FINANCIAL SECTION 2020

CONTENTS
01 TEN-YEAR SUMMARY
03 MANAGEMENT’S DISCUSSION AND ANALYSIS
03 ANALYSIS OF OPERATING RESULTS
05 ANALYSIS OF FINANCIAL POSITION
05 BASIC POLICY ON PROFIT ALLOCATION AND DIVIDENDS FOR
THE FISCAL YEAR ENDED MARCH 31, 2020 AND THE FISCAL YEAR ENDING MARCH 31, 2021
05 RISK INFORMATION
07 CONSOLIDATED FINANCIAL STATEMENTS
08 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
09 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
10 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
11 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
12 CONSOLIDATED STATEMENT OF CASH FLOWS
13 NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
65 INDEPENDENT AUDITOR’S REPORTJSR Corporation
Annual Report
2020

01

TEN-YEAR SUMMARY
Millions of yen

2010

Fiscal Years ended March 31

2011

2012

2013

2014

2015

Results for the year¥

Net sales
Costs and expenses

340,666¥

349,947¥

371,487¥

394,309¥404,073¥

386,709(301,571)(313,982)(336,281)(358,247)(366,005)(352,301)

39,09535,96435,20636,06238,06834,408Interest and dividends income

626

634

809

916

1,390

1,380

Interest expenses

(146)

(147)

(126)

(142)

(345)

(527)

40,674

41,24542,84736,956

41,06927,367

Operating profit

Profit before income taxes
Profit attributable to owners of parent

27,571

26,40730,27825,17329,91924,069

Capital expenditures

11,801

19,72827,60821,49935,157

24,276

Depreciation

19,245

17,784

19,14518,096

17,40718,508

390,591

430,693482,935

501,320534,592

516,360

1,028

500

6,626

11,06920,38722,249Total liabilities

126,475

148,335

167,202

164,060

169,918

154,006

Equity262,679

280,955

308,641

331,284

358,303353,145

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

Current ratio (times)

2.4

2.3

2.3

2.5

2.5

2.7

Return on assets (%)

7.1

6.4

6.6

5.1

5.8

4.6

Return on equity (%)

10.8

9.7

10.3

7.9

8.7

6.8

Equity ratio (%)

67.3

65.2

63.9

66.1

67.0

68.4

Per share of common stock(Yen and U.S. Dollars)¥Profit attributable to owners of parent
Cash dividends
Equity113.07¥109.46¥126.13¥106.10¥128.19¥105.87

32.00

32.00

34.00

38.00

40.00

50.00

1,088.87

1,164.63

1,299.77

1,409.06

1,557.08

1,565.45(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 = 108.83 Japanese yen; the prevailing rate on
March 31, 2020.
2. The Group has adopted International Financial Reporting Standards (IFRS) as from the fiscal year ending March 2018.

Revenue/Profit attributable toowners of parent

Operating Profit/
Operating Profit Margin(¥ billions)

Total Assets/ROA(¥ billions)
50

500

50

(%)

(¥ billions)

(%)

20

700

14

677.7

472.0

400

40

40

300

30

30

20

20

10

10

22.6

200

12

500

10

400

8

300

6

16
32.9

12

8
7.0

100

600

200

4

4

3.3

100
0
(FY)

0
2016

2017

2018

Revenue
Profit attributable to owners of parent

2019

0
(FY)

0
2016

2017

Operating profit
Operating profit margin

2018

2019

0
(FY)

2
0

2016

Total assets
ROA

2017

2018

2019

JSR Corporation
Annual Report
2020

02
TEN-YEAR SUMMARY

2016

FY2016FY2017

Millions of yen

Thousands of U.S. dollars

FY2019FY2019FY2018Results for the year¥

390,599

Revenue(358,228)

Costs, other income and expenses¥

471,967$ 4,336,734(352,512)

388,455¥(378,360)

421,930¥(450,093)

495,354¥(439,082)(4,034,571)
302,163

32,370Operating profit

35,943

43,56945,261

32,884

1,369

Finance income

3,045

3,659

2,499

1,929

17,723(699)

Finance costs(694)(1,022)(1,352)(2,184)(20,070)

38,327

Profit before tax

38,294

46,206

46,40832,629299,815

30,078

Profit attributable to owners of parent

30,24333,23031,116

22,604

207,699

31,785

Capital expenditures

31,37742,40835,98145,880432,575

14,676

Depreciation

14,793

16,973

21,79026,343

241,161

6,227,265

Year-end financial position
576,016

Total assets

578,484

647,699

691,435

677,713

38,381

Borrowings (non-current liabilities)

38,38153,45650,777

52,684

484,093

199,302

Total liabilities

202,120

236,084

251,075

240,301

2,208,043

361,394

Total equity attributable toowners of parent

361,889

393,499

401,998

396,7933,645,987

2.5

2.3

1.97

2.05

2.05

2.5

Current ratio (times)

5.5

Return on assets (%)

5.5

5.4

4.7

3.3

3.3

8.4

Return on equity (%)

8.5

8.8

7.8

5.7

5.7

62.7

Equity ratio (%)

62.6

60.8

58.1

58.5

58.5

Per share of common stock(Yen and U.S. Dollars)¥

134.43

Profit attributable to owners of parent

50.00

Cash dividends

1,624.14

Equity attributable to owners of parent

Equity/ROE(¥ billions)

(%)

500

20

¥

135.17¥149.32¥140.62¥104.38

$

50.00

60.00

60.00

0.55

1,626.36

1,767.81

1,823.69

1,848.01

16.98

R&D Expenses/
Capital Expenditures

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

50

(%)

25

100

45.9

437.4

10.0

400

16

40

300

12

30

20

80

15

60
57.5

25.4

200
5.7

100

0
(FY)
Equity
ROE

2016

2017

2018

2019

0.96

50.00

12.9

8

20

10

40

4

10

5

20

0

0
(FY)

2016

2017

R&D expenses
Capital expenditures

2018

2019

0
(FY)

0
2016

2017

2018

Dividend
Share buyback
Dividend payout ratio

2019JSR Corporation
Annual Report
2020

03

MANAGEMENT’S DISCUSSION AND ANALYSIS
Analysis of Operating Results
Overview of FY ended March 2020
(April 1, 2019 to March 31, 2020)
In FY ended in March 2020 (April 1, 2019 to March 31, 2020),
among the JSR Group’s main customer industries, global
automobile production fell from the previous fiscal year, mainlyreflecting the growing economic slowdown among East Asian
nations. Automobile production in China began to increase in
December, recovering from a slump in the first half, but it declinedby 12% in January and by 80% in February year-on-year due to theimpact of the spread of COVID-19 infections. Automobile
production in other regions has also been negatively impacted by
the spread of COVID-19 infections. Consequently, automobile tire
production was also down year-on-year. In the semiconductor
market, memory devices remained sluggish due to the lingering
impact of price levels that had tumbled in the second half of theprevious fiscal year, whereas logic devices have been on arecovery path since the first half. As overall display market
demand, particularly for wide-screen TV LCD panels, has waned,
operational adjustments, including abandonment of production bysome customers, were implemented from the 3rd quarter onward.
As for the exchange rate, the yen appreciated slightly against the
dollar year-on-year.
Amid these circumstances, the Digital Solutions Business,
specifically the Semiconductor Materials Business, recorded higher
revenue over the previous fiscal year on the back of strong sales,
especially in state-of-the-art photoresists and expanded sales ofadvanced cleans solutions and packaging materials. Display
Materials Business revenue fell because of operational
adjustments brought on by worsening demand and a drop in sales
prices. Consequently, the Digital Solutions Business, as a whole,posted a gain in revenue against a decline in operating profit.
The JSR Group’s Elastomers Business saw lower revenue
compared to the previous fiscal year, due to a decline in sales
volume because of slackening demand, especially for automobile
tires, and falling sales prices caused by deteriorating raw-material
market conditions. The segment posted an operating loss, as aresult of the revenue decline, worsening price spreads between
product prices and raw material prices, and an impairment loss onsome fixed assets made in the 4th quarter.
The Plastics Business recorded lower revenue and lower
operating profit compared to the previous fiscal year, due to anarrowing price spread caused by slumping raw-material market
conditions, in addition to declines in sales volume, primarily in theautomobile markets both in Japan and abroad.
As a result, the Group reported revenue of 471,967 million yen(down 4.7% year-on-year), operating profit of 32,884 million yen(down 27.3% year-on-year), and profit attributable to owners ofparent of 22,604 million yen (down 27.4% year-on-year).
With the transfer of JM Energy Corporation shares on April 1,
2020, the lithium-ion capacitor business has been classified as a
discontinued operation. Consequently, revenue, operating profit orloss, and other line items are accounted for as sums of continuing
operations and the previous consolidated accounting period aresimilarly reclassified for the purpose of comparison.

Business Segment Overview
Digital Solutions Business Segment
As already stated, in the Semiconductor Materials Business,memory devices continued at a sluggish pace reflecting lingering
effects of tumbling prices in the second half of the previous fiscal
year, whereas logic devices have been on a recovery path since thefirst half. In addition to strong sales, particularly for state-of-the-art
photoresists, expanded sales of new products such as EUV resists
and advanced cleans together with sales expansion of packaging
materials in the Chinese market pushed revenue higher comparedto the previous fiscal year. The Semiconductor Materials Business
was not affected by COVID-19. In the Display Materials Business,sales volumes of alignment films and insulating films forwide-screen TV LCD panels for the Chinese market expanded,however, the business posted lower revenue due to the impact ofoperational adjustments, including abandonment of production bysome customers, amid the shifting structural changes of LC display
production from Korea and Taiwan to China. The Edge Computing
Business expanded sales of its NIR Cut Filter. The Semiconductor
Materials Business secured a higher operating profit despite rising
temporary expenses accompanying expanded advanced cleans andloss on disposal of finished goods and raw materials and the Edge
Computing Business performed steadily whereas the Display
Materials Business, which reported lower revenue, also reported alower operating profit.
Consequently, the Digital Solutions Business segment posted
an operating profit of 30,917 million yen (down 5.3% year-on-year)
on revenue of 144,805 million yen (up 1.8% year-on-year).

Operating Profit (¥ millions)Fiscal Years ended March 31

FY2018FY2019

Digital Solutions Business¥ 142,216¥ 144,805

32,66330,91743,87250,496781

3,594

Elastomers Business

200,736

178,794

Operating Profit

7,421(1,758)

Plastics Business

105,446

95,092

Operating Profit

9,214

6,237

Operating Profit
Life Sciences Business
Operating Profit

Other Businesses & Adjustment
Operating Profit
Revenue
Operating Profit

3,084

2,779

(4,818)(6,104)¥ 495,354¥ 471,967

45,261

32,884

JSR Corporation
Annual Report
2020

04
MANAGEMENT’S DISCUSSION AND ANALYSIS

Life Sciences Business Segment
The Life Sciences Business segment saw stable revenue growthon the back of favorable progress by the CDMO business, led by
the Group companies KBI and Selexis, and in the CRO business led
by Crown Bio, which became a wholly-owned subsidiary in May
2018. Sales of diagnostic reagent materials, bioprocess materials,
and other products also climbed. Medical & Biological Laboratories
Co., Ltd.’s diagnostic reagent business grew steadily, contributing
to overall higher revenue from the previous fiscal year. The
segment saw a substantial jump in operating profit thanks toexpanded revenue as well as realizing benefits from businessrestructuring undertaken in the previous fiscal year.
As a result, the Life Sciences Business segment posted an
operating profit of 3,594 million yen (up 360.4% year-on-year) on
revenue of 50,496 million yen (up 15.1% year-on-year).
Elastomers Business Segment
Global production of automobile tires, one of the segment’s main
customer industries, remained weak throughout the year, due to a
decline in automobile production, particularly in China, compoundedby temporary production stoppages or reductions at tire-makerplants in Europe and other areas. The spread of COVID-19
infections also had a negative impact on the market as a whole.
Amid these circumstances, the sales volume of solution
styrene-butadiene rubber (SSBR), positioned by JSR as a strategic
product, improved over the previous fiscal year, despite a year-onyear decline in worldwide tire production. Nevertheless, thesegment recorded lower revenue compared to the previous fiscal
year, as the segment’s overall sales volume was sluggish and sales
prices slid because of a deterioration in raw-material market
conditions. The segment posted an operating loss for the full term
as a result of revenue decline, narrower price spreads, and the
impairment loss on some fixed assets made in the 4th quarter.
Consequently, the Elastomers Business segment posted an
operating loss of 1,758 million yen, on revenue of 178,794 million
yen (down 10.9% year-on-year).
Plastics Business Segment
In addition to sluggish performance in the automobile industry,
especially outside of Japan, the segment’s sales volume wasnegatively effected by the impact of COVID-19 in the 4th quarterand sales prices fell due to a deterioration in raw material market
conditions. These factors caused revenue to decrease from theprevious fiscal year, and the decline in revenue together with the
decline in price spread led to a lower operating profit.
As a result, the Plastics Business segment posted an operating
profit of 6,237 million yen (down 32.3% year-on-year) on revenueof 95,092 million yen (down 9.8% year-on-year).

Business Outlook
With the impact of COVID-19 on global economic and corporate
activities, predicting the course of the pandemic or its resolution isextremely difficult. In these circumstances, based on available
data, we assume the effects of the pandemic will continue for acertain period of time in the coming consolidated fiscal year, andmade the following assumptions for revenues in each businesssegment in the FY ending March 2021.
The table below shows the rate and amount of change in theGroup's revenue for the FY ending March 2021, not including theimpact of COVID-19. Cost control measures against the risk of
reduced sales have been incorporated into the business plan. As aresult, we forecast overall revenue of 423 billion yen (a 10.4%
year-on-year decrease), operating profit of 23 billion yen (down
30.1%), and profit attributable to owners of parent of 15 billion yen(down 33.6%).
* Fiscal 2020 forecasts are as of April 2020. Please refer to the JSR website(https://www.jsr.co.jp/jsr_e/ir/library/presentation.html) for the latest forecasts.

Rate and amount of change to revenue forecasts
attributable to COVID-19 in FY ending March 2021
1H

2H

Semiconductor Materials

-5%

-5%

Display Materials

-10%

-10%

Life Sciences Business0%0%

Elastomers Business

-20%

-10%

Plastics Business

-20%

-10%

Digital Solutions
Business

Total-50.0 billion yen

JSR Corporation
Annual Report
2020

05
MANAGEMENT’S DISCUSSION AND ANALYSIS

Analysis of Financial Position
Overview
Total assets at the end of the current consolidated fiscal year
amounted to 677,713 million yen, a 13,722 million yen decrease
from the previous fiscal year.
Current assets were 303,475 million yen, down 35,508 million
yen, owing to a decrease in trade and other receivables and cash
and cash equivalents.
Non-current assets increased by 21,787 million yen to374,238 million yen, due to an increase in property, plant andequipment arising from the application of IFRS 16 standards forleases, which offset a decrease in other financial assets reflecting
the sale of securities.
Although other financial liabilities increased due to theapplication of IFRS 16 standards for leases, total liabilities
amounted to 240,301 million yen, down 10,774 million yen, owing
to a decrease in trade and other payables.
In terms of equity, although retained earnings were up, total
equity attributable to owners of parent was down 5,206 million yen
to 396,793 million yen, due to the acquisition of treasury shares
and a decrease in other components of equity. Total equity,
including non-controlling interests, amounted to 437,412 million
yen, a decrease of 2,948 million yen.

The Company determines shareholder returns in considerationof business performance and mid- to long-term capital requirements,
while taking into account the balance between returning profits toshareholders and retaining earnings necessary for future growth.
During the JSR20i9 mid-term business plan, the Company sought an
overall return ratio of more than 50%, through a combination ofdividends and timely share buybacks. We will continue to determine
shareholder returns based on this target of 50% or higher.
Moreover, the Company's policy is to pay an interim and yearend dividend.
The decision-making bodies that determine dividend payments
are the General Meeting of Shareholders for year-end dividends
and the Board of Directors for interim dividends.
Based on the above 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 an interim
dividend for the FY ended March 2020 was made by the Board of
Directors on October 28, 2019.

