On July 29, 2020 JSR Corporation reported that (Press release, JSR, July 29, 2020, View Source [SID1234575066])

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1. Consolidated financial results for the first three months of the fiscal year ending March 31, 2020 (from April 1, 2019 to June 30, 2019)
(1) Consolidated operating results (Cumulative)
(2) Consolidated financial position

2. Cash dividends

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2020 (from April 1, 2019 to March 31, 2020) 1. Qualitative Information on Quarterly Results (1) Explanation of Business Results Overview of the First Quarter of FY ending March 2020 (April 1, 2019 to June 30, 2019) JSR Group’s main customer industries have continued to face tough conditions since the second half of the previous fiscal year, given the U.S.-China trade conflict, the confusion surrounding the negotiations of the U.K.’s exit from the EU, and other factors. Under these circumstances, JSR Group has focused in the Elastomers Business on expanding global sales of products with advantages in technological competitiveness. In the Plastics Business, Techno-UMG Co. Ltd. — in its second year since its merger — has aimed to realize synergy benefits through business consolidations and continued with integration of sales, development, and manufacturing. In the Digital Solutions Business, the Group has promoted expanded sales of semiconductor materials applicable to cutting-edge technologies as well as greater sales of display materials in the Chinese market where strong growth is expected. In the Life Sciences Business, the Group has concentrated on enhancing consolidation of the structures undertaking end-to-end biomedical drug discovery, production process development, and contract manufacturing obtained through active business acquisitions, in addition to greater sales of highly functional materials, a company strength.

In the First Quarter of FY ending March 2020, the Company reported revenue of 119,501 million yen (down 2.3% year-on-year), operating profit of 10,035 million yen (down 12.6% year-on-year), and profit attributable to owners of parent of 7,291 million yen (down 18.4% year-on-year).

(i) Elastomers Business Segment Overall sales volume in the Elastomers Business segment decreased from the same period of the previous year and revenue was also down, despite satisfactory growth in SSBR sales volume. Operating profit dropped considerably, impacted by a contraction in price spreads due to lower sales prices caused primarily by lower raw material prices. Consequently, the Elastomers Business segment posted an operating profit of 294 million yen (down 88.0% year-on-year) on revenue of 45,792 million yen (down 7.8% year-on-year) in the first three months of FY ending March 2020.

(ii) Plastics Business Segment Sales volume, especially sales to overseas destinations, in the Plastics Business segment slipped from the same period of the previous year and revenue also fell. Despite better price spreads supported by improved sales prices on higher raw material prices, operating profit declined due to the significant impact of the sales volume slump. Consequently, the Plastics Business segment posted an operating profit of 1,970 million yen (down 9.3% year-on-year) on revenue of 24,822 million yen (down 6.0% year-on-year) in the first three months of FY ending March 2020.

(iii) Digital Solutions Business Segment Revenue improved in the Digital Solutions Business segment from the same period of the previous year, on the back of sales volume growth in edge computing materials and a good showing by semiconductor and display materials in spite of tough conditions in customer markets. Operating profit also rose slightly, driven by revenue growth. Consequently, the Digital Solutions Business segment posted an operating profit of 8,333 million yen (up 1.6% year-on-year) on revenue of 36,038 million yen (up 1.8% year-on-year) in the first three months of FY ending March 2020.

(iv) Life Sciences Business Segment The Life Sciences Business segment saw a sizable jump in revenue from the same period of the previous year, supported by expanded sales in biomedical drug discovery, production process development, and contract manufacturing as well as in diagnostic reagents. The segment’s operating profit increased due to a rise in profits concurrent with expanded revenue. Consequently, the Life Sciences Business segment posted an operating profit of 1,145 million yen (up 211.3% year-on-year) on revenue of 12,308 million yen (up 37.2% year-on-year) in the first three months of FY ending March 2020. (2) Explanation of Future Forecast Information, such as Forecast of Consolidated Business Results There are no changes in the forecast of consolidated business results for the first six-month period and the full term of FY ending March 2020, as announced in the "Consolidated Business Results for FY ended March 2019" on April 24, 2019(5) Notes on Condensed Quarterly Consolidated Financial Statements (Cautionary Notes regarding Assumptions of Going Concern) Not applicable (Significant Accounting Policies) The significant accounting policies that apply to the Group’s condensed quarterly consolidated financial statements are identical to the accounting policies applied to the consolidated financial statements pertaining to FY ended March 2019, apart from the matters stated below. Income tax expenses in the first three months of FY ending March 2020 have been calculated on the basis of the estimated annual effective tax rate.

The Group has applied the following standard from the First Quarter of FY ending March 2020. IFRS Summary of New / Revised Standard IFRS 16 — Leases Revision accounting related to lease contracts (Changes in Accounting Policy) The Group has applied IFRS 16 — Leases ("IFRS 16") from the First Quarter of FY ending March 2020. For the adoption of IFRS 16, the Group has employed a method recognizing the cumulative effect of the standard’s application, deemed to be a transitional measure, as the balance of retained earnings at the beginning of the current period 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 the contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group elects not to recognize right-of-use assets and lease liabilities for short-term leases 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 contain, a lease. The lease liability of a lease transaction is measured 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 the commencement date, plus any costs to restore the underlying asset or the site on which it is located and other related costs required in the lease contract. The right-of-use asset is periodically depreciated over the term of the lease. Lease payments are allocated to finance costs 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-ofuse asset on the Condensed Quarterly Consolidated Statement of Profit or Loss.

Whether a contract is a lease or whether a contract contains a lease is determined based on the substance of the contract, even when the contract is not legally a lease-type contract. The lease payments associated with leases with a term concluding within 12 months and leases for which the underlying asset is of low value are recognized as an expense on a straight-line basis over the lease term. As a result of the transition to IFRS 16, right-of-use assets of 13,810 million yen have been incrementally recognized in Property, plant and equipment and lease liabilities of 13,678 million yen have been incrementally recognized in Other financial liabilities under current liabilities and non-current liabilities on the current Condensed Quarterly Consolidated Statement of Financial Position at the date of initial application. The weighted average incremental borrowing rate applied to lease liabilities recognized at the date of initial application of IFRS 16 was 3.0%. (Segment Information)

(1) Outline of Reportable Segments JSR Group reportable segments are components of the Group for which separate financial information is available. The Board of Directors determines the basis of business segments 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 and overseas strategies for its products and conducts business activities according to the strategies. Core Group companies take the initiative in working out comprehensive domestic and overseas strategies and conduct business activities according to the strategies. Thus, the JSR Group’s businesses consist of business segments by product based on divisions and core Group companies. JSR Group has four reportable segments: Elastomers Business, which consists mainly of the manufacture and sale of general-purpose synthetic rubber products for automobile tires, functional special synthetic rubber for automobile components, thermoplastic elastomers for modifying plastics, and synthetic rubber latex for coated paper; Plastics Business, which engages mainly in the manufacture and sale of ABS and other resins for automobiles, office equipment, and amusement applications; Digital Solutions Business, which conducts mainly the manufacture and 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, the nature of production processes, and similarity in markets and other economic characteristics. The accounting methods for reportable segments are the same as the methods adopted for preparation of consolidated financial statements.