1

Update on JSR20i6 in April 2015

April 23, 2015Representative Director and President

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Table of contents

I. Progress on JSR20i6II. Growth scenario for achieving JSR20i6

i. Petrochemicals businessii. Semiconductor materials businessiii. Display materials businessiv. Strategic business

III. Capital allocation policyIV. Summary

I. Progress on JSR20i6

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4

Post JSR20i6 Phase ⅢJSR20i6 Phase Ⅱ[Jump onto the growth track]

Implement priority measures under JSR20i3 to achieve results—steady earnings growth.

Our growth driver is the core business (S-SBR, cutting-edge lithograph materials, etc.).

[Toward sustainable growth]Develop the Strategic business as a

third pillar of JSR’s business that contributes to earnings with the aim of transforming JSR into a company that can grow stably and continually.

JSR20i3 PhaseⅠ[Activation toward growth]Intensively invest in main

businesses and products that drive sustainable growth; Establish the business infrastructure; and Build up the competitiveness of the core

business.

Ⅰ

Progress on JSR20i6: Three modifications

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Progress on key milestones

Petrochemicals business

Fine Chemicals business

Strategic business

• Began full-scale operation of the 1st phase JBE’s plant, but will begin full-scale sales in FY March 2016.

• Will establish the 2nd phase JBE’s plant in FY March 2017 or later.

<Semiconductor materials>• Maintained a dominant share in products below 20

nm generation in 2014 and will focus on keeping the share at the current level.

<FPD materials>• Decided to construct an LCD materials

manufacturing plant in China, a growing market in the future.

<Life Sciences business>• Invested in MBL*2 and KBI*3 in the US to expand our

business domain, successfully increasing sales to the 20 billion yen level. Will also form an alliance with Keio University to expand the business in the future.

< LIC business>• Began commercial production at a mass production plant

with a capacity of 3 million cells. Will try to persuade potential customers to adopt our LIC.

Initial Targets Progress & KSF*1

• Begin full-scale operation of the 1st phase plant in Thailand (JSR BST Elastomer, “JBE”) and full-scale sales.

• Establish the 2nd phase JBE’s plant.

<Semiconductor materials>

• Maintain a dominant share in products below 20 nm generation.

<FPD materials>

• Further accelerate the shift to Asia.

<Life Sciences business>

• Establish bases in Europe and North America and boost sales to the 20 billion yen level.

<LIC business>

• Begin commercial production at a mass production plant with a capacity of 3 million cells.

*1 KSF: Key Success Factor *2 MBL: MEDICAL & BIOLOGICAL LABORATORIES CO., LTD. *3 KBI: KBI Biopharma Inc.

Ⅰ

380 410

5%

7%

9%

11%

13%

15%

17%

19%

0

100

200

300

400

500

600

2011 2012 2013 2014 2015 2016

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ه We keep the target for FY March 2017 intact (net sales of 500 billion yen, operating income of 50 billion yen, ROIC at 15%, and ROE at 12%).

ه In FY March 2015, business results were in line with the original budget, since negative factors in the second half wiped out positive factors in the first half.

ROIC：15%

ROE：12%

JSR20i3 JSR20i6

* ROIC: Net profit ÷ (Working capital + Non-current assets)

Unit: 100 million yen

Ⅰ

Progress towards earnings target

II. Growth scenario for achieving JSR20i6

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8

ه The spread between butadiene (BD) and naphtha prices narrowed sharply in the 4th quarter of FY March 2015.ه Raw material prices continued to decrease in FY March 2016. The spread between butadiene (BD) and naphtha prices

may narrow further, reaching the lowest possible level in the first half of FY March 2016.

