HOYA Corporation and its Subsidiaries
Consolidated Financial Statements under IFRSs
and Independent Auditor’s Report
For the year ended 31 March 2018HOYA 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......................................................................................................................

13

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

15

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

15

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

16

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

17

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

33

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

34

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

39

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

43

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

46

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

50

10． Deferred taxes and income taxes.................................................................................................................

51

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

56

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

57

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

58

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

58

15． Interest-bearing debt....................................................................................................................................

59

16． Finance lease obligations.............................................................................................................................

61

17． Operating lease arrangements......................................................................................................................

62

18． Retirement benefit plans...............................................................................................................................

63

19． Provisions.....................................................................................................................................................

67

20． Trade and other payables.............................................................................................................................

68

21． Share capital and other equity items............................................................................................................

69

22． Financial instruments...................................................................................................................................

73

23． Share-based payments..................................................................................................................................

89

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

92

25． Finance income and costs............................................................................................................................

94

26． Other comprehensive income......................................................................................................................

95

27． Earnings per share.......................................................................................................................................

97

28． Non-cash transactions..................................................................................................................................

98

29． Subsidiaries..................................................................................................................................................

99

30． Related party disclosures.............................................................................................................................

106

31． Business combinations.................................................................................................................................

107

32． Contingent liabilities....................................................................................................................................

110

33． Commitments for expenditure.....................................................................................................................

110

34． Subsequent events........................................................................................................................................

110

35． Approval of financial statements.................................................................................................................

110

- 2 -

-3-

Consolidated Statement of Financial Position
HOYA Corporation and its Subsidiaries
As at 31 March 2018

(Thousands of U.S.

(Millions of Yen)

(Millions of Yen)

Notes

As at 31 March 2017

As at 31 March 2018

As at 31 March 2018

Property, plant and equipment—net
Goodwill

6,8,337,8

103,729
14,590105,493
31,892992,969
300,193

Dollars (Note 2))

ASSETSNON-CURRENT ASSETS:

Intangible assets

7,33

26,41236,863346,979

Investments in associates
Long-term financial assets

9
11,22

196
7,357

1,476
15,595

13,890146,791

Other non-current assets
Deferred tax assets

12,18
10

2,578
9,399

2,302
10,834

21,668
101,974

164,263

204,455

1,924,464

Total non-current assets
CURRENT ASSETS:
Inventories

13

65,501

71,341

671,508

Trade and other receivables
Other short-term financial assets

14,22
11,22

98,315
17,788

107,632
4,955

1,013,101
46,639

Income taxes receivable
Other current assets

12389
16,477

1,228
15,198

11,559143,057

Cash and cash equivalents

22

296,851

245,835

2,313,962

Total current assets

495,321446,190

4,199,826

Total assets

659,583

650,645

6,124,290- 4 -(Thousands of U.S.

(Millions of Yen)

(Millions of Yen)

Notes

As at 31 March 2017

As at 31 March 2018

As at 31 March 2018

EQUITY
Share capital

21(1)

6,264

6,264

58,963

Capital reserves
Treasury shares

21(1)
21(2)

15,899(6,816)

15,899(10,886)

149,648(102,465)

Other capital reserves
Retained earnings

21(2),23
21(3),34(5,345)506,367(6,660)529,818(62,689)
4,986,995(5,482)(8,242)(77,580)

510,887
4,518

526,193
4,484

4,952,873
42,208515,405

530,677

4,995,081

15,16,22
11,22

504
4,843

451
6,983

4,246
65,731Retirement benefit liabilities
Provisions

18
19

2,001
2,419

2,127
2,398

20,022
22,576

Other non-current liabilities
Deferred tax liabilities

12
10

813
2,857

956
2,774

9,000
26,114

13,43815,690147,688

Dollars (Note 2))

EQUITY AND LIABILITIES

Accumulated other comprehensive income/(loss)
Equity attributable to owners of the Company
Non-controlling interests

21(4)Total equity
LIABILITIESNON-CURRENT LIABILITIES:Interest-bearing long-term debt
Other long-term financial liabilities

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

15,16,22

36,913

1,901

17,898Trade and other payables
Other short-term financial liabilities

20,22
11,22

41,371
652

46,555643

438,205
6,050

Income tax payables
Provisions

19

11,6491,333

12,355
1,280

116,294
12,051Other current liabilities

12

38,822

41,542

391,023

Total current liabilities

130,740

104,277

981,521

Total liabilities

144,178

119,967

1,129,209

Total equity and liabilities

659,583

650,645

6,124,290- 5 -Consolidated Statement of Comprehensive Income
HOYA Corporation and its Subsidiaries
For the year ended 31 March 2018
(Thousands of(Millions of Yen) (Millions of Yen) U.S. Dollars (Note
2))
Notes

For the year ended For the year ended For the year ended
31 March 201731 March 2018

31 March 2018535,6121,562－

5,041,531
14,700－3,999

37,639541,173

5,093,871

Continuing operations
Revenue:
Sales
Finance income

24
25

478,927
8,022

Share of profit of associates
Other income

9
24

16
2,764

Total revenue

489,729

Expenses:
Changes in inventories of goods, products and work in progress
Raw materials and consumables used
Employee benefits expense

18,23,24

Depreciation and amortisation
Subcontracting cost

6,7,24Advertising and promotion expense
Commissions expense

24

Impairment losses
Finance costs

8
18,25

Share of loss of associates
Foreign exchange (gain)/loss

924

Other expenses

6,7,17,24

3,132

534

5,030

74,304
114,504

83,924
127,820789,952
1,203,127

29,777
4,783

28,711
4,919

270,251
46,302

12,912
28,52313,08532,506

123,166
305,966

334
1,130
－

5,798
771

54,576
7,261

2,389

44
268

418
2,518

107,147

118,543

1,115,800

Total expenses

378,935

416,925

3,924,367

Profit before tax

110,795

124,248

1,169,503

Income tax expense

1023,94325,026

235,562

Profit for the year from continuing operations

86,852

99,222

933,942

Profit for the year

86,852

99,222

933,942

(281)

88

833

(4)

10

94

(285)

98

927

180

423

(5,808)(1)(2,712)(9)

3,981（25,532)

Other comprehensive income/(loss):
Items that will not be reclassified subsequently to profit or loss:

26

Remeasurements of the net defined benefit liability (asset)
Income tax relating to components of other comprehensive income/(loss)
Subtotal

10

Items that may be reclassified subsequently to profit or loss:
Net gain/(loss) on revaluation of available-for-sale financial assets
Exchange differences on translation of foreign operations
Share of other comprehensive income of associates

(86)

(58)

(112)

(1,052)

Subtotal(5,687)(2,410)(22,688)

Total other comprehensive income/(loss)(5,972)(2,312)(21,761)

Total comprehensive income for the year

80,87996,910912,180

Income tax relating to components of other comprehensive income

- 6 -

10

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 201731 March 2018

31 March 2018

Dollars (Note 2))

Profit attributable to:
Owners of the Company

86,74099,494

936,503

Non-controlling interests

112

(272)

(2,561)

Total

86,852

99,222

933,942

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

81,06996,833

911,452

Non-controlling interests

(189)

77

728

Total

80,87996,910912,180

Notes

Basic earnings per share(U.S. Dollars (Note

(Yen)

(Yen)

For the year ended

For the year ended

For the year ended

31 March 201731 March 2018

31 March 2018

2))

27

Continuing operations
Discontinued operations

221.93
Basic earnings per share

Diluted earnings per share

258.46

2.43

－

－

－

221.93258.462.43

221.49257.88

2.43

27

Continuing operations
Discontinued operations
Diluted earnings per share

- 7 -

－

－

－

221.49257.882.43

Consolidated Statement of Changes in Equity
HOYA Corporation and its Subsidiaries
For the year ended 31 March 2018
(Millions of Yen)
Notes
Balance at 1 April 2016

Share capital

Capital reserves

Treasury shares

6,264

15,899(34,633)

Other capitalreserves(4,956)

Retained earnings
510,787

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

86,74026
86,740Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)(34,987)(20)

Disposal of treasury shares
Cancellation of treasury shares

21(2)

1,412

(662)

21(2)

61,392(61,392)

Dividends, 75 yen per share

21(3)Change in non-controlling interests

21(4)

(115)

(29,482)

Share-based payments (stock options)

23

408
(285)

Transfer to retained earnings
Total contributions by and distributions toowners－－27,817(389)(91,160)

Total transactions with owners－－

27,817(389)(91,160)

Balance at 31 March 2017

6,264

15,899(6,816)(5,345)506,367

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

99,49426
99,494

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)(55,007)(27)

Disposal of treasury shares

21(2)

3,819

(1,579)47,118Cancellation of treasury shares

21(2)Dividends, 75 yen per share

21(3)(47,118)

Change in non-controlling interests

21(4)

(26)

Share-based payments (stock options)

23

317

(29,024)

98

Transfer to retained earnings
Total contributions by and distributions toowners－－(4,070)(1,315)(76,043)

Total transactions with owners－－(4,070)(1,315)(76,043)

Balance at 31 March 2018

6,264

15,899(10,886)(6,660)529,818- 8 -(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 2016

Share of otherthe net definedon revaluation

(20)

1,882

－

(1,958)(96)

126(5,511)

(285)

(1)

(5,671)

126(5,511)

(285)

(1)

(5,671)

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

26

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)Disposal of treasury shares21(2)Cancellation of treasury shares

21(2)Dividends, 75 yen per share

21(3)Change in non-controlling interests

21(4)Share-based payments (stock options)

23285Transfer to retained earnings

285

Total contributions by and distributions toowners

－

－

285

－

Total transactions with owners

－

－

285

－

285

Balance at 31 March 2017106

(3,629)－(1,960)(5,482)272(3,023)98(9)(2,661)272(3,023)98(9)(2,661)

285

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

26

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)Disposal of treasury shares21(2)Cancellation of treasury shares

21(2)Dividends, 75 yen per share

21(3)Change in non-controlling interests

21(4)Share-based payments (stock options)

23
(98)

Transfer to retained earnings(98)

Total contributions by and distributions toowners

－

－

(98)

－

(98)

Total transactions with owners

－

－

(98)

－

(98)

Balance at 31 March 2018

378

(6,652)－(1,969)(8,242)- 9 -(Millions of Yen)
EquityNotes

Non-controlling
Total equity

attributable to owners
interestsof the Company

493,265

Balance at 1 April 2016

4,909

498,174

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

26

Total comprehensive income/(loss) for the year

86,740112

86,852(5,671)(301)(5,972)

81,069(189)

80,879Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)(35,007)(35,007)

Disposal of treasury shares

21(2)

749

749

Cancellation of treasury shares

21(2)

－

Dividends, 75 yen per share

21(3)(29,482)－(29,482)

Change in non-controlling interests

21(4)

(115)

(202)

(316)

Share-based payments (stock options)

23

408

408

－

－

Transfer to retained earnings－

Total contributions by and distributions toowners(63,446)(202)(63,648)

Total transactions with owners
Balance at 31 March 2017

(63,446)(202)(63,648)

510,887

4,518

515,405

99,494(272)

99,222(2,661)349(2,312)

96,83377

96,910Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)

26

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)(55,034)(55,034)

Disposal of treasury shares

21(2)

2,240

2,240

Cancellation of treasury shares

21(2)

－

－

Dividends, 75 yen per share21(3)(29,024)(34)(29,058)

Change in non-controlling interests

21(4)

(26)

(77)

(103)

Share-based payments (stock options)

23

317

317

－

－

Transfer to retained earnings
Total contributions by and distributions toowners(81,526)(111)(81,638)

Total transactions with owners(81,526)(111)(81,638)

Balance at 31 March 2018

526,193

4,484

530,677- 10 -

Consolidated Statement of Changes in Equity
HOYA Corporation and its Subsidiaries
For the year ended 31 March 2018-Continued(Thousands of U.S. Dollars (Note 2))
Notes
Balance at 31 March 2017

Share capital

Capital reserves

Treasury shares

58,963

149,648(64,157)

Other capitalreserves(50,312)Retained earnings
4,766,259

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

936,50326
936,503

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)(517,758)(259)

Disposal of treasury shares
Cancellation of treasury shares21(2)35,946(14,859)21(2)443,504(443,504)

Dividends, 75 yen per share

21(3)Change in non-controlling interests

21(4)

(241)

(273,190)

Share-based payments (stock options)

23

2,982
927

Transfer to retained earnings
Total contributions by and distributions toownersTotal transactions with owners
Balance at 31 March 2018－－(38,308)(12,377)(715,767)－－(38,308)(12,377)(715,767)

58,963

149,648(102,465)(62,689)

4,986,995(Thousands of U.S. Dollars (Note 2))

Remeasurements ofNet gain/(loss)

Notes

Exchange differenceson translation offoreign operations

comprehensive

comprehensive

income of associates

income/(loss)(asset)financial assets

1,002

Accumulated otherbenefit liabilityof available-for-sale

Balance at 31 March 2017

Share of otherthe net definedon revaluation(34,159)－(18,445)(51,602)

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

26

Total comprehensive income/(loss) for the year

2,561

(28,452)

927

(86)

(25,050)

2,561(28,452)

927

(86)

(25,050)

Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)Disposal of treasury shares21(2)Cancellation of treasury shares

21(2)Dividends, 75 yen per share

21(3)Change in non-controlling interest21(4)Share-based payments (stock options)

23
(927)

Transfer to retained earnings(927)

Total contributions by and distributions toownersTotal transactions with owners
Balance at 31 March 2018

－

－

(927)

－

(927)

－

－

(927)

－

(927)

(62,611)－(18,532)(77,580)

3,563- 11 -

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

Non-controlling
Total equity

attributable to owners
interestsof the Company

Balance at 31 March 2017

4,808,799

42,5294,851,328

936,503(2,561)

933,942(25,050)

3,289(21,761)

911,452

728

912,180

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

26

Total comprehensive income/(loss) for the year
Transactions with owners
Contributions by and distributions to owners
Acquisition of treasury shares21(2)(518,017)(518,017)

Disposal of treasury shares21(2)21,08721,087

Cancellation of treasury shares

21(2)

－

－

Dividends, 75 yen per share

21(3)(273,190)(320)(273,510)

Change in non-controlling interest

21(4)

(241)

(729)

(970)

Share-based payments (stock options)

23

2,982

2,982

－

－

Transfer to retained earnings
Total contributions by and distributions to(767,378)(1,049)(768,427)

Total transactions with owners(767,378)(1,049)(768,427)

Balance at 31 March 2018

4,952,873

42,2084,995,081

owners- 12 -

Consolidated Statement of Cash Flows
HOYA Corporation and its Subsidiaries
For the year ended 31 March 2018
(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 201731 March 2018

31 March 2018

Cash flows from operating activities
Profit before tax

110,795

124,248

1,169,503

Depreciation and amortisation
Impairment losses

29,777334

28,711
5,798

270,251
54,576

Finance income
Finance costs(8,022)
1,130(1,562)771(14,700)
7,261

Share of (profits)/loss of associates(Gain)/loss on sales of property, plant and equipment

(16)
(720)

44
(438)

418
(4,127)

Loss on disposal of property, plant and equipment
Foreign exchange (gain)/loss

226
1,269

432
(1,447)

4,064(13,618)

Others

3,589

4,631

43,592

138,360

161,189

1,517,220

729

1,763

16,598(5,528)(859)(6,562)
4,052(61,769)
38,144

Notes

Cash generated from operations (before movements in working
capital)Movements in working capital
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in retirement benefit liabilities and provisions
Subtotal

16

(234)

(2,201)

132,718

160,2091,507,993

Interests received

1,813

1,499

14,109Dividends received
Interest paid

50
(858)

8
(456)

76
(4,296)

Income taxes paid
Income taxes refunded(26,614)553(26,425)664(248,732)
6,253

Net cash generated from operating activities

107,662

135,499

1,275,402

Cash flows from investing activities
Withdrawals of time deposits

10,14911,025

103,771

Payments for time deposits
Proceeds from sales of property, plant and equipment(8,898)1,060(6,186)559(58,226)
5,258

Payments for acquisition of property, plant and equipment
Proceeds from sales of investment(17,974)959(169,179)
9,030

Payments for acquisition of investment
Proceeds from sales of subsidiaries(21,528)
5,818－－(1,333)
5(12,547)
46

Payments for acquisition of subsidiaries
Payments to non-controlling interests upon merger(6,360)(19)(54,018)(2)(508,453)(19)

Payments for business transfer
Other proceeds(6,193)
597

(251)
759

(2,362)
7,142

Other payments(2,134)(2,076)(19,542)

Net cash used in investing activities(27,507)(68,533)(645,078)- 13 -

Consolidated Statement of Cash Flows
HOYA Corporation and its Subsidiaries
For the year ended 31 March 2018-Continued(Millions of Yen)

(Millions of Yen)

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

Notes

Cash flows from financing activities
Dividends paid to owners of the Company
Dividends paid to non-controlling interests
Increase/(decrease) in short-term debt
Repayments of long-term borrowings
Payments for redemption of bonds

15

Proceeds from disposal of treasury shares

21(2)Payments for purchase of treasury shares
Proceeds from exercise of stock options

21(2)Proceeds from share issuance to non-controlling shareholders
Payments for acquisition of non-controlling interests

21(4)
21(4)

For the year ended

For the year ended

For the year ended

31 March 201731 March 2018

31 March 2018(29,447)－(29,042)(273,359)

(4)

(34)
－

(320)
ー

(258)

(339)

(3,193)(21)
0(35,021)－(329,640)
ー(35,007)749
ー(55,034)2,240(518,017)
21,087425(1,395)

(301)

45
(148)

Net cash used in financing activities(64,289)(117,333)(1,104,412)

Net increase/(decrease) in cash and cash equivalents

15,866(50,367)(474,087)

Cash and cash equivalents at the beginning of the year

286,292

296,851

2,794,154

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
Note:
Non-cash transactions are stated in Note 28 “Non-cash transactions”.
There are no short-term investments within three months as at 31 March 2018.

