Risk of investment underperformance, impairment and increased borrowings
First written in FY2021. 3 of 6 entries say "Restated". Latest entry: FY2024-Q3.
TESS Holdings moved to the "Worse" side of this theme in 2022, the same year as the typical company in this theme.
The whole theme swung hardest in 2019: 10 of 27 companies on the "Worse" side.
14 other companies' latest entry also says "Restated".
- FY2024-Q3RestatedAnnual report
「If major delays or suspension of the project, a substantial decline in profitability or other adverse developments arise in the future due to construction problems, a sharp increase in fuel procurement prices or difficulty procuring fuel, unsuccessful financing for development funds, interest-rate fluctuations or other unforeseen circumstances, the Group’s revenue may deteriorate and it may be required to recognize impairment losses on the investment, power plant facilities and other related assets. This could affect the Group’s business, operating results and financial condition.」
The risks of delays, suspension, lower profitability and impairment arising from construction, fuel, financing, interest rates and other factors continue to be disclosed for the Imari Large-Scale Biomass Power Generation Project. - FY2023RestatedAnnual report
「In making business investments, the Group conducts thorough reviews and verification, including confirming alignment with its management strategy and synergies with existing businesses, assessing the profitability of the investment targets and conducting various due diligence procedures. However, these business investments may involve the risk that the Group will be unable to make the investments as planned, or that the investments themselves will require more time or expense than anticipated.」
The Group continues to address risks including failure to achieve business investment objectives, excess costs and time, impairment, and increased borrowing through advance reviews. - FY2023-Q3MaterialisedAnnual report
「The total planned investment was changed from ¥2,899 million to ¥3,186 million due to the addition of specifications to improve the economics of the power generation business, fluctuations in the prices of overseas-procured products and construction costs, among other factors. In addition, the planned completion month was changed from July 2023 to August 2023 because delivery was delayed due to logistics conditions for overseas-procured products.」
At the Nishikicho Kinokaminishi Biomass Power Plant, an increase in the investment amount and a postponement of the scheduled completion date actually occurred, concretely demonstrating the variability in the costs and time required for the business investment. - FY2022-Q3RestatedAnnual report
「In constructing the power plant, the Group plans to prepare a detailed design plan with the EPC contractor (Note) and enter into a construction contract under which the EPC contractor undertakes to complete the work. However, if the Group fails to enter into a contract with the EPC contractor, or if additional construction not anticipated in the original design becomes necessary after the contract is signed due to matters outside the scope of the contract,」
The risks of higher construction costs, construction delays and lower profitability caused by the EPC contract, additional construction, force majeure and other factors continue to be disclosed for the Imari Large-Scale Biomass Power Generation Project. - FY2022-Q2WorsenedAnnual report
「In addition, if development is discontinued for any reason in the future, or if the profitability of the business declines substantially below initial expectations due to procurement risks involving biomass fuel or for various other reasons, the Group may be required to recognize losses through impairment of assets such as investments and construction in progress recorded in connection with the construction of power plants. This could affect the Group’s business, operating results and financial condition.」
Additional specific investment risks have been disclosed for the Imari Large-Scale Biomass Power Generation Project, including development discontinuation, fuel procurement, lower profitability, and impairment of construction in progress and other assets. - FY2021First statedAnnual report
「These business investments may involve the risk that the Group will be unable to make the investments as planned, that the investments themselves will require more time or expense than anticipated, that the businesses will not progress as expected, that the amortization burden on the investment assets will increase, or that the proportion of the Group’s interest-bearing debt will rise due to substantial borrowing.」
The risks associated with the business investments are organized as delays or failure to achieve the investments, amortization burdens, and increased borrowing, among others.