* Source: JSR prepared the chart based on statistics of Platts and JSR, etc. *BD: Butadiene

Change in BD and naphtha prices

Ⅱ-ⅰ

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Spread(BD ‐Naphtha)

BD price

Naphtha

Unit：$/ton

Petrochemicals business: Change in raw material prices

Japan Japan Japan Japan Japan Japan

GermanyGermany Germany Thailand Thailand

Thailand

0

50

100

150

200

2011 2012 2013 2014 2015 2016

Capacity：Thailand

Capacity：Germany

Capacity：Japan

Original sales volume KTons(FY)

Actual sales volume KTons(FY)

ه The sales volume of S-SBR did not reach the original target in FY March 2015 due to a delay in approval by customers in Thailand and the shuffling of the product’s grades. In addition, the launch of the 2nd phase JBE’s plant is delayed until 2017.

ه We will launch the 4th generation S-SBR, a differentiated product, at an early stage.

9

JSR’s S-SBR production capacity and sales results and estimateUnit: 1,000 tons

Original estimate

Updated estimate

Ⅱ-ⅰ

Petrochemicals business: Progress of S-SBR

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ه We aim to capture the top share in the global S-SBR market by implementing the following measures.

RR

/Wet G

rip Performance , P

rice

High

Low

JSR’s target

markets

Markets where

competitors have

already entered

High End Market

Middle High Market

Middle-RangeMarket

Low End Market

<Economies of scale>Plan to construct the 2nd phase JBE’s plant in Thailand and a plant in Hungary.Strengthen production capacity to meet expanding demand.

Will launch the 4th generation S-SBR, a product employing differentiated technology, in the high-end market ahead of competitors.Launch a product employing JSR’s original technology in the middle market, a large market.

Both JBE in Thailand and the future base in Hungary are joint venture firms with BD manufacturers.Establish a production system that enables JSR to stably procure BD at competitive prices, because the supply of BD is expected to fall short of demand in the future.

<Cost competitiveness>

<Technical advantage>

Ⅱ-ⅰ Petrochemicals business: Business strategy of S-SBR

0

50

100

150

200

2011 2012 2013 2014 2015 2016 2017 2018 11

Petrochemicals business: Establish a system to meet requirements in the future

ه We use this opportunity (the doldrums of the market) to upgrade facilities that we constructed around 40 years ago (cope with new grades, replace facilities, take earthquake countermeasures, and secure labor safety) and expand our organization.⇒ We forecast that operating income will temporarily remain sluggish due to a rise in fixed costs during the JSR

20i6 period including FY March 2016.⇒ We establish a system that enables JSR to operate its plants stably and safely over 20 to 30 years.

Establish more resilient and sustainable system

Unit: 100 million

yen

Ⅱ-ⅰ

0

100

200

300

400

500

0%

20%

40%

60%

80%

100%

120%

140%

2010 2011 2012 2013 2014 2015 2016 2017 2018

Right: Memory Right: Logic(Leading‐edge)Right: ASIC&ASSP Right: othersLeft: Global wafer(200～300mm)  Left: Global KrF&ArF photoresists 12

Semiconductor materials business: Market trendsه The semiconductor market will continue to grow, supported by the growth in demand related to trends, such

as Big Data and Internet of Things (IoT).ه In association with the spread of finer circuit patterns, the lithography market is expected to continue to

grow faster than the wafer market in the future.Unit: $BMKrF&ArF growth rate

CAGR+6.9％*2010 to 2014

Wafer Input growth rate

CAGR+3.8％*2010 to 2014

Semiconductor marketgrowth rate

CAGR+3.5％*2010 to 2018

* Source: JSR prepared the chart based on statistics of SEMI and Gartner, etc.

Ⅱ-ⅱ

0

100

200

300

400

500

2011 2012 2013 2014 2015 2016

Multi‐layer and other

TCX

ArF photoresist

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Semiconductor materials business: Forecast on the growth of lithography materials

ه In FY March 2015, JSR’s shipments grew sharply, exceeding the market growth rate. We will shift our focus to the development of 10 nm products and next generation products (finer circuit patterns and defect control).

