities¥(1,278)

Cash flows from investing activities(517)

Cash flows from financing activities
Total

Thousands of U.S. dollars

Fiscal year ended
March 31, 2021¥—
(1,176)

Fiscal year ended
March 31, 2021$—
(10,627)

2,858

—

—

¥ 1,062¥(1,176)$(10,627)

Note: Cash flows from investing activities in the current fiscal year are due to expenditures (cash and cash equivalents of the disposed subsidiary) due to the sale of shares of thesubsidiary accompanying a change in the scope of consolidation.

(14) Other Assets
The breakdown of other assets is as shown below.
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021$ 38,622

Other current assets¥ 5,837¥ 4,276

Income taxes receivable

Excise tax receivable

1,569

2,044

18,458Prepaid expenses

1,921

3,509

31,693

Other
Total

2,160

1,987

17,945¥11,487¥11,815$106,718

Other non-current assets
Long-term prepaid expenses
Other
Total

195

41

373

2,274

3,557

32,126¥ 2,469¥ 3,598$ 32,499

JSR Corporation Annual Report 2021

29

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(15) Property, Plant and Equipment
Changes in carrying amounts and the balance of acquisition costs and accumulated depreciation of property, plant and equipment are
as follows. For information on impairment losses, see “(18) Impairment of Non-financial Assets.”
Changes in Carrying Amounts
Millions of yen

Buildings
Machineryand structures and vehicles
April 1, 2019
Adjustment due to adoption of IFRS 16
April 1, 2019

¥ 47,295¥ 69,697

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

¥11,029¥17,240¥ 38,173¥ 23¥183,457

11,965

227

12

1,607

—

—

13,810¥ 59,260¥ 69,924¥11,041¥18,847¥ 38,173¥ 23¥197,268

Acquisition

4,587

5,458

813

1,997

35,753143

48,750Depreciation(6,585)(12,559)(4,196)

(253)

—

—

(23,593)

Impairment loss

(104)

(1,563)

(93)

(1)

(37)

—

(1,797)

Sales and disposals

(424)

(788)

(72)

(12)

(159)

—

(1,454)

Transfer

4,772

11,9784,604(0)(21,337)(18)—

Exchange differences of foreign operations(816)(1,342)

(96)

(31)

(1,300)0(3,584)

Other
March 31, 2020

(210)

656

(3)

(271)

(95)

(1)

75

¥ 60,481¥ 71,763¥11,999¥20,275¥ 50,999¥ 147¥215,664

Acquisition

8,644

2,670

1,310

44

39,67096

52,434

Depreciation(7,322)(14,349)(4,731)

(243)

—

(29)

(26,675)

Impairment loss

(17,655)(52,226)(2,241)

—

(988)

—

(73,110)

(102)

(298)

(89)

0

(221)

1

(709)

Transfer

21,58540,6483,790

291(66,177)(137)—

Exchange differences of foreign operations

2,043

3,276

195

64

1,839

(9)

7,408

Sales and disposals

Other
March 31, 2021

625

(290)

(111)

(1,081)(3,780)52(4,585)¥ 68,299¥ 51,194¥10,122¥19,350¥ 21,342¥ 120¥170,428

Thousands of U.S. dollars

Buildings
Machineryand structures and vehicles
March 31, 2020

$ 546,301$ 648,209

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

$108,383$183,140$ 460,653$ 1,324$1,948,010

Acquisition

78,07624,118

11,836395

358,321870

473,615

Depreciation(66,141)(129,610)(42,737)(2,191)—(261)(240,941)

Impairment loss

(159,471)(471,736)(20,244)—(8,922)—(660,374)(922)(2,690)(806)

0(1,992)

6(6,404)

Transfer

194,968

367,158

34,2382,628(597,751)(1,241)—

Exchange differences of foreign operations

18,456

29,5881,764

580

16,607(81)

66,915

Sales and disposals

Other
March 31, 2021

5,650

(2,619)(1,003)(9,767)(34,143)467(41,415)$ 616,917$ 462,418$ 91,430$174,784$ 192,772$ 1,085$1,539,406

Acquisition Cost
Millions of yen

Buildings
Machineryand structures and vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

March 31, 2020

¥162,022¥364,873¥68,381¥21,779¥50,999¥147¥668,201

March 31, 2021

¥194,226¥409,383¥70,942¥21,176¥21,342¥199¥717,267

Thousands of U.S. dollars

Buildings
Machineryand structures and vehicles
March 31, 2021

$1,754,367$3,697,793

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

$640,788$191,271$192,772$1,800$6,478,792

JSR Corporation Annual Report 2021

30

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Depreciation and Impairment
Millions of yen

Buildings
Machineryand structures and vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

March 31, 2020

¥101,541¥293,110¥56,382¥1,504¥—¥—¥452,536

March 31, 2021

¥125,927¥358,188¥60,819¥1,825¥ 0¥79¥546,839

Thousands of U.S. dollars

Buildings
Machineryand structures and vehicles
March 31, 2021

$1,137,449

Tools, fixturesand fittings

Land$549,358$16,487$3,235,375

Constructionin progress
$0

Other

Total

$715

$4,939,386(Notes) 1.	Depreciation expenses of property, plant and equipment are recorded as “inventories” in the consolidated statement of financial position, or “cost of sales”, “selling, generaland administrative expenses” and “profit from discontinued operations” in the consolidated statement of profit or loss.
2.	Impairment loss is recorded as “other operating expenses” and “Profit from discontinued operations” in the consolidated statement of profit or loss.
3.	“Other” in the changes of carrying amounts includes transfer to/from “inventories” in the consolidated statement of financial position, or “cost of sales” and “selling, generaland administrative expenses” in the consolidated statement of profit or loss.
4.	Amounts of property, plant and equipment pledged as collateral for liabilities are stated in “(21) Borrowings and bonds (including Other financial liabilities).”
5.	Right-of-use asset included in carrying amounts of property, plant and equipment is stated in “(16) Lease.”(16) Lease
The Group leases Offices, Production equipment, Company cars, Land and Other assets as the lessee. Certain lease contracts include
an extension option. No significant restrictions are imposed by lease contracts, such as restrictions regarding additional borrowings
or leases.
1) Right-of-Use Asset
Net increase in right-of-use asset, depreciation and carrying amount in the fiscal year ended March 31, 2020 are as follows:
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen

Carrying amount
Depreciation

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Total

¥12,710¥3,944¥ 33¥2,278¥18,965(2,734)

(704)

(37)

(253)

(3,728)(Note) Increase amount of right-of-use asset is ¥7,718 million.

Fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)
Millions of yen

Carrying amount
Depreciation

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Total

¥17,000

¥ 943

¥ 29

¥1,056¥19,028(3,154)

(425)

(22)

(243)

(3,844)(Note) Increase amount of right-of-use asset is ¥8,165 million.

Thousands of U.S. dollars

Carrying amount
Depreciation

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Total

¥153,552¥ 8,519¥ 261¥ 9,539¥171,872(28,491)(3,839)(195)(2,191)(34,717)(Note) Increase amount of right-of-use asset is $73,754 thousand.

JSR Corporation Annual Report 2021

31

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

2) Finance Costs Related to Lease
Finance costs related to leases in the fiscal year ended March 31, 2020 are as follows:
Fiscal year ended March 31 ,2020 (from April 1, 2019 to March 31, 2020)
Millions of yen

Finance costs related to leases¥  615

Expenses relating to short-term leases

340

Expenditures relating to leases of low-value assets

672

Variable lease payments

67

The amount of cash outflow related to leases¥3,899Fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)
Millions of yen

Finance costs related to leases

Thousands of U.S. dollars¥  537$ 4,852

Expenses relating to short-term leases

246

2,223

Expenditures relating to leases of low-value assets

570

5,147

Variable lease payments
The amount of cash outflow related to leases

40

357

¥3,264$29,479

For the information on Maturity analysis for lease liabilities, see “(35) Financial Instruments, 2) Financial Risks, (iii) Liquidity Risks.”(17) Goodwill and Other Intangible Assets
Changes in carrying amounts and the balance of acquisition costs and accumulated amortization of goodwill and other intangible assets
are as follows. For information of impairment losses, see “(18) Impairment of Non-financial Assets.”
Changes in Carrying Amounts
Millions of yen

Other intangible asset
April 1, 2019

Goodwill

Software

Other

Total

¥59,066¥ 4,137¥10,068¥14,205

Acquisition

—

4,134

306

4,440

Amortization—(1,144)(1,621)(2,765)

Impairment loss

—

(3)

—

(3)

Sales and disposals

—

(116)

(267)

(382)

—

(214)

214

—

(784)

(34)

(194)

(228)

Transfer to other property, plant and equipment
Exchange differences of foreign operations
Other
March 31, 2020

—

461

165

626

¥58,283¥ 7,220¥ 8,671¥15,891

Acquisition

—

8,259

309

8,567

Amortization—(1,334)(1,468)(2,802)(688)(3,908)(1,869)(5,777)

Sales and disposals

Impairment loss

—

(4)

(201)

(205)

Transfer to other property, plant and equipment

—

(480)

480

—

1,039

59

283

343

Exchange differences of foreign operations
Other
March 31, 2021—

(1,056)53(1,003)¥58,633¥ 8,755¥ 6,258¥15,014

JSR Corporation Annual Report 2021

32

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars

Other intangible asset
March 31, 2020

Goodwill

Software

Other

Total

$526,446$ 65,213$ 78,323$143,536

Acquisition—

74,5972,790

77,386

Amortization—(12,050)(13,264)(25,313)(6,217)(35,299)(16,880)(52,180)

Sales and disposals

Impairment loss

—

(37)

(1,812)(1,850)Transfer to other property, plant and equipment—(4,339)

4,339

—

9,383

535

2,561

3,096

Exchange differences of foreign operations
Other
March 31, 2021—

(9,536)475(9,061)$529,611$ 79,085$ 56,530$135,615

Acquisition Cost
Millions of yen

Other intangible asset
Goodwill

Software

Other

Total

March 31, 2020

¥58,283¥24,919¥26,708¥51,627

March 31, 2021

¥58,633¥30,999¥27,615¥58,614

Thousands of U.S. dollars

Other intangible asset
March 31, 2021

Goodwill

Software

Other

Total

$529,611$280,000$249,438$529,439

Accumulated Amortization and Impairment
Millions of yen

Other intangible asset
Goodwill

Software

Other

Total

March 31, 2020¥—

¥17,699¥18,037¥35,736

March 31, 2021¥—

¥22,243¥21,357¥43,600

Thousands of U.S. dollars

Other intangible asset
March 31, 2021

Goodwill

Software

Other

Total

$—

$200,915$192,909$393,824(Notes) 1.	Amortization expenses of other intangible assets are recorded as “cost of sales”, “selling, general and administrative expenses” and “profit (loss) from discontinued operations”
in the consolidated statement of profit or loss.
2.	“Other operating expenses” in the consolidated statement of profit or loss include the impairment loss.
3.	“Other” changes in the carrying amount include the transfer amount to “Cost of sales”, “Selling, general and administrative expenses” in the consolidated statement of profit orloss.

JSR Corporation Annual Report 2021

33

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(18) Impairment on Non-Financial Assets
1) Impairment Losses on Property, Plant and Equipment and Intangible Assets Other Than Goodwill
Impairment losses in the fiscal years ended March 31, 2019 and 2020 are as follows:
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Property, plant and equipment
Buildings and structures¥   92¥17,655$159,471

Machinery and vehicles

1,355

52,226

471,736

Tools, fixtures and fittings

63

2,241

20,244

Construction in progress

—

988

8,922

1,510

73,110660,374

Subtotal
Goodwill and other intangible asset
Goodwill

—

688

6,217

Software3

3,908

35,299

Other

—

1,869

16,8803

6,465

58,397¥1,514¥79,575$718,771

Subtotal
Total

The Company had commenced and partially implemented
business restructuring, including unlimited structure reforms in
the Elastomers Business in the current fiscal year. As part of thebusiness restructuring program, the Company reduced thecarrying amount to the recoverable amount for assets of some
operations of the Elastomers Business, the Display Solutions
Business and the Life Sciences Business for which theinvestment amount became unlikely to be recovered. The
reduction amount of ¥79,575 million ($718,771 thousand) whose
breakdown(¥ 77,227 million ($697,558 thousand), ¥ 1,408 million($12,722 thousand), ¥940 million ($ 8,491 thousand)) wasrecorded as impairment loss under “Other operating expenses.”
Regarding the Elastomers business, the Group changed the
cash-generating unit for impairment accounting from theproduction line to the entire Elastomers business as the Grouphas reviewed our strategic approach while working on profit
improvement measures and business restructuring. The

recoverable amount in the Elastomers business is measured by
the fair value less cost of disposal, and the fair value iscalculated based on the enterprise values obtained from thepotential buyers as part of its business structure reforms. The
fair value hierarchy is classified as Level 3. Adopting theenterprise values obtained from the potential buyers as thebasis of the fair value by comparing them with a discounted
present value of future cash flows of the Elastomers businesscalculated by an external valuation expert.
Future cash flows are calculated based on a five-yearbusiness plan, and the terminal value is calculated inconsideration of the terminal growth rate and the EBITDA
multiples of similar transactions.
The recoverable amount in the Display solutions businessand part of the Life Sciences business is measured by the value
in use.

