HOYA Corporation and its subsidiaries
Consolidated Financial Statements under IFRSs
and Independent Auditor's Report
For the year ended 31 March 2014

HOYA Corporation

Contents

Independent Auditor’s Report.....................................................................................................................................

3

Consolidated Statement of Financial Position.............................................................................................................

4

Consolidated Statement of Comprehensive Income....................................................................................................

6

Consolidated Statement of Changes in Equity............................................................................................................

8

Consolidated Statement of Cash Flows (including discontinued operations).............................................................

13

Notes to the Consolidated Financial Statements.........................................................................................................

15

1． General information.....................................................................................................................................

15

2． Basis of consolidated financial statements..................................................................................................

15

3． Significant accounting policies....................................................................................................................

24

4． Critical accounting judgements and key sources of estimation uncertainty................................................

40

5． Operating segment information...................................................................................................................

41

6． Property, plant and equipment.....................................................................................................................

46

7． Goodwill and intangible assets....................................................................................................................

50

8． Impairment losses........................................................................................................................................

53

9． Investments in associates.............................................................................................................................

57

10． Deferred taxes and Income taxes.................................................................................................................

58

11． Other financial assets and liabilities.............................................................................................................

63

12． Other assets and liabilities...........................................................................................................................

64

13． Inventories...................................................................................................................................................

66

14． Trade and other receivables.........................................................................................................................

66

15． Cash and cash equivalents...........................................................................................................................

67

16． Interest-bearing debt....................................................................................................................................

68

17． Finance lease obligations.............................................................................................................................

69

18． Operating lease arrangements......................................................................................................................

70

19． Retirement benefit plans...............................................................................................................................

71

20． Provisions.....................................................................................................................................................

75

21． Trade and other payables.............................................................................................................................

76

22． Share capital and other equity items............................................................................................................

77

23． Financial instruments...................................................................................................................................

80

24． Share-based payments..................................................................................................................................

95

25． Revenue and expenses (excluding finance income and costs).....................................................................

98

26． Finance income and costs............................................................................................................................

100

27． Other comprehensive income......................................................................................................................

101

28． Earnings per share.......................................................................................................................................

103

29． Non-cash transactions..................................................................................................................................

104

30． Subsidiaries..................................................................................................................................................

105

31． Related party disclosures.............................................................................................................................

111

32． Business combinations.................................................................................................................................

112

33． Contingent liabilities....................................................................................................................................

116

34． Commitments for expenditure.....................................................................................................................

116

35． Subsequent events........................................................................................................................................

116

36． Approval of financial statements.................................................................................................................

116

-3-

Consolidated Statement of Financial Position
HOYA Corporation and its subsidiaries
As at 31 March 2014

(Thousands of U.S.

(Millions of Yen)

(Millions of Yen)

Notes

As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

6,8,34

140,747

129,513

1,258,381

Dollars (Note 2))

ASSETSNON-CURRENT ASSETS:
Property, plant and equipment—net
Goodwill

7,8,32(6)8,367

10,961

106,502

Intangible assets

7,8,32(5),34

19,18923,947

232,680

9

534

140

1,358

Investments in associates
Long-term financial assets

11,23

9,150

9,062

88,050

Other non-current assets

8,12,19

2,467

2,527

24,551

Deferred tax assets

10

15,473

13,421

130,402

195,927

189,571

1,841,924

13

66,72062,647

608,696

Trade and other receivables

14,23

88,824

95,529928,187

Other short-term financial assets

11,23

9,210

10,492

101,939

722

982

9,537

Other current assets

12

7,786

13,970135,732

Cash and cash equivalents

15,23

248,896

331,094

3,217,000

Total current assets

422,157

514,7125,001,091

Total assets

618,084

704,283

6,843,015

Total non-current assets
CURRENT ASSETS:
Inventories

Income tax receivables-4-Notes(Millions of Yen)

(Millions of Yen)

As at 31 March 2013

As at 31 March 2014

(Thousands of U.S.
Dollars (Note 2))
As at 31 March 2014

EQUITY AND LIABILITIESEQUITY
Share capital

22(1)

6,264

6,264

60,865

Capital reserves22(1)15,89915,899154,476

Treasury shares22(2)(10,712)(8,890)(86,378)

Other capital reserves22(2),24(2,313)(2,839)(27,587)

Retained earnings

22(3),35

485,836516,243

5,015,962

Accumulated other comprehensive income/(loss)(24,241)

9,850

95,705Equity attributable to owners of the Company

470,733

536,526

5,213,043

(187)

6,121

59,476

470,547

542,648

5,272,519

Non-controlling interests

22(4)Total equity
LIABILITIESNON-CURRENT LIABILITIES:Interest-bearing long-term debt

16,17,23

60,83735,829348,127

Other long-term financial liabilities

11,23

149

－

－

Retirement benefits liabilities

19

1,457

1,675

16,275

Provisions

20

1,975

2,155

20,942

12

2,224

2,188

21,256

10,32(5)

2,160

2,911

28,28668,80244,758434,886

Other non-current liabilities
Deferred tax liabilities
Total non-current liabilities
CURRENT LIABILITIES:Interest-bearing short-term debt

16,17,23

1,891

27,450266,714

Trade and other payables

21,23

40,41540,291

391,476

Other short-term financial liabilities

11,23

Income tax payables

385

152

1,474

5,680

13,369129,900

Provisions

20

800

955

9,283

Other current liabilities

12

29,564

34,660336,762

Total current liabilities

78,735

116,877

1,135,610

Total liabilities

147,537

161,635

1,570,496

Total equity and liabilities

618,084

704,283

6,843,015-5-

Consolidated Statement of Comprehensive Income
HOYA Corporation and its subsidiaries
For the year ended 31 March 2014

Notes

(Thousands of U.S.

(Millions of Yen)

(Millions of Yen)

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Dollars (Note 2))

Continuing operations
Revenue:
Sales

25

Finance income

26

965

1,849

17,965

Other income

25

39,8885,453

52,984413,347434,877

4,225,387

Total Revenue

372,494

427,575

4,154,438

Expense:Changes in inventories of goods, products and work in progress

7,379

7,038

68,387

Raw materials and consumables used

70,634

84,135

817,479

Employee benefits expense

19,24,25

94,168102,759

998,437

Depreciation and amortisation

6,7,2530,87233,891

329,293

4,707

4,737

46,030Subcontracting cost
Advertising and promotion expense

10,31011,769114,354

Commission expense

25

21,357

20,460198,794

Impairment losses

8

1,119

4,770

46,347

Finance costs

26

2,143

1,309

12,720Share of loss of associates

911,912

268

2,608

25

(12,539)(8,496)(82,550)

6,7,18,25

80,08086,749842,879

Total Expense

322,144349,391

3,394,778

Profit before tax

91,20485,486

830,609

Foreign exchange (gain)/loss
Other expenses

Income tax expense1018,801

25,347

246,275

Profit for the year from continuing operations

72,40360,140584,334

Profit for the year

72,40360,140584,334

(98)

81

787

income

19

(15)

(143)

Sub total

(80)

66

644

Other comprehensive income:27

Items that will not be reclassified subsequently to profit or loss:
Remeasurements of the net defined benefit liability (asset)
Income tax relating to components of other comprehensive

10

Items that may be reclassified subsequently to profit or loss:
Net gain /(loss) on revaluation of available-for-sale financial
assetsExchange differences on translation of foreign operations
Income tax relating to components of other comprehensive

613

(185)

(1,799)42,17534,488335,09610

income

(203)

(89)

(860)

Sub total

42,58534,214332,437

Total other comprehensive income/(loss)

42,50634,281333,081

Total comprehensive income for the year

114,909

94,420917,415-6-

Notes(Thousands of U.S.

(Millions of Yen)

(Millions of Yen)

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Dollars(Note 2))

Profit attributable to:
Owners of the Company

72,260Non-controlling interests

58,390567,334

143

1,750

17,001

72,40360,140584,334

Owners of the Company

114,765

92,548899,219

Non-controlling interests

143

1,873

18,196

114,909

94,420917,415

Total
Total comprehensive income attributable to:

Total

Notes

Basic earnings per share

(Yen)

(Yen)

(U.S. Dollars(Note 2))

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

28

Continuing operations

167.47

Discontinued operations
Basic earnings per share
Diluted earnings per share

135.26

1.31

－

－

－

167.47135.261.31

167.44135.04

1.31

28

Continuing operations
Discontinued operations
Diluted earnings per share

-7-

－

－

－

167.44135.04

1.31

Consolidated Statement of Changes in Equity
HOYA Corporation and its subsidiaries
For the year ended 31 March 2014
(Millions of Yen)
Notes
Balance at 1 April 2012

Share capital

Capital reserves

Treasury shares

6,264

15,899(10,928)

Other capitalreserves(2,505)Retained earnings
442,898

Accumulated adjustments due to changes in(1,198)accounting policies
6,264

Balance at 1 April 2012 (restated)

15,899(10,928)(2,505)

441,700

Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

72,26027
72,260Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)

(2)

Disposal of treasury shares

22(2)

218

Dividends, 65 Yen per share

22(3)Change in non-controlling interests

22

Share-based payments (Stock option)

24

(106)
(28,045)299(80)Transfer to retained earnings
Total contributions by and distributions toowners216

193(28,124)

Total transactions with owners

216

193

(28,124)(10,712)(2,313)

485,836

6,264

Balance at 31 March 201315,899Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

58,39027
58,390Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)

(5)

Disposal of treasury shares

22(2)

1,827

Dividends, 65 Yen per share

22(3)Change in non-controlling interests

22

Share-based payments (Stock option)

24

(768)
(28,050)242
66

Transfer to retained earnings
Total contributions by and distributions toowners

1,822

(527)

(27,983)

Total transactions with owners

1,822

(527)

(27,983)(8,890)(2,839)516,243

Balance at 31 March 2014

6,264

-8-

15,899(Millions of Yen)

Remeasurements ofNet gain/(loss)

Notes

Exchange differenceson translation of

Accumulated othercomprehensive

comprehensive

income of associates

income/(loss)

benefit liabilityof available-for-saleforeign operations(asset)financial assets

Balance at 1 April 2012

Share of otherthe net definedon revaluation

186(64,869)(34)(2,110)－(2,143)(66,826)

2,143

－

－

(66,826)

Accumulated adjustments due to changes inaccounting policies
Balance at 1 April 2012 (restated)

152(66,978)－403

42,182(80)

403

42,182(80)

Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

27

Total comprehensive income/(loss) for the year

42,505－42,505

Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)Disposal of treasury shares

22(2)Dividends, 65 Yen per share

22(3)Change in non-controlling interests

22

Share-based payments (Stock option)

24
80

80

owners80

80

Total transactions with owners

80

80

Transfer to retained earnings
Total contributions by and distributions toBalance at 31 March 2013

555

(24,797)－(114)

34,20566(114)

34,205

66－(24,241)

Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

27

Total comprehensive income/(loss) for the year

34,158－34,158Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)Disposal of treasury shares

22(2)Dividends, 65 Yen per share

22(3)Change in non-controlling interests

22

Share-based payments (Stock option)

24
(66)

(66)

owners(66)(66)

Total transactions with owners

(66)

(66)

Transfer to retained earnings
Total contributions by and distributions toBalance at 31 March 2014

442

-9-

9,408

－

－

9,850

(Millions of Yen)
EquityNotes

Non-controlling
Total equity

attributable to owners
interestsof the Company

384,802

Balance at 1 April 2012

(149)

384,653

Accumulated adjustments due to changes inaccounting policies(1,198)(1,198)

Balance at 1 April 2012 (restated)

383,604(149)

383,455

72,260143

72,403

Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

27

Total comprehensive income/(loss) for the year

42,505

1

42,506

114,765

143

114,909

Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)

(2)

Disposal of treasury shares

22(2)

112

Dividends, 65 Yen per share22(3)(28,045)

Change in non-controlling interests

22

Share-based payments (Stock option)

24

Transfer to retained earnings

(2)
112
(134)

(28,178)

(47)

(47)

299

299

－

－

Total contributions by and distributions toowners(27,636)(181)(27,817)

Total transactions with owners(27,636)(181)(27,817)

470,733(187)

Balance at 31 March 2013

470,547

58,3901,750

60,14034,158123

34,281

92,548

1,873

94,420Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

27

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)

(5)

(5)

Disposal of treasury shares

22(2)

1,058

1,058

(28,050)Dividends, 65 Yen per share

22(3)Change in non-controlling interests

22

Share-based payments (Stock option)

24

Transfer to retained earnings(6)(28,055)

4,441

4,441

242

242

－

－

Total contributions by and distributions toowners(26,754)

4,435(22,319)

Total transactions with owners(26,754)

4,435(22,319)

Balance at 31 March 2014

536,5266,121

542,648-10-

Consolidated Statement of Changes in Equity
HOYA Corporation and its subsidiaries
For the year ended 31 March 2014-Continued(Thousands of U.S. Dollars (Note 2))
Notes
Balance at 31 March 2013

Share capital

Capital reserves

Treasury shares

60,865

154,476(104,079)

Other capitalreserves(22,469)

Retained earnings
4,720,522

Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

567,33427
567,334

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)

(46)

Disposal of treasury shares22(2)17,747

Dividends, 65 Yen per share

22(3)Change in non-controlling interests

22

Share-based payments (Stock option)

24(7,466)(272,537)

2,348
644

Transfer to retained earnings
Total contributions by and distributions toowners17,701(5,118)(271,893)

Total transactions with owners

17,701(5,118)(271,893)(86,378)(27,587)

5,015,962

Balance at 31 March 2014

60,865

154,476(Thousands of U.S. Dollars (Note 2))

Remeasurements ofNet gain/(loss)

Notes

Exchange differenceson translation offoreign operations

comprehensive

income of associates

income/(loss)(asset)financial assets(240,930)－(1,104)332,345644(1,104)332,345

644

5,395

Accumulated otherbenefit liabilityof available-for-sale

Balance at 31 March 2013

Share of othercomprehensive

the net definedon revaluation－(235,536)

Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

27

Total comprehensive income/(loss) for the year

331,885－

331,885

Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)Disposal of treasury shares

22(2)Dividends, 65 Yen per share

22(3)Change in non-controlling interests

22

Share-based payments (Stock option)

24
(644)

(644)

owners

(644)

(644)

Total transactions with owners

(644)

(644)

Transfer to retained earnings
Total contributions by and distributions toBalance at 31 March 2014

4,291

-11-

91,414－－

95,705(Thousands of U.S. Dollars (Note 2))
EquityNotes

Non-controlling
Total equity

attributable to owners
interestsof the Company

Balance at 31 March 2013

4,573,778(1,813)

4,571,965

567,334

17,001

584,334

331,885

1,196

333,081899,219

18,196

917,415

Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

27

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares

22(2)

(46)

(46)

Disposal of treasury shares22(2)10,281

10,281Dividends, 65 Yen per share

22(3)(272,537)

Change in non-controlling interests

22

Share-based payments (Stock option)

24

Transfer to retained earnings(55)(272,592)

43,147

43,147

2,348

2,348

－

－

Total contributions by and distributions toowners(259,954)

43,092(216,862)

Total transactions with owners(259,954)

43,092(216,862)

Balance at 31 March 2014

5,213,043

59,476

5,272,519-12-

Consolidated Statement of Cash Flows
HOYA Corporation and its subsidiaries
For the year ended 31 March 2014
(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

Notes

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Cash flows from operating activities
Profit before tax

91,20485,486

830,609

Depreciation and amortisation

30,87233,891

329,293

Impairment losses

1,119

4,770

46,347

Finance income(965)(1,849)(17,965)

Finance costs

2,143

1,309

12,720Share of (profits)/loss of associates

11,912268

2,608(Gain)/loss on sales of property, plant and equipment(1,973)(658)(6,396)

735

450

4,368

(22,771)(2,900)(28,181)112,275

120,767

1,173,403

Loss on disposal of property, plant and equipment
OthersCash generated from operations (before movements in working
capital)Movements in working capital
Decrease/(increase) in inventories

5,030

11,785

114,508

Decrease/(increase) in trade and other receivables(8,216)(4,548)(44,188)

Increase/(decrease) in trade and other payables(7,692)(2,171)(21,091)

Increase/(decrease) in retirement benefits liabilities(6,081)

215

2,087

Sub-total

95,316

126,048

1,224,719

Interests received

1,000

1,065

10,351Dividends received

59

56

544

Interests paid

(1,544)(1,238)(12,033)

Income taxes paid

(6,073)(24,492)(237,970)

232

1,231

11,964

88,991

102,670

997,575

Income taxes refunded
Net cash generated from operating activities
Cash flows from investing activities
Withdrawals of time deposit

1,656

6,098

59,247

Deposits for time deposit(1,721)(9,087)(88,290)

Proceeds from withdrawals of certificate of deposit

40,000－－

Proceeds from sales of property, plant and equipment

7,573

950

9,230

(43,049)(16,546)(160,762)

－

1,007

9,784

(10,127)(6,390)(62,091)

(4)

(4)

(39)

568

－

－

(3,150)－－

Payments for acquisition of property, plant and equipment
Proceeds from sales of investment
Payments for purchase of subsidiary

32

Payments to non-controlling interests on merger
Proceeds from business transfer
Payments for business acquisition
Other proceeds

9,050

7,339

71,312Other payments(1,745)(4,250)(41,290)(948)(20,882)(202,899)

Net cash used in investing activities-13-

Consolidated Statement of Cash Flows
HOYA Corporation and its subsidiaries
For the year ended 31 March 2014-Continued(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Dollars (Note 2))
Notes

Cash flows from financing activities
Dividends paid to owners of the Company(28,071)(28,101)(273,033)

Dividends paid to non-controlling interests

(134)

(6)

(55)

Increase/(decrease) in short-term debt

(380)

(2)

(22)

Repayments of long-term borrowings

(235)

(505)

(4,904)

Payments for redemption of bonds(40,287)(234)(2,277)

Proceeds from disposal of treasury shares

0

－

－

Payments for purchase of treasury shares

(2)

(5)

(46)

Proceeds from exercise of stock options
Net cash used in financing activities

111

1,058

10,281(68,997)(27,794)(270,054)

Net increase/(decrease) in cash and cash equivalents

19,04653,994

524,622

Cash and cash equivalents at the beginning of the year

204,772

248,896

2,418,343

25,07828,204

274,035

248,896

331,094

3,217,000

Effects of exchange rate changes on the balance of cash and cash
equivalents in foreign currencies
Cash and cash equivalents at the end of the year

15

Note:
Non-cash transactions are stated in Note 29 “Non-cash transactions”.

-14-Notes to the Consolidated Financial Statements

1.General information
HOYA Corporation (the “Company”) is a limited company incorporated in Japan. The addresses of its registered office and principal
place of business are disclosed on the Company’s website (URL http://www.hoya.co.jp). The principal activities of the Company, its
subsidiaries and its associates (the “Group”) are described in Note 5 “Operating segment information”.

2.Basis of consolidated financial statements(1) Basis of consolidated financial statements
The accompanying consolidated financial statements have been prepared in accordance with International Financial ReportingStandards (“IFRSs”).
The accompanying consolidated financial statements are stated in Japanese Yen.
The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan
using the rate of ¥102.92 to $1, the foreign exchange rate at 31 March 2014. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S.dollars at that or any other rate. Amounts of less than one
million yen and one thousand U.S. dollars have been rounded to the nearest million yen and one thousand U.S. dollars in thepresentation of the accompanying consolidated financial statements. As a result, the totals in yen and U.S. dollars do not necessarily
agree with the sum of the individual amounts.
The Company and its domestic subsidiaries maintain their books and prepare their financial statements in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”) while its foreign subsidiaries maintain their books and prepare theirfinancial statements in conformity with accounting principles generally accepted in the countries of their domicile. Certain
adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform to IFRSs.
These adjustments were not recorded in their statutory books and ledgers.
(2) Effects of applying new accounting standards
The Group adopted the following IFRSs for the year ended 31 March 2014:

IFRSs

Subject of new standards/amendments and transitional provisions- Revision to the presentation of other comprehensive income- Clarification of the following requirements for comparative information:
1.Additional comparative information is not necessary for periods beyond theminimum comparative financial statement requirements of IAS 1
2. If additional comparative information is provided, the information should bepresented in accordance with IFRSs, including disclosure of comparative
information for any additional statements included beyond the minimum

IAS 1

Presentation ofcomparative financial statement requirement(Revised)

Financial Statements

3. An entity that changes accounting policies retrospectively, or makes aretrospective restatement or reclassification which has a material effect on theinformation in the statement of financial position at the beginning of the preceding
period would present the statement of financial position at the end of the current

IAS 16(Revised)

Property, Plant and Equipment

period and the beginning and end of the preceding period
4. Other than disclosure of certain specified information, related notes are notrequired to accompany the opening statement of financial position as at the
beginning of the preceding period- Classification of servicing equipment that spare parts, stand-by equipment andservicing equipment should be classified as property, plant and equipment when
they meet the definition of property, plant and equipment in IAS 16 and as
inventory otherwise-15-

IFRSsSubject of new standards/amendments and transitional provisions

IAS 27

Separate Financial(Revised)

Statements- Revision to the treatment of actuarial gains or losses eliminating the use of the‘corridor’ approach and all remeasurement results be recognised in othercomprehensive income (OCI)- Revision to recognition of actuarial gains and losses to be recognised in othercomprehensive income- Revision to the calculation method for interest cost with the removal of expected
return on plan assets- Introduction of enhanced disclosures for defined benefit plans- Amendments based on the publication of IFRS 10 and applicable only to separate
financial statements

Investments in- Amendments based on the publication of IFRS 10, IFRS11 and IFRS 12

IAS 19(Revised)

IAS 28(Revised)
IAS 32(Revised)

IAS 34(Revised)

IFRS 7(Revised)

Employee Benefits

Associates andJoint Ventures
Financial
Instruments:
Presentation

Interim Financial Reporting

Financial
Instruments:
Disclosures
Consolidated

IFRS 10

Financial- Clarification that income tax relating to distributions to holders of an equity
instrument and transaction costs of an equity transaction should be accounted forin accordance with IAS 12- Revision that the total assets and total liabilities for a particular reportablesegment would be separately disclosed in interim financial reporting only when
the amounts are regularly provided to the chief operating decision maker and there
has been a material change from the amounts disclosed in the last annual financial
statements for that reportable segment- Disclosure requirement of information about rights of offset and related
arrangements for financial instruments under an enforceable master netting
agreement or similar arrangement- Guidance for consolidated financial statements including the definition, elements
and assessment of control for all entities

Statements- Classification of joint arrangements as either joint operations (combining theexisting concepts of jointly controlled assets and jointly controlled operations) or
joint ventures (equivalent to the existing concept of a jointly controlled entity)
IFRS 11

Joint Arrangements

Entities

ventures and the elimination of the proportionate consolidation method- An investor of joint operation must include in its financial statements its share ofassets, liabilities, revenues and expenses relating to the joint operation- Integration of the disclosure requirements on the nature of and risks associatedwith its interests in other entities and the effects of those interests on its financial
statements

Fair Value- New guidance for both financial and non-financial items measured at fair value

Disclosure of
IFRS 12IFRS 13- Requirement of the use of the equity method of accounting for interests in joint

Interests in Other

Measurement

These standards were applied in accordance with respective transitional provisions. There are no standards that were early adopted by
the Group.