- 14 -(5,307)(649)(6,104)

296,851

245,835

2,313,962

Notes to the Consolidated Financial Statements
HOYA Corporation and its Subsidiaries
For the year ended 31 March 2018

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.com). The principal activities of the Company, its
subsidiaries and its associates (the “Group”) are described in Note 5 “Operating segment information”.

- 15 -

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 ¥106.24 to $1, the foreign exchange rate at 31 March 2018. 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 2018:

IAS 7(Revised)
IAS 12(Revised)

IFRSs

Subject of new standards/amendments and transition provisions

Statement of Cash Flows

Requiring disclosure of changes in liabilities arising from financial activities

Income Taxes

Clarifying recognition of deferred tax assets for unrealised losses

These standards and interpretations were applied in accordance with their respective transition provisions and had no significant
impact on the consolidated financial statements of the Group.
(3) Standards and interpretations in issue but not yet adopted by the GroupAt the date of approval of the consolidated financial statements, the main standards and interpretations that were issued but not yet
effective for mandatory adoption are as follows. There are no standards and interpretations that were early adopted by the Group. The
implications from adoption of IFRS 16 have not yet been fully assessed by the Group. The impact of the adoption of other standards
and interpretations on the consolidated financial statements of the Group is immaterial.

IFRSs

Mandatory
adoption（fromthe yearbeginning)

To be adopted
by the Group
from the year

Subject of new standards/amendments

endingIFRS 9Financial
Instruments

1 January 2018

31 March 2019

Amendment to the accounting treatment for financial
instruments

IFRS 15

Revenue from Contracts
with Customers

1 January 2018

31 March 2019

Amendment to the accounting treatment for revenue
recognition

IFRS 16

Leases

1 January 2019

31 March 2020

IFRS 10

Consolidated Financial(Revised)
IAS 28

Statements
Investments in Associates

Not determined

Not determined(Revised)

and Joint Ventures- 16 -

Amendment to the accounting treatment for leasearrangements
Amendments to the accounting treatment for sale orcontribution of assets to a joint venture or associate

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 the ability to affect those returns through its power over the investee. The Group reassesses 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 intragroup transactions, balances, income and expenses are eliminated in full in preparing the 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; and2. 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 an asset held for sale, in which case it is accounted for inaccordance with 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.

- 17 -

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 their interests in joint operations. Joint
ventures shall apply the equity method. The Group has neither joint operations nor joint ventures.

(3) Business combinations
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.
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 is not remeasured and any subsequent settlement is accounted for in equity; or(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.

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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 carrying amount in accordance with theprevious 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 of
the reporting 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.

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(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 projects. 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 suchcomponents as individual assets to be depreciated with specific useful lives. All other repair and maintenance costs are recognised in
profit or loss 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: 2-10 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.

- 20 -

(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 initial recognition. Intangible assets acquired in a business combination arerecognised 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 (“R&D”) 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.
Technology: 5-20 years
Customer related assets: 5-16 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.

- 21 -

(8) Goodwill
Goodwill arising from the acquisition of a business is recognised as an asset at the date that control is acquired (i.e., the acquisitiondate). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests inthe acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the acquisition-dateamounts of 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 offinancial 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 on a pro-rata basis of the carrying amountof each asset in the unit. Impairment losses recognised for goodwill are not reversed in subsequent periods. Upon disposal of a cashgenerating unit, goodwill attributed to the unit is included in the determination of the profit or loss upon 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 fair value through profit and loss (“FVTPL”).
Details of derivative transactions are set out in Note 22 “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 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 at 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 or interests earned on the financial asset and isincluded in the consolidated statement of comprehensive income.
As at 31 March 2017 and 2018, the Group did not have financial assets classified as FVTPL other than derivative financial
instruments designated as FVTPL.

- 23 -

③ Held-to-maturity investments
Financial assets other than derivatives for which the Group has the positive intent and ability to hold to maturity are classified as heldto-maturity 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 2017 and 2018, 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 22 “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 or is determined to be impaired, the cumulative gain or loss that was 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 options), which are incentive plans to the 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 23 “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 distributions
Dividend distributions to the Company’s shareholders are recognised as liabilities 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 at 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 designated 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 ofcomprehensive income. Fair value is determined in the manner described in Note 22 “Financial instruments”.
As at 31 March 2017 and 2018, 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 contracts
Financial guarantee contracts 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”.

- 28 -

(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 consolidated statement of financial position with a charge or credit
recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive
income is reflected 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; or- Remeasurement.
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 represent 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.

- 29 -

(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.

- 30 -

(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 transfer 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 the 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.

- 31 -

(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 carryforwards 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 (excluding business combinations)· 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 thebenefits of the temporary differences can be utilised 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 the current tax assets against the 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.

- 32 -

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 22 “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 22 “Financial instruments”)· Recoverability of deferred tax assets (Note 10 “Deferred taxes and income taxes”)· Assumptions used for treatment of retained earnings of overseas subsidiaries and associates for tax purposes (Note 10 “Deferredtaxes and income taxes”)· Discrepancy in opinion with a tax authority relating to tax calculations (Note 10 “Deferred taxes and income taxes”)· Assumptions used to calculate retirement benefit obligations (Note 18 “Retirement benefit plans”)· Asset retirement obligations arising from legal obligations and constructive obligations (Note 19 “Provisions”)· Fair value of stock options (Note 23 “Share-based payments”)· Possibility of outflow of resources embodying economic benefits on contingent liabilities (Note 32 “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 accounting estimates will affect 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 markets in which the Group operates· Development of new products and timing of development· Changes in the political, economic and regulatory environment, shortage of labour, labour strikes, natural disasters, and impacts of
unexpected international affairs in the countries in which the Group is located and operates· The effect of deferred taxes and income taxes on transactions between locations in different tax jurisdictions withdifferent tax rates, or transactions between taxable and tax-exempt businesses(including discrepancies in opinion between the Company and the tax authority)· Fluctuations of currency exchange rates· The trend of environmental and governmental regulations
Global economic stagnation and the occurrence of natural disasters 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 “Deferred taxes and income taxes”)- 33 -

5. Operating segment information(1) Overview of major products and services of reportable segments
Reportable segments are components of the Group for which separate financial information is obtained and examined on a regularbasis by the board of directors and 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 “life and culture” and “information technology” 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 Life Care business, the Information Technology businessand Other business, which are consistent with the above business domains.
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 a requirement to obtain approvals and permissions in accordance with the Pharmaceutical Affairs Act of Japanand other regulations, and sophisticated technologies and highly reliable quality control systems represent critical elements for
operating this business.
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.
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
Life Care

Information Technology

Major Products and Services

Health Care related products

Eyeglass lenses and Contact lenses

Medical related products

Endoscopes, Medical accessories, Intraocular lenses, Artificial bone,
Metallic implants for orthopedics

Electronics related products

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

Imaging related products
Other

Optical lenses, Optical glasses, Lens modules, Laser equipment
Design of information systems and other services- 34 -

(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

Life Care

2017

Information

Other

Total

Adjustments

Consolidated

Technology

Revenue from externalcustomers
Inter-segment sales

314,4420160,617
609

3,866
1,860

478,9252,469

3(2,469)478,927－

Total

314,442

161,226

5,726

481,394(2,466)478,927

372
(589)

294
(221)

2
(0)

668
(811)

1,090
(312)

1,758
(1,123)(16,362)(12,792)(74)(29,228)(549)(29,777)

13
(90)

2
(244)

－

16
(334)

－

－

－

16
(334)

(243,067)(93,758)(4,752)(341,577)

2,905(338,672)

54,71854,507902

110,128

667

110,795

12,512

10,202

99

22,81449

22,863

Interest income
Interest expense
Depreciation and amortisation
Share of profit (loss) of
associates
Impairment losses
OthersSegment profit before tax
Other disclosure
Capital expenditure（Millions of Yen）
For the year ended 31 March
2018

Life Care

Information
Technology

Other

Total

Adjustments

ConsolidatedーRevenue from externalcustomers
Inter-segment sales

352,8723

178,480
256

4,260
1,679

535,612
1,938(1,938)535,612ー

Total

352,876

178,736

5,939

537,550(1,938)535,612

273
(849)

360
(270)

2
(0)

635
(1,120)

918
421

1,554
(699)

Depreciation and amortisation
Share of profit (loss) of(18,041)(10,080)(303)(28,424)(287)(28,711)associates
Impairment losses

22(5,638)

(2)
(160)

ー
ー

20
(5,798)

(64)
ー

(44)
(5,798)(272,194)(98,601)(4,774)(375,570)(2,096)(377,665)

56,44869,982

864

127,294(3,046)124,248

10,727

8,413

112

19,25336

19,289Interest income
Interest expense

OthersSegment profit before tax
Other disclosure
Capital expenditure- 35 -

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

Life Care

2018

Information

Other

Total

Adjustments

ConsolidatedーTechnology

Revenue from externalcustomers
Inter-segment sales

3,321,464
30

1,679,967
2,409

40,10015,803

5,041,531
18,242(18,242)

5,041,531
ー

Total

3,321,494

1,682,376

55,903

5,059,773(18,242)

5,041,531

2,570(7,989)3,389(2,544)

20
(4)

5,979
(10,537)

8,645
3,962

14,624(6,576)

Depreciation and amortisation
Share of profit (loss) of(169,812)(94,880)(2,853)(267,545)(2,706)(270,251)

associates
Impairment losses

203(53,068)(15)(1,509)ーー

188(54,576)

(606)
ー

(418)
(54,576)(2,562,069)(928,100)(44,937)(3,535,105)(19,726)(3,554,831)

531,328

658,718

8,129

1,198,176(28,672)

1,169,503

100,972

79,191

1,058

181,221340

181,561Interest income
Interest expense

OthersSegment profit before tax
Other disclosure
Capital expenditure

Note:(i) Adjustments to revenue from external customers of 3 million yen for the year ended 31 March 2017 represent revenue generated by
the R&D department which is not included in any reportable segment.
(ii) Adjustments to segment profit before tax of 667 million yen for the year ended 31 March 2017 consist of the elimination of aninter-segment transaction of 5 million yen, and profit or loss of the Company’s headquarters, the R&D department and overseas
holding companies (after elimination of dividend income from group companies) of 662 million yen. Adjustments to segment profit
before tax of (3,046) million yen ((28,672) thousand U.S. dollars) for the year ended 31 March 2018 consist of elimination of intersegment transactions of 3 million yen (24 thousand U.S. dollars), and profit or loss of the Company’s headquarters, the R&D
department and overseas holding companies (after elimination of dividend income from Group companies) of (3,049) million yen((28,697) thousand U.S. dollars).

- 36 -

(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 2017 and 2018:(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 201731 March 2018

31 March 2018

Life Care
Health Care related products
Medical related products

234,622
79,819265,645
87,2282,500,421
821,043

Life Care total

314,442352,872

3,321,464

Electronics related products

124,247

134,878

1,269,559

Imaging related products
Information Technology total

36,37043,602

410,408

160,617

178,480

1,679,967

3,866

4,260

40,1003--

478,927535,6125,041,531

Information Technology

Other
Corporate (R&D)
Total revenue from externalcustomers(4) Information about geographical areas
Revenue from external customers(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended
31 March 2017

For the year ended
31 March 2018

For the year ended
31 March 2018

Japan

151,316

156,164

1,469,916

U.S.A.
China

63,24751,21475,36549,413

709,383
465,109

Others

213,150

254,670

2,397,124

Total

478,927535,6125,041,531

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

- 37 -

Non-current assets(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended
31 March 2017

For the year ended
31 March 2018

For the year ended
31 March 2018

U.S.A.

25,21549,664

467,470

Japan
China

31,91814,76829,916
16,609281,592
156,339

Thailand
Vietnam

15,863
9,587

15,9507,999

150,134
75,291OthersTotal

47,381

54,110509,315

144,732

174,249

1,640,140

Note:(i) Geographical areas are based on the physical location of non-current assets.
(ii) Financial instruments, deferred tax assets, and pension plan assets are not included.
Revenue from external customers in Thailand and Vietnam is insignificant; therefore, the amount 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% or more of revenue of the Group.