Analysis of Cash Flows

Risk Information

Cash and cash equivalents (“funds”) as of March 31, 2020 stood at
61,931 million yen, down 8,854 million yen from a year earlier.
Net cash provided by operating activities amounted to 54,228
million yen, up 23,288 million yen from the previous fiscal year. The
main factors included profit before tax of 32,629 million,
depreciation expenses and depreciation charges of 26,359 million
yen, and income taxes paid of 12,773 million yen.
Net cash used in investing activities totaled 35,592 million yen,down 30,674 million yen from the previous fiscal year. The main
items were 43,951 million yen in payments for purchase ofproperty, plant and equipment associated with plant expansion and15,449 million yen in proceeds from sale of investments.
Net cash used in financing activities totaled 25,264 million yen,
up 6,298 million yen from the previous fiscal year. The main items
were 13,052 million yen in dividends paid and 10,002 million yen in
payments for purchase of treasury shares.

Basic Policy on Profit Allocation and Dividends for the
Fiscal Year ended March 31, 2020 and the Fiscal Yearending March 31, 2021
The Company believes it is of the utmost importance to pursue
sustainable, long-term business growth by strengthening its
competitiveness through the reinforcement of research anddevelopment activities and new businesses expansion.

JSR Group is exposed to the following risks that may impact on
operating results, financial position, cash flows, and other aspectsof its business performance.
Forward-looking statements are based on the Group’s
judgments as of March 31, 2020, and the Group’s business andother 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, such as
automobiles and electronics, may be influenced by the economic
climate in countries or regions. An economic slowdown could
reduce demand in these industries and adversely affect JSRGroup’s operating results.
(2) Fluctuation 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, could change
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 preventthe timely development of new products and adversely affect JSRGroup’s operating results.

JSR Corporation
Annual Report
2020

06
MANAGEMENT’S DISCUSSION AND ANALYSIS(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 JSR Group
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 to quality
issues or bankruptcy could hinder production activities andadversely affect JSR Group’s operating results.
(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 have to
pay compensation and other costs, or the Group may have to makenew 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 to various
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 eventthat a law or regulation is violated, or a law or regulation becomes
stricter or is significantly altered, there could be limitations to theGroup’s business activities or additional compliance costs. Any ofthese 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 political environment or
economic trends; labor disputes and other problems due todifferences in labor laws and other working conditions; difficulty inrecruiting and retaining employees; an adverse impact on businessactivities due to inadequate social infrastructure; and the impact ofwars, terrorism, and other social instability. Any of these events
could adversely affect JSR 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 other external
party. The outcome of significant litigation could adversely affectJSR Group’s operating results.

JSR Corporation
Annual Report
2020

07

CONSOLIDATED FINANCIAL STATEMENTS
Financial Section
1. Preparation Policy of the Consolidated Financial
Statements
The consolidated financial statements of the Company are preparedin accordance with International Financial Reporting Standards(hereinafter “IFRS”) pursuant to the provisions of Article 93 of theRegulation on Terminology, Forms and Preparation Methods ofConsolidated 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, 2020 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
Accordance with IFRS
(1) The 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 order to develop
a system that enables it to properly understand the contents ofaccounting 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 Accounting Standards Board of Japan.
(2) For the adoption of IFRS, the Company keeps up with the latest
accounting standards by obtaining press releases and standards
published by the International Accounting Standards Board asneeded. To prepare appropriate consolidated financial statements
under IFRS, the Company has developed accounting policies,
etc. of the Group in accordance with IFRS and performs
accounting procedures based on these policies.

JSR Corporation
Annual Report
2020

08

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 and 2020

Millions of yen

Thousands of U.S. dollars

Note

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020

Cash and cash equivalents

9¥ 70,785¥ 61,931$ 569,064

Trade and other receivables

10, 34135,280

110,506

1,015,404

12

117,046

112,840

1,036,850

Other financial assets

11, 34

5,002

4,064

37,347

Other current assets

14

10,870

11,487

105,547

338,983

300,8292,764,212

AssetsCurrent assets

Inventories

Subtotal
Assets associated with disposal group classified as held
for sale

13

—

2,646

24,310338,983

303,475

2,788,523

15, 16, 18

183,457

215,664

1,981,661

17, 1859,06658,283535,540

17

14,205

15,891

146,015233,251

Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments accounted for using equity method

19

24,26925,385Retirement benefit asset

23

1,503

2,560

23,519Other financial assets

11, 3458,89544,656410,330

Other non-current assets

14

2,305

2,469

22,687

Deferred tax assets

20

8,751

9,331

85,739352,452

374,238

3,438,742

691,435

677,713

6,227,265

Total non-current assets
Total assets
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables

22, 34

118,053

92,839853,067

Borrowings

21, 3433,51930,043

276,050

5,598

1,757

16,141

Income taxes payable
Other financial liabilities

21, 34532

3,138

28,837

Other current liabilities

24

14,752

17,976

165,172

172,455

145,752

1,339,266

Subtotal
Liabilities associated with disposal group classified as held
for sale

13

Total current liabilities

—

2,646

24,310172,455

148,398

1,363,577

Non-current liabilities
21, 3450,777

52,684

484,093Retirement benefit liability

23

15,87016,216

148,999

Other financial liabilities

21, 34

1,675

16,198148,838

Other non-current liabilities

24

2,733

3,667

33,695

Deferred tax liabilities

20

7,565

3,139

28,842

78,62091,903

844,466

251,075

240,301

2,208,043

214,742

Borrowings

Total non-current liabilities
Total liabilities
EquityEquity attributable to owners of parent
Share capital

25

23,37023,370Capital surplus

25

18,436

18,242

167,615

Retained earnings

25

351,476

369,1023,391,550

Treasury shares

25(10,042)(19,547)(179,614)

Other components of equity

25

18,7585,626

51,694401,998

396,7933,645,987

Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity
See accompanying notes.

38,361

40,619373,235

440,360

437,412

4,019,222¥691,435¥677,713$6,227,265

JSR Corporation
Annual Report
2020

09

CONSOLIDATED STATEMENT OF PROFIT OR LOSSJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 and 2020

Millions of yen

Thousands of U.S. dollars

Note

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

7, 27Continuing operations¥ 495,354¥ 471,967$ 4,336,734

Cost of sales(347,928)(331,228)(3,043,537)

Gross profit

147,426

140,739

1,293,197(958,773)

Revenue

Selling, general and administrative expenses

28(102,105)(104,343)

Other operating income

29

1,713

1,304

11,982Other operating expenses

18, 29(2,306)(4,879)(44,830)

533

64

586

Operating profit

7

45,261

32,884

302,163

Finance income

7, 30

2,499

1,929

17,723Finance costs

7, 30(1,352)(2,184)(20,070)
299,815

Share of profit of investments accounted for using equity
methodProfit before tax

746,40832,629

Income tax expenses

20(10,985)(6,859)(63,023)

35,42325,770236,792

Profit from continuing operations
Discontinued operations(1,837)252¥ 33,586¥ 26,022

Owners of parent

31,116

22,604Non-controlling interests

2,470

3,418

¥ 33,586¥ 26,022

Profit (loss) from discontinued operations

13

Profit for the period

2,314
$

239,106

Profit attributable to:

Total

Yen

207,699
31,407$239,106
U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Earnings per share¥140.62¥104.38$0.96

Continuing operations

32

148.92103.220.95

Discontinued operations

32(8.30)

1.16

0.01

140.27104.190.96

Basic earnings per share

Diluted earnings per share
Continuing operations

32

148.55103.030.95

Discontinued operations

32(8.28)

1.16

0.01

See accompanying notes.

JSR Corporation
Annual Report
2020

10

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 and 2020

Millions of yen
NoteProfitThousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥33,586¥26,022$239,106

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

31(4,678)(1,377)(12,650)

Remeasurements of defined benefit plans

31

54

661

6,071

Share of other comprehensive income of investments
accounted for using equity method

31

5

(31)

(286)

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

31

(79)

(124)

(1,143)

Exchange differences on translation of foreign operations

31

476

(4,111)(37,771)

Share of other comprehensive income of investments
accounted for using equity method

31(1,213)(904)(8,306)(5,435)(5,886)(54,084)

28,151

20,136

185,022

Owners of parent

25,611

17,486160,673

Non-controlling interests

2,540

2,650

24,349¥28,151¥20,136$185,022

Total other comprehensive income, net of tax
Total comprehensive income
Comprehensive income attributable to:

Total
See accompanying notes.

JSR Corporation
Annual Report
2020

11

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 and 2020

Millions of yen

Fiscal year ended March 31, 2019

Equity attributable to owners of parent

Note
Balance at April 1, 2018

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesOther
componentsof equity

Total

Noncontrollinginterests

Total
equity¥23,370¥18,502¥331,913¥ (5,358)¥25,071¥393,499¥18,116¥411,615

31,1162,470

33,586(5,505)(5,505)70(5,435)—(5,505)25,611

2,540

28,151

88

(1)

(623)

(12,798)

31,116

ProfitOther comprehensive income—

Total comprehensive income
26(12,175)(10)

Changes in treasury shares
Transfer from other components of equity toretained earnings
Changes by business combination

31,116(202)

Share-based remuneration transactions
Dividends—(4,772)

146(67)

Balance at March 31, 2019

(689)

—

(119)

27

(4,782)—
17,61017,637

1

(67)

718

651

—

(66)

(11,554)(4,684)(808)(17,111)

17,705594¥23,370¥18,436¥351,476¥(10,042)¥18,758¥401,998¥38,361¥440,360

Other movements
Total transactions with owners, etc.

(115)

(4,782)

689
8

(115)
(12,175)

Millions of yen

Fiscal year ended March 31, 2020

Equity attributable to owners of parent

Note
Balance at April 1, 2019

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesOther
componentsof equity

Total

Noncontrollinginterests

Total
equity¥23,370¥18,436¥351,476¥(10,042)¥18,758¥401,998¥38,361¥440,360

402,131

38,361

440,493
26,022133

Effect of changes in accounting policies
23,370

Restated balance at April 1, 201918,436351,609133(10,042)

18,75822,604

Profit22,604

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

2,650

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

Other comprehensive income—

Total comprehensive income

22,604(174)

Share-based remuneration transactions
Dividends—

26(13,054)(31)

Changes in treasury shares
Transfer from other components of equity toretained earnings

71(13,054)(9,798)
7,968(7,968)(9,829)—Changes in equity due to capital increase of subsidiary

—

—

(361)

(361)

—

1,422

1,422

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

Total
equityOther movements
Balance at March 31, 2020

71

(9,829)Changes by sale of shares of subsidiaries

Total transactions with owners, etc.

133

(13)

(13)

Thousands of U.S. dollars

Fiscal year ended March 31, 2020

Equity attributable to owners of parent

Note
Balance at April 1, 2019

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesOther
componentsof equity

Total

Noncontrollinginterests$214,742$169,400$3,229,584$ (92,268)$172,362$3,693,820$352,490$4,046,310

3,695,041

352,490

4,047,531
239,106

1,221

Effect of changes in accounting policies
214,742

Restated balance at April 1, 2019

169,400

3,230,806

1,221(92,268)

207,699

Profit—Total comprehensive income—

207,699(1,598)

Share-based remuneration transactions
26

207,699

31,407(47,026)(7,058)(54,084)—(47,026)

160,673

24,349185,022

2,684

(429)

(119,950)(13,355)(133,303)(90,312)(1)(90,313)(3,314)(3,314)

13,066

13,066(119,948)(283)

Changes in treasury shares
Transfer from other components of equity toretained earnings(90,029)
73,213(73,213)657

Changes in equity due to capital increase of subsidiary

Balance at March 31, 2020

—

95

(218)

—

(1,786)(46,954)(87,345)(73,642)(209,727)(3,604)(213,331)$214,742$167,615$3,391,550$(179,614)$ 51,694$3,645,987$373,235$4,019,222

Other movements

See accompanying notes.

657—

Changes by sale of shares of subsidiaries

Total transactions with owners, etc.

1,221

(47,026)

Other comprehensive income

Dividends

172,362

(124)

(124)

JSR Corporation
Annual Report
2020

12

CONSOLIDATED STATEMENT OF CASH FLOWSJSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 and 2020

Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥ 46,408¥ 32,629$ 299,815(2,232)(3,208)(29,477)

Depreciation and amortization

21,842

26,359242,199

Interest and dividend income(1,631)(1,369)(12,579)

Interest expenses

1,352

1,825

16,769Note
Cash flows from operating activities
Profit before tax
Loss before tax from discontinued operations

13

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

18

(533)

(64)

(586)

438

1,801

16,545214,254

1,553

23,317

Decrease (increase) in inventories(22,039)

1,446

13,285

Increase (decrease) in trade and other payables(5,834)(27,721)(254,716)

Other

3,026

11,912

109,459

Dividends received

1,785

1,591

14,615Interest received

224

216

1,986

Interest paid

(1,236)(1,732)(15,919)

Income taxes paid

(12,183)(12,773)(117,367)

Net cash provided by (used in) operating activities

30,94054,228498,284
9,517

Decrease (increase) in trade and other receivables

Cash flows from investing activities
Net decrease (increase) in time deposits(1,108)

1,036

Net decrease (increase) in marketable securities

10,000——Purchase of property, plant and equipment(36,210)(43,951)(403,850)

273

913

8,391

Purchase of investments(4,449)(4,426)(40,671)

Proceeds from sale of investments

1,656

15,449141,9578(36,225)

—

—

—

(749)

(6,885)

8

3,213

—

—

Purchase of shares in associates(163)(1,928)(17,713)

Payments for loans receivable(2,814)(1,441)(13,238)

Collection of loans receivable

290

309

2,836

Other

(731)

(804)

(7,385)(66,266)(35,592)(327,042)

Proceeds from sale of property, plant and equipment

Purchase of shares of subsidiaries resulting in change in scopeof consolidation
Payments for sale of shares of subsidiaries resulting in change
in scope of consolidation
Proceeds from company split

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

21(1,938)2,547

23,405

Repayments of long-term borrowings

21(7,975)(7,839)(72,028)

Proceeds from long-term borrowings

21

Payments for purchase of treasury shares
Dividends paid

26

Dividends paid to non-controlling interests
Capital contribution from non-controlling interests
Repayments of lease liabilities
Other

21

Net cash provided by (used in) financing activities

9,231

5,846

53,714(5,001)(10,002)(91,908)(12,175)(13,052)(119,928)(623)(1,453)(13,354)—

1,422

13,066(551)(3,025)(27,791)

66

292

2,681

(18,966)(25,264)(232,143)

121(1,049)(9,642)

Net increase (decrease) in cash and cash equivalents(54,171)(7,677)(70,542)

Cash and cash equivalents at beginning of period

124,956

70,785650,417

Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents included in assets associated withdisposal groups classified as held for sale
Cash and cash equivalents at end of period
See accompanying notes.

9—(1,176)(10,810)¥ 70,785¥ 61,931$ 569,064

JSR Corporation
Annual Report
2020

13

NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
JSR Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 and 2020

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

Elastomers Business, the Plastics Business, the Digital Solutions
Business and the Life Sciences Business as well as businesses
related to these. The products of these businesses 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 ofArticle 93 of the said Ordinance.
2) Basis for Measurement
The Group’s consolidated financial statements, with the exceptionof assets pertaining to post-employment benefit plans, financial
instruments measured at fair value, etc., stated on “(4) Significant
Accounting Policies,” are prepared on a historical cost model.
3) Presentation Currency and Units
The Group’s consolidated financial statements are presented inJapanese yen, the currency of the primary economic environment inwhich the Company performs business activities (the “functional
currency”), with amounts rounded to the nearest million yen.
The translation of the amounts in Japanese yen into US dollar
is included solely for the convenience of readers outside Japan,
using the prevailing exchange rate on March 31, 2020, which was¥108.83 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 dollar
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 30, 2020.

(3) Explanation of New Standards and Interpretations Not Applied
The major new or revised standards and interpretations publishedprior 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 tothose applied to all periods stated in the consolidated financial
statements.

1) Basis of Consolidation

within the Group are eliminated in preparing the consolidated
financial statements.
When the Company retains control when there has been partial
disposal of ownership interest in a subsidiary, the partial disposal isaccounted for as an equity transaction. Any difference between theamount by which the non-controlling interests are adjusted and thefair value of the consideration paid or received is recognized directlyin equity attributable to Owners of the parent company.
If the Company loses control over the subsidiary, gains or losses
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.