JSR Corporation Annual Report 2021

34

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

2) Impairment Test on Goodwill
The goodwill listed in the consolidated statement of financial position is mainly the goodwill related to drug discovery and development
service that happened in the 2018 acquisition of Crown Bioscience International, and the carrying amount of goodwill allocated to cashgenerating units (or groups of cash-generating units) is as follows:
Millions of yen

Cash-generating units(groups of cash-generating units)

Segment

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021$ 23,471

Plastics business

Plastics¥ 2,598¥ 2,598

Life Sciencesbusiness

In-vitro Diagnostics and Research Reagents

3,641

3,641

32,889Contract Development and Manufacturing for Biomedicine

5,124

5,213

47,086

Contract of the Services for Development andGeneration of Cell-lines

9,184

9,528

86,064

Drug Discovery and Development Services

36,90436,823332,605

Other
Total

830

830

7,498

¥58,283¥58,633$529,612

Of the above goodwill, major goodwill was tested for impairment as follows. The recoverable amount was measured as the higher ofthe value in use or the fair value less costs of disposal.
The value in use was calculated by reflecting the external information such as past experience and market growth rate which cashgenerating units belong to and internal information such as equipment capacity, and it was discounting the estimated amount of cash
flows to the present value based on the plan approved by management.
A terminal growth rate used for impairment tests of major goodwill, pre-tax discount rate and term to estimate cash flows areas below.
Measured at the Value in Use
Cash-generating units(groups of cash-generating units)

Terminal
growth rate

Pre-tax
discount rate

Term to estimate
cash flows

Plastics

0.0%

10.3%

5 years

In-vitro Diagnostics and Research Reagents

1.0%

10.0%

5 years

Contract Development and Manufacturing for Biomedicine

2.0%

13.0%

5 years

Contract of the Services for Development and Generation of Cell-lines

2.0%

10.8%

5 years

Drug Discovery and Development Services

2.0%

14.8%

5 years

As a result of the above calculation, the recoverable amounts well exceed the carrying amount of each cash-generating unit. As for
those cash-generating units, the Group considers that the carrying amount will not exceed the recoverable amount even if there is achange in the key assumptions used in the estimation of the recoverable amounts within a reasonable range.

(19) Investments Accounted for Using the Equity Method
1) Investments in Associates
There are no investments in significant associates.
The carrying amount of investments in associates that are not individually significant is as follows:
Millions of yen

Carrying amountThousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021¥5,955¥5,061$45,716

JSR Corporation Annual Report 2021

35

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

The Group’s share of comprehensive income of associates that are not individually significant is as follows:
Millions of yen

Fiscal year ended
March 31, 2020
Share of profit (loss)

Thousands of U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥287¥(640)

Share of other comprehensive income

(88)

(22)

(198)

Share of total comprehensive income¥199¥(661)$(5,975)$(5,777)2) Investments in Joint Ventures
There are no investments in significant joint ventures.
Carrying amount of investments in joint ventures that are not individually significant is as follows:
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021¥19,429¥15,954$144,103

Carrying amount

The Group’s share of comprehensive income of joint ventures that are not individually significant is as follows:
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021$(31,543)¥  (223)¥(3,492)

Share of other comprehensive income

Share of profit (loss)

(847)

155

1,398

Share of total comprehensive income¥(1,070)¥(3,337)$(30,144)(20) Income Taxes
1) Deferred Tax Assets and Liabilities(i) Deferred Tax Assets and Liabilities Recognized
The breakdown of deferred tax assets and liabilities by major causes for occurrence in each fiscal year is as follows:
Fiscal year ended March 31, 2019 (April 1, 2019 to March 31, 2020)
Millions of yen

April 1, 2019

Recognizedthrough profit(loss)

Recognizedthrough othercomprehensive
incomeOther

March 31, 2020

Deferred Tax Assets¥ 1,133¥  (33)¥ —Accrued bonuses

Inventories

1,710

198

—

—

1,908

Non-current assets

1,956

(632)

—

—

1,324

Retirement benefit liability

4,780

(133)

(292)

—

4,355

425

276

—

—

701

3,562

2,094

507

(300)

5,863

¥ 13,566¥1,770¥ 215¥ (300)¥15,252(1,625)73——(1,551)

Unused tax losses
Other
Total

¥

—

¥ 1,100

Deferred Tax Liabilities
Non-current assets
Financial asset measured at fair value through othercomprehensive income(8,763)

—

657

3,176

(4,931)Other(1,992)

(586)

—

—

(2,578)¥(12,380)¥ (512)¥ 657¥3,176¥ (9,060)

Total

JSR Corporation Annual Report 2021

36

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Fiscal year ended March 31, 2020 (April 1, 2020 to March 31, 2021)
Millions of yen

April 1, 2020

Recognizedthrough profit(loss)

Recognizedthrough othercomprehensive
incomeOther

March 31, 2021
¥ 1,122

Deferred Tax Assets¥ 1,100¥     22—¥ —Accrued bonuses

Inventories

1,908

(41)

—

—

1,867

Non-current assets

1,324

24,405——25,729Retirement benefit liability

4,355

75

(711)

—

3,719

701

(426)

—

69

344

5,863

829

(185)

(422)

6,086

¥15,252¥ 24,864¥  (895)¥(353)¥ 38,868(1,551)37——(1,514)

Unused tax losses
Other
Total

¥

Deferred Tax Liabilities
Non-current assets
Financial asset measured at fair value through othercomprehensive income(4,931)—(2,241)377(6,794)Retained earnings(1,619)(11,440)——(13,059)

Other
Total

(959)

532

—

—

(427)

¥ (9,060)¥(10,871)¥(2,241)¥ 377¥(21,794)

Other

March 31, 2021

Fiscal year ended March 31, 2020 (April 1, 2020 to March 31, 2021)
Thousands of U.S. dollars

April 1, 2020

Recognizedthrough profit(loss)

Recognizedthrough othercomprehensive
incomeDeferred Tax Assets$  9,937$    201

Accrued bonuses

Inventories

17,233

(369)

$

—

—

$

—

—

16,864Non-current assets

11,962

220,441——

232,403
33,592$ 10,138

Retirement benefit liability

39,337675(6,419)—

Unused tax losses

6,333(3,850)

—

623

3,106

Other

52,961

7,487(1,667)(3,808)54,974$137,764$224,584$ (8,086)$(3,185)$ 351,077(14,013)

336

—

—

(13,676)

Total
Deferred Tax Liabilities
Non-current assets
Financial asset measured at fair value through othercomprehensive income(44,536)—(20,239)3,405(61,370)

Retained earnings(14,625)(103,333)——(117,958)

Other
Total

(8,659)

4,807

—

—

(3,853)$ (81,833)$ (98,191)$(20,239)$ 3,405$(196,857)(ii) Temporary Differences, etc., for which Deferred Tax Assets Have Not Been Recognized
The Group assesses the recoverability of deferred tax assets in each period and recognizes deferred tax assets taking into accountsignificant uncertainty on the recoverability of its deferred tax assets.
Tax losses carried forward and deductible temporary differences for which deferred tax assets have not been recognized are
as follows:
Millions of yen

Unused tax losses
Deductible temporary differences
Total

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021¥ 9,881¥11,471$103,617

2,531

1,874

16,924¥12,412¥13,345$120,541

JSR Corporation Annual Report 2021

37

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Expiration schedule of tax losses carried forward for which no deferred tax asset is recognized is as follows:
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,2021$      0Not later than one year¥  276¥     —

Later than one year and not later than five years

2,015

2,259

20,406Later than five years

7,590

9,212

83,211

Total¥9,881¥11,471$103,617

The amount of taxable temporary differences pertaining toinvestments in subsidiaries, etc., for which deferred tax
liabilities have not been recognized was ¥34,309 million as ofMarch 31, 2020 and ¥22,963 million ($207,417 thousand) as ofMarch 31, 2021. For these temporary differences, deferred tax

liabilities have not been recognized because the Group cancontrol the timing of the reversal of the temporary differences
and it is probable that the temporary differences will not reversein the foreseeable future.

2) Income Tax Expense
The breakdown of income tax expense is as follows:
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Current tax expenses¥ 4,656¥ 6,093$ 55,036

Deferred tax expenses(1,257)(13,993)(126,394)¥ 3,399¥ (7,900)$ (71,357)

Continuing operations

6,859(7,900)(71,357)

Discontinued operations(3,460)

—

—

Total

Deferred tax expenses include tax losses of ¥720 million and¥218 million ($1,973 thousand), which had not been recognized,in the previous fiscal year and the current fiscal year,
respectively. Also, the amounts of benefits arising from

temporary differences in past periods are included in theprevious fiscal year and the current fiscal year, which were ¥164
million and ¥90 million ($812 thousand), respectively.

Differences between statutory income tax rates and average effective tax rates can be explained by the following factors.
%

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Statutory income tax rate

30.6

30.6

Retained earnings

0.6(18.0)Tax credit on experiment and research expenses

(2.9)

1.3

Differences in tax rates applied to foreign operations

(3.8)

(0.7)

Special deduction for reconstruction district

(0.3)

0.3

Share of loss (profit) of entities accounted for using the equity method

(0.1)

(2.0)

Other

(3.1)

1.2

Average effective tax rate

21.0

12.7

JSR Corporation Annual Report 2021

38

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(21) Borrowings and Bonds (Including Other Financial Liabilities)
1) Financial Liabilities
Borrowings and bonds (including Other financial liabilities) consisted of the following:
Millions of yen

Thousands of
U.S. dollars%

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021

Averageinterest rates

Payment Due¥ 23,559¥ 22,333$  201,724

0.69%

—

Current portion of non-current borrowings

6,483

15,539140,356

1.52%—

Non-current borrowings

52,68446,537420,350

2.01%

2022-272025-30

Current borrowings

Bonds payable—

34,869314,955

0.28%

Current lease liabilities

3,094

3,330

30,076——

Non-current lease liabilities

15,672

19,043172,008—2022-44

Derivative liabilities

111

815

7,364

—

—

Other

460

—

—

—

—

Total

¥102,063¥142,465$1,286,832——

Current liabilities

33,181

41,745377,070——

Non-current liabilities

68,882

100,720909,762

—

—

Total

¥102,063¥142,465$1,286,832——

Borrowings and bonds are classified as financial liabilities measured at cost. Derivative liabilities are classified as financial liabilities
measured at fair value through profit or loss.
No restrictive financial covenants have been attached to the Group’s borrowings.
Payment schedules of non-current borrowings and bonds payable are as follows:
Millions of yen

Later than
one year andnot later than
two years

Later than
two years andnot later than
three years

Later than
three years andnot later thanfour years

Later thanfour years andnot later than
five years

Later than
five years

Total¥8,248¥13,392¥15,276¥ 8,238¥ 1,384¥46,537———

13,00022,00035,000Non-current borrowings
Bonds Payable

Thousands of U.S. dollars

Later than
one year andnot later than
two years

Later than
two years andnot later than
three years

Later than
three years andnot later thanfour years

Later thanfour years andnot later than
five years

Later than
five years

Total$74,501$120,962$137,978$ 74,409$ 12,500$420,350———

117,424

198,717

316,141

Non-current borrowings
Bonds Payable

2) Pledged Assets
The Company and its consolidated subsidiaries have pledged collateral under standard customary terms in standard borrowing contracts.
Pledged assets are as follows:
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021

Cash and cash equivalents¥     7¥     7$    63

Property, plant and equipment

14,04012,814

11,574¥14,047¥12,821$11,580

Total

JSR Corporation Annual Report 2021

39

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Corresponding liabilities are as follows:
Millions of yen

As of March 31,
2020
Current borrowings and current portion of non-current borrowings

Thousands of U.S. dollars

As of March 31,
2021

As of March 31,
2021

¥29

¥ 2

Other current liabilities

2

—

—

Non-current portion of non-current borrowings

2

31

280

¥33

¥33

$294

Total

$ 14

3) Reconciliation of Liabilities Arising from Financing Activities
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen

Non-cash items
Adjustment
due toadoption of
IFRS 16

As ofMarch 31,2019

Cash flow—¥50,777¥ 5,568

Exchangedifferences

Transfer
betweennon-current
and current

Other

As of
March 31,2020—¥(1,476)¥(2,184)¥—¥ 52,684

Lease

Borrowings (non-current)¥50,777

Borrowings (current)

33,519—33,519(5,014)

—

(648)

2,184

1

30,043

Lease liabilities

1,731

13,67815,408(3,025)

6,721

(339)

—

—

18,766¥86,027¥13,678¥99,704¥(2,470)¥6,721¥(2,464)—¥ 1¥101,492

Total

¥

As of
April 1,
2019

¥

¥

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Millions of yen

Non-cash items

Borrowings (non-current)
Bonds Payable
Borrowings (current)
Lease liabilities
Total

Exchangedifferences

Transfer
betweennon-current
and current

Other

As of
March 31,2021—

¥2,166¥(19,208)¥ —¥ 46,537

34,836

—

—

—

33

34,869(13,427)—

1,715

19,208333

37,872

As ofApril 1,
2020

Cash flow

Lease¥ 52,684¥ 10,896¥—
30,04318,766(3,264)

6,000

871

¥101,492¥ 29,041¥6,000¥4,752——

22,373—¥366¥141,650

Exchangedifferences

Transfer
betweennon-current
and current

Other

As of
March 31,2021—

$19,563$(173,502)$$  420,350¥

Thousands of U.S. dollars

Non-cash items

Borrowings (non-current)
Bonds Payable
Borrowings (current)
Lease liabilities
Total

As of
April 1,
2020

Cash flowLease$475,872$ 98,416$—

314,656

—

—

—

299

314,955

271,362(121,281)—

15,492

173,502

3,005

342,080

169,507(29,479)

54,191

7,864$916,742$ 262,313$54,191$42,919

$

—

—

—

202,084—$3,303$1,279,468

JSR Corporation Annual Report 2021

40

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(22) Trade and Other Payables
Trade and other payables are classified as financial liabilities measured at amortized cost. The breakdown is shown below.
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021¥61,156¥ 73,751$666,166

31,17826,521

239,553

504

525

4,741

¥92,839¥100,797$910,460

Trade Payable
Notes and accounts payable-trade
Other Payable
Accounts payable-other, and accrued expenses
Other
Total

(23) Employee Benefits
1) Outline of Post-Employment Benefit Plans
The Company and certain consolidated subsidiaries haveadopted funded and unfunded defined benefit plans and defined
contribution plans, and virtually all employees of thesecompanies are covered by these plans. In Japan, defined benefit
plans under the Defined-benefit Corporate Pension Act, defined
benefit corporate pension plans and lump-sum retirement
benefit plans have been operational. The amount of thesebenefits is calculated based on certain points, etc., given inaccordance with service years and contribution. These pension
plans are exposed to general investment risk, interest rate risk,
inflation risk and others.
Funded defined benefit plans have been operated by acorporate pension fund that is legally separated from the Groupin accordance with laws and regulations including DefinedBenefit Corporate Pension Act. The board of the corporate
pension fund and the pension-managing trustee are required bylaws and regulations to act in the best interests of plan
participants, and are responsible for managing plan assets basedon predetermined policies.
The management of plan assets is conducted based on
basic asset allocation aimed to ensure stable revenue in themedium to long term within the limits of tolerable risks, in orderto ensure the payment of pension benefits, etc., at present andin the future. The basic asset allocation is periodically reviewed
in order to respond to changes in the market environment andthe funding position from initial assumptions made.