JSR20i3 JSR20i6

Changes in net sales of cutting-edge lithography materials2014 to 2016CAGR (Forecast)Around 9.1%

Unit: 100 million yen

2011 to 2013 CAGR (Actual)Around 4.4%

Ⅱ-ⅱ

14

Semiconductor materials business: Strategy to Consolidate R&D and Manufacturing Base of Semiconductor materials business in Japan

ETEC（Wholly-owned subsidiary）

Internal manufacturing of basic polymer

X

Y

ه Concentrate R&D and manufacturing at the Yokkaichi Plant to speed up cutting-edge product development and strengthening cost efficiency.

Raw material suppliers

JSR(Yokkaichi) Device manufacturesin each country

Alliance

Alliance

Fine Electric MaterialsResearch Laboratories

Manufacturing plant

Cooperation among 3 parties (raw material suppliers, R&D

and manufacturing) is essential to seek high product

performance and quality.

Ⅱ-ⅱ

Alliance

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Semiconductor materials business: Efforts to cope with EUV generation products

ه We will use our global network to develop and commercialize materials for EUV resists with new reaction mechanism.

Chemical amplification resist14nmhp@45mJcm-2

Exposure: NXE3300

Non-chemical amplification resist26nmhp@4.7mJcm-2

Exposure: bMET

Fundamental analysis

Outgas management

New raw materials

Mechanism development

Ⅱ-ⅱ

0

50

100

150

200

250

2013 2014 2016 2020

中国 台湾

韓国 日本

60%

110%

160%

210%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Display materials business: Market trendsه Key points: (1) Shift to TVs with high-definition and larger screens, (2) China as the future

growth driver, (3) Accelerated shift to high-definition panels for mobile equipment<(1) Growth rate of shipments of LCD

panels for TVs and panel areas> Panel area growth rate

CAGR7.2％* Forecast for 2011 to 2020

Unit growth rate

CAGR3.0％* Forecast for 2011 to 2020

<(2) Panel area demand by region (Million m2/year)>

0

100

200

300

400

2013 2014 2016 2020

4K2K Non‐4K2K

<(3) LCD-TV panel shipments (million units/year)>

*Source: DisplaySearch

Ⅱ-ⅲ

※2011=100%

China

South Korea

TaiwanJapan

0

200

400

600

800

1000

2011 2012 2013 2014 2015 2016

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Display materials business: Future outlookه The FPD materials business is expected to continue to contribute to stable earnings growth,

supported by sound market growth in association with a shift to TVs with high-definition and larger screens.

JSR20i3 JSR20i6

Changes in net sales of FPD materials

2014 to 2016Net sales CAGRAround 4.6%

2011 to 2013Net sales CAGRAround 6.4%

2014 to 2016TV panel area CAGR

Around 6.4%

Unit: 100 million yen

*Source: DisplaySearch

2011 to 2013TV panel area CAGR

Around 15.1%

Ⅱ-ⅲ

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Display materials business: Future business development

Market trend

UHD TV(4K)Materials for the next-generation

TVs, such as 4K2K, CURVED

High definition panels for mobile equipment

Materials for high definition panels for mobile equipment

Improvement of productivity for panel production

Reduction of costs for panel production

Material technology trendFive main LCD materials

Main material technology

Use of synergy

Cope with the next

generation and high functional

materials

ه We will surely keep catching up with the market and material technology trends centering on five main LCD materials in which JSR has an advantage.

High-flatness protective coatings and Di-electric films

High color reproducibility resistsPhoto-alignment films

High resolution spacerLow-K (Interlayer

Di-electric materials)

OLED color pigment resists, OLED Di-electric films

OLED bank materials, desiccant

Display with high flexibility

New FPD materials

Ⅱ-ⅲ

・JMW

・JSR・JMK

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Display materials business: Accelerated shift to Asia

ه We decided to build an LCD materials manufacturing plant in China. We will further strengthen the system to develop JSR’s technology at Asian cost levels.