- 38 -

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 andTools,
structures
carriers
equipment andLandConstruction inprogressTotal

fixtures
Balance at 1 April 2016

98,057

282,870

52,501

9,251

7,228

449,908

Additions

1,229

2,461

2,489

－

15,207

21,386

Acquisitions through businesscombinations

5

272

33

－

－

309

Disposals (i)Transfer from construction in(2,949)1,192(13,262)
11,741(3,415)
913

(39)
－

(256)
(13,846)(19,920)－

progress
Effect of foreign currency(539)(1,581)

(338)

(33)

217

(2,274)exchange differences
Others80(1,825)

492

－

(100)

(1,353)

97,074

280,677

52,674

9,179

8,451

448,055

681

1,605

2,294

－

13,077

17,657

combinations
Disposals (i)2,267(1,550)4,135(5,604)595(2,464)

538
(282)

508
(182)

Transfer from construction inprogress

2,309

12,820734

2(15,865)

8,042(10,082)－

Effect of foreign currency
exchange differences

253

276

671

127

44

1,370

Others414(1,658)

1,013

13

(78)

(295)

101,448

292,251

55,518

9,576

5,955

464,749

Balance at 31 March 2017
Additions
Acquisitions through business

Balance at 31 March 2018

- 39 -

（Millions of Yen）
Accumulated depreciation andimpairment losses

Buildings and Machinery andstructures

carriers

Tools,

Land

Construction inequipment andfixturesTotal

progress

Balance at 1 April 2016

(60,751)(242,367)(36,749)(1,116)(175)(341,157)

Depreciation expense
Impairment losses (ii)

(4,390)(226)(17,297)(30)(3,734)
(6)

－
－

－
－

(25,421)(262)

Disposals (i)Effect of foreign currency

2,660

12,990

3,230

2

127

19,009exchange differences
Others

196
37

566
1,808

201
697

－
－

(0)
－

963
2,542

Balance at 31 March 2017

(62,472)(244,331)(36,360)(1,114)(48)(344,326)

Depreciation expense
Impairment losses (ii)

(4,315)(356)(15,005)(8)(4,101)
－

－
－

－
－

(23,420)(364)

Disposals (i)Effect of foreign currency

1,363

5,162

1,920

162

－

8,607

exchange differences
Others

(529)
(428)

(253)
1,580

(584)
488

－
(26)

(2)
2

(1,368)
1,616

Balance at 31 March 2018(66,738)(252,855)(38,636)

(978)

(49)

(359,256)（Millions of Yen）
Carrying amount

Buildings and Machinery andstructures

carriers

Tools,

Land

equipment andfixtures

Construction in

Total

progress

Balance at 1 April 2016

37,30640,50315,753

8,135

7,054

108,751

Balance at 31 March 201734,602

36,346

16,314

8,064

8,403

103,729

Balance at 31 March 2018

34,71039,396

16,882

8,598

5,907

105,493- 40 -

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

Buildings and Machinery andstructures

Balance at 31 March 2017carriers

Tools,

Land

Construction inequipment andfixturesTotal

progress

913,727

2,641,914

495,805

86,39779,5464,217,388

6,409

15,10821,595－123,089

166,202

combinations
Disposals (i)21,338(14,594)

38,922(52,750)

5,600(23,191)

5,062(2,656)

4,777(1,709)75,699(94,900)

Transfer from construction inprogress

21,737

120,6676,908

22(149,335)－

Effect of foreign currency
exchange differences

2,380

2,597

6,313

1,194

415

12,900

Others

3,900(15,604)

9,540

121

(730)

(2,773)

954,898

2,750,854

522,571

90,14056,053

4,374,516

Additions
Acquisitions through business

Balance at 31 March 2018

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

Buildings and Machinery andstructures

carriers

Tools,

Land

Construction inequipment andfixturesTotal

progress

Balance at 31 March 2017

(588,031)(2,299,802)(342,246)(10,489)(454)(3,241,023)

Depreciation expense
Impairment losses (ii)

(40,618)(3,351)(141,234)(73)(38,597)
－

－
－

－
－

(220,449)(3,424)

Disposals (i)Effect of foreign currency

12,82948,584

18,075

1,527－

81,016exchange differences
Others(4,982)(4,027)(2,380)14,867(5,493)
4,594

－
(244)

(19)
16

(12,874)
15,208

Balance at 31 March 2018

(628,180)(2,380,037)(363,666)(9,206)(457)(3,381,547)(Thousands of U.S. Dollars (Note 2))
Carrying amount

Buildings and Machinery andstructures

Balance at 31 March 2018326,717carriers

Tools,

Land

equipment andfixtures370,816

158,905

Construction in

Total

progress
80,93455,596992,969

Note:(i) Gain and loss arising from the sale or disposal of property, plant and equipment for the years ended 31 March 2017 and 2018, are
set out in Note 24 “Revenue and expenses (excluding finance income and costs)”. Gain and loss on sale of assets held for sale areincluded in ‘gain on sale of property, plant and equipment’ and ‘loss on sale of property, plant and equipment’ in Note 24.
(ii) Details of impairment losses are set out in Note 8 “Impairment losses”.
(iii) Property, plant and equipment under construction are included in ‘construction in progress’ in the table above.

- 41 -

Details of commitments for the acquisition of property, plant and equipment are set out in Note 33 “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 2017 and 2018, which areincluded in each corresponding amount in the preceding table:(Millions of Yen）
Buildings and structures Machinery and carriers

Tools, equipment andfixtures

Total

Balance at 31 March 2017

30

29

287

346

Balance at 31 March 2018

33

30

317

380

(Thousands of U.S. Dollars (Note 2))
Buildings and structures Machinery and carriers
Balance at 31 March 2018

309

287

Tools, equipment andfixtures

Total

2,981

The obligation under finance lease (Note 16 “Finance lease obligations”) is secured by the leased assets on which the lessor has
ownership.

- 42 -

3,577

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

Goodwill

Intangible assets
SoftwareBalance at 1 April 2016

Technology

Customer
related assets

Others (i)Total

12,936

17,187

12,91912,335

7,357

49,798

0

1,394

3

－

80

1,477

4,970
(21)

1
(250)

8,970
(2)

3,891
(9)

245
(156)

13,106
(418)

154
－

240

(421)

126

(414)

(469)

367

(32)

361

(333)

363

18,03918,94021,436

16,704

6,778

63,857

－

1,561

－

－

71

1,632

24,489
－

166

2,495

1,405

14,765(196)(8,235)

10,700－(192)(8,622)exchange differences
Others(1,915)
(15)

239
1,208

(569)
189

(733)
1,094

(106)
(1,109)(1,169)1,383

Balance at 31 March 2018

40,596

21,91815,316

27,765

6,847

71,846

Additions
Acquisitions through businesscombinations
Disposals (ii)
Effect of foreign currency
exchange differences
OthersBalance at 31 March 2017
Additions
Acquisitions through businesscombinations
Disposals (ii)
Effect of foreign currency（Millions of Yen）
Accumulated amortisation andGoodwill

impairment losses
Balance at 1 April 2016

Intangible assets
SoftwareTechnology

Customer
related assets

OthersTotal(3,434)(14,232)(10,759)(4,174)(4,316)(33,481)－(1,156)－(815)－(1,568)－(817)－(4,356)
－

197

1

2

149

349

57
－

(191)
(37)

34
(0)

(81)
(401)

275
445

36
7

Balance at 31 March 2017

(3,449)(15,419)(11,539)(6,222)(4,264)(37,445)

Amortisation expense (iii)
Impairment loss (iv)－

(1,305)－(1,282)－(2,264)－(440)－(5,291)
－

179

8,235

－

191

8,605

186
(7)

(190)
(913)

200
(3)

188
(492)

128
230

326
(1,178)(8,704)(17,647)(4,390)(8,791)(4,155)(34,983)

Amortisation expense (iii)
Impairment loss (iv)
Disposals (ii)
Effect of foreign currency
exchange differences
Others

Disposals (ii)
Effect of foreign currency
exchange differences
OthersBalance at 31 March 2018

(72)－

(5,434)－- 43 -

（Millions of Yen）
Carrying amount

Goodwill

Intangible assets
SoftwareTechnology

Customer
related assets

Others

Total

Balance at 1 April 2016

9,502

2,955

2,160

8,161

3,041

16,317

Balance at 31 March 2017

14,590

3,521

9,897

10,482

2,513

26,412

Balance at 31 March 2018

31,892

4,270

10,926

18,974

2,693

36,863(Thousands of U.S. Dollars (Note 2))
Cost

Goodwill

Intangible assets
SoftwareBalance at 31 March 2017

Technology

Customer
related assets

Others (i)Total

169,793

178,271

201,769

157,230

63,797

601,067－

14,689－－670

15,359combinations
Disposals (ii)

230,502－

1,562(1,844)23,483(77,511)

100,712－

13,222(1,805)

138,979(81,160)

Effect of foreign currency
exchange differences(18,029)

2,250(5,357)(6,898)(998)(11,003)

Additions
Acquisitions through business

OthersBalance at 31 March 2018

(145)

11,375

1,781

10,296(10,436)

13,017382,120

206,303

144,165

261,340

64,450676,259(Thousands of U.S. Dollars (Note 2))
Accumulated amortisation andGoodwill

impairment losses
Balance at 31 March 2017
Amortisation expense (iii)
Impairment loss (iv)
Disposals (ii)
Effect of foreign currency

Intangible assets
SoftwareTechnology

Customer
related assets

OthersTotal(32,462)(145,134)(108,614)(58,570)(40,139)(352,457)－(12,287)－(12,063)－(4,142)－(49,802)－

1,688

77,511(21,310)
－
－

1,799

80,998(51,152)－

exchange differences
Others

1,753(67)(1,788)(8,590)

1,879
(32)

1,767
(4,632)

1,208
2,168

3,067
(11,086)

Balance at 31 March 2018

(81,928)(166,110)(41,320)(82,745)(39,106)(329,281)- 44 -

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

Goodwill

Intangible assets
SoftwareBalance at 31 March 2018

300,193

Technology

Customer
related assets

102,846

178,595

40,194

Others25,344

Total
346,979

Note:(i) There were no significant internally generated intangible assets for the years ended 31 March 2017 and 2018.
(ii) Loss on disposal of intangible assets is set out in Note 24 “Revenue and expenses (excluding finance income and costs)”.
(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.
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 33 “Commitments for expenditure”.
Details of intangible assets in the consolidated statement of financial position are as follows:
As at 31 March 2017

As at 31 March 2018

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

lives (Years)(Millions of Yen)

U.S. Dollars(Note 2))

lives (Years)

－

－

2,197

20,679

10

9,897

12

8,492

79,934

12

Health Care related
products

8,347

915,354

144,518

12

Medical related
products

1,585

9

1,462

13,7588

Health Care related
Technology

products
Medical related
products

Customer related
assets- 45 -

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 2017

For the year ended 31 March 2018

For the year ended 31 March 2018

356

3,351

Buildings and structures

226

Machinery and equipment

30

8

73

Tools, equipment and fixtures

6

－

－

Total impairment losses onproperty, plant and equipment

262

364

3,424

72

5,434

51,152334

5,798

54,576

Goodwill
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, theasset is individually tested for impairment.

- 46 -

(2) Impairment losses on assets in business units
For the year ended 31 March 2017
The Group performed an impairment test for the goodwill in Life Care during the year ended 31 March 2017 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 (average remaining useful lives) approved by the Group’s management, and a discount rate of
16% per annum, which is the SBU’s pre-tax weighted-average capital cost (“WACC”).
(Millions of Yen)
Impairment lossesLife Care
Health Care related products (Eyeglass lenses)
Goodwill

72

Total

72

For the year ended 31 March 2018
The Group performed an impairment test for the goodwill in Life Care during the year ended 31 March 2018 based on the latest
business plan. As a result, the following impairment losses, mainly for a subsidiary in Brazil, were recognised, as the profitability inthe initial plan is no longer achievable due to a hike in purchase costs along with devaluation of Brazil real.
Recoverable amount was measured at the value in use and determined using cash flow projections based on the financial budgets for a
maximum of five years approved by the Group's management, and a discount rate of 19.8% to 20.9% per annum, which is the SBU's
pre-tax WACC.
(Millions of Yen)

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

Impairment losses

Impairment lossesLife Care
Health Care related products (Eyeglass lenses)
Goodwill
Total- 47 -

5,434

51,152

5,434

51,152

(3) Impairment losses on idle assets
For the year ended 31 March 2017, the carrying amount of the related assets, which were not expected to be used in the future due tobusiness restructuring, was written down to the recoverable amount which was measured at fair value less related selling costs, and thecorresponding impairment loss was recognised.
Impairment losses were recognised as follows for the year ended 31 March 2017:(Millions of Yen)
Impairment lossesLife Care
Machinery and carriers

18
Total Life Care

18

Information Technology
Buildings and structures

226

Machinery and carriers
Tools, equipment and fixtures

12
6

Total Information Technology

244

Total

262

For the year ended 31 March 2018, the carrying amount of the related assets, which were not expected to be used in the future due tobusiness restructuring, was written down to the recoverable amount which was measured at fair value less related selling costs, and thecorresponding impairment loss was recognised.
Impairment losses were recognised as follows for the year ended 31 March 2018:(Millions of Yen)

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

Impairment losses

Impairment lossesLife Care
Buildings and structures
Machinery and carriers

203
0

1,912
4

204

1,916

Buildings and structures

153

1,439

Machinery and carriers

7

69

Total Information Technology

160

1,509

Total

364

3,424

Total Life Care
Information Technology- 48 -

(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. The recoverable amountof goodwill allocated to cash-generating units was measured at the value in use and it was determined using cash flow projections
based on the financial budgets that had been approved by the Group’s management and applying a discount rate of 4% to 21% perannum which is the cash-generating units’ pre-tax WACC. Cash flow projections during the budgeted period are based on the
expected gross margins and taking into account inflation. The cash flows beyond the 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, WACC) on which the recoverable amount is based would not cause the aggregate carrying amount to exceed theaggregate 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 2017

Life Care
Health Care related

Other

Medical related products

Other

Total

products
Eyeglass lenses

Medical accessories

Japan
Americas

791
7,080

733
3,237

Europe
Asia

594
1,384

770
－

9,850

4,740

Total

1,524
10,317

－
－
－
－

1,364
1,384

－

14,590（Millions of Yen）

As at 31 March 2018

Life Care
Health Care related

Other

Medical related products

Other

Total

products
Eyeglass lenses

Medical accessories

Japan
Americas791
24,989

733
3,065

－
－

1,524
28,054

Europe
Asia

680
245

839
－

551
－

2,070
245

26,7054,637

551

31,892

Total(Thousands of U.S. Dollars (Note 2))
As at 31 March 2018

Life Care

Japan

Other

Health Care related
products

Medical related products

Eyeglass lenses

Medical accessories

7,448

6,897

Americas235,213

Europe
Asia

6,401
2,302
251,365

Total- 49 -

Other

Total

－

14,34528,852－

264,065

7,898
－

5,182
－

19,4802,302

43,6465,182

300,1939. Investments in associates
A summary of the Group’s associates, which are not individually significant, is as follows:(Millions of Yen)

(Millions of Yen)

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

As at / for the year
ended 31 March 2017

As at / for the year
ended 31 March 2018

As at / for the year
ended 31 March 2018

The Group’s share of net income (loss)

16

(44)

(418)

The Group’s share of other comprehensive income (loss)

(1)

(9)

(86)

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

14
196

(54)
1,476

(504)
13,890Details of the Group’s associates, which are not individually significant, are as follows:
Ownership interest (%)

Place of
Name of associate
AVANSTRATE, INC.

Principal activity incorporation andoperation

Segment

As at
31 March 2017As at
31 March 2018

Production andsale of glass

JAPAN

Corporate

46.6

46.6

INDIA

Corporate－

24.3

substrate for thinfilm transistor(TFT) liquid
crystalEYE-Q VISION PRIVATE

Medical services

LIMITEDrelated toophthalmology

HTK LENTES OFTALMICASLTDASale of opticallens

BRAZIL

Life Care

38.9

38.3

JIASHAN CANDEO OPTICAL

Production and

CHINA

Information

49.0

49.0

GLASS CO., LTD.

sale of special
glass, such as

Technology

coloured glass
The Group’s unrecognised share of loss on associates is as follows:(Millions of Yen)

(Millions of Yen)

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

As at / for the year
ended 31 March 2017

As at / for the year
ended 31 March 2018

As at / for the year
ended 31 March 2018

The Group’s unrecognised share of net loss (income)(1,132)

4,420

41,604The Group’s unrecognised share of accumulated net loss

2,973

7,394

69,592- 50 -

10. Deferred taxes and income taxes(1) Deferred taxes
Details of deferred tax assets and liabilities are as follows:（Millions of Yen）
Recognised
As at
1 April 2016

Recognised in
profit or loss

in othercomprehensive

Business
combinations

As at
31 March 2017

incomeTemporary differences
Enterprise tax payable
Write-down of inventories

590
1,183

(48)
41

Allowance for doubtful
accounts

524

11

Provisions
Accrued expenses

898
3,590

53
(44)

Unrealised profit on inventories
Depreciation and amortisation

3,066
1,958

(81)
(27)

520
－

50
－

Impairment losses
Exchange differences on

－

－

－
－

－
－

－

－

－
－

－
－

－
－

－
－

－

－

543
1,223
535
950
3,546
2,985
1,931
570
－

translating foreign operations
3,428

(491)

(4)

－

2,932

Subtotal

15,756

(536)

(4)

－

15,216

Undistributed retained earnings(2,723)

(14)

－

－

(2,737)of subsidiaries
Depreciation and amortisation(4,492)

90
－

－
(58)

(3,446)－(7,849)

8

(545)

88

－

－

(457)

(7,752)164(58)(3,446)(11,092)

1,322
2

39
15

－
－

1,040
－

2,402
17

Subtotal

1,324

54

－

1,040

2,418

Total

9,328

(318)

(62)

(2,406)

6,542

OthersNet gain/(loss) on revaluationof available-for-sale financial(50)

assetsOthersSubtotal
Tax loss carryforwards and tax
credits
Tax loss carryforwards
Tax credits

