Changes in market and competitive conditions after M&A and inability to recover investments
First written in FY2022-Q2. 4 of 8 entries say "Materialised", first in FY2023-Q2. Latest entry: FY2024.
The whole theme swung hardest in 2024: 36 of 89 companies on the "Worse" side.
- FY2024MaterialisedAnnual report
「During the current fiscal year, in addition to web marketing, we worked on sales through agencies, but this did not result in a notable improvement in return on investment. We also decided to change our business policy by curbing investment in promoting existing products while promoting the development of new products. As this event indicated impairment, we conducted an impairment test and recognized impairment losses of ¥64.930 million, representing all remaining goodwill, and ¥1.982 million, representing the balance of right-of-use assets in the insurance business, because the profitability initially assumed was no longer expected to be achieved.」
In the insurance business, return on