Analysis of Disclosure in “Basic Policy Regarding Selection of Accounting Standards” Tokyo Stock Exchange, Inc. 1 I. Background Jun. 24, 2014 Japan Revitalization Strategy (Revised in 2014) 4) Promoting of an increase in the number of companies voluntarily adopting IFRS Tokyo Stock Exchange will encourage listed companies to explain to investors their basic views on the selection of accounting standards (for example, whether they are considering adopting IFRS). Nov. 11, 2014 Revision of Guidelines for Financial Results Request description on “Basic Policy Regarding Selection of Accounting Standards” in Financial Results ＜Guidelines for Financial Results＞ ・Please describe basic policy regarding selection of accounting standards. ・For example, whether you are considering the adoption of IFRS. （stage of consideration, scheduled adoption date） Adoption from Financial Results for FY-ended Mar. 31, 2015 (early adoption possible) Jun. 30, 2015 Japan Revitalization Strategy (Revised in 2015) 4) Further promotion of an increase in the number of companies voluntarily adopting IFRS Listed companies disclose their progress in considering the adoption of IFRS in “Basic Policy Regarding Selection of Accounting Standards” of the financial results. The government will analyze this together with Tokyo Stock Exchange and disseminate the state of IFRS adoption to contribute to efforts among listed companies to consider transitioning to IFRS. 2 II. Scope of Analysis Coverage：3,194 companies TSE-listed companies that provided description in Basic Policy Regarding Selection of Accounting Standards (hereinafter ”Basic Policy”) of financial results：3,193 companies FY ended March 2015：2,308 companies FY ended April 2015 ~ FY ended December 2015：885 companies Other companies that have adopted IFRS (FY ended January 2016 ~ FY ended February 2016)：1 company 3 Ⅲ. Content of Analysis of IFRS Adoption 1. Categories of Companies in Analysis（P.5） 2. Shift in Number of Companies That Have Adopted IFRS （P.6） 3. Number and Market Cap of Companies That Have Adopted IFRS（P.7～8） 4. IFRS Adoption by Industrial Sector（P.9～13） 5. IFRS Adoption Date（P.14） 6. Stage of Progress Among "④ Companies Considering IFRS Adoption"（P.15） 4 Ⅲ－1. Categories of Companies in Analysis Categories of companies included in analysis （3,194 companies） ① Companies that have adopted IFRS（74 companies） Companies that submitted IFRS-based consolidated financial statements or quarterly consolidated financial statements by Mar. 31, 2016 ② Companies that have decided to adopt IFRS（32 companies） Companies whose executive body has disclosed, by Mar. 31, 2016, its decision to adopt IFRS ③ Companies planning to adopt IFRS（22 companies） Companies whose executive body has described plans to adopt IFRS in its Basic Policy, but yet to decide on IFRS adoption ④ Companies considering IFRS adoption（213 companies） Companies that described that it is considering IFRS adoption in its Basic Policy ⑤ Other companies（2,853 companies） For example, the following companies: Company that mentioned only the possibility of future adoption of IFRS Companies that mentioned only its current accounting standards 5 Ⅲ－2. Shift in Number of Companies That Have Adopted IFRS The combined number of “① Companies that have adopted IFRS”, ”② Companies that have decided to adopt IFRS”, and “③ Companies planning to adopt IFRS” is 128 companies as of Mar. 31, 2016. Number