(i) Subsidiaries
Subsidiaries refer to all entities controlled by the Group. The Groupis deemed to have control over an entity if it has exposure or rights
to variable returns from its involvement in the entity and has theability to use its power over an entity to affect such returns. The
financial statements of subsidiaries are included in the Group’s
consolidated financial statements from the date the Company gains
control until the date it loses control of the subsidiary.
In cases where the accounting policies applied by a subsidiaryare different from those applied by the Group, adjustments are
made to the subsidiary’s financial statements, if necessary.
All intergroup balances of payables and receivables, internaltransactions and unrealized gains or losses arising from transactions

JSR Corporation
Annual Report
2020

14
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(ii) Associates
Associates are entities over which the Group has significant
influence but does not have control over the financial and operating
policies. The equity method is applied to all associates from the dateon 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 an associate
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 more parties
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 and operating decisions related to
relevant activities require unanimous consent of the parties sharing
control.
Joint ventures of the Group are accounted for using the equity
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 and theamount of non-controlling interests in the acquired entity are taken
as the acquisition costs based on the acquisition method.
Non-controlling interests are measured at equivalent amount for
the fair price of the acquired entity’s identifiable net assets andliabilities in proportion to the share of the non-controlling interest.
Ancillary costs incurred relating to business combination suchas brokerage fees, attorney’s fees, due diligence costs, otherprofessional fees, consulting fees, as well as other acquisition-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 in which
the business combination took place, such incomplete items aremeasured at provisional amounts based on the best 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 acquisition date,
the provisional amount recognized on the acquisition date isretrospectively 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, and thefair 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 the acquisitiondate, the excess amount is recognized as goodwill.

If, on the other hand, such aggregate amount does not exceed
the net value of identifiable assets and liabilities at the acquisitiondate, the difference is recognized in profit or loss. Additional
acquisitions of non-controlling interests after the controlling
acquisition are accounted for as capital transactions and are notrecognized 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 theirfunctional 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’s functional currency.
(ii) Foreign Currency Transactions
Foreign currency transactions, meaning transactions conducted in acurrency other than the respective entity’s functional currency, aretranslated into the functional currency either by using the exchange
rates prevailing at the date of the transaction or using an averagerate when there are no material fluctuations in exchange rates.
Monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the exchange rates
prevailing at the reporting date, and exchange differences arerecognized in profit or loss in principle.
(iii) Foreign Operations
The assets and liabilities (including goodwill arising from acquisitions
and adjustments of fair value) of foreign operations that use acurrency other than Japanese yen as their functional currency aretranslated into Japanese yen at the exchange rates prevailing at thereporting date. The revenues and expenses of foreign operations aretranslated into Japanese yen at the average rates of exchange over
the reporting period, unless there are material fluctuations in
exchange rates. Exchange differences arising from such translations
in foreign operations’ financial statements are recognized in othercomprehensive 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 canbe withdrawn as needed, and short-term investments that are easily
converted into cash with minimal risk of changes in value.

5) Inventories
Inventories are measured at the lower of cost or net realizable value.
Cost of inventories is calculated based on the weighted-average
cost formula. Net realizable value is the estimated selling price of
inventories in the ordinary course of business, less the estimatedcosts of completion and estimated selling expenses. Inventories andwork in process manufactured by the Company include the amountsof manufacturing overhead appropriately allocated based on theordinary operating rate.

JSR Corporation
Annual Report
2020

15
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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, and the present value ofthe estimated costs of removal of the assets and site restoration.
Furthermore, borrowing costs that satisfy certain conditions directly
attributable to the acquisition, construction, etc., of the assets arerecognized as part of the cost of the assets.
Depreciation expenses are recognized using the straight-line
method over the estimated useful life of each asset to depreciate
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 the event of the modification inestimates, impacts therefrom are recognized in the accounting
period in which the estimates were modified and in the futureaccounting 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 are capitalized
as intangible assets only when all of the following conditions
are satisfied: the amount for such expenditures can be reliably
measured; the products or the processes to be developed therefrom
are technically and commercially viable; there is a high probabilityof generating future economic benefits; and the Group intends tocomplete the development and use the process or the products
therefrom as well as sufficient resources to make them feasible.
All other expenditures 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. Impairment of goodwill isstated in “8) Impairment of non-financial assets.” Impairment lossesof goodwill are recognized as profit or loss and not reversed
subsequently.
After the initial recognition, goodwill is presented at cost lessaccumulated 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 business combination
are accounted after initial recognition at cost less any accumulated
amortization and accumulated impairment losses, which areamortized using the straight-line method over the estimated usefullife 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 of software,etc., are accounted at cost less any accumulated amortization andaccumulated impairment losses, which are amortized using thestraight-line method over the estimated useful life of each asset.
The estimated useful life of 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 to recover the carrying
amount due to changes in such assets or circumstances. If any such
indication exists, impairment testing is conducted.
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 thevalue in use, the estimated future cash flows from the asset are
discounted to the present value using a discount rate that reflects
the time value of money and the inherent risks of the asset. For the
purposes of determining impairment, assets are grouped into anindividual 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, and thecost 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 have beenrecognized in prior years, an assessment is conducted at the end ofeach reporting period to determine if there are any possibilities ofreversal 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 aresubsequently classified into those measured at amortized cost 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 at fairvalue through other comprehensive income and financial assets
measured at amortized cost are initially measured at fair value plustransaction costs that are directly attributable to the acquisition of
the financial asset. Additionally, trade receivables that do not include
significant financing components are initially measured at thetransaction price.
(a) Financial assets measured at amortized cost
Financial assets are classified as those measured at amortizedcost only when both of the following conditions are satisfied;the asset is held within a business model whose objective is tohold assets in order to collect contractual cash flows; and theJSR Corporation
Annual Report
2020

16
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal andinterest on the principal amount outstanding.
(b) Financial assets measured at fair value
Financial assets are classified as those measured at fair value 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 of principal andinterest on the principal amount outstanding and are held
within a business model whose objective is achieved both bycollecting 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 Group has
made an irrevocable election to present subsequent changes infair value in other comprehensive income and to classify theseassets as equity financial assets measured at fair value throughother comprehensive income.
Financial assets such as derivative assets, other than theabove assets, are classified as financial assets measured at fairvalue through profit or loss.
(ii) Subsequent Measurement
After initial recognition, financial assets are measured according totheir 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 the financial asset.
Dividends received from designated equity instruments
measured at fair value through other comprehensive income
are recognized in profit or loss. If the fair value of the equity
instrument depreciates materially or if the equity instrument isdisposed of, any accumulated other comprehensive income orloss is reclassified to retained earnings.
(iii) Derecognition
Financial assets are derecognized when the contractual rights to the
cash flows from the investment expire or when the contractual
rights to the cash flows from the investment are assigned andsubstantially all the risks and rewards of the Group’s ownership ofsuch 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 less transaction
costs that are directly attributable to the acquisition of the financial
liability.
(ii) Subsequent Measurement
After initial recognition, financial liabilities are measured according totheir 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 or loss,
which include those designated financial liabilities measured atfair value through profit or loss, are measured at fair value.
(iii) Derecognition
Financial liabilities are derecognized when contractual obligations aredischarged, cancelled, or expired.
(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 of financial
assets against the recognized amount of financial liabilities; there is
the intent either to settle on a net basis or to realize assets andsettle liabilities simultaneously.

10) 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 as aloss allowance. In the case of trade receivables that do not include
significant financial components, however, the loss allowance isalways 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 in credit risk has occurred fromthe initial recognition is based on the degree of changes in default
risk. When the Group judges whether or not there are materialchanges in default risk, it reviews the information on the past due
status as well as the following factors;• External credit grades of the financial asset• Internal credit grades• Results of operations of the borrower• Financial assistance from the parent company, etc. of theborrower
Expected credit losses are measured as weighted average ofthe present value of the difference between all contractual cash
flows that are due to the entity in accordance with the contract andall cash flows that the entity expects to receive, weighted byrespective risks of default occurring. The Group treats any financial
asset as a credit-impaired financial asset in cases where the financial
asset is considered to have defaulted, including cases where thefinancial asset is significantly past due even after enforcement
activities for the performance of obligations are taken and where
the debtor files legal proceedings for bankruptcy, corporate
reorganization, civil rehabilitation or special liquidation. The Group
presents the financial assets measured at amortized cost at the net
amount that the loss allowance is deducted from the carrying
amount in the consolidated statement of financial position andrecognizes the loss as profit or loss.
When the Group has no reasonable expectations of recovering
all or part of a financial asset, the carrying amount of the asset isdirectly written off by that amount.

JSR Corporation
Annual Report
2020

17
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

11) Derivatives and Hedge Accounting
Derivatives are initially recognized at fair value at the date on which
the derivative contract is entered into and are subsequently
remeasured at their fair value at the end of each reporting period
after initial recognition. The method of recognizing the resulting gainor loss depends on whether or not the derivative is designated as ahedging 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 in foreign operations.
The Group documents, at the start of the transaction, therelationship between hedging instruments and hedged items as wellas the objectives and strategies for managing risk regarding theexecution of their hedging transactions. Furthermore, the Group
documents at the start of the hedge, and on a continuing basis,
assessments of whether or not the derivatives used in the hedging
transaction are effective in offsetting changes in the hedged items’
cash flow.
Hedge effectiveness is assessed on a continuing basis, and ahedge 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 the economic
relationship; and the hedge ratio of the hedging relationship isequivalent to the ratio arising from the volume of hedging
instruments and hedged items that are actually being hedged.
The effective portions of change in the fair values of derivatives
designated as hedging instruments of cash flow hedges andsatisfying the conditions thereof are recognized in othercomprehensive income. Gains or losses arising from ineffective
portions are recognized immediately as profit or loss. Accumulated
gains or losses recognized through other comprehensive 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, the accumulated gains or losses
recognized in other comprehensive income will continue to berecognized as other components of equity. In cases where forecast
transactions are no longer expected to occur, the accumulated gains
or losses recognized in 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 hedges of
net investment in foreign operations. Of exchange differences in thehedging instruments, any ineffective portion of the hedge or any
portion of the hedge not subject to the assessment of hedge
effectiveness is recognized in profit or loss.

Through net investment hedges, the cumulative amount of gainor loss recognized in other comprehensive income is reclassified to
profit or loss on the disposal of foreign operations.

12) Leases
Fiscal year ended March 31, 2019 (from April 1, 2018 to March 31,
2019)
Lease transactions are classified as finance leases whenever theterms of the lease transfer substantially all the risks and rewards ofownership to the lessee, while all other leases are classified as
operating leases.
Whether a contract is a lease or whether a contract contains
a lease is determined based on the substance of the contract
following IFRIC 4 — Determining Whether an Arrangement Contains
a Lease, even when the contract is not legally a lease-type contract.
In finance lease transactions, lease assets and lease liabilities
are recognized in the consolidated statement of financial position at
the lower of the fair value of the leased property calculated on the
inception date of the lease term and the aggregate present value ofthe minimum lease payments. Lease payments are allocated toliabilities and finance costs. Interest components in finance costs
are expensed as profit or loss over the lease term in such a way thata fixed term interest rate applies to the liability balance in eachreporting period. Lease assets are depreciated using the straight-line
method based on the accounting policies applied to the assets.
In operating lease transactions, lease payments are recognized
as an expense over the lease term on a straight-line basis.
Fiscal year ended March 31, 2020 (from April 1, 2019 to March 31,
2020)
At inception of a contract, the Group assesses whether the contractis, or contains, a lease based on whether the contract conveys theright to control the use of an identified asset for a period of timein exchange for consideration. The Group elects not to recognize
right-of-use assets and lease liabilities for short-term 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 and leases of
low-value assets are recognized as an expense on a straight-line
basis over the lease term.
Right-of-use assets are measured under the cost model and arestated at cost less accumulated depreciation and accumulated
impairment losses.
The cost of right-of-use assets is initially measured based on theinitial measurement amount of the lease liability adjusted for any
initial direct costs incurred or any lease payments made at or before
the commencement date, plus any costs to restore the underlying
asset or the site at which it is located and other related costs
required in the lease contract. Right-of-use assets are depreciatedover the lease term on a straight-line basis. Right-of-use assets arerecorded in Property, plant and equipment on the current

JSR Corporation
Annual Report
2020

18
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Financial Position. Lease liability ismeasured at the present value of unpaid lease payments at thecalculated interest rate of the lease or when the calculated interest
rate cannot be easily calculated, discounted by the incremental
borrowing rate. Generally, the Group uses incremental borrowing
rate as discount rate. Lease payments are apportioned between
finance costs 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 as liabilities in theamount estimated to be paid based on the applicable bonus
payment system when there is a legal or constructive 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 the reporting period
less the fair value of the plan assets. An independent specialist
calculates the defined benefit obligations for each reporting periodusing the projected unit credit method. Any amount recognized asassets from this calculation is limited to the present value of any
future economic benefit available in the form of refunds from theplans or reductions in future contributions to the plans when
there is a possibility for the assets to generate these to the Group.
Calculations of the present value of economic benefits take into
consideration the minimum funding requirement. The present valueof defined benefit obligations is calculated by discounting theestimated future cash flows in reference to market yields onhigh-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.
Defined contribution plans are post-employment benefit plans
under which an employer pays fixed contributions to an independent
entity and has no legal or constructive obligation to pay further
contributions. Contribution obligations under the defined
contribution plans are recognized as an expense in the period inwhich the employee renders the related service.

14) Non-current Assets Held for Sale and Discontinued
Operations
A non-current asset or disposal group is classified as held for sale
if its carrying amount will be recovered principally through a saletransaction 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 in its present
condition and the sale must be highly probable. The classification is

also limited to when management of the Group is committed to
executing the sale plan and the sale is generally expected tocomplete within one year. After classification as held for sale, anasset or disposal group is measured at the lower of the carrying
amount and the fair value less costs to sell, and is not depreciatedor 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, andis recognized when there is a plan to dispose of that line of businessor 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 andinherent 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 balance ofdisposals is recognized as capital surplus. Common shares areclassified 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 the planis recognized as an expense over the option’s vesting period and thesame amount is recorded as an increase in equity. The plan was
terminated in June 2018 (however, of share acquisition rights asshare-based stock options that were already 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 performance-linked
remuneration plan and applied the accounting treatment for
equity-settled share-based plans under this plan.
Fair value of the share-based remuneration is determined using
the fair value of ordinary shares on the grant date. The fair value isrecognized as an expense over the share’s vesting period, and thesame amount is recorded as an increase in equity.

JSR Corporation
Annual Report
2020

19
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

18) Revenue Recognition
The Group recognizes revenue by applying the following five steps,
apart from interest and dividend income accounted for in accordancewith 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: Allocate the transaction price to performanceobligations.
Step 5: Recognize revenue when (or as) the Group satisfies a
performance obligation.
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 thecontract 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 attachedto the grant and that the grant will be received. Government grants
are recognized in profit or loss on a systematic 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 thecarrying amounts of the assets. Grants are recognized in profit orloss over the useful lives of the depreciated assets as changes 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 theeffective interest method. Dividends received are recognized when
the Group’s rights to receive dividends have been established; there
is a high probability that the economic benefits associated with thedividends 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 cost of that asset. Allother borrowing costs are recognized as an expense in the period inwhich they are incurred.

21) Income Taxes
Income taxes comprise current taxes and deferred taxes. They arerecognized in profit or loss, with the exception of income taxes
associated with items recognized in other comprehensive income oritems that are directly recognized in equity.

(i) Current Taxes
The Group recognizes current taxes based on taxable profits for thereporting period. Current tax amounts are calculated using the tax
rates that are in force or substantially in force on the final day of thereporting period. Income taxes receivable and payable are measured
at the estimated refund from or payment to the tax authorities.
(ii) Deferred Taxes
The Group recognizes deferred taxes using the asset and liability
approach for temporary differences between the amounts of assets
and liabilities for accounting purposes and their tax bases. In
principle, deferred tax liabilities are all recognized in taxable
temporary differences, and deferred tax assets are recognized only
to the extent it is probable that there will be taxable profits against
which deductible temporary differences, tax losses, etc., may beutilized. Deferred tax assets and liabilities, however, are notrecognized for the following temporary differences:• Taxable temporary differences arising from initial recognition of
goodwill;• Temporary differences arising from initial recognition of assets
or liabilities in transactions (excluding business combinations)that do not affect taxable profits (tax losses) in profit or loss foraccounting purposes; and• Taxable temporary differences pertaining to investments in
subsidiaries and associates where the timing of the reversal 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 associated deferred
tax assets will be realized or the period when the deferred tax
liabilities will be settled, based on the tax rates that are in force orsubstantially in force at the end of the reporting 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 and liabilities areassociated with the income taxes levied on the same taxable entity,or the equivalent or different taxable entity intended to be settled ona 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 thereporting period. Diluted quarterly earnings per share are calculated
through adjustments for the effect of all potentially dilutive common
stock.