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

- 51 -

（Millions of Yen）
Recognised
As at
1 April 2017

Recognised in
profit or loss

in othercomprehensive

Business
combinations

As at
31 March 2018

incomeTemporary differences
Enterprise tax payable
Write-down of inventories

543
1,223

30
(190)

Allowance for doubtful
accounts

535

51

Provisions
Accrued expenses

950
3,546

(145)
119

Unrealised profit on inventories
Depreciation and amortisation

2,985
1,931

(464)
(686)

570
－

(24)
－

2,932
Subtotal

－

－

－
－

－

573
1,033

2

588
805
3,665

－

－

－
－

－
－

－
－

104
－

3

－

546
3

242

10

－

3,184

15,216(1,067)13

106

14,267

Undistributed retained earnings(2,737)545－－(2,192)of subsidiaries
Depreciation and amortisation(7,849)

3,462
－

－

(1,768)－(6,154)

Impairment losses
Exchange differences on

2,521
1,349

translating foreign operations
OthersNet gain/(loss) on revaluationof available-for-sale financial

(50)

(115)

(164)

assets
(457)

35

－

－

(421)

(11,092)

4,043

(115)

(1,768)(8,932)

2,402
17

(104)
(9)

－
－

419
－

2,716
8

Subtotal

2,418

(113)

－

419

2,724

Total

6,542

2,862

(102)

(1,243)

8,059

OthersSubtotal
Tax loss carryforwards and tax
credits
Tax loss carryforwards
Tax credits

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

- 52 -

(Thousands of U.S. Dollars (Note 2))
Recognised
As at
1 April 2017

Recognised in
profit or loss

in othercomprehensive

Business
combinations

As at
31 March 2018

incomeTemporary differences
Enterprise tax payable
Write-down of inventories

5,110
11,515285(1,790)

－

－

－
－

－

5,395
9,726

Allowance for doubtful
accounts

5,033

482

17

5,532

Provisions
Accrued expenses

8,945
33,380(1,368)
1,116

－

－

－
－

－
－

7,578
34,496

Unrealised profit on inventories
Depreciation and amortisation

28,093
18,175(4,365)(6,458)

Impairment losses
Exchange differences on

5,367
－

(225)
－

－
－

978
－

29

－

5,142
29

27,602

2,277

94

－

29,973

Subtotal

143,221(10,046)

123

995

134,293

Undistributed retained earnings(25,762)

5,130

－

－

(20,633)of subsidiaries
Depreciation and amortisation(73,879)

32,591－－(16,638)－(57,927)

23,728
12,694translating foreign operations
OthersNet gain/(loss) on revaluationof available-for-sale financial(467)(1,080)(1,547)

assets(4,299)333－－(3,966)(104,408)

38,054(1,080)(16,638)(84,073)

22,608
156

(983)
(83)

－
－

3,942
－

25,56773

Subtotal

22,764(1,066)－

3,942

25,640Total

61,577

26,942(958)(11,702)75,860

OthersSubtotal
Tax loss carryforwards and tax
credits
Tax loss carryforwards
Tax credits

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

- 53 -Tax loss carryforwards and deductible temporary differences for which deferred tax assets have not been recognised are as follows:(Millions of Yen)

(Millions of Yen)

As at
31 March 2017As at
31 March 2018

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

Tax loss carryforwards
Deductible temporary differences
Total

As at
31 March 201812,285
4,083

12,972
4,494

122,105
42,30016,36817,466

164,405

The expiration date and amounts of tax loss carryforwards 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
31 March 2017As at
31 March 2018

As at
31 March 2018Year 1

931

680

6,400

Year 2
Year 3

1,736
2,340

1,819
2,162

17,117
20,348Year 4

988
6,290

1,004
7,308

9,453
68,787

12,285

12,972

122,105

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 2017 and 2018, were 273,333 million yen and 290,558 million yen (2,734,924
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 2017 and 2018.
(2) Income taxes
In Japan, the normal effective statutory tax rates are 30.5% for each of the years ended 31 March 2017 and 2018.
Current or deferred taxes in 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:(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 201731 March 2018

31 March 2018

Current tax expense: (i)Current year

22,09427,340257,346

1,523

42

396

23,617

27,382257,742326－(1,819)(17,124)(537)(5,056)

Total deferred tax expense326(2,356)(22,180)

Total income tax expense

23,94325,026

235,562

23,943－25,026－

235,562－

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

Continuing operations
Discontinued operations
Note:(i) ‘Current tax expense’ includes previously unrecognised tax benefits from tax loss carryforwards, tax credits and deductible
temporary differences. These benefits were 147 million yen and 77 million yen (727 thousand U.S. dollars) for the years ended 31
March 2017 and 2018, respectively.

- 54 -

(ii) ‘Deferred tax expense’ includes previously unrecognised tax benefits from tax loss carryforwards, 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 the deferred tax expense by 282 million yen and 357 million yen (3,363 thousand
U.S. dollars) for the years ended 31 March 2017 and 2018, respectively.
(iii) On 26 June 2013, the Company received a reassessment notice from the Tokyo Regional Taxation Bureau (“TRTB”) for
additional tax on the transfer pricing taxation of transactions with overseas subsidiaries that develop and manufacture electronics
related products, for the five financial years ended from 31 March 2007 to 2011. The additional tax assessment was 8,419 million yen.
The Company has lodged an objection with TRTB seeking withdrawal of the assessment in accordance with the relevant law.
On 29 March 2018, the Company received a written verdict from the National Tax Tribunal (the “Tribunal”), which partially cancels
the reassessments. It is expected that 503 million yen (4,730 thousand U.S. dollars) will be refunded to the Company as corporate tax,
local taxes, and others. The Company disagrees with the remaining findings of the Tribunal’s verdict that maintains portions of thereassessment and the Company expects to appeal the findings in court to seek cancellation of all the reassessments by the tax
authorities.
Consequently, 503 million yen (4,730 thousand U.S. dollars) to be refunded is included in “Income taxes receivable” and theremaining amount of 7,916 million yen (74,513 thousand U.S. dollars) is included in “Other current assets” as a 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.
For the year ended

For the year ended

31 March 201731 March 2018

Effective statutory tax rate

30.5%

30.5%

Expenses not deductible for tax purposes
Income not taxable for tax purposes

0.8%(0.0)%

2.0%(0.0)%

Effect of unrecognised deferred tax assets
Impact of different tax rates applied to overseas subsidiaries

0.4%(13.8)%

Profits and losses on investments in associates
Adjustment on deferred tax assets and liabilities due to the change of corporate tax(0.0)%

0.2%(15.8)%－

rate
Tax rate difference due to the elimination of unrealised profit on inventories(0.0)%(0.4)%(0.0)%

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

0.0%(0.4)%

Prior year income taxes
Foreign withholding tax arising from dividends from subsidiaries

1.4%
1.9%

(0.0)%
3.9%

Others0.4%

0.1%

Actual tax rate

21.6%

20.1%

There was no effect on income tax resulting from dividends paid to shareholders.

- 55 -－

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.
Dollars (Note 2))

As at
31 March 2017As at
31 March 2018

As at
31 March 2018

Other financial assets
Available-for-sale financial assets
Loans and receivables

1,345

1,689

15,902Loans and receivables
Allowance for doubtful accounts

24,359（559)

19,434(574)

182,929(5,402)Loans and receivables–net

23,80018,861

177,527

Total

25,14520,550

193,430

7,357

15,595

146,791

17,788

4,955

46,639Total non-current assets (long-term financial
assets)Total current assets (other short-term financial
assets)(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.

As at

As at

As at

31 March 201731 March 2018

31 March 2018

Dollars (Note 2))

Other financial liabilities
FVTPL financial liabilities (derivative instruments)

492

－

－

Other financial liabilities measured at amortised
cost

5,003

7,626

71,781

5,495

7,626

71,781

4,843

6,983

65,731

652

643

6,050

Total
Total non-current liabilities (other long-term
financial liabilities)
Total current liabilities (other short-term financial
liabilities)- 56 -

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 2017

As at 31 March 2018

As at 31 March 2018

Long-term prepaid expenses
Others

2,557
21

2,246
56

21,137
532

Total

2,578

2,302

21,668Suspense payment (Note)

8,419

7,916

74,513

Prepaid expenses
Refundable consumption taxes

2,679
2,381

2,984
2,024

28,092
19,049Non-current: Other assets

Current: Other assets

Others
Total

2,998

2,274

21,403

16,477

15,198143,057(Millions of Yen)

(Millions of Yen)

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

As at 31 March 2017

As at 31 March 2018

As at 31 March 2018

813

956

9,000

813

956

9,000

Accrued salary/bonus/vacation pay
Other accrued expenses

14,27817,613

15,32817,088144,281
160,844

Advance received/deferred revenue
Accrued consumption taxes

3,165
1,478

4,437
1,804

41,765
16,985

Others

2,289

2,884

27,14838,822

41,542

391,023

Non-current: Other liabilities
Deposit received and long-term advancerevenue, etc.
Total
Current: Other liabilities

Total
Note:

On 26 June 2013, the Company received a reassessment notice from the TRTB for additional tax on the transfer pricing taxationof transactions with overseas subsidiaries that develop and manufacture electronics-related products for the five financial years
ended 31 March 2007 to 2011. The additional tax assessment was 8,419 million yen. The Company has lodged an objection with
TRTB seeking withdrawal of the assessment in accordance with the relevant law.
On 29 March 2018, the Company received a written verdict from the Tribunal, which partially cancels the reassessments. It is
expected that 503 million yen will be refunded to the Company as corporate tax, local taxes, and others. The Company disagrees
with the remaining findings of the Tribunal’s verdict that maintains portions of the reassessment and the Company expects toappeal the findings in court to seek cancellation of all the reassessments by the tax authorities.
Consequently, 503 million yen to be refunded is included in “Income taxes receivable” and the remaining amount of 7,916
million yen is included in “Other current assets” as a suspense payment.

- 57 -

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 2017

As at 31 March 2018

As at 31 March 2018

Goods and products

31,49836,835

346,719

Work in progress
Raw materials

7,015
16,081

7,521
15,97670,794150,373

Supplies

10,907

11,009103,62165,501

71,341

671,508

5

6

53

Total
Inventories expected to be soldafter more than 12 months

The cost of inventories recognised as an expense during the years ended 31 March 2017 and 2018, was 220,712 million yen and
244,443 million yen (2,300,855 thousand U.S. dollars), respectively.
The cost of inventories recognised as an 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 201731 March 2018

31 March 2018

Amount of write-down

1,351

1,421

13,372

Amount of reversal of write-

(55)

(31)

(291)

down
The reversal of write-down was due to an increase in net realisable value, as a result of an increase in new orders with positive sales
activities.

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 2017

As at 31 March 2018

As at 31 March 2018

Accounts receivable

91,177101,145

952,039

Notes receivable andelectronically recorded

6,472

6,782

63,834monetary claims-operating
Other receivables

3,164

2,675

25,182

Allowance for doubtful accounts(2,499)(2,970)(27,953)

Total

98,315

107,632

1,013,101

The credit terms for customers are set between 90 days and 120 days on average.
Refer to Note 22 “Financial instruments” for credit risk management and fair value of trade and other receivables.

- 58 -

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

Yen)

Yen)

U.S. Dollars(Note 2))Averageinterest rate

As at 31 March As at 31 March As at 31 March
2017
2018
2018
Long-term bank loans (excluding current portion)

8

1

13

－

Current portion of long-term bank loans
Short-term bank loans

7
1,640
14
35,01568
15,610－－Bonds (ii)Current portion of bonds (ii)

7
1,658
－
14

127

1.12%
－
－

483
252

450
222

4,233
2,092

－
－

Total interest-bearing debt

37,4182,353

22,143

Total non-current debt

504

451

4,246

Total current debt

36,913

1,901

17,898Long-term finance lease obligations (Note 16)
Short-term finance lease obligations (Note 16)

Due

(%)
(i)
2019
－
－
－
－
2019-2023－

Note:(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 of (Thousands ofYen)
Company

Item

Yen)

U.S. Dollars

Issue Date

(Note 2))As at 31
As at 31
As at 31
March 2017 March 2018 March 2018
11

HOYA

Unsecured

CORPORATION

bond (No. 3)

September
2007

HOYA

1 Private

5
NovemberTechnosurgical, Inc. Note
Total

CollateralInterest rate
(Millions of
(%)
Yen)

Due

20
34,994

－

－

1.93

－

September
2017

35

14

127

1.51

－

4 April 201835,028

14

127

－

－

－

2011
－

－

The obligations under finance leases are secured by the leased assets for which the lessor has ownership. Refer to Note 16 “Financelease obligations”. There is no debt with covenants as at 31 March 2018.
Details of the remaining contractual maturity for long-term borrowings and bonds and fair values are set out in Note 22 “Financial
instruments”.

- 59 -

The changes in liabilities arising from financial activities are as follows:(Millions of Yen)
Non-cash changes
As at 31 March 2017

Short-term bankExchange differences

Cash flowon translation offoreign operations

As at 31 March 2018

Others

1,640

－

19

－

1,658

15

(7)

1

－

9

35,028(35,021)

－

6

14

735

(332)

57

212

672

37,418(35,360)

77

218

2,353

loans
Long-term bank
loans
Bond
Finance leaseobligations
Total(Thousands of U.S. Dollars (Note 2))

Non-cash changes
As at 31 March 2017

Exchange differenceson translation ofCash flow

As at 31 March 2018

Othersforeign operations
Short-term bank

15,433－

177－

15,610

137

(68)

12

－

81

329,706(329,640)

－

61

127

6,923

(3,125)

536

1,992

6,325

352,200(332,834)

724

2,053

22,143loans
Long-term bank
loans
Bond
Finance leaseobligations
Total- 60 -

16. 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

2017

2018

2018

2017

2018

2018

Amounts payable under financeleases:
Not later than one year
Later than one year but not

273

258

2,424

252

222

2,092

later than five years
Later than five years

543
1

488
－

4,596
－

482
1

450
－

4,233
－

817

746

7,020

735

672

6,325

(82)

(74)

(695)

735

672

6,325

735

672

6,325

252

222

2,092

483

450

4,233

Total
Less future finance charges
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 as part of its policy, except for cases 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 2018.
Certain lease contracts include renewal options or purchase options. However, there are no sub-lease contracts, contingent rents,
escalation payments or specific limitations (such as dividends, additional debt, and further leasing) included in these lease contracts.
The Group’s fair values of lease obligations are set out in Note 22 “Financial instruments”.

- 61 -

17. 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 201731 March 2018

31 March 2018

Minimum lease payments
Contingent rent

8,179
774

8,722
900

82,093
8,474

Total

8,953

9,622

90,567

The amounts above are included in the line item ‘Other expenses’ in the consolidated statement of comprehensive income.
Contingent rent, which is determined in rent contracts for stores at shopping malls, is the rent based on the stores’ sales amounts.
As at 31 March 2017 and 2018, 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))As at 31 March 2017

As at 31 March 2018

As at 31 March 2018

Not later than one year
Later than one year but not later than five years

1,353
2,129

Later than five years
Total

1,333
3,194

12,54530,064

2,790

2,638

24,829

6,272

7,165

67,438Operating lease payments represent rentals payable by the Group for the land used for offices, buildings, etc. The average remaining
operating lease terms for those assets as at 31 March 2018, are 34 years and four years, respectively.
Certain lease contracts include renewal options, purchase options or escalation payments. However, there are no sub-lease contracts or
restrictions (such as dividends, additional debt, and further leasing), included in these contracts.

