Investment and M&A Projects: Variances from Assumptions
First written in FY2020. 3 of 5 entries say "Materialised", first in FY2021. Latest entry: FY2026.
SAAF Holdings moved to the "Worse" side of this theme in 2021, the same year as the typical company in this theme.
The whole theme swung hardest in 2020: 28 of 84 companies on the "Worse" side.
21 other companies' latest entry also says "Mitigated".
- FY2026MitigatedAnnual report
「The Company conducts detailed investigations of investment targets, including target companies and new business areas, and thoroughly examines the associated risks. For acquisitions, business alliances, other strategic investments, and the acquisition and holding of fixed assets related to each business, the Investment and Financing Committee evaluates investment economics and scrutinizes investment recovery and risks.」
For themes involving past failures to achieve expected earnings from M&A and new businesses, the Company specified management measures consisting of detailed investigations and investment economics evaluations by the Investment and Financing Committee. - FY2022MaterialisedAnnual report
「During that period, management repeatedly pursued M&A transactions without regard to the Company's financial condition and focused on developing numerous new businesses. As a result, the Group established numerous subsidiaries whose scale exceeded its financial capacity, subsidiaries recorded substantial losses after entering businesses in which they had no experience, and, from the perspective of shareholders, the Group's financial condition deteriorated to the point where no future vision for shareholder returns through dividends or enhancement of corporate value was apparent.」
The Company reported that the impact of investments, M&A, and new businesses extended beyond failure to achieve expected earnings to the establishment of numerous subsidiaries, substantial losses, and a financial condition offering no clear prospect of shareholder returns through dividends or enhancement of corporate value. - FY2022-Q1MaterialisedAnnual report
「In March 2020, the Company made Misuzu a subsidiary with the aim of creating new sales channels for high-quality women's clothing, fashion accessories, and other products by strengthening and expanding Misuzu's e-commerce sales, thereby increasing revenue and profit for the Group as a whole. However, as a result of prolonged store closures, reduced operating hours, and other effects of COVID-19, Misuzu reported a loss for the fiscal year ended March 2021, and the Company determined that a short-term recovery in Misuzu's business performance would be difficult within the Group.」
With respect to the planned strengthening of e-commerce and improvement in earnings at the time of the acquisition of Misuzu, a loss-making financial year and difficulty achieving a short-term recovery in business performance occurred, leading to the decision to transfer the shares. - FY2021MaterialisedAnnual report
「At B&W Co., Ltd., which operates the Other business and was formerly known as 望夢英語寺子屋有限会社, expected earnings at the time of the share acquisition could no longer be anticipated, so the unamortized goodwill balance of ¥11.530 million was recognized as an impairment loss. At イスト Co., Ltd., which operates the human resources business, expected earnings at the time of the share acquisition could no longer be anticipated, so the unamortized goodwill balance of ¥86.082 million was recognized as an impairment loss.」
After the investments and M&A transactions, the inability to achieve expected earnings actually occurred at B&W and イスト, and total goodwill impairment losses of ¥97.612 million were recognized. - FY2020First statedAnnual report
「If events inconsistent with the Company's assumptions occur in investments or M&A transactions conducted in the future, they may affect business performance.」
The Company first explicitly identified the risk of an impact on business performance if events differing from expectations occur in connection with investments and M&A undertaken to become a company with revenue of ¥100 billion.