## Notes to reconciliation of profit or loss and comprehensive income for the year ended 31 March 2013 

The major components of the reconciliations of profit and loss and comprehensive income for the year ended 31 March 2013 are as follows: 

## A Sales 

(Presentation) 

Certain costs of sales rebates were included in “Selling, general and administrative expenses” under Japanese GAAP. However, they are deducted from “Sales” under IFRS. (Recognition and measurement) Under Japanese GAAP, sales arising from transactions where the Group was acting as a principal or agent were presented on a gross basis. However, under IFRS, sales are presented on a net basis when the Group is acting as an agent. As a result, the amount of “Sales” has decreased by ¥21,031 million. 

## B Cost of sales 

(Presentation) 

Certain royalty expenses associated with sales included in “Selling, general and administrative expenses” under Japanese GAAP have been included in “Cost of sales” under IFRS. (Recognition and measurement) Under IFRS, sales and cost of sales arising from transactions where the Group is acting as an agent are presented on a net basis. As a result, the amount of “Cost of sales” has decreased by ¥21,031 million. 

With regard to the cost formula of inventories, the Company and its domestic subsidiaries were mainly using the average method. However, the Group applied the first-in, first-out (FIFO) method under IFRS. As a result, the amount of “Cost of sales” has increased. 

## C Selling, general and administrative expenses 

(Presentation) 

Research and development expenses and amortisation of intangible assets included in “Selling, general and administra- tive expenses” under Japanese GAAP have been presented separately as “Research and development expenses” and “Amortisation of intangible assets” under IFRS. 

Certain royalty expenses associated with sales included in “Selling, general and administrative expenses” under Japanese GAAP have been included in “Cost of sales” under IFRS. 

Certain sales rebates were included in “Selling, general and administrative expenses” under Japanese GAAP. However, they are deducted from “Sales” under IFRS. 

Restructuring costs and losses from settlement of litigation included in “Selling, general and administrative expenses” under Japanese GAAP have been included in “Other expense” under IFRS. 

(Recognition and measurement) 

Goodwill was amortised over a specified period under Japanese GAAP while it is not amortised under IFRS. Consequently, there has been a ¥10,318 million decrease in “Selling, general and administrative expenses”. 

Under Japanese GAAP, actuarial gains and losses associ- ated with retirement benefits were amortised mainly on a straight-line basis from the following year in which they were incurred over the average remaining service years of employ- ees. However, under IFRS, actuarial gains and losses are fully recognised in other comprehensive income when they are incurred as remeasurements of defined benefit plans. As a result, the amount of “Selling, general and administrative expense” has decreased. 

## D Research and development expenses 

(Presentation) 

Research and development expenses included in “Selling, general and administrative expenses” under Japanese GAAP have been presented separately as “Research and development expenses” under IFRS. 

(Recognition and measurement) 

Under Japanese GAAP, costs associated with the in-licensing of products and technologies incurred before filing an applica- tion for approval from regulatory authorities were recognised as research and development expenses. However, under IFRS, those costs that satisfy certain criteria are capitalised as intangible assets. As a result, the amount of “Research and development expenses” has decreased. 

## E Amortisation of intangible assets 

(Presentation) 

Amortisation of intangible assets included in “Selling, general and administrative expenses” under Japanese GAAP has been presented separately as “Amortisation of intangible assets” under IFRS. 

(Recognition and measurement) 

Under Japanese GAAP, costs associated with the in-licensing of products and technologies incurred before filing an applica- tion for approval from regulatory authorities were recognised as research and development expenses, but under IFRS, those costs that satisfy certain criteria are capitalised as intan- gible assets and amortised over their estimated useful lives on a straight-line basis. Also, the Group revised the useful life of certain marketing rights upon adoption of IFRS. 

As a result, the amount of “Amortisation of intangible assets” has increased by ¥2,752 million. 