JSR’s LCD materials production bases

Expansion to China (JMCH)

*JMK：JSR Micro Korea Co., Ltd *JMW：JSR Micro Taiwan Co., Ltd*JMCH：JSR Micro（Changshu）Co., Ltd.

Establishment of a joint venture company to manufacture LCD materials in China

• Company name: JSR Micro (Changshu) Co., Ltd. (JMCH)

• Partner: Chang Chun Petrochemical Co., Ltd. (Taiwan)• Investment ratio: JSR 51%• Total investment: around 4.0 billion yen

Future strategy for LCD materials business

(1) Strengthen the system of the Chinese business→ Increase commitment to China, a main market in the

future.

(2) Upgrade YP platform technology→ Concentrate resources in the Yokkaichi Plant to

develop elementary precision-processing technologies.

Ⅱ-ⅲ

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Life Sciences business: Business trendه We have developed business centering on bio-pharmaceutical and advanced diagnosis fields, considering

the medical trend.

Medical trend

Personali-zed

medical treatment

Tailor-made pharmaceuticals

(Bio-pharmaceutical)

Shift from treatment

to prevention

Companion diagnosisGene diagnosis

Minor side effects

High efficacyBio-pharmaceutical

field

Advanced diagnosis field

Early diagnosis of diseases

Monitoring and banking biological information

Business fields developed by JSR Medical needs

Phar

mac

eutic

al

com

pani

es

Hos

pita

ls, d

octo

rs,

and

exam

inat

ion

cent

ers

Ⅱ-ⅳ

Dia

gnos

is

Bioprocess (antibody medicine)

Seeds Functional materials

Product development

Permission and application Sales channels Needs

General use

Bio-chemistry diagnosis,

Infectious disease diagnosis etc.

AdvancedGene diagnosis,

POCT, etc.

Reagent research

Venture funds

Manufacture and sale of diagnostic agent intermediates (Beijing, China)

• Sales channels for diagnostic and research reagents• Acquisition of permissions and manufacturing (GMP)

infrastructure• Antibody library and techniques for producing antibodies

Universities(research and clinical tests)

Keio University

Filmy filter

Continuous chromatographic

processes

Purifying materials/Device development

Application of antibody technology

Process development/Undertaking production

CMIC JSR Biologics Co., Ltd.

Pharma-ceutical

companies

DoctorsHospitals

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Life Sciences business: Future business development

We have actively secured channels that connect JSR’s functional materials and final users (hospitals, doctors, and pharmaceutical companies) through M&A and the establishment of a joint research system. We have established business infrastructure.

Secure technological seeds and necessary functions through M&A,

investment, and alliance.

Ⅱ-ⅳ

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Life Sciences business: Future outlookه We will accelerate the development of JSR Group’s Life Sciences business by making the most of

its business infrastructure. We will continue to actively use non-organic growth, such as M&A.

0

200

400

600

2010 2011 2012 2013 2014 2015 2016 2020

(Net sales mentioned above include those of equity-method companies.)

Life Sciences business JSR Group’s sales planUnit: 100 million yen

Increase net sales to 20.0 billion yen or more, bringing the Life Sciences business to the next stage.

Development from particles to diagnostic

reagents

Expand the Life Sciences business as JSR’s core business.

ＨＯＰ

ＳＴＥＰＪＵＭＰ

Ⅱ-ⅳ

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LIC Business: State of progressه JME: The number of companies that have adopted LIC exceeds 10. We will strive to obtain

small customers using a newly completed plant to mass manufacture LIC.

Automatic GuidedVehicles(AGV)

Instantaneous voltage drop

compensating deviceKonica Minolta PortableX-ray imaging device

Optare/ BLUWAYS Buses

Prismatic-type cells Laminated cells

ULTIMO ®

Sumitomo Construction MachineryExcavators

New mass production plant with a capacity

of 3 million cells （Hokuto City, Yamanashi Prefecture）

＜Examples of adopting LIC>

2014: Completion2015: Commencement of commercial production

III. Capital allocation policy

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Capital allocation policy: Changes in cash flow from operating activities

ه We have generated stable cash flow from operating activities over a long period, despite changes in net income.