- 62 -

18. 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 are stated in Note 3 “Significant accounting policies (19)Retirement benefit costs”.
The Company and its domestic subsidiaries mainly have defined contribution plans. Overseas subsidiaries have benefit plans requiredby the local laws and regulations of each country. Unless a defined benefit plan is required by the laws of the country in which theoverseas subsidiaries operate, a defined contribution plan has been put into place. The plan in the U.K. represents a substantial portionof the pension plans of the Group, where it is the closed plan that stopped new registrations. Management believes that general risks,such as investment, credit and salary risks are not significant in the 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.
Dollars (Note 2))

As at 31 March 2017

As at 31 March 2018

As at 31 March 2018

5,539
(3,543)

6,033(3,906)56,786(36,765)

1,996
0

2,127
－

20,022
－

1,996

2,127

20,022

2,001
5

2,127
－

20,022－Present value of funded defined benefit obligation
Fair value of plan assets
Total
Effect of 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)- 63 -

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 201731 March 2018

31 March 2018

(Note 2))Service cost
Current service cost

353

349

3,284

Net interest expense

13

30

287

Components of defined benefit costs

366

379

3,571

Return on plan assets
Actuarial gains and losses arising from

(145)
(68)

27
(35)

259
(328)

changes in demographic assumptions
Actuarial gains and losses arising from

512

54

506

changes in financial assumptions
Actuarial gains and losses arising fromrecognised in profit or loss
Remeasurement of net defined benefit
liability

7

(135)

(1,269)experience adjustments
Adjustments for restrictions on the

(25)

(0)

(0)

defined benefit asset
Components of defined benefit costs

281

(88)

(833)

647

291

2,738

recognised in other comprehensive
income
Total

Service cost and net interest expense are included in ‘Employee benefits expense’ and ‘Finance cost’ in the consolidated statement ofcomprehensive income.
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 201731 March 2018

31 March 2018

Beginning balance

5,266

5,539

52,138Business combination

－

238

2,237

Current service cost
Interest cost

353
110

349
116

3,284
1,087

Remeasurement (gains)/losses
Actuarial gains and losses arising from

(68)

(35)

(328)

changes in demographic assumptions
Actuarial gains and losses arising from

512

54

506

changes in financial assumptions
Actuarial gains and losses arising from

7

(135)

(1,269)

(286)

(292)

(2,744)

Effect of foreign currency exchange
differences

(354)

199

1,876

Ending balance

5,539

6,033

56,786experience adjustments
Benefits paid

- 64 -

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
31 March 2017

For the year ended
31 March 2018

For the year ended
31 March 2018

Beginning balance

3,610

3,543

33,347

Business combination－

Interest income

96

40
85

377
800

Remeasurement gain (loss)
Return on plan assets (excluding amounts

145

(27)

(259)

included in net interest expense)
Contributions from the employer

255

245

2,308

Benefits paid
Effect of foreign currency exchange

(206)
(358)

(124)
144

(1,166)
1,357

differences
Ending balance

3,543

3,906

36,765

Movements in the effect of 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
31 March 2017

For the year ended
31 March 2018

For the year ended
31 March 2018

Beginning balance

29

0

0

Interest expense

0

0

0

Effect of changes in the asset ceiling
Effect of foreign currency exchange

(25)

(0)

(0)

differences
Ending balance

(4)

0

0

0

－

－

Remeasurement gain (loss)

The fair values of major categories of plan assets as at 31 March 2017 and 2018, are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2017
Cash and cash equivalents

As at 31 March 2018

As at 31 March 2018

644

745

7,013

1,829

1,986

18,695

Debt instruments - Foreign governmental
bonds

503

557

5,239

Debt instruments - Foreign bonds
Others

538
28

585
33

5,509
309

3,543

3,906

36,765Equity instruments - Foreign equity
instruments

Total

The fair values of financial instruments are measured at quoted market price in active markets. 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 2017
Discount rate

As at 31 March 2018
2.6%

2.6%

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.

- 65 -

(2) Defined contribution plans
The total expense recognised was 2,271 million yen and 2,341 million yen (22,033 thousand U.S. dollars) for the years ended 31
March 2017 and 2018, 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 2,471 million yen and 2,307 million yen (21,712 thousand U.S. dollars) for the years
ended 31 March 2017 and 2018, respectively.

- 66 -

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

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2017
Asset retirement obligation

2,441

Warranties provision
Total

As at 31 March 2018

As at 31 March 2018

2,423

22,811

1,311

1,255

11,816

3,752

3,679

34,626

Non-current liabilities

2,419

2,398

22,576

Current liabilities

1,333

1,280

12,051An analysis of the change in provisions is as follows:(Millions of Yen)
Asset retirement obligation

Warranties provision

Total

Balance at 1 April 2017

2,441

1,311

3,752

Provision for the year

42

910

Interest cost associated with passage of time
Reduction resulting from settlement for the year

19
(42)

867
－

19
(929)

(887)

Effect of foreign currency exchange differences

(37)

(36)

(72)

Balance at 31 March 2018

2,423

1,255

3,679

(Thousands of U.S. Dollars (Note 2))
Asset retirement obligation
Balance at 1 April 2017

Warranties provisionTotal

22,976

12,34035,316
8,563

Provision for the year

397

Interest cost associated with passage of time
Reduction resulting from settlement for the year

174
(391)

8,165
－
（8,353)

174(8,744)

Effect of foreign currency exchange differences

(346)

(337)

(682)

Balance at 31 March 2018

22,811

11,816

34,626

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

- 67 -

20. 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 2017

As at 31 March 2018

As at 31 March 2018

Accounts payable

19,437

26,036

245,070

Notes payable, trade
Processing cost payable

5,760
529

6,286
697

59,169
6,558

Other payables
Notes payable for capital investment

14,983663

13,087449

123,182
4,226

Total

41,371

46,555438,205

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 payables related to intragroup transactions; thus, upon consolidation,these trade accounts payable are eliminated. The Group arranges cash pooling for Japan, Europe and U.S.A. to ensure that all payables
are paid within the pre-agreed credit terms.

- 68 -

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

Number of issued

Number of

Share capitalauthorised sharessharesoutstanding shares(Ordinary shares (Ordinary shares (Ordinary shares (Millions ofwith no par value） with no par value） with no par value）
Yen)

CapitalShare capital

Capitalreserves
reserves(Millions of (Thousands of (Thousands of
Yen)

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

Balance at
1 April 2016

1,250,519,400

404,607,520

396,615,183

6,264

15,89958,963

149,648－

14,827,600

8,521,412

－

－

－

－

31 March 2017

1,250,519,400

389,779,920

388,093,771

6,264

15,89958,963

149,648

Decrease (i), (ii)－8,343,500

8,579,425

－

－

－

－

1,250,519,400

381,436,420

379,514,346

6,264

15,89958,963

149,648

Decrease (i), (ii)
Balance atBalance at
31 March 2018

Note:(i) Decrease in number of issued shares is due to cancellation of treasury shares.
(ii) 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
Amount(Millions of Yen)

Numbers of shares
Balance at 1 April 2016

7,992,337

34,6338,866,700(14,827,600)

34,983(61,392)

792
(80)

3
(0)

Decrease on exercise of stock options(346,000)(1,411)

Balance at 31 March 2017

1,686,149

6,816

Repurchase of treasury shares
Cancellation of treasury shares
Repurchase of odd-lot shares
Disposal of odd-lot shares

Repurchase of treasury shares

9,334,600

54,999Cancellation of treasury shares
Repurchase of odd-lot shares(8,343,500)
1,225(47,118)
7

Decrease on exercise of stock options(756,400)(3,819)Balance at 31 March 2018

1,922,074

10,886- 69 -

Amount
Numbers of shares(Thousands of U.S. Dollars(Note 2))

Balance at 31 March 2017

1,686,149

64,157

Repurchase of treasury shares
Cancellation of treasury shares

9,334,600(8,343,500)

517,691(443,504)

Repurchase of odd-lot shares
Decrease on exercise of stock options

1,225(756,400)

68(35,946)

Balance at 31 March 2018

1,922,074

102,465② Other capital reserves
Gain (loss) on
disposal of treasury

Stock option (i)Others

Total(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(7,129)

3,087

(914)

(4,956)

(20)
－
－

(662)
408

sharesBalance at 1 April 2016
Repurchase of treasury shares－－

Disposal of treasury shares
Share-based payments (i)

(474)
－
－

(188)
408
－

(115)

(115)

(7,603)

3,307(1,049)(5,345)－－(1,069)
－

(27)
－
－

(1,579)
317

－

(509)
317
－

(26)

(26)

(8,672)

3,114(1,101)(6,660)Change in non-controlling interests (ii)
Balance at 31 March 2017
Repurchase of treasury shares
Disposal of treasury shares
Share-based payments (i)Change in non-controlling interests (iii)
Balance at 31 March 2018

Gain (loss) on
disposal of treasury

(20)

(27)

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))(71,564)

31,125(9,873)(50,312)

－

－

(259)

(10,066)－－(4,793)
2,982
－

(259)
－
－
(241)

(241)

(81,631)

29,315(10,373)(62,689)

sharesBalance at 31 March 2017
Repurchase of treasury shares
Disposal of treasury shares
Share-based payments (i)Change in non-controlling interests (iii)
Balance at 31 March 2018(14,859)
2,982

Note:
(i) Refer to Note 23 “Share-based payments” for details of stock options.
(ii) The Group acquired 16.7% of outstanding shares in SISTEMAS INTEGRALES DE MEDICINA, S.A. As a result, the ownershipinterest of the Group increased to 91.7%. 115 million yen, the difference between the decrease of non-controlling interests (i.e.,
proportional interests of the carrying amount of the net assets) and the consideration paid for the shares is included in 'Other capitalreserves' in the consolidated statement of financial position.
(iii) The Group acquired 8.3% of outstanding shares in SISTEMAS INTEGRALES DE MEDICINA, S.A. As a result, the ownershipinterest of the Group increased to 100%. 26 million yen (241 thousand U.S. dollars), the difference between the decrease of noncontrolling interests (i.e., proportional interests of the carrying amount of the net assets) and the consideration paid for the shares is
included in 'Other capital reserves' in the consolidated statement of financial position.

- 70 -

(3) Retained earnings and dividends
Amount(Millions of Yen)
Balance at 1 April 2016

510,787

Profit for the year (attributable to owners of the Company)
Cancellation of treasury shares

86,740(61,392)

Dividends
Transfer to retained earnings(29,482)(285)

Balance at 31 March 2017

506,367

Profit for the year (attributable to owners of the Company)
Cancellation of treasury shares

99,494(47,118)

Dividends
Transfer to retained earnings(29,024)
98

Balance at 31 March 2018

529,818
Amount(Thousands of U.S. Dollars (Note 2))

Balance at 31 March 2017

4,766,259

Profit for the year (attributable to owners of the Company)
Cancellation of treasury shares

936,503(443,504)

Dividends
Transfer to retained earnings(273,190)
927

Balance at 31 March 2018

4,986,995

Details of dividends are as follows:

Date of resolution

Dividends per
share
(Yen)

Total dividends
Dividends per
Total dividends(Thousands ofshare(Millions of
U.S. Dollars(U.S. Dollars
Yen)(Note 2))
(Note 2))

Record date

Effective date

20 May 2016

45

0.42

17,848167,994

31 March 2016

1 June 2016

28 October 2016

30

0.28

11,634

109,50930 September 2016

30 November 2016

23 May 2017

45

0.42

17,464

164,385

31 March 2017

1 June 201727 October 2017

30

0.28

11,559108,805

30 September 201730 November 201724 May 2018

45

0.42

17,078160,751

31 March 2018

1 June 2018

Dividends payable are included in the line item ‘Other short-term financial liabilities’ in the consolidated statement of financial
position.

- 71 -

(4) Non-controlling interests
Amount(Millions of Yen)
Balance at 1 April 2016

4,909

Profit for the year, attributable to non-controlling interests
Other comprehensive income

112
(301)

Decrease due to acquisition of non-controlling interests(202)

Balance at 31 March 2017

4,518

Profit for the year, attributable to non-controlling interests(272)

Other comprehensive income
Dividends

349
(34)

Increase due to establishment of subsidiaries
Decrease due to acquisition of non-controlling interests

45
(123)

Balance at 31 March 2018

4,484
Amount(Thousands of U.S. Dollars (Note 2))

Balance at 31 March 2017

42,529Profit for the year, attributable to non-controlling interests(2,561)Other comprehensive income
Dividends

3,289
(320)

Increase due to establishment of subsidiaries
Decrease due to acquisition of non-controlling interests425(1,155)

Balance at 31 March 2018

42,208- 72 -

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

(Millions of Yen)

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

As at

As at

As at

31 March 201731 March 2018

31 March 2018

Interest-bearing debt

37,4182,353

22,143

Less: Cash and cash equivalents

296,851

245,835

2,313,962

Net debt(259,433)(243,483)(2,291,819)

Equity515,405

530,677

4,995,081

In order to maximise the corporate value of the Group, cash flows have been a priority of the Group management. As at 31 March2017 and 2018, the Group maintained cash and cash equivalent balances in excess of interest-bearing debt balances. The Group is not
subject to any externally imposed capital regulations as at 31 March 2018.
Details of interest-bearing debt and equity are described in Note 15 “Interest-bearing debt” and Note 21 “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”.

- 73 -

(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 201731 March 2018

31 March 2018

Financial assets
Loans and receivables
Trade and other receivables
Other financial assets (ii)98,31523,800Available-for-sale financial assets (ii)107,632
18,861

1,013,101
177,527

1,345

1,689

15,902296,851

245,835

2,313,962

492

－

－

Trade and other payables
Interest-bearing debt

41,371
37,41846,5552,353

438,205
22,143

Other financial liabilities (iii)

5,003

7,626

71,781

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

Note:(i) The items above are not included in discontinued operations and disposal groups 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) 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 2017 and 2018, 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 an 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.

- 74 -

(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 exchange rates, interest rates, 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 from the Thai Baht, the Euro and the
U.S. dollar, have a significant impact on the Group’s financial results. If the Japanese yen appreciates against these currencies, bothsales and profit stated in the Japanese yen might decrease even though sales and profits 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, as the Company has multiple SBUs and conducts its own finance and dividend payments to the Company’s
shareholders, and the holding companies under the Company receive dividends from their subsidiaries and distribute them to theCompany and/or other group companies, the Group’s foreign currency-dominated balances in receivables, liabilities and/or bankdeposits may not fully offset each other. This might cause significant gains or losses on foreign exchange differences when the Yen
appreciates or depreciates against the U.S. dollar 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 profit and equity of a 1% appreciation of the Yen against the Thai Baht, the Euro and the U.S.
dollar with the assumption that the exchange rates for other currencies are constant.
For the year ended 31 March 2017

For the year ended 31 March 2018

Average exchange rate
(Yen per each currency)
Thai Baht

3.10

3.36

118.68108.72130.25110.70Thai Baht
Euro

(79)
(24)

(152)
(30)

U.S. dollar

(355)

(404)

Thai Baht
Euro

(158)
(364)

(261)
(275)

U.S. dollar

(607)

(682)

Euro
U.S. dollar
Impact on profit for the year
(Millions of Yen)

Impact on equity(Millions of Yen)

For the year ended 31 March 2018
Impact on profit for the year
(Thousands of U.S. Dollars (Note 2))
Thai Baht（1,428)Euro
U.S. dollar(280)(3,803)

Impact on equity(Thousands of U.S. Dollars (Note 2))
Thai Baht
Euro(2,459)(2,587)

U.S. dollar(6,420)- 75 -

Note:
Numbers in parentheses are the amounts of negative impact on profit and equity resulting from a 1% appreciation of the Yen. The
amounts above represent the impact on the consolidated financial statements of the Group resulting from foreign currency conversion
and not the impact on the Group’s cash flows or operations themselves.
Likewise, the tables below show the impact 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 currencies on the assumption that exchange
rates for other currencies are constant. The information about the holding companies with immaterial risk is not included in the tables
below.
2)-1. Parent company (the Company)(Millions of Yen)Euro
31 March 2017
Trade and other receivables
Trade and other payables

U.S. dollar
31 March 2018

(19)
2
－
－

Long-term financial assets
Short-term financial assets

31 March 201731 March 2018

(28)
2
－

(58)
11
－

(0)
－

(0)
－

(73)
16
－
(0)

Short-term interest-bearing debt
Cash and cash equivalents

(13)

(1)

(63)

122
(57)

Total

(30)

(28)

(110)

9

－

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

U.S. dollar

31 March 2018

31 March 2018

Trade and other receivables

(262)

(683)

Trade and other payables
Long-term financial assets

14
－

152
－

Short-term financial assets
Short-term interest-bearing debt

(0)
－

(0)
1,150

(12)

(533)

(260)

(86)

Cash and cash equivalents
Total
Note:

Numbers in parentheses are the amounts of negative impact on profit and equity resulting from a 1% appreciation of the Yen. A 1%
depreciation of the Yen has a positive impact in the same amount.
Intercompany receivables/payables are included in the calculation of the impact as they cause foreign exchange gain or loss in theprocess of translation.
2)-2. Holding company (Europe)(Millions of Yen)
Yen
31 March 2017

U.S. dollar
31 March 2018

31 March 201731 March 2018

Trade and other receivables

－

－

－

Trade and other payables
Long-term financial assets

0
－
－

0
－
－

0
－

(1)

－

(0)
(3)

(11)

(0)

0

(3)

(11)

Short-term financial assets
Cash and cash equivalents
Total- 76 -－－－－

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

U.S. dollar

31 March 2018
Trade and other receivables
Trade and other payables
Long-term financial assets
Short-term financial assets
Cash and cash equivalents
Total

31 March 2018
－

－

0
－

－
－

－
－

(102)

(0)

(102)

－

Note:
Numbers in parentheses are the amounts of negative impact on profit and equity resulting from a 1% appreciation of the Euro. A 1%
depreciation of the Euro has a positive impact in the same amount.
Intercompany receivables/payables are included in the calculation of the impact as 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 in 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 that stated above is adhered to.
Details of the forward foreign exchange contracts at the end of each reporting period are as follows:(Millions of Yen)

For the year ended
31 March 2017

Average
Foreignexchange rate currency (mil)Notional
amountFair value

Forward foreign exchange contracts
Within one year
US$Sell

0.74(€Buy)(€/US$)

$22.7

2,013

(492)
(Millions of Yen)

For the year ended
31 March 2018

Average
Foreignexchange rate currency (mil)Notional
amountFair value(Thousands of U.S. Dollars (Note 2))

Notional
amountFair value

Forward foreign exchange contracts
N/A
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.

