Sumitomo Dainippon Pharma Annual Report 2017

The accompanying consolidated nancial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of the International Financial Reporting Standards. The accounts of consolidated subsidiaries in the U.S. are prepared in accordance with U.S. generally accepted accounting principles, with adjustments for the specied four items as applicable according to Practical Issues Task Force No. 18 “Practical Solution on Unication of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements.” In preparing these consolidated nancial statements, certain reclassications and rearrangements have been made to the consolidated nancial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. The consolidated nancial statements are stated in Japanese yen, the currency of the country in which Sumitomo Dainippon Pharma Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been translated at the rate of ¥112 to U.S.$1.00, the approximate rate of exchange on March 31, 2017. These 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. The Company and its consolidated subsidiaries (together, the “Group”) have made certain reclassications in the 2016 consolidated nancial statements to conform to the classications applied in 2017. These reclassications have had no effect on the previously reported net income or retained earnings.1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTSa. Principles of ConsolidationThe accompanying consolidated nancial statements include the accounts of the Company and signicant subsidiaries over which the Company has control through majority of voting rights or certain other conditions evidencing control by the Company. The consolidated nancial statements include the accounts of the Company and its 16 signicant subsidiaries. Under the control concept, those companies in which the Company directly or indirectly is able to exercise control over operations are consolidated. Investments in unconsolidated subsidiaries and afliates over which the Company has the ability to exercise signicant inuence in operating and nancial policies are accounted for by the equity method. The equity method is applied to 3 signicant afliates. Investments in the unconsolidated subsidiaries and afliates other than 3 companies are not accounted for by equity method since the effect on the accompanying consolidated nancial statements is not material. Material intercompany balances, transactions and unrealized prot included in assets have been eliminated in consolidation. There are 12 consolidated overseas subsidiaries. Among the consolidated subsidiaries, Sumitomo Pharmaceuticals (Suzhou) Co., Ltd., has a scal accounting year-end date of December 31. In the preparation of the consolidated nancial statements, Sumitomo Pharmaceuticals (Suzhou) Co., Ltd. prepared a set of nancial statements based on a provisional statement of accounts at March 31 for consolidation purpose.b. Cash EquivalentsCash equivalents are short-term investments that are readily convertible into cash and have no signicant risk of change in value. Cash equivalents include time deposits and short term, highly liquid investments, all of which mature within three months from the date of acquisition.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNotes to Consolidated Financial StatementsSumitomo Dainippon Pharma Co., Ltd. and Consolidated SubsidiariesYears Ended March 31, 2017 and 2016Financial Section72Sumitomo Dainippon Pharma Co., Ltd. Annual Report 2017

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