-16-

Except for the impact of adoption of the revision to IAS 1 and IAS 19 discussed below, these standards had no significant impact for
the year ended 31 March 2013 and 2014.
The changes in accounting policies due to the revision of IAS 1 and IAS 19 were applied retrospectively, and the financial statements
as at/for the year ended 31 March 2013 were restated. The effects of these changes on each financial statement line item are as
follows:
Consolidated Statement of Financial Position(Millions of Yen)

(Millions of Yen)

As at 31 March 2013

Adjustments(Millions of Yen)
As at 31 March 2013
(Restated)

Deferred tax assets

15,464915,473

Total non-current assets

195,9179

195,927

Total assets

618,0749618,084

Retained earnings

485,953(117)

485,836

Accumulated other comprehensive income(24,220)(21)(24,241)

Equity attributable to owners of the Company

470,872(138)

470,733

Total equity

470,685(138)

470,547

Retirement benefits liabilities

1,309

148

1,457

Total non-current liabilities

68,655148

68,802

Total liabilities

147,389

148

147,537

Total equity and liabilities

618,0749618,084-17-

Consolidated Statement of Comprehensive Income(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

For the year ended

For the year ended

Adjustments

31 March 2013

31 March 2013 (Restated)

Other income

38,8091,080

39,888

Total Revenue

412,268

1,080

413,347

Employee benefits expense

94,982(814)

94,168Finance costs

2,086

57

2,143

Total Expense

322,900(757)

322,144

Profit before tax

89,368

1,836

91,204

Income tax expense

18,125675

18,801

Profit for the year from continuing operations

71,242

1,161

72,403

Profit for the year

71,242

1,161

72,403

－

(98)

(98)

－

19

19

－

(80)

(80)

594

19

613

42,04513042,175

171

(171)

－

Total other comprehensive income

42,606(101)

42,506

Total comprehensive income for the year

113,848

1,060

114,909

Profit attributable to: Owners of the Company

71,0991,161

72,260113,705

1,060

114,765

Items that will not be reclassified subsequently to
profit or loss:
Remeasurements of the net defined benefits
liability (asset)
Income tax relating to components of othercomprehensive income
Total items that will not be reclassified
subsequently to profit or loss
Net gain/(loss) on revaluation of available-for-salefinancial assets
Exchange differences on translation of foreign
operations
Share of other comprehensive income ofassociates

Total comprehensive income attributable to:
Owners of the Company(Yen)

For the year ended
31 March 2013

(Yen)

(Yen)

For the year ended

Adjustments

31 March 2013 (Restated)

Basic earnings per share

164.782.69

167.47

Diluted earnings per share

164.752.69

167.44

Consolidated Statement of Cash Flows(Millions of Yen)
For the year ended
31 March 2013

(Millions of Yen)

(Millions of Yen)

For the year ended

Adjustments

31 March 2013 (Restated)

Profit before tax

89,368

1,836

91,204

Finance costs

2,086

57

2,143

110,381

1,893

112,275(4,188)(1,893)(6,081)

Cash generated from operations (before
movements in working capital)
Decrease in retirement benefits liabilities andprovisions-18-

(3) Standards and interpretations in issue not yet adopted by the GroupAt the date of approval of the consolidated financial statements, the main standards and interpretations that were in issue but not yet
effective for mandatory adoption are as follows. There are no standards and interpretations that were early adopted by the Group.
The description of the standards related to the first-time adoption, IFRS 1 “First-time Adoption of International Financial ReportingStandards” and IFRS 14 “Regulatory Deferral Accounts” are omitted.
Mandatory
adoption
IFRSs

（from
the yearbeginning)

To be adopted
by the Group

Subject of new standards/amendmentsfrom the year
ending- Performance conditions and service conditions are defined in
IFRS 2(Revised)order to clarify various issues, including the following:
Share-based Payment

1 July 2014

31 March 2016 1. A performance condition may be a market or non-market
condition
2. A performance condition must contain a service condition- Contingent consideration in a business combination that is notclassified as equity but as an asset or liability is subsequently
measured at fair value through profit or loss

IFRS 3Business(Revised)

Combinations

1 July 2014

31 March 2016

- The amendment clarifies that:
1. Joint arrangements are outside the scope of IFRS 3, not just
joint ventures
2. The scope exception applies only to the accounting in thefinancial statements of the joint arrangement itself- Operating segments may be combined/aggregated if they are
consistent with the core principle of the standard, which
includes that the segments have similar economic
characteristics and that they are similar in other qualitative

IFRS 8(Revised)

Operating Segments

1 July 2014

31 March 2016

respects. If they are combined, an entity must disclose the basisof determination whether the segments are ‘similar’ or not.
- The reconciliation of segment assets to total assets is only
required to be disclosed if the reconciliation is regularly
provided to the chief operating decision maker, similar to thedisclosure requirement for segment liabilities.

-19-

Mandatory
adoption
IFRSs

（from
the yearbeginning)

To be adopted
by the Group

Subject of new standards/amendmentsfrom the year
ending- Replacement of IAS 39 for classification of financial assets
measured either at amortised cost or fair value on the basis of
the business model and contractual cash flows of the financial
assets- Amendment to IAS 39 where financial instruments measured
at fair value through profit or loss (FVTPL) or amortised cost,
all relating gains or losses are recognised in profit or loss,
where investments in equity instruments are designated to bemeasured at fair value through other comprehensive income, allrelating gains or losses are recognised in other comprehensive
income, except dividends on the investments which arerecognised in profit or loss
- Amendment that the changes in fair value of financial
liabilities designated at fair value through profit or loss are to
be recognised in profit or loss, except changes in the own credit
risk which are recognised directly in other comprehensive
IFRS 9(Revisedin 2013)

incomeFinancial
Instruments

Not determined Not determined- Prohibition on the reclassification of amount presented inother comprehensive income subsequently to profit or loss
- Enhancement of eligible hedged items and hedging
instruments with economic relationship to better reflect theentity’s risk management activities in their financial statements- Introduction of flexibility of hedge effectiveness testing by
removing the effectiveness test in the subsequent period andquantitative threshold (within 80-125 percent).
- Enhancement of disclosures about hedge accounting- Time value of options, and forwards, which qualities forhedge accounting are accounted for as hedging costs, by usinga systematic and rational basis- Introduction of accounting for credit derivative for hedging
purpose to be measured at FVTPL, if an entity manages thecredit risk of all or a portion of a credit exposure- Amendment to allow an entity elect to account for certain
agreements to buy or sell a nonfinancial item for “own use” at
FVTPL if it eliminates or significantly reduces an accounting
mismatch-20-

Mandatory
adoption
IFRSs

（from
the yearbeginning)

To be adopted
by the Group

Subject of new standards/amendmentsfrom the year
ending- Exception of the requirements of consolidation of subsidiaries
IFRS 10(Revised)

if an entity meets the definition of investment entity, such as

Consolidated
Financial

1 January 2014 31 March 2015 requiring to measure its investments in certain subsidiaries atStatements

fair value through profit or loss in accordance with IFRS 9 or
IAS 39- An acquirer of interests in a joint operation in which theactivity constitutes a business as defined in IFRS 3 is required
to apply all of the principles on business combinations
accounting in IFRS 3 and other IFRSs with the exception of

IFRS 11(Revised)

Joint Arrangements

1 January 2016 31 March 2017

those principles that conflict with the guidance in IFRS 11.
- The amendments apply not only to the acquisition of aninterest in an existing joint operation and but also to theacquisition of an interest in a joint operation on its formation,
unless the formation of the joint operation coincides with theformation of the business.

IFRS 12(Revised)

Disclosure ofInterests in Other

1 January 2014 31 March 2015

Entities- Amendments as a result of addition of “Investment Entities”
to IFRS 10- Clarification that the scope of the portfolio exception defined

IFRS 13

Fair Value(Revised)

Measurementsin paragraph 52 of IFRS 13 includes all contracts accounted for
1 July 2014

31 March 2016 within the scope of IAS 39 or IFRS 9, regardless of whether
they meet the definition of financial assets or financial
liabilities as defined in IAS 32.
- The core principle of IFRS 15 which consists of five steps isthat revenue is recognised to depict the transfer of promised
goods or services to customers in an amount that reflects the

Revenue fromIFRS 15

Contracts withconsideration to which the entity expects to be entitled in
1 July 201731 March 2018 exchange for those goods or services.

Customers- Extensive disclosures are required, including disaggregationof total revenue; information about performance obligations;changes in contract assets and liabilities between periods andkey judgements and estimates.
- Proportionate restatement of accumulated depreciation forproperty, plant and equipment accounted for under revaluation

IAS 16(Revised)
IAS 38(Revised)

model
Property, Plant andEquipment- Clarification of revaluation for property, plant and equipment
1 July 2014

31 March 2015 accounted for under revaluation model by using observable

Intangible Assets

data with respect to the gross or net carrying amount- The amendment also clarifies that accumulated
depreciation/amortisation is the difference between the grossand the net carrying amounts of the asset-21-

Mandatory
adoption
IFRSs

（from
the yearbeginning)

To be adopted
by the Group

Subject of new standards/amendmentsfrom the year
ending- Clarification of requirement for contributions from employeesor third parties under defined benefit plans- Clarification that, if the amount of the contributions is
independent of the number of years of service, an entity may
IAS 19(Revised)recognise such contributions as a reduction in the service cost
Employee Benefits

1 July 2014

31 March 2016 in the period in which the service is rendered, which may affectremeasurement of defined benefit liabilities (assets)- If such contributions are linked to the period of service, it
shall be attributed to periods of service as a negative benefit,
similar to the allocation of the contributions to the periods ofservice.
- Clarification that a management entity, which provides key

IAS 24

Related Party(Revised)

Disclosuresmanagement personnel services, is a related party subject to the
1 July 2014

31 March 2015 related party disclosures- An entity which employs a management entity is required todisclose the expenses incurred for management services.

IAS 27(Revised)

Consolidated andSeparate Financial

1 January 2014 31 March 2015

Statements- Amendments based on the application of “Investment
Entities” to IFRS 10- Clarification that in order to offset a financial asset and afinancial liability, a right to set-off must be available today
rather than being contingent on a future event and must be
IAS 32(Revised)

exercisable by any of the counterparties, both in the normal

Financial
Instruments:

1 January 2014 31 March 2015

Presentation

course of business and in the event of default, insolvency orbankruptcy- Clarification on which settlement processes would meet therequirement for offsetting that an entity has the intention tosettle a financial asset and a financial liability net or
simultaneously- Clarification of the requirement to disclose the recoverable
amount for each cash-generating unit for which the significant
components of carrying amount of goodwill or intangible assets

IAS 36(Revised)

Impairment of Assets 1 January 2014 31 March 2015

with indefinite useful lives allocated to that unit, only when an
impairment loss has been recognised- Clarification of disclosure requirement for the recoverable
amounts of impaired assets only when the amount is measured
at fair value less costs of disposal- Amendments that the novation of a hedging instrument should

Financial
IAS 39Instruments:(Revised)

Recognition andnot be considered an expiration or termination giving rise to the
1 January 2014 31 March 2015

Measurement

discontinuation of hedge accounting when a hedging derivative
is novated as a consequence of laws and regulations, or the
introduction of laws and regulations, one or more clearing
counterparties replace the original counterparty-22-

Mandatory
adoption
IFRSs

（from
the yearbeginning)

To be adopted
by the Group
from the year

Subject of new standards and interpretations /amendments

ending- Clarification that determining whether a transaction meets the

IAS 40(Revised)definition of business combination as defined in IFRS 3 on
Investment Property

1 July 2014

31 March 2016 asset acquisition requires consideration of application of IFRS
3, not the incidental services under IAS 40, the separate
application of both standards independently of each other- Guidance on when to recognise a liability for a levy imposedby a government when an obligating event has occurred- The liability is recognised progressively if the obligating

IFRIC 21

Levies

1 January 2014 31 March 2015 event occurs over a period of time.
- If an obligation is triggered on reaching a minimum threshold(e.g., amounts of sales or products), the liability is recognised
when that minimum threshold is reached.

The Group will apply the aforementioned standards and interpretations for the respective fiscal years.
The implications from adoption of these standards and interpretations have not yet been fully assessed by the Group, however, thesestandards and interpretations should have no significant impacts on the future consolidated financial statements of the Group, except
for IFRS 9 “Financial Instruments (Revised in 2013)” and IFRS 15 “Revenue from Contracts with Customers”.

-23-

3.Significant accounting policies(1) Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis except for certain non-current assets andfinancial instruments measured at revalued amounts or fair value. The principal accounting policies are set out below.

(2) Basis of consolidation① Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company as
at 31 March of each year. An investor controls an investee when it is exposed or has rights, to variable returns from its involvementwith the investee and has ability to affect those returns through its power over the investee. The Group reassess whether it controls an
investee if facts and circumstances indicate that there are changes to elements of control.
The operating results of the subsidiaries are included in the consolidated statement of comprehensive income from the effective datethe Group obtained control of the subsidiaries to the effective date the Group lost control, as appropriate. Where necessary,adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by othermembers of the Group. All intra-group transactions, balances, income and expenses are eliminated in full in preparing consolidated
financial statements.
Changes in an interest of a subsidiary without losing control are accounted for as equity transactions. The carrying amounts of thecontrolling and non-controlling interests are adjusted to reflect the changes in their respective percentage of interests in the subsidiary.
If there is a difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration
paid or received, the difference is recognised directly in equity and attributed to the owners of the parent.
If loss in control of a subsidiary occurs, the Group recognises in profit or loss any resulting difference of the following:
1. sum of the fair value of any consideration received and any investment retained in the former subsidiary at its fair value;
2. previous carrying amounts of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of
those interests at the date of the original business combination and the non-controlling share of changes in equity since the date of the
combination. Total comprehensive income is attributed to the owners of the Company and to the non-controlling interests even if thisresults in the non-controlling interests having a deficit balance.
② Investments in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint
venture. The results of and the investments in associates are incorporated in the consolidated financial statements using the equity
method of accounting, except when the investment is classified as assets held for sale, in which case it is accounted for in accordancewith IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”.
Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost and thenadjusted for post-acquisition changes in the Group’s share of the net assets of the associates, less any impairment in the value of theinvestments.
Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance,
form part of the Group’s net investment in the associate) are recognised only to the extent that the Group has incurred legal orconstructive obligations or made payments on behalf of the associate and the excess of those losses is no longer recognised.

-24-

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities of the associate recognised at the date of acquisition is tested for impairment. Any excess of the Group’s share of the net fairvalue of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit orloss. When a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s
interest in the relevant associate.
③ Joint Arrangements
The Group classifies joint arrangements as either joint operations (having rights to assets and obligations for liabilities accounted foraccordingly) or joint ventures (having rights to net assets and equity accounted). The classification depends upon the rights andobligations of the parties to the arrangement.
Joint operators shall account for the assets, liabilities, revenues and expenses relating to its interest in a joint operation. Joint ventures
shall apply the equity method. The Group does not have either joint operations or joint ventures.

(3) Business combination
Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognised in profit
or loss as incurred. The acquiree’s identifiable assets acquired and liabilities assumed are recognised at their fair values at theacquisition date except for the following:
・ a deferred tax asset or liability arising from the assets acquired and liabilities assumed, and a liability (or asset, if any) related to theacquiree’s employee benefit arrangements;
・ a liability or an equity instrument related to the replacement of an acquiree’s share-based payment awards with share-based payment
awards of the acquirer; and・ an asset or disposal group that is classified as held for sale at the acquisition date in accordance with IFRS 5 “Non-current Assets
Held for Sale and Discontinued Operations”.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent
consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of theconsideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as
measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed
one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The changes in the fair value of the contingent consideration resulting from events after the acquisition date are accounted for as
follows:(a) Contingent consideration classified as equity shall not be remeasured and any subsequent settlement shall be accounted for inequity.
(b) Contingent consideration classified as an asset or a liability is accounted for in accordance with IAS 37 “Provisions, Contingent
Liabilities and Contingent Assets” and IAS 39 “Financial Instruments: Recognition and Measurement” or other IFRSs as appropriate.
Goodwill is measured on the basis of the excess of the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree over the fair value ofidentifiable assets acquired, net of liabilities assumed at acquisition date. Negative goodwill is recognised immediately in profit or loss
as a bargain purchase gain.

-25-Non-controlling interests in subsidiaries are reported in equity separately from the equity attributable to owners of the Company. Noncontrolling interests are initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised
amounts of the acquiree’s identifiable net assets on a transaction-by-transaction basis.
When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to thefair value at the acquisition date (i.e., the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in
profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that were previously recognised in othercomprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.
Goodwill arising from business combinations before the IFRSs transition date is measured at their carrying amount in accordance withthe previous GAAP (i.e., Japanese GAAP) after performing an impairment test.

(4) Foreign currencies① Foreign currency transactions
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which
the entity operates (i.e., its functional currency). For the purpose of the consolidated financial statements, the financial results,financial position and cash flows of each group entity are presented in Japanese Yen, which is the functional currency of the Company
and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency(foreign currencies) are translated at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that
date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at thedate when the fair value was determined. Exchange differences are recognised in profit or loss during the period.
② Financial statements of foreign operations
The assets and liabilities of foreign operations are translated into Japanese Yen at the foreign exchange rates prevailing at the end ofreporting period. The revenues and expenses of foreign operations are translated into Japanese Yen at the average rates of exchange
for the year. Where there are material fluctuations in exchange rates, the exchange rate at the transaction date is used. Foreignexchange differences arising from translation are initially recognised as exchange differences on translation of foreign operations inother comprehensive income and accumulated in “accumulated other comprehensive income”, which are reclassified from equity to
profit or loss on disposal of the net investment and included in “other expenses” in the consolidated statement of comprehensive
income.

-26-

(5) Property, plant and equipment
The Group applies the cost model for measuring property, plant and equipment.
Property, plant and equipment are stated at cost, net of accumulated depreciation and impairment losses. Properties in the course of
construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any
recognised impairment losses. Cost includes the expenses directly attributable to the assets, the initial estimated costs relating to scrap,
removal and retirement, and, for qualifying assets, the borrowing cost for long-term project. Depreciation of these assets commences
when the assets are available for their intended use.
When significant components of property, plant and equipment are required to be replaced periodically, the Group recognises suchparts as individual assets to be depreciated with specific useful lives. All other repair and maintenance costs are recognised in profit orloss as incurred.
Property, plant and equipment other than land and construction in progress are depreciated mainly on a straight-line basis over thefollowing estimated useful lives. The estimated useful lives, residual values and depreciation method are reviewed at each year-end,
with the effect of any changes in estimate being accounted for on a prospective basis.
Buildings and structures: 3-50 years
Machinery and carriers: 3-10 years
Tools, equipment and fixtures: 2-10 years
Leased assets are depreciated over their estimated useful lives where the transfer of the title of the assets is certain by the end of thelease term. Leased assets where the transfer of the title of the assets is not certain by the end of the lease term are depreciated over the
shorter of their estimated useful lives or their lease terms.

(6) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership tothe lessee. All other leases are classified as operating leases.
As a lessee, assets held by the Group under finance leases such as machinery and carriers, furniture and fixtures, tools, equipment andfixtures, are initially recognised as assets of the Group at their fair value at the inception of the lease or the present value of theminimum lease payments, whichever is lower. The corresponding liability to the lessor is included in the consolidated statement offinancial position as ‘Interest-bearing short-term debt’ or ‘Interest-bearing long-term debt’. Lease payments are apportioned between
finance costs and reduction of the lease obligation so as to achieve a constant rate of interest on the declining balance of the liability.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term.
Contingent rent is recognised as an expense in the period in which it is incurred.

-27-

(7) Intangible assets
The Group uses the cost model for measuring intangible assets. Intangible assets are carried at cost less accumulated amortisation andimpairment losses.
① Intangible assets acquired separately and/or acquired in a business combination
Intangible assets acquired separately are carried at cost at the initial recognition. Intangible assets acquired in a business combination
and recognised separately from goodwill at their fair value at the acquisition date, when they are satisfied with the definition of
intangible assets, identifiable, and their fair value is reasonably measured.
② Internally-generated intangible assets—research and development costs
Expenditures on research activities are recognised as expense in the period in which they are incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is
recognised if, and only if, all of the following have been demonstrated:(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale;(b) the intention to complete the intangible asset and use or sell it;(c) the ability to use or sell the intangible asset;(d) how the intangible asset will generate probable future economic benefits;(e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible
asset; and(f) the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenses incurred from the date when theintangible assets first meet all of the recognition criteria listed above. The assets are amortised over the estimated period in which thedevelopment costs are expected to be recovered. If no future economic benefit is expected before the end of the life of assets, theresidual carrying amount is expensed.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation andimpairment losses. Where no internally-generated intangible asset can be recognised, development costs are recognised as an expensein the period in which they are incurred.
③ Amortisation of intangible assets
Amortisation is recognised on a straight-line basis over the estimated useful lives below. The Group does not have any intangible
assets with indefinite useful lives.
Patents: 7-12 years
Technology: 10-20 years
Customer related assets: 5-15 years
Software 3-5 years④ Derecognition of intangible assets
An intangible asset is derecognised on disposal or when no future economic benefits are expected from use or disposal. Gains orlosses arising from derecognition of an intangible asset are recognised in profit or loss when the asset is derecognised.

-28-

(8) Goodwill
Goodwill arising in an acquisition of business is recognised as an asset at the date that control is acquired (i.e., the acquisition date).
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in theacquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the acquisition-date amountsof the net fair value of the identifiable assets acquired and the liabilities assumed.
Goodwill is not amortised but is reviewed for impairment at least annually. Goodwill is recorded at cost less accumulated impairment
losses on the consolidated statement of financial position.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cashgenerating units) that is expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If therecoverable amount of the cash-generating unit is less than its carrying amount, the impairment losses are allocated first to reduce thecarrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. Impairment losses recognised for goodwill are not reversed in subsequent periods. On disposal of acash-generating unit, goodwill attributed to the unit is included in the determination of the profit or loss on disposal.
The Group’s accounting policy for goodwill arising on the acquisition of an associate is described at “(2) Basis of consolidation – ②
Investments in associates” above.

(9) Impairment of property, plant and equipment and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets
to determine whether there are any indications that those assets have suffered impairment losses. If any such indication exists, therecoverable amount of the cash-generating unit to which the asset belongs is estimated in order to determine the extent of theimpairment losses (if any).
Where a reasonable and consistent basis of allocation can be identified, corporate assets (i.e., assets other than goodwill that contributeto the future cash flows of both the cash-generating unit under review and other cash-generating units) are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable andconsistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable amount.
Where impairment losses subsequently reverse, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment losses been recognised for the asset (or cash-generating unit) in prior years. A reversal of impairment
losses is recognised immediately in profit or loss.

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(10) Derivative financial instruments
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured attheir fair value at the end of each reporting period.
The Group uses forward exchange contracts to manage the foreign exchange exposure of recognised financial assets or liabilities, or
future forecast transactions. Hedge accounting does not apply to these derivative transactions. Accordingly, derivative financial
instruments are classified as FVTPL.
Details of derivative transactions are set out in Note 23 “Financial instruments”.

(11) Financial assets other than derivative financial instruments① Initial recognition and measurement
All regular way purchases or sales of financial assets, that require delivery of assets within the time frame established by regulation orconvention in the marketplace, are recognised and derecognised on the trade date, and are initially measured at fair value, plustransaction costs.
Financial assets are classified into the following specified categories:· financial assets at fair value through profit or loss (FVTPL);· held-to-maturity investments;· loans and receivables; and· available-for-sale financial assets.
The classification depends on the nature and holding purpose of the financial assets and is determined at the time of initial recognition.
② Financial assets classified as FVTPL
Financial assets are classified as FVTPL when the financial assets are either held for trading or are designated as an FVTPL.
A financial asset is classified as held for trading if:(a) it has been acquired principally for the purpose of selling it in the near term; or(b) on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent
actual pattern of short-term profit-taking; or(c) it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as FVTPL upon initial recognition if:(a) such designation eliminates or significantly reduces a measurement or recognition inconsistency (i.e., accounting mismatch) thatwould otherwise arise; or(b) the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance isevaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, andinformation about the grouping is provided internally on that basis; or(c) it forms part of a contract containing one or more embedded derivatives, and IAS 39 “Financial Instruments: Recognition andMeasurement” permits the entire combined contract (asset or liability) to be designated as FVTPL.
Financial assets classified as FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit orloss. The net gain or loss recognised in profit or loss incorporates any dividends, interests or fair value gain or loss arising on
remeasurement of the financial assets is included in the consolidated statement of comprehensive income.
As at 31 March 2013 and 2014, the Group did not have financial assets classified as FVTPL other than derivative financial
instruments designated as FVTPL.