2) Defined Benefit Plans(i) Reconciliation of Defined Benefit Plan Obligations and Plan Assets
The relationship between defined benefit plan obligations and plan assets, and net defined benefit liabilities and assets recorded in the
consolidated statement of financial position is as follows:
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021

Present value of funded retirement benefit obligation¥ 38,349¥ 38,495$ 347,712

Fair value of plan assets(37,472)(40,114)(362,334)

Subtotal

877(1,619)(14,622)

12,77913,148

118,757¥ 13,656¥ 11,529$ 104,135

Retirement benefit liability

16,216

16,434148,438

Retirement benefit asset(2,560)(4,905)(44,303)¥ 13,656¥ 11,529$ 104,135

Present value of unfunded retirement benefit obligation
Total Net liability (asset) for retirement benefit
Amounts on consolidated statement of financial position

Total Net liability (asset) for retirement benefit

JSR Corporation Annual Report 2021

41

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(ii) Reconciliation of Present Value of Defined Benefit Plan Obligations
Increase or decrease in the present value of defined benefit plan obligations is as follows:
Millions of yen

Balance of present value of retirement benefit obligation at the beginning of
the fiscal year
Service costThousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥52,139¥51,128$461,817

2,409

2,462

22,238

158

215

1,940

Interest expense
Remeasurement
Actuarial gains (losses) arising from changes in demographic assumptions

(207)

53

475

Actuarial gains (losses) arising from changes in financial assumptions

(827)

44

398

(2,333)(2,402)(21,700)

(212)

144

1,302

¥51,128¥51,643$466,469

Benefits paid
Other
Balance of present value of retirement benefit obligation at the end of the fiscal year

The weighted average duration of defined benefit plan obligations was 13.7 years in the fiscal year ended March 31, 2020 and 13.3
years in the fiscal year ended March 31, 2021.
(iii) Reconciliation of Fair Value of Plan Assets
Increase or decrease in the fair value of plan assets is as follows:
Millions of yen

Balance of fair value of plan assets at the beginning of the fiscal year

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥37,772¥37,472$338,468

117

312

2,817

Interest revenue
Remeasurement

(84)

2,436

22,005Contributions paid by the employer

Return on plan assets

1,677

1,519

13,717

Benefits paid

(1,816)(1,703)(15,380)

(194)

78

708

¥37,472¥40,114$362,334

Other
Balance of fair value of plan assets at the end of the fiscal year

mortality rate and expected withdrawal rate) and verifies theappropriateness of contributions determined.
The Group will make contributions of ¥1,990 million ($17,973
thousand) in the fiscal year ending March 31, 2022.

Contributions to defined benefit plans are determined by
performing an actuarial review periodically so that balanced
budgets can be maintained in the future. In the actuarial review,
the Group reviews assumptions related to the determination ofcontributions (such as expected rate of interest, expected(iv) Items of Plan Assets
Plan assets consisted of the following items.

Millions of yen

As of March 31, 2020
Assets for which
active market
prices areavailable
Cash and cash equivalents¥ 3,861

Assets for which
active market
prices are notavailable¥

As of March 31, 2021

Total

Assets for which
active market
prices areavailable—¥ 3,861¥ 4,546

Assets for which
active market
prices are notavailable
¥

Total

—

¥ 4,546

Equity instruments
Domestic equity securities

1,149

—

1,149

1,482

—

1,482

Foreign equity securities

3,316

—

3,316

4,005

—

4,005

Domestic bonds

9,197

—

9,197

9,669

—

9,669

Foreign bonds

10,657—

10,657

10,632—

10,632

Debt instruments

General accounts of life insurance

—

660

660

—

688

688

Alternative investments*

—

8,632

8,632

—

9,090

9,090

¥28,180¥9,292¥37,472¥30,335¥9,779¥40,114

Total*Alternative investments include hedge funds.

JSR Corporation Annual Report 2021

42

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars

As of March 31, 2021
Assets for which
active market
prices areavailable
Cash and cash equivalents$ 41,064

Assets for which
active market
prices are notavailable
$

Total

—

$ 41,064

Equity instruments
Domestic equity securities

13,390—13,390Foreign equity securities

36,175—36,175

Domestic bonds

87,340—87,340Foreign bonds

96,037—

96,037

General accounts of life insurance

—

6,218

6,218

Alternative investments*—

82,11082,110$274,006$88,328$362,334

Debt instruments

Total*Alternative investments include hedge funds.

(v) Main Component Used for Actuarial Assumption%

Discount rates (weighted average)(vi) Sensitivity Analysis
In the fiscal year ended March 31, 2021, a 0.5% increase(decrease) in the discount rate used in actuarial calculation
would have resulted in a decrease (increase) in the present
value of defined benefit plan obligations by ¥2,751 million($24,849 thousand). This provisional calculation assumes thatvariables other than the assumptions used in the calculation are

As of March 31,
2020

As of March 31,
2021

0.51

0.50

constant. In reality, since individual assumptions are affected bychanges in economic indicators and conditions at the sametime, the assumptions are expected to change independently
or in a correlated fashion, and the actual effects of suchchanges on defined benefit plan obligations may differ fromthe expected effects.

3) Defined Contribution Plans
The amount recognized as expenses in relation to defined contribution plans was ¥1,273 million in the fiscal year ended March 31,
2020 and ¥1,427 million ($12,893 thousand) in the fiscal year ended March 31, 2021.
4) Employee Benefits Expense
The total amount of employee benefits expense included in “cost of sales” and “selling, general and administrative expenses” in the
consolidated statement of profit or loss in the fiscal year ended March 31, 2020 and the fiscal year ended March 31, 2021 was ¥3,724
million and ¥3,792 million ($34,254 thousand), respectively.

JSR Corporation Annual Report 2021

43

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(24) Provisions
Increase or decrease in provisions are the following:
Millions of yen

Thousands of U.S. dollars

Provision for loss on
business restructuring

Provision for loss on
business restructuring

As of April 1, 2020¥

Increase
As of March 31, 2021

—

$

—

1,837

16,594¥1,837$16,594

Provision for Loss on Business Restructuring
To provide for losses due to business restructuring that are expected to arise for the future, the estimated loss is reported.
The payment period is within one year from the end of the fiscal year.
Provisions on consolidated statement of financial position consisted of the following:
Millions of yen

Thousands of U.S. dollars

As of March 31,
2021

As of March 31,
2021

Current liabilities¥1,837$16,594

Total¥1,837$16,594(25) Other Liabilities
Other liabilities include the following items.
Millions of yen

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021

Unearned revenue¥   52¥    55$   501

Accrued bonuses

5,188

5,254

47,461

860

1,019

9,205

3,386

3,867

34,9309,486

10,196

92,097

Other current liabilities

Accrued consumption taxes
Other
Total
Other non-current assets
Provision for environmental measures
Other
Total

804

787

7,111

2,864

4,349

39,281¥3,667¥ 5,136$46,392(Note) “Contract liabilities” included in “Other current liabilities” in the previous fiscal year have been reclassified as a separate item in the current fiscal year, because the amount has
become significant. The change is reflected in the above-mentioned previous fiscal year.

JSR Corporation Annual Report 2021

44

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(26) Equity and Other Equity Items
1) Share Capital and Capital Surplus
Capital surplus consists of legal capital surplus and other capital surplus.
The Companies Act of Japan (hereinafter the “Companies Act”) stipulates that at least half of the payment or contribution at theshare issue shall be credited to share capital, and the remaining amount may be recorded as legal capital surplus included in capitalsurplus. In addition, under the Companies Act, legal capital surplus may be credited to share capital by resolution of the general
meeting of shareholders.
Increase or decrease in the number of authorized shares and the number of issued shares are as follows:
As of April 1, 2019

Number of shares authorized

Number of shares issued

696,061,000

226,126,145

Increase/Decrease——

As of March 31, 2020

696,061,000

226,126,145

Increase/Decrease——

As of March 31, 2021

696,061,000

226,126,145(Note) A ll shares issued by the Company are ordinary shares with no rights limitations and without par value and restricted shares. Issued shares are fully paid.

2) Treasury Shares
The Companies Act stipulates that entities may determine thenumber of shares to be acquired, the total amount of acquisition
price, etc., and acquire treasury shares by resolution of thegeneral meeting of shareholders, to the extent of the
distributable amount. Moreover, in the case of acquisition

through market transactions or a takeover bid, treasury shares
may be acquired by resolution of the Board of Directors within
the requirements prescribed in the Companies Act inaccordance with the provisions of the Articles of Incorporation.

Increase or decrease in the number of treasury shares is as follows:
Number of shares
5,694,949

As of April 1, 2019
Increase/Decrease

5,717,359

As of March 31, 2020

11,412,308

Increase/Decrease(188,973)

As of March 31, 2021

11,223,335(Note) Increase or decrease during the period is mainly due to the disposal of treasury stock as the restricted share-based remuneration.

3) Retained Earnings
Retained earnings consist of legal retained earnings and otherretained earnings.
The Companies Act stipulates that one-tenth of the amount
paid as dividends of surplus shall be reserved as legal capitalsurplus or legal retained earnings until the sum of legal capitalsurplus included in capital surplus and legal retained earnings

included in retained earnings reaches one quarter of sharecapital. Accumulated legal retained earnings may beappropriated to cover a deficit. It is specified that legal retained
earnings may be reversed by resolution of the general meetingof shareholders.

JSR Corporation Annual Report 2021

45

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

4) Other Components of Equity
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen

Net change infinancial assets
measured atfair value
Net change
through other in fair value
comprehensive on cash flow
incomehedges
As of April 1, 2019
Other comprehensive income
Total comprehensive income
Share-based remuneration plan
Transfer from other components of equity toretained earnings
Total transactions with owners, etc.
As of March 31, 2020

Exchangedifferences
Remeasureon translation
ments ofof foreign
defined benefit
operationsplans

Restricted
shares

Other

Total

¥19,508¥ 30¥  (293)

¥ —

¥(26)

¥(460)¥18,758(1,320)(63)(4,364)630——(5,118)(1,320)(63)(4,364)630——(5,118)

—

—

—

—

(47)

—

(47)

(7,338)

—

—

(630)

—

—

(7,968)(7,338)

—

—

(630)

(47)

—

(8,014)¥10,849¥(34)¥(4,657)

¥ —

¥(73)

¥(460)¥ 5,626

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Millions of yen

Net change infinancial assets
measured atfair value
Net change
through other in fair value
comprehensive on cash flow
incomehedges
As of April 1, 2020
Other comprehensive income
Total comprehensive income
Share-based remuneration plan
Transfer from other components of equity toretained earnings

Exchangedifferences
Remeasureon translation
ments ofof foreign
defined benefit
operationsplans¥

Restricted
shares

Other

Total

—

¥(73)

¥(460)¥ 5,626¥10,849¥(34)¥(4,657)

5,055

14

5,038

1,590

—

—

11,697

5,055

14

5,038

1,590

—

—

11,697

—

—

—

—

(9)

—

(9)
(2,399)

(808)

—

—

(1,590)——Changes in non-controlling interests

—

—

(27)

—

—

—

(27)

Other movements

—

—

—

—

—

460

460

Total transactions with owners, etc.
As of March 31, 2021

(808)

—

(27)

¥15,096¥(20)¥   354(1,590)
¥

—

(9)

460

(1,975)

¥(82)

¥ —

¥15,348

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Thousands of U.S. dollars

Net change infinancial assets
measured atfair value
Net change
through other in fair value
comprehensive on cash flow
incomehedges
As of April 1, 2020
Other comprehensive income
Total comprehensive income
Share-based remuneration plan
Transfer from other components of equity toretained earnings

Exchangedifferences
Remeasureon translation
ments ofof foreign
defined benefit
operationsplans$

Restricted
shares

Other

Total

—

$(659)$(4,151)$ 50,816$ 97,996$(305)$(42,065)

45,656

128

45,506

14,365——

105,655

45,656

128

45,506

14,365——

105,655

—

—

—

—

(80)

—

(80)
(21,665)(7,300)——(14,365)——

Changes in non-controlling interests

—

—

(243)

—

—

—

(243)

Other movements

—

—

—

—

—

4,151

4,151

Total transactions with owners, etc.
As of March 31, 2021

(7,300)—(243)$136,352$(177)$ 3,199$(14,365)(80)—$(739)$—(17,837)—$138,634

JSR Corporation Annual Report 2021

46

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(a) Net Change in Financial Assets Measured at Fair Value
through Other Comprehensive Income
It represents valuation differences on fair value of equity
instruments measured at fair value through othercomprehensive income.
(b) N et Change in Fair Value of Cash Flow Hedges
It represents change in profit or loss on valuation of derivatives
as hedging instruments that were recorded in the statement ofcomprehensive income on and before the date of cessation ofhedge accounting.
(c) Exchange Differences on Translation of Foreign
Operations
They represent translation differences on foreign operations’financial statements.
(d) R emeasurements of Defined Benefit Liabilities (Assets)
Remeasurements of defined benefit liabilities (assets) arechanges in actuarial differences, return on plan assets (excluding
the amount included in interest revenue) and the effect of
the asset ceiling (excluding the amount included in interest
revenue). Actuarial differences are adjustments based on
actual results related to defined benefit plan obligations(differences between actuarial assumptions at the beginning of
the period and actual results) and the effect of changes in
actuarial assumptions. These items are recognized in othercomprehensive income when they arise, and are immediatelytransferred from other components of equity to retained earnings.
(e) R estricted Shares
Under the restricted share-based remuneration plan, monetary
remuneration to be used as contributed properties for restricted
shares is provided. The amount equivalent to fair value of
remuneration determined at the initial recognition is recorded inshare capital, and recognized as the amount debited to othercomponents of equity. Over the vesting period, othercomponents of equity recognized as the debited amount are
deducted at the time when remuneration cost is recognized.
Details of the restricted share-based remuneration plan areprovided in the note “(35) Share-based remuneration.”(f) The Company has entered into an agreement with noncontrolling shareholders that the Company purchases all
interests held by the non-controlling shareholders under certain
terms and conditions. With regard to the obligations to purchasethese interests, the present value of the purchase amount had
been recognized as financial liabilities, and the same amount
had been reduced from other components of equity in theprevious fiscal year.
The carrying amount of financial liabilities at the time ofextinguishment was transferred to capital surplus because theobligations to purchase these interests expired in the current
fiscal year.

