Recognition of insurance assets due to changes in estimates for credit insurance

「To clearly reflect the legal substance and business practices of our Group’s breakdown warranty business, liabilities relating to remaining coverage and liabilities relating to incurred insurance claims are disclosed as “deferred breakdown warranty revenue” in the condensed quarterly consolidated statement of financial position. Insurance revenue and insurance service expenses are disclosed as “breakdown warranty revenue” and “breakdown warranty cost,” respectively, in the notes detailing “operating revenue” and “operating expenses” in the condensed quarterly consolidated statement of profit or loss.」

「Our Group has applied IFRS 17, “Insurance Contracts” (hereinafter, “IFRS 17”), from the first-quarter consolidated cumulative period. IFRS 17 was applied as of the beginning of the previous consolidated fiscal year, the date of transition to the standard, and the beginning of the previous consolidated fiscal year was retrospectively restated.」

「To clearly reflect the legal substance and business practices of our Group’s breakdown warranty business, liabilities relating to remaining coverage and liabilities relating to incurred insurance claims are disclosed as “deferred breakdown warranty revenue” in the condensed quarterly consolidated statement of financial position. Insurance revenue and insurance service expenses are disclosed as “breakdown warranty revenue” and “breakdown warranty cost,” respectively, in the notes detailing “operating revenue” and “operating expenses” in the condensed quarterly consolidated statement of profit or loss.」

「Payments received under insurance claims had previously been recorded under “insurance revenue” within other income. In light of efforts to strengthen our internal control systems for credit insurance contracts, and after reviewing the scope of operating revenue based on the view that the entire process, from extending credit through collection and full repayment to coverage under credit insurance, constitutes part of our operating activities, we have recorded as “insurance fulfillment revenue” within operating revenue the income arising from payments received in excess of the amount of the insurance assets.」

「As a result of changes to the credit insurance contract and efforts to strengthen our internal control systems, from the first-quarter consolidated accounting period onward we have recorded as “insurance assets” the amounts expected to be almost certainly covered by credit insurance. Of the insurance assets recorded as a corresponding item, ¥2,080.841 million, relating to the portion of the allowance for doubtful accounts recorded at the end of March 2019, has been recorded as “insurance asset valuation gains”」

「As a result of changes to credit insurance contracts and strengthened internal management systems, from the first quarter of the current consolidated fiscal year the company has recognized as insurance assets the amounts expected to be almost certainly covered by credit insurance. Of the corresponding insurance assets recognized as a result, ¥2,058.191 million, relating to the allowance for doubtful accounts recognized at the end of March 2019, was recognized as a gain on valuation of insurance assets」