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③ Held-to-maturity investments
Financial assets except derivatives for which the Group has the positive intent and ability to hold to maturity are classified as held-tomaturity investments. Held-to-maturity investments are measured at amortised cost using the effective interest method less any
impairment, with income recognised on an effective yield basis. As at 31 March 2013 and 2014, the Group did not have held-tomaturity investments.
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts, of which the calculationreflects effective interest method including premium or discount between counterparties through the expected life of the financial
assets, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
④ Loans and receivables
Trade receivables, loans, and other receivables that are not quoted in an active market are classified as loans and receivables. Loans
and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Principally, interest
income is recognised by applying the effective interest rate.
⑤ Available-for-sale financial assets
Financial assets other than derivatives, either designated as available-for-sale financial assets or not classified as FVTPL, held-tomaturity investments or loans and receivables, are classified as available-for-sale financial assets.
Available-for-sale equity investments that are listed and traded in an active market are classified as available-for-sale financial assets
and stated at fair value. The Group also has investments in unlisted equity investments that are not traded in an active market but alsoclassified as available-for-sale financial assets, which are stated at fair value using valuation techniques. Fair value is determined in
the manner described in Note 23 “Financial instruments”. Gains and losses arising from changes in fair value are recognised in othercomprehensive income, with the exception of impairment losses and foreign exchange gains and losses on monetary assets being
recognised in profit or loss.
Where the financial asset is derecognised of or is determined to be impaired, the cumulative gain or loss, that were previously
accumulated in accumulated other comprehensive income is reclassified to profit or loss.
Dividends on available-for-sale financial assets (equity instruments) are recognised in profit or loss when the Group’s right to receive
the dividends is established. The fair value of available-for-sale financial assets (monetary assets) denominated in a foreign currency isdetermined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains andlosses that were recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange
gains and losses are recognised in other comprehensive income.

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⑥ Impairment of financial assets
Financial assets, other than FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are
considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initialrecognition of the financial asset, the estimated future cash flows of the investment have been affected.
For listed and unlisted equity investments classified as available-for-sale financial assets, a significant or prolonged decline in the fairvalue of the investment below its cost is considered to be objective evidence of impairment.
For all other financial assets, including redeemable notes classified as available-for-sale financial assets and finance lease receivables,
objective evidence of impairment could include:(a) significant financial difficulties of the debtor;(b) default or delinquency in interest or principal payments; or(c) a high probability that the borrower will go into bankruptcy or financial re-organisation.
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in
addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include
the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average
credit period of 90 days to 120 days, as well as observable changes in national or local economic conditions that correlate with default
on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of tradereceivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable, including pastdue receivable, is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account arerecognised in profit or loss.
With the exception of available-for-sale financial assets (equity instruments), if, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date theimpairment is reversed does not exceed the amount the amortised cost would have been had the impairment not been recognised.
In respect of equity instruments classified as available-for-sale financial assets, impairment losses previously recognised in profit orloss are not reversed through profit or loss. Any increase in fair value subsequent to impairment is recognised in other comprehensive
income, unless additional impairment is recognised.
⑦ Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group retains
substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset
and a collateralised borrowing for the proceeds received.

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(12) Inventories
Inventories are measured at the lower of cost and net realisable value. Net realisable value represents the estimated selling price for theinventories in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale. Costs,
including purchase costs, process costs, storage costs and all other costs incurred in bringing the inventories to their present locationand condition, are assigned to inventories mainly by the weighted-average method. The production costs include an appropriate
portion of fixed and variable overhead expenses.

(13) Cash and cash equivalents
Cash and cash equivalents are composed of cash on hand and bank deposits including short term investments. The short term
investments with original maturities of three months or less are deemed as cash equivalents since they are readily convertible to cashwithout restriction and with low risk of fluctuation of values.

(14) Assets held for saleNon-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through asale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and thenon-current asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to thesale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary
are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controllinginterest in its former subsidiary after the sale.
Assets classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Property,
plant and equipment and intangible assets classified as held for sale are not depreciated or amortised after their classification.

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(15) Treasury shares
The Group’s own equity instruments, which are reacquired (i.e., treasury shares), are recognised at cost and deducted from equity. No
gain or loss is recognised on the purchase, disposal or cancellation of the Group’s own equity instruments. Any difference between the
carrying amount and the consideration given is recognised in other capital reserves.

(16) Share-based payments
Equity-settled share-based payments (i.e., stock option), which are incentive plans to Group’s directors, officers and certain
employees, are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fairvalue of equity-settled share-based transactions are set out in Note 24 “Share-based payments”.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over thevesting period while the corresponding amount to other capital reserves is recognised, based on the Group’s estimate of equity
instruments that will eventually vest. At the end of each reporting period, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to other capital reserves.
Accounting policies described above are applied to share-based payments which were granted after 7 November 2002 and vested on
or after 1 April 2008.

(17) Dividend Distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the consolidated financial statements in the period
in which the dividends are approved by the Company’s Board of Directors.

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(18) Equity instruments and financial liabilities issued by the Groupexcluding derivative instruments① Equity instruments (shares)
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
② Financial liabilities
Financial liabilities are classified as either financial liabilities classified as FVTPL or other financial liabilities.
③ Financial liabilities classified as FVTPL
Financial liabilities classified as FVTPL are either held for trading or designated as an FVTPL.
A financial liability is classified as held for trading if:(a) it has been acquired principally for the purpose of selling or redeeming it in the near term; or(b) on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent
actual pattern of short-term profit-taking; or(c) it is a derivative that is not a financial guarantee contract and is not designated as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as FVTPL upon initial recognition if:(a) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or(b) the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performanceis evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, andinformation about the grouping is provided internally on that basis; or(c) it forms part of a contract containing one or more embedded derivatives, and IAS 39 “Financial Instruments: Recognition andMeasurement” permits the entire combined contract (asset or liability) to be designated as FVTPL.
Financial liabilities as FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.
The net gain or loss recognised in profit or loss is included in finance costs in the consolidated statement of comprehensive income.
Fair value is determined in the manner described in Note 23 “Financial instruments”.
As at 31 March 2013 and 2014, the Group did not have financial liabilities as FVTPL other than derivative financial instruments
designated as FVTPL.
④ Other financial liabilities
Other financial liabilities, including bank loans, are initially measured at fair value, net of transaction costs. Other financial liabilities
are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yieldbasis.
⑤ Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
⑥ Financial guarantee contract
Financial guarantee contract are initially measured at their fair values and subsequently measured at the higher of:· the amount of the obligation under the contract, as determined in accordance with IAS 37 “Provisions, Contingent Liabilities andContingent Assets”; and· the amount initially recognised less cumulative amortisation recognised in accordance with IAS 18 “Revenue”.

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(19) Retirement benefit costs
For defined benefit plans, the cost of providing retirement benefits is determined using the projected unit credit method, with actuarial
valuations being carried out at the end of each reporting period.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return onplan assets (other than interest), is reflected immediately in the statement of financial position with a charge or credit recognised inother comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income isreflected immediately in retained earnings and will not be reclassified to profit or loss.
Past service cost is recognised in profit or loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
Service cost (including current service cost, past service cost, as well as gains or losses on curtailments and settlements);
Net interest expense or income; orRemeasurement.
The Group presents the first two components of defined benefit cost in profit or loss as “Employee benefits expense” or “Financecost”.
The retirement benefit liabilities recognised in the consolidated statement of financial position represents the actual deficit or surplus
in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic
benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service to theGroup.

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(20) Provisions, and contingent liabilities assumed in a business combination
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle the obligation by outflow of resources embodying economic benefits, and a reliable estimate canbe made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required tosettle the present obligation at the end of the reporting period (i.e., future cash outflow), taking into account the risks and uncertainties
surrounding the obligation.
Where time value of money is material, a provision is measured at the present value to which estimated future cash flows are
discounted using a pre-tax discount rate that reflects the risks specific to the obligation Interest cost associated with the passage oftime is recognised as finance cost.
The types of provisions are as follows:① Asset retirement obligation
The Group recognises provisions for an asset retirement obligation for estimated costs arising from a contractual obligation to alandlord to dismantle and remove leasehold improvements from a leased office at the end of the lease contract, and estimated costs todecontaminate certain fixed assets. An asset retirement obligation is provided based on past experience of actual cost and each asset isconsidered individually. The discount rate depends on the useful life of the corresponding assets and the country in which such assets
are located. Future expected timing of outflow of economic benefits is mainly more than one year from each reporting period.
② Warranties provision
Warranties provision is estimated and recognised based on past experience of the occurrence of defective goods and the expected after
service costs in the warranty period. Expected outflow of economic benefits in the future is within one year from each reporting
period.
③ Contingent liabilities assumed in a business combination
Contingent liabilities resulting from a business combination are initially measured at fair value at the date of acquisition. Subsequent
to initial recognition, such contingent liabilities are remeasured considering expected future payments, possible occurrence and timingof payments at each reporting period.

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(21) Revenue
Revenue is recognised at fair value of the consideration received or receivable less discount, rebate and consumption taxes.
As for customers’ earning points upon their purchase under customer loyalty programmes, the fair value of the points granted isestimated and accounted for as a reduction in revenue.
① Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:(a) the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;(b) the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold;(c) the amount of revenue can be measured reliably;(d) it is probable that the economic benefits associated with the transaction will flow to the Group; and(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Specifically, revenue is recognised when the risks and rewards of ownership of the goods transfers from the Group to the customer at
the time of shipment, customer receipt, or upon customer approval depending on the terms of sale.
② Rendering of services
Services provided by the Group are mainly related to the products sold by the Group, including repairs and short term maintenance.
Generally, revenue from rendering of services is recognised when the services have been provided to the customer.
③ Dividend and interest income
Dividend income from investments is recognised when the shareholder’s right to receive payment has been established. Interest
income is recognised based on principal and effective interest rate on an accrual basis.

(22) Government grants
Government grants are measured and recognised at fair value when there is reasonable assurance that the Group will comply with theconditions attached to them and that the grants will be received.
Government grants associated with an expense are recognised as revenue in the same accounting period when the expense is incurred.
Government grants for purchase of assets are recognised as deferred revenue in the consolidated statement of financial position andtransferred to profit or loss on a systematic basis over the useful lives of the related assets.

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(23) Income taxes
Income tax expense represents the sum of the current tax and deferred tax. Current and deferred taxes are recognised in profit or loss,
except when they relate to items that are recognised directly in other comprehensive income or equity, or where they arise from theinitial accounting for a business combination.
The current tax is calculated based on estimated refund or payment from/to taxation authorities. The Group’s current tax liability is
calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period based on the taxable profit
or loss for the Group’s operating activity in each country.
Deferred tax is provided using the liability method on temporary differences, tax loss carry forward and tax credits at the reporting
date.
Deferred tax assets or liabilities are not recognised for:· Temporary differences arising from the initial recognition of goodwill· Temporary differences arising from the initial recognition of assets and liabilities in transactions that do not affect either accounting
profit or taxable profit (exclude business combination)· Taxable temporary differences associated with investments in subsidiaries and associates where the timing of the reversal of thetemporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets arising from deductible
temporary differences are only recognised to the extent that it is probable that there will be sufficient taxable profits against which toutilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognised deferred tax
assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits willallow the deferred tax assets to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled
or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting
period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same tax authority.
In the case of a business combination, the tax effect is included in the accounting for the business combination, when measuring theamount of goodwill or determining negative goodwill.

(24) Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent
by the weighted-average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated byadjusting profit or loss attributable to ordinary equity holders of the parent and the weighted-average number of ordinary shares
outstanding, for the effect of all potential dilutive ordinary shares.

(25) Reclassification
Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

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4.Critical accounting judgements and key sources of estimation uncertainty(1) Application of estimates and assumptions
Preparation of consolidated financial statements requires management to make estimates and assumptions in order to determine thereported amounts of certain assets, liabilities, income and expense items, as well as certain amounts disclosed in the notes to theconsolidated financial statements relating to contingent liabilities.
The following are items that require estimates and assumptions and are considered significant:· Determination of net realisable value of obsolete inventory (Note 13 “Inventories”)· Expected cash flow from overdue trade and other receivables (Note 23 “Financial instruments”)· Useful lives of property, plant and equipment, including assets under finance lease (Note 3 “Significant accounting policies”, Note 3(5) “Property, plant and equipment” and Note 3 (7) “Intangible assets”)· Assumptions used to estimate future cash flows of cash-generating units to assess the recoverability of property, plant and equipment
and intangible assets, including goodwill (Note 8 “Impairment losses”)· Valuation techniques used to value available-for-sale financial assets without an active market (Note 23 “Financial instruments”)· Recoverability of deferred tax assets (Note 10 “Income taxes”)· Assumptions used for treatment of retained earnings of overseas subsidiaries and associates for tax purposes (Note 10 “Income
taxes”)· Discrepancy in opinion with a tax authority relating to tax calculations (Note 10 “Income taxes”)· Assumptions used to calculate retirement benefit obligations (Note 19 “Retirement benefit plans”)· Asset retirement obligations arising from legal obligations and constructive obligations (Note 20 “Provisions”)· Fair value of stock options (Note 24 “Share-based payments”)· Possibility of outflow of resources embodying economic benefits on contingent liabilities (Note 33 “Contingent liabilities”)
The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions of the accounting estimates will impact current and/or future periods.
(2) Key sources of risk and estimation uncertainty
The Group’s financial position, financial performance and cash flows are exposed to the following risks and uncertainties:· Tough competition and excess-supply of inventory in the markets the Group belongs to· Development of new products and timing of development· Changes in the political, economic and regulatory environment, shortage of labour, labour strike, natural disasters, and impact of
unexpected international affair in the countries the Group belongs to and operates in· The effect of deferred taxes and income taxes on the transactions between locations in different tax jurisdictions withdifferent tax rates, or the transactions between taxable and tax-exempt businesses(including the discrepancies in opinion between the Company and the tax authority)· Fluctuation of currency exchange rates· The trend of environmental and governmental regulation
The global economic stagnation and disaster may have a significant impact on future profitability of the Group. Future profitability of
the Group may affect the estimates for the following:· Impairment of property, plant and equipment and intangible assets including goodwill (Note 8 “Impairment losses”)· Recoverability of deferred tax assets (Note 10 “Income taxes”)-40-

5.Operating segment information(1) Overview of major products and services of reportable segments
The reportable segments are constituent units of the Group for which separate financial information is obtained and examined on aregular basis by the Board of Directors, the chief operating decision maker, to determine the allocation of management resources andevaluate the business performance.
In accordance with its management philosophy, the Group has categorised “information technology” and “life and culture” as its
business domains. To achieve sustainable growth in corporate value in these business domains, the Group has been making decisions
on the allocation of management resources and monitoring the operating results.
As a result, the Group consists of three reportable business segments: the Information Technology business, the Life Care businessand Other business, which are consistent with the above business domains.
In the Information Technology business, the Group has developed an extensive range of products following the digitalisation of
information and the emergence of the internet. The Group produces and sells a broad array of I/O (Input/Output Device) related
products in the information and communication sector, including electronics related products that are essential for the modern digital
information and communication technologies, and imaging related products that are necessary to import pictures and video images asdigital information based on optical technologies.
In the Life Care business, the Group produces and sells health care related products that are used in the health care and medical sectors
and medical related products, including medical equipment and medical materials that are used in medical treatments. In operating thisbusiness, it is typically required to obtain approvals and permissions in accordance with the Pharmaceutical Affairs Act in Japan andother regulations, and sophisticated technologies and highly reliable quality control systems represent the critical elements for
operating this business.
Other business mainly includes the business that provides information system services and new businesses.
The main products and services for each “reportable segment” described above are as follows:
Reportable Segment
Information Technology

Electronics related products

Major Products and Services
Photomasks and Maskblanks for semiconductors,
Masks and Devices for liquid-crystal displays (LCDs)
Glass disks for hard disk drives (HDDs).

Imaging related products

Optical lenses, Optical glasses,
Digital camera modules, Optical devices, Laser equipments.

Life Care

Health Care related products
Medical related products

Eyeglass lenses, Contact lenses.
Endoscopes, Medical accessories, Intraocular lenses, Artificial bone,
Metallic implant for orthopedics.

Other

Design of information systems, other services.

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(2) Segment revenues and results
The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 3 “Significant
accounting policies”.
（Millions of Yen）
For the year ended 31 March

Information2013

Technology

Life Care

Other

Total

Adjustments

Consolidated

Revenue from externalcustomers

161,216

208,968

2,269

372,45341

372,494

Inter-segment sales

159

1

2,670

2,831

(2,831)－

Total

161,375

208,969

4,940

375,284(2,790)372,494

302

289

10

600

305

906

Interest income
Interest expense
Depreciation and amortisation

(298)

(245)

(1)

(544)

(1,051)(1,596)(18,103)(12,408)(142)(30,653)(219)(30,872)

Share of profit (loss) of
associates
Impairment losses
OthersSegment profit before tax

2

－

－

2

(11,914)(11,912)

(805)

(314)

－

(1,119)－(1,119)(110,655)(132,097)(3,975)(246,727)

10,030(236,698)

31,82064,194831

96,844(5,640)91,204

24,771

20,01864

44,853

158

45,011Other disclosure
Capital expenditure（Millions of Yen）
For the year ended 31 March

Information

2014

Technology

Life Care

Other

Total

Adjustments

Consolidated

Revenue from external
159,333

265,470

2,739

427,54233

427,575

Inter-segment sales

customers

186

0

2,083

2,269

(2,269)－Total

159,520

265,470

4,822

429,811(2,237)427,575

368

321

9

699

438

1,137

Interest income
Interest expense
Depreciation and amortisation

(318)

(312)

(0)

(630)

(665)

(1,295)(16,925)(16,698)(125)(33,747)(144)(33,891)

0

154

－

154

(422)

(268)

Share of profit (loss) of
associates
Impairment losses
OthersSegment profit before tax(3,722)(197)－(3,918)(852)(4,770)(103,069)(199,051)(4,104)(306,224)

3,222(303,002)

35,854

49,689602

86,146(659)

85,486

8,736

7,834

143

16,713

125

16,838Other disclosure
Capital expenditure-42-

（Thousands of U.S. Dollars (Note 2)）
For the year ended 31 March

Information

2014

Technology

Life Care

Other

Total

Adjustments

Consolidated

Revenue from externalcustomers

1,548,127

2,579,383

26,6104,154,120

317

4,154,438

Inter-segment sales

1,810

1

20,23922,049(22,049)－

Total

1,549,937

2,579,384

46,8484,176,169(21,732)

4,154,438

3,579

3,121

92

6,792

4,258

11,050Interest income
Interest expense
Depreciation and amortisation(3,089)(3,027)(4)(6,120)(6,458)(12,578)(164,445)(162,239)(1,211)(327,895)(1,397)(329,293)

1

1,496

－

1,497

(4,104)(2,608)

Share of profit (loss) of
associates
Impairment losses
OthersSegment profit before tax(36,161)(1,910)－(38,072)(8,275)(46,347)(1,001,451)(1,934,034)(39,873)(2,975,358)

31,304(2,944,054)

348,371482,790

5,853

837,014(6,405)

830,60984,87976,118

1,394

162,390

1,217

163,607

Other disclosure
Capital expenditure
Note:(i) Adjustments to revenue from external customers of 41 million yen and 33 million yen (317 thousand U.S.dollars) for the years
ended 31 March 2013 and 2014, respectively, represent revenue by R&D department which is not included in any reportable segment.
(ii) Adjustments to segment profit before tax of (5,640) million yen consist of the elimination of an inter-segment transaction of (1)million yen, and profit or loss of the Company’s headquarters, R&D department and overseas holding companies (after elimination ofdividend income from group companies) of (5,639) million yen for the year ended 31 March 2013 and (659) million yen ((6,405)
thousand U.S.dollars) consist of elimination of inter-segment transaction of 3 million yen (29 thousand U.S.dollars), and profit or lossof the Company’s headquarters, R&D department and overseas holding companies (after elimination of dividend income from groupcompanies) of (662) million yen ((6,434) thousand U.S.dollars) for the year ended 31 March 2014.
(iii) Transfer prices between operating segments are on an arm’s length basis for the years ended 31 March 2013 and 2014,
respectively.
(iv) Insurance Proceeds pertaining to the flood in Thailand in the amount of 32,187 million yen and Gains related to the step
acquisition of shares of subsidiary in the amount of 2,238 million yen are included in Others in Life Care for the year ended 31 March
2013.

-43-

(3) Revenue from major products and services
The following is an analysis of the Group’s revenue from continuing operations from its major products and services for the years
ended 31 March 2013 and 2014:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

(Note 2))

Information Technology
Electronics related products

108,756

115,973

1,126,828

Imaging related products

52,46143,360421,300

Information Technology total

161,216

159,333

1,548,127

Health Care related products

150,100

194,618

1,890,965

Medical related products

58,86870,852

688,418

Life Care total

208,968

265,470

2,579,383

2,269

2,739

26,610Life Care

Other
Corporate (R&D)
Total revenue from external

41

33

317

372,494

427,575

4,154,438

customers(4) Information about geographical areas
Revenue from external customers(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

(Note 2))

Japan

136,896

143,560

1,394,870

U.S.A.

37,316

48,721

473,389

China

48,921

44,219429,646

Others149,361

191,074

1,856,532

Total

372,494

427,575

4,154,438

Note:Geographical areas are based on the location of the customers.

-44-

Non-current assets(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Japan

43,552

39,716

385,890

Thailand

32,546

27,580267,974
201,839

Vietnam

18,125

20,773

Philippines

15,486

8,650

84,050

Others59,11766,710648,171

Total

168,827

163,429

1,587,923

Note:(i) Geographical areas are based on the physical location where non-current assets are located.
(ii) Financial instruments, deferred tax assets, and pension plan assets are not included.
Revenue from external customers in Thailand, Vietnam, and Philippines is insignificant; therefore the amount is included in Others.
Non-current assets located in U.S.A. and China are insignificant; therefore the balance is included in Others.
(5) Information about major customers
The Group has no revenue from transactions with a single external customer that amounts to 10 percent or more of revenue of theGroup.