JSR Corporation
Annual Report
2020

20
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(5) Changes in Accounting Policies
The Group has applied the following standard from the current fiscal
year.
IFRS
IFRS 16 — Leases

Summary of New / Revised Standard
Revision of accounting related to lease
contracts

The Group has applied IFRS 16 — Leases (“IFRS 16”) from thecurrent consolidated fiscal year. For the adoption of IFRS 16, theGroup has employed a method of recognizing the cumulative effectof the standard’s application, deemed to be a transitional measure,as the balance of retained earnings at the beginning of the current
fiscal year at the date of initial application, without presenting a
restatement of comparative information (modified retrospective
approach).
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 short-termleases within12 months and leases of low-value assets.
The Group recognizes a right-of-use asset and a lease liability at
the lease commencement date when a contract is assessed to be,or contains, a lease. The lease liability of a lease transaction ismeasured at the discounted present value of the total unpaid
value of lease payments at the lease commencement date.
The right-of-use asset is initially measured based on the initial
measurement amount of the lease liability adjusted for any initial
direct costs incurred or any lease payments made at or before thecommencement date, plus any costs to restore the underlying asset
or the site at which it is located and other related costs required in

the lease contract. The right-of-use asset is periodically depreciatedover the term of the lease. Lease payments are allocated to financecosts and an amortization component of the lease liability balance,in such a way as to apply a fixed interest rate to the lease liability
balance. Finance costs are categorized and recorded as depreciation
pertaining to the right-of-use asset in the Consolidated Statement ofProfit or Loss.
Whether a contract is a lease or contains a lease is determinedbased on the substance of the contract, even when the contract is
not legally a lease-type contract. The lease payments associatedwith short-term leases within 12 months and leases of low-value
assets are recognized as an expense on a straight-line basis over thelease term.
As a result of the transition to IFRS 16, right-of-use assets of¥13,810 million ($126,899 thousand) have been additionallyrecognized in Property, plant and equipment and lease liabilities of¥13,678 million ($125,678 thousand) have been additionallyrecognized in Other financial liabilities under current liabilities andnon-current liabilities in the Consolidated Statement of Financial
Position at the date of initial application. The weighted averageincremental borrowing rate applied to lease liabilities recognized at
the date of initial application of IFRS 16 was 3.0%.
The minimum future lease payments under non-cancellable
operating leases to which IAS 17 “Leases” were applied at the endof the fiscal year immediately before the date of initial application,and the lease liability recognized at the date of initial application(excluding ¥1,731 million ($15,903 thousand) in finance leaseobligations at the end of the previous fiscal year) has a differenceof ¥4,602 million ($42,287 thousand). The main reason for thisdifference is a cancelable operating lease agreement.

(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 are recognized in the
period in which the review was conducted and in 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 and judgments.
However, the assumptions may be affected by results of uncertainchanges in economic conditions in the future and amendment or
promulgation of related laws and regulations, and if a review isnecessary, this may have significant effects on amounts recognizedin consolidated financial statements in the following fiscal years.

1) Impairment of Non-Financial Assets
In the calculation of recoverable amount in impairment test, certain
assumptions have been made for useful life of the asset, 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) Employee Benefits
The present value of defined benefit plan obligations, service cost,etc. pertaining to post-employment benefit plans adopted by theGroup have been calculated based on actuarial assumptions. For
actuarial assumptions, estimates and judgments on a variety ofvariables including discount rate are required. Actuarial assumptions
and related sensitivity are provided in the note “(23) Employee
Benefits.”

3) 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 can beobtained in the future are available and the amount of these profits
based on the business plan. The relevant content and amount ofdeferred tax assets are provided in the note “(20) Income Taxes.”

JSR Corporation
Annual Report
2020

21
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(7) Segment Information
1) Overview of Reportable Segments

thermoplastic elastomers for modifying plastics, and synthetic
rubber latex for coated paper; Plastics Business, which is engaged
mainly in the manufacture and sale of ABS and other resins forautomobiles, office equipment, and amusement applications; Digital
Solutions Business, which is engaged mainly in the manufactureand sale of semiconductor materials, display materials, and products
related to edge computing; and Life Sciences Business. The Digital
Solutions Business is a reportable segment comprising multiple
segments based on the nature of the products and services, thenature of production processes, and similarity in markets and othereconomic characteristics.
The accounting methods for reportable segments are the sameas the methods adopted for the preparation of consolidated financial
statements.
The Group has classified the lithium-ion capacitor business as
discontinued operations from the current fiscal year. Accordingly, 2)
Reportable Segment Revenues, Profits and Losses, Assets and othermaterial items and 4) Information by Region present amounts only forcontinuing operations excluding the lithium-ion capacitor business.

JSR Group’s reportable segments are based on its businesssegments for which separate financial information is available andwhich the Board of Directors determines the basis that are subject
to regular reviews for decisions on the allocation of managerial
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 business activities
according to the strategies. Core Group companies also take theinitiative in working out comprehensive domestic and overseas
strategies and conduct business activities according to thestrategies. Thus, JSR Group’s businesses consist of businesssegments by product based on divisions and core Group companies.
JSR Group has four reportable segments: Elastomers
Business, which is engaged mainly in the manufacture and sale ofgeneral-purpose synthetic rubber products for automobile tires,functional special synthetic rubber for automobile components,
Main Products in Each Business Segment
Business segments

Main products

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; natural latex compounded products; high-functional coating
materials; high-functional dispersants; industrial particles; materials for heat insulation paints; materials forbatteries; butadiene monomers; etc.

Plastics Business

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

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 and development
services, etc.

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, 2019 (April 1, 2018 to March 31, 2019)
Millions of yen
Reportable Segment

Revenue from external customers
Operating profit (loss)

Digital Solutions Life Sciences

Other[Note 1]

Adjustment[Note 2]

Total

Elastomers

Plastics¥200,736¥105,446¥142,216¥ 43,872¥3,083¥495,353

7,421

9,214

32,663781

135

50,214¥

AmountRecorded in theConsolidated
Financial
Statements

1¥495,354(4,953)45,261

Finance income

—

2,499

Finance costs—(1,352)

Profit before tax
Segment assets—

46,408291,256

77,794

131,779

114,353

9,594

624,775

64,193688,968

8,821

2,395

6,036

3,740

214

21,207584

21,790

—

—

—

—

—

—

—

—

19,738

3,108

7,194

5,218

—

35,257724

35,981Other 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 operating profit or operating loss downward adjustment of ¥4,953 million contains company-wide profits and losses not allocated to the reportable segments. The adjustment
amounts 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 long-term investment funds (securities (equity financial assets))) owned by the parent company.

JSR Corporation
Annual Report
2020

22
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen
Reportable Segment

Elastomers
Revenue from external customers
Operating profit (loss)

Plastics

Digital Solutions Life Sciences

Other[Note 1]

Total

Adjustment[Note 2]

¥178,794¥95,092¥144,805¥ 50,496¥ 2,779¥471,967(1,758)

6,237

30,917

3,594

(250)

38,739¥AmountRecorded in theConsolidated
Financial
Statements

0¥471,967(5,855)32,884

Finance income

—

1,929

Finance costs—(2,184)

Profit before tax
Segment assets—

32,629260,488

69,035

145,736

129,485

11,485616,230

58,837675,068

Depreciation and amortization

9,925

2,372

6,627

5,420

221

24,565

1,778

26,343

Impairment losses

1,454

—

—

60

—

1,514

—

1,514

Capital expenditures

15,5602,891

18,341

8,613—

45,405475

45,880

Other 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 operating profit or operating loss downward adjustment of ¥5,855 million 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 long-term investment funds (securities (equity financial assets))) owned by the parent company.
Note 3: In the Elastomers Business, impairment losses of 1,454 million yen were recorded for fixed assets associated with the production of general-purpose rubber products.

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Thousands of U.S. dollars
Reportable Segment

Revenue from external customers
Operating profit (loss)

Elastomers

Plastics$1,642,872$873,770$1,330,565(16,157)

57,311

284,083

Other[Note 1]

Total

$ 463,987$ 25,538$4,336,733

33,021(2,296)355,962

Digital Solutions Life Sciences

Adjustment[Note 2]$

AmountRecorded in theConsolidated
Financial
Statements

1$4,336,734(53,799)

302,163

Finance income—

17,723Finance costs—(20,070)

Profit before tax
Segment assets—

299,815

2,393,533

634,341

1,339,118

1,189,793

105,535

5,662,321

540,634

6,202,954

Depreciation and amortization

91,19821,79260,89749,805

2,027

225,718

16,342242,060

Impairment losses

13,356

—

—

552

—

13,908—13,908

Capital expenditures

142,972

26,566

168,528

79,144—417,209

4,366

421,575

Other 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 operating profit or operating loss downward adjustment of $53,799 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 long-term investment funds (securities (equity financial assets))) owned by the parent company.
Note 3: In the Elastomers Business, impairment losses of 1,454 million yen ($13,356 thousand) were recorded for fixed assets associated with the production of general-purpose rubber
products.

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.

JSR Corporation
Annual Report
2020

23
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Revenue from External Customers
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Japan

¥220,288¥198,238$1,821,540

China

63,87667,022615,837

U.S.

58,19260,403555,023

Other regions

152,999

146,304

1,344,334

Total¥495,354¥471,967$4,336,734

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,
2019

As of March 31,
2020

As of March 31,
2020

Japan

¥ 93,327¥111,160$1,021,408

Thailand

27,20225,287232,349

Hungary

32,07537,867

347,943

U.S.

13,96823,769218,406

Other regions

16,886

17,582

161,556

Total¥183,457¥215,664$1,981,661

Note: We confine items presented to property, plant and equipment considering cost of the preparation.

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 interms 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, 2018 to March 31, 2019)
1. Absorption-type split in which a subsidiary is the successor
company(1) Overview of the Business Combination
The Company executed an absorption-type split dated April 1, 2019,with UMG ABS, Ltd., which was equally owned by Ube Industries,
Ltd. (50%) and Mitsubishi Chemical Corporation (50%), as theabsorbed company and Techno Polymer Co., Ltd. (renamed
Techno-UMG Co., Ltd. on April 1, 2019), a wholly owned subsidiaryof the Company, as the successor company.
In keeping with the absorption-type split, Techno-UMG Co., Ltd.
issued new common shares so that the Company owns 51% of theissued shares of Techno-UMG Co., Ltd.
(i) Name of acquired company and business domain
Name of acquired company: UMG ABS, Ltd.
Business domain: manufacture and sale of ABS resins(ii) Date of business combination
April 1, 2018(iii) Method by which the acquiring company obtained control of
the acquired company
Absorption-type split through the allocation of 58,800
common shares of Techno Polymer Co., Ltd., with UMG
ABS, Ltd. as the absorbed company and Techno Polymer
Co., Ltd. as the successor company(2) Primary Reason for the Business Combination
The conditions surrounding the ABS resin business will become
increasingly challenging both in and outside of Japan. The
primary purpose of the business combination is to optimize
operations, enhance manufacturing efficiencies, and secure costcompetitiveness for the ABS resin business, in order to ensure
the stable supply of products in Japan and expand sales in global
markets.

JSR Corporation
Annual Report
2020

24
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(3) Fair Value of Assets Acquired, Liabilities Assumed, and Goodwill
Recognized on the Acquisition Date(i) Fair value of the consideration transferredTechno-UMG Co., Ltd. common shares: ¥19,350 million(ii) Share valuation method
The Company calculated the share valuation in consultation
with the transaction parties, referring to a share valuation
report and other materials received from a third-party
appraiser.
(iii) Assets acquired, liabilities assumed, and goodwill recognized
as of the acquisition date (April 1, 2018).
Millions of yen
Current assets
Cash and cash equivalents¥ 2,617

Trade and other receivables

10,508Inventories

6,945

Other

736

Non-current assets
Property, plant and equipment
Other intangible assets
Deferred tax assets

11,356
357
992

Other

1,775

Assets acquired

35,287

Current liabilities
Trade and other payables

13,865

Borrowings

3,450

Income taxes payable

719

Other

910

Non-current liabilities
Borrowings

80

Retirement benefit liability

629

Other

45

Liabilities assumed

19,698

Recognized value of assets acquired and liabilities
assumed (net amount)

15,589Goodwill

3,760

Goodwill is primarily composed of synergies with existing
businesses and excess earning power that are expected to arise
from the acquisition, which do not individually fulfill the criteria forrecognition. Furthermore, the goodwill is not deductible for tax
purposes.
The amount of goodwill included in the consolidated statementof financial position as of the date of the business combination
was ¥1,918 million because of the change in ownership ratio inTechno-UMG Co., Ltd.

(4) Acquisition-related Costs
Acquisition-related costs pertaining to the business combination
were ¥136 million including those incurred prior to the current fiscal
year. The amount incurred in the current fiscal year is accounted foras an expense in “Selling, general and administrative expenses” inthe consolidated statement of profit or loss.
(5) Impact on Cash Flows of Business Combination
Millions of yen
Cash and cash equivalents held by the company
acquired on the date of acquisition¥3,213

Proceeds from the company’s split¥3,213(6) Impact on the Group’s Result
A quantitative statement of the impact on the Group’s result has
been omitted as it is difficult to calculate rationally the quantitative
effect on the Group during the current fiscal year.
(7) Effect on Non-controlling Interests
Non-controlling interests increased by ¥17,625 million due to thedecrease in the ownership ratio in Techno-UMG Co., Ltd. from 100
percent to 51 percent.
2. Subsidiary Establishment by Means of the Acquisition of
Crown Bioscience International(1) Overview of the Business Combination(i) Name of acquired company and business domain
Name of acquired company: Crown Bioscience International
Business domain: drug discovery and development services(ii) Acquisition date
May 31, 2018(iii) Percentage of voting rights acquired
100%(iv) Method for the acquiring company to obtain control over theacquired company
Acquisition of shares in exchange for cash payment(v) Primary reason for the business combination
The primary purpose of the business combination is toincorporate a drug discovery and development contracting
business into the Group’s Life Sciences Business and toprovide seamless value to the pharmaceutical industry, fromthe provision of products and services for drug-discovery
processes to GMP manufacturing.

JSR Corporation
Annual Report
2020

25
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(2) Fair Value of Consideration Transferred and Recognized Value ofAssets Acquired and Liabilities Assumed on the Acquisition Date
Millions of yen
Fair value of consideration¥40,583

Current assets
Cash and cash equivalents

4,398

Trade and other receivables

2,164

Other

429

Acquisition-related costs pertaining to the business combination
were ¥335 million including those incurred prior to the current fiscal
year. The amount incurred in the current fiscal year is accounted foras an expense in “Selling, general and administrative expenses” inthe consolidated statement of profit or loss.
The incurred goodwill is primarily composed of expected future
earning power. The goodwill is not deductible.
(3) Impact on Cash Flows of Business Combination

Non-current assets
Property, plant and equipment

2,412

Other intangible assets

2,438

Deferred tax assets

132

Other

87

Assets acquired

12,060Current liabilities
Trade and other payables

1,282

Other

3,941

Non-current liabilities
Borrowings
Deferred tax liabilities
Liabilities assumed
Non-controlling interests
Goodwill

2,581
376
8,180

Millions of yen
Cash and cash equivalents used for the acquisition¥40,583

Cash and cash equivalents held by the company
acquired on the date of acquisition

4,398

Purchase of investments in subsidiaries resulting inchange in the scope of consolidation¥36,186(4) Impact on the Group’s Result
Revenue of ¥8,380 million and profit of ¥800 million arising from
Crown Bioscience International since the acquisition date, areincluded in the Group’s Consolidated Statement of Profit or Loss.
The impact on the Group’s result in the current fiscal year would
have been immaterial on the assumption that the businesscombination had been executed at the beginning of the term.

157
36,860

As of March 31, 2019, the allocation of the purchase price, for theamount of goodwill incurred and the amounts of assets acquired
and liabilities assumed on the date of the business combination,
was completed because the identifiable assets and liabilities on thedate of the business combination were identified. As a result,goodwill decreased ¥1,257 million from the amount calculated
provisionally. The increase in the assets and liabilities received fromthe original provisional amounts is other intangible assets of ¥1,505
million and deferred tax liabilities of ¥248 million.

