Failure to Meet Plans and Impairment Risk Following M&A and Capital and Business Alliances
First written in FY2016. 4 of 8 entries say "Materialised", first in FY2019-Q3. Latest entry: FY2025.
The whole theme swung hardest in 2024: 36 of 89 companies on the "Worse" side.
- FY2025WorsenedAnnual report
「At the end of the fiscal year, the Company determined that there were indications of impairment in ¥1,233,062 thousand of goodwill and ¥2,815,363 thousand of customer-related assets associated with UUUM株式会社, as the business plan at the time of acquisition diverged from the results at the end of the fiscal year. However, because the total undiscounted future cash flows expected from the asset group, including the goodwill and customer-related assets, exceeded the carrying amount of the asset group, the Company determined that recognition of an impairment loss was not necessary.」
For UUUM, indications of impairment were identified in goodwill and customer-related assets due to the divergence between the business plan at acquisition and actual results, but no impairment loss was recognized for the current fiscal year because undiscounted future cash flows exceeded the carrying amount. - FY2024MaterialisedAnnual report
「As the market price of the UUUM株式会社 shares held by the Company fell significantly below their acquisition cost, the Company recognized an impairment loss on the shares in its non-consolidated financial statements. Accordingly, it recognized the amortization of goodwill as an extraordinary loss in its consolidated financial statements.」
Regarding the risk to investment value and failure to meet plans after M&A, the impairment of UUUM shares led to the recognition of ¥3,212,733 thousand in goodwill amortization as an extraordinary loss on a consolidated basis. - FY2021-Q2MitigatedAnnual report
「The Company's consolidated subsidiary adGeek had received notice on 23 November 2020 that CtrlShift Holdings Pte. Ltd. would file arbitration with the Singapore International Arbitration Centre, seeking the purchase of The Studio by CtrlShift Pte. LTD. shares for US$1,500 thousand, on the grounds that adGeek had failed to perform its obligation to purchase the shares under the share transfer agreement for The Studio by CtrlShift Pte. LTD. entered into with CtrlShift Holdings Pte. Ltd. in December 2018. On 3 March 2021, however, CtrlShift Holdings notified the Singapore International Arbitration Centre that it did not intend to proceed with the arbitration, and the arbitration filing was therefore deemed withdrawn, bringing the dispute to an end.」
The arbitration filing concerning the purchase of the remaining shares of The Studio by CtrlShift was deemed withdrawn, bringing the dispute to an end. - FY2021-Q1RestatedAnnual report
「The Company's consolidated subsidiary adGeek received notice on 23 November 2020 that CtrlShift Holdings Pte. Ltd. would file arbitration with the Singapore International Arbitration Centre, seeking the purchase of The studio by CtrlShift Pte. LTD. shares for US$1,500 thousand, on the grounds that adGeek had failed to perform its obligation to purchase the shares under the share transfer agreement for The studio by CtrlShift Pte. LTD. entered into with CtrlShift Holdings Pte. Ltd. in December 2018.」
The Company continued to disclose that it had received notice of an arbitration filing seeking the purchase of the remaining shares, equivalent to 30%, of The Studio by CtrlShift, and that it believed it could reject the claim in full. - FY2020MaterialisedAnnual report
「Under this share transfer agreement, 株式会社adGeek completed the purchase in December 2018 of shares equivalent to 70% of studio's voting rights, while this arbitration filing seeks the additional purchase of the remaining shares, equivalent to 30%.」
The Company received notice of an arbitration filing seeking the purchase of the remaining shares, equivalent to 30%, of M&A target The Studio by CtrlShift for US$1,500 thousand. The Company believes it can reject the claim in full because the contractual conditions for completion have not been satisfied. - FY2019MaterialisedAnnual report
「Because adGeek and its subsidiary The Studio by CtrlShift failed to generate the excess earnings originally anticipated, the Company recognized a full impairment loss on the unamortized goodwill.」
Regarding the risk of failure to meet post-M&A plans and impairment, the failure of adGeek and The Studio by CtrlShift to generate the anticipated excess earnings and the full impairment of goodwill actually occurred. - FY2019-Q3MaterialisedAnnual report
「Losses arising from the loss of major customers at some M&A targets」
The disclosure stated that some M&A targets incurred losses due to the loss of major customers, demonstrating as an actual event the impact on earnings when post-acquisition business development fails to proceed as planned. - FY2016First statedAnnual report
「If events not identified or anticipated in these investigations become apparent or occur after the execution of M&A or other transactions, or if business development fails to proceed as planned due to changes in market conditions or other factors, the Group may be required to impair the investment value of the target company, which could affect its earnings and business development.」
While stating a policy of conducting due diligence, the Company identifies unexpected events after acquisitions and failure to meet plans, resulting in impairment and an impact on earnings, as risks.