-45-

6.Property, plant and equipment
The following are the cost, accumulated depreciation and impairment losses of property, plant and equipment:（Millions of Yen）
Cost

Buildings and Machinery andstructures

carriers

Land

Tools,

Construction in

Total

progress

equipment andfixtures

Balance at 1 April 2012

77,933

221,416

42,48010,10013,108365,038

Additions

1,345

3,505

2,154

－

37,05644,060Business transfer (iii)

1,155

2,380

131

117

816

4,599

Disposals (i)(1,090)(5,582)(2,142)

(117)

(215)

(9,146)

(324)

－

－

(310)

－

(634)

6,513

21,397

1,189－(29,099)－

7,544

20,923

3,577

405

2,562

35,012

(46)

312

193

332

(1,312)(521)

Balance at 31 March 2013

93,031

264,352

47,581

10,527

22,916438,407

Additions

1,048

1,702

1,865

17

10,53815,169Reclassification to assets held
for saleTransfer from construction inprogress
Effect of foreign currency
exchange differences
OthersBusiness combinations (iii)
Disposals (i)Reclassification to assets held

74

768

160

－

12

1,014

(1,934)(5,406)(1,355)

(37)

(73)

(8,804)

(62)

－

－

－

－

(62)

2,821

16,953

1,005－(20,778)

－

3,664

9,923

2,264

94

849

16,795(40)(2,288)

234

－

309

(1,784)

98,602

286,00351,753

10,602

13,773

460,733

for saleTransfer from construction inprogress
Effect of foreign currency
exchange differences
OthersBalance at 31 March 2014-46-

（Millions of Yen）
Accumulated depreciation andimpairment losses

Buildings and Machinery andstructures

carriers

Land

Tools,

Construction in

Total

progress

equipment andfixtures

Balance at 1 April 2012

(27,057)(264)－(256,634)(18,656)(3,896)－－(26,778)

(243)

(46)

(286)

(112)

(975)

896

5,311

1,404

－

－

7,611

287

－

－

286

－

573

(3,141)(14,854)(2,866)－－(20,862)(41,642)

Depreciation expense(4,227)

Impairment losses (ii)(289)

Disposals (i)(187,670)

Reclassification to assets held
for saleEffect of foreign currency
exchange differences
Others

(512)

(518)

436

－

－

(594)

Balance at 31 March 2013

(48,628)(216,630)(32,025)

(264)

(112)

(297,660)

Depreciation expense(5,130)(19,841)(4,125)－－(29,096)

Impairment losses (ii)(2,555)

(740)

(104)

(852)

(310)

(4,561)

Disposals (i)

1,417

5,201

1,280

－

－

7,898

57

－

－

－

－

57

(1,742)(7,394)(1,564)－(14)(10,714)

62

1,827

944

－

22

2,855

(56,519)(237,577)(35,594)(1,116)(414)(331,221)

Reclassification to assets held
for saleEffect of foreign currency
exchange differences
OthersBalance at 31 March 2014

（Millions of Yen）
Carrying amount

Buildings and Machinery andstructures

carriers

Tools,

Land

equipment andConstruction in

Total

progress

fixtures
Balance at 1 April 2012

36,292

33,745

15,423

9,836

13,108108,404

Balance at 31 March 2013

44,40247,721

15,556

10,26322,804

140,747

Balance at 31 March 2014

42,083

48,426

16,1599,486

13,359129,513-47-

(Thousands of U.S. Dollars (Note 2))
Cost

Buildings and Machinery andstructures

carriers

Land

Tools,

Construction in

Total

progress

equipment andfixtures

Balance at 31 March 2013

903,9132,568,515

462,314102,288

222,656

4,259,686

Additions

10,17916,533

18,117

166

102,387

147,382

Business combinations (iii)
Disposals (i)

719

7,459

1,551

－

120

9,848

(18,787)(52,528)(13,164)

(359)

(708)

(85,546)

(599)

－

－

－

－

(599)

27,407

164,7179,763－(201,887)－

Reclassification to assets held
for saleTransfer from construction inprogress
Effect of foreign currency
exchange differences

35,60396,41721,993917

8,251

163,182

Others(388)(22,230)

2,276

－

3,007

(17,335)

958,047

2,778,882

502,850

103,012

133,826

4,476,618

Balance at 31 March 2014

(Thousands of U.S. Dollars (Note 2))
Accumulated depreciation andimpairment losses

Buildings and Machinery andstructures

carriers

Tools,

Land

Construction inequipment andTotal

progress

fixtures
Balance at 31 March 2013

(472,487)(2,104,840)(311,168)

Depreciation expense(49,849)(192,776)(40,082)

Impairment losses (ii)

(24,821)(7,191)(1,015)

Disposals (i)13,76450,534

12,437557－(16,922)(71,843)(2,569)(1,087)(2,892,151)－－(282,707)(8,275)(3,010)(44,312)－－76,735

－

－

－

557

(15,193)－(141)(104,100)

Reclassification to assets held
for saleEffect of foreign currency
exchange differences
OthersBalance at 31 March 2014

601

17,753

9,177

－

210

27,741(549,158)(2,308,363)(345,844)(10,844)(4,027)(3,218,237)(Thousands of U.S. Dollars (Note 2))
Carrying amount

Buildings and Machinery andstructures

carriers

Tools,

Land

equipment andConstruction in

Total

progress

fixtures
Balance at 31 March 2014

408,889

470,519

157,006

92,168

129,798

1,258,381

Note:(i) Gain and loss arising from sale or disposal of property, plant and equipment for the years ended 31 March 2013 and 2014 are set
out in Note 25 “Revenue and expenses (excluding finance income and costs).” Gain and loss on sale of assets held for sale were
included in ‘gain on sale of property, plant and equipment’ and ‘loss on sale of property, plant and equipment’ in Note 25.
(ii) Details of impairment losses and reversal of impairment losses are set out in Note 8 “Impairment losses” .
(iii) Details of business combination are set out in Note 32 “Business combinations”.
(iv) Property, plant and equipment under construction are included in ‘construction in progress’ in the table above.

-48-

Buildings and structures of 33 million yen (320 thousand U.S. dollars), Machinery and carriers of 6 million yen (59 thousand U.S.
dollars), and Tools, equipment and fixtures of 35 million yen (340 thousand U.S. dollars) has been pledged as collateral to secure 307
million yen (2,978 thousand U.S. dollars) ‘Interest-bearing long-term debt’ and 5 million yen (44 thousand U.S. dollars) ‘Interestbearing short-term debt’ as at 31 March 2014. Refer to Note 16 “Interest-bearing debt” for details. Besides the above, Buildings in theamount of 90 million yen (878 thousand U.S. dollars) and Land in the amount of 1 million yen (11 thousand U.S. dollars) were
provided as collateral for the conditional obligation in the amount of 95 million yen (923 U.S. dollars) associated with the government
grant.
Details of commitments for the acquisition of property, plant, and equipment are set out in Note 34 “Commitments for expenditure”.
There is no borrowing cost capitalised and included in the cost of acquisition of property, plant and equipment.
The following are carrying amounts for property, plant and equipment under finance leases as at 31 March 2013 and 2014, which areincluded in each corresponding amount in the table above.
(Millions of Yen）
Buildings and structures Machinery and carriers

Tools, equipment andfixtures

Total

Balance at 31 March 2013

92

71

522

685

Balance at 31 March 2014

89

90

296

475

(Thousands of U.S. Dollars (Note 2))
Buildings and structures Machinery and carriers
Balance at 31 March 2014

866

874

Tools, equipment andfixtures

Total

2,874

The obligation under finance lease (Note 17 “Finance lease obligations”) is secured by the leased assets on which the lessor has
ownership.

-49-

4,614

7.Goodwill and intangible assets
The following are the cost, accumulated amortisation and impairment losses of goodwill and intangible assets:（Millions of Yen）
Cost

Intangible assets
Goodwill

Balance at 1 April 2012
Additions

SoftwareTechnology

Customer

Patents

related assets

Others (i)

Total

3,905

12,166

10,791

10,591－

3,297

36,844

－

867

－

29

－

42

938

Acquisitions through businesscombinations

6,382

107

－

1

6,417

1,506

8,031

Disposals (ii)

－

(414)

－

(130)

－

(0)

(544)

910

1,044

337

0

565

363

2,309

Effect of foreign currency
exchange differences
OthersBalance at 31 March 2013
Additions

－

255

－

－

514

(501)

268

11,19814,025

11,128

10,491

7,497

4,706

47,847

－

810

－

16

31

813

1,670

Acquisitions through businesscombinations

2,747

98

1,275

－

5,120

880

7,373

Disposals (ii)

－

(274)

－

－

－

(9)

(283)

262

266

281

8

(18)

573

1,109

Effect of foreign currency
exchange differences
OthersBalance at 31 March 2014

－

209

(1)

(3)

－

7

211

14,207

15,134

12,682

10,512

12,6306,970

57,927（Millions of Yen）
Accumulated amortisation andGoodwill

impairment losses
Balance at 1 April 2012

Intangible assets
Patents

Customer

SoftwareTechnology(2,474)(8,793)(6,934)(6,172)－(1,781)(23,679)

related assets

OthersTotal

Amortisation expense (iii)－(1,272)(800)(1,259)

(542)

(221)

(4,094)

Impairment loss (iv)

－

(22)

－

(108)

－

－

(130)

Disposals (ii)

－

381

－

77

－

0

458

(357)

(747)

(207)

(2)

(89)

(151)

(1,196)

－

(17)

－

－

(214)

214

(17)

Balance at 31 March 2013

(2,831)(10,470)(7,940)(7,464)(845)(1,939)(28,658)

Amortisation expense (iii)－(1,399)(863)(1,195)

(847)

(490)

(4,795)

(148)

(13)

－

－

－

(49)

(62)

－

245

－

－

－

7

252

(267)

(268)

(195)

(2)

(6)

(265)

(735)

Effect of foreign currency
exchange differences
OthersImpairment loss (iv)
Disposals (ii)
Effect of foreign currency
exchange differences
OthersBalance at 31 March 2014

－

3

7

－

(7)

14

17

(3,246)(11,901)(8,992)(8,661)(1,705)(2,722)(33,980)-50-

（Millions of Yen）
Carrying amount

Goodwill

Intangible assets
SoftwareBalance at 1 April 2012

Technology

Customer

Patents

related assets

1,431

3,373

3,856

4,419

Balance at 31 March 2013

8,367

3,555

3,187

Balance at 31 March 2014

10,961

3,232

3,691

Others

Total

－

1,516

13,164

3,027

6,652

2,767

19,1891,851

10,925

4,248

23,947(Thousands of U.S. Dollars (Note 2))
Cost

Goodwill

Intangible assets
CustomerOthers (i)TotalSoftwareTechnology

Patents

108,798

136,271

108,120

101,935

72,84145,728464,896

－

7,867

－

153

305

7,899

16,225

combinations

26,695948

12,392－

49,748

8,554

71,641

Disposals (ii)－

(2,659)

－

－

－

(92)

(2,751)

2,546

2,586

2,727

74

(177)

5,566

10,776

－

2,028

(14)

(26)

－

63

2,051

138,039

147,042

123,224

102,136

122,718

67,719562,838

Balance at 31 March 2013
Additionsrelated assets

Acquisitions through business

Effect of foreign currency
exchange differences
OthersBalance at 31 March 2014

(Thousands of U.S. Dollars (Note 2))
Accumulated amortisation andGoodwill

impairment losses
Balance at 31 March 2013
Amortisation expense (iii)
Impairment loss (iv)
Disposals (ii)
Effect of foreign currency

Intangible assets
SoftwareTechnology

Patents(27,507)(101,729)(77,150)(72,519)－(13,594)(8,386)(1,435)(124)－

CustomerOthersTotal(8,208)(18,842)(278,448)(11,614)(8,230)(4,760)(46,585)

－

－

(475)

(599)

related assets

－

2,380

－

－

－

71

2,451

(2,594)(2,601)(1,892)

(16)

(62)

(2,573)(7,144)

－

33

64

－

(63)

134

167

(31,536)(115,636)(87,364)(84,149)(16,564)(26,445)(330,158)

exchange differences
OthersBalance at 31 March 2014-51-

(Thousands of U.S. Dollars (Note 2))
Carrying amount

Goodwill

Balance at 31 March 2014

106,502

Intangible assets
SoftwareTechnology

31,40635,860

Customer

Patents

related assets

17,986

Others106,153

41,274

Total
232,680

Note:(i) There were no significant internally-generated intangible assets for the years ended 31 March 2013 and 2014.
(ii) Loss on disposal of intangible assets is set out in Note 25 “Revenue and expenses (excluding finance income and costs)”, (6) Other
expenses.
(iii) Amortisation expense is included in the line item ‘Depreciation and amortisation’ in the consolidated statement of comprehensive
income.
(iv) Refer to Note 8 “Impairment losses” for details of impairment losses and reversal of impairment losses.
No intangible assets have been pledged as collateral to secure the debt. There is no restriction on legal title of these assets. Details ofcommitments for the acquisition of intangible assets are set out in Note 34 “Commitments for expenditure”.
The details of intangible assets in Consolidated Statement of Financial Position are as follows:
As at 31 March 2013

As at 31 March 2014
Carrying amount

Carrying amount Remaining useful Carrying amount(Thousands ofRemaining useful(Millions of Yen)

U.S. Dollars

lives (Year)

lives (Year)(Millions of Yen)

(Note 2))
Technology
Patents

Medical related
products

2,201

4

2,962

28,776

10

2,673

2

1,604

15,589

1

5,636

14

6,896

67,002

10

－

－

2,771

26,927

11

Medical related
products

Customer related

Health Care related

assetsproducts
Medical related
products-52-

8.Impairment losses
The following are the details of impairment losses recognised.
Impairment losses have been included in the line item ‘Impairment losses’ in the consolidated statement of comprehensive income.
(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars (Note 2))

For the year ended 31 March 2013

For the year ended 31 March 2014

For the year ended 31 March 2014

Buildings and structures

289

2,555

24,821

Machinery and equipment

243

740

7,191

Tools, equipment and fixtures

46

104

1,015

Land

286

852

8,275

Construction in progress

112

310

3,010

Subtotal losses on property, plant
975

4,561

44,312

Goodwill

－

148

1,435

Intangible assets

130

62

599

14

－

－

1,119

4,770

46,347and equipment

Other non-current assets (Longterm prepaid expense)
Total impairment losses(1) Cash-generating units
The Group identifies each strategic business unit (“SBU”) as a cash-generating unit for impairment testing purposes. Each business
unit has been set based on the production and sale of product lines. For any asset expected to be sold or disposed, or any idle asset, an
individual asset is tested for impairment.

-53-

(2) Impairment losses on assets in business units
For the year ended 31 March 2013
The Group identified indications of impairment due to the decline in the Optical device market caused by a decrease of demand in PCs
and the spread of downloading data via the Internet. The Group performed an impairment test based on the latest business plan, andthe following impairment losses were recognised.
Recoverable amount was measured at the value in use and determined using cash flow projections based on the financial budgets forthe following five fiscal years approved by the Group’s management, and a discount rate of 10% per annum which is the SBU’s pretax weighted average capital cost (WACC).
(Millions of Yen)
Impairment losses

Information Technology
Imaging related products (Optical Devices)
Buildings and structures

212

Machinery and carriers

231

Tools, equipment and fixtures46

Construction in progress

112

Property, plant and equipment Total

601

Software22

Patents

108
Intangible assets Total

130

Other non-current assets (Long-term prepaid expenses)

14

Information Technology Total

745

For the year ended 31 March 2014
The Group identified indications of impairment due to the delay in profit recovery in the electronics related products, although theGroup has been promoting the products by developing and improving their brand recognition. In addition, the Group performed an
impairment test for goodwill in Life Care based on the latest business plan, and the following impairment losses were recognised.
Recoverable amount was measured at the value in use and determined using cash flow projections based on the financial budgets forthe following four or five fiscal years approved by the Group’s management, and a discount rate of 10% per annum which is the
SBU’s pre-tax weighted average capital cost (WACC).
(Millions of Yen)

(Thousands of U.S. Dollars (Note 2))

Impairment losses

Impairment losses

Information Technology
Electronics related products
Buildings and structures

558

5,426

Machinery and carriers

647

6,291

Tools, equipment and fixtures

1

15

Property, plant and equipment Total

1,207

11,731

2

22

Information Technology Total

1,210

11,753

SoftwareLife Care
Health Care related products
Goodwill

148

1,435

Life Care Total

148

1,435

Total

1,357

13,188-54-

(3) Impairment losses on idle assets
For the year ended 31 March 2013 and 2014, the carrying amount of idle assets and the assets that the Group plans to change theirintended purpose, resulting from business restructuring, which were not expected to be used in the future, was written down to therecoverable amount which was measured at fair value less related selling costs, and the corresponding impairment loss wasrecognised. The fair value was based on an appraisal or publicly posted land price. For any asset to be disposed of, its recoverable
amount was considered to be zero.
Impairment losses were recognised as follows for the year ended 31 March 2013:(Millions of Yen)
Impairment losses

Information Technology
Buildings and structures

60

Information Technology Total

60

Life Care
Buildings and structures

17

Machinery and carriers

12

Land

286
Life Care Total

314

Total

374

Impairment losses were recognised as follows for the year ended 31 March 2014:(Millions of Yen)

(Thousands of U.S. Dollars (Note 2))

Impairment losses

Impairment losses

Information Technology
Buildings and structures

1,996

Machinery and carriers

93

900

Tools, equipment and fixtures

103

1,000

Construction in progress

19,396

310

3,010

2,502

24,306

10

102

2,512

24,408

49

475

49

475

852

8,275

Corporate Total

852

8,275

Total

3,413

33,158Property, plant and equipment Total
SoftwareInformation Technology Total
Life Care
Other intangible assets
Life Care Total
Corporate
Land

-55-

(4) Goodwill allocated to cash-generating units
When the recoverable amount of the goodwill specifically associated with a cash-generating unit is lower than the carrying amount ofsuch goodwill, an impairment loss is recognised and the goodwill is written down to the recoverable amount. Recoverable amount of
goodwill allocated to cash-generating units was measured at the value in use and it was determined using cash flow projections basedon the financial budgets which had been approved by the Group’s management, and a discount rate of 5% to 10% per annum which isthe cash-generating units’ pre-tax weighted average capital cost (WACC). Cash flow projections during the budget period are basedon the same expected gross margins and inflation throughout the budget period. The cash flows beyond budget period have been
extrapolated using a steady annum growth rate which is the projected long-term average growth rate for the main products market.
Management believes that any reasonably possible change in the key assumptions (e.g., profit ratio, inflation, the projected long-term
average growth rate and the before tax, weighted average cost of capital) on which recoverable amount is based would not cause theaggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
The carrying amount of goodwill was allocated to the cash-generating units as follows:（Millions of Yen）
As at 31 March 2013

Life Care
Health Care related
products
Eyeglass lenses
Japan

Adjustments

Medical related products

R&D

Total

Medical accessories
－

733

－

733

Americas

6,301

66

35

6,402

Europe

655

69

－

724

Asia

508

－

－

508

7,464

868

35

8,367

Total

（Millions of Yen）
As at 31 March 2014

Life Care
Health Care related
products
Eyeglass lenses
Japan

Adjustments

Medical related products

R&D

Total

Medical accessories
791

733

1,524

－

Americas

6,175

71

38

6,284

Europe

694

911

－

1,605

Asia
Total

1,549

－

－

1,549

9,209

1,714

38

10,961(Thousands of U.S. Dollars (Note 2))
As at 31 March 2014

Life Care
Health Care related
products
Eyeglass lenses
Japan

7,688

Americas
EuropeAsia
Total

Adjustments

Medical related products

R&D

Total

Medical accessories
7,120

－

14,80859,995687

372

61,054

6,743

8,848

－

15,591

15,049－－15,04989,476

16,654372

106,502

Note:
Impairment loss on goodwill of Health Care related products (Eyeglass lens) was recognised in the amount of 148 million yen (1,435
thousand U.S. dollars) for the year ended 31 March 2014.
-56-

9.Investments in associates
Summary of the Group’s associates, not individually significant, is as follows:(Thousands of U.S.

(Millions of Yen)

(Millions of Yen)

As at / for the year

As at / for the year

As at / for the year

ended 31 March 2013

ended 31 March 2014

ended 31 March 2014

(11,912)(268)(2,608)

171

31

299

(11,741)(238)(2,309)

534

140

1,358

Group’s share of net income (loss)
Group’s share of other comprehensive income (loss)
Group’s share of comprehensive income (loss)
Group’s share of net assets

Dollars (Note 2))

Details of the Group’s associates, not individually significant, are as follows:
Ownership interest (%)

Place of
Name of associate

Principal activity incorporation andSegment

operation
AVANSTRATE, INC.

Production and

As at

As at

31 March 2013

31 March 2014

JAPAN

Corporate

46.6

46.6

CHINA

Information

49.0

49.0

－

－

sale of glass
substrate for thinfilm transistor(TFT) liquid
crystalJIASHAN CANDEO OPTICAL

Production and

GLASS CO., LTD.

sale of special

Technology

glass, such ascolored glass
SEIKO OPTICAL PRODUCTS

Design and sales

CO., LTD.

of optical lensJAPAN

Life Careand frames andother opticalproducts
Note:
SEIKO OPTICAL PRODUCTS CO., LTD. became an affiliate of the Group on 31 May 2013 with 30% ownership, and subsequently
became a subsidiary of the Group on 31 March 2014 due to the additional acquisition of shares which resulted in 50% ownership by
the Group.
Group’s unrecognised share of loss of associates is as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

As at / for the year

As at / for the year

As at / for the year

ended 31 March 2013

ended 31 March 2014

ended 31 March 2014

Group’s unrecognised share of net loss

－

2,722

26,450Group’s unrecognised share of accumulated net loss

－

2,722

26,450-57-

10.Deferred taxes and Income taxes(1) Deferred taxes
Details of deferred tax assets and liabilities are as follows:（Millions of Yen）
Recognised in
As at

Recognised inotherBusiness

As at

1 April 2012

profit or loss

comprehensive

Combinations

31 March 2013

incomeTemporary differences
39

325

Written down inventories

878

Allowance for doubtful

471
672

Enterprise tax payable

－

0

364

(418)

－

35

495

179

－

3

652

46

－

116

834

accounts
Provisions
Accrued expenses

4,389

565

－

49

5,002

Unrealised profit on inventories

2,248

224

－

－

2,472

Depreciation and amortisation

3,716

1,650

－

－

5,366

96

(96)

－

－

(0)

1,127

19

－

－

1,146

705

－

7

－

712

4,010

(680)

19

44

3,392

Sub total

18,350

1,813

26

246

20,436

Undistributed retained earnings

(605)

(501)

－

－

(1,106)

Depreciation and amortisation(3,601)(1,910)－(2,409)(7,920)Net gain/(loss) on revaluation

(102)

－

(210)

－

(312)

(507)

110

－

(190)

(586)

(4,814)(2,301)(210)(2,599)(9,924)

10,990(8,376)

－

－

2,615

841

(653)

－

－

188

Sub total

11,831(9,029)

－

－

2,802

Total

25,367(9,516)(184)(2,353)

13,314

Tax goodwill
Impairment losses
Exchange differences ontranslating foreign operations
Othersof subsidiaries

of available-for-sale financial
assetsOthers
Sub total
Tax losses carry forward and tax
credits
Tax losses carry forward
Tax credits

Note:
The difference between the total amount of “Recognised in profit or loss” as above and “Deferred tax expenses” in Note 10 “Income
taxes” (2) Income taxes, is due to foreign exchange fluctuations.

-58-

（Millions of Yen）
Recognised
As at

Recognised inin otherBusiness

As at

1 April 2013

profit or loss

comprehensive

Combinations

31 March 2014

incomeTemporary differences
Enterprise tax payable

364

448

－

2

813

Written down inventories

495

704

－

179

1,377

Allowance for doubtful

652

77

－

33

761

834

(52)

－

32

814

Accrued expenses

5,002(1,257)

－

348

4,093

Unrealised profit on inventories

2,472

(12)

－

－

2,460

Depreciation and amortisation

5,366

(738)

－

0

4,629

accounts
Provisions

(0)

0

－

－

－

1,146

(141)

－

－

1,005

712

－

(160)

－

552

3,392

347

(15)

27

3,751

Sub total

20,436

(625)

(175)

620

20,255

Undistributed retained earnings(1,106)

(901)

－

－

(2,007)

Depreciation and amortisation(7,920)630－(1,679)(8,970)Net gain/(loss) on revaluation

(312)

(0)

72

－

(240)

(586)

(5)

－

－

(591)

(9,924)(276)

72(1,679)(11,808)

Tax goodwill
Impairment losses
Exchange differences ontranslating foreign operations
Othersof subsidiaries

of available-for-sale financial
assetsOthers
Sub total
Tax losses carry forward and tax
credits
2,615

(828)

－

276

2,063

188

(188)

－

－

－

Sub total

2,802(1,015)

－

276

2,063

Total

13,314(1,917)

(103)

(784)

10,510Tax losses carry forward
Tax credits

Note:
The difference between the total amount of “Recognised in profit or loss” as above and “Deferred tax expenses” in Note 10 “Income
taxes” (2) Income taxes, is due to foreign exchange fluctuations.