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Not Applicable2) Acquisition of Non-controlling Interest
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Not Applicable
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Not Applicable(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,
2019

As of March 31,
2020

As of March 31,
2020

Cash and deposit¥55,784¥48,931$449,606

Short-term investment

15,001

13,001

119,458¥70,785¥61,931$569,064

Cash and cash equivalents

Total

JSR Corporation
Annual Report
2020

26
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(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,
2019

As of March 31,
2020

As of March 31,
2020¥116,956¥ 97,758$ 898,268

18,053

12,430114,219

271

317

2,919

¥135,280¥110,506$1,015,404

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
As of March 31,
2019
Derivative asset¥

Thousands of U.S. dollars

As of March 31,
2020

60

¥

3

As of March 31,
2020
$

24

Investments (equity financial assets)

55,00539,955367,134

Term deposits

4,485

3,297

30,292

Other

4,347

5,466

50,227¥63,896¥48,721$447,677

Total
Current assets

5,002

4,064

37,347

Non-current assets

58,89544,656410,330

Total¥63,896¥48,721$447,677

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 areclassified as financial assets measured at amortized cost.

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,
2019

As of March 31,
2020

As of March 31,
2020¥20,656¥6,576$60,427

Optorun Co., Ltd.

4,941

5,941

54,593

Carbon, Inc.

3,509

5,775

53,061

Tosoh Corporation

2,717

1,456

13,381

762

1,051

9,661

1,249

1,030

9,467

OSAKA ORGANIC CHEMICAL INDUSTRY LTD.
Mitsubishi Chemical Holdings Corporation

JSR Corporation
Annual Report
2020

27
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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

Dividends received

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥1,409¥1,139$10,4673) 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 other comprehensive
income at the time of disposal in each fiscal year are as follows:
Millions of yen
Fiscal year ended March 31, 2019

Thousands of U.S. dollars
Fiscal year ended March 31, 2020

Fiscal year ended March 31, 2020

Fair Value

Accumulated gains
or losses

Fair Value

Accumulated gains
or losses

Fair Value

Accumulated gains
or losses¥1,656¥629¥15,449¥7,338$141,957$67,427

For 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.

(12) Inventories
Inventories consist of the following items.
Millions of yen

Finished goods and merchandise

Thousands of U.S. dollars

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020$ 678,337¥ 78,707¥ 73,823

Work in process

3,665

3,613

33,197

Raw materials and supplies

34,67435,404

325,317¥117,046¥112,840$1,036,850

Total

The amount of valuation losses on inventories recognized as expenses was ¥835 million as of March 31, 2019 and ¥497 million ($4,565
thousand) as of March 31, 2020. 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 ¥328,648 million as of March 31, 2019 and ¥308,487 million ($2,834,574 thousand) as of March 31,
2020.

JSR Corporation
Annual Report
2020

28
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(13) Notes on Disposal Groups Classified as Held for Sale and Discontinued
Operations
The Group classifies as discontinued operations business segmentsthat 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% shares of JM

Energy Corporation (JM Energy), a consolidated subsidiary of JSR, in
January, 2020. Upon completion of the share transfer, JSR will hold20% of JM Energy’s shares, and JM Energy will then become an
equity-method affiliate of JSR. With the execution of the transfer,the assets and liabilities of JM Energy are classified as disposalgroups classified as held for sale and the lithium-ion capacitor
business is classified as discontinued operations from the fiscal year
ended March 2020.

The following are the assets and liabilities related to disposal groups classified as held for sale.
Millions of yen
Fiscal year ended
March 31, 2019

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020
$10,810

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

Trade and other receivables

—

216

1,980

Inventories

—

1,207

11,090

Other current assets

—

47

430

Property, plant and equipment

—

0

0

¥—

¥2,646$24,310

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

—

659

6,055

Income taxes payable

—

222

2,037

Other current liabilities

—

1,016

9,332

Retirement benefit liability

—

254

2,332

Deferred tax liabilities

—

496

4,555

Total liabilities¥—¥2,646$24,3102) Discontinued Operations(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, 2019

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Revenue¥ 1,392590$ 5,424

Cost of sales and expenses(3,623)(3,798)(34,901)

Loss before tax from discontinued operations(2,232)(3,208)(29,477)

394

3,460

31,791252$ 2,314

Income tax expenses
Profit (loss) from discontinued operations¥

Fiscal year ended
March 31, 2020¥(1,837)¥(ii) Cash Flows Arising from Discontinued Operations
The following are cash flows from discontinued operations.
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Cash flows from operating activities¥(1,091)¥(1,278)$(11,747)

Cash flows from investing activities

(113)

(517)

(4,754)

Cash flows from financing activities

1,241

2,858

26,26137¥ 1,062$ 9,761

Total¥

JSR Corporation
Annual Report
2020

29
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(14) Other Assets
The breakdown of other assets is as shown below.
Millions of yen

Thousands of U.S. dollars

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020¥ 6,650¥ 5,837$ 53,635

566

1,569

14,413

1,446

1,921

17,651Other current assets
Excise tax receivable
Income taxes receivable
Prepaid expenses
Other
Total

2,208

2,160

19,849¥10,870¥11,487$105,547

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

472

195

1,793

1,833

2,274

20,895¥ 2,305¥ 2,469$ 22,687(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

April 1, 2018
Acquisition

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

¥38,512¥ 59,463¥ 9,095¥15,153¥ 37,412¥ 199¥159,834

525

2,194

1,090

102

30,198(182)

33,927

Changes by business combination

6,403

4,616

701

2,171

924

—

14,816

Depreciation(19,167)(3,717)(11,552)(3,899)———Impairment loss

(46)

(117)

(101)

(163)

(2)

—

(430)

Sales and disposals

(187)

(492)

(130)

(32)

0

—

(840)

Transfer

6,115

13,5024,342(3)(23,956)

—

—

(2)

574

(47)

13

(1,423)

5(879)

Exchange differences of foreign operations
Other
March 31, 2019

(309)

1,508

(23)

—

(4,980)—(3,804)¥47,295¥ 69,697¥11,029¥17,240¥ 38,173¥ 23¥183,457

Adjustment due to adoption of IFRS 16

11,965

227

12

1,607

—

—

13,810April 1, 201959,26069,924

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

JSR Corporation
Annual Report
2020

30
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars

March 31, 2019

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

$434,577$ 640,421$101,343$158,412$ 350,761$ 210$1,685,725

Adjustment due to adoption of IFRS 16

109,945

2,083

106

14,765——

126,899

April 1, 2019544,522642,504

101,450

173,178

350,761210

1,812,624

Acquisition

42,14950,1497,470

18,346

328,5221,314

447,951

Depreciation(60,506)(115,404)(38,554)(2,328)——(216,792)(955)(14,361)

(851)

(8)

(337)

—

(16,513)

Sales and disposals

Impairment loss

(3,895)(7,237)

(660)

(112)

(1,459)—(13,364)

Transfer

43,850110,059

42,306

0(196,054)

(161)

—

Exchange differences of foreign operations(7,494)(12,327)

(882)

(280)

(11,949)(3)(32,936)

Other(1,932)

6,024

(24)

(2,491)

(873)

(12)

691

$555,739$ 659,406$110,256$186,303$ 468,610$1,347$1,981,661

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

March 31, 2019

¥141,647¥356,983¥65,906¥17,240¥38,173¥156¥620,105

March 31, 2020

¥162,002¥364,873¥68,381¥21,779¥50,999¥147¥668,201

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

$1,488,759$3,352,690$628,329$200,121$468,610$1,347$6,139,857

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

March 31, 2019

¥ 94,352¥287,286¥54,877

¥

—

¥—

¥133

¥436,648

March 31, 2020

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

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Constructionin progress

Other

Total

$933,020$2,693,283$518,074$13,818$—$—$4,158,195

March 31, 2020

Acquisition Cost
Millions of yen

Thousands of U.S. dollars

March 31, 2020

Accumulated Depreciation and Impairment
Millions of yen

Thousands of U.S. dollars

March 31, 2020

(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, general andadministrative expenses” and “profit (loss) from discontinued operations” in the consolidated statement of profit or loss.
2. Impairment loss is recorded as “other operating expenses” and “Profit (loss) 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, general andadministrative 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 Other Financial Liabilities.”
5. Right-of-use asset included in carrying amounts of property, plant and equipment is stated in “(16) Lease.”JSR Corporation
Annual Report
2020

31
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(16) Lease
The Group leases Offices, Production equipment, Company cars, Land and Other assets as lessee. Certain lease contracts include 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:
Millions of yen

Net increase

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Total

¥ 3,616¥3,133

¥ 37

¥ 931

¥ 7,718

Depreciation(2,734)

(704)

(37)

(253)

(3,728)Carrying amount

12,710

3,944

33

2,278

18,965

Thousands of U.S. dollars

Net increase

Buildings
and structures

Machineryand vehicles

Tools, fixturesand fittings

Land

Total

$ 33,225$28,790$ 344$ 8,557$ 70,916

Depreciation(25,122)(6,468)(337)(2,328)(34,256)

Carrying amount

116,786

36,239307

20,929174,260

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

Thousands of U.S. dollars¥ 615$ 5,655

Expenses relating to short-term leases

340

3,128

Expenditures relating to leases of low-value assets

672

6,176

Variable lease payments

67

616

3,899

35,825

Finance costs related to leases

The amount of cash outflow related to leases

For the information on Maturity analysis for lease liabilities, see “(34) Financial Instruments, 2) Financial Risks, (iii) Liquidity Risks.”

JSR Corporation
Annual Report
2020

32
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(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, 2018
Acquisition

Goodwill

Software

Other

Total

¥19,389¥ 2,734¥ 7,670¥10,403
2,112

—

1,773

339

38,549

444

2,898

3,342

Amortization—(1,138)(1,536)(2,675)

Impairment loss

—

(9)

—

(9)

Sales and disposals

—

(11)

(59)

(71)

—

(153)

153

—

1,128

18

132

150

Changes by business combination

Transfer to other property, plant and equipment
Exchange differences of foreign operations
Other
March 31, 2019

—

480

471

951

¥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

Thousands of U.S. dollars
Other intangible asset
March 31, 2019

Goodwill

Software

Other

Total

$542,740$ 38,010$ 92,510$130,520

Acquisition—

37,9852,811

40,796

Amortization—(10,513)(14,894)(25,407)

Impairment loss

—

(32)

—

(32)

Sales and disposals—(1,063)(2,451)(3,514)—(1,971)

1,971—(7,200)(314)(1,783)(2,096)

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

—

4,237

1,512

5,749

$535,540$ 66,340$ 79,676$146,015

Acquisition Cost
Millions of yen
Other intangible asset
Goodwill

Software

Other

Total

March 31, 2019

¥59,066¥21,045¥24,315¥45,359

March 31, 2020

¥58,283¥24,919¥26,708¥51,627

Thousands of U.S. dollars
Other intangible asset
March 31, 2020

Goodwill

Software

Other

Total

$535,540$228,969$245,414$474,383

JSR Corporation
Annual Report
2020

33
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Amortization and Impairment
Millions of yen
Other intangible asset
Goodwill

Software

Other

Total

March 31, 2019¥—¥16,908¥14,247¥31,155

March 31, 2020¥—

¥17,699¥18,037¥35,736

Thousands of U.S. dollars
Other intangible asset
March 31, 2020

Goodwill

Software

Other

Total

$—

$162,629$165,738$328,368(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” in the changes of carrying amounts includes transfer to/from “cost of sales” and “selling, general and administrative expenses” in the consolidated statement of profit orloss.

(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
Fiscal year ended
March 31, 2019

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Property, plant and equipment
Buildings and structures¥—¥

Machinery and vehicles

—

1,355

Tools, fixtures and fittings

—

63

582

—

1,510

13,876

Subtotal

92

$

847

12,447

Other intangible asset
Software

—

3

32

Total

¥—

¥1,514$13,908

The impairment losses were recognized in the fiscal year ended
March 31, 2020 due to the decrease in future profitability
regarding a part of non-current assets in production equipment for
general-purpose synthetic rubber products in the Elastomers
business and a part of fixed assets in the Life Sciences business.
The carrying amounts of the above assets has been reduced to therecoverable amount, and impairment losses of ¥1,454 million($13,356 thousand) and ¥60 million ($552 thousand), respectively,

totaling ¥1,514 million ($13,908 thousand) were recorded in “Other
operating expenses” in the consolidated statement of profit or loss.
The recoverable amount is measured by the value in use, and thevalue in use is calculated as zero.
The impairment losses regarding fixed assets of the lithium-ion
capacitor business in the previous fiscal year (¥438 million) and thecurrent fiscal year (¥287 million, $2,637 thousand) were reclassified
as profit (loss) from discontinued operations.

JSR Corporation
Annual Report
2020

34
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

2) Impairment Test on Goodwill
Carrying amount of goodwill allocated to cash-generating 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,
2019

As of March 31,
2020

As of March 31,
2020

Plastics business

Plastics¥ 2,598¥ 2,598$ 23,876

Life Sciencesbusiness

In-vitro Diagnostics and Research Reagents

3,641

3,641

33,457

Contract Development and Manufacturing for Biomedicine

5,226

5,124

47,086

Contract of the Services for Development andGeneration of Cell-lines

9,133

9,184

84,390Drug Discovery and Development Services

37,63736,904

339,105

Other
Total

830

830

7,628

¥59,066¥58,283$535,540

Of the above goodwill, major goodwill was tested for impairment as follows. The recoverable amount was measured as the higher of the value
in use or the fair value less costs of disposal.
Measured at the Value in Use
Cash-generating units(groups of cash-generating units)

Continued
growth rate

Pre-tax
discount rate

Term to estimate
cash flows

Plastics

0.0%

11.3%

5 years

In-vitro Diagnostics and Research Reagents

1.0%

10.1%

5 years

Contract Development and Manufacturing for Biomedicine

2.0%

13.6%

5 years

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

2.0%

12.6%

5 years

Drug Discovery and Development Services

2.0%

13.0%

5 years

The value in use was calculated by discounting the estimated cash flows to the present value based on the plan reflecting past experience andexternal information and approved by management.
As for those cash-generating units, the Group considers that the carring 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.
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,
2019

As of March 31,
2020

As of March 31,
2020¥3,628¥5,955$54,721

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, 2019
Share of profit (loss)

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥442

¥287

Share of other comprehensive income

(39)

(88)

$2,635(807)

Share of total comprehensive income

¥403

¥199

$1,828JSR Corporation
Annual Report
2020

35
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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,
2019

As of March 31,
2020

As of March 31,
2020¥20,641¥19,429$178,530

Carrying amount

The Group’s share of comprehensive income of joint ventures that are not individually significant is as follows:
Millions of yen
Fiscal year ended
March 31, 2019
Share of profit (loss)¥

Thousands of U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020$(2,048)91¥ (223)

Share of other comprehensive income(1,169)(847)(7,785)

Share of total comprehensive income¥(1,078)¥(1,070)$(9,833)(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, 2018 to March 31, 2019)
Millions of yen

April 1, 2018

Recognizedthrough profit(loss)

Recognizedthrough othercomprehensive
incomeOther

March 31, 2019¥

Deferred Tax Assets
Inventories¥ 1,153¥ (20)—¥ 1,133

Accrued bonuses

1,574

(18)

—

154

1,710

Non-current assets

1,898

58

—

—

1,956

Retirement benefit liability

4,205

426

(24)

173

4,780

390

(97)

—

132

425

2,751

(50)

181

679

3,562

¥ 11,972

¥ 299

¥ 157

¥1,138¥ 13,566

Non-current assets(1,513)

(111)

—

—

(1,625)

Financial asset measured at fair value through othercomprehensive income(11,097)

—

2,334

—

(8,763)

Other(1,764)

243

0

(471)

(1,992)¥(14,374)¥ 132¥2,334¥ (471)¥(12,380)

Unused tax losses
Other
Total

¥

—

Deferred Tax Liabilities

Total

JSR Corporation
Annual Report
2020

36
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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

April 1, 2019

Recognizedthrough profit(loss)¥ 1,133¥

Recognizedthrough othercomprehensive
incomeOther

March 31, 2020

Deferred Tax Assets
Inventories

(33)

¥ —

—

¥ 1,100

Accrued bonuses

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

Non-current assets(1,625)73——(1,551)

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)

Other

March 31, 2020

Unused tax losses
Other
Total

¥

Deferred Tax Liabilities

Total

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Thousands of U.S. dollars

April 1, 2019

Recognizedthrough profit(loss)

Recognizedthrough othercomprehensive
incomeDeferred Tax Assets
Inventories—$ 10,109

