## Tarceva Government Investigation 

In November of 2011, OSI Pharmaceuticals, LLC (OSI), one of the Company’s indirect US subsidiaries, received a subpoena from the U.S. Department of Justice, represented by the U.S. Attorney’s Office in San Francisco, California, requesting docu- ments and other information concerning the promotion, 

## 39. events after the reporting perioD 

## Early retirement incentive program 

Amid a rapidly changing business environment, the Group is targeting sustainable growth by focusing on three strategic initiatives: maximizing the value of new products; enhancing the Group’s ability to generate innovative drugs; and achieving operational excellence. 

This series of initiatives is transforming the business 

## 40. first-tiMe aDoption 

The Group disclosed the consolidated financial statements under IFRS for the first time for the fiscal year ended 31 March 2014. 

The latest consolidated financial statements under account- ing principles generally accepted in Japan (“Japanese GAAP”) are prepared for the fiscal year ended 31 March 2013 and the date of transition to IFRS is 1 April 2012. 

## (1) Exemptions to retrospective application of IFRS 

IFRS 1 stipulates that an entity adopting IFRS for the first time shall apply IFRS retrospectively to prior periods. However, IFRS 1 allows certain exemptions from the retrospective application of certain aspects of IFRS, and accordingly the Group has applied the following exemptions: 

## Use of fair value as deemed cost: 

IFRS 1 permits an entity to measure items of property, plant and equipment, investment property and intangible assets at the date of transition to IFRS at its fair value and use that fair value as deemed cost at that date. The Group elected to use the fair value at the date of transition to IFRS as deemed cost at the date of transition to IFRS for certain items of property, plant and equipment. Further, the Group elected to use the cost model for items of property, plant and equipment and intangible assets under IFRS, thus the revaluation model is not applied. 

## Exchange differences on translating foreign operations: 

IFRS 1 permits the cumulative amount of exchange differences on translating foreign operations to be deemed to be zero at the date of transition to IFRS. The Group elected to apply this 

marketing, and sale of Tarceva in the US. The investigation is civil and criminal in nature. OSI is in the process of responding to the subpoena, and OSI is continuing to cooperate fully with the investigation. We cannot predict or determine the timing or outcome of this investigation or its impact on our financial condition or results of operations at this time. 

structure, as a result of which organizational and personnel requirements are changing. Accordingly, the Group is aligning human resources with the new business structure by offering an early retirement incentive program to 300 employees working at the Company and its domestic subsidiaries in June 2014. 

The impact of this program on the Group’s financial results of operation for the year ending 31 March 2015 is yet to be seen. 

exemption and deemed all cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. 

## Business combinations: 

IFRS 1 permits an entity not to apply IFRS 3 “Business Combinations” retrospectively to business combinations that occurred prior to the date of transition to IFRS. The Group elected to apply this exemption and did not apply IFRS 3 retrospectively to business combinations that occurred before the date of transition to IFRS. Further, the Group performed an impairment test on goodwill at the date of transition to IFRS regardless of whether there was any indication that the goodwill may be impaired. 

## Share-based payment transactions: 

IFRS 1 permits an entity not to apply IFRS 2 “Share-based Payment” to equity instruments granted on or after 7 November 2002 and vested before the later of the date of transition to IFRS and 1 January 2005. The Group elected not to apply IFRS 2 to equity instruments granted on or after 7 November 2002 and vested before the date of transition to IFRS. 

## (2) Reconciliations 

The reconciliations required to be disclosed in the first IFRS financial statements are described below. 

In the reconciliations below, “Presentation” includes items that do not affect retained earnings and comprehensive income, while “Recognition and measurement” includes items that affect retained earnings and comprehensive income. 