-59-

(Thousands of U.S. Dollars (Note 2))
Recognised in
As at

Recognised inotherBusiness

As at

1 April 2013

profit or loss

comprehensive

Combinations

31 March 2014

incomeTemporary differences
Enterprise tax payable

3,537

4,351

－

15

7,903

Written down inventories

4,807

6,837

－

1,735

13,378

Allowance for doubtful

6,339

743

－

316

7,398

8,102

(507)

－

311

7,906

Accrued expenses

48,603(12,218)－

3,381

39,766

Unrealised profit on inventories

24,023

(121)

－

－

23,902

Depreciation and amortisation

52,139(7,167)－

1

44,973

(0)

0

－

－

－

11,133(1,371)

－

－

9,762

accounts
Provisions

Tax goodwill
Impairment losses
Exchange differences ontranslating foreign operations

6,921

－

(1,556)－

5,366

Others32,956

3,375

(143)

261

36,449Sub total

198,560(6,077)(1,699)6,020

196,804

Undistributed retained earnings(10,746)(8,754)－－(19,501)

Depreciation and amortisation(76,954)

6,121－(16,317)(87,151)

Net gain/(loss) on revaluation(3,031)

(1)

696

－

(2,337)(5,694)

(49)

－

－

(5,743)(96,426)(2,683)696(16,317)(114,730)

Tax losses carry forward

25,405(8,044)－2,680

20,041

Tax credits

1,823(1,823)－－－Sub total

27,228(9,867)－2,680

20,041

Total

129,362(18,627)(1,003)(7,617)102,116of subsidiaries

of available-for-sale financial
assetsOthers
Sub total
Tax losses carry forward and tax
credits

Note:
The difference between the total amount of “Recognised in profit or loss” as above and “Deferred tax expenses” in Note 10 “Income
taxes” (2) Income taxes, is due to foreign exchange fluctuations.

-60-

Tax losses carry forward and deductible temporary differences for which deferred tax assets have not been recognised are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

As at

As at

As at

31 March 2013

31 March 2014

31 March 2014

Tax losses carry forward

10,34514,808143,875

942

3,340

32,451

11,28618,147

176,326

Deductible temporary differences
Total

The expiration date and amounts of tax losses carry forward for which deferred tax assets are not recognised are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars Note 2))

As at

As at

As at

31 March 2013

31 March 2014

31 March 2014

Year 1

1,094

799

7,759

Year 2

1,460

640

6,216

Year 3922

1,203

11,691

Year 4

2,056

1,455

14,134

4,812

10,712104,077

10,34514,808143,875

Year 5 or later
Total

The aggregate amounts of temporary differences associated with undistributed retained earnings of the subsidiaries for which deferred
tax liabilities have not been recognised at 31 March 2013 and 2014 were 250,948 million yen and 264,188 million yen (2,566,921
thousand U.S. dollars), respectively. No liability has been recognised in respect of these differences because the Group is in a position
to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in theforeseeable future.
The Company recognised no deferred tax assets on the tax losses as at 31 March 2013 and 2014.

-61-

(2) Income taxes
In Japan, the normal effective statutory tax rates are approximately 38.0 % for the years ended 31 March 2013 and 2014.
Current or deferred taxes at other tax jurisdictions are calculated by the tax rates generally applied to those tax jurisdictions.
Details of current tax expense and deferred tax expense are as follows:(Thousands of U.S.

(Millions of Yen)

(Millions of Yen)

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Dollars (Note 2))

Current tax expense: (i)Current year

9,116

22,705

220,605

Prior years

(27)

115

1,113

9,089

22,819221,717

9,712

2,174

21,120

－

354

3,438

Total current tax expense
Deferred tax expense: (ii)
Origination and reversal of temporary difference
Changes in tax rates
Total deferred tax expense

9,712

2,527

24,558

Total income tax expense

18,801

25,347

246,275

18,801

25,347

246,275－－－

Continuing operations
Discontinued operations
Note:(i) ‘Current tax expense’ includes previously unrecognised tax benefits from tax losses carry forward, tax credits and deductible
temporary differences. These benefits were 135 million yen and 43 million yen (415 thousand U.S. dollars) for the years ended 31
March 2013 and 2014, respectively.
(ii) ‘Deferred tax expense’ includes previously unrecognised tax benefits from tax losses carry forward, tax credits, deductible
temporary differences, and expenses or benefits arising from write-downs of deferred tax assets or the reversal of previous writedowns of deferred tax assets. These effects increased/decreased the deferred tax expense by (135) million yen and 2,128 million yen(20,678 thousand U.S. dollars) for the years ended 31 March 2013 and 2014, respectively.
(iii) On 26 June 2013, the Company received a reassessment notice for additional tax on the transfer pricing taxation. The additional
tax assessment was 8,419 million yen (81,800 thousand U.S. dollars). The Company has lodged an objection with the Tokyo Regional
Taxation Bureau (“TRTB”) seeking withdrawal of the assessment in accordance with the relevant law. Consequently, 8,419 million
yen is included in “Other current assets” as suspense payment.
A reconciliation of the normal effective statutory tax rate with the actual tax rate is as follows. The actual tax rate represents the ratio
of income tax expense and profit before tax from continuing operations.

Effective statutory tax rate

For the year ended

For the year ended

31 March 2013

31 March 2014

38.0%

38.0%

Expenses not deductible for tax purposes

0.7%

1.0%

Income not taxable for tax purposes(4.6)%(0.2)%

Effect of unrecognised deferred tax assets

0.4%

2.5%

(17.1)%(16.4)%

5.0%

0.1%

rate

－%

0.4%

Tax rate difference due to the elimination of the unrealised profit on inventories

0.0%

0.5%

Impact of different tax rates applied to overseas subsidiaries
Profits and losses on investments in associates
Adjustment on deferred tax assets and liabilities due to the change of corporate tax

Increase/decrease in deferred tax liabilities related to undistributed earnings of foreignsubsidiaries

0.5%

1.1%

Others(2.3)%

2.6%

Actual tax rate

20.6%

29.6%

There was no effect on income tax resulting from dividends paid to shareholders.
-62-11.Other financial assets and liabilities
Details of other financial assets and liabilities are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.

As at

As at

As at

31 March 2013

31 March 2014

31 March 2014

Dollars (Note 2))

Other financial assets
FVTPL financial assets (derivative instruments)

3,555

1,295

12,585

Available-for-sale financial assets

3,281

2,821

27,412Loans and receivables
Loans and receivables

12,514

16,500160,319

Allowance for doubtful accounts(990)(1,063)(10,327)

Loans and receivables –net

11,524

15,437

149,992

18,36019,554

189,989

9,150

9,062

88,0509,210

10,492

101,939

Total
Non-current assets total (Long-term financial
assets)Current assets total (Other short-term financial
assets)(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

As at

As at

As at

31 March 2013

31 March 2014

31 March 2014

Other financial liabilities
FVTPL financial liabilities (derivative instruments)

349

－

－

185

152

1,474

534

152

1,474

149

－

－

385

152

1,474

Other financial liabilities measured at amortised
cost
Total
Non-current liabilities total (Other long-term
financial liabilities)
Current liabilities total (Other short-term financial
liabilities)-63-

12.Other assets and liabilities
Details of other assets and liabilities are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

1,853

2,222

21,589

613

305

2,962

2,467

2,527

24,551

Non-current: Other assets
Long-term prepaid expenses
Others
Total
Current: Other assets
－

8,419

81,800Prepaid expenses

Suspense payment (i)

2,196

1,948

18,923

Refundable consumption taxes

4,796

2,337

22,708794

1,266

12,302

7,786

13,970135,732

Others
Total(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

1,009

998

9,700

1,215

1,189

11,556

2,224

2,188

21,256

Non-current: Other liabilities
Consideration payable for business combination(ii)
Deposit received and Long-term advancerevenue, etc
Total
Current: Other liabilities
Accrued salary/bonus/vacation pay

11,15912,251

119,035

Other accrued expenses

12,146

14,161

137,592

Advance received/Deferred revenue (iii)

1,785

2,959

28,751

Accrued consumption taxes

1,567

1,907

18,531Others
Total

2,906

3,381

32,852

29,564

34,660336,762Note:(i) On 26 June 2013, the Company received a reassessment notice for additional tax on the transfer pricing taxation in transactions
with overseas subsidiaries that develop and manufacture electronics related products, for the five financial years ended 31 March
2007 to 31 March 2011 from the Tokyo Regional Taxation Bureau (“TRTB”). The additional tax assessment was 8,419 million
yen. The Company was required to pay 3,309 million yen due to the existence of net operating losses carried forward with respect
to the indicated financial years and paid it in the current year. The Company has lodged an objection with TRTB seeking
withdrawal of the assessment in accordance with the relevant law. Consequently 8,419 million yen is included in “Other current
assets” as suspense payment.
(ii) The amount represents a part of the consideration payable for the business combination of Seiko Epson Corporation Eyeglasslens development and manufacturing on 1 February 2013 which will be paid when the actual amount of royalties for the four years
after the closing date are determined.

-64-

(iii) Details of advance received and deferred revenue are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.

As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

250

335

3,256

1,536

2,624

25,495

1,785

2,959

28,751

Dollars (Note 2))
Advance received/Deferred revenue
Government grants
OthersTotal-65-

13.Inventories
Details of inventories are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013
Goods and products

As at 31 March 2014

28,766As at 31 March 2014

31,937

310,309

Work in progress

6,393

5,670

55,094

Raw materials

20,27314,367

139,598

Supplies
Total

11,28910,672

103,694

66,72062,647

608,6961

4

41

Inventories expected to be soldafter more than 12 months

Inventories of 904 million yen are pledged as collateral for long-term bank loans of 290 million yen (Note 16. Interest-bearing debt).
The cost of inventories recognised as expense during the years ended 31 March 2013 and 2014 was 201,701 million yen and 221,199
million yen (2,149,233 thousand U.S. dollars), respectively.
The cost of inventories recognised as expense in respect of write-down and the reversal of such write-down is as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Amount of write-down

2,272

2,564

24,910－－－

Amount of reversal of writedown

14.Trade and other receivables
Details of trade and other receivables are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013
Accounts receivable

As at 31 March 2014

As at 31 March 2014

73,416

89,400868,640

Notes receivable

6,526

6,878

66,826

Other receivables

10,874

1,644

15,975

Allowance for doubtful accounts(1,992)(2,393)(23,255)

Total

88,824

95,529928,187

The credit terms for customers are set between 90 days to 120 days on average.
Refer to Note 23 “Financial instruments” for credit risk management and fair value of trade and other receivables.
Trade and other receivable of 1,063 million yen are pledged as collateral for long-term bank loans of 290 million yen (Note 16.
Interest-bearing debt).
Other receivables as at 31 March 2013 include insurance proceeds receivable of 9,652 million yen for the damaged fixed assets andbusiness interruptions caused by the flood in Thailand in October 2011. This amount is included in “Other income (Insurance
proceeds)” in the consolidated statement of comprehensive income for the year ended 31 March 2013.

-66-

15.Cash and cash equivalents
Details of cash and cash equivalents are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

Cash and cash equivalents
Cash and deposit within three239,498

331,094

3,217,000

9,398

－

－

248,896

331,094

3,217,000

monthsShort-term investments within
three months
Total

-67-

16.Interest-bearing debt
Details of interest-bearing debt are as follows:(Millions of(Millions of(Thousands of

Yen)

Yen)

U.S. Dollars

Averageinterest rate

(Note 2))As at 31 March As at 31 March As at 31 March
2013
Long-term bank loans (excluding current portion)

2014
12

Current portion of long-term bank loans

261

(i)

2,532

2.38

2016-2020

1,477

82

796

2.54

－

6

2,007

19,504

1.39－

Short-term bank loans
Bonds (ii)

2014

Due

(%)

60,12635,032

340,384－－

Current portion of bonds (ii)234

25,119244,065－－

Long-term finance lease obligations (Note 17)

699

536

5,210

－

2016-2020

Short-term finance lease obligations (Note 17)

175

242

2,349

－

－

Interest-bearing debt Total

62,72963,279614,841

Non-current debt total

60,83735,829348,127

Current debt total

1,891

27,450266,714Note:(i) Interest rates are based on the weighted-average rates that applied to the balances at the end of each fiscal year.
(ii) The summary of issuance conditions for bonds is as follows:(Millions of (Millions ofCompany

Item

Yen)

Yen)

As at 31

As at 31

Issue Date

(Thousands of
U.S. Dollars(Note 2))As at 31

Interest rate(%)

Collateral(Millions of

Due

Yen)

March 2013 March 2014 March 2014
HOYA

Unsecured

CORPORATION

bond (No.2)

HOYA

Unsecured

CORPORATION

bond (No.3)

HOYA

5 Private

Technosurgical, Inc. Notes
Total

－

11
September

19
24,98024,993242,841

1.62

－

2007

September
2014

11
September

20
34,94434,956339,641

1.93

－

2007

September
2017

2011-2012

437

203

1,968

1.40

－

2014-2018－

60,36060,152584,450－－－

Trade and other receivables of 1,063 million yen, Inventories of 904 million yen, Buildings and structures of 33 million yen,
Machinery and carriers of 6 million yen, and Tools, equipment and fixtures of 35 million yen are pledged as collateral for long-termand short-term bank loans (including current portion) stated above.
The obligations under finance lease are secured by the leased assets for which the lessor has ownership. Refer to Note 17 “Financelease obligations”.
There is no debt with covenants as at 31 March 2014.
Details of the remaining contractual maturity for long-term borrowings and bonds, and fair values are set out in Note 23 “Financial
instruments”.

-68-17.Finance lease obligations
Details of finance lease obligations are as follows:
Minimum lease payments

Present Value of Minimum
Lease Payments(Millions of Yen) (Millions of Yen) (Thousands of U.S. (Millions of Yen) (Millions of Yen) (Thousands of U.S.
Dollars (Note 2))

Dollars (Note 2))

As at 31 March

As at 31 March

As at 31 March

As at 31 March

As at 31 March

As at 31 March

2013

2014

2014

2013

2014

2014

Amounts payable under financeleases:
Not later than one year

201

266

2,588

175

242

2,349

later than five years

725

595

5,776

662

516

5,010

Later than five years

43

23

226

37

21

200

874

778

7,559

874

778

7,559

175

242

2,349

699

536

5,210

Later than one year but not

Total
Less future finance charges

969

884

8,590

(95)

(106)

(1,031)

874

778

7,559

Present value of leaseobligations
Less amount due for settlement
within 12 months
Amount due for settlement after
12 months

The Group has not entered into any new finance lease contracts in its policy, except the case only when it concludes that it has anumber of advantages of having a lease arrangement in respect of cost reduction or the avoidance of the risk associated with productobsolescence. The average remaining lease term is approximately two to four years as at 31 March 2014.
Some lease contracts include renewal options or purchase options. However, there is no sub-lease contract, contingent rent, escalation
payments and specific limitations (such as dividends, additional borrowing, and additional lease contract), included in these lease
contracts.
The Group’s fair values of lease obligations are set out in Note 23 “Financial instruments”.

-69-

18.Operating lease arrangements
Details of minimum lease payments and contingent lease payments for the period under operating lease arrangements are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Minimum lease payments

6,547

7,664

74,466

446

545

5,295

6,993

8,209

79,761

Contingent rent
Total

The amounts above are included in the line item ‘Other expenses’ in the consolidated statement of comprehensive income.
Contingent rent, which are determined in rent contracts for stores at shopping malls, is the rent based on the stores’ sales amounts.
As at 31 March 2013 and 2014, the maturity periods of the outstanding commitments under non-cancellable operating leases are as
follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Not later than 1 year

1,218

1,775

17,248Later than 1 year but not later than 5 years

2,449

3,857

37,479

417

669

6,498

4,083

6,301

61,225Later than 5 years
Total

Operating lease payments represent rentals payable by the Group for the land used for an office, building and machinery, and tools,
equipment and fixtures. The average remaining operating lease terms for those assets as at 31 March 2014 are 18 years, three years
and two years, respectively.
Some lease contracts include renewal options, purchase options or escalation payments. However, there are no sub-lease contract or
restrictions (such as dividends, additional borrowing, and additional lease contract), included in these contracts.

-70-

19.Retirement benefit plans
The Group has contributory defined contribution plans and defined benefit plans, and non-contributory defined benefit plans. The
accounting policies adopted by the Group for retirement benefit plans is stated in Note 3 “Significant accounting policies (19)Retirement benefit costs”. The Group has applied IAS 19 “Employee benefits (Revised in 2011)” and changed the accounting policies
for the year ended 31 March 2014. These changes were applied retrospectively, and the accumulated effects of the changes werereflected in the beginning balance for the year ended 31 March 2013.
The Company and its domestic subsidiaries mainly have defined contribution plans. Overseas subsidiaries have benefit plans requiredby local law and regulations of each country. Unless a defined benefit plan is required by the laws of the country in which the overseas
subsidiaries operate, a defined contribution plan has been put into place. The plan in U.K. represents a substantial portion of thepension plans of the Group, where it is the closed plan which stopped the new registrations. Management believes that general risks,such as investment risks, credit risks and salary risks are not significant in the plan.
Defined benefit plans taken over from PENTAX CORPORATION as a result of the merger were settled during the year ended 31
March 2013 and the plans have been converted to the Group’s defined contribution plan.
The Group does not have retirement benefit plans other than pension plans and lump-sum retirement allowances.
(1) Defined benefit plans
The amounts included in the consolidated statement of financial position arising from the Group’s obligations in respect of its defined
benefit plans are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.

As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

3,870
(2,442)

4,832(3,191)

46,949(31,000)

1,428
26

1,641
31

15,949
300

1,454

1,672

16,248

1,457
3

1,675
3

16,27527

Dollars (Note 2))
Present value of funded defined benefit obligation
Fair value of plan assets
Total
The effect of the changes to the asset ceiling
Net liability arising from defined benefit plansobligations
Balance in the consolidated statement of financial
position
Liability
Asset (Other non-current assets)-71-

Amounts recognised in the consolidated statement of comprehensive income in respect of these defined benefit plans are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

(Note 2))Service cost
Current service cost

466

389

3,779

Past service cost and (gain)/loss from

(777)

(28)

(274)

86

54

528

(226)

415

4,033

Return on plan assets

(113)

(10)

(98)

Actuarial gains and losses arising from

(57)

(20)

(191)

186

(218)

(2,116)

59

166

1,618

24

0

0

98

(81)

(787)

(127)

334

3,246

settlements
Net interest expense
Components of defined benefit costs
recognised in profit or loss
Remeasurement on the net defined benefit
liabilitychanges in demographic assumptions
Actuarial gains and losses arising fromchanges in financial assumptions
Actuarial gains and losses arising fromexperience adjustments
Adjustments for restrictions on thedefined benefit asset
Components of defined benefit costs
recognised in other comprehensive income
Total

Movements in the present value of the defined benefit obligations are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Beginning balance

14,9683,870

37,603Current service cost

466

389

3,779

Interest cost

262

175

1,700

(57)

(20)

(191)

186

(218)

(2,116)

59

166

1,618

－

(28)

(274)

(11,371)

－

－

5

78

762

(1,065)

(94)

(913)

418

513

4,980

3,870

4,832

46,949Remeasurement (gains)/losses
Actuarial gains and losses arising fromchanges in demographic assumptions
Actuarial gains and losses arising fromchanges in financial assumptions
Actuarial gains and losses arising fromexperience adjustments
Past service cost
Decrease due to settlement
Increase due to acquisition of subsidiaries
Benefits paid
Effect of foreign currency exchange
differences
Ending balance-72-Movements in the present value of the plan assets are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Beginning balance

7,757

2,442

23,727

Interest income

176

121

1,172

113

10

98

Remeasurement gain (loss)
Return on plan assets (excluding amounts
included in net interest expense)
Contributions from the employer

365

384

3,730

(5,581)－－

Benefits paid

(611)

(184)

(1,790)Effect of foreign currency exchange

223

418

4,062

2,442

3,191

31,000Decrease due to settlement

differences
Ending balance

Movements in the effect of the changes to the asset ceiling are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Beginning balance

－

26

250

Interest expense

－

0

0

24

0

0

Remeasurement gain (loss)
The effect of the changes to the asset
ceiling
Effect of foreign currency exchange
differences

2

5

49

Ending balance

26

31

300

The fair values of major categories of plan assets as at 31 March 2013 and 2014 are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013
Cash and cash equivalents

As at 31 March 2014

As at 31 March 2014

26

363

3,523

1,391

1,016

9,876

470

1,299

12,620Debt instruments - Foreign bonds

476

474

4,609

Others

80

38

373

2,442

3,191

31,000Equity instruments - Foreign equity
instruments
Debt instruments - Foreign governmental
bonds

Total

The fair values of financial instruments are measured at quoted market price in active market. No transferable instrument is includedin plan assets.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
As at 31 March 2013
Discount rate

As at 31 March 2014
4.4%

4.5%

The Group believes there is no material impact on operating results, financial positions and cash flows due to the defined benefit planof the Group, including the amount, timing and uncertainly of future cash flows.

-73-(2) Defined contribution plans
The total expense recognised was 1,451 million yen, and 1,908 million yen (18,537 thousand U.S. dollars) for the years ended 31
March 2013 and 2014, respectively.
(3) Severance payments
Under certain circumstances (such as retirement before the predetermined retirement date), additional payments are made uponretirement. The total expense recognised was 2,465 million yen, and 1,790 million yen (17,392 thousand U.S. dollars) for the years
ended 31 March 2013 and 2014, respectively.

-74-

20.Provisions
Details of provisions are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013
Asset retirement obligation

2,071

Warranties provision
Total
Non-current liabilities
Current liabilities

As at 31 March 2014

As at 31 March 2014

2,142

20,813

704

969

9,412

2,776

3,111

30,225

1,975

2,155

20,942

800

955

9,283

An analysis of the change in provisions is as follows:(Millions of Yen)
Asset retirement obligation

Warranty provision

Total

Balance at 1 April 2013

2,071

704

2,776

Provision for the year

98

297

395

Business Combination

－

181

181

Interest cost associated with passage of time
Reduction resulting from settlement for the year
Effect of foreign currency exchange differences
Balance at 31 March 2014

29

－

29

(115)

(279)

(394)

59

66

124

2,142

969

3,111

(Thousands of U.S. Dollars (Note 2))
Asset retirement obligation

Warranty provision

Total

Balance at 1 April 201320,126

6,843

26,969Provision for the year

948

2,886

3,833

Business Combination

－

1,754

1,754

Interest cost associated with passage of time
Reduction resulting from settlement for the year
Effect of foreign currency exchange differences
Balance at 31 March 2014

286

－

286

(1,117)(2,709)(3,826)

570

639

1,209

20,813

9,412

30,225Note:
Refer to Note 3 “Significant accounting policies (20) Provisions, and contingent liabilities assumed in a business combination” fordetail of each provision.

-75-

21.Trade and other payables
Details of trade and other payables are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

Accounts payable

20,572

23,323

226,616

Notes payable, trade

373

407

3,957

Processing cost payable

399

959

9,321

19,045

15,585

151,429

27

16

153

40,41540,291

391,476

Other payables
Notes payable for capital investment
Total
Trade notes payable are due 120 days on average.