Accrued bonuses

15,714

1,817

—

—

17,531

Non-current assets

17,975(5,807)——

12,169Retirement benefit liability

43,921(1,225)(2,679)—40,016

Unused tax losses

3,903

3,173

—

—

7,076

Other

32,72918,6094,659(2,754)53,242$ 124,654$16,264$1,979$ (2,754)$140,144

Non-current assets(14,929)

674

—

—

(14,255)

Financial asset measured at fair value through othercomprehensive income(80,523)—

6,040

29,178(45,306)

Other(18,303)(5,383)——(23,687)$(113,755)$ (4,709)$6,040$29,178$ (83,247)

Total$ 10,412

$

(303)

$

—

$

Deferred Tax Liabilities

Total

JSR Corporation
Annual Report
2020

37
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(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 account significant
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

As of March 31,
2020

As of March 31,
2020¥ 8,211¥ 9,881$ 90,790

3,086

2,531

23,257¥11,297¥12,412$114,047

Deductible temporary differences
Total

Thousands of U.S. dollars

As of March 31,
2019

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

Not later than one year

Thousands of U.S. dollars

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020

¥

88

¥ 276

$ 2,534

Later than one year and not later than five years

4,017

2,015

18,519Later than five years

4,107

7,590

69,737

Total¥8,211¥9,881$90,790

The amount of taxable temporary differences pertaining toinvestments in subsidiaries, etc. for which deferred tax liabilities
have not been recognized was ¥26,388 million as of March 31, 2019and ¥34,309 million ($315,253 thousand) as of March 31, 2020. For

these temporary differences, deferred tax liabilities have not beenrecognized because the Group can control the timing of the reversalof the temporary differences and it is probable that the temporary
differences will not reverse in 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, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Current tax expenses¥11,021¥ 4,656$ 42,787

Deferred tax expenses(431)(1,257)(11,554)

Total¥10,591¥ 3,399$ 31,232

Continuing operations

10,985

6,859

63,023

Discontinued operations(394)(3,460)(31,791)

Deferred tax expenses include tax losses of ¥243 million and ¥720
million ($6,620 thousand), which had not been recognized, in theprevious consolidated fiscal year and the current consolidated fiscal
year respectively. Also, the amounts of benefits arising from

temporary differences in past periods are included in the previous
consolidated fiscal year and the current consolidated fiscal year,
which were ¥232 million and ¥164 million ($1,506 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, 2019

Fiscal year ended
March 31, 2020

Statutory income tax rate

30.6

30.6

Tax credit on experiment and research expenses

(3.9)

(2.9)

Differences in tax rates applied to foreign operations

(2.2)

(3.8)

Special deduction for reconstruction district

(0.6)

(0.3)

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

(0.4)

(0.1)
(1.0)

Valuation allowance

0.8

Other

(0.4)

(1.5)

Average effective tax rate

24.0

21.0

JSR Corporation
Annual Report
2020

38
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(21) Borrowings and Other Financial Liabilities
1) Financial Liabilities
Borrowings and other financial liabilities consisted of the following:
Millions of yen

Thousands of
U.S. dollars%

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020

Average interest
rates

Current borrowings¥21,695¥ 23,559$216,479

0.85%—

Current portion of non-current borrowings

11,824

6,483

59,571

2.06%—

Non-current borrowings

50,777

52,684

484,093

1.91%

2021–26

Current lease liabilities

515

3,094

28,428

—

—

1,216

15,672

144,007—2021–45

Non-current lease liabilities

Payment Due

Derivative liabilities

17

111

1,017

—

—

Other

460

460

4,223

—

—

¥86,503¥102,063$937,817——

34,05133,181

304,886

—

—

Total
Current liabilities
Non-current liabilities

52,452

68,882632,931

—

—

Total

¥86,503¥102,063$937,817——

Borrowings 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.
With the application of IFRS 16, lease obligations included in other financial liabilities have been reclassified to lease liabilities from thecurrent fiscal year.
Payment schedules of non-current borrowings are as follows:
Later than one year
and not later than
two years

Later than two years
and not later than
three years

Later than three
years and not later
than four years

Later than four years
and not later than
five years

Later than five years

Total

Millions of yen¥ 13,431¥ 7,700¥ 11,635¥ 19,570¥ 348¥ 52,684

Thousands of U.S. dollars$123,415$70,748$106,906$179,826$3,197$484,093

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
As of March 31,
2019
Cash and cash equivalents¥

590

Thousands of U.S. dollars

As of March 31,
2020
¥

7

As of March 31,
2020
$

64

Trade and other current receivables

8,283

—

—

Current inventories

3,656

—

—

Other current financial assets

44

—

—

Other current non-financial assets

279

—

—

20,31914,040129,009

Intangible assets

671

—

—

Non-current assets

1,099

—

—

Total

¥34,940¥14,047$129,074

Property, plant and equipment

JSR Corporation
Annual Report
2020

39
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Corresponding liabilities are as follows:
Millions of yen
As of March 31,
2019
Current borrowings and current portion of non-current borrowings

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2020¥7,037¥29$267

Other current liabilities

—

2

18

Non-current portion of non-current borrowings

2

2

15

¥7,039

¥33

$301

Total

3) Reconciliation of Liabilities Arising from Financing Activities
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Millions of yen
Non-cash items

As of April 1,
2018

Cash flow

Business
Combination

Acquisition

Exchangedifferences

Transfer
betweennon-current
and current

As of March
31, 2019

Other

Borrowings (non-current)¥53,456¥ 8,641¥ 828¥—¥ (586)¥(11,610)¥48¥50,777

Borrowings (current)

25,947(9,323)

3,450

—

1,831

11,6103

33,519Lease liabilities

2,196

(551)

0

63

23

—

(1)

1,731

¥81,600¥(1,233)¥4,278¥63¥1,268—¥51¥86,027

Exchangedifferences

Transfer
betweennon-current
and current

Other

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

Total¥

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen
Non-cash items
As ofMarch 31,
2019
Borrowings (non-current)¥50,777

Borrowings (current)
Lease liabilities
Total

Adjustment
due toadoption of
IFRS 16¥

As ofApril 1,
2019

Cash flow

Lease

—

¥50,777¥ 5,568¥

33,519—33,519(5,014)

—

(648)

2,184

1

30,043

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

Exchangedifferences

Transfer
betweennon-current
and current

Other

As of
March 31,2020—$(13,567)$(20,071)$—$484,093¥

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Thousands of U.S. dollars
Non-cash items
As ofMarch 31,
2019

Adjustment
due toadoption of
IFRS 16

Cash flow—$466,572$ 51,158

Lease

Borrowings (non-current)$466,572

Borrowings (current)

307,996—

307,996(46,067)—(5,958)20,071

9

276,050

Lease liabilities

15,903

125,678

141,581(27,791)

61,761(3,115)——

172,435$790,470$125,678$916,148$(22,700)$61,761$(22,640)—$ 9$932,578

Total

$

As of
April 1,
2019

$

$

JSR Corporation
Annual Report
2020

40
NOTES ON 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,
2019

As of March 31,
2020

As of March 31,
2020¥ 89,240¥61,156$561,945

28,134

31,178286,488

680

504

4,634

¥118,053¥92,839$853,067

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 have adopted
funded and unfunded defined benefit plans and defined contributionplans, and virtually all employees of these companies are coveredby these plans. In Japan, as 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 these benefits is calculated based on
certain points, etc. given in accordance with service years andcontribution. These pension plans are exposed to generalinvestment risk, interest rate risk, inflation risk and others.
Funded defined benefit plans have been operated by a corporate
pension fund that is legally separated from the Group in accordancewith laws and regulations including Defined-Benefit Corporate
Pension Act. The board of the corporate pension fund and thepension-managing trustee are required by laws and regulations to
act in the best interests of plan participants, and are responsible formanaging plan assets based on predetermined policies.
The management of plan assets is conducted based on basic
asset allocation aimed to ensure stable revenue in the medium tolong term within the limits of tolerable risks, in order to ensure thepayment of pension benefits, etc. at present and in the future. The
basic asset allocation is periodically reviewed in order to respond tochanges in the market environment and the funding position frominitial 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,
2019

As of March 31,
2020

As of March 31,
2020

Present value of funded retirement benefit obligation¥ 39,636¥ 38,349$ 352,372

Fair value of plan assets(37,772)(37,472)(344,315)

Subtotal

1,864

877

8,057

12,503

12,779117,422¥ 14,367¥ 13,656$ 125,480

Retirement benefit liability

15,87016,216

148,999

Retirement benefit asset(1,503)(2,560)(23,519)¥ 14,367¥ 13,656$ 125,480

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
2020

41
NOTES ON 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

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥49,724¥52,139$479,089

2,382

2,409

22,139

194

158

1,452

Actuarial gains (losses) arising from changes in demographic assumptions

(259)

(207)

(1,903)

Actuarial gains (losses) arising from changes in financial assumptions

444

(827)

(7,597)(2,600)(2,333)(21,438)

Balance of present value of retirement benefit obligation at the beginning of
the fiscal year
Service cost
Interest expense
Remeasurement

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

2,254

(212)

(1,948)¥52,139¥51,128$469,795

The weighted average duration of defined benefit plan obligations was 13.7 years in the fiscal year ended March 31, 2019 and 13.7 years in
the fiscal year ended March 31, 2020.
(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
Interest revenue

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥36,227¥37,772$347,075

177

117

1,076

Remeasurement
264

(84)

(772)

Contributions paid by the employer

Return on plan assets

1,620

1,677

15,408Benefits paid

(2,027)(1,816)(16,689)

Other

1,512

(194)

(1,783)¥37,772¥37,472$344,315

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

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 of contributions(such as expected rate of interest, expected mortality rate andexpected withdrawal rate) and verifies the appropriateness ofcontributions determined.
The Group will make contributions of ¥1,955 million ($17,968
thousand) in the fiscal year ending March 31, 2021.

JSR Corporation
Annual Report
2020

42
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(iv) Items of Plan Assets
Plan assets consisted of the following items.
Millions of yen
As of March 31, 2019
Assets for which
active market
prices are available
Cash and cash equivalents¥ 4,041

As of March 31, 2020

Assets for which
active market
prices are notavailable¥

Total

Assets for which
active market
prices are available—¥ 4,041$ 3,861

Assets for which
active market
prices are notavailable
$

Total

—

$ 3,861

Equity instruments
Domestic equity securities

1,313

—

1,313

1,149

—

1,149

Foreign equity securities

3,540

—

3,540

3,316

—

3,316

Domestic bonds

9,279

—

9,279

9,197

—

9,197

Foreign bonds

10,249—10,24910,657—

10,657

Debt instruments

General accounts of life insurance

—

650

650

—

660

660

Alternative investments*

—

8,700

8,700

—

8,632

8,632

¥28,422¥9,350¥37,772$28,180$9,292$37,472

Total*Alternative investments include hedge funds.

Thousands of U.S. dollars
As of March 31, 2020
Assets for which
active market
prices are available
Cash and cash equivalents$ 35,478

Assets for which
active market
prices are notavailable
$

Total

—

$ 35,478

Equity instruments
Domestic equity securities

10,554—

10,554Foreign equity securities

30,472—30,472

Domestic bonds

84,506—

84,506

Foreign bonds

97,926—97,926

General accounts of life insurance

—

6,061

6,061

Alternative investments*—

79,31879,318$258,936$85,379$344,315

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, 2020, 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 ¥2,832 million ($26,018 thousand). This provisional
calculation assumes that variables other than the assumptions

As of March 31,
2019

As of March 31,
2020

0.36

0.51

used in the calculation are constant. In reality, since individualassumptions are affected by changes in economic indicators andconditions at the same time, the assumptions are expected tochange independently or in a correlated fashion, and the actual
effects of such changes on defined benefit plan obligations may
differ from the expected effects.

JSR Corporation
Annual Report
2020

43
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

3) Defined Contribution Plans
The amount recognized as expenses in relation to defined contribution plans was ¥1,025 million in the fiscal year ended March 31, 2019 and¥1,273 million ($11,701 thousand) in the fiscal year ended March 31, 2020.

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, 2019 and the fiscal year ended March 31, 2020 was ¥3,377 millionand ¥3,724 million ($34,216 thousand), respectively.

(24) Other Liabilities
Other liabilities include the following items.
Millions of yen
As of March 31,
2019

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2020

Other current liabilities
Unearned revenue

¥

34

¥

52

$

480

Contract liabilities

5,969

8,489

78,006

Accrued bonuses

5,353

5,188

47,667

752

860

7,906

2,644

3,386

31,114¥14,752¥17,976$165,172

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

929

804

7,383

1,804

2,864

26,312¥ 2,733¥ 3,667$ 33,695(25) 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 the shareissue shall be credited to share capital, and the remaining amount may be recorded as legal capital surplus included in capital surplus. 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, 2018

Number of shares authorized

Number of shares issued

696,061,000

226,126,145

Increase/Decrease——

As of March 31, 2019

696,061,000

226,126,145

Increase/Decrease——

As of March 31, 2020

696,061,000

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

JSR Corporation
Annual Report
2020

44
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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 the general
meeting of shareholders, to the extent of the distributable amount.

Moreover, in the case of acquisition through market transactions ora takeover bid, treasury shares may be acquired by resolution of theBoard of Directors within the requirements prescribed in the
Companies Act in accordance with the provisions of the Articles ofIncorporation.

Increase or decrease in the number of treasury shares is as follows:
Number of shares
3,534,779

As of April 1, 2018
Increase/Decrease

2,160,170

As of March 31, 2019

5,694,949

Increase/Decrease

5,717,359

As of March 31, 2020

11,412,308(Note) Increase or decrease during the period is mainly due to the purchase of shares resolved at the Board of Directors.

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 capital surplus orlegal retained earnings until the sum of legal capital surplus included

in capital surplus and legal retained earnings included in retained
earnings reaches one quarter of share capital. Accumulated legal
retained earnings may be appropriated to cover a deficit. It is
specified that legal retained earnings may be reversed by resolutionof the general meeting of shareholders.

4) Other Components of Equity
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Millions of yen
Net change infinancial assets
measured atfair value
through othercomprehensive
incomeAs of April 1, 2018
Other comprehensive income
Total comprehensive income
Share-based remuneration plan
Transfer from other components of equity toretained earnings
Changes by business combination
Other movements
Total transactions with owners, etc.
As of March 31, 2019¥25,064

Net change
in fair value
on cash flow
hedges¥ 70

Exchangedifferenceson translationof foreign
operations¥ 422

Remeasurements ofdefined benefit
plans
¥—

Restricted
Shares

Other

Total

¥(25)

¥(460)¥25,071(4,754)

(40)

(770)

60

—

—

(5,505)(4,754)

(40)

(770)

60

—

—

(5,505)

—

—

—

—

(1)

—

(1)

(629)

—

—

(60)

—

—

(689)

(173)

—

54

—

—

—

(119)

(0)

—

1

—

—

—

1

(802)

—

55

(60)

(1)

—

(808)

¥19,508¥ 30¥(293)¥—¥(26)¥(460)¥18,758

JSR Corporation
Annual Report
2020

45
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen
Net change infinancial assets
measured atfair value
through othercomprehensive
incomeAs 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

¥19,508

Net change
in fair value
on cash flow
hedgesExchangedifferenceson translationof foreign
operations¥ 30¥ (293)Remeasurements ofdefined benefit
plans
¥ —

Restricted
Shares

Other

Total

¥(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, 2020 (April 1, 2019 to March 31, 2020)
Thousands of U.S. dollars
Net change infinancial assets
measured atfair value
through othercomprehensive
incomeAs 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

$179,248

Net change
in fair value
on cash flow
hedgesExchangedifferenceson translationof foreign
operations$ 273$ (2,695)

Remeasurements ofdefined benefit
plans
$

—

Restricted
Shares

Other

Total

$(241)$(4,223)$172,362(12,132)(583)(40,096)

5,786

—

—

(47,026)(12,132)(583)(40,096)

5,786

—

—

(47,026)

—

—

—

—

(429)

—

(429)

(67,427)——(5,786)——(73,213)(67,427)——(5,786)(429)—(73,642)$ 99,689$(310)$(42,791)$$(671)$(4,223)$ 51,694(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 other comprehensive income.
(b) Net 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) Remeasurements of Defined Benefit Liabilities (Assets)
Remeasurements of defined benefit liabilities (assets) are changes
in actuarial differences, return on plan assets (excluding the amountincluded 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 todefined benefit plan obligations (differences between actuarial
assumptions at the beginning of the period and actual results) andthe effect of changes in actuarial assumptions. These items are—recognized in other comprehensive income when they arise, andimmediately transferred from other components of equity toretained earnings.
(e) Restricted 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, other componentsof equity recognized as the debited amount are deducted at thetime when remuneration cost is recognized.
Details of the restricted share-based remuneration plan areprovided in the note “(33) Share-based remuneration.”(f) The Company has entered into an agreement with non-controllingshareholders that the Company purchases all interests held by the
non-controlling shareholders under certain terms and conditions.
With regard to the obligations to purchase these interests, thepresent value of the purchase amount has been recognized as
financial liabilities, and the same amount has been reduced fromother components of equity.