- 77 -

② Interest rate risk management
The majority of the interest-bearing debt consists of bonds with fixed interest rates. The Group’s cash and cash equivalents exceed theinterest-bearing debt, and currently, the impact of interest expense on the Group’s profit/loss is immaterial. Therefore, the Groupconsiders the interest rate risk to be immaterial and has not performed sensitivity analyses 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 purposes. The Group does not sell these investments frequently and theGroup 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 34 million
yen and 53 million yen (499 thousand U.S. dollars) as at 31 March 2017 and 2018, respectively, as a result of changes in fair value ofthe equity instruments.

- 78 -

(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 that are approved by the authorised personnel of each SBU.
The main customers for the Information Technology business are globalised companies that have relatively large-scale and stablefinancial conditions. On the other hand, credit losses were incurred on a sporadic basis in the Life Care business as 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 that sells goods to medical institutions andoperates wholesale businesses 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 a large number of customers across a diverse range of 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
risk over 5% of total financial assets as at 31 March 2018.
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 2017

As at 31 March 2018

As at 31 March 2018

Guarantee liabilities

11－

The Group does not hold any collateral or other credit enhancements to cover the risks disclosed above.

- 79 -－

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 2017
Total

Overdue amounts

Within due
dateWithin 30days

31 to 60 days 61 to 90 days

91 to 120

Over 120

days

days

Trade and other receivables(gross)Allowance for doubtful accounts

100,813(2,499)89,168
(387)

5,310
(51)

1,769
(78)

793
(131)

696
(143)

3,078
(1,709)Trade and other receivables (net)98,31588,781

5,259

1,691

662

553

1,369

Other financial assets (gross)
Allowance for doubtful accounts

24,359(559)

23,504
(5)

48
－

1
－

－
－

－
－

806
(554)

Other financial assets (net)23,80023,499

48

1

－

－

252

(Millions of Yen)
Balance at 31 March 2018
Total

Within due
date

Overdue amounts
Within 30
91 to 120
31 to 60 days 61 to 90 days
days
days

Over 120days

Trade and other receivables(gross)Allowance for doubtful accounts

110,602(2,970)95,642
(369)

7,057
(122)

2,840
(95)

1,029
(127)

805
(206)

3,228
(2,050)Trade and other receivables (net)107,632

95,273

6,935

2,745

902

599

1,178

Other financial assets (gross)

19,434

18,551

23

Allowance for doubtful accounts

(574)

(46)

(23)

－
－

14
－

1
－

(505)

Other financial assets (net)18,861

18,505

1

－

14

1

340

845

(Thousands of U.S. Dollars (Note 2))
Balance at 31 March 2018
Total
Trade and other receivables(gross)

1,041,054

Within due
date

Overdue amounts
Within 30
days

900,246

66,43031 to 60 days 61 to 90 days

91 to 120

Over 120

days

days

26,732

9,681

7,581

30,386

Allowance for doubtful accounts(27,953)(3,478)(1,149)(893)(1,193)(1,941)(19,300)

Trade and other receivables (net)1,013,101

896,768

65,281

25,840

8,488

5,640

11,085

Other financial assets (gross)

182,929

174,613220

Allowance for doubtful accounts(5,402)

(434)

(214)

4
－

129
－

12
－

(4,754)

Other financial assets (net)177,527

174,179

6

4

129

12

3,197

The Group does not hold any collateral or other credit enhancements on the above financial assets, excluding the following:
As at 31 March 2017
Current portion of long-term loans to subsidiaries and affiliates of 8,166 million yen
As at 31 March 2018
Long-term loans to subsidiaries and affiliates of 8,047 million yen (75,744 thousand U.S. dollars)
Details of collaterals are described in Note 30 “Related party disclosures”.

- 80 -

7,952

In case of impairment of financial assets, the Group does not directly write off such assets by reducing the carrying amount; instead, it
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)

Total

accounts (Non-current)

Balance at 1 April 2016

2,348

783

3,131

Provision for the year

434

39

473

Reduction resulting from settlement for the year

(136)

(238)

(374)

Reduction for the year (reversal)

(63)

(8)

(71)

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

(84)

(17)

(100)

Balance at 31 March 2017

2,499

559

3,058

Provision for the year

465

65

529

Reduction resulting from settlement for the year

(110)

(32)

(141)

Reduction for the year (reversal)

(41)

(44)

(84)

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

156

26

182

2,970

574

3,544

Balance at 31 March 2018

(Thousands of U.S. Dollars (Note 2))
Allowance for doubtful Allowance for doubtful
accounts (Current)
accounts (Non-current)
Balance at 31 March 201723,521

5,262

Total
28,783

Provision for the year

4,375

608

4,983

Reduction resulting from settlement for the year

(1,032)(298)(1,330)

Reduction for the year (reversal)

(383)

(411)

(794)

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

1,473

241

1,714

Balance at 31 March 2018

27,953

5,402

33,355The Group continuously monitors the financial status of customers that 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, credit risk is widely dispersed among customers and the Group does not depend on specificcustomers. Therefore, the possibility of a chain-reaction of bankruptcies of certain customers is considered to be remote and the Group
does not set an 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 2017 and 2018.

- 81 -

(7) Liquidity risk management
The 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 2017

Carrying Contractual Less than 1 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5amount cash flows
year
years

Non-derivative liabilities
Trade and other payables
Long-term bank loans (excluding

41,371
8

41,371
8

41,371
－

－

－

7

1

－
－

－
－

－
－

current portion)
Current portion of long-term bank

－

－

－

－

－

7

7

7

loans
Short-term bank loans

1,640

1,640

Bonds (excluding current portion)
Current portion of bonds

14
35,01514
35,021

1,640－

Long-term finance leaseobligations

483

Short-term finance leaseobligations
Other financial liabilities
Derivative liabilities

－

－

－

－

－

－
－

－
－

－
－

－
－

483

35,021
－

14
－
192

137

105

48

1

252

252

252

－

－

－

－

－

5,003

5,003

496

734

2,965

673

134

－

Currency derivative

492

492

492

－

－

－

－

－

Total

84,28384,29079,279

946

3,103

778

183

1

(Millions of Yen)
Balance at 31 March 2018
Non-derivative liabilities
Trade and other payables

Carrying Contractual Less than 1 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5amount cash flows
year
years
46,55546,555

－

－

－

－

1

1

46,555－－Long-term bank loans (excluding
current portion)

1

－

－

－

－

Current portion of long-term bank
loans

7

7

7

－

－

－

－

－

Short-term bank loans
Current portion of bonds

1,658
14

1,658
14

－
－

－
－

－
－

－
－

－
－

Long-term finance leaseobligations

450

450

1,658
14
－

189

152

90

19

－

Short-term finance leaseobligations

222

222

222

－

－

－

－

－

Other financial liabilities
Total

7,626

7,626

1,802

3,409

1,900

459

56

－

56,53356,53350,259

3,599

2,052

549

75

－

- 82 -

(Thousands of U.S. Dollars (Note 2))
Balance at 31 March 2018
Non-derivative liabilities
Trade and other payables

Carrying Contractual Less than 1 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5amountcash flows

year

years

438,205438,205

－

－

－

－

13

13

438,205－－

Long-term bank loans (excluding
current portion)

13

－

－

－

－

Current portion of long-term bank
loans

68

68

68

－

－

－

－

－

Short-term bank loans
Current portion of bonds

15,610127

15,610
127

－
－

－
－

－
－

－
－

－
－

Long-term finance leaseobligations

4,233

4,233

15,610
127
－

1,780

1,429

848

175

－

Short-term finance leaseobligations

2,092

2,092

2,092

－

－

－

－

－

Other financial liabilities
Total

71,781

71,781

16,96432,085

17,886

4,316

530

－

532,129

532,129

473,066

33,87819,315

5,165

705

－

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 in the following ways.
Details of financing methods and status are as follows:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2017

As at 31 March 2018

As at 31 March 2018

Bank overdraft
Used
Unused
Total

－

－

－

65,00065,000611,82265,00065,000611,822

Commercial paper
Used
Unused
Total

－

－

－

50,00050,000470,633

50,00050,000470,633- 83 -

(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.
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 the Group’s share of the net assets of issuing companies at stated periods. Any
excess of the cost of the investment over the Group’s share of net assets is deemed as fair value.
① Financial instruments that are measured at fair value(Millions of Yen)
As at 31 March 2017

Level 1

Level 2

Level 3

Total

Available-for-sale financial assets

679

－

666

1,345

Total

679

－

666

1,345

FVTPL financial liabilities (derivative instruments)

－

492

－

492

Total

－

492

－

492
(Millions of Yen)

As at 31 March 2018

Level 1

Level 2

Level 3Available-for-sale financial assets

1,072

－

Total

1,072

－

Total
618

1,689

618

1,689

(Thousands of U.S. Dollars (Note 2))
As at 31 March 2018

Level 1

Level 2

Level 3

Total

Available-for-sale financial assets

10,086－

5,816

15,902

Total

10,086－

5,816

15,902Note:
As at 31 March 2017
The common stocks classified as Level 3 were transferred to Level 1 during the year ended 31 March 2017, as they became
measurable at quoted prices in active markets.
As at 31 March 2018
No transfers occurred between Levels 1, 2 and 3 during the year ended 31 March 2018.

- 84 -

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(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 201731 March 2018

31 March 2018

Opening balance

1,051

666

6,269

Total gains or losses recognised:

(11)

(48)

(453)

- in profit or loss (i)- in other comprehensive income (ii)

(9)
(2)

(73)
25

(685)
233

Purchase
Sale

0
(0)

0
－

0
－

Others

(374)
(0)

－
－

－
－

Closing balance

666

618

5,816

Transfer to Level 1

Note:(i) In the total gains or losses for the years ended 31 March 2017 and 2018, included in profit or loss, (9) million yen in loss and (73)
million yen ((685) thousand U.S. dollars) in loss, respectively, relate to available-for-sale financial assets at the end of the reporting
period. Related loss on these assets is included in the line item ‘Finance costs’ in the consolidated statement of comprehensive income.
Refer to Note 25 “Finance income and costs”.
(ii) In the total gains or losses for the years ended 31 March 2017 and 2018, included in other comprehensive income, (2) million yen
in loss and 25 million yen (233 thousand U.S. dollars) in profit, respectively, relate to the shares not traded in the market. Related loss
and profit are included in the line item ‘Net gain/ (loss) on revaluation of available-for-sale financial assets’ in Note 26 “Other
comprehensive income”.

- 85 -

(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)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))As at 31 March 2017

As at 31 March 2018

As at 31 March 2018

Carrying
amountFair value

Carrying
amountFair value

Carrying
amountFair value

8,166

8,169

－

－

－

－

－

－

8,185
4,985

75,74446,922

77,04746,922

AssetsLoans and receivables
Current portion of long-term loans to
subsidiaries and affiliates
Long-term loans to subsidiaries and affiliates
Lease deposits

4,857

4,857

8,047
4,985

Total

13,022

13,025

13,032

13,170122,666

123,969

Long-term bank loans (excluding current
portion)

8

8

1

1

13

13

Current portion of long-term bank loans
Bonds (excluding current portion)

7
14

7
14

7
－

7
－

68
－

68
－

Current portion of bonds
Long-term finance lease obligations

35,015483

35,350
577

14
450

14
537

127
4,233

128
5,055

Short-term finance lease obligations

252

267

222

236

2,092

2,217

35,77836,223

694

795

6,533

7,480

Liabilities
Financial liabilities measured at amortised costTotal

- 86 -

② 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, 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 is 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 2017

Level 1

Level 2

Level 3

Total

AssetsLoans and receivables
Long-term loans to subsidiaries and affiliates

－
－

8,169
4,857

－

Lease deposits

－

8,169
4,857

Total

－

13,025－13,025

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

－

8

－

8

Current portion of long-term bank loans
Bonds (excluding current portion)

－
－

7
14

－
－

7
14

Current portion of bonds
Long-term finance lease obligations－－

35,350577－－

35,350577

Short-term finance lease obligations

－

267

－

267

Total

－

36,223－36,223Liabilities(Millions of Yen)
As at 31 March 2018

Level 1

Level 2

Level 3

Total

AssetsLoans and receivables
Long-term loans to subsidiaries and affiliates
Lease deposits

－
－

8,185
4,985

－
－

8,185
4,985

Total

－

13,170－13,170Financial liabilities measured at amortised cost
Long-term bank loans (excluding current portion)

－

1

－

1

Current portion of long-term bank loans
Current portion of bonds

－
－

7
14

－
－

7
14

Long-term finance lease obligations
Short-term finance lease obligations

－
－

537
236

－
－

537
236

Total

－

795

－

795

Liabilities- 87 -

(Thousands of U.S. Dollars (Note 2))
As at 31 March 2018

Level 1

Level 2

Level 3

Total

AssetsLoans and receivables
Long-term loans to subsidiaries and affiliates－

77,047－

Lease deposits
Total

77,047－46,922－

46,922－

123,969－

123,969

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

－

13

－

13

Current portion of long-term bank loans
Current portion of bonds

－
－

68
128

－
－

68
128

Long-term finance lease obligations
Short-term finance lease obligations

－
－

5,055
2,217

－
－

5,055
2,217

Total

－

7,480

－

7,480

Liabilities- 88 -

23. Share-based payments(1) Details 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
results of the Group by motivating 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 the 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 payment transactions. Expense recorded in the consolidated
statement of comprehensive income from undertaking shared-based payment transactions was 408 million yen and 317 million yen(2,982 thousand U.S. dollars) for the years ended 31 March 2017 and 2018, respectively.
Details of the stock options that are outstanding for the years ended 31 March 2017 and 2018, are as follows:No.