JSR Corporation Annual Report 2021

47

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(27) Dividends
The amounts of dividends paid are as follows:
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Class ofsharesTotal amount ofdividends

Dividends
per share

Ordinary General Meeting of Shareholders
on June 18, 2019

Ordinary Shares¥6,613 million

Board of Directors Meetingon October 28, 2019

Ordinary Shares¥6,441 million

Resolution

Record date

Effective date ofdividends

Source ofdividends¥30

March 31,2019

June 19,2019

Retained Earnings¥30

September 30,
2019

November 27,
2019

Retained Earnings

Record date

Effective date ofdividends

Source ofdividends

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Class ofsharesTotal amount ofdividends

Dividends
per share

Ordinary General Meeting of Shareholders
on June 17, 2020

Ordinary Shares¥6,441 million($58,183 thousand)¥30 ($0.27)

March 31,2020

June 18,
2020

Retained Earnings

Board of Directors Meetingon October 27, 2020

Ordinary Shares¥6,447 million($58,233 thousand)¥30 ($0.27)

September 30,
2020

November 27,
2020

Retained Earnings

Resolution

Dividends of which record dates belong to the current fiscal year and of which effective dates of dividends fall after the end of thecurrent fiscal year are as follows:
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Resolution
Ordinary General Meeting of Shareholders
on June 17, 2020

Class ofsharesTotal amount ofdividends

Dividends
per share

Ordinary Shares¥6,441 million¥30

Record date

Effective date ofdividends

Source ofdividends

March 31,2020

June 18,
2020

Retained Earnings

Record date

Effective date ofdividends

Source ofdividends

March 31,2021

June 18,2021

Retained Earnings

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Resolution
Ordinary General Meeting of Shareholders
on June 17, 2021

Class ofsharesTotal amount ofdividends

Dividends
per share

Ordinary Shares¥6,447 million($58,234 thousand)¥30 ($0.27)

JSR Corporation Annual Report 2021

48

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(28) Revenue
1) Disaggregation of Revenue
Regarding the revenue arising from contracts with the Group’s customers, the breakdown of revenue into domestic and overseas andits relation to the reportable segments are as follows:
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen

Digital Solutions

The Reportable Segments

Domestic

Overseas

Total¥ 27,853¥116,953¥144,805

Semiconductor Materials

16,89967,09583,994

Display Materials

5,350

43,63848,988

5,604

6,220

11,823

Life Sciences

Edge Computing Materials

9,912

40,58450,496

Elastomers

103,21975,575

178,794

Plastics

55,96939,12495,092

1,286

1,493

2,779

¥198,238¥273,729¥471,967

Other
Total
Adjustment
Amount Recorded in the Consolidated Financial Statements

0

—

0

¥198,238¥273,729¥471,967

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Millions of yen

Digital Solutions

The Reportable Segments

Domestic

Overseas

Total¥ 28,152¥123,268¥151,420

Semiconductor Materials

19,26975,585

94,855

Display Materials

4,919

42,43647,354

Edge Computing Materials
Life Sciences

3,964

5,247

9,211

12,36942,82855,197
143,186

Elastomers

84,96758,219

Plastics

47,81731,306

79,123

11,3336,350

17,682

Total¥184,637¥261,971¥446,609

Adjustment

0

—

0

¥184,637¥261,971¥446,609

Other

Amount Recorded in the Consolidated Financial Statements

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Thousands of U.S. dollars

Digital Solutions

The Reportable Segments

Domestic

Overseas

Total$  254,286$1,113,435$1,367,721

Semiconductor Materials

174,053

682,734

856,787

Display Materials

44,428383,306

427,734

Edge Computing Materials
Life Sciences

35,80547,39583,200111,723

386,848

498,570
1,293,342

Elastomers

767,469

525,872

Plastics

431,917282,772

714,689

102,362

57,356

159,719

Total$1,667,757$2,366,283$4,034,040

Adjustment

1

—

1

$1,667,758$2,366,283$4,034,041

Other

Amount Recorded in the Consolidated Financial Statements

JSR Corporation Annual Report 2021

49

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(1) Digital Solutions Business
In Digital Solutions business, the Group manufactures and sells
semiconductor materials, display materials, and products related
to edge computing, etc.
For the sales contracts on products and merchandise, theGroup recognizes revenue upon delivery because the control ofthe products and merchandise is considered to be transferred tothe customer and the performance obligation is satisfied bydelivery.
(2) Life Sciences Business(i) M anufacturing and sale of in-vitro diagnostics and research
reagents, related materials, and bioprocess materials
For the sales contracts on products and merchandise, the Group
recognizes revenue upon delivery because the control of the
products and merchandise is considered to be transferred to thecustomer and the performance obligation is satisfied by delivery.
(ii) Contract development and manufacturing for bioprocess, etc.
The Group renders services in the contract research andmanufacturing businesses related to bioprocess, etc.
For rendering of services, the Group recognizes revenue atover time with fulfillment of performance obligation based on
the contract between the Group and the customer.
(3) Elastomers Business
In Elastomers business, the Group manufactures and sells
general-purpose synthetic rubber products for automobile tires,functional special synthetic rubber for automobile components,
thermoplastic elastomers for modifying plastics, synthetic
rubber latex for coated paper, etc.
For the sales contracts on products and merchandise, theGroup recognizes revenue upon delivery because the control ofthe products and merchandise is considered to be transferred tothe customer and the performance obligation is satisfied bydelivery.
(4) Plastics Business
In Plastics business, the Group manufactures and sells ABS andother resins for automobiles, office equipment, and amusement
applications, etc.
For the sales contracts on products and merchandise, theGroup recognizes revenue upon delivery because the control ofthe products and merchandise is considered to be transferred tothe customer and the performance obligation is satisfied bydelivery.

2) Liabilities Arising from Contracts with the Customers
The Group recognizes unearned revenue arising from contracts
with the customers as contract liabilities.
The Group recognized almost all balances of contract
liabilities at the beginning of the current fiscal year as revenue inthat year, and there is no importance for the amounts carriedover from the next fiscal year.
In addition, in the current fiscal year, there is no significant
amount of revenue arisen from the performance obligations
which were satisfied in the past periods.
The major changes in the contract liabilities in the current
fiscal year are that unearned revenue from the customers
temporarily increased in the Life Sciences Business.
3) T ransaction Price Allocated to the Remaining
Performance Obligations
The Group applies the practical expedient and omits informationon the remaining performance obligations because there are no
significant transactions with initial expected contractual terms
exceeding one year.
There are no significant amounts of consideration fromcontracts with customers that are not included in transaction
prices.
The consideration does not include a significant financing
component, since the consideration for transaction prices ismainly collected within one year from the time of delivery of
products and merchandise to customers or the agreement
based on the contract such as milestone achievement.
4) A ssets Recognized from the Costs of Obtaining or
Fulfilling Contracts with Customers
There is no significance in the amount of assets recognizedfrom the costs incurred to obtain or fulfill a contract with acustomer in the current fiscal year.
The Group applies the practical expedient of recognizing theincremental costs of obtaining a contract as an expense whenincurred if the amortization period of the asset that the Groupotherwise would have recognized is one year or less.

JSR Corporation Annual Report 2021

50

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(29) Selling, General and Administrative Expenses
1) Major items in selling, general and administrative expenses are as follows:
Millions of yen

Transportation and warehousing expenses

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥ 12,151¥ 11,242$101,543

Salaries and allowances

23,651

25,475230,104

Retirement benefit expenses

1,280

1,108

10,007

Experiment and research expenses

24,066

23,406211,420

Depreciation

5,798

7,052

63,700

Supplies expenses

3,772

3,049

27,539Business consignment expenses

3,544

3,745

33,830Other

30,081

30,040271,339¥104,343¥105,117$949,481

Total2) Amount of research and development expense included in general and administrative expenses and manufacturing costs
Millions of yen

Research and development expense

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥25,233¥24,436$220,716(30) Other Operating Income and Expenses
Other operating income consisted of as follows:
Millions of yen

Gain on sales of non-current assets
Rent income
Other
Total

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021¥    7¥  135$ 1,221

84

103

933

1,213

1,552

14,019¥1,304¥1,790$16,172

Other operating expenses consisted of as follows:
Millions of yen

Loss on abandonment of non-current assets
Loss on sales of non-current assets
Impairment loss
Business Restructuring expenses*
Other
Total

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021¥  657¥   278$  2,512

61

84

760

1,514

—

—

-—

84,021

758,928

2,646

3,200

28,908¥4,879¥87,584$791,108*Business Restructuring expenses mainly consisted of costs related to structural reforms in the Elastomers Business of ¥81,563 million ($736,725 thousand) and costs related to structuralreforms in the Display Solutions Business of ¥2,458 million ($22,203 thousand). The main contents are impairment losses on non-current assets of ¥79,575 million ($718,771 thousand)and special retirement benefits.

JSR Corporation Annual Report 2021

51

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(31) Financial Income and Costs
Financial income consisted of the following:
Millions of yen

Fiscal year ended
March 31, 2020

Thousands of U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Interest income
Financial assets measured at amortized cost¥  230¥188$1,695

Dividend income
1,139

715

6,458

Foreign exchange gains

Equity financial assets measured at fair value through other comprehensive income

559

35

314

Other

—

10

86

¥1,929¥947$8,552

Total

Financial costs consisted of the following:
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥1,210¥1,206$10,892

615

537

4,852

359

0

4

¥2,184¥1,743$15,748

Interest expenses
Financial liabilities measured at amortized cost
Lease liabilities
Other*
Total*“Other” in the previous fiscal year is mainly profit or loss on shares of subsidiaries.

(32) Other Comprehensive Income
Changes in items of other comprehensive income are shown below:
Amount incurred and reclassification for profit or loss in items of other comprehensive income, and effects of income tax are
shown below:
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen

Amount incurred

Reclassification

Before tax

Income tax

Net of tax¥(2,034)¥—¥(2,034)¥657¥(1,377)

952

—

952

(292)

661

Other comprehensive income that will not be reclassified to
profit or loss
Net change in financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using the equity method
Total

(31)

—

(31)

—

(31)

¥(1,113)¥—¥(1,113)¥366¥  (747)

Items that may be reclassified to profit or loss
Cash flow hedges
Exchange differences on translation of foreign operations
Share of other comprehensive income of investments
accounted for using the equity method
Total
Total

(103)

(22)

(124)

—

(124)

(4,068)(43)(4,111)—(4,111)

(904)

—

(904)

—

(904)

¥(5,075)¥(64)¥(5,139)¥ —¥(5,139)¥(6,187)¥(64)¥(6,252)¥366¥(5,886)

JSR Corporation Annual Report 2021

52

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Millions of yen

Amount incurred

Reclassification

Before tax

Income tax

Net of tax¥ 7,342¥—¥ 7,342¥(2,241)¥ 5,101

2,072

—

2,072

(635)

1,438

Other comprehensive income that will not be reclassified to
profit or loss
Net change in financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using equity method
Total

68

—

68

—

68

¥ 9,482¥—¥ 9,482¥(2,875)¥ 6,607

(10)

37

28

—

28

6,167

—

6,167

—

6,167

Items that may be reclassified to profit or loss
Cash flow hedges
Exchange differences on translation of foreign operations
Share of other comprehensive income of investments
accounted for using the equity method
Total
Total

65

—

65

—

65

¥ 6,223¥37¥ 6,260¥—¥ 6,260¥15,705¥37¥15,742¥(2,875)¥12,867

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Thousands of U.S. dollars

Amount incurred

Reclassification

Before tax

Income tax

Net of tax$ 66,315$ —$ 66,315$(20,239)$ 46,076

18,717—

18,717(5,731)

12,986

Other comprehensive income that will not be reclassified to
profit or loss
Net change in financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using the equity method
Total

615

—

615

—

615

$ 85,647$ —$ 85,647$(25,970)$ 59,677

(88)

339

251

—

251

55,709—55,709—55,709Items that may be reclassified to profit or loss
Cash flow hedges
Exchange differences on translation of foreign operations
Share of other comprehensive income of investments
accounted for using the equity method
Total
Total

585

—

585

—

585

$ 56,206$339$ 56,545$—$ 56,545$141,853$339$142,192$(25,970)$116,222

JSR Corporation Annual Report 2021

53

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(33) Earnings per Share
Fiscal year ended
March 31, 2020
1) Basic earnings (loss) per share

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥104.38¥(256.73)$(2.32)

Continuing operations¥103.22¥(256.73)$(2.32)

Discontinued operations

¥1.16

¥—

$—

(Basis of calculation)
Profit (loss) attributable to owners of parent¥22,604 million¥(55,155) million$(498,197) thousand

Continuing operations¥22,352 million¥(55,155) million$(498,197) thousand

Discontinued operations¥252 million——

216,545

214,838

214,838

Average shares outstanding during the year (1,000 shares)
2) Diluted earnings (loss) per share¥104.19¥(256.73)$(2.32)

Continuing operations¥103.03¥(256.73)$(2.32)

Discontinued operations

¥1.16

¥—

$—

(Basis of calculation)
Increase in common stock due to stock options (1,000 shares)
Average diluted shares outstanding during the year (1,000 shares)

405

—

—

216,950

214,838

214,838(Note) D ilutive potential ordinary shares are 331 thousand shares in the current fiscal year.
These are excluded from the calculation of the Diluted loss per share because these have reverse dilution effect.