JSR Corporation
Annual Report
2020

46
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(26) Dividends
The amounts of dividends paid are as follows:
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Class ofsharesTotal amount ofdividends

Dividends
per share

Ordinary General Meeting of Shareholders
on June 15, 2018

Ordinary Shares¥5,565 million

Board of Directors Meetingon October 29, 2018

Ordinary Shares¥6,610 million

Resolution

Record date

Effective date ofdividends

Source ofdividends¥25

March 31,2018

June 18,2018

Retained Earnings¥30

September 30,
2018

November 28,
2018

Retained Earnings

Record date

Effective date ofdividends

Source ofdividends

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($60,764 thousand)¥30 ($0.28)

March 31,2019

June 19,2019

Retained Earnings

Board of Directors Meetingon October 28, 2019

Ordinary Shares¥6,441 million($59,186 thousand)¥30 ($0.28)

September 30,
2019

November 27,
2019

Retained Earnings

Resolution

Dividends of which record dates belong to the current consolidated fiscal year and of which effective dates of dividends fall after the end of
the current consolidated fiscal year are as follows:
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Resolution
Ordinary General Meeting of Shareholders
on June 18, 2019

Class ofsharesTotal amount ofdividends

Dividends
per share

Ordinary Shares¥6,613 million¥30

Record date

Effective date ofdividends

Source ofdividends

March 31,2019

June 19,2019

Retained Earnings

Record date

Effective date ofdividends

Source ofdividends

March 31,2020

June 18,
2020

Retained Earnings

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($59,188 thousand)¥30 ($0.28)

JSR Corporation
Annual Report
2020

47
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(27) Revenue
1) Disaggregation of Revenue
Regarding the revenue arising from contracts with the Group’s customers, the breakdown of revenue into domestic and overseas and its
relation to the reportable segments are as follows.
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Millions of yen
Elastomers

Reporting Segments

Domestic

Overseas

Total¥118,016¥ 82,720¥200,736

Plastics

60,84044,606

105,446

Digital Solutions

30,995111,221

142,216

Semiconductor Materials

17,05659,044

76,100

Display Materials

5,557

47,11452,671

Edge Computing Materials

8,382

5,063

13,445

9,038

34,83443,872

Life Sciences
Other
Total
Adjustment
Amount Recorded in the Consolidated Financial Statements

1,396

1,686

3,083

¥220,286¥275,0767¥495,353

1—

1¥220,287¥ 275,067¥495,354

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Millions of yen
Elastomers

Reporting Segments

Domestic

Overseas

Total¥103,219¥ 75,575¥178,794

Plastics

55,96939,12495,092

Digital Solutions

27,853116,953

144,805

Semiconductor Materials

16,89967,09583,994

Display Materials

5,350

43,63848,988Edge Computing Materials

5,604

6,220

11,823

9,912

40,58450,496

Life Sciences
Other
Total
Adjustment
Amount Recorded in the Consolidated Financial Statements

1,286

1,493

2,779

¥198,238¥273,729¥471,9670—0¥198,238¥273,729¥471,967

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Thousands of U.S. dollars
Elastomers

Reporting Segments

Domestic

Overseas

Total$ 948,443$ 694,429$1,642,872

Plastics

514,275

359,495

873,770

Digital Solutions

255,930

1,074,636

1,330,565

Semiconductor Materials

155,277

616,511771,788

Display Materials

49,160400,976

450,136

Edge Computing Materials

51,492

57,149108,641

91,075372,912463,987

11,816

13,722

25,538$1,821,539$2,515,194$4,336,733

Life Sciences
Other
Total
Adjustment
Amount Recorded in the Consolidated Financial Statements

0

—

0

$1,821,540$2,515,194$4,336,734

JSR Corporation
Annual Report
2020

48
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(1) 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, 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.
(2) 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, 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.
(3) Digital Solutions Business
In Digital Solutions business, the Group manufactures and sells
semiconductor materials, display materials, and products related toedge computing, etc.
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.
(4) Life Sciences Business(i) Manufacturing 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 at overtime with fulfillment of performance obligation based on thecontract between the Group and the customer.

2) Liabilities Arising from Contracts with the Customers
The Group recognizes unearned revenue arising from contracts withthe customers as contract liabilities.
The Group recognized almost all balances of contract liabilities atthe beginning of the current fiscal year as revenue in that year, andthere is no importance for the amounts carried over from the next
consolidated fiscal year.
In addition, in the current consolidated fiscal year, there isno significant amount of revenue arisen from the performanceobligations which were satisfied in the past periods.
There are no significant changes in the contract liabilities in thecurrent consolidated fiscal year.

3) Transaction 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 from contracts
with customers that are not included in transaction prices.
The consideration does not include a significant financing
component, since the consideration for transaction prices is mainlycollected within one year from the time of delivery of products andmerchandise to customers or the agreement based on the contractsuch as milestone achievement.

4) Assets Recognized from the Costs of Obtaining or
Fulfilling Contracts with Customers
There is no significance in the amount of assets recognized from thecosts incurred to obtain or fulfill a contract with a customer in thecurrent consolidated 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
2020

49
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(28) 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, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥ 11,703¥ 12,151$111,650

Salaries and allowances

23,241

23,651

217,317Retirement benefit expenses

1,466

1,280

11,759Experiment and research expenses

24,22724,066

221,138

Depreciation

3,478

5,798

53,272

Supplies expenses

4,015

3,772

34,663Business consignment expenses

3,415

3,544

32,569Other

30,55830,081

276,405¥102,105¥104,343$958,773

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, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥24,364¥25,233$231,857(29) Other Operating Income and Expenses
Other operating income consisted of as follows:
Millions of yen

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

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

¥

¥

52
90

7
84

Fiscal year ended
March 31, 2020
$

63
771

266

—

—

1,316

1,213

11,148¥1,723¥1,304$11,982

Other operating expenses consisted of as follows:
Millions of yen

Loss on abandonment of non-current assets

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020
$ 6,041

¥ 216

¥ 657

Loss on sales of non-current assets

21

61

564

Impairment loss

—

1,514

13,908Provision for environmental measures

399

—

—

Extra payments for early retirements

199

—

—

1,470

2,646

24,317¥2,306¥4,879$44,830

Other
Total

JSR Corporation
Annual Report
2020

50
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(30) Financial Income and Costs
Financial income consisted of the following:
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥ 222

¥ 230

$ 2,113

1,409

1,139

10,467

868

559

5,133

¥2,499¥1,929$17,723

Interest income
Financial assets measured at amortized cost
Dividend income
Equity financial assets measured at fair value through other comprehensive
incomeForeign exchange gains
Total

Financial costs consisted of the following:
Millions of yen

Thousands of U.S. dollars

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

¥1,352¥1,210$11,115

—

615

5,655

—

359

3,301

¥1,352¥2,184$20,070

Interest expenses
Financial liabilities measured at amortized cost
Lease liabilities
Other*
Total*Other is mainly profit or loss on shares of subsidiaries.

(31) Other Comprehensive Income
Changes in items of other comprehensive income are shown below:
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Millions of yen
Amount incurred

Reclassification

Before tax

Income tax

Net of tax

Other comprehensive income that will not bereclassified to profit or loss
Net change in financial assets measured at fairvalue through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income ofinvestments accounted for using the equity method¥(6,813)¥—¥(6,813)¥2,135¥(4,678)

78

—

78

(24)

54

5

—

5

—

5

¥(6,729)¥—¥(6,729)¥2,111¥(4,618)

Cash flow hedges

(30)

(49)

(79)

—

(79)

Exchange differences on translation of foreign
operations

476

—

476

—

476

Total
Items that may be reclassified to profit or loss

Share of other comprehensive income ofinvestments accounted for using the equity method
Total
Total

(1,213)—(1,213)¥ (768)¥(49)¥ (817)¥—(1,213)—¥ (817)¥(7,497)¥(49)¥(7,546)¥2,111¥(5,435)

JSR Corporation
Annual Report
2020

51
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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

Other comprehensive income that will not bereclassified to profit or loss
Net change in financial assets measured at fairvalue through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income ofinvestments accounted for using equity method
Total¥(2,034)¥—¥(2,034)¥ 657¥(1,377)

952

—

952

(292)

661

(31)

—

(31)

—

(31)

¥(1,113)¥—¥(1,113)¥ 366¥ (747)

(103)

(22)

(124)

—

(124)

(4,068)(43)(4,111)—(4,111)

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

(904)

—

(904)

—

(904)

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

Income tax

Net of tax

Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Thousands of U.S. dollars
Amount incurred

Reclassification

Before tax

Other comprehensive income that will not bereclassified to profit or loss
Net change in financial assets measured at fairvalue through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income ofinvestments accounted for using equity method
Total$(18,690)$ —$(18,690)$ 6,040$(12,650)

8,750

—

8,750

(2,679)

6,071

(286)

—

(286)

—

(286)

$(10,225)$ —$(10,225)$ 3,361$ (6,864)

(943)

(200)

(1,143)—(1,143)(37,380)(392)(37,771)—(37,771)

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

(8,306)—(8,306)$(46,628)$(591)$(47,220)$—(8,306)—$(47,220)$(56,853)$(591)$(57,445)$ 3,361$(54,084)

JSR Corporation
Annual Report
2020

52
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(32) Earnings per Share
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

1) Basic earnings per share¥140.62¥104.38$0.96

Continuing operations¥148.92¥103.22$0.95

Discontinued operations(¥8.30)

¥1.16

$0.01

(Basis of calculation)
Profit attributable to owners of parent¥31,116 million¥22,604 million$207,699 thousand

Continuing operations¥32,953 million¥22,352 million$205,385 thousand

Discontinued operations(¥1,837 million)¥252 million$2,314 thousand

221,276

216,545

216,545

2) Diluted earnings per share¥140.27¥104.19$0.96

Continuing operations¥148.55¥103.03$0.95

Discontinued operations(¥8.28)

¥1.16

$0.01

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

551

405

405

221,827

216,950

216,950(33) Share-based Remuneration
1) Stock Options

The fair value on the date the option was granted under the planis recognized as an expense over the option’s vesting period and thesame amount is recorded as an increase of equity. The plan was
terminated in June 2017 (however, share acquisition rights alreadygranted as share-based stock options to directors, etc. that have notbeen exercised will be continued).

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

SharesFiscal year ended March 31, 2019
Number of shares
Outstanding at the beginning
GrantedExercised

Weighted average
exercise priceYen

U.S. dollars

Fiscal year ended March 31, 2020
Number of shares

Weighted average
exercise price

Weighted average
exercise price615,300¥ 1

480,200

¥ 1

—

—

—

—

$0.01
—

(135,100)

1(119,200)1

0.01

Forfeited

—

—

—

—

—

Expired

—

—

—

—

—

Outstanding at the end

480,200

1

361,000

1

0.01

Exercisable at the end

267,7001

229,100

1

0.01

The weighted average share price as of the exercise date of stock
options exercised during the period was ¥1,784 and ¥1,697 ($15.59)
in the fiscal years ended March 31, 2019 and 2020, respectively.
In the fiscal years ended March 31, 2019 and 2020, the exercise
price of unexercised stock options was ¥1 each. The weighted
average remaining contract terms in the fiscal years ended March
31, 2019 and 2020 were 11.0 years and 10.5 years, respectively, for
the unexercised balance at the end of the fiscal year, and 12.3 years
and 10.0 years, respectively, for the exercisable balance at the endof the fiscal year.

2) Restricted Share-Based Remuneration Plan
The Group employs the restricted share-based remuneration plan inorder to further promote sharing of values with shareholders andestablish a remuneration structure that contributes to sustained
improvement in corporate value in the medium to long term. Under
this plan, to grant restricted shares to directors, excluding outside
directors, and executive officers (hereinafter “Eligible Directors,etc.”), the Company is to provide the Eligible Directors, etc. withclaims for monetary remuneration in principle in each period andhave them contribute these claims in kind as contributed properties
to the Company. Accordingly, the Company is to issue or dispose ofordinary shares of the Company to the Eligible Directors, etc. andmake them hold the shares.

JSR Corporation
Annual Report
2020

53
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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 other way shares
granted under the allotment agreement at will during a given periodof 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 the other
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 inprinciple.

Details of restricted shares granted during the period are as follows:
Fiscal year ended March 31, 2020
(from April 1, 2019 to March 31, 2020)
Number of restricted shares granted
Fair value on the grant date

171,100 shares¥1,706 per share ($15.68 per share)

Calculation method for fair value
measurement
Transfer Restriction Period

Calculated on the basis of closing price ofordinary shares of the Company at the Tokyo
Stock Exchange on the business day
proceeding the date when the Board of
Directors adopted a resolution.
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, ¥104 million in the fiscal year ended
March 31, 2019 and ¥245 million ($2,253 thousand) in the fiscal year
ended March 31, 2020.

(34) Financial Instruments
1) Capital Management Policy

The Group uses derivatives to avert risks described below, and as its
policy, does not perform any speculative transaction.

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 effectsof the risks. For fund management, approval of the Company’s
Board of Directors is received in principle at the beginning of eachperiod. Transactions and risk management during the period are
principally conducted based on internal management regulations.

(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 foreignexchange forward contracts as derivative transactions for tradereceivables 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. andreports monthly trading results to responsible directors.

Details of currency derivatives are as follows:
Derivative Transactions to which Hedge Accounting Is Not Applied
Millions of yen
As of March 31, 2019
Contracted
AmountLater than
one year

Purchase

¥ 911

Sell

6,543
¥7,454As of March 31, 2020
Fair value

Contracted
AmountLater than
one year

Fair value

¥—

¥ (3)

¥ 585

¥—

¥ 4

—

(34)

6,670

—

(49)

¥—

¥(37)

¥7,255¥—¥(44)

U.S. dollar
Forward exchange contracts

Total

JSR Corporation
Annual Report
2020

54
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars
As of March 31, 2020
Contracted
AmountLater than
one year

Fair value

Purchase$ 5,371

$—

$ 41

Sell

61,290—(447)$66,661$—$(406)

U.S. dollar
Forward exchange contracts

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

Thousands of U.S. dollars

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020

Japanese yen¥6,232¥4,613$42,385

Korean won

4,753

3,472

31,901Thai baht

4,008

3,831

35,206Functional Currency

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 each currency
moves inversely, this will have effects opposite to and at the same amount as the table below. The calculation is based on the assumption thatcurrencies other than the currency used do not fluctuate.
Millions of yen
Functional Currency

As of March 31,
2019

Thousands of U.S. dollars

As of March 31,
2020

As of March 31,
2020

Japanese yen (weak U.S. dollar)

¥(62)

¥(46)

$(424)

Korean won (weak U.S. dollar)

(48)

(35)

(319)

Thai baht (weak U.S. dollar)

(40)

(38)

(352)

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. Theseshares were acquired to expand businesses mutually and enhance
the transaction relationships, and the Group does not hold theshares for the purpose of short-term trading.
Equity instruments include listed shares and unlisted shares.
The Group periodically monitors market value, financial conditions of
the issuers (business partners), etc. and reviews the ownership inlight of the relationships with the business partners.

If the share price increases (decreases) by 5% with otherchanging factors remaining constant, other components of equity(net of related tax effects) will increase (decrease) by ¥1,001 million($9,195 thousand) for the fiscal year ended March 31, 2020 (fiscal
year ended March 31, 2019: ¥1,889 million) due to the change in fairvalue.
(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.

JSR Corporation
Annual Report
2020

55
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

the counterparty and multiplying the receivables amount by theallowance 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 is calculated bymultiplying the gross carrying amount by the allowance rateestablished as stated above, in accordance with the generalapproach.
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 is recognizedat 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 calculated by discounting
future estimated cash flows using the original effective interest rate
for the asset, and the gross carrying amount.
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 areconsiderated to be not exposed to credit risks.