Number of shares

Grant date

Expiry date

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

6

585,600

7 Nov 2006

30 Sep 2016

4,750

3,961

7
8

77,6001,036,000

14 Nov 2007
28 Nov 2008

30 Sep 201730 Sep 2018

4,230
1,556

3,357
952

10
11

1,247,600
1,225,600

8 Dec 2009
7 Dec 2010

30 Sep 201930 Sep 2020

2,215
1,947

2,784
1,861

12
13

680,800
560,800

17 Jan 201216 Jan 2013

30 Sep 2021
30 Sep 2022

1,616
1,648

1,427
1,707

14
15

758,800
582,400

15 Jan 201414 Jan 2015

30 Sep 2023
30 Sep 2024

2,846
3,972.5

3,141
3,585

16
17

460,400
386,800

13 Jan 201617 Jan 201730 Sep 2025
30 Sep 2026

4,928
4,839

3,407
3,740

18

40,40013 Feb 2018

30 Sep 2027

5,765

4,009

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
The weighted-average fair value of the stock options granted during the years ended 31 March 2017 and 2018, was 3,740 yen and
4,009 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 2017 and 2018.
Expected volatility was determined based on recent historical daily share price volatility from the grant date to the forecasted
remaining period.
No. 17
Share price at grant date (Yen)No. 18

4,722

5,421

Exercise price (Yen)
Expected volatility

4,839
27.46%

5,765
26.63%

Expected remaining option life (Years)
Dividends yield

6.0
1.59%

5.9
1.38

Risk free rate

(0.10)%(0.06)%- 89 -

(3) The number and weighted-average exercise prices of stock options
The weighted-average exercise price of the outstanding options was 3,415 yen and 3,604 yen as at the years ended 31 March 2017 and2018, respectively. Weighted-average remaining contractual life was 6.5 years and 5.9 years as at 31 March 2017 and 2018,
respectively.
For the year ended 31 March 2017

For the year ended 31 March 2018

Weighted-average
Number of shares

exercise price(Yen)

Weighted-average
Number of shares

exercise price(Yen)

3,126,200

3,249

2,741,200

3,415

386,800

4,839

40,4005,765

Forfeited (i)(76,000)

3,387(56,400)

4,071

Exercised(346,000)

2,164(756,400)

2,962

Expired(349,800)

4,750(44,400)

4,230

Outstanding at the end of the period

2,741,200

3,415

1,924,400

3,604

Exercisable at the end of the period

1,582,700

2,717

1,260,900

3,003

Outstanding at the beginning of the period
GrantedNote:(i) Stock options forfeited were due to employee retirements.
Stock options exercised during the year ended 31 March 2018, were as follows:No.

Number of shares exercised

Exercise period

Weighted-average of share price at
exercise date (Yen)

7
8

5,200
48,400April 2017
June 2017 to March 2018

5,274
6,120

10
11

54,80069,200April 2017 to March 2018
April 2017 to February 2018

5,918
5,763

12
13

52,80054,400April 2017 to February 2018
April 2017 to March 2018

6,006
6,122

14
15

203,600
195,200

April 2017 to March 2018
April 2017 to February 2018

5,930
6,037

16
17

53,60019,200July 2017 to February 2018
October 2017 to January 2018

6,173
6,169

Total

756,400

Note:
The number of shares exercised and the amount paid by key management personnel are 450,000 shares and 1,274 million yen,respectively.
Stock options exercised during the year ended 31 March 2017, were as follows:No.

Number of shares exercised

Exercise period

Weighted-average of share price at
exercise date (Yen)

7
8

4,000
25,600March 2017
May 2016 to March 2017

5,500
4,839

10
11

52,40055,200

May 2016 to March 2017
June 2016 to March 2017

4,497
4,351

12
13

24,00099,600April 2016 to March 2017
April 2016 to March 2017

4,424
4,529

14
15

64,80020,400August 2016 to March 2017
November 2016 to March 2017

4,761
4,946

Total

346,000

Note:
The number of shares exercised and the amount paid by key management personnel are 22,800 shares and 61 million yen,respectively.

- 90 -

(4) Stock options to which IFRS 2 is not applied
IFRS 2 was not applied to stock options vested prior to the IFRS transition date (April 1, 2008). In the previous consolidated fiscal
year, all of the 118,200 stock options not applied expired. Therefore, IFRS 2 is applied to accounting for all stock options from thecurrent consolidated fiscal year.

- 91 -

24. 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:

Sales of goods and products(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended
31 March 2017

For the year ended
31 March 2018

For the year ended
31 March 2018

477,051

533,273

5,019,513

1,877

2,339

22,019478,927535,6125,041,531

Service revenue
Total sales(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(Note 2))For the year ended

For the year ended

For the year ended

31 March 201731 March 2018

31 March 2018

Commission

237

399

3,755

Rent
Government grants

131
135

135
159

1,266
1,498

Gain on sale of plant, property and equipment
and intangible assets

733

462

4,353

Insurance proceeds
Settlement proceeds

287
－

27
1,697

258
15,977

1,240

1,119

10,531

2,764

3,999

37,639OthersTotal other income(3) R&D expenses recognised as incurred(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note 2))For the year ended
31 March 2017

For the year ended
31 March 2018

For the year ended
31 March 2018

Employee benefits expense
Depreciation and amortisation

8,450
1,617

9,014
2,056

84,843
19,355

Commission expenses
Other expenses

1,270
10,489

2,420
9,800

22,78392,242

Total R&D expenses recognised as incurred

21,82623,290219,222Note:
The above items are included in the corresponding line items in the consolidated statement of comprehensive income.

- 92 -

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

Salary, bonuses and others(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 201731 March 2018

31 March 2018

103,799

116,431

1,095,926

353

349

3,284

2,271

2,341

22,033

2,624

2,690

25,316Retirement benefit
Defined benefit
Defined contribution
Retirement benefit total
Share-based payments (stock option)

408

317

2,982

2,471
5,203

2,307
6,076

21,71257,191

114,504

127,820

1,203,127

Severance payments
OthersTotal 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 201731 March 2018

31 March 2018

(Note 2))

Packaging/shipping/transportation
Travel

8,983
5,936

10,6396,670

100,137
62,783Rent
Utilities

7,047
10,423

7,604
12,03871,572
113,313

Repair and maintenance
Loss on sales of property, plant and equipment

11,493
13

12,867
24

121,114
226

Loss on disposal of property, plant andequipment

143

415

3,902

Loss on disposal of intangible assets
Others82
63,02617
68,269161
642,591

107,147

118,543

1,115,800

Total other expenses- 93 -

25. 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 201731 March 2018

31 March 2018

Finance income
Interest income
Cash and cash equivalents, loans andreceivables

1,758

1,554

14,62450

876

Dividend income
Available-for-sale financial assets
Gain on sale
Available-for-sale financial assets

6,215

－

－

Total finance income

8,022

1,562

14,700Interest-bearing debt
Retirement benefits liabilities

996
22

409
30

3,849
287

Provisions
Other liabilities

20
84

19
241

174
2,266

Loss on sale
Available-for-sales financial assets

0

－

－

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

6

73

685

1,130

771

7,261

Finance costs
Interest costs

Total finance costs

Note:(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.

- 94 -

26. Other comprehensive income
For the years ended 31 March 2017 and 2018, items that may be reclassified subsequently to profit or loss comprise the following:(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars(Note2))For the year ended

For the year ended

For the year ended

31 March 201731 March 2018

31 March 2018

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
Reclassification adjustments to profit orloss for the year
Total

174

350

3,296

6

73

685

180

423

3,981

(5,808)(2,680)(25,229)

－

(32)

(303)

(5,808)(2,712)(25,532)

(1)

(9)

(88)

② Exchange differences on translation offoreign operations (ii)
Gains (losses) arising during the year
Reclassification adjustments to profit orloss for the year
Total
③ Share of other comprehensive income ofassociates
Gains (losses) arising during the year
Reclassification adjustments to profit orloss for the year

0

0

2

Total

(1)

(9)

(86)

tax
Income tax relating to components of other(5,630)(2,299)(21,637)

comprehensive income
Total other comprehensive income/(loss)

(58)

(112)

(1,052)(5,687)(2,410)(22,688)

Other comprehensive income/(loss) before(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’ consists of differences on foreign currency conversion for financial
statements of foreign operations.

- 95 -

Deferred and current taxes on each item of other comprehensive income for the years ended 31 March 2017 and 2018, 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 201731 March 2018

31 March 2018

(Note 2))

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 assets② Exchange differences on

184

(58)

126

380

(108)

272

3,579

(1,018)2,561(5,511)－(5,511)(3,026)

3(3,023)(28,481)29(28,452)

(281)

(4)

(285)

88

10

98

833

94

927

(1)

－

(1)

(9)

－

(9)

(86)

－

(86)

(5,609)(62)(5,671)(2,566)(95)(2,661)(24,156)(895)(25,050)

(4)

－

(4)

43

(7)

36

403

(63)

340

(297)

－

(297)

313

－

313

2,949

－

2,949

(301)

－

(301)

356

(7)

349

3,352

(63)

3,289

(5,910)(62)(5,972)(2,210)(102)(2,312)(20,804)(958)(21,761)translation of foreign
operations③ Remeasurements of the
net defined benefit
liability (asset)④ Share of othercomprehensive incomeof associates
Subtotal
Other comprehensive
income attributable to non-controlling interests① Net gain/(loss) onrevaluation ofavailable-for-salefinancial assets② Exchange differences ontranslation of foreign
operations
Subtotal
Total other comprehensive
income/(loss)- 96 -

27. 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 201731 March 2018

31 March 2018

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

221.93－258.46－2.43－

221.93258.462.43

221.49－257.88－2.43－

221.49257.88

2.43(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

For the year ended

For the year ended

For the year ended

31 March 201731 March 2018

31 March 2018

(Note 2))

Profit attributable to owners of theCompany from continuing operations

86,74099,494

936,503－－－86,74099,494

936,503

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 2017

For the year ended 31 March 2018

Weighted-average number of ordinary
shares390,837- 97 -

384,946

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

For the year ended
31 March 2017

For the year ended
31 March 2018

For the year ended
31 March 2018

(Note 2))

Profit attributable to owners of theCompany from continuing operation
after dilution
Profit attributable to owners of the86,74099,494

936,503－－－86,74099,494

936,503

Company 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)
For the year ended
31 March 2017
Weighted-average number of ordinary shares

For the year ended
31 March 2018

390,837

384,946

778

865

391,615

385,811

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

28. Non-cash transactions
Non-cash transactions for the years ended 31 March 2017 and 2018, consisted of acquiring property, plant and equipment through new
finance lease arrangements in the amount of 415 million yen and 212 million yen (1,993 thousand U.S. dollars), respectively.

- 98 -

29. Subsidiaries(1) Composition of the Group
Information about the composition of the Group as at 31 March 2017 and 2018, is as follows:

Reportable Segment
Life Care

Information Technology

Number of wholly-owned subsidiaries

Location

As at 31 March 2017

As at 31 March 2018

U.S.A.

6

14

ARGENTINA

1

1

UNITED KINGDOM

2

4

ITALY

2

2

INDIA

3

3

INDONESIA

2

3

AUSTRALIA

1

1

NETHERLANDS

44

CANADA

2

6

SINGAPORE

3

3

SWITZERLAND

1

1SWEDEN

1

1

SPAIN

1

2

THAILAND

2

3

CZECH REPUBLIC

1

1

DENMARK

1

1

GERMANY

4

4

TURKEY

1

1

HUNGARY

22

PHILIPPINES

2

2

FINLAND

1

1

BRAZIL

2

2

FRANCE

3

3

BULGARIA

1

1

VIETNAM

1

1

BELGIUM

1

1

POLAND1

1

MALAYSIA

34

RUSSIA

2

2

SOUTH KOREA

1

3

TAIWAN

1

1

CHINA

7

7

SOUTH AFRICA

1

1

JAPAN

6

6

U.S.A.

1

1

SINGAPORE

1

1

THAILAND

2

2

PHILIPPINES

3

3

VIETNAM

4

4MALAYSIA

1

1

SOUTH KOREA

1

1

TAIWAN

1

1

CHINA

6

6

JAPAN

1

1

- 99 -

Reportable Segment
Other

Information Technology

As at 31 March 2017

As at 31 March 2018

U.S.A.

2

3

UNITED KINGDOM－

1AUSTRALIA－

1

NETHERLANDS

2

3SINGAPORE

1

1

SWEDEN

－

1

SPAIN

－

1

GERMANY－1

FRANCE－

1

SOUTH KOREA

1

1

JAPAN

1

1

Reportable Segment
Life Care

Number of wholly-owned subsidiaries

Location

Number of non-wholly-owned subsidiaries

Location

As at 31 March 2017

As at 31 March 2018IRELAND

1

1

U.S.A.

1

1

UNITED KINGDOM

1

1

NETHERLANDS

1

1

SPAIN

1

－

GERMANY

4

2

FRANCE

1

1

VIETNAM

1

1

BELGIUM

1

1

CHINA

3

4

JAPAN

3

3

PHILIPPINES

1

1

CHINA

2

2

- 100 -

(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 ownershipinterests and voting
Name ofsubsidiaries

Locationrights held by noncontrolling interests(Millions of (Millions of
Yen)

Yen)

Accumulated non-controlling interests(Thousands(Thousands(Millions of (Millions ofof U.S.
of U.S.
Yen)
Yen)
Dollars)
Dollars)

As at 31
As at 31
As at 31
As at 31
As at 31
As at 31
As at 31
As at 31
March 2017 March 2018 March 2017 March 2018 March 2018 March 2017 March 2018 March 2018
WASSENBURG MEDICALNETHER
LANDS

B.V. and six
and otherother companies countries

49.0%

49.0%

74

(47)

(443)

2,894

3,101

29,188

50.0%

50.0%

(9)

(232)

(2,186)

1,127

980

9,221

SEIKO
OPTICAL
PRODUCTS
CO., LTD. andseven otherJAPANand othercountries

companies
Individually immaterial subsidiaries with non-controlling interests
Total

497

404

3,799

4,518

4,484

43,208

Summarised financial information in respect of each of the Group’s subsidiaries that have 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
ended 31 March 2017

As at / for the year
ended 31 March 2018

As at / for the year
ended 31 March 2018

WASSENBURG MEDICAL B.V. and six
other companies
Non-current assets

3,506

3,511

33,046

Current assets

4,197

4,749

44,704Non-current liabilities

(591)

(471)

(4,432)Current liabilities(1,205)(1,461)(13,753)

Equity attributable to owner of the Company

3,012

3,227

30,378Non-controlling interests

2,894

3,101

29,187

Revenue

5,546

6,434

60,559

Expenses(5,396)(6,530)(61,463)

Profit/(loss) for the year

150

(96)

(903)

Other comprehensive income/(loss)

(425)

518

4,872

Comprehensive income/(loss)

(275)

422

3,968

Dividends paid to non-controlling interests

－

－

－

Net cash flow from operating activities

380

243

2,283

Net cash flow from investing activities

(168)

(229)

(2,159)Net cash flow from financing activities

(14)

(10)

(97)

Net cash flow

198

3

27

- 101 -

(Millions of Yen)

(Millions of Yen)

(Thousands of U.S. Dollars)

As at / for the year
ended 31 March 2017

As at / for the year
ended 31 March 2018

As at / for the year
ended 31 March 2018

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

1,297

1,328

12,501

Current assets

11,80012,131

114,182

(59)

(13)

(126)

(10,472)(11,199)(105,413)

1,283

1,123

10,572

Non-current liabilities
Current liabilities
Equity attributable to owner of the Company
Non-controlling interests

1,283

1,123

10,572

Revenue

30,31532,481

305,736

Expenses(30,604)(32,970)(310,331)

Profit/(loss) for the year

(289)

(488)

(4,595)

Other comprehensive income/(loss)

(156)

169

1,593

Comprehensive income/(loss)

(445)

(319)

(3,002)－－－

Dividends paid to non-controlling interests
Net cash flow from operating activities

1,094

337

3,176

Net cash flow from investing activities

(21)

(60)

(561)

Net cash flow from financing activities

(101)

268

2,522

Net cash flow

973

546

5,138

Note:
The Company holds less than a majority of the voting rights of SEIKO OPTICAL PRODUCTS CO., LTD. (“SOP”); however, theCompany has the power to appoint a majority of its board of directors. Thus, the Company is considered to control SOP and includes
it in its subsidiaries.

