Risk of goodwill impairment due to earnings shortfalls following subsidiary acquisitions
First written in FY2019. 1 of 3 entries say "Materialised", first in FY2025. Latest entry: FY2026.
The whole theme swung hardest in 2024: 36 of 89 companies on the "Worse" side.
60 other companies' latest entry also says "Restated".
- FY2026RestatedAnnual report
「However, if changes in the business environment after an M&A transaction result in a divergence from the business plan, or if the integration of the business and personnel does not progress and the expected synergies are not achieved, recovery of the invested capital may take a certain period of time or may not be possible.」
The Company has reaffirmed, as major M&A-related risks, the risk that invested capital may not be recovered due to post-acquisition divergence from plans, delays in business and personnel integration, and failure to realize synergies. - FY2025MaterialisedAnnual report
「Goodwill was temporarily amortized as a result of impairment of the shares of Cerevo Co., Ltd., the Company's consolidated subsidiary, and the amount was recorded as an extraordinary loss.」
The risk that post-acquisition performance and business plans could affect the expected recovery of goodwill materialized in the form of a temporary ¥353 million amortization of goodwill following impairment of Cerevo shares. - FY2019First statedAnnual report
「The group amortizes goodwill on a straight-line basis over the period in which it expects the goodwill to generate benefits. It assesses the asset's recoverability based on the subsidiary's performance and business plans. If the initially expected earnings can no longer be expected in the future and the need for impairment is identified, the group may record an impairment loss on goodwill in the relevant consolidated fiscal year.」
The Company has indicated the possibility of impairment of acquisition-related goodwill if the subsidiary's performance or business plan falls below expectations and earnings are no longer anticipated.