(34) Share-based Remuneration
1) Stock Options(i) Overview of Share-based Remuneration Plan
The Group operated an equity-settled share-based remuneration
plan where it received services from directors, executive
officers, and employees and paid equity instruments (options)as consideration thereof until June 2017.
The fair value on the date the option was granted under theplan is recognized as an expense over the option’s vesting

period and the same amount is recorded as an increase of
equity. The plan was terminated in June 2017 (however, shareacquisition rights already granted as share-based stock options
to directors, etc., that have not been exercised will be
continued).

(ii) Number and Weighted Average Exercise Prices of Stock Options
SharesYen

SharesFiscal year ended March 31, 2020
Number of shares
Outstanding at the beginning
GrantedExercised

Weighted average
exercise priceYen

U.S. dollars

Fiscal year ended March 31, 2021
Number of shares

Weighted average
exercise price

Weighted average
exercise price

480,200¥ 1

361,000

¥ 1

—

—

—

—

—

(119,200)

1(48,400)

1

0.01

$0.01

Forfeited

—

—

—

—

—

Expired

—

—

—

—

—

Outstanding at the end

361,000

1

312,600

1

0.01

Exercisable at the end

229,100

1

312,600

1

0.01

The weighted average share price as of the exercise date ofstock options exercised during the period was ¥1,697 and¥2,445 ($22.09) in the fiscal years ended March 31, 2020 and
2021, respectively.
In the fiscal years ended March 31, 2020 and 2021, theexercise price of unexercised stock options was ¥1 each.

The weighted average remaining contract terms in the fiscal
years ended March 31, 2020 and 2021 were 10.5 years and 10.2
years, respectively, for the unexercised balance at the end of
the fiscal year, and 10.0 years and 10.2 years, respectively, forthe exercisable balance at the end of the fiscal year.

JSR Corporation Annual Report 2021

54

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

2) Restricted Share-based Remuneration Plan
The Group employs the restricted share-based remuneration
plan in order to further promote sharing of values withshareholders and establish a remuneration structure that
contributes to sustained improvement in corporate value in themedium to long term. Under this plan, to grant restricted sharesto directors, excluding outside directors, and executive officers(hereinafter “Eligible Directors, etc.”), the Company is toprovide the Eligible Directors, etc., with claims for monetary
remuneration in principle in each period and have them
contribute these claims in kind as contributed properties to theCompany. Accordingly, the Company is to issue or dispose ofordinary shares of the Company to the Eligible Directors, etc.,
and make them hold the shares.
The Company enters into an agreement with Eligible
Directors, etc., for allotment of restricted shares, and Eligible
Directors, etc., cannot transfer, pledge or dispose of in any otherway shares granted under the allotment agreement at will
during a given period of time stipulated in the agreement(hereinafter the “Transfer Restriction Period”) (hereinafter, the“Transfer Restriction”). The Transfer Restriction is lifted for all
shares held by Eligible Directors, etc., when the Transfer
Restriction Period expires, on the condition that the Eligible
Directors, etc., continued to hold a position of directors,
executive officers, audit & supervisory board members,

employees, or any other equivalent position of the Company or
its subsidiaries during the Transfer Restriction Period. On theother hand, under this structure, shares for which the Transfer
Restriction has not been lifted at the time when the Transfer
Restriction Period expires are acquired by the Company without
any payment in principle.
Details of restricted shares granted during the period are
as follows:
Fiscal year ended March 31, 2021
(from April 1, 2020 to March 31, 2021)
Number of restricted shares granted
Fair value on the grant dateCalculation method for fair value
measurement

155,100 shares¥2,110 per share ($19.06 per share)
Calculated on the basis of closing price ofordinary shares of the Company at theTokyo Stock Exchange on the business day
proceeding the date when the Board of
Directors adopted a resolution.

Transfer Restriction Period

3 years3) Share-based Remuneration Expense
The amount of share-based remuneration expense included in“selling, general and administrative expenses” in the
consolidated statement of profit or loss was ¥245 million in thefiscal year ended March 31, 2020 and ¥318 million ($2,876
thousand) in the fiscal year ended March 31, 2021.

(35) Financial Instruments
1) Capital Management Policy
The Group considers it vitally important to improve corporate
performance on a long-term basis and achieve improvement incorporate value in the medium to long term by strengthening its
research and development activities from a long-term viewpointand enhancing competitiveness through development of new
businesses. For capital efficiency, the Group monitors ROE on atimely basis.
2) Financial Risks
The Group is exposed to financial risks related to operating
activities (market risk, credit risk and liquidity risk), and conducts
risk management based on a certain policy to avoid or mitigate
effects of the risks. For fund management, approval of theCompany’s Board of Directors is received in principle at the
beginning of each period. Transactions and risk management
during the period are principally conducted based on internalmanagement regulations. The Group uses derivatives to avert

risks described below, and as its policy, does not perform any
speculative transaction.
(i) Market Risks(a) Exchange Rate Risks
The Group operates business globally and sells products
manufactured by the Company and each subsidiary and others
abroad. Thus, the Group is exposed to the risk that profit or loss,
cash flows, etc., are affected by fluctuations in exchange rates.
To avoid exchange rate risks, the Group mainly utilizes
foreign exchange forward contracts as derivative transactions
for trade receivables and payables denominated in foreign
currencies.
The Company’s responsible department manages risks inaccordance with the derivative transaction management
regulations that specify authority for transactions, maximum
amount, etc., and reports monthly trading results to responsible
directors.

JSR Corporation Annual Report 2021

55

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Details of currency derivatives are as follows:
Derivative Transactions to which Hedge Accounting Is Not Applied
Millions of yen

As of March 31, 2020
Contracted
AmountAs of March 31, 2021

Later than
one year

Fair value

Contracted
AmountLater than
one year

Fair value¥ 16

Forward exchange contracts
Purchase¥  585¥—¥ 4¥  651

¥—

Sell

6,670

—

(49)

8,584

—

(462)

¥7,255¥—¥(44)¥9,235¥—¥(447)

Total

Thousands of U.S. dollars

As of March 31, 2021
Contracted
AmountLater than
one year

Fair value$   142

Forward exchange contracts
Purchase$ 5,878$—

Sell

77,538—(4,176)$83,416$—$(4,035)

Total

Millions of yen

As of March 31, 2020

As of March 31, 2021

Assumedprincipal

Later than
one yearContracted
AmountFair value

Later than
one year

Fair value

U.S. dollars

¥—

¥—

EUR

—

—

¥—

¥ 6,975¥4,982¥(228)

—

6,620

—

¥—

¥—

(33)

¥—

¥13,595¥4,982¥(262)

Currency swap

Total

Thousands of U.S. dollars

As of March 31, 2021
Assumedprincipal

Later than
one year

Fair value$ 63,000$45,000$(2,064)

59,794—(300)$122,794$45,000$(2,363)

Currency swap
U.S. dollars
EUR
Total

Although the Group does not apply hedge accounting to these derivative transactions, it considers that the transactions effectively
offset effects of exchange fluctuations.
Exposure to Exchange Rate Risks
The Group’s exposure of Japanese yen, Korean won and Thai baht as functional currencies against the US dollar, the major foreign
currency, is as follows. These amounts are after deduction of amounts of exchange rate risks hedged through derivative transactions, etc.
Millions of yen

Functional Currency

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021$17,646

Japanese yen¥4,613¥1,954

Korean won

3,472

780

7,042

Thai baht

3,831

7,379

39,156JSR Corporation Annual Report 2021

56

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Foreign Exchange Sensitivity Analysis
With regard to foreign currency receivables and payables held by the Group at the end of each fiscal year, effects of 1% depreciation of
the US dollar against each functional currency on profit before tax in the consolidated statement of profit or loss are as follows. If eachcurrency moves inversely, this will have effects opposite to and at the same amount as the table below. The calculation is based on theassumption that currencies other than the currency used do not fluctuate.
Millions of yen

Functional Currency

As of March 31,
2020

Thousands of U.S. dollars

As of March 31,
2021

As of March 31,2021

Japanese yen (weak U.S. dollar)

¥(46)

¥(20)

Korean won (weak U.S. dollar)

(35)

(8)

(70)

Thai baht (weak U.S. dollar)

(38)

(74)

(392)

The Group hedges against the risk of exchange rate fluctuations
regarding net investment in foreign operations by using foreign
currency borrowings. The Group designates it as hedges of net
investment.
(b) Equity Price Risks
Equity instruments held by the Group are principally shares ofcompanies with which the Group has business relationships.
These shares were acquired to expand businesses mutually andenhance the transaction relationships, and the Group does nothold the shares for the purpose of short-term trading.
Equity instruments include listed shares and unlisted shares.
The Group periodically monitors market value, financial conditionsof the issuers (business partners), etc., and reviews theownership in light of the relationships with the business partners.
If the share price increases (decreases) by 5% with otherchanging factors remaining constant, other components ofequity (net of related tax effects) will increase (decrease) by¥1,252 million ($11,312 thousand) for the fiscal year ended
March 31, 2021 (fiscal year ended March 31, 2020: ¥1,001
million) due to the change in fair value.
(c) Interest Rate Risks
The Group is exposed to interest rate fluctuation risks because
it receives variable-rate loans from financial institutions.
For variable-rate, long-term borrowings involving interest rate
fluctuation risks, the Group mitigates the risks by fixing cash
flows using interest rate swap transactions, and applies cash
flow hedges.
Exposure to interest rate fluctuation risks for the Group islimited, and effects of interest rate fluctuations are insignificant.

$(176)(ii) Credit Risks
The Group’s trade and other receivables, other financial assets,etc., are exposed to credit risks of customers.
The Group establishes terms of collection and credit limit fortransaction partners. In addition, the Group confirms the credit
status periodically by obtaining the latest credit report ontransaction partners from external organizations where
necessary and analyzing the report as well as past results ofcollection and other factors. If it is considered that there is any
change or abnormality in the credit status as a result of theconfirmation, measures for protection of receivables are taken
appropriately, including change in the credit limit, modification of
the terms of collection or obtaining transaction credit insurance.
In the execution of derivative transactions, the Group
conducts transactions only with financial institutions with highcredit ratings in principle to mitigate credit risks.
The Group classifies receivables, etc., based on the natureof the credit risk to calculate loss allowance.
In terms of trade receivables that do not include significant
financial components, the loss allowance is always determinedas the same amount as lifetime expected credit loss (simplified
approach). The amount of expected credit loss is calculated byclassifying receivables, etc., according to the nature of the credit
risk of the counterparty and multiplying the receivables amountby the allowance rate set according to the classification. This
allowance rate is set in view of the probability of future
occurrence of credit loss based on external credit reports.
In terms of other receivables, etc., the loss allowance ismeasured as the same amount as the 12-month expected credit
loss in principle. The amount of expected credit loss iscalculated by multiplying the gross carrying amount by theallowance rate established as stated above, in accordance withthe general approach.

JSR Corporation Annual Report 2021

57

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Of other receivables, etc., in terms of assets for which thecredit risk has significantly increased from the initial recognition,
including the case where the receivable is past due for payment,
and credit-impaired financial assets, the loss allowance isrecognized at the same amount as lifetime expected credit loss.
In doing so, the amount of expected credit loss is determined as
the difference between the present value, which is calculatedby discounting future estimated cash flows using the original
effective interest rate for the asset, and the gross carrying
amount.
The gross carrying amount and loss allowance of financial
assets for which loss allowance is recognized are as shown
below. Time deposits are excluded from the table below as
those are considered to be not exposed to credit risks.
Millions of yen

Gross carrying amount
Trade and other receivables
Measured at
12-month expectedcredit losses

Measured at
lifetime expectedcredit losses

Other financial assets
Measured bysimplified
approach

Measured at
12-month expectedcredit losses

Measured at
lifetime expectedcredit losses

As of March 31, 2020

¥12,748¥ 0¥ 98,547¥3,879¥130

As of March 31, 2021

¥16,676¥—¥109,332¥3,802¥168

As of March 31, 2021

$150,631$—$34,341$1,519Thousands of U.S. dollars$987,533*	Financial assets for which loss allowance is measured at the amount equivalent to lifetime expected credit loss are principally credit-impaired financial assets.
* Credit risk rating:	For financial assets for which loss allowance is measured at 12-month expected credit loss, the credit risk rating for expected credit loss (assets to which the simplified approach isapplied also correspond to this) is relatively high compared to financial assets for which loss allowance is measured at the amount equivalent to lifetime expected credit loss, and thecredit rating of financial assets falling in the same category is basically the same.
Millions of yen

Loss Allowance
Trade and other receivables

Other financial assets

Measured at
12-month expectedcredit losses

Measured at
lifetime expectedcredit losses

Measured bysimplified
approach

Measured at
12-month expectedcredit losses

Measured at
lifetime expectedcredit losses

As of April 1, 2019

¥—

¥ 0

¥ 618

¥ 1

Increase

—

—

676

—

¥ 309
47

Decrease (Utilization)

—

—

(28)

—

(225)

Decrease (Reversal)

—

—

(545)

(1)

0

Other

—

—

68

—

(1)

As of March 31, 2020

¥—

¥ 0

¥ 789

¥ 0

¥ 130

Increase

—

—

299

2

40

Decrease (Utilization)

—

(0)

(188)

—

—

Decrease (Reversal)

—

—

(116)

(1)

—

Other

—

—

(67)

(1)

1

As of March 31, 2021

¥—

¥—

¥ 717

¥ 0

¥ 168

Thousands of U.S. dollars

Loss Allowance
Trade and other receivables

Other financial assets

Measured at
12-month expectedcredit losses

Measured at
lifetime expectedcredit losses

Measured bysimplified
approach

Measured at
12-month expectedcredit losses

Measured at
lifetime expectedcredit losses

As of March 31, 2020

$—

$ 0

$ 7,123$ 0$1,173

Increase

—

—

2,700

—

360

Decrease (Utilization)—(0)(1,699)——Decrease (Reversal)—

0(1,046)

(5)

(18)

Other

—

0

(604)

(10)

4

As of March 31, 2021

$—

$ 0

$ 6,474$ 1$1,519*There is no significant change in gross carrying amount that could affect a change in loss allowance.

