Impairment Losses Due to Declining Profitability of M&A-Related and Other Fixed Assets
First written in FY2021-Q2. 3 of 9 entries say "Restated". Latest entry: FY2025.
Cyberlinks moved to the "Worse" side of this theme in 2022, 1 year after the typical company in this theme (2021).
The whole theme swung hardest in 2020: 51 of 96 companies on the "Worse" side.
10 other companies' latest entry also says "Other".
- FY2025Indicators of impairment identified for synergy-related assetsAnnual report
「The Company determined that there were indicators of impairment for goodwill and customer-related assets, also taking into account the relatively large amounts allocated at the time of acquisition. In determining whether impairment losses needed to be recognized, the Company concluded that no impairment loss was necessary for either asset because the total undiscounted future cash flows exceeded the carrying amounts.」
The Company identified indicators of impairment for synergy-related assets but did not recognize an impairment loss for the current fiscal year, concluding that future cash flows exceeded the carrying amount. - FY2024-H1MaterialisedAnnual report
「Following a review of the sales plan for software for the education market during the current interim consolidated accounting period, the company could no longer expect the originally projected revenue. It therefore reduced the carrying amount of the asset group related to the business to its recoverable amount and recognized the resulting ¥29 million reduction as an impairment loss under extraordinary losses.」
The risk of impairment from declining profitability of fixed assets and software materialized as a ¥29 million impairment loss following a review of the sales plan for software targeting the education market. - FY2023WorsenedAnnual report
「For 8 Docomo Shops, the Company judged recoverability to be low because operating losses were expected to continue, reduced their carrying amounts to recoverable amounts, and recognized the resulting decrease as an impairment loss under extraordinary losses. In addition, regarding the goodwill recognized when the Company absorbed Mobile Media Link Co., Ltd. and K-O Plan Co., Ltd., which operated Docomo Shops in Wakayama Prefecture, in December 2022, the Company reduced the carrying amount to the recoverable amount and recognized the resulting decrease of ¥197 million as an impairment loss under extraordinary losses because the performance of the Docomo Shops acquired through the merger was expected to fall below the originally projected business plan.」
The risk of declining profitability of M&A and fixed assets materialized as total impairment losses of ¥256 million, including the ¥197 million impairment of existing goodwill, a ¥46 million impairment loss on 8 Docomo Shops, and an ¥8 million impairment loss on Synergy's Tokyo branch, among others. - FY2023-Q2RestatedAnnual report
「The Company mainly recognized impairment losses on goodwill.」
The Company has continued to disclose the recognition of a ¥197 million impairment loss on goodwill arising from the absorption merger of Mobile Media Link and K-O Plan. - FY2023-Q1MaterialisedAnnual report
「Regarding the goodwill recognized when the Company absorbed Mobile Media Link Co., Ltd. and K-O Plan Co., Ltd., which operated Docomo Shops in Wakayama Prefecture, in December 2022, the Company reduced the carrying amount to the recoverable amount and recognized the resulting decrease of ¥197 million as an impairment loss under extraordinary losses. This was because the performance of the Docomo Shops acquired through the merger was expected to fall below the originally projected business plan, as the planned store relocation to strengthen earnings could not be carried out at the expected time and a recovery in incentives from NTT Docomo, Inc. became difficult to anticipate.」
The impairment risk from failure to meet the business plan after M&A and declining profitability materialized as a ¥197 million impairment loss on goodwill arising from the absorption merger of Mobile Media Link and K-O Plan. - FY2022-Q3WorsenedAnnual report
「Goodwill recognized: ¥1,113 million」
The Company recognized ¥1,113 million in goodwill in connection with the acquisition of Synergy as a wholly owned subsidiary. This newly recognized goodwill is subject to impairment risk due to failure to meet the business plan after M&A or declining profitability. - FY2021RestatedAnnual report
「In conducting M&A, the Company performs financial, legal and business due diligence on the target company, carefully examines the risks, analyzes its normalized earnings capacity, and makes decisions through the appropriate internal approval process. It also seeks to ensure thorough performance management of acquired companies.」
The Company continues to address impairment risk from M&A and declining profitability of fixed assets and software through due diligence and post-acquisition performance management. - FY2021-Q3RestatedAnnual report
「The Group takes a flexible approach to M&A in order to enhance its services. In conducting M&A, it performs financial, legal and business due diligence on the target company, carefully examines the risks, analyzes its normalized earnings capacity, and makes decisions through the appropriate internal approval process. It also seeks to ensure thorough performance management of acquired companies.」
The Company continues to address impairment risk from M&A and declining profitability of fixed assets and software through due diligence and post-acquisition performance management. - FY2021-Q2First statedAnnual report
「However, if the assessment of enterprise value is insufficient and previously unidentified issues arise after an acquisition, such as contingent liabilities or unrecognized obligations, causing the acquired company's business plan to fall short, impairment losses on goodwill may be incurred.」
The Company identifies impairment of goodwill due to failure to meet business plans after M&A and impairment losses due to declining profitability of property, plant and equipment and software as separate performance-impact risks. Due diligence and post-acquisition performance management are cited as countermeasures.