Risks of Underperformance, Failure to Recover Invested Capital and Goodwill Impairment in M&A

「Because the amount of the acquisition cost allocated to goodwill and customer-related assets was relatively large, the company identified indicators of impairment during the current consolidated fiscal year for assets belonging to AJ・Flat株式会社, including goodwill and customer-related assets. However, after comparing the total undiscounted future cash flows with the carrying amount, the company determined that no impairment loss needed to be recognized because the total undiscounted future cash flows exceeded the carrying amount.」

「In conducting M&A, we will strive to proceed after considering market trends, customer needs, the performance and financial condition of the target company, and the results of analyses of risks associated with the M&A. However, if the acquired business is unable to develop as planned for reasons including contingent liabilities arising after the acquisition, and the funds invested cannot be recovered, this may affect the performance of the Group through additional costs, impairment of goodwill, or other factors.」