JSR Corporation Annual Report 2021

58

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

The maximum exposure for credit risk of financial assets is the carrying amount presented in the consolidated statement offinancial position.
With regard to debt guarantees, the maximum exposure for credit risk is as follows:
Millions of yen

As of March 31,
2020
Guarantee Obligation

Thousands of U.S. dollars

As of March 31,
2021¥3,140

As of March 31,
2021

¥—

$—

*Loss allowance related to losses that could arise due to performance of a debt guarantee contract has not been recorded.

(iii) Liquidity Risks
Liquidity risks are the risks that the Group cannot execute apayment on the due date. Funds of the Group as a whole are ina position of net cash where funds held exceed borrowings. The
Group formulates a financial plan based on the annual businessplan, and then manages liquidity risks by ensuring an appropriatebalance between direct and indirect financing and between
short-term and long-term financing to prepare for these risks.

The balance of financial liabilities of the Group by maturity is as follows:
Millions of yen

4-5 years

Later than
5 years

Contractual
cash flows
Total

¥

¥

—

¥ 92,839

379

84,226

As of March 31, 2020

Carrying
amountNot later than
one year

Trade and other receivables¥ 92,839¥ 92,839

82,72630,21013,816

8,186

12,10919,527

111

44

—

—

—

—

66

111

18,766

3,425

3,313

1,965

1,824

1,609

8,332

20,468¥194,442¥126,518¥17,129¥10,151¥13,933¥21,136¥8,777¥197,644

4-5 years

Later than
5 years

Contractual
cash flows
Total

Borrowings
Derivative liabilities
Lease liabilities
Total

1-2 years¥

2-3 years—¥—

3-4 years¥——

Millions of yen

As of March 31, 2021

Carrying
amountNot later than
one year

Trade and other receivables¥100,797¥100,797—¥100,797

Borrowings

84,40938,067

8,954

13,70515,033

8,272

1,389

85,421

Bonds payable

34,869

97

97

97

97

13,097

22,33635,820

815

544

—

—

—

—

271

815

22,373

3,800

2,612

2,344

2,122

2,044

11,50824,430¥243,263¥143,305¥11,662¥16,146¥17,252¥23,413¥35,504¥247,283

Contractual
cash flows
Total$  910,460

Derivative liabilities
Lease liabilities
Total

1-2 years¥

2-3 years—¥—

3-4 years
¥

—

¥

—

¥

Thousands of U.S. dollars

As of March 31, 2021

Carrying
amountNot later than
one year

1-2 years

2-3 years

3-4 years

4-5 years

Later than
5 years

Trade and other receivables$  910,460$  910,460

$

$

$

$

$

Borrowings

762,433

343,844

80,878

123,792

135,787

74,71812,546

771,574

Bonds payable

314,955

874

874

874

874

118,298

201,749

323,544

Derivative liabilities
Lease liabilities
Total

—

—

—

—

—

7,364

4,914

—

—

—

—

2,450

7,364

202,084

34,327

23,59021,174

19,165

18,466

103,948

220,669$2,197,295$1,294,419$105,342$145,840$155,827$211,482$320,692$2,233,611

JSR Corporation Annual Report 2021

59

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

3) Fair Value of Financial Instruments
The Group classifies financial instruments into the following three levels in the fair value hierarchy according to the observability of
inputs used for fair value measurement in markets:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2: Directly or indirectly observable inputs that are not included in Level 1
Level 3: Fair value that is determined using a valuation technique including unobservable inputs
Carrying amount and fair value of financial instruments measured at amortized cost are as follows:
Millions of yen

As of March 31, 2020
Long-term loans payable

Thousands of U.S. dollars

As of March 31, 2021

As of March 31, 2021

Carrying Amount

Fair Value

Carrying Amount

Fair Value

Carrying Amount

Fair Value¥59,167¥58,412¥62,076¥60,874$560,706$549,850——

34,86935,474

314,955

320,427

Bonds payable

The above figures include balances to be collected within one
year or to be repaid and redeemed within one year.
Financial instruments for which the carrying amount isreasonably approximate to the fair value are not included in thetable above.
The fair value of long-term borrowings is calculated bydiscounting the total amount of principal and interest using theinterest rate at which a similar new loan is assumed to be made.
Borrowings are classified as Level 3 in the fair value hierarchy.
The fair value of bonds payable is calculated by discounting
future cash flows using the current market interest rate.
Bonds payable are classified as Level 2 in the fair value
hierarchy.

Assets and liabilities measured at fair value by the Group are as follows:
Millions of yen

As of March 31, 2020

Level 1

Level 2

Level 3

Total

<Financial Assets>
Financial assets measured at fair value through profit or loss
Investments (equity financial assets)

¥

—

¥ —

¥ 3,582¥ 3,582

—

3

—

3

20,013—

16,36036,373

Derivatives
Financial assets measured at fair value through other comprehensive income
Investments (equity financial assets)
Financial assets defined as hedging instruments
Derivatives
Total

—

—

—

—

¥20,013¥  3¥19,942¥39,958

—

44

—

44

<Financial Liabilities>
Financial liabilities measured at fair value through profit or loss
Derivatives
Financial liabilities measured at fair value through other comprehensive income
Financial liabilities defined as hedging instruments
Derivatives
Total

¥

—

66

—

¥111

¥

—

66

—

¥   111

JSR Corporation Annual Report 2021

60

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Millions of yen

As of March 31, 2021

Level 1

Level 2

Level 3

Total

<Financial Assets>
Financial assets measured at fair value through profit or loss
Investments (equity financial assets)

¥

—

¥ —

¥ 3,805¥ 3,805

—

1

—

1

25,141—

17,23942,380Derivatives
Financial assets measured at fair value through other comprehensive income
Investments (equity financial assets)
Financial assets defined as hedging instruments
Derivatives
Total

—

—

—

—

¥25,141¥  1¥21,044¥46,186

—

544

—

544

<Financial Liabilities>
Financial liabilities measured at fair value through profit or loss
Derivatives
Financial liabilities measured at fair value through other comprehensive income
Financial liabilities defined as hedging instruments
Derivatives
Total

—

271

—

¥815

Level 1

Level 2

Level 3

Total

$

¥

¥

—

271

—

¥   815

Thousands of U.S. dollars

As of March 31, 2021
<Financial Assets>
Financial assets measured at fair value through profit or loss
Investments (equity financial assets)$—$ 34,370$ 34,370

—

7

—

7

227,091—

155,715

382,806

Derivatives—

Financial assets measured at fair value through other comprehensive income
Investments (equity financial assets)
Financial assets defined as hedging instruments
Derivatives
Total

—

—

—

—

$227,091$    7$190,084$417,183

—

4,914

—

4,914

<Financial Liabilities>
Financial liabilities measured at fair value through profit or loss
Derivatives
Financial liabilities measured at fair value through other comprehensive income
Financial liabilities defined as hedging instruments
Derivatives
Total

$

—

2,450

—

$7,364

$

—

2,450

—

$  7,364(Note) O ther than the above assets and liabilities, the Company has entered into an agreement with non-controlling shareholders that the Company purchases all interests held by the
non-controlling shareholders under certain terms and conditions in the previous fiscal year. With regard to the obligations to purchase these interests, ¥460 million that is the present
value of the purchase amount has been recognized as financial liabilities. These are classified as Level 3 in the fair value hierarchy. There is no recognition as financial liabilities
because the obligations to purchase these interests expired in the current fiscal year.

Transfer between levels in the fair value hierarchy is recognized on the day when the event or change in circumstances that caused thetransfer occurred. In each fiscal year, there was no significant transfer between Level 1 and Level 2 in the fair value hierarchy.

JSR Corporation Annual Report 2021

61

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Changes in financial instruments classified as Level 3 are as follows:
Millions of yen

Balance at the beginning

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020
(from April 1, 2019 toMarch 31, 2020)

Fiscal year ended
March 31, 2021
(from April 1, 2020 toMarch 31, 2021)

Fiscal year ended
March 31, 2021
(from April 1, 2020 toMarch 31, 2021)¥17,219¥19,942$180,126

Total gains and losses

355

446

4,029

Profit or loss

(271)

(32)

(286)

Other comprehensive income (Note)

625

478

4,315
14,847Purchase

4,171

1,644

Selling

(56)

—

—

Other

(1,747)(934)(8,432)¥19,942¥21,098$190,570

Balance at the end(Note) G ains and losses included in other comprehensive income relate to financial assets measured at fair value through other comprehensive income as at the reporting date. Thesegains and losses are included in “net change in financial assets measured at fair value through other comprehensive income” in the consolidated statement of comprehensive
income.

Financial assets and liabilities classified as Level 2 are derivativetransactions related to foreign exchange forward contracts,
interest rate swaps, etc. Fair value of foreign exchange forward
contracts, interest rate swaps, etc., is calculated based on
observable market data such as the interest rate presented byfinancial institutions with which the Group has transactions
and others.

Financial assets classified as Level 3 are mainly unlisted
shares. With regard to valuation of unlisted shares, principally,
the fair value is measured taking into account future profitability
or cash flows of the investees comprehensively. The results arereviewed and approved by a person with appropriate authority.
For financial instruments classified as Level 3, an increase or
decrease in fair value if unobservable inputs are changed toreasonably possible alternative assumptions is not significant.

4) Hedge Accounting
Effects of hedging instruments designated as hedge on the Group’s consolidated statement of financial position are as follows:
Millions of yen

As of March 31, 2020

Notional principal ofhedging instruments

Carrying amount of hedging instruments
Asset

Liability

Item on the consolidated
statement of financial position¥4,516¥—¥    66

Other financial liabilities

11,862($109 million)—

11,862

Borrowings

Cash flow hedges
Interest rate risk
Interest rate swap
Hedging instruments of net investment in foreign operations
Exchange rate risk
Borrowings in U.S. dollars

Millions of yen

As of March 31, 2021

Notional principal ofhedging instruments

Carrying amount of hedging instruments
Asset

Liability

Item on the consolidated
statement of financial position¥2,048¥—¥   38Other financial liabilities

8,691($79 million)

—

8,691

Borrowings

Cash flow hedges
Interest rate risk
Interest rate swap
Hedging instruments of net investment in foreign operations
Exchange rate risk
Borrowings in U.S. dollars

JSR Corporation Annual Report 2021

62

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars

As of March 31, 2021

Notional principal ofhedging instruments

Carrying amount of hedging instruments
Asset

Liability

Item on the consolidated
statement of financial position$18,500$—$   347

Other financial liabilities

78,500—78,500Borrowings

Cash flow hedges
Interest rate risk
Interest rate swap
Hedging instruments of net investment in foreign operations
Exchange rate risk
Borrowings in U.S. dollars

There are no cash flow hedge reserves arising from hedge relationship for which the hedge accounting was discontinued, and no
ineffective portion of hedges recognized in profit or loss.
Effects of hedging instruments designated as cash flow hedges and hedges of net investment on the Group’s profit or loss and othercomprehensive income are as follows:
Millions of yen

Fiscal year ended March 31, 2020
(April 1, 2019 to March 31, 2020)

Hedging gains (losses)
recognized as othercomprehensive income(Note)

Transfer from other componentsof equity to profit or loss as
reclassification adjustments(Note)

Item of transfer to profit or loss
as reclassification adjustments¥(124)¥(22)

Financial costs

(67)

—

—

Hedging gains (losses)
recognized as othercomprehensive income(Note)

Transfer from other componentsof equity to profit or loss as
reclassification adjustments(Note)

Item of transfer to profit or loss
as reclassification adjustments

¥ 28

¥(37)

Financial costs

517

—

—

Hedging gains (losses)
recognized as othercomprehensive income(Note)

Transfer from other componentsof equity to profit or loss as
reclassification adjustments(Note)

Item of transfer to profit or loss
as reclassification adjustments$  251$(338)

Financial costs

4,670

—

—

Cash flow hedges
Interest rate risk
Interest rate swap
Hedging instruments of net investment in foreign operations
Exchange rate risk
Borrowings in U.S. dollars(Note) Before tax effectMillions of yen

Fiscal year ended March 31, 2021
(April 1, 2020 to March 31, 2021)
Cash flow hedges
Interest rate risk
Interest rate swap
Hedging instruments of net investment in foreign operations
Exchange rate risk
Borrowings in U.S. dollars(Note) Before tax effectThousands of U.S. dollars

Fiscal year ended March 31, 2021
(April 1, 2020 to March 31, 2021)
Cash flow hedges
Interest rate risk
Interest rate swap
Hedging instruments of net investment in foreign operations
Exchange rate risk
Borrowings in U.S. dollars(Note) Before tax effectJSR Corporation Annual Report 2021

63

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(36) Subsidiaries
The number of consolidated subsidiaries as of March 31, 2021
was 64 (61 as of March 31, 2020).
Changes in the consolidated subsidiaries in the current fiscal
year are as follows:	The number of companies consolidated by acquisition,
establishment, etc.: 5	The number of subsidiaries excluded by liquidation,
sales, etc.: 2
The condensed financial information for consolidated
subsidiaries for which the Group has recognized significant noncontrolling interests are as follows. The condensed financial
information shows the amount before elimination oftransactions within the Group.

