Impairment Risk for M&A-Related Goodwill and Software
First written in FY2025. 5 of 6 entries say "Worsened", first in FY2026-H1. Latest entry: FY2026.
Arent moved to the "Worse" side of this theme in 2025, 1 year after the typical company in this theme (2024).
The whole theme swung hardest in 2023: 35 of 97 companies on the "Worse" side.
26 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「The acquisition of consolidated subsidiaries increased goodwill by ¥1,698 million, bringing goodwill at the end of the consolidated fiscal year under review to ¥2,537 million. If estimates of the future cash flows used to value goodwill change, for example because post-acquisition performance falls below plan, the Company may recognize an impairment loss on goodwill.」
Goodwill associated with M&A increased from ¥839 million to ¥2,537 million, expanding exposure to impairment risk arising from changes in estimates of future cash flows. - FY2026-H1WorsenedAnnual report
「Our group has recorded goodwill in connection with the acquisition of subsidiaries. If estimates of the future cash flows used to value goodwill change because post-acquisition performance falls below plan or for other reasons, we may record an impairment loss on goodwill, which could materially affect our group's financial position and operating results.」
Following multiple subsidiary acquisitions, goodwill increased from ¥839.108 million at the end of the previous fiscal year to ¥2,299.413 million, expanding our exposure to impairment risk arising from changes in estimated future cash flows. - FY2025MaterialisedAnnual report
「Our group holds software, including software under development, and goodwill as important operating assets. If indicators of impairment of fixed assets exist, we determine whether impairment should be recognized based on the future cash flows generated by the relevant assets or asset groups. If an impairment loss is recognized as a result, it will affect our financial position and operating results.」
This newly explicitly identifies valuation risk for software and goodwill acquired through M&A and other transactions. Goodwill of ¥839.108 million was recorded, and PlantStream actually incurred a software impairment loss of ¥614.589 million.