Difference in net results under IFRS and Japan GAAP ("JGAAP")

The material differences between IFRS and JGAAP when applied to the Company include:

• Amortization of goodwill on consolidation arising from strategic acquisitions (a consolidation adjustment which is a non-cash expense)
  JGAAP requires goodwill arising from consolidation to be amortized within 20 years. The goodwill on consolidation of the Company has been and is projected to be amortized by the straight-line method over a period of 20 years. Under IAS 36, goodwill on consolidation in connection with subsidiaries acquired on or after March 31, 2004 is not amortized but is assessed for impairment at least annually.


• Compensation expense related to Employee Stock Option Plan
  Under IFRS and JGAAP, fair value of shares or options granted for compensation is amortized over the vesting period of the shares or options. Under JGAAP there is no requirement for this amortization for shares or options granted for compensation prior to May 1, 2006. However, shares and options granted after May 1, 2006 start to attract compensation expense under JGAAP.


• Share issuance expenses
  Under IFRS, share issuance expenses are capitalized on the balance sheet. Under JGAAP, share issuance expenses are expensed through the income statement.


• Fair value gain on the redemption option of the US$100 million (￥11.4 billion) 10% Senior Guaranteed Notes (the "Notes")
  Under IFRS, at each balance sheet date subsequent to initial recognition, the redemption option in the Notes is measured at fair value, with changes in fair value recognized directly in profit or loss in the period in which they arise. This is not required under JGAAP.


• Fair value loss on the conversion of XFMedia convertible loan into equity shares of XFMedia upon its IPO
  Under IFRS, the change in fair value arising from the conversion of XFMedia convertible loan into XFMedia equity shares upon IPO is recognized directly in the income statement. This is not required under JGAAP.


• Impairment and one time amortization of goodwill
  Under JGAAP, on top of the discounted cash flow methodology carried out under IFRS for impairment assessment of non current assets (including goodwill and intangible assets), additional review on the recoverability of the net assets of the acquired subsidiary is carried out. As such, this has resulted in additional one-time amortization of goodwill under JGAAP.