Guarantees and loss obligations associated with club leases
First written in FY2016. 4 of 7 entries say "Worsened", first in FY2017. Latest entry: FY2025.
No other company in this theme has enough history to compare yet.
- FY2025WorsenedAnnual report
「Because the lease terms are generally long-term, ranging from 10 to 30 years, if a lease is terminated before its expiration for reasons attributable to the Company, the Company may provide some form of compensation to the lessor.」
The upper limit of the lease term was stated as 10 to 30 years, compared with the previous range of generally 10 to 20 years, indicating the possibility of compensation associated with long-term contracts. - FY2023WorsenedAnnual report
「The balance of security deposits and guarantee deposits paid to lessors under land and building lease agreements was ¥8,814 million at the end of the fiscal year.」
The balance of security deposits and guarantee deposits increased from ¥8,458 million at the end of the previous fiscal year to ¥8,814 million, increasing exposure to the risk of non-recovery if a lessor’s financial condition deteriorates. - FY2022SoftenedAnnual report
「Because the lease terms are generally long-term, ranging from 10 to 20 years, if a lease is terminated before its expiration for reasons attributable to the Company, the Company may provide some form of compensation to the lessor. The Company aims to contribute to local communities over the long term as a company that makes “Healthy Communities!” a reality, and its basic policy is to continue operating wherever possible by renewing or re-entering into lease agreements after their expiration.」
The previously disclosed number of clubs covered by the loss-bearing obligation and the maximum amount were no longer shown. Instead, the disclosure generally described long-term contracts and the possibility of providing compensation, while explicitly stating the Company’s policy of continuing operations through renewals and new contracts. - FY2019WorsenedAnnual report
「As of 31 March 2019, 95 of our 97 directly operated clubs were operated under lease agreements. Seventeen clubs could require a loss compensation payment, with a maximum loss compensation payment of ¥11.857 billion.」
The number of clubs subject to loss compensation payments increased from 15 to 17, and the maximum amount increased from ¥8.595 billion to ¥11.857 billion. Contract-related exposure increased, including rent guarantees and other guarantees. - FY2018MitigatedAnnual report
「As of 31 March 2018, 94 of our 96 directly operated clubs were operated under lease agreements. Fifteen clubs could require a loss compensation payment, with a maximum loss compensation payment of ¥8.595 billion.」
The number of clubs subject to loss compensation payments remained 15, but the maximum amount decreased from ¥10.189 billion in the previous fiscal year to ¥8.595 billion. The amounts of guarantees for rent over the remaining contract term and other guarantees also decreased from the previous fiscal year. - FY2017WorsenedAnnual report
「Under lease agreements with leasing companies based on fixed-term land leases, generally for approximately 10 to 20 years, 15 clubs could require a loss compensation payment if we do not renew the lease agreement at the end of the term for reasons attributable to us. The maximum loss compensation payment is ¥10.189 billion. In addition, 10 clubs provide guarantees for rent over the remaining contract term, with total guarantees of ¥2.237 billion; 7 clubs provide guarantees for the outstanding balance of borrowings incurred by lessors for their investments upon termination, with total guarantees of ¥1.744 billion; and 13 clubs provide guarantees for the residual value of building investments by lessors upon termination, with total guarantees of ¥3.137 billion.」
The number of clubs subject to loss compensation payments increased from 14 to 15, and the maximum amount increased from ¥8.425 billion to ¥10.189 billion. The details and amounts of the guarantees have also been specified. - FY2016First statedAnnual report
「As of 31 March 2016, 93 of our 95 directly operated clubs were operated under lease agreements. Under lease agreements with leasing companies based on fixed-term land leases, generally for approximately 10 years, 14 clubs could require a loss compensation payment if we do not renew the lease agreement at the end of the term for reasons attributable to us. The maximum loss compensation payment is ¥8.425 billion.」
The exposure to rent guarantees, residual value guarantees and loss compensation payments was quantified for a substantial number of leased clubs.