(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 on transaction
partners from external organizations where necessary and analyzing
the report as well as past results of collection and other factors. If it
is considered that there is any change or abnormality in the credit
status as a result of the confirmation, measures for protection ofreceivables 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 high credit ratings inprinciple to mitigate credit risks.
The Group classifies receivables, etc. based on nature of thecredit risk to calculate loss allowance.
In terms of trade receivables that do not include significant
financial components, the loss allowance is always determined as
the same amount as lifetime expected credit loss (simplified
approach). The amount of expected credit loss is calculated byclassifying receivables, etc. according to nature of the credit risk ofMillions of yen
Gross carrying amount
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, 2019¥18,321¥0¥117,573¥2,884¥309

As of March 31, 2020

¥12,748¥0¥ 98,547¥3,879¥130

As of March 31, 2020

$117,136$0$35,640$1,193Thousands of U.S. dollars* Financial assets for which loss allowance is measured at the amount equivalent tolifetime 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$905,512

approach is applied also correspond to this) is relatively high compared to financial assets
for which loss allowance is measured at the amount equivalent to lifetime expectedcredit loss, and the credit rating of financial assets falling in the same category is basicallythe same.

Millions of yen
Loss Allowance
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 April 1, 2018

¥—

¥ 263

¥ 273

¥ 1

Increase

—

—

196

—

4

Decrease (Utilization)

—

—

(339)

—

(30)

Decrease (Reversal)

—

(17)

(137)

(0)

(54)

Other

—

(246)

624

—

(1)

As of March 31, 2019

¥—

¥

0

¥ 618

¥ 1

¥ 309

Increase

—

—

676

—

47

Decrease (Utilization)

—

—

(28)

—

(225)

Decrease (Reversal)

—

—

(545)

(1)

0

Other

—

—

68

—

(1)

As of March 31, 2020

¥—

0

¥ 789

¥ 0

¥ 130

¥

¥ 390

JSR Corporation
Annual Report
2020

56
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars
Loss Allowance
Trade and other receivables
Measured at
12-month expectedcredit losses

Measured at
lifetime expectedcredit losses

Other financial assets
Measured at
12-month expectedcredit losses

Measured bysimplified approach

Measured at
lifetime expectedcredit losses

As of March 31, 2019

$—

$ 0

$ 5,677$ 5

Increase

—

—

6,211

—

$ 2,840430

Decrease (Utilization)

—

—

(261)

—

(2,070)Decrease (Reversal)—

0(5,009)

(5)

(0)

Other

—

0

628

—

(7)

As of March 31, 2020

$—

$ 0

$ 7,246$ 0$ 1,193*There is no significant change in gross carrying amount that could affect a change in loss allowance.

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

Thousands of U.S. dollars

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020¥3,032¥3,140$28,852

Guarantee Obligation*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 a payment on the due date. Funds of the Group as a whole are in a position of net
cash where funds held exceed borrowings. The Group formulates a financial plan based on the annual business plan, and then manages
liquidity risks by ensuring an appropriate balance between direct and indirect financing and between short-term and long-term financing toprepare for these risks.
The balance of financial liabilities of the Group by maturity is as follows:
Millions of yen
Later than
5 years

Contractual
cash flows
Total

¥

—

¥118,053

10,18286,549As of March 31, 2019

Carrying
amountNot later than
one year

Trade and other receivables¥118,053¥118,053

84,29633,81812,91011,697

10,093

7,849

17

17

—

—

—

—

—

17

1,731

515

309

267

230

203

207

1,731

¥204,097¥152,403¥13,219¥11,964¥10,323¥8,052¥10,389¥206,350

Later than
5 years

Contractual
cash flows
Total

Borrowings
Derivative liabilities
Other
Total

1-2 years

2-3 years

3-4 years

¥

¥

¥

—

—

4-5 years—¥—

Millions of yen

As of March 31, 2020

Carrying
amountNot later than
one year

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

82,72630,21013,816

8,186

12,10919,527379

84,226

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

Borrowings
Derivative liabilities
Lease liabilities
Total

1-2 years

2-3 years

3-4 years

4-5 years

¥

¥

¥

¥

—

—

—

—

¥

JSR Corporation
Annual Report
2020

57
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars

As of March 31, 2020
Trade and other receivables
Borrowings
Derivative liabilities
Lease liabilities
Total

Carrying
amountNot later than
one year

1-2 years

2-3 years

3-4 years

4-5 years

Later than
5 years

Contractual
cash flows
Total$ 853,067$ 853,067

$

$

$

$

$

—

$ 853,067

760,143

277,588

126,948

75,218111,263

179,4313,479

773,927

1,017

408

—

—

—

—

608

1,017

172,435

31,46930,44318,054

16,756

14,78776,564

188,073$1,786,662$1,162,532$157,392$93,272$128,019$194,218$80,651$1,816,083

—

—

—

—

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

Thousands of U.S. dollars

As of March 31, 2019

As of March 31, 2020

As of March 31, 2020

Carrying Amount

Fair Value

Carrying Amount

Fair Value

Carrying Amount

Fair Value¥62,601¥61,868¥59,167¥58,412$543,664$536,724

Long-term loans 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 the table
above.

For fair value of long-term borrowings, the method where thefair value is calculated by discounting the total amount of principal
and interest using the interest rate assumed for a similar new loan
is used.
Borrowings are classified as Level 3 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, 2019

Level 1

Level 2

Level 3

Total

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

¥

—

¥—

¥ 4,570¥ 4,570

—

1

—

1

37,786—

12,64950,434

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

—

58

—

58

¥37,786¥60¥17,219¥55,064<Financial Liabilities>
Financial liabilities measured at fair value through profit or loss
Derivatives
Total

¥

—

17

—

¥17

—
¥

—

17
¥

17

JSR Corporation
Annual Report
2020

58
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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

Thousands of U.S. dollars
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)$—$ 32,915$ 32,915

—

24

—

24

183,896—

150,323

334,219

Derivatives—

Financial assets measured at fair value through other comprehensive income
Investments (equity financial assets)
Financial assets defined as hedging instruments
Derivatives
Total—$183,896

$

—

—

—

24

$183,238$367,158

408

—

408

<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

$

—

608

—

$1,017

—
$

—

608
$

1,017

(Note) Other 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. With regard to the obligations to purchase these interests, ¥460 million ($4,223 thousand) that is the present value ofthe purchase amount has been recognized as financial liabilities. These are classified as Level 3 in the fair value hierarchy.

JSR Corporation
Annual Report
2020

59
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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.
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, 2019(from April 1, 2018 toMarch 31, 2019)

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

Fiscal year ended
March 31, 2020
(from April 1, 2019 toMarch 31, 2020)$158,220¥14,631¥17,219

Total gains and losses

195

355

3,261

Profit or loss

(53)

(271)

(2,486)

Other comprehensive income (Note)
Purchase

248

625

5,746

3,430

4,171

38,325

Selling

—

(56)

(515)

Other

(1,037)(1,747)(16,052)¥17,219¥19,942$183,238

Balance at the end(Note) Gains and losses included in other comprehensive income relate to financial assets measured at fair value through other comprehensive income as at the reporting date. These gains
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 interest rate presented by financial institutions withwhich 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 are reviewed andapproved by a person with appropriate authority. For financial
instruments classified as Level 3, an increase or decrease in fairvalue if unobservable inputs are changed to reasonably 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, 2019

Notional principal ofhedging instruments

Carrying amount of hedging instruments
Asset

Liability

Item on the consolidated
statement of financial position

Cash flow hedges
Interest rate risk
Interest rate swap

¥7,869¥58¥—

17,471($157 million)—

17,471Other financial liabilities

Hedging instruments of net investment in foreign
operations
Exchange rate risk
Borrowings in U.S. dollars

Borrowings

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

Cash flow hedges
Interest rate risk
Interest rate swap

¥4,516¥—

11,862($109 million)

—

¥

66

Other financial liabilities

Hedging instruments of net investment in foreign
operations
Exchange rate risk
Borrowings in U.S. dollars

11,862

Borrowings

JSR Corporation
Annual Report
2020

60
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars
As of March 31, 2020

Notional principal ofhedging instruments

Carrying amount of hedging instruments
Asset

Liability

Item on the consolidated
statement of financial position

Cash flow hedges
Interest rate risk
Interest rate swap

$ 41,500

$—

$

608

Other financial liabilities

Hedging instruments of net investment in foreign
operations
Exchange rate risk
Borrowings in U.S. dollars

109,000

109,000

Borrowings

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, 2019
(April 1, 2018 to March 31, 2019)

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¥ (79)¥(49)

Financial costs

337

—

—

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$(1,143)$(200)

Financial costs

(620)

—

—

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, 2020
(April 1, 2019 to March 31, 2020)
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, 2020
(April 1, 2019 to March 31, 2020)
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 effectJSR Corporation
Annual Report
2020

61
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(35) Subsidiaries
The number of consolidated subsidiaries as of March 31, 2020 was
61 (61 as of March 31, 2019).
Changes in the consolidated subsidiaries in the current fiscal year
are as follows:
The number of companies consolidated by acquisition,
establishment, etc.: 3
The number of subsidiaries excluded by liquidation, sales, etc.: 3
The condensed financial information for consolidated subsidiaries forwhich the Group has recognized significant non-controlling interests
are as follows. The condensed financial information shows theamount before elimination of transactions within the Group.
Techno-UMG Co., Ltd.
(1) Proportion of non-controlling interests and the cumulative
amount of non-controlling interests

Thousands of
U.S. dollars

As of March 31,
2020

As of March 31,
2020

Current assets¥36,175$332,400

Non-current assets

23,200213,180

Total assets

59,376545,581

Current liabilities

15,277140,372

Non-current liabilities

772

7,095

Total current liabilities¥16,049$147,468

Total equity¥43,327$398,113¥59,376$545,581

Total liabilities and equity

2) Condensed Statements of Profit or Loss and Comprehensive
IncomeThousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

As of March 31,
2020

As of March 31,
2020

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Revenue¥78,657$722,756

Profit (loss)

4,240

38,961

Comprehensive income

4,134

37,98449%

49%¥19,232$176,712(2) Profit or loss allocated to non-controlling interests anddividends paid for non-controlling interests

Profit or loss allocated to
non-controlling interests

Millions of yen

Millions of yen

Proportion of share of non-controllinginterests
The cumulative amount of
non-controlling interests(3) The condensed financial information
1) Condensed Statement of Financial Position

3) Condensed Statement of Cash Flows
Millions of yen

Thousands of
U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Millions of yen

Thousands of
U.S. dollars

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

Cash flows from operating activities¥ 6,437$ 59,147

Cash flows from investing activities(2,540)(23,339)¥2,077$19,084

Cash flows from financing activities(3,569)(32,794)

12,919Net increase (decrease) in cash andcash equivalents

328

3,014

Cash and cash equivalents at the endof the period

3,981

36,580

Dividends paid for non-controllinginterests

1,406(36) Related Parties
1) Transactions with Joint Venture
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Millions of yen
Attribute
Joint venture

Name of the company
KRATON JSR
ELASTOMERS K. K.

Contents of transactions
Manufacturing consignment of elastomer products
Supply of raw material gas

Transaction amount

Balance at the end of
the current fiscal year

¥11,134¥6,150

5,558

3,013

(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.

JSR Corporation
Annual Report
2020

62
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

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, 2020 (April 1, 2019 to March 31, 2020)
Thousands of U.S. dollars
Attribute
Joint venture

Transaction amount

Balance at the end of
the current fiscal year

Manufacturing consignment of elastomer products$81,437$29,666

Supply of raw material gas

38,052

13,835

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, 2019
(April 1, 2018 toMarch 31, 2019)

Thousands of U.S. dollars

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

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

Basic compensation

¥276

¥361

$3,320Bonuses

103

134

1,234

Share-based remuneration

37

99

914

¥416

¥595

$5,467

Total(37) 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,
2019

As of March 31,
2020

As of March 31,
2020¥1,573¥5,152$47,340

JSR Corporation
Annual Report
2020

63
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS(38) Subsequent Events
Issuance of corporate bonds
JSR gained approval for issuance of corporate bonds at the Board of Directors meeting held on May 11, 2020 and issued unsecured bonds on
May 28, 2020.
The details are as below.
Name of the bonds

JSR Corporation
Unsecured Bonds (with special pari passu conditions among bonds) series 8

Total amount of bonds¥13,000 million

Denomination per bond¥100 million

Coupon rate

0.180%

Date of coupon payment

May 28 and November 28, every year

Issue price

100 yen per face value of 100 yen

Date of issuanceMay 28, 2020

Method and due date forthe redemption

1. Redemption amount
100 yen per face value of 100 yen
2. Redemption and maturity date(1) The principal of the bonds will be redeemed in a lump sum on May 28, 2025. (In the case of retirement
by purchase, the total amount of the bonds purchased will be deducted.)(2) If the redemption date is a bank holiday, it will be advanced to a previous business day.
(3) The issuer may repurchase the bonds after the payment date unless otherwise provided in the laws
and ordinances or regulations such as operating rules regarding to the service of the custody oftransfer agency stated in the separate paragraph.

Collateral

No collateral or guarantee is pledged, and no assets are specifically reserved to secure the bonds.

Use of proceeds

Capital investment, working capital and repayment of borrowings

Name of the bonds

JSR Corporation
Unsecured Bonds (with special pari passu conditions among bonds) series 9

Total amount of bonds¥10,000 million

Denomination per bond¥100 million

Coupon rate

0.290%

Date of coupon payment

May 28 and November 28, every year

Issue price

100 yen per face value of 100 yen

Date of issuanceMay 28, 2020

Method and due date forthe redemption

1. Redemption amount
100 yen per face value of 100 yen
2. Redemption and maturity date(1) The principal of the bonds will be redeemed in a lump sum on May 28, 2027. (In the case of retirement
by purchase, the total amount of the bonds purchased will be deducted.)(2) If the redemption date is a bank holiday, it will be advanced to a previous business day.
(3) The issuer may repurchase the bonds after the payment date unless otherwise provided in the laws
and ordinances or regulations such as operating rules regarding to the service of the custody oftransfer agency stated in the separate paragraph.

Collateral

No collateral or guarantee is pledged, and no assets are specifically reserved to secure the bonds.

Use of proceeds

Capital investment, working capital and repayment of borrowings

JSR Corporation
Annual Report
2020

64
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS

Name of the bonds

JSR Corporation
Unsecured Bonds (with special pari passu conditions among bonds) series 10

Total amount of bonds¥12,000 million

Denomination per bond¥100 million

Coupon rate

0.370%

Date of coupon payment

May 28 and November 28, every year

Issue price

100 yen per face value of 100 yen

Date of issuanceMay 28, 2020

Method and due date forthe redemption

1. Redemption amount
100 yen per face value of 100 yen
2. Redemption and maturity date(1) The principal of the bonds will be redeemed in a lump sum on May 28, 2030. (In the case of retirement
by purchase, the total amount of the bonds purchased will be deducted.)(2) If the redemption date is a bank holiday, it will be advanced to a previous business day.
(3) The issuer may repurchase the bonds after the payment date unless otherwise provided in the laws
and ordinances or regulations such as operating rules regarding to the service of the custody oftransfer agency stated in the separate paragraph.

Collateral

No collateral or guarantee is pledged, and no assets are specifically reserved to secure the bonds.

Use of proceeds

Capital investment, working capital and repayment of borrowings

JSR Corporation
Annual Report
2020

65

INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of JSR Corporation:
OpinionWe have audited the accompanying consolidated financial statements of JSR Corporation and its consolidated subsidiaries (collectively
referred to as “the Group”), which comprise the consolidated statement of financial position as at March 31, 2020, and 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 positionof the Group as at March 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended inaccordance 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 inJapan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
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 forsuch internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free frommaterial 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 of accounting
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 including thedesign, 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 from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detecta material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, 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 andperform 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 the circumstances,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 bymanagement.

JSR Corporation
Annual Report
2020

66
INDEPENDENT AUDITOR’S REPORT• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue asa going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease tocontinue 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 Group to
express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with corporate auditors and the board of corporate auditors regarding, among other matters, the planned scope and timingof 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 bearon our independence, and where applicable, related safeguards.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2020 are presented
solely for convenience. Our audit also included the translation of 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

Koichi Kohori
Designated Engagement Partner
Certified Public Accountant

Yukihiro Kase
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Tokyo Office, Japan
July 8, 2020

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 JSR Corporation and KPMG AZSA LLC.