Accounts payable are due 30 to 60 days from the invoice date in Asia except for Japan, and due 90 to 120 days from the invoice datein Japan. Accounts payable in Europe and U.S.A. are mainly payable related to the intragroup transactions, thus upon consolidationthese trade accounts payable are eliminated. The Group arranges a cash pooling for Japan, Europe and the U.S.A. to ensure that all
payables are paid within the pre-agreed credit terms.

-76-

22.Share capital and other equity items(1) Share capital and capital reserves
Number of

Number of issued

Number of

authorised sharessharesoutstanding shares

Share capital(Ordinary shares (Ordinary shares (Ordinary shareswith no par-with no par-with no par-value）

value）

value）

CapitalShare capital

Capitalreserves(Millions ofreserves(Millions of (Thousands of (Thousands of

Yen)

Yen)

U.S. Dollars

U.S. Dollars(Note 2))

(Note 2))

Balance at
1 April 2012

1,250,519,400

435,017,020

431,425,420

6,264

15,89960,865

154,476

Increase (i)－－70,721－－－－

1,250,519,400

435,017,020

431,496,141

6,264

15,89960,865

154,476－－598,558

－

－

－

－

1,250,519,400

435,017,020

432,094,699

6,264

15,89960,865

154,476

Balance at
31 March 2013
Increase (i)Balance at
31 March 2014
Note:(i) Increase or decrease in number of outstanding shares is due to increase or decrease in treasury shares.
(2) Treasury shares and other capital reserves① Treasury shares
AmountNumbers of shares
Balance at 1 April 2012

(Millions of Yen)

3,591,600

10,928

Repurchase of odd-lot shares

911

2

Disposal of odd-lot shares to shareholders

(32)

(0)

Decrease on exercise of stock option(71,600)(218)

Balance at 31 March 2013

3,520,879

10,712

Repurchase of odd-lot shares

1,842

5

Decrease on exercise of stock option(600,400)(1,827)

Balance at 31 March 2014

2,922,321

8,890
AmountNumbers of shares(Thousands of U.S. Dollars(Note 2))

Balance at 31 March 2013

3,520,879

Repurchase of odd-lot shares

104,079

1,842

46

Decrease on exercise of stock option(600,400)(17,747)

Balance at 31 March 2014

2,922,321

86,378-77-

② Other capital reserves
Gain (loss) on
disposal of treasury

Stock option (i)OthersTotalshares(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

Balance at 1 April 2012

(4,900)

2,788

(393)

(2,505)

Disposal of treasury shares

(89)

(17)

－

(106)

Share-based payments

－

299

－

299

Balance at 31 March 2013

(4,989)

3,070

(393)

(2,313)

Disposal of treasury shares

(535)

(233)

－

(768)

－

242

－

242

(5,524)

3,078

(393)

(2,839)

Share-based payments
Balance at 31 March 2014

Gain (loss) on
disposal of treasury

Stock option (i)Others

Total(Thousands of U.S.

(Thousands of U.S.

(Thousands of U.S.

(Thousands of U.S.

Dollars (Note 2))

Dollars (Note 2))

Dollars (Note 2))

Dollars (Note 2))

sharesBalance at 31 March 2013

(48,477)

29,826(3,818)(22,469)

Disposal of treasury shares(5,199)(2,267)－(7,466)

Share-based payments
Balance at 31 March 2014

－

2,348

－

2,348

(53,676)

29,906(3,818)(27,587)

Note:(i) Refer to Note 24 “Share-based payments” for details of stock option.
(3) Retained earnings and dividends
Amount(Millions of Yen)
Balance at 1 April 2012

441,700

Profit for the year (attributable to owners of the Company)

72,260

Dividends(28,045)

Transfer to retained earnings(80)

Balance at 31 March 2013

485,836

Profit for the year (attributable to owners of the Company)

58,390

Dividends(28,050)

Transfer to retained earnings

66

Balance at 31 March 2014

516,243-78-

Amount(Thousands of U.S. Dollars (Note 2))
Balance at 31 March 2013

4,720,522

Profit for the year (attributable to owners of the Company)

567,334

Dividends(272,537)

Transfer to retained earnings

644

Balance at 31 March 2014

5,015,962

Details of dividends are as follows:
Dividends per
Date of resolution

Dividends per

share

share

Total Dividends(U.S. Dollars(Yen)(Note 2))

(Millions of
Yen)

Total Dividends(Thousands of
U.S. Dollars

Record date

Effective date

(Note 2))30 May 2012

35

0.34

15,100160,552

31 March 2012

1 June 2012

31 October 2012

30

0.29

12,945

137,638

30 September 2012

30 November 2012

30 May 2013

35

0.34

15,102

160,578

31 March 2013

3 June 2013

31 October 2013

30

0.29

12,947125,798

30 September 201329 November 2013

21 May 2014

45

0.44

19,444

188,926

31 March 2014

29 May 2014

Dividends payable are included in the line item of ‘Other current liabilities’ in the consolidated statement of financial position.
(4) Non-controlling interests
Amount(Millions of Yen)
Balance at 1 April 2012

(149)

Profit for the year, attributable to non-controlling interests

143

Translation differences for foreign operations (other comprehensive income)1

Dividends(134)

Decrease due to liquidation of subsidiaries(47)

Balance at 31 March 2013

(187)

Profit for the year, attributable to non-controlling interests

1,750

Translation differences for foreign operations (other comprehensive income)

123

Dividends(6)

Increase due to acquisition of subsidiaries

4,441

Balance at 31 March 2014

6,121
Amount(Thousands of U.S. Dollars (Note 2))

Balance at 31 March 2013

(1,813)

Profit for the year, attributable to non-controlling interests

17,001

Translation differences for foreign operations (other comprehensive income)

1,196

Dividends(55)

Increase due to acquisition of subsidiaries

43,147

Balance at 31 March 2014

59,476

Note:
Refer to Note.32 ‘‘Business combinations” (6) Goodwill arising from the acquisitions, for the details of increase in shares due to theacquisitions of subsidiaries.

-79-23.Financial instruments(1) Capital risk management
The Group manages its capital for its continuous growth and to maximise the corporate value of the Group.
The net debt and equity of the Group is as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

As at

As at

As at

31 March 2013

31 March 2014

31 March 2014

Interest-bearing debt

62,72963,279614,841

Less: Cash and cash equivalents

248,896

331,094

3,217,000

Net debt(186,167)(267,814)(2,602,160)

Equity470,547

542,648

5,272,519

In order to maximise the corporate value of the Group, cash flows have been a priority of the Group management. As at 31 March2013 and 2014, the Group maintained cash and cash equivalents balances in excess of interest-bearing debt balances. The Group is not
subject to any externally imposed capital regulation as at 31 March 2014.
Details of interest-bearing debt, cash and cash equivalents and equity are described in Note 16 “Interest-bearing debt”, Note 15 “Cashand cash equivalents”, and Note 22 “Share capital and other equity items”, respectively.

(2) Significant accounting policies
Accounting policies and criteria for recognition of financial assets, financial liabilities and equity instruments, basis of measurement
and recognition of income and expenses are described in Note 3 “Significant accounting policies”.

-80-(3) Categories of financial instruments(Millions of Yen)

(Millions of Yen)

(Thousands of
U.S. Dollars (Note 2))

As at

As at

As at

31 March 2013

31 March 2014

31 March 2014

Financial assets
FVTPL financial assets (derivative instruments) (ii)

3,555

1,295

12,585Loans and receivables
Trade and other receivables

88,824

95,529928,187

Other financial assets (ii)11,524

15,437

149,992

Available-for-sale financial assets (ii)

3,281

2,821

27,412

248,896

331,094

3,217,000

349

－

－

Trade and other payables

40,41540,291

391,476

Interest-bearing debt

62,72963,279614,841

185

152

1,474

Cash and cash equivalents
Financial liabilities
FVTPL financial liabilities (derivative instruments) (iii)
Financial liabilities measured at amortised cost

Other financial liabilities (iii)Note:(i) The items above are not included in discontinued operations and disposal group held for sale. The Group does not have held-tomaturity investments and derivative instruments designated as hedging instruments. Likewise, the Group does not have financial
assets or financial liabilities using the fair value option.
(ii) FVTPL financial assets (derivative instruments), other financial assets and available-for-sale financial assets are included in ‘Long-term financial assets’ or ‘Other short-term financial assets’ in the consolidated statement of financial position.
(iii) FVTPL financial liabilities (derivative instruments) and other financial liabilities are included in ‘Other long-term/short-term
financial liabilities’ in the consolidated statement of financial position.
(iv) Financial assets or liabilities to be offset as at 31 March 2013 and 2014 are immaterial.

(4) Financial risk management
In its operations, the Group is exposed to various financial risks. The Group undertakes risk management steps to minimise the effectsof these financial risks. In the effort to manage these risks, the Group’s risk management approach is to eliminate the sources of theserisks or to minimise the risks that are not avoidable.
The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. In
certain cases, the Group obtains additional borrowings from financial institutions to react to temporary cash shortages or uses forward
foreign exchange contracts to sustain cash flows. The above financial risks are managed by the financial department of the Group.

-81-

(5) Market risk management
The Group is exposed to risks arising from changes in the economic environment and financial markets. The factors of the risk
relating to financial markets are fluctuation risk of foreign currency, interest rate, and fair value of equity instruments.
① Foreign currency risk
1) Foreign currency risk management
As the Group’s businesses have expanded globally, foreign exchange fluctuations in particular Thai Baht, Euro and U.S. dollar, have asignificant impact on the Group’s financial results. If the Japanese yen appreciates against these currencies, both sales and profit statedin Japanese yen might decrease even though sales and profit stated in local currencies have increased.
The Group intends to marry major currencies the Group uses (i.e., Euro, U.S. dollar and Yen) in settlements of receivables/payables
resulting from operating activities. Specifically, the subsidiaries that continuously conduct import or export transactions retain foreign
currencies obtained from exports of goods for payables on imported supplies. This enables the Group to mitigate foreign currency risk.
On the other hand, the Company, having multiple SBU and conducting finance and dividend, and its holding companies within theGroup, receiving dividends from their subsidiaries and distributing it to the Company and/or other group companies, sometimes falls
into disparity of foreign currency debt-credit balances in receivables, liabilities and/or bank deposits. This might cause significant
gains or losses on foreign exchange differences when the Yen appreciates or depreciates against the U.S. dollars or the Euro, or when
the Euro appreciates or depreciates against the U.S. dollar.
2) Foreign currency sensitivity analysis
The chart below shows the impact on the profit and equity in a case of a 1% appreciation of Yen against the Thai Baht, Euro and U.S.
dollar with the assumption that other currencies are constant.
For the year ended 31 March 2013

For the year ended 31 March 2014

Average exchange rate
(Yen per each currency)
Thai Baht

2.72

3.18

Euro

107.39135.12

U.S. dollar

83.32

100.49Thai Baht

(349)

(140)

Euro

(14)

(15)

U.S. dollar

(162)

(160)

Thai Baht

(403)

(194)

Euro

(321)

(441)

U.S. dollar

(291)

(274)

Impact on profit for the year
(Millions of Yen)

Impact on equity(Millions of Yen)

For the year ended 31 March 2014
Impact on profit for the year
(Thousands of U.S.Dollars (Note 2))
Thai Baht(1,364)

Euro

(150)

U.S. dollar(1,558)Impact on equity(Thousands of U.S.Dollars (Note 2))
Thai Baht(1,881)Euro(4,283)

U.S. dollar(2,660)-82-

Note:
Numbers in brackets mean the amount of negative impact on profit and equity resulting from a 1% appreciation of Yen. The amounts
above represent the impact on the consolidated financial statements of the Group resulting from foreign currency conversion, not the
impact on Group’s cash flows or operations themselves.
Likewise, the charts below show the impact in case of a 1% appreciation of functional currencies of the Company and its holding
company within the Group on their receivables/liabilities and bank deposits denominated in foreign currency on the assumption that
other currencies are constant. The information about its holding companies with immaterial risk is not included in the below chart.
2)-1. Parent company (the Company)(Millions of Yen)Euro
31 March 2013

U.S. dollar
31 March 2014

31 March 2013

31 March 2014

Trade and other receivables

(26)

(23)

(188)

(75)

Trade and other payables

0

1

56

34

Long-term financial assets

(0)

－

－

－

Short-term financial assets

－

7

(282)

－

(8)

(17)

(559)

(661)

(35)

(31)

(973)

(702)

Cash and cash equivalents
Total(Thousands of U.S. Dollars (Note 2))
Euro

U.S. dollar

31 March 2014
Trade and other receivables

31 March 2014

(220)

(730)

Trade and other payables

8335

Long-term financial assets－－

Short-term financial assets

72－

Cash and cash equivalents(163)(6,426)(303)(6,821)

Total
Note:

Numbers in brackets mean the amount of negative impact on profit and equity resulting from a 1% appreciation of Yen. The 1%
depreciation of Yen has a positive impact in the same amount.
Intercompany receivables/payables are included in the calculation of the impact since they cause foreign exchange gain or loss in theprocess of translation.
Short-term financial assets include the fair value of forward contracts in long or short positions in currency derivative instruments.
2)-2. Holding company (Europe)(Millions of Yen)
Yen
31 March 2013

U.S. dollar
31 March 2014

31 March 2013

31 March 2014

Trade and other receivables

－

－

(3)

－

Trade and other payables

2

0

2

0

Long-term financial assets

(0)

－

－

(0)

Short-term financial assets

－

－

－

(27)

Cash and cash equivalents

(48)

(110)

(71)

(559)

(46)

(110)

(72)

(585)

Total

-83-

(Thousands of U.S. Dollars (Note 2))
Yen

U.S. dollar

31 March 2014

31 March 2014

Trade and other receivables－－

Trade and other payables

04Long-term financial assets－(2)

Short-term financial assets

－

(259)

(1,068)(5,431)(1,067)(5,687)

Cash and cash equivalents
Total
Note:

Numbers in brackets mean the amount of negative impact on profit and equity resulting from a 1% appreciation of Euro. The 1%
depreciation of Euro has a positive impact in the same amount.
Intercompany receivables/payables are included in the calculation of the impact since they cause foreign exchange gain or loss in theprocess of translation.
Long-term and short-term financial assets include the fair value of forward contracts in long or short positions in currency derivative
instruments.
3) Currency derivatives
The Group’s policy prohibits the use of derivative instruments such as forward foreign exchange contracts, except for certain
circumstances in which the use of such derivatives is determined to be beneficial. In such case, the Group can enter into contracts
upon obtaining formal approval from the Chief Financial Officer (“CFO”) of the Group in accordance with its group headquarters
approval process.
In order to economically hedge foreign currency exposures on intercompany receivables, payables and dividends, forward foreignexchange contracts are occasionally entered into. In these cases, the same approval policy as stated above is adhered to.
The following are the details of the forward foreign exchange contracts at the end of each reporting period:(Millions of Yen)

For the year ended

Average

31 March 2013

Foreignexchange rate currency (mil)Notional

Fair value

amountForward foreign exchange contracts
Over one year
US$Sell

0.77(€Buy)(€/US$)

US$Sell

0.77$185.2

17,157(149)$139.2

12,897(200)$300.024,625

3,555

Within one year(€Buy)(€/US$)US$Buy82.08(Yen Sell)(Yen/US$)(Millions of Yen)

For the year ended

Average

31 March 2014

Foreign

Notional value

Fair value

exchange rate currency (mil)(Thousands of U.S. Dollars (Note 2))

Notional

Fair value

amountForward foreign exchange contracts
Over one year
US$Sell

0.75(€Buy)(€/US$)

$70.9

7,567

383

73,5283,717$260.6

22,137912

215,087

8,861

€5.2

735

1

7,140

7

Within one year
US$Sell

0.76(€Buy)(€/US$)€Buy

141.44(Yen Sell)(Yen/€)-84-

Note:
The fair values of forward foreign exchange contracts are determined based on the forward exchange rate at the market at the end ofeach reporting period.
② Interest rate risk management
The majority of the interest-bearing debt is bonds with fixed interest rates. The Group’s cash and cash equivalents exceed the interestbearing debt, and currently the impact of interest expense on the Group’s profit/loss is immaterial. Therefore, the Group considers thatthe interest rate risk is immaterial and has not performed a sensitivity analysis such as Basis Point Value.
③ Price risks management in equity instruments
The Group is exposed to equity price risks arising from equity instruments (i.e., listed shares). These investments are held from aviewpoint of business strategy, not for short term trading purpose. The Group does not sell these investments frequently and the Group
periodically reviews the fair value of these instruments as well as the financial condition of investees.
The sensitivity analysis has been based on the exposure to the price of equity instruments (listed shares) at the end of the reporting
period. If equity prices increase or decrease by 5%, accumulated other comprehensive income (pre-tax) would change by 129 million
yen and 105 million yen (1,020 thousand U.S. dollars) as at 31 March 2013 and 2014, respectively, as a result of changes in fair valueof the equity instruments.

-85-

(6) Credit risk management
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Groupmanages its credit risk by setting credit limits which are approved by the authorised personnel of each SBU.
Main customers for the Information technology business are globalised companies, which have relatively large scale and stablefinancial conditions. On the other hand, credit losses were incurred on a sporadic basis in the Life Care business since those products
were sold to relatively small and diversified customers, such as end consumers, retailers, and medical institutions. Accordingly, no
significant credit losses were incurred in the past. A division in the Life Care business of selling goods to medical institutions andoperating wholesale business in certain countries has some past-due receivables due to the financial conditions of those medical
institutions or customers. Credit limits have been set for those customers to minimise the loss from a failure to collect the receivables.
Trade receivables consist of large number of customers across diverse industries and geographical areas. The Group has neither
significant credit risk exposure for a specific customer or customer group categorised by similarity, nor concentration of credit riskover 5% of total financial assets as at 31 March 2014.
① Financial assets and other credit exposures
Except for the items below, the carrying amounts after impairment presented in the consolidated financial statements are themaximum exposure for the Group’s credit risk without considering the appraised value of the related collateral.
Maximum credit risk
(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013
Guarantee liabilities

527

As at 31 March 2014
290

The Group does not hold any collateral or other credit enhancements to cover the risks disclosed above.
Details of guarantee liabilities are described in Note 33 “Contingent liabilities”.

-86-

As at 31 March 2014
2,821

② Impaired or past-due financial assets
The following table provides the ageing details of the financial assets not yet due and the financial assets past-due but not impaired at
the end of the reporting period:(Millions of Yen)
Balance at 31 March 2013
Total
Trade and other receivables

Within due
date

Overdue amounts
Within 30days

31 to 60 days 61 to 90 days

91 to 120

Over 120

days

days

90,81680,189

4,764

1,678

926

596

2,662

Allowance for doubtful accounts(1,992)

(628)

(11)

(31)

(66)

(78)

(1,178)Trade and other receivables (net)88,82479,561

4,753

1,647

861

518

1,484

(gross)Other financial assets (gross)

12,514

11,642

7

－

－

－

864

Allowance for doubtful accounts

(990)

(235)

－

－

－

－

(755)

Other financial assets (net)

11,524

11,407

7

－

－

－

109

(Millions of Yen)
Balance at 31 March 2014
Total
Trade and other receivables

97,922

Within due
date

Overdue amounts
Within 30
days

84,773

6,556

31 to 60 days 61 to 90 days

91 to 120

Over 120

days

days

2,128

838

798

2,829

(gross)Allowance for doubtful accounts(2,393)

(525)

(10)

(73)

(142)

(87)

(1,555)Trade and other receivables (net)95,52984,249

6,546

2,055

696

711

1,273

Other financial assets (gross)

16,50015,580

12

－

－

－

907

Allowance for doubtful accounts(1,063)

(254)

－

－

－

－

(809)

Other financial assets (net)15,437

15,327

12

－

－

－

98

(Thousands of U.S. Dollars (Note 2))
Balance at 31 March 2014
Total
Trade and other receivables

Within due
date

Overdue amounts
Within 30days

31 to 60 days 61 to 90 days

91 to 120

Over 120

days

days

951,441

823,681

63,69820,680

8,144

7,754

27,483(23,255)(5,099)

(99)

(712)

(1,382)(849)(15,114)(gross)Allowance for doubtful accounts
Trade and other receivables (net)928,187

818,582

63,59919,969

6,762

6,906

12,370

Other financial assets (gross)160,319

151,381

120

－

－

－

8,817

Allowance for doubtful accounts(10,327)(2,463)

－

－

－

－

(7,863)

Other financial assets (net)149,992

148,918

120

－

－

－

954

The Group does not hold any collateral or other credit enhancements on the above financial assets.

-87-

In case of impairment on financial assets, the Group does not directly write off such assets by reducing the carrying amount, instead
records an allowance for doubtful accounts. Movement in the allowance for doubtful accounts is as follows:(Millions of Yen)
Allowance for doubtful Allowance for doubtful
accounts (Current)
Balance at 1 April 2012

1,873

Total

accounts (Non-current)
789

2,662

Provision for the year

260

202

461

Reduction resulting from settlement for the year

(159)

(10)

(170)

Reduction for the year (reversal)

(183)

(26)

(209)

38

－

38

Business combinations
Other (foreign exchange translation gain or losses, etc.）

163

36

199

1,992

990

2,982

Provision for the year

322

348

670

Reduction resulting from settlement for the year

(28)

(285)

(313)

Reduction for the year (reversal)

Balance at 31 March 2013

(148)

(44)

(192)

Business combinations

54

6

60

Other (foreign exchange translation gain or losses, etc.）

201

47

249

2,393

1,063

3,456

Balance at 31 March 2014

(Thousands of U.S. Dollars (Note 2))
Allowance for doubtful Allowance for doubtful
accounts (Current)

Total

accounts (Non-current)

Balance at 31 March 2013

19,355

Provision for the year

3,129

3,384

6,513

Reduction resulting from settlement for the year(271)

(2,767)(3,038)(1,441)(427)(1,868)

526

59

585

Reduction for the year (reversal)
Business combinations

9,618

28,973

Other (foreign exchange translation gains or losses）

1,957

459

2,416

Balance at 31 March 2014

23,255

10,32733,582The Group continuously monitors the financial status of customers which appear to represent a credit risk in collecting receivables,
including restructured receivables. Based on this monitoring, the Group sets the allowance for doubtful accounts considering thecollectability of the receivables.
Because the Group operations are global, the credit risk is widely diversified among customers and the Group does not depend on
specific customers. Therefore, the possibility of a chain-reaction of bankruptcies at a certain customer is considered to be remote and
the Group does not set additional general allowance for doubtful accounts resulting from the concentration of this credit risk.
③ Transfer of financial assets
The Group transferred some of its notes receivable to financial institutions before maturity on a discounted basis. The Group isrequired to repurchase these notes in the event of a default. Accordingly, the Group continues to recognise the full carrying amount of
the notes receivable until maturity and the cash proceeds received on the sale of the notes receivable is accounted for as a secured
borrowing.
There were no notes receivable transferred and discounted that were outstanding as at 31 March 2013 and 2014.