of companies 128 120 112 +16 companies since 22 previous announcement 100 21 32 73 80 23 60 52 ③Companies planning to 35 adopt IFRS 42 14 40 ②Companies that have 15 68 74 decided to adopt IFRS 20 38 38 ①Companies that have 27 adopted IFRS 0 Jun 30 2014 Dec 31 2014 Mar 31 2015 Aug 31 2015 Mar 31 2016 6 Ⅲ－3. Number and Market Cap of Companies That Have Adopted IFRS The combined market capitalization of “① Companies that have adopted IFRS” and ”② Companies that have decided to adopt IFRS” and “③ Companies planning to adopt IFRS” is JPY 140 trillion (128 companies). Number of Market capitalization companies ① Companies that have 74 companies JPY 85 trillion adopted IFRS ② Companies that have JPY 140 trillion 32 companies JPY 19 trillion decided to adopt IFRS (128 companies) ③ Companies planning to 22 companies JPY 35 trillion adopt IFRS ④ Companies considering 213 companies JPY 84 trillion IFRS adoption ⑤ Other companies 2,853 companies JPY 262 trillion Total 3,194 companies JPY 486 trillion Note: Market capitalization as of Mar. 31, 2016. 7 Ⅲ－3. Number and Market Cap of Companies That Have Adopted IFRS The combined market capitalization of “① Companies that have adopted IFRS” and ”② Companies that have decided to adopt IFRS” and “③ Companies planning to adopt IFRS” is JPY 140 trillion, 27% of the entire listed market capitalization (JPY 518 trillion). All TSE-listed companies ①～③ JPY 140 trillion JPY 518 trillion (128 companies)：27% (3,494 companies) ① Companies that ⇒ ＋3% since previous have adopted IFRS announcement JPY 85 trillion (74 companies) Not included ：16% ② Companies that have in analysis decided to adopt IFRS JPY 32 trillion JPY 19 trillion (300 companies)：6% (32 companies)：4% ③ Companies planning ⑤ Other companies ④ Companies to adopt IFRS JPY 262 trillion considering IFRS (2,853 companies)：51% adoption JPY 35 trillion (22 companies)：7% JPY 84 trillion (213 companies) ：16% Note: Market capitalization as of Mar. 31, 2016. 8 Ⅲ－4. IFRS Adoption by Industrial Sector By industrial sector, "① Companies that have adopted IFRS“, "② Companies that have decided to adopt IFRS“, and "③ Companies planning to adopt IFRS" are found in 23 of the 33 industrial sectors. ⇒ ＋1 industrial sector since previous announcement Industrial sectors that have a significant number of "① Companies that have adopted IFRS" and "② Companies that have decided to adopt IFRS" and "③ Companies planning to adopt IFRS" are: Electric Appliances (20), Pharmaceutical (13), Information & Communication (12), Transportation Equipment (11), Services (11), and Wholesale Trade (10). Note: (1) Market capitalization as of Mar 31, 2016. (2) Numbers to the left of company names indicate the order of their market capitalization within the industrial sector. Rubber Products Pharmaceutical Information & Communication Wholesale Trade Foods (4/19) (13/65) (12/376) (10/319) (6/125) (2) Sumitomo Rubber (1) Takeda Pharmaceutical (2) KDDI (1) Mitsubishi (1) JAPAN TOBACCO Industries (2) Astellas Pharma (4) SoftBank (2) MITSUI (2) Asahi Group Holdings (5) Sumitomo Riko (3) ONO PHARMACEUTICAL (5) Yahoo Japan (3) ITOCHU (3) Suntory Beverage & (5) Eisai (8) NEXON (4) SUMITOMO Food ①Adopted (6) CHUGAI PHARMACEUTICAL (15) KONAMI (5) Marubeni (13) NH Foods ②Decided to (8) DAIICHI SANKYO (24) ITOCHU Techno-Solutions (9) Hitachi High-Technologies adopt (9) Mitsubishi Tanabe Pharma (115) Infoteria (13) Sojitz (12) SANTEN