Changes in cash flow from operating activities (net income + depreciation)

0

100

200

300

400

500

600

70020

04

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Net income Depreciation

Unit: 100 million yen

Ⅲ

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Shift in Capital allocation policyDuring JSR20i6ه We decided to continue the preferential allocation of resources to investments for growth (100.0 billion yen

over three years), but reviewed the policy for the return to shareholders to further improve ROE after considering the current economic environment and JSR’s financial situation. Increase the ratio of return to shareholders to 50% or higher from the current level (30% to 50%).

Investment for growthAround 100.0 billion yen

Return to shareholders50 to 100%

Organic investment Nonorganic investment Dividends Share buyback

JSR20i6Cumulated cash flow

160.0 billion yen

(Forecast)

JSR’s capital allocation (image)Cash on

hand

Ⅲ

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Capital allocation policy: Investment for growth

ه We plan to invest around 100.0 billion yen in total over three years during JSR20i6.

0 500 1,000

JSR20i6

FY March2015 Forecast

(rough estimate)

Petrochemicals businessFine Chemicals businessStrategic business and other

Unit: 100 million yen

ه FY March 2015: ه 1st phase of JBE’s plant

construction ه Construction of a mass production

plant by JM Energyه FY March 2016:

ه 2nd phase of JBE’s plant construction

ه FY March 2017:ه Construction of a plant in Hungary

* Reference: Progress on capital expenditure

◆ Main investment projects

◆ Main capital investment projects:ه FY March 2015:

ه Capital investment to MBLه Capital investment to KBI Biopharma

Inc.

Ⅲ

34.0%

36.0%

117.8%

46.5%

46.7%

29.2%

46.7% 52.3%

64.6%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

0

50

100

150

200

250

'07/3 '08/3 '09/3 '10/3 '11/3 '12/3 '13/3 '14/3 '15/3

The ratio of total amounts returned to

shareholders to profit

Am

ount

s re

turn

ed to

sha

reho

lder

s (1

00 m

illio

n ye

n)

Share buyback

Dividends

The ratio of total amounts returned toshareholders to profit

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Capital allocation policy : Return to shareholdersه We have been implementing the return to shareholders stably and flexibly.ه We will maintain the ratio of total amounts returned to shareholders to profit at a level of 50% or higher

through dividend payment and share buyback.

Changes in amounts returned to shareholders and the ratio of total amounts returned to shareholders to profit

Ⅲ

Annual dividendper share (yen)

24 32 32 26 32 32 34 38 40

Dividend payoutratio

18.0% 21.7% 56.8% 46.5% 28.3% 29.2% 27.0% 35.8% 31.2%

Total payoutratio

34.0% 36.0% 117.8% 46.5% 46.7% 29.2% 46.7% 52.3% 64.6%

We have modified our policy in the following three points, considering the change in the business environment and progress against the budget in each business over one year.

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Summary: Year One Progress Review on JSR20i6

In FY March 2015, business results slightly exceeded the original budget due to better-than-expected results in the Fine Chemicals business, despite sluggish results in the Petrochemicals business.

Earnings guidance for FY March 2016 is likely to be below expectations. This is mainly due to a sluggish market in the Petrochemicals business and the structural reform JSR implemented. The Fine Chemicals business generated better-than-expected results and the Life Sciences business may increase earnings further.We will strive to achieve the target under JSR20i6 and aim to take giant steps forward under Post JSR20i6.

Ⅳ

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* "FY ended March 31 "JSR's accounting period (fiscal year) is defined as the period from April 1 to March 31 of the following year. When noted "FY March 2015", this indicates the period from April 1, 2014 to March 31, 2015“

* The forecasts, future plans and strategies made in this document contain a variety of uncertain factors, since it has been prepared based on judgments from currently available information. Actual business results may differ from those projected, depending on factors such as the economic status of the market 

surrounding the company.