-88-

(7) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the CFO of the Group who is appointed by the Board of Directors.
Based on the instructions from the CFO, the financial headquarters of the Group mainly manages the Group’s liquidity risk by
maintaining an appropriate level of retained earnings and credit facilities, and monitors the actual cash flows and forecasted cash
flows. Temporary cash shortages due to dividends or bonus payments are funded through the issuance of commercial paper, etc.
The following table details the contractual maturity of its financial liabilities, including derivative financial instruments but
excluding guarantee liabilities:(Millions of Yen)
Balance at 31 March 2013

Carrying Contractual Less than 1 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years

Over 5amountcash flows

year

years

40,41540,41540,415

－

－

－

－

－

12

12

－

4

4

4

－

－

1,477

1,477

1,477

－

－

－

－

－

6

6

6

－

－

－

－

－

Non-derivative liabilities
Trade and other payables
Long-term bank loans (excluding
current portion)
Current portion of long-term bankloans
Short-term bank loans
Bonds (excluding current portion)

60,12660,203－25,12621

21

35,021

14

Current portion of bonds

234

234

234

－

－

－

－

－

Long-term finance lease

699

699

－

230

184

150

99

37

175

175

175

－

－

－

－

－

185

185

185

－

－

－

－

－

obligations
Short-term finance leaseobligations
Other financial liabilities
Derivative liabilities
Currency derivative instruments
Total

349

349

200

12

48

23

66

－

103,677

103,754

42,691

25,371

256

198

35,186

51(Millions of Yen)
Balance at 31 March 2014

Carrying Contractual Less than 1 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years

Over 5amountcash flows

year

years

40,29140,29140,291

－

－

－

－

－

261

261

－

161

81

10

7

2

82

82

82

－

－

－

－

－

Short-term bank loans

2,007

2,007

2,007

－

－

－

－

－

Bonds (excluding current portion)

35,03235,077－21

21

35,021

14－

Current portion of bonds

25,11925,12625,126

－

－

－

－

－

Long-term finance lease

536

536

－

206

165

104

40

21

242

242

242

－

－

－

－

－

Non-derivative liabilities
Trade and other payables
Long-term bank loans (excluding
current portion)
Current portion of long-term bankloans

obligations
Short-term finance leaseobligations
Other financial liabilities
Total

152

152

152

－

－

－

－

－

103,722103,773

67,899389

267

35,135

60

22

-89-

(Thousands of U.S. Dollars(Note 2))
Balance at 31 March 2014

Carrying Contractual Less than 1 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years

Over 5amountcash flows

year

years

391,476

391,476

391,476

－

－

－

－

－

2,532

2,532

－

1,567

792

94

65

15

796

796

796

－

－

－

－

－

19,504

19,504

19,504

－

－

－

－

－

Non-derivative liabilities
Trade and other payables
Long-term bank loans (excluding
current portion)
Current portion of long-term bankloans
Short-term bank loans
Bonds (excluding current portion)

340,384

340,813

－

204

204

340,274131－

Current portion of bonds

244,065

244,131244,131

－

－

－

－

－

Long-term finance lease

5,210

5,210

－

2,005

1,601

1,015

389

200

2,349

2,349

2,349

－

－

－

－

－

1,474

1,474

1,474

－

－

－

－

－

1,007,791 1,008,286

659,730

3,776

2,597

341,383

584

215

obligations
Short-term finance leaseobligations
Other financial liabilities
Total
Note:
Guarantee liabilities have been excluded from the above table as the likelihood of execution has been determined as low. Assets
and liabilities recognised as a result of undertaking derivative instruments transactions are presented on a net basis.
Temporary cash shortages due to dividends or bonus payments are funded through the following ways.
The following are the details of financing method and status:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

Bank overdraft
Used－

UnusedTotal－－

65,00065,000631,558

65,00065,000631,558－－－

Commercial paper
Used
UnusedTotal

50,00050,000485,81450,00050,000485,814-90-

(8) Fair value of financial assets and liabilities that are measured at fair value on a recurring basis
The following table provides an analysis of financial instruments that have been measured at fair value subsequent to initialrecognition.
The fair values are categorised into Levels 1 to 3.
Level 1: Fair value derived from quoted prices in active markets for identical assets or liabilities.
Level 2: Fair value derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices).
· Forward exchange contracts are measured at fair value on forward exchange rate at the closing date
· Preferred shares with convertible right are measured at fair value based on the fair value of common stock
Level 3: Fair value derived from inputs for the asset or liability that are not based on observable market data (i.e., unobservable
inputs).
· Unlisted shares are measured by recognising Group’s share of the net asset of issuing companies at stated periods. Any
excess of the cost of the investment over the Group’s share of net assets are deemed as fair value.
① Financial instruments that are measured at fair value(Millions of Yen)
As at 31 March 2013

Level 1FVTPL financial assets (derivative instruments)

Level 2－

Level 3

3,555

Total
3,555

－

Available-for-sale financial assets

2,237

352

693

3,281

Total

2,237

3,906

693

6,836

FVTPL financial liabilities (derivative instruments)

－

349

－

349

Total

－

349

－

349
(Millions of Yen)

As at 31 March 2014

Level 1FVTPL financial assets (derivative instruments)

Level 2

Level 3

Total

－

1,295

－

1,295

Available-for-sale financial assets

2,102

－

720

2,821

Total

2,102

1,295

720

4,116

－

－

－

－

－

－

－

－

FVTPL financial liabilities (derivative instruments)
Total(Thousands of U.S. Dollars (Note 2))
As at 31 March 2014

Level 1FVTPL financial assets (derivative instruments)

Level 2－

Level 3

12,585

Total－

12,585

Available-for-sale financial assets

20,420－6,992

27,412

Total

20,42012,585

6,992

39,996

FVTPL financial liabilities (derivative instruments)

－

－

－

－

Total

－

－

－

－

Note:
No transfers occurred between Levels 1, 2 and 3 during the years ended 31 March 2013 and 2014, excluding that:the preferred shares were transferred from Level 2 to Level 1 due to the conversion to common stocks during the year ended 31 March
2014.

-91-

② Reconciliation of financial assets categorised at Level 3 from beginning balance to ending balance
Fair value measurement as at the end of the reporting period

Available-for-sale financial assets(Thousands of U.S. Dollars(Millions of Yen)

(Millions of Yen)

For the year ended 31 March

For the year ended 31 March

For the year ended 31 March

2013

2014

2014

Opening balance

680(Note 2))

693

6,731

Total gains or losses recognised:

(237)

27

261

- in profit or loss (i)

(292)

(16)

(153)

- in other comprehensive income (ii)

55

43

413

Purchase－0

0

Others250

00Closing balance

693

720

6,992

Note:
(i) In the total gains or losses for the years ended 31 March 2013 and 2014 included in profit or loss, (292) million yen and (16)
million yen ((153) thousand U.S. dollars), respectively, relate to available-for-sale financial assets at the end of the reporting period.
Related loss of these assets is included in the line item of ‘Finance costs’ in the consolidated statement of comprehensive income.
Refer to Note 26 “Finance income and costs”.
(ii) In the total gains or losses for the years ended 31 March 2013 and 2014 included in other comprehensive income, 55 million yen
and 43 million yen (413 thousand U.S. dollars), respectively, relate to the shares not traded in the market. Related loss and profit isincluded in the line item of ‘Net gain/ (loss) on revaluation of available-for-sale financial assets’ in Note 27 “Other comprehensive
income”.

-92-(9) Fair value of financial assets and liabilities that are measured at fair value on a non-recurringbasis① Carrying amounts and fair value(Millions of Yen)

(Thousands of U.S. Dollars(Millions of Yen)

(Note 2))As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

Carrying

Carrying

Carrying

amountFair value

amountFair value

amountFair value

AssetsLoans and receivables
Lease deposits

4,373

4,350

4,413

4,372

42,883

42,483

Total

4,373

4,350

4,413

4,372

42,883

42,483

12

12

261

272

2,532

2,640

Liabilities
Financial liabilities measured at amortised cost
Long-term bank loans (excluding current
portion)Current portion of long-term bank loans

1,477

1,476

82

85

796

822

Bonds (excluding current portion)

60,126

63,21035,032

37,030340,384

359,793

Current portion of bonds

234

237

25,11925,302

244,065

245,843

Long-term finance lease obligations

699

766

536

631

5,210

6,127

Short-term finance lease obligations
Total

175

207

242

255

2,349

2,482

62,72365,90861,272

63,574595,337

617,707② Fair value hierarchy
Level 1: Fair value derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair value derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices).
· Fair value of loans and receivables is measured by the present value of future cash flows of each loan categorised according
to a certain range of term, and discounted by the risk-free rate, etc.
· Fair value of bonds issued by the Company is measured by discounting the total of principal and interest using an interest ratethat reflects each bond’s credit risk.
· Fair value of Interest-bearing debt other than bonds are measured by the present value of future cash flows of each debt
categorised according to a certain range of term, and discounted by the interest rate that reflects the remaining period to thematurity and credit risk.
Level 3: Fair value derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(Millions of Yen)
As at 31 March 2013

Level 1

Level 2

Level 3

Total

AssetsLoans and receivables
Lease deposits

－

4,350

－

4,350

Total

－

4,350

－

4,350

－

12

－

12

Current portion of long-term bank loans

－

1,476

－

1,476

Bonds (excluding current portion)－

63,210－63,210Current portion of bonds

－

237

－

237

Long-term finance lease obligations

－

766

－

766

Short-term finance lease obligations

－

207

－

207

Total

－

65,908－65,908

Liabilities
Financial liabilities measured at amortised cost
Long-term bank loans (excluding current
portion)-93-

(Millions of Yen)
As at 31 March 2014

Level 1

Level 2

Level 3

Total

AssetsLoans and receivables
Lease deposits

－

4,372

－

4,372

Total

－

4,372

－

4,372

－

272

－

272

Current portion of long-term bank loans

－

85

－

85

Bonds (excluding current portion)－

37,030－37,030Current portion of bonds－

25,302－25,302Long-term finance lease obligations

－

631

－

631

Liabilities
Financial liabilities measured at amortised cost
Long-term bank loans (excluding current
portion)

Short-term finance lease obligations

－

255

－

255

Total

－

63,574－63,574(Thousands of U.S. Dollars (Note 2))
As at 31 March 2014

Level 1

Level 2

Level 3

Total

AssetsLoans and receivables
Lease deposits－

42,483－

42,483

Total－

42,483－

42,483

－

2,640

－

2,640

Liabilities
Financial liabilities measured at amortised cost
Long-term bank loans (excluding current
portion)Current portion of long-term bank loans

－

822

－

822

Bonds (excluding current portion)－

359,793－359,793

Current portion of bonds－

245,843－

245,843

Long-term finance lease obligations

－

6,127

－

6,127

Short-term finance lease obligations

－

2,482

－

2,482

Total

－

617,707－617,707-94-

24.Share-based payments(1) Detail of share-based payments
The Company has a stock option plan. The purpose of the plan is to increase the value of the Group and to improve the financial resultof the Group by motivating the members such as directors, officers, employees of the Group, as well as to retain valuable employees.
After the details and eligible members are approved at the meeting of board of directors, options are granted to individuals on thecondition that they render services over the vesting period, that is, subsequent to the grant date, if a member terminates his or her
employment prior to the vesting date, the options will expire. The exercise period of the options is the period determined in each
option contract. The options not exercised within this exercise period will expire. The option contract includes a clause that limits the
maximum number of stock options a member can exercise each year during the exercisable periods.
Stock options granted to members are accounted for as share-based payments transactions. Expense recorded in the consolidated
statement of comprehensive income from undertaking shared-based payments transactions were 299 million yen and 242 million yen(2,348 thousand U.S. dollars) for the years ended 31 March 2013 and 2014, respectively.
Details of the stock options that are outstanding for the years ended 31 March 2013 and 2014 are as follows:No.

Number of shares

Grant date

Expiry date

Exercise price (Yen)Fair value at grant date
(Yen)

5

445,000

1 Jan 2006

30 Sep 2015

4,150

2,917

6

585,600

7 Nov 2006

30 Sep 2016

4,750

3,961

7

77,60014 Nov 2007

30 Sep 2017

4,230

3,357

8

1,036,000

28 Nov 2008

30 Sep 2018

1,556

952

10

1,247,600

8 Dec 2009

30 Sep 2019

2,215

2,784

11

1,225,600

7 Dec 2010

30 Sep 2020

1,947

1,861

12

680,800

17 Jan 2012

30 Sep 2021

1,616

1,427

13

560,800

16 Jan 2013

30 Sep 2022

1,648

1,707

14

758,800

15 Jan 2014

30 Sep 2023

2,846

3,141

Note:
The fair value of the stock options at grant date does not include the fair value of stock options to which IFRS 2 “Share-based
Payments” does not apply, as mentioned in (4) below.
(2) Determination of stock option value
Weighted average fair value of the stock option granted during the years ended 31 March 2013 and 2014 was 1,707 yen and 3,141
yen, respectively.
In determining the expense of the stock options, the options were priced using the Black-Scholes model. The following table details
the assumptions used in the Black-Scholes model for the options granted in the years ended 31 March 2013 and 2014.
Expected volatility was determined based on recent historical daily share price volatility from the grant date to forecasted remaining
period.
No.13
Share price at grant date (Yen)

No.14

1,771

2,994

Exercise price (Yen)

1,648

2,846

Expected volatility

36.34%

33.71%

6.0

6.0

Dividends yield

Expected remaining option life (years)

3.67%

2.17%

Risk free rate

0.28%

0.28%

-95-

(3) The number and weighted average exercise prices of stock options
Weighted average exercise price of the outstanding options was 2,323 yen and 2,522 yen as at the years ended 31 March 2013 and2014, respectively. Weighted average remaining contractual life was 6.7 years and 6.2 years as at 31 March 2013 and 2014,
respectively.
For the year ended 31 March 2013

For the year ended 31 March 2014
Weighted average

Weighted average
exercise price

Number of shares

Number of shares

exercise price
(Yen)

(Yen)
4,497,500

Outstanding at the beginning of the period

2,402

4,602,800

2,323

Granted

560,800

1,648

758,800

2,846

Forfeited (i)(383,900)

2,404(510,100)

2,100

Exercised(71,600)

1,557(600,400)

1,762

Outstanding at the end of the period

4,602,800

2,323

4,251,100

2,522

Exercisable at the end of the period

2,824,100

2,654

2,691,500

2,673

Note:
(i) Stock options forfeited were due to employee retirements.
Stock options exercised during the year ended 31 March 2014 were as follows:No.

Number of shares exercised

Exercise period

Weighted average of share price at
exercise date (Yen)

8260,000

May 2013 to March 2014

2,584

10

101,200

December 2013 to March 2014

2,955

11

127,200

June 2013 to March 2014

2,876

12

88,400July 2013 to March 2014

2,613

13

23,600

October 2013 to March 2014

2,576

Total

600,400

Stock options exercised during the year ended 31 March 2013 were as follows:No.

Number of shares exercised

Exercise period

Weighted average of share price at
exercise date (Yen)

870,800April 2012 to September 2012

1,750

12

800

March 2013

1,822

Total

71,600-96-

(4) Stock options to which IFRS 2 is not applied
The following are details of the stock options granted after 7 November 2002 and vested before 1 April 2008, opening balance of thefirst time adoption of IFRSs, resulting in IFRS 2 not being applied:No.

NumberGrant date

Expiry date

Exercise price

Fair value at grant date

(Yen)

(Yen)

5

445,000

1 Jan 2006

30 Sep 2015

4,150

2,518

6

195,200

7 Nov 2006

30 Sep 2016

4,750

1,113

Weighted average exercise price of the outstanding options was 4,333 yen and 4,326 yen as at 31 March 2013 and 2014, respectively.
Weighted average remaining contractual life was 2.8 years and 1.8 years as at 31 March 2013 and 2014, respectively.
For the year ended 31 March 2013

For the year ended 31 March 2014

Weighted average
Number of shares

exercise price

Weighted average
Number of shares(Yen)

exercise price(Yen)

Outstanding at the beginning of the period

514,900

4,338

476,400

4,333

Forfeited (i)(38,500)

4,407(19,500)

4,504

－

－

－

－

Outstanding at the end of the period

476,400

4,333

456,900

4,326

Exercisable at the end of the period

476,400

4,333

456,900

4,326

Exercised

Note:(i) Stock options forfeited were due to employee retirements.
There were no stock options exercised for these plans during the years ended 31 March 2013 and 2014.

-97-

25.Revenue and expenses (excluding finance income and costs)(1) Sales from continuing operations
The following is an analysis of the Group’s sales from continuing operations:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

(Note 2))

Sales of goods and products

372,220

Service revenue
Total sales

426,727

4,146,196

274

848

8,241

372,494

427,575

4,154,438(2) Other income from continuing operations
The following is an analysis of the Group’s other income from continuing operations:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

(Note 2))

Commission

391

437

4,242

Rent

65

83

803

Government grants

174

509

4,950

Gain on sale of plant, property and equipment

2,134

771

7,489

Insurance proceeds (i)32,327813

7,898

Gains related to the step acquisition of shares ofan associate (ii)

2,238

－

－

Others

2,560

2,841

27,602

39,8885,453

52,984

Total other income
Note:(i) Of the “Insurance proceeds” of 32,187 million yen for the year ended 31 March 2013 is related to the damaged fixed assets andbusiness interruptions caused by the flood in Thailand in October 2011.
(ii) “Gains related to the step acquisition of shares of an associate” for the year ended 31 March 2013 are related to the additional
acquisition of shares of OPTOTAL HOYA LIMITADA.
(3) Research and development expenses recognised as incurred(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Employee benefits expenses

6,513

7,427

72,166

Depreciation and amortisation

1,680

1,632

15,859Commission expenses

1,700

1,424

13,831Other expenses

5,811

8,647

84,016

15,703

19,130185,872

Total research and development expenses
recognised as incurred
Note:
The above items are included in the corresponding line items in the consolidated statement of comprehensive income.

-98-

(4) Employee benefits expense
The following is an analysis of the Group’s employee benefits expense from continuing operations:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Salary, bonuses and others

85,094

93,842

911,791

Retirement benefit (Note 19）
Defined benefit (Note 19)

768

361

3,505

Defined contribution (Note 19）

1,451

1,908

18,537Retirement benefit total

2,219

2,269

22,042

Share-based payments (stock option) (Note 24）

299

242

2,348

Severance payments (Note 19）

2,465

1,790

17,392Others

4,091

4,618

44,865

94,168102,759

998,437

Total employee benefits expense(5) Foreign exchange gains or losses

Foreign exchange gains or losses include gains resulting from changes in fair value of currency derivatives.
(6) Other expenses
The following is an analysis of the Group’s other expenses from continuing operations:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

(Note 2))

Packaging/shipping/transportation

6,873

8,083

78,541

Travel

4,893

5,360

52,078

Rent

5,235

6,275

60,969

Utilities

9,820

11,860115,233

Repair and maintenance

8,235

9,413

91,455

160

113

1,093

649

419

4,069

Loss on sales of property, plant and equipment
Loss on disposals of property, plant andequipment
Loss on disposals of intangible assets
OthersTotal other expenses

-99-

86

31

300

44,12945,196439,141

80,08086,749842,879

26.Finance income and costs(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Finance income
Interest income
Cash and cash equivalents, loans andreceivables

906

1,137

11,050

59

56

544

Available-for-sale financial assets

－

656

6,371

Total finance income

965

1,849

17,965

Dividend income
Available-for-sale financial assets
Gain on saleFinance costs
Interest costs
1,511

1,220

11,857Retirement benefits liabilities

Interest-bearing debt

57

49

476

Provisions

17

14

140

Other liabilities

11

11

105

Impairment losses
Available-for-sales financial assets (i)

547

15

142

Total finance costs

2,143

1,309

12,720Note:(i) Impairment losses were recognised on listed shares and the shares of private companies categorised as available-for-sale financial
assets due to significant or prolonged decline in the fair values against the carrying amount.

-100-

27.Other comprehensive income
For the years ended 31 March 2013 and 2014, items that may be reclassified subsequently to profit or loss comprises the following:(Thousands of U.S. Dollars(Millions of Yen)

(Millions of Yen)

(Note2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Items that may be reclassified subsequently
to profit or loss :① Net gain/(loss) on revaluation ofavailable-for-sale financial assets (i)Gains (losses) arising during the year

112

443

4,308

501

(629)

(6,107)

613

(185)

(1,799)41,94034,187332,166

235

302

2,930

42,17534,488335,096

42,78834,303

333,297

(203)

(89)

(860)

42,58534,214332,437

Reclassification adjustments to profit orloss for the year
Total
② Exchange differences on translation offoreign operations (ii)
Gains (losses) arising during the year
Reclassification adjustments to profit orloss for the year
Total
Other comprehensive income/(loss) before
tax
Income tax relating to components of othercomprehensive income
Total other comprehensive income/(loss)(net of tax)Note:(i) ‘Net gain/ (loss) on revaluation of available-for-sale financial assets’ represents unrealised gain or loss on available-for-salefinancial assets at the end of the reporting period.
(ii) ‘Exchange differences on translation of foreign operations’ consist of differences on foreign currency conversion for financial
statements of foreign operations.

-101-Deferred and current taxes on each item of other comprehensive income for the years ended 31 March 2013 and 2014 is as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars (Note 2))

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Total

Tax

Net of tax

Total

Tax

Net of tax

Total

Tax

Net of tax

Other comprehensive
income attributable toowners of the Company① Net gain/(loss) onrevaluation ofavailable-for-salefinancial assets

613

(210)

403

(185)

72

(114)

(1,799)696(1,104)42,174

7

42,182

34,365(160)

34,205333,900(1,556)332,345② Exchange differences ontranslation of foreign
operations③ Remeasurements of the
net defined benefit
liability (asset)

(98)

19

(80)

81

(15)

66

787

(143)

644

Sub total

42,689(184)

42,50534,261(103)

34,158332,888(1,003)331,885

Other comprehensive
income attributable to Noncontrolling interests② Exchange differences ontranslation of foreign
operations
Sub total

1

－

1

123

－

123

1,196

－

1,196

1

－

1

123

－

123

1,196

－

1,196

42,690(184)

42,50634,384(103)

34,281

334,084(1,003)333,081

Total other comprehensive
income-102-

28.Earnings per share(1) Basic earnings per share and diluted earnings per share
(Yen)

(Yen)

(U.S. Dollars (Note 2))

For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Basic earnings per share
From continuing operations

167.47

From discontinued operations
Total basic earnings per share

135.26

1.31

－

－

－

167.47135.261.31

167.44135.04

1.31

Diluted earnings per share
From continuing operations
From discontinued operations
Total diluted earnings per share

－

－

－

167.44135.04

1.31(2) The basis of calculation of basic earnings per share and diluted earnings per share① Basic earnings per share(a) Profit for the year attributable to owners of the Company(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Profit attributable to owners of theCompany from continuing operations

72,26058,390567,334－－－

72,26058,390567,334

Profit attributable to owners of theCompany from discontinued operations
Profit used in the calculation of basic
earnings per share(b) Weighted average number of ordinary shares used in the calculation of basic earnings per share(Shares in thousands)
For the year ended 31 March 2013

For the year ended 31 March 2014

Weighted-average number of ordinary
shares431,476-103-

431,678

② Diluted earnings per share(a) Profit for the year attributable to owners of the Company(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Profit attributable to owners of theCompany from continuing operation after
dilution

72,26058,390567,334－－－

72,26058,390567,334

Profit attributable to owners of theCompany from discontinued operation
after dilution
Profit used in the calculation of diluted
earnings per share(b) Weighted average number of ordinary shares used in the calculation of diluted earnings per share(Shares in thousands)

Weighted-average number of ordinary shares

For the year ended

For the year ended

31 March 2013

31 March 2014

431,476431,67883

701

431,559432,379

Shares deemed to be issued for no consideration in respect of:
Stock options
Weighted average number of ordinary shares used in the calculation of diluted
earnings per share

29.Non-cash transactions
Non-cash transactions for the years ended 31 March 2013 and 2014 consisted of acquiring property, plant and equipment through new
finance lease arrangements in the amount of 14 million yen and 186 million yen (1,803 thousand U.S. dollars), respectively.

-104-

30.Subsidiaries(1) Composition of the Group
Information about the composition of the Group as at 31 March 2013 and 2014 is as follows:

Reportable Segment
Information Technology

Life Care

Number of wholly owned subsidiaries

Location

As at 31 March 2013

As at 31 March 2014

U.S.A.

2

2

SINGAPORE

2

2

THAILAND

2

2

PHILIPPINES

3

3

VIETNAM

3

4

MALAYSIA

1

1

SOUTH KOREA

1

1

TAIWAN

1

1

CHINA

8

8

JAPAN

1

1

U.S.A.