- 102 -

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

Name of subsidiary

HOYA LENSMANUFACTURING

Reportablesegment

Life Care

MALAYSIA SDN.BHD.
HOYA LENS THAILAND LTD. Life Care

Major products/
services in the

Proportion of

Proportion ofshares held

shares held

As at 31 March

As at 31 March

2017

2018

MALAYSIA

100.0%

100.0%THAILAND

100.0%

100.0%

Location

reportable segment
Health Care related
products
Health Care related
products

HOYA LENS GUANGZHOULTD.

Life Care

Health Care related
products

CHINA

95.0%

95.0%

HOYA LENS AUSTRALIA
PTY.LTD.

Life Care

Health Care related
products

AUSTRALIA

100.0%

100.0%

INDIA

100.0%

100.0%VIETNAM

100.0%

100.0%

CHINA－

100.0%INDONESIA－

100.0%HOYA LENS INDIA PRIVATELIMITEDLife Care

HOYA LENS VIETNAM LTD. Life Care
DAEJEON DAEMYUNG
OPTICAL (HANGZHOU) CO., Life Care
LTD.

Health Care related
products
Health Care related
products
Health Care related
products
Health Care related

PT.VISION-EASE ASIA

Life CarePERFORMANCE OPTICS
KOREA, LTD.

Life Care

Health Care related
products

SOUTH KOREA－

100.0%HOYA HOLDINGS N.V.

Health Care relatedLife Care andproducts and EU
Corporate
headquarters

NETHERLANDS

100.0%

100.0%GERMANY

100.0%

100.0%HOYA LENSDEUTSCHLAND GMBH

Life Care

products

Health Care related
products

HOYA LENS U.K. LTD.

Life Care

Health Care related
products

UNITED
KINGDOM

100.0%

100.0%HOYA LENS ITALIA S.P.A.

Life Care

Health Care related
products

ITALY

100.0%

100.0%HOYA LENS IBERIA S.A.

Life Care

SPAIN

100.0%

100.0%HOYA LENS FRANCE S.A.S.

Life Care

FRANCE

100.0%

100.0%

Health Care related
products
Health Care related
products

HOYA TURKEY OPTIK LENSLife Care
SANAYI VE TICARET A.S.

Health Care related
products

TURKEY

100.0%

100.0%HOYA LENS OF AMERICA,
INC.

Life Care

Health Care related
products

U.S.A.

100.0%

100.0%HOYA LENS CANADA, INC.

Life Care

CANADA

100.0%

100.0%U.S.A.

100.0%

100.0%U.S.A.

－

100.0%HOYA OPTICAL LABS OF
AMERICA, INC.
VISION EASE, LP

Life Care
Life Care

Health Care related
products
Health Care related
products
Health Care related
products

SEIKO OPTICAL PRODUCTS
Life Care
OF AMERICA, INC.

Health Care related
products

U.S.A.

50.0%

50.0%

SEIKO OPTICAL PRODUCTS
Life Care
CO., LTD.

Health Care related
products

JAPAN

50.0%

50.0%

- 103 -Name of subsidiary

Reportablesegment

Major products/
services in the

Proportion of
Location

reportable segment

Proportion ofshares held

shares held

As at 31 March

As at 31 March

2017

2018

PENTAX EUROPE GMBH

Life Care

Medical related
products

GERMANY

100.0%

100.0%PENTAX ITALIA S.R.L

Life Care

Medical related
products

ITALY

100.0%

100.0%PENTAX U.K. LTD.

Life Care

100.0%

100.0%PENTAX CANADA, INC.

Life Care

CANADA

100.0%

100.0%

Medical related
products

U.S.A.

100.0%

100.0%

Electronics related
products

THAILAND

100.0%

100.0%PHILIPPINES

100.0%

100.0%VIETNAM

100.0%

100.0%MICROLINE SURGICAL, INC. Life Care

Medical related

UNITEDproducts

KINGDOM

Medical related
products

HOYA LAMPHUN LTD.

Information
Technology

HOYA GLASS DISKInformation

Electronics related

PHILIPPINES, INC.

Technology

products

HOYA GLASS DISKInformation

Electronics related

VIETNAM LTD.

Technology

products

HOEV CO., LTD.

Information
Technology

Electronics related
products

VIETNAM

100.0%

100.0%HOYA GLASS DISKVIETNAM Ⅱ LTD.

Information
Technology

Electronics related
products

VIETNAM

100.0%

100.0%HOYA MICROELECTRONICS Information
TAIWAN CO., LTD.
Technology

Electronics related
products

TAIWAN

100.0%

100.0%HOYA ELECTRONICS KOREA Information

Electronics relatedCO., LTD.

Technology

products

SOUTH KOREA

100.0%

100.0%HOYA ELECTRONICS

Information

Electronics related

MALAYSIA SDN.BHD.

Technology

products

MALAYSIA

100.0%

100.0%HOYA ELECTRONICS
SINGAPORE PTE. LTD.

Information
Technology

Electronics related
products

SINGAPORE

100.0%

100.0%HOYA CORPORATION USA

Information
Technology

Electronics related
products

U.S.A.

100.0%

100.0%HOYA OPTICS (THAILAND)

Information

Imaging related

LTD.

Technology

products

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%HOYA OPTO-ELECTRONICS Information

Imaging related

QINGDAO LTD.

Technology

products

Information
Technology

Imaging related
products

HOYA OPTICAL (ASIA) CO., Information

Imaging relatedLTD.

products

HOYA OPTICALTECHNOLOGY (SUZHOU)LTD.

Technology

HOYA OPTICAL

Information
TECHNOLOGY (WEIHAI) CO.,Technology
LTD.

Imaging related
products

PENTAX CEBU PHILIPPINES Information

Imaging related

CORPORATION

products

Technology- 104 -Name of subsidiary

HOYA HOLDINGS ASIA
PACIFIC PTE LTD

Reportablesegment

Major products/
services in the

Proportion of
Location

reportable segment

Proportion ofshares held

shares held

As at 31 March

As at 31 March

2017

2018

Corporate

Asia and Oceania
headquarters

SINGAPORE

100.0%

100.0%HOYA HOLDINGS (ASIA) B.V. Corporate

Asia and Oceania
holding company

NETHERLANDS

100.0%

100.0%NETHERLANDS

100.0％

100.0%U.S.A.

100.0%

100.0%HOYA FINANCE B.V.

Corporate

HOYA HOLDINGS, INC.

Corporate

Asia and Oceania
financing company
North America
headquarters- 105 -

30. 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 transactions with related parties as follows:
As at/for the year ended 31 March 2017:
Name ofaffiliates
Affiliates

AvanStrate, Inc.

Nature of related party transactions

Transaction amount

Outstanding balance(Millions of Yen)

(Millions of Yen)

Partial repayment of loans of funds

59

8,166

Interest received

219

35

Advance paid

5

－

Note:
The platinum owned by a subsidiary of the affiliate is pledged as collateral.
As at/for the year ended 31 March 2018:
Name ofaffiliates

Nature of related
party transactions

Transaction
amountOutstandingbalance(Millions of Yen) (Millions of Yen)

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

(Note 2))

Incorporation ofdeferredinterests
receivable into
Affiliates

AvanStrate, Inc.

55

principal
Partial repayment

515

173

of loans

8,047

1,631

75,744

Interest received

264

58

2,480

543

Advance paid

196

－

1,848

－

Note:
Interest rates on loans are determined considering market rates.
The deferred interest receivable, which is calculated on the unpaid principal based on deferred interest rates, is incorporated into
principal.
The due date of the loan is 27 December 2023. It will be repaid in six installments after a certain period of deferment, and deferredinterests will be paid by batch payment on the due date.
Platinum owned by a subsidiary of the affiliate is pledged as collateral.
(2) Remuneration of key management personnel
Remuneration of directors and other 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 201731 March 2018

31 March 2018

Short-term benefits

427

536

5,044

Share-based payments

147

102

961

Total remuneration of key management personnel

574

638

6,005

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 performance.

- 106 -

31. Business combinations
The Group acquired certain companies through business combinations during the year ended 31 March 2018 as follows:(1) Overview of acquired companies

Reportablesegments

Name of acquirees Primary business

Acquisition
date

Percentage of

Total

Total
consideration

voting equity
interests

considerationtransferredtransferred(Thousands ofacquired(Million Yen)

U.S. Dollars(Note 2))Acquisition
methodDevelopment
and sales of text
ReadSpeaker
Holdings B.V.

-to-speechservice for

Other

13 Jul 2017

100%

2,762

25,993Other

13 Jul 2017

100%

－

－

Acquisition ofshareswebsites andcontents
Development
and sales of text
ReadSpeaker B.V.
-to-speechand eight otherservice forcompanies
websites andAcquisition ofshares(indirect)

contents
Manufacturing
Performance
Optics, LLC

and sales ofophthalmic
lensesVision Ease, LPand sixteen othercompanies

Life Care(Health Care

100%

30,145

283,746

1 Aug 2017

100%

－

－

related products

Manufacturing
and sales ofophthalmic
lenses

1 Aug 2017

Life Care(Health Carerelated products)

Acquisition ofsharesAcquisition ofshares(indirect)(2) Primary reasons for business combinations① ReadSpeaker Holdings B.V. (“ReadSpeaker”)
The acquisition will augment the language development capabilities and future commercial applications for the Group's speechsynthesizer products in the global market.
② Performance Optics, LLC (“Performance Optics”)
The acquisition of Performance Optics, which has the leading technologies in polycarbonate, photochromic, polarised, and highindex eyeglass lenses, strengthens the Group's ability to provide customers with a broader portfolio of leading products.
(3) Consideration for the acquisitions(Millions of Yen)
ReadSpeaker
Cash and cash equivalents (Note 1)

Performance Optics

2,010

Non-current liabilities (Note 2)

752

Total

2,762

Total

30,145－32,15530,14532,907

752(Thousands of U.S. Dollars (Note 2))
ReadSpeaker
Cash and cash equivalents (Note 1)
Non-current liabilities (Note 2)
Total

Performance Optics

Total

18,915
7,078

283,746－

302,662
7,078

25,993

283,746309,740Note:
1. The Group financed 24,471 million yen (230,341 thousand U.S. dollars) as funds for repayment of loans of Performance Optics inaddition to the consideration for the acquisition.

- 107 -

2. Non-current liabilities represent contingent liabilities paid as a part of consideration for the acquisition on the achievement of
milestones or accumulated revenue and are recognised at the fair value estimating the probability of achievement. The maximum
amount of contingent liabilities is not determined.
(4) Expenses related to acquisition
Expenses of 554 million yen related to the acquisitions for the year ended 31 March 2017, and 216 million yen (2,037 thousand
U.S. dollars) for the year ended 31 March 2018 are included in ‛Commission expense’ in the consolidated statement ofcomprehensive income.
(5) The amounts of assets acquired and liabilities assumed at the acquisition dates are as follows:(Millions of Yen)
ReadSpeaker

Performance Optics

Total

Non-current assets
Property, plant and equipment-net
Intangible assets (Note)

8
2,615

8,032
12,1508,040
14,765

Deferred tax assets
Non-current assets other than above

2
2

306
135

308
137

2,627

20,62423,251

Sub-total
Current assets
Inventory

－

7,575

7,575

Trade and other receivables(Before deducting allowance for doubtful accounts)

184

2,967

3,151

Cash and cash equivalents
Current assets other than above

174
98

2,487
420

2,662
518

Sub-total

456

13,44913,905

Total assets

3,083

34,07337,156

(523)
(345)

(25,945)(1,816)(26,468)(2,161)

Total liabilities(868)(27,760)(28,629)

Fair value of identifiable acquired net assets

2,215

6,312

8,527

Non-current liabilities (Note)
Current liabilities(Thousands of U.S. Dollars (Note 2))
ReadSpeaker

Performance Optics

Non-current assets
Property, plant and equipment-net
Intangible assets (Note)
Deferred tax assets

78

75,60475,682

24,611
17

114,368
2,880

138,979
2,897

Non-current assets other than above
Sub-total

Total

19

1,275

1,293

24,725

194,126

218,851－

71,296

71,296

1,731
1,642

27,92523,41429,65525,055Current assets
Inventory
Trade and other receivables(Before deducting allowance for doubtful accounts)
Cash and cash equivalents
Current assets other than above
Sub-total
Total assets

922

3,954

4,876

4,294

126,589

130,883

29,019320,715

349,734(4,927)(3,246)(244,207)(17,093)(249,134)(20,339)

Total liabilities(8,173)(261,300)(269,472)

Fair value of identifiable acquired net assets

20,84659,41680,262

Non-current liabilities (Note)
Current liabilities

Note:
Intangible assets mainly consist of “Technology” and “Customer related assets”.
Deferred tax liabilities are mainly recognised on temporary differences arising from recognition of identifiable intangible assets.
- 108 -

(6) Goodwill arising from the acquisitions(Millions of Yen)
ReadSpeaker
Consideration for acquisitions
Less: Fair value of identifiable acquired net assets

Performance Optics

Total

2,762
(2,215)30,145(6,312)32,907(8,527)547

23,83324,380Goodwill arising in acquisitions(Thousands of U.S. Dollars (Note 2))
ReadSpeaker
Consideration for acquisitions
Less: Fair value of identifiable acquired net assets
Goodwill arising in acquisitions

Performance Optics

Total

25,993

283,746309,740(20,846)(59,416)(80,262)

5,147

224,331229,478

Note:
Goodwill recognised consists of “control premium”, “expected synergy” and “human resources”.
Goodwill arising from the acquisitions are not tax-deductible.
(7) Net cash outflows for the acquisitions of subsidiaries(Millions of Yen)
ReadSpeaker

Performance Optics

Total

Consideration for the acquisitions paid in cash

2,010

54,61756,626

Less: Cash and cash equivalents owned bysubsidiaries acquired(174)(2,487)(2,662)

52,12953,964

Net cash outflows for the acquisitions of subsidiaries

1,835(Thousands of U.S. Dollars (Note 2))
ReadSpeaker

Performance Optics

Total

Consideration for the acquisitions paid in cash

18,915514,087

533,003

Less: Cash and cash equivalents owned bysubsidiaries acquired(1,642)(23,414)(25,055)

17,274490,674

507,948

Net cash outflows for the acquisitions of subsidiaries

Note:
Consideration for the acquisitions paid in cash includes the loan paid in cash to Performance Optics in the amount of 24,471 million
yen (230,341 thousand U.S. dollars).
(8) Impact of the Business combinations on the Group’s financial results
The disclosure of revenue and profit included in the consolidated comprehensive income, and of the pro forma revenue and profit asthough the acquisition date for these business combinations had been on 1 April 2017, are omitted due to immateriality.

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32. Contingent liabilities
In April 2015, the U.S. Department of Justice issued a subpoena to Pentax of America, Inc. (“Pentax”), a U.S. subsidiary of theCompany. The subpoena seeks information with respect to duodenoscopes that Pentax and its affiliated companies manufactured
and sold. The Company and Pentax are cooperating with the U.S. Department of Justice and responding to its requests.
Depending on future developments, there is a possibility that this may impact on the consolidated financial results, however, it is notpossible to make a reasonable estimate of this impact at present.

33. 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 2017

As at 31 March 2018

As at 31 March 2018

Commitments for the acquisition ofproperty, plant and equipment andintangible assets

5,210

10,649100,234

34. Subsequent events
Resolution on cash dividends
On 24 May 2018, a resolution was made by the Company’s board of directors for the payment of a cash dividend to shareholders ofrecord on 31 March 2018 of 17,078 million yen (160,751 thousand U.S. dollars) (45 yen per common share).
Investment in K.K. Pangea
On 1 June 2018, the Group invested 27,000 million yen (254,142 thousand U.S. dollars) in K.K. Pangea (“Pangea”). Pangea is a
special purpose company formed by a consortium led by Bain Capital Private Equity L.P. (including its affiliates) to acquire all theissued and outstanding shares of Toshiba Memory Corporation, a wholly owned subsidiary of Toshiba Corporation.
Pangea is neither a subsidiary nor an affiliate of the Company.
At present, the impact of the consolidated results for the year ending 31 March 2019, is yet to be determined.

35. Approval of financial statements
The consolidated financial statements for the year ended 31 March 2018, were approved by Mr. Ryo Hirooka, the chief financial
officer of the Group on 8 June 2018.

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