PHARMACEUTICAL (204) Fusion Partners (29) ITOCHU ENEX (18) Sosei Group (235) Hotto Link (44) KANEMATSU (42) GNI Group (1) BRIDGESTONE (4) Otsuka Holdings (1) NTT DOCOMO (19) AUTOBACS SEVEN (4) Ajinomoto ③Planning to (3) Yokohama Rubber (10) Kyowa Hakko Kirin (3) NIPPON TELEGRAPH AND (5) Kirin Holdings adopt (19) SAWAI PHARMACEUTICAL TELEPHONE (6) NTT DATA Market capitalization JPY 4.3 trillion JPY 21.6 trillion JPY 37.5 trillion JPY 11.1 trillion JPY 12.9 trillion （A） Total market cap of industrial JPY 4.9 trillion JPY 28.5 trillion JPY 52.5 trillion JPY 21.1 trillion JPY 24.9trillion sector（B） （A/B） 87% 76% 71% 53% 52% 9 Ⅲ－4. IFRS Adoption by Industrial Sector Oil & Coal Products Precision Instruments Electric Appliances Chemicals Transportation Equipment (1/13) (4/51) (20/262) (8/209) (11/97) (1) JX Holdings (1) HOYA (6) Hitachi (1) Kao (2) HONDA MOTOR (21) Noritsu Koki (7) Panasonic (5) NITTO DENKO (4) DENSO (11) SYSMEX (8) Mitsubishi Chemical Holdings (22) TS TECH (14) TOSHIBA (17) TAIYO NIPPON SANSO (26) KEIHIN (15) FUJITSU (19) Hitachi Chemical (29) F.C.C. (16) RICOH (64) The Nippon Synthetic (30) NISSIN KOGYO (20) SEIKO EPSON Chemical Industry (32) KYB (26) KONICA MINOLTA (66) KUREHA (35) SHOWA ①Adopted (30) BROTHER INDUSTRIES (54) YUTAKA GIKEN ②Decided to (41) ADVANTEST (59) Yachiyo Industry adopt (47) Hitachi Kokusai Electric (53) TOSHIBA TEC (59) CLARION (63) ANRITSU (142) SUMIDA (147) NIHON DEMPA KOGYO (160) TEAC (208) NISHISHIBA ELECTRIC ③Planning to (4) NIKON (9) NIDEC (10) NIPPON PAINT HOLDINGS (10) Mazda Motor adopt (15) NIKKISO (19) NEC Market capitalization JPY 1.1 trillion JPY 2.5 trillion JPY 14.5 trillion JPY 6.8 trillion JPY 11.4 trillion （A） Total market cap of industrial JPY 2.4 trillion JPY 8.1 trillion JPY 54.6 trillion JPY 30.3 trillion JPY 53.3 trillion sector（B） （A/B） 45% 31% 27% 23% 21% 10 Ⅲ－4. IFRS Adoption by Industrial Sector Metal Products Services Glass & Ceramics Products Other Financing Business Retail Trade (2/85) (11/379) (2/58) (3/29) (5/338) (1) LIXIL Group (4) DENTSU (1) Asahi Glass (2) Japan Exchange Group (2) FAST RETAILING (5) Rakuten (10) Nippon Sheet Glass (8) Hitachi Capital (26) SKYLARK (7) M3 (14) J Trust (51) COLOWIDE (16) DeNA (64) Toridoll ①Adopted (23) COOKPAD ②Decided to (26) NEXT adopt (35) TechnoPro Holdings (41) BELLSYSTEM24 HOLDINGS (46) SEPTENI HOLDINGS (51) OUTSOURCING ③Planning to (12) G-TEKT (117) Metaps (79) OHSHO FOOD SERVICE adopt Market capitalization JPY 0.8 trillion JPY 5.1 trillion JPY 0.8 trillion JPY 1.4 trillion JPY 4.4 trillion （A） Total market cap of industrial JPY 3.7 trillion JPY 25.3 trillion JPY 4.2 trillion JPY 7.8 trillion JPY 33.0 trillion sector（B） （A/B） 21% 20% 19% 17% 13% 11 Ⅲ－4. IFRS Adoption by Industrial Sector Securities & Commodity Iron and Steel Real Estate Machinery Nonferrous Metals Futures (1/46) (3/113) (6/230) (1/34) (2/42) (3) Hitachi Metals (5) Iida Group Holdings (3) SBI Holdings (8) NSK (14) Asahi Holdings (32) TOSEI (11) Monex Group (11) Hitachi Construction ①Adopted Machinery ②Decided to (21) MIURA adopt (29) DMG MORI SEIKI (40) Hitachi Koki (54) TSUBAKI NAKASHIMA ③Planning to (10) NTT URBAN DEVELOPMENT adopt Market capitalization JPY 0.5 trillion JPY 1.0 trillion JPY 0.3 trillion JPY 1.5 trillion JPY 0.05 trillion （A） Total market cap of industrial JPY 5.6 trillion JPY 14.1 trillion JPY 5.1 trillion JPY 22.7 trillion JPY 3.5 trillion sector（B） （A/B） 9% 7% 7% 7% 2% 12 Ⅲ－4.