5

5

ARGENTINA

1

1

UNITED KINGDOM

2

2

ITALY

1

1

INDIA

3

3

INDONESIA

1

1

AUSTRALIA

1

1

NETHERLANDS

44

CANADA

2

2

SINGAPORE

3

3

SWEDEN

1

1

SPAIN

1

1

THAILAND

22

CZECH REPUBLIC

1

1

DENMARK

1

1

GERMANY

4

4

HUNGARY

22

PHILIPPINES

2

2

FINLAND

1

1

BRAZIL

2

2

FRANCE

4

3

BULGARIA

1

1

VIETNAM

1

1

BELGIUM

1

1

POLAND1

1

MALAYSIA

3

3

-105-

Reportable Segment
Life Care

Other

Life Care

As at 31 March 2013

As at 31 March 2014

SOUTH KOREA

1

1

TAIWAN

1

1

CHINA

5

7

SOUTH AFRICA

1

1

JAPAN

4

5

U.S.A.

2

2

NETHERLANDS

1

1

SINGAPORE

1

1

SOUTH KOREA

1

1

JAPAN

1

1

Reportable Segment
Information Technology

Number of wholly owned subsidiaries

Location

Number of non-wholly owned subsidiaries

Location

As at 31 March 2013

As at 31 March 2014

PHILIPPINES

1

1

CHINA

3

3

IRELAND－

1

U.S.A.

－

1

UNITED KINGDOM

－

1

ITALY

1

1

NETHERLANDS

－

4

SPAIN

1

1

GERMANY－

3

FRANCE－

1

VIETNAM－1

BELGIUM

－

1

CHINA

2

3

JAPAN

－

3

-106-

(2) Details of the non-wholly owned subsidiaries that have material non-controlling interests
Details of the non-wholly owned subsidiaries that have material non-controlling interests are as follows:
Profit (loss) allocated to noncontrolling interests

Proportion of ownership

Accumulated non-controlling interests

interests and voting
Name of

Locationsubsidiaries

rights held by noncontrolling interests
As at 31

As at 31

(Millions of (Millions of
Yen)

Yen)

As at 31

As at 31

(Thousandsof U.S.

(Millions of (Millions of
Yen)

Yen)

As at 31

As at 31

Dollars)
As at 31

(Thousandsof U.S.
Dollars)
As at 31

March 2013 March 2014 March 2013 March 2014 March 2014 March 2013 March 2014 March 2014
SHENZHENKTM GLASS

49.0%

－

(13)

1,514

14,710(1,402)

－

－

－

49.0%

－

60

585

－

2,942

28,590

－

50.0%

－

－

－

－

1,608

15,622

Individually immaterial subsidiaries with non-controlling interests

1,215

1,571

15,264

Total

(187)

6,121

59,476

SUBSTRATE

CHINA

CO., LTD
WASSENBUR

NETHER

G &Co. B.V.

LANDS

and eight otherand othercompanies

countries

SEIKO
OPTICAL
PRODUCTS
CO., LTD andseven otherJAPANand othercountries

companies

Summarised financial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out
below. The summarised financial information below represents amounts before intragroup eliminations.

(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars)

As at / for the year

As at / for the year

As at / for the year

ended 31 March 2013

ended 31 March 2014

ended 31 March 2014

SHENZHEN KTM GLASS SUBSTRATE
CO., LTD
Non-current assets

－

－

－

Current assets

5

－

－

Non-current liabilities

－

－

－

Current liabilities

2,865

－

－

Equity attributable to owner of the Company

1,459

－

－

Non-controlling interests

1,402

－

－

Revenue

03,124

30,349

Expenses

(27)

(34)

(329)

Profit(loss) for the year

(27)

3,090

30,020

Dividends paid to non-controlling interests

－

－

－

Net cash flow from operating activities

(7)

(5)

(47)

Net cash flow from investing activities

－

－

－

Net cash flow from financing activities

－

－

－

Net cash flow

(7)

(5)

(47)

-107-

(Millions of Yen)

(Millions of Yen)

As at / for the year

As at / for the year

(Thousands of U.S. Dollars)
As at / for the year

ended 31 March 2013

ended 31 March 2014

ended 31 March 2014

WASSENBURG &Co. B.V. and eight othercompanies
Non-current assets

－

5,074

49,301

Current assets

－

3,621

35,179Non-current liabilities－(1,177)(11,432)

Current liabilities－(1,513)(14,701)

Equity attributable to owner of the Company

－

3,063

29,757

Non-controlling interests

－

2,942

28,590

Revenue－

2,258

21,936

Expenses－(2,401)(23,332)

Profit(loss) for the year

－

(144)

(1,395)

Dividends paid to non-controlling interests

－

－

－

Net cash flow from operating activities

－

398

3,870

Net cash flow from investing activities

－

(30)

(292)

Net cash flow from financing activities

－

(71)

(686)

Net cash flow

－

298

2,892

(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars)

As at / for the year

As at / for the year

As at / for the year

ended 31 March 2013

ended 31 March 2014

ended 31 March 2014

SEIKO OPTICAL PRODUCTS CO., LTD
and seven other companies
Non-current assets

－

2,813

27,332Current assets

－

9,659

93,851

Non-current liabilities

－

(108)

(1,048)Current liabilities－(9,066)(88,086)

Equity attributable to owner of the Company

－

1,649

16,025

Non-controlling interests

－

1,649

16,025

Revenue－－－

Expenses－－－Profit(loss) for the year

－

－

－

Dividends paid to non-controlling interests

－

－

－

Net cash flow from operating activities

－

－

－

Net cash flow from investing activities

－

－

－

Net cash flow from financing activities

－

－

－

Net cash flow

－

－

－

-108-

(3) Details of the material subsidiaries
Details of the Company's material subsidiaries are as follows:

Name of subsidiaries

Reportablesegment

services in the

Information

Electronics related(THAILAND) LTD.

Technology

products

HOYA GLASS DISKInformation

Electronics related

PHILIPPINES, INC.

Technology

products

HOYA GLASS DISKInformation

Electronics related

VIETNAM LTD.

Technology

products

HOYA GLASS DISKInformation

Electronics related

VIETNAM Ⅱ LTD.

Technology

products

HOYA MICROELECTRONICS Information

Electronics related

TAIWAN CO., LTD.

products

HOYA ELECTRONICS KOREA Information

Electronics relatedCO., LTD.

Technology

products

HOYA ELECTRONICS

Information

Electronics related

MALAYSIA SDN.BHD.

Technology

products

HOYA ELECTRONICS

Information

Electronics related

SINGAPORE PTE. LTD.

Technology

products

Information

Electronics related

Technology

products

EAST CHEER INVESTMENT

Information

Electronics related

LIMITED

Technology

products

SHENZHEN KTM GLASSInformation

Electronics related

SUBSTRATE CO., LTD.

Technology

products

HOYA OPTICS (THAILAND)

Information

Imaging related

LTD.

Technology

products

HOYA CORPORATION USA

HOYA OPTO-ELECTRONICS Information

Imaging related

QINGDAO LTD.

Technology

products

Information

Imaging related

Technology

products

HOYA OPTICALTECHNOLOGY (SUZHOU)LTD.

HOYA OPTICAL (ASIA) CO., Information

Imaging related

LTD.

Technology

products

Information

Imaging related

Technology

products

HOYA OPTICALTECHNOLOGY (WEIHAI) CO.,LTD.

PENTAX CEBU PHILIPPINES Information

Imaging related

CORPORATION

products

Technology

Proportion ofshares held

shares held

As at 31 March

As at 31 March

2013

2014

THAILAND

100.0%

100.0%PHILIPPINES

100.0%

100.0%VIETNAM

100.0%

100.0%VIETNAM

100.0%

100.0%TAIWAN

100.0%

100.0%

SOUTH KOREA

100.0%

100.0%

MALAYSIA

100.0%

100.0%

SINGAPORE

100.0%

100.0%U.S.A.

100.0%

100.0%

CHINA

100.0%

100.0%

CHINA

51.0%

－

THAILAND

100.0%

100.0%

CHINA

100.0%

100.0%

CHINA

100.0%

100.0%

CHINA

100.0%

100.0%

CHINA

100.0%

100.0%PHILIPPINES

100.0%

100.0%

Location

reportable segment

HOYA GLASS DISKTechnology

Proportion ofMajor products/-109-Name of subsidiaries

Reportablesegment

HOYA LENSMANUFACTURING

Life Care

MALAYSIA SDN.BHD.
HOYA LENS THAILAND LTD. Life Care
HOYA LENS GUANGZHOULTD.
HOYA LENS AUSTRALIA
PTY.LTD.
HOYA LENS INDIA PRIVATELIMITEDLife Care
Life Care
Life Care

HOYA LENS VIETNAM LTD. Life Care
HOYA LENSDEUTSCHLAND GMBH

Life Care

HOYA LENS U.K. LTD.

Life Care

HOYA LENS ITALIA S.P.A.

Life Care

HOYA LENS IBERIA S.A.

Life Care

HOYA LENS FRANCE S.A.S.

Life Care

HOYA LENS OF AMERICA,
INC.
HOYA HOLDINGS N.V.
SEIKO OPTICAL PRODUCTS
CO., LTD.

Life Care
Life Care andCorporate
Life CarePENTAX CANADA, INC.

Life CarePENTAX EUROPE GMBH

Life CarePENTAX ITALIA S.R.L

Life CarePENTAX U.K. LTD.

Life Care

MICROLINE SURGICAL, INC. Life Care
HOYA HOLDINGS ASIA

Proportion of

Proportion ofshares held

shares held

As at 31 March

As at 31 March

2013

2014

MALAYSIA

100.0%

100.0%THAILAND

100.0%

100.0%

CHINA

95.0%

95.0%

AUSTRALIA

100.0%

100.0%

INDIA

100.0%

100.0%VIETNAM

100.0%

100.0%GERMANY

100.0%

100.0%

100.0%

100.0%

ITALY

100.0%

100.0%

SPAIN

100.0%

100.0%FRANCE

100.0%

100.0%U.S.A.

100.0%

100.0%NETHERLANDS

100.0%

100.0%－

50.0%

CANADA

100.0%

100.0%GERMANY

100.0%

100.0%

ITALY

60.0%

60.0%

100.0%

100.0%U.S.A.

100.0%

100.0%

SINGAPORE

100.0%

100.0%

Major products/
services in the

Location

reportable segment
Health Care related
products
Health Care related
products
Health Care related
products
Health Care related
products
Health Care related
products
Health Care related
products
Health Care related
products
Health Care related

UNITEDproducts

KINGDOM

Health Care related
products
Health Care related
products
Health Care related
products
Health Care related
products
Health Care related
products and EU
headquarters
Health Care related
products
Medical related
products
Medical related
products
Medical related
products

Japan

Medical related

UNITEDproducts

KINGDOM

Medical related
products

Corporate

Asia headquarters

HOYA HOLDINGS (ASIA) B.V. Corporate

Holding company

NETHERLANDS

100.0%

100.0%HOYA HOLDINGS, INC.

U.S. headquarters

U.S.A.

100.0%

100.0%PACIFIC PTE. LTD.

Corporate-110-

31.Related party disclosures
Transactions between the Company and its subsidiaries which are related parties of the Company, have been eliminated inconsolidation and are not disclosed in this note. Details of the balances and transactions between the Company and other relatedparties are disclosed as follows:(1) Transactions with related parties, and receivables and payables balances
The Group had the transactions with related parties as follows:
As at/ for the year ended 31 March 2013:
Name of affiliates
Affiliates

AvanStrate Inc.

Nature of related party

Transaction amount

Outstanding balancetransactions(Millions of Yen)

(Millions of Yen)

Purchase of material27－

As at/ for the year ended 31 March 2014:
Name of affiliates

Nature of related

Transaction amountTransaction amountparty transactions(Millions of Yen)

(Thousands of U.S.
Dollars (Note 2))

SEIKO OPTICAL PRODUCTS CO., LTD

Sales of products

6,150

59,754

Sales of products

373

3,624

SEIKO OPTICAL PRODUCTS OF AMERICA, INC. Sales of products

556

5,402

Subsidiaries SEIKO OPTICAL EUROPE GMBH

The Company acquired 9,000 stocks, 30 percent of the outstanding shares, of SEIKO OPTICAL PRODUCTS CO., LTD. (“SOP”) on
1 June 2013. As a result, SOP became an affiliate of the Group. On 31 March 2014, the Company acquired additional shares of 6,000,
20 percent of the outstanding shares. Consequently, as a result of obtaining control, SOP became a subsidiary of the Group. SEIKOOPTICAL EUROPE GMBH and SEIKO OPTICAL PRODUCTS OF AMERICA, INC. are the wholly owned subsidiaries of SOP.
As the transaction amounts with SOP in the year ended 31 March 2014 are included in the consolidated financial statements, thetransaction amounts are disclosed as the transaction with related parties. The outstanding balances are not disclosed, as the receivables
and payables have been eliminated in consolidation.
(2) Remuneration of key management personnel
The remuneration of directors and other members of key management personnel during the year is as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended

For the year ended

For the year ended

31 March 2013

31 March 2014

31 March 2014

Short-term benefits

345

486

4,723

Share-based payments

22

66

644

Total remuneration of key management personnel

367

552

5,366

The remuneration of directors and key management personnel is determined by the remuneration committee based on the businessenvironment of the Company, the remuneration of other companies and the performance.

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32.Business combinations
The Group acquired some companies through business combination during the year ended 31 March 2014 as follows:(1) Overview of acquired companies
Total

Name of acquirees Primary business

Reportable

Acquisition

segments

date

Percentage of

Total

consideration

voting equity

considerationtransferred

Acquisitioninterests

transferred(Thousands ofmethodacquired(Million Yen)

U.S. Dollars(Note 2))

RICH EPOCHINVESTMENTLTD.
VISION OPTICS(SHANGHAI)
CO., LTD.

Manufacturing
and sales ofophthalmic
lensesManufacturing
and sales ofophthalmic
lensesLife Care(Health Care

2 Apr 2013

100%

2,313

22,476－－

related products)
Life Care(Health Care

2 Apr 2013

related products)

100%
(i)

Acquisition ofsharesAcquisition ofshares(indirect)

Manufacturing
WASSENBURG& CO. B. V.

and sales ofLife Careautomated(Medical related

endoscope

products)

1 Nov 2013

51%

3,765

36,586－－

Acquisition ofsharesreprocessing
WASSENBURGENGINEERING
B. V. and sevenother companies
SEIKO OPTICALPRODUCTS CO.,LTD.

Manufacturing
and sales ofLife Careautomated(Medical related

endoscope

products)

1 Nov 2013

(51%)
(ii)

Acquisition ofshares(indirect)

reprocessing
Sales ofophthalmic
lenses related
products

BEST VISION

Sales ofCO., LTD. andophthalmic

six otherlenses relatedcompanies

products

Life Care(Health Care

31 Mar 2014

50%

2,399

23,309related products)
Life Care(Health Care

31 Mar 2014

related products)

(50%)
(iii)

Acquisition ofsharesAcquisition of－－shares(indirect)

Note:(i) VISION OPTICS (SHANGHAI) CO., LTD. is the wholly owned subsidiary of RICH EPOCH INVESTMENT LTD. (indirectacquisition).
(ii) WASSENBURG ENGINEERING B. V. and seven other companies are the wholly owned subsidiaries of WASSENBURG & CO.
B.V. (indirect acquisition).
(iii) BEST VISION CO., LTD and six other companies are the wholly owned subsidiaries of SEIKO OPTICAL PRODUCTS CO.,LTD. (indirect acquisition).

-112-

(2) Primary reasons for business combinations① RICH EPOCH INVESTMENT LTD. and VISION OPTICS (SHANGHAI) CO., LTD. (“REI”)
The Group seeks to expand its sales in the middle segment in China and Asian markets which are expected to grow.
② WASSENBURG & CO. B. V. and eight other companies (“WASSENBURG”)
The Group aims to offer not only endoscopes but also wide range of outstanding products including automated endoscope
reprocessing. Furthermore, it seeks to enlarge its sales in developing markets, such as Asia Pacific, Eastern Europe, Middle East,
and Africa, by offering various products.
③ SEIKO OPTICAL PRODUCTS CO., LTD. and seven other companies (“SOP”)
The Group acquired the shares of SEIKO OPTICAL PRODUCTS CO., LTD., a subsidiary of SEIKO HOLDINGSCORPORATION (“SEIKO”), for the global strategic alliance with SEIKO, seeking the global promotion of ophthalmic lenses
related products.
(3) Consideration for the acquisitions(Millions of Yen)
REI
Cash and cash equivalents

WASSENBURG
2,313

SOP

3,765

Total
2,399

8,478

(Thousands of U.S. Dollars (Note 2))
REI
Cash and cash equivalents

WASSENBURG
22,47636,586

SOP

Total
23,30982,370(4) Expenses related to acquisition
Expenses related to acquisition in the amount of 95 million yen (928 thousand U.S. dollars) are included in “Commission expense”
in the consolidated statement of comprehensive income.

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(5) The amount of assets acquired and liabilities assumed at the acquisition dates are as follows:(Millions of Yen)
REI

WASSENBURG

SOP

Total

Non-current assets
Property, plant and equipment-net

200

234

579

1,014

Intangible assets (Note)

539

4,908

1,927

7,373

Deferred tax assets

－

－

450

450

Non-current assets other than above

－

13

131

144

739

5,155

3,087

8,981

307

1,191

3,141

4,639

Sub-total
Current assets
Inventory
Trade and other receivables(Before deducting allowance for doubtful
accounts)

283

947

5,296

6,525

Allowance for doubtful accounts

－

－

(54)

(54)

Cash and cash equivalents

257

937

894

2,087

0

69

31

101

Sub-total

847

3,144

9,308

13,299Current assets other than above
Total assets

1,586

8,299

12,39522,280Non-current liabilities (Note)(135)(1,292)(108)(1,534)Current liabilities(278)(1,225)(9,072)(10,575)

Total liabilities(412)(2,517)(9,180)(12,109)

Fair value of identifiable acquired net assets

1,174

5,782

3,216

10,171(Thousands of U.S. Dollars (Note 2))
REI

WASSENBURG

SOP

Total

Non-current assets
Property, plant and equipment-net

1,945

2,278

5,625

9,848

Intangible assets (Note)

5,237

47,68318,721

71,641

Deferred tax assets

－

－

4,373

4,373

Non-current assets other than above

－

123

1,277

1,401

7,182

50,08429,99787,263

2,981

11,57230,52245,075

2,746

9,203

51,454

63,403

－

－

(526)

(526)

2,497

9,101

8,683

20,280

5

674

305

984

Sub-total
Current assets
Inventory
Trade and other receivables(Before deducting allowance for doubtful
accounts)
Allowance for doubtful accounts
Cash and cash equivalents
Current assets other than above
Sub-total

8,228

30,54990,437129,215

Total assets

15,41080,633

120,434

216,478

Non-current liabilities (Note)(1,309)(12,552)(1,048)(14,909)

Current liabilities(2,698)(11,904)(88,144)(102,745)

Total liabilities(4,007)(24,456)(89,191)(117,654)

Fair value of identifiable acquired net assets

11,40456,17831,243

98,824

Note:
Intangible assets mainly consist of “Customer related assets”.
Deferred tax liabilities are mainly recognised on temporary differences arising in recognition of identifiable intangible assets.
The Group reported the provisional amounts of certain intangible assets for the period ended 31 December 2013, since themeasurement process was not completed. It was completed as at 31 March 2014.

-114-

(6) Goodwill arising from the acquisitions(Millions of Yen)
REI

WASSENBURG

Consideration for acquisitions

SOP

Total

2,313

3,765

2,399

8,478

－

2,833

1,608

4,441

(1,174)(5,782)(3,216)(10,171)

1,139

817

791

2,747

Add: Non-controlling interests (Note)
Less: Fair value of identifiable acquired
net assets
Goodwill arising in acquisitions(Thousands of U.S. Dollars (Note 2))
REI
Consideration for acquisitions

WASSENBURG

SOP

Total

22,47636,58623,30982,370－27,527

15,622

43,149(11,404)(56,178)(31,243)(98,824)

11,072

7,935

7,688

26,695

Add: Non-controlling interests (Note)
Less: Fair value of identifiable acquired
net assets
Goodwill arising in acquisitions
Note:

Non-controlling interests of acquiree are measured on the proportionate share of the net of identifiable assets and assumed liabilities.
Goodwill recognised consists of “control premium”, “expected synergy” and “human resources”.
Goodwill arising from these acquisitions is not tax-deductible.
(7) Net cash outflows for the acquisitions of subsidiaries(Millions of Yen)
REI

WASSENBURG.

SOP

Total

Consideration for the acquisitions paid in
cash

2,313

3,765

2,399

8,478

(257)

(937)

(894)

(2,087)

2,056

2,829

1,505

6,390

Less: Cash and cash equivalents owned bysubsidiaries acquired
Net cash outflows for the acquisitions ofsubsidiaries(Thousands of U.S. Dollars (Note 2))
REI

WASSENBURG

SOP

Total

Consideration for the acquisitions paid incash

22,47636,58623,30982,370(2,497)(9,101)(8,683)(20,280)

19,97927,485

14,626

62,091

Less: Cash and cash equivalents owned bysubsidiaries acquired
Net cash outflows for the acquisitions ofsubsidiaries(8) Impact on the Group’s financial results of the Business combinations
If these business combinations were made on 1 April 2013, sales and profit from continuing operations of the Group would have been
447,410 million yen (4,347,163 thousand U.S. dollars) and 60,548 million yen (588,302 thousand U.S. dollars), respectively. Thesepro forma information represents information for reference, such as comparison with the future reporting period.
In determining the pro forma revenue and profit of these business combination, management has calculated depreciation of property,
plant and equipment and intangible assets acquired on the basis of the fair values arising in the initial accounting for the businesscombination rather than the carrying amounts recognised in the pre-acquisition financial statements of the acquirees.
Sales and profit for the year included in the consolidated statement of comprehensive income are 3,228 million yen (31,367 thousand
U.S. dollars) and 95 million yen (925 thousand U.S. dollars), respectively.

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33.Contingent liabilities
Guarantee liabilities
The Group provides guarantees to financial institutions on borrowings of business partners as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013
Business partners
Total

As at 31 March 2014

As at 31 March 2014

527

290

2,821

527

290

2,821

34.Commitments for expenditure
Payment commitments after the reporting date are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2013

As at 31 March 2014

As at 31 March 2014

Commitments for the acquisition ofproperty, plant and equipment andintangible assets

4,915

5,781

56,17435.Subsequent events
Resolution on cash dividends
On 21 May 2014, a resolution was made by the Company's Board of Directors for the payment of a cash dividend to shareholders ofrecord on 31 March 2014 of 19,444 million yen (188,926 thousand U.S. dollars) (45 yen per common share).
Repurchase of treasury stock
The Board of Directors made a resolution to purchase the Company’s treasury stock on 7 May 2014 pursuant to the first paragraph of
Article 459 of the Companies Act.
1. Reason for purchase of treasury stock
To manage capital policy flexibly in response to a changing business environment, and improve shareholders’ value per share.
2. Outline of Repurchase(1) Class of shares: Common stock issued by Hoya Corporation(2) Total number of shares: Up to 10 million shares (2.31% of total shares outstanding, excluding treasury stock)(3) Total purchase cost: Up to 30 billion yen (291,489 thousand U.S. dollars)(4) Period for purchase: 8 May 2014 to 7 November 2014(5) Method of purchase: Purchase at the Tokyo Stock Exchange based on a discretionary investment contract

36.Approval of financial statements
The consolidated financial statements for the year ended 31 March 2014 were approved by the Company’s Board of Directors andauthorised for issue on 21 May 2014.

-116-