(3) T he condensed financial information
1) Condensed Statement of Financial Position
Millions of yen

Thousands of
U.S. dollars

As of March 31,
2021

As of March 31,
2021

Current assets¥43,266$390,805

Non-current assets

23,928216,129

Total assets

67,194606,933

Current liabilities

20,628186,323

Non-current liabilities

853

7,708

Total current liabilities¥21,481$194,031

Total equity¥45,712$412,902¥67,194$606,933

Total liabilities and equity

2) C ondensed Statements of Profit or Loss and Comprehensive
IncomeMillions of yen

Thousands of
U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Revenue¥66,346$599,278

Profit (loss)

3,109

28,084Comprehensive income

3,249

29,345

Techno-UMG Co., Ltd.
(1) Proportion of non-controlling interests and thecumulative amount of non-controlling interests

Proportion of share of non-controllinginterests
The cumulative amount of
non-controlling interests

Millions of yen

Thousands of
U.S. dollars

As of March 31,
2021

As of March 31,
2021

49%

49%

¥20,268$183,070(2) Profit or loss allocated to non-controlling interests anddividends paid for non-controlling interests

Profit or loss allocated to
non-controlling interests
Dividends paid for non-controllinginterests

Millions of yen

Thousands of
U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

¥1,475$13,325

423

3,820

3) Condensed Statement of Cash Flows
Millions of yen

Thousands of
U.S. dollars

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2021

Cash flows from operating activities¥10,073$ 90,984

Cash flows from investing activities(2,815)(25,425)

Cash flows from financing activities(863)(7,796)

Net increase (decrease) in cash andcash equivalents

6,395

57,763

Cash and cash equivalents at the endof the period

10,376

93,722JSR Corporation Annual Report 2021

64

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(37) Related Parties
1) Transactions with Joint Venture
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen

Attribute
Joint venture

Transaction amount

Balance at the end of
the current fiscal year

Manufacturing consignment of elastomer products¥8,863¥3,229Supply of raw material gas

4,141

1,506

Name of the company
KRATON JSR
ELASTOMERS K. K.

Contents of transactions(Notes) 1.	Transactions with joint venture have been determined through price negotiations in light of market prices and others. In addition, the receivables and payables are settled in cash
and consistent with the terms of third party settlements.
2. There is no outstanding balance of collateral or guarantee. Loss allowance has not been made for the receivables.

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Millions of yen

Attribute
Joint venture

Transaction amount

Balance at the end of
the current fiscal year

Manufacturing consignment of elastomer products¥6,109¥2,869Supply of raw material gas

2,095

1,019

Name of the company
KRATON JSR
ELASTOMERS K. K.

Contents of transactions(Notes) 1.	Transactions with joint venture have been determined through price negotiations in light of market prices and others. In addition, the receivables and payables are settled in cash
and consistent with the terms of third party settlements.
2. There is no outstanding balance of collateral or guarantee. Loss allowance has not been made for the receivables.

Fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Thousands of U.S. dollars

Attribute
Joint venture

Transaction amount

Balance at the end of
the current fiscal year

Manufacturing consignment of elastomer products$55,181$25,916

Supply of raw material gas

18,927

9,207

Name of the company
KRATON JSR
ELASTOMERS K. K.

Contents of transactions(Notes) 1.	Transactions with joint venture have been determined through price negotiations in light of market prices and others. In addition, the receivables and payables are settled in cash
and consistent with the terms of third party settlements.
2. There is no outstanding balance of collateral or guarantee. Loss allowance has not been established for the receivables.

2) Key Management Personnel Compensation
Millions of yen

Fiscal year ended
March 31, 2020
(April 1, 2019 toMarch 31, 2020)

Thousands of U.S. dollars

Fiscal year ended
March 31, 2021
(April 1, 2020 toMarch 31, 2021)

Fiscal year ended
March 31, 2021
(April 1, 2020 toMarch 31, 2021)

Basic compensation

¥361

¥339

Bonuses

134

149

1,347

Share-based remuneration

99

124

1,124

¥595

¥613

$5,533Total$3,062(38) Commitments
Commitments related to expenditures taking place after the last day of the fiscal year are as follows:
Millions of yen

Acquisition of property, plant and equipment

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2021

As of March 31,
2021¥5,152¥16,672$150,593

JSR Corporation Annual Report 2021

65

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(39) Subsequent Events
The Separation of the Company’s Elastomer Business andTransfer of Stock to ENEOSThe Board of Directors meeting of JSR Corporation held on May
11, 2021 (hereinafter referred to as “JSR” or “Splitting
Company”) resolved to separate JSR’s Elastomers business into
a new standalone company named “Japan Synthetic Rubber
Spin-off Preparation Co., Ltd.” by an absorption-type company
split (hereinafter referred to as “Japan Synthetic Rubber” or“Successor Company”). Additionally, JSR resolved to transfer all
stocks of Japan Synthetic Rubber to ENEOS Corporation andentered into the stock transfer agreement with ENEOS
Corporation as described below.
The completion of the Company Separation and the stocktransfer are subject to the necessary clearances, permits andapprovals under domestic and international competition laws
and other laws and regulations.
The Group will classify the Elastomer Business as
discontinued operations from the fiscal year ending March 31,
2022. The Group will present profit or loss from discontinued
operations separately from continuing operations.
I. Purpose of the Transaction
JSR was established in December 1957 through the “Act on
Special Measures for Synthetic Rubber Manufacturing
Business,” which was enacted to support the domestic
production of synthetic rubber in Japan (former name: Japan
Synthetic Rubber Co., Ltd.). In 1969, JSR became a privatecompany and expanded its petrochemical business fromsynthetic rubber to emulsions and synthetic resins.
Subsequently, JSR expanded its business to include
semiconductor materials, display materials, optical materials,
and other areas, leveraging JSR’s unique polymer technology.
In recent years, as the business environment has become
increasingly complex and uncertain, JSR has positioned its

digital solutions and life sciences businesses, where the global
market offers strong growth potential and where JSR can better
leverage its strengths in technological innovation, as growth
drivers for JSR over the medium- to long-term. To generatevalue to all stakeholders, JSR is building a strong organizationthat can respond to changes in the business environment andachieve sustainable growth.
As the number one synthetic rubber company in Japan,
JSR’s Elastomers business has earned international trust with
its advanced technological capabilities, especially in the field ofhigh-value-added synthetic rubbers such as solution polymerized
butadiene styrene rubber (SSBR). However, the businessenvironment has become increasingly challenging due tointensifying global competition. To address these challenges,
JSR launched a strategic review of its business portfolio while
taking measures to improve profitability and implement
structural business reforms. Following the conclusion of thisstrategic review, JSR resolved to separate the Elastomers
business and transfer this business to a new base where it cangrow further.
JSR has determined that the best way to ensure thesustainable development of the Elastomers business is totransfer the business to ENEOS Corporation, a subsidiary of
ENEOS Holdings, Japan‘s largest integrated energy, resources,
and materials company. ENEOS Corporation is engaged in the
manufacture and sale of petrochemical products globally, hasadvanced technological capabilities, greater business scale, andis actively working to strengthen its lineup of high-value-added
products. Consequently, JSR has resolved to make theElastomers business a separate company and transfer theshares of that company to ENEOS Corporation, a subsidiary of
ENEOS Holdings, Inc.

II. Outline of the Company Separation
1. Summary of the Company Separation(1) Schedule
Date of the Board of Directors to approve stock transfer

May 11, 2021

Establishment of the Successor Company

May 12, 2021

Board of Directors meeting to approve agreement of the absorption-type split

May 11, 2021

Date of conclusion of the absorption-type split agreement

May 18, 2021

Ordinary General Shareholders’ Meeting to approve the absorption-type split agreement

June 17, 2021

Effective date of the absorption-type company split

April 1, 2022 (plan)

JSR Corporation Annual Report 2021

66

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS(2) Method
This is an absorption-type company split in which JSR is theSplitting Company and Japan Synthetic Rubber is the Successor
Company.
(3) Details of Allocation to the Splitting Company
Upon the absorption-type split, the Successor Company will
issue and allocate one share of common stock to the Splitting
Company.
(4) Treatment of stock acquisition rights and bonds with stockacquisition rights in connection with the absorption-type split
There will be no change in the handling of JSR’s stockacquisition rights as a result of the absorption-type split.

(6) Rights and obligations to be ceded by the Successor
Company
As of the effective date of the absorption-type split, theSuccessor Company will cede to the assets, liabilities,
contractual status, rights and obligations, etc., related to JSR’s
Elastomers business as stipulated in the absorption-type split
agreement.
(7) Prospect of fulfillment of obligations
JSR has determined that there are no concerns with theprospects for the fulfillment of obligations to be borne by the
Successor Company on and after the effective date of theabsorption-type split.

(5) Capital to be increased or decreased as a result of theCompany Separation
There will be no increase or decrease in the capital of JSR as aresult of this absorption-type split.

2. Outline of the Parties related to the Company Separation(1) Name

Japan Synthetic Rubber Spin-off Preparation Co., Ltd.

(2) Address

1-9-2 Higashi Shimbashi, Minato-ku, Tokyo(3) Representative

Representative Director and President Hayato Hirano(4) Business Outline

Sales and manufacturing of synthetic rubbers and high performance materials.

(5) Capital

1 million yen(6) Date of establishment

May 12, 2021

(7) Number of shares issued

1,000 shares(8) Shareholder

JSR Corporation 100.00%(9) Relationship between the Splitting Company
and Successor Company

1. CapitalAt the time of Japan Synthetic Rubber’s establishment, JSR held 100% of thestocks of the Successor Company, but plans to transfer all such stocks to
ENEOS Corporation on April 1, 2022.
2. Personnel
Hayato Hirano, Managing Officer of the Splitting Company will concurrently
serve as Representative Director.
3. BusinessNot applicable.
4. Status of related parties
On the effective date of the absorption-type split, Japan Synthetic Rubber
would be a consolidated subsidiary of JSR and fall under the category of a
related party; however, it is scheduled to transfer all of its stocks in the
Successor Company to ENEOS Corporation on April 1, 2022, and will no longer
be a related party.

JSR Corporation Annual Report 2021

67

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

3. Overview of the business unit to be separated(1)	Business of the division to be separated
Part of the Elastomer product manufacturing and sales business
operated by JSR. Subsidiaries and affiliates, related to the
Elastomer business such as ELASTOMIX CO., LTD. and JSR
Trading Co., Ltd. will also be included in the scope of thisabsorption-type company split.
(2)	Operating results of the division to be separated(Fiscal year ended March 31, 2021)• Revenue¥143,186 million ($1,293,342 thousand)(3)	Items and amounts of assets of the division to be separated(As of March 31, 2021)• Current Assets¥96,449 million ($871,188 thousand)• Non-current Assets¥87,298 million ($788,528 thousand)• Total		¥183,747 million ($1,659,715 thousand)(Note) T he above amounts are for the entire elastomer business as of March 31,
2021, and differ from the actual amounts to be separated.

4. Status after the Company Separation
Please refer to “2. Outline of the Parties related to the Company
Separation” above for the name, head office location, title andname of representative, business, capital and fiscal year-end,
net assets and total assets of the Splitting Company and theSuccessor Company after the absorption-type split.
III. Outline of the Stock Transfer
1. Reason for the change
As described in “I. Purpose of the Transaction” above.
2. Method of transfer
After the Elastomer business is transferred to Japan Synthetic
Rubber through an absorption-type split, the Company willtransfer all of its Japan Synthetic Rubber stocks to ENEOS
Corporation.
3. Overview of the Subsidiary to be transferred
As described in the “Successor Company” section of “2.
Outline of the Parties related to the Company Separation”
above.

4. Outline of Transferee( 1 ) NameENEOS Corporation( 2 ) Address

1-1-2 Otemachi, Chiyoda-ku, Tokyo 100-8162, Japan( 3 ) Representative

Representative Director Tsutomu Sugimori
Representative Director, President Katsuyuki Ota( 4 ) Business Outline

Refining and marketing of petroleum products (such as gasoline, kerosene, andlubricating oil), import and sale of gas and coal, manufacture and sale ofpetrochemical products and supply of electricity and hydrogen( 5 ) Capital

30 billion yen( 6 ) Date of Establishment

May 10, 1888

( 7 ) Consolidated Net Assets(As of March 31, 2021)

760,808 (Million yen)

( 8 ) Consolidated Total Assets(As of March 31, 2021)

3,368,039 (Million yen)

( 9 ) Major Shareholders and Shareholding Ratio(As of March 30, 2021)

ENEOS Holdings, Inc. 100%

(10) Relationship between our Company andthe Company

1. Capital
Not applicable.
2. Personnel
Not applicable.
3. Business
There is a business relationship between JSR and ENEOS regarding thepurchase and sale of petrochemical-related materials. In addition, JSR has
business relationships with subsidiaries and other group companies of ENEOS
regarding sales and purchase of petrochemical products and related materials.
4. Status of related parties
Not applicable.

JSR Corporation Annual Report 2021

68

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

5. Number of shares to be transferred, enterprise value, and status of shares held before and after the transfer(1) Shares held before the change

1,001 shares (Percentage of voting rights held: 100.00%) (plan)(2) Number of shares to be transferred

1,001 shares (Percentage of voting rights held: 100.00%) (plan)(3) Enterprise value

115 billion yen(4) Number of shares held after the change

0 shares (Percentage of voting rights held: 0.00%)(Note) J SR and ENEOS have agreed on an enterprise value of 115 billion yen ($1,038,750 thousand) for the Elastomers business, and the final stock transfer price will be determined after
adjustments are made in consideration of the cash and deposits, interest-bearing debt, various other liabilities and assets, and working capital of the Elastomers business as of thecompletion of the absorption-type split.

6. Schedule
Date of resolution by the Board of Directors

May 11, 2021

Date of conclusion of stock purchase agreement

May 11, 2021

Execution date of share transfer

April 1, 2022 (plan)

Change in the Equity Method Affiliates
The Board of Directors decided at a meeting held on May 11,2021 to transfer all shares held of Kumho Polychem Co., Ltd.
(located in Seoul, Republic of Korea, hereinafter referred to as“KPC“), an equity method affiliate, to Kumho Petrochemical Co.,
1. Reasons for the share transfer and dissolution of the joint
ventureKPC was established in 1985 as a joint venture between JSR
and KKPC and has been mainly engaged in the manufacture andsale of ethylene propylene rubber. Since its establishment,
KPC‘s products have been recognized as indispensable products
for the automotive industry. In light of the current businessenvironment, JSR is reviewing its strategies in each of its

Ltd. (located in Seoul, Republic of Korea, hereinafter referred toas “KKPC”). The Group will classify KPC as held for sale fromthe fiscal year ending March 31, 2022.

businesses. In order for this business to continue to grow,transformation is necessary in several ways including
consideration of the investment of management resources at an
appropriate scale. Therefore, we have reached an agreementwith KKPC to dissolve the joint venture agreement with KPC,
judging that enabling rapid decision-making under KKPC’s solecontrol will lead to increased corporate value.

JSR Corporation Annual Report 2021

69

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

2. Profile of joint venture(1) Name

Kumho Polychem Co., Ltd.

(2) Location

8F, East Wing, Signature Tower #100, Cheonggyecheon-ro, Jung-gu,
Seoul 100-230, Korea(3) Representative

Chairman Chan Koo Park, Vice President Takeshi Sugimoto(4) Description of business

Production and sales of Ethylene Propylene Rubber(5) Capital

WON 21,500,000,000(6) Date of establishment

June 5, 1985(7) M ajor shareholders and percentage ofshares held

JSR Corporation 50%, Kumho Petrochemical 50%
1. Capital
JSR’s equity interest in KPC is 50%.
2. Personnel
An employee of JSR serves as the Executive Vice President of KPC. In addition,
one director and two employees of the Company serve as directors andauditors of KPC.
3. Business
JSR purchases products from this company.

(8) Relationship(9) Operating results and financial position for the three most recent fiscal years(Unit Million WON)

Fiscal year ended December 31, 2018
(January 1, 2018 to December 31, 2018)

Fiscal year ended December 31, 2019
(January 1, 2019 to December 31, 2019)

Fiscal year ended December 31, 2020
(January 1, 2020 to December 31, 2020)

480,523

429,172

405,905

Total Assets
Net Assets

318,614308,730

304,688

Revenue

476,796

390,670

328,029

Operating Profit(2,751)(8,155)(2,993)

Profit(5,073)(9,176)(5,483)

3. Profile of joint venture partner(1) Name

Kumho Petrochemical Co., Ltd. (KKPC)(2) Location

10th-14th Floor, Signature Tower East Wing, 100 Cheonggyecheon-ro, Jung-gu,
Seoul, Republic of Korea(3) Representative

CEO Chan-Koo Park, Dong-Joon Moon

(4) Description of business

Production of synthetic rubbers, plastics, functional chemicals, etc. KKPC groupprovides services in construction, logistics, financial-related matters.

(5) Capital

167,456 million WON(6) Date of establishment

December 28, 1970

4. Details of the share transfer(1) Number of shares held prior to transfer

2,150,000 shares (Percentage of voting rights: 50%)(2) Number of shares transferred

2,150,000 shares(3) Number of shares held after transfer

0 shares (Percentage of voting rights: 0%)(4) Date of share transfer

July 1, 2021 (plan)

JSR Corporation Annual Report 2021

70

INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of JSR Corporation:
OpinionWe have audited the accompanying consolidated financial statements of JSR Corporation (“the Company”) and its consolidated
subsidiaries (collectively referred to as “the Group”), which comprise the consolidated statement of financial position as at March 31,
2021, the consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended,and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Group as at March 31, 2021, and its consolidated financial performance and its consolidated cash flows for the year thenended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter
We draw attention to Note 39 “Subsequent Events” of the consolidated financial statements.
The Board of Directors meeting of the Company held on May 11, 2021 resolved to separate its Elastomers business into a new
standalone company named “Japan Synthetic Rubber Spin-off Preparation Co., Ltd.” by an absorption-type company split. Additionally,
the Company resolved to transfer all stocks of Japan Synthetic Rubber Spin-off Preparation Co., Ltd. to ENEOS Corporation andconclude the stock transfer agreement with ENEOS Corporation.
Our opinion is not modified in respect of this matter.

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

Appropriateness of the impairment loss on non-financial assets used in the Elastomers business
The key audit matter
As described in Note 18, “Impairment on Non-Financial Assets” of the consolidated financial statements, the Group recognized
an impairment loss of ¥77,227 million on non-financial assets used in the Elastomers business in the consolidated statement of profit
or loss.
Non-financial assets need to be tested for impairment whenever there is an impairment indicator. In the impairment testing, when therecoverable amount of non-financial assets is less than the carrying amount, the carrying amount is reduced to the recoverable amount,and the resulting decrease in the carrying amount is recognized as an impairment loss. The recoverable amount is the higher of either
the value in use or fair value less cost of disposal.

JSR Corporation Annual Report 2021

71

INDEPENDENT AUDITOR’S REPORTIn the current fiscal year, since the Company had commenced and partially implemented business structure reforms related to the
Elastomers business, an impairment indicator was identified for the entire business, and therefore the Company performed an
impairment test. In the impairment testing, the Company used the fair value less cost of disposal as the recoverable amount because
as part of its business structure reforms the Company obtained the enterprise values of the entire Elastomers business from potential
buyers through a fair bidding process.
The impairment loss was calculated based on the fair value less cost of disposal and the carrying amounts of non-financial assets usedin the Elastomers business. The Company assessed the appropriateness of using the enterprise values obtained from potential buyers
as a basis for the fair value by comparing them with a discounted present value of future cash flows of the Elastomers businesscalculated by an external valuation expert. The future cash flows were based on the five-year business plan developed by management
and the terminal value was measured considering EBITDA multiples of similar transactions from the market participants’ perspectives
in addition to a terminal growth rate. Since the discounted present value of future cash flows is based on the premise that the assets
will be used for a long period, the cash flows after the periods covered by the five-year business plan had a significant effect on the
discounted present value. Therefore, the measurement of the terminal value was important in estimating the discounted present valueof future cash flows. The terminal growth rate and the EBITDA multiples of similar transactions used in the measurement of theterminal value included assumptions involving uncertainty, which required management judgement. In addition, selecting appropriate
models and input data for estimating the discount rate required a high degree of expertise in valuation.
Moreover, the carrying amounts of non-financial assets used in the Elastomers business may not be properly aggregated bymanagement because the Elastomers business is spread over a number of subsidiaries of the Company.
We, therefore, determined that our assessment of the appropriateness of the impairment loss on non-financial assets used in the
Elastomers business was one of the most significant matters in our audit of the consolidated financial statements for the current fiscal
year, and accordingly, a key audit matter.

How the matter was addressed in our audit
The primary procedures we performed to assess the appropriateness of the impairment loss on non-financial assets used in the
Elastomers business included the following:(1) Internal control testing
We tested the design and operating effectiveness of certain of the Company’s internal controls relevant to the impairment testing on
non-financial assets. In this assessment, we focused our testing on the following controls:•	Controls designed to prevent and/or detect the use of unreasonable assumptions in assessing the appropriateness of the fair valueless cost of disposal; and•	Controls to ensure that the carrying amounts of non-financial assets used in the Elastomers business are properly aggregated.

(2) Assessment of the reasonableness of the fair value less cost of disposal
We performed the following procedures by involving a valuation specialist within our domestic network firms in assisting ourassessment of the reasonableness of key assumptions and the discount rate adopted in calculating the terminal value included in the
discounted present value of future cash flows:•	Evaluated the reasonableness of the terminal growth rate and the EBITDA multiples of similar transactions the Company adopted byinspecting the results of the evaluation by the external valuation expert and inquiring of the external expert about the rationales, andthen comparing them with relevant data published by external organizations;•	Assessed the appropriateness of the model used to estimate the discount rate based on subject matters relevant to valuation and therequirements of accounting standards;•	Assessed the reasonableness of input data used to calculate the discount rate through comparison with relevant data published byexternal organizations; and•	After considering the results of our assessment of the reasonableness of key assumptions and the discount rate, analyzed thesensitivity of the discounted present value of future cash flows to changes in input data used to calculate the terminal growth rate
and the discount rate.
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Furthermore, we assessed the consistency of the fair value with the consideration for the stock transfer agreement related to the
Elastomers business entered into on May 11, 2021.
(3) Assessment of the appropriateness of the carrying amounts
We examined whether the carrying amounts of non-current assets used in the Elastomers business were properly aggregated byconfirming the consistency with the carrying amount reaggregated from data we independently retrieved from the accounting system.

Appropriateness of management’s judgment as to whether an impairment loss should be recognized on goodwill
allocated to the drug discovery and development services business
The key audit matter
As described in Note 18, “Impairment on Non-Financial Assets” of the consolidated financial statement, the Group recognized goodwillof ¥36,823 million allocated to the drug discovery and development services business, which represented 5% of total assets in the
consolidated financial statements. The goodwill arose when the Company acquired control of Crown Bioscience International.
Goodwill is required to be tested for impairment at least annually or more frequently whenever it is determined that there is an
impairment indicator. In the impairment testing, when the recoverable amount of a group of cash-generating units is less than the
carrying amount, the carrying amount is reduced to the recoverable amount, and the resulting decrease in the carrying amount isrecognized as an impairment loss. The recoverable amount is the higher of either the value in use or fair value less costs of disposal.
In the annual impairment testing, no impairment loss was recognized in the current fiscal year as the value in use of the drug discovery
and development services business exceeded the carrying amount.
The value in use was discounted to the present value of an estimated amount of future cash flows based on the five-year businessplan approved by management. The five-year revenue projection based on the business plan involved a high degree of uncertainty as
the revenue is affected by the future growth potential of the CRO business in which the drug discovery and development services
business operates and the capacity of the equipment used in the business. Accordingly, management’s judgment thereon had asignificant effect on the estimated future cash flows.
In addition, selecting appropriate models and input data for estimating the discount rate requires a high degree of expertise in valuation.
We, therefore, determined that our assessment of the appropriateness of management’s judgment as to whether an impairment loss
should be recognized on goodwill allocated to the drug discovery and development services business was one of the most significant
matters in our audit of the consolidated financial statements for the current fiscal year, and accordingly, a key audit matter.

How the matter was addressed in our audit
The primary procedures we performed to assess whether management’s judgment with respect to the recognition of an impairment
loss on goodwill allocated to the drug discovery and development services business was appropriate included the following:(1) Internal control testing
We tested the design and operating effectiveness of certain of the Company’s internal controls relevant to measuring the value in use
used in the impairment testing on goodwill. In this assessment, we focused our testing on controls to prevent and/or detect the use of
unreasonable assumptions to estimate the value in use.
(2) Assessment of the reasonableness of the estimated value in use
In order to assess the reasonableness of key assumptions adopted by management in preparing the business plan, which was used as
the basis for estimating future cash flows, we inquired of management and the personnel responsible for the drug discovery anddevelopment services business about the basis on which those assumptions were developed. In addition, we:•	Compared the five-year revenue included in the business plan with available external data related to the market growth rate andexamined the consistency of the capacity of the equipment which is currently held and/or is expected to be invested in the futurewith the projected revenue; and•	Compared management’s estimate of future cash flows with those independently estimated by incorporating the effect of specificuncertainty into the business plan and assessed any impact on management’s judgment as to whether an impairment loss should
be recognized.
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Furthermore, we performed the following procedures by involving a valuation specialist within our domestic network firms in assisting
our evaluation of the discount rate:•	assessment of the appropriateness of the model used to estimate the discount rate based on subject matters relevant to valuationand the requirements of accounting standards; and•	assessment of the reasonableness of input data through comparison with relevant data published by external organizations.

Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS,
and for such internal control as management determines is necessary to enable the preparation of consolidated financial statementsthat are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern in accordance with IFRS and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted inJapan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:•	Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances, while the objective of the audit is not to express an opinion on the effectiveness of the Group’s internal control.
•	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
•	Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
•	Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with IFRS, the overall
presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
•	Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Groupto express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.
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We communicate with corporate auditors and the board of corporate auditors regarding, among other matters, the planned scope andtiming of the audit, significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we determine those matters that were ofmost significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2021 arepresented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made on the basis described in Note 2 to the consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.

Tomoyoshi Inoue
Designated Engagement Partner
Certified Public Accountant

Iwao Hirano
Designated Engagement Partner
Certified Public Accountant
Yukihiro Kase
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Tokyo Office, Japan
July 9, 2021

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by the Company and KPMG AZSA LLC.

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