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## Foreign exchange sensitivity analysis 

The financial impact on profit before tax for the years ended 31 March 2013 and 2014 in the case of a 10% increase in Japanese yen, which is the Company’s functional currency, against the U.S. dollar and euro is as follows. 

Also, it is based on the assumption that currencies other than the ones used for the calculation do not fluctuate and other change factors are held constant. 

<img src='content_image/253078.jpg'>

The above negative amounts represent the negative impact on profit before tax in the event of a 10% appreciation in Japanese yen. 

## (4) Fair values of financial instruments 

## (i) Fair value calculation of financial instruments 

## Financial assets at FVTPL 

Financial assets at FVTPL comprise mainly short-term debt securities and foreign exchange forward contracts. The fair value of those financial instruments is measured based on prices provided by counterparty financial institutions. 

## Loans and receivables 

The carrying amount approximates fair value due to the short period of settlement terms. 

## Available-for-sale financial assets 

The fair value of marketable securities is based on quoted market prices at the end of the period. The fair value of unquoted equity shares is measured mainly based on the discounted future cash flows. 

## Cash and cash equivalents 

The carrying amount approximates fair value due to the short maturities of the instruments. 

## Financial liabilities measured at amortised cost 

Financial liabilities measured at amortised cost comprise trade 

and other payables and other financial liabilities. The carrying amount approximates fair value due to the short period of settlement terms. 

## (ii) Financial instruments measured at fair value on a recurring basis 

## Fair value hierarchy 

The levels of the fair value hierarchy are as follows: 

– Level 1: Fair value measured using quoted prices (unad- justed) in active markets for identical assets or liabilities; 

– Level 2: Fair value measured using inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly; and 

– Level 3: Fair value measured using significant unobservable inputs for the assets or liabilities. 

The level of the fair value hierarchy is determined based on the lowest level of significant input used for the measurement of fair value. 

The Group accounts for transfers between levels of the fair value hierarchy as if they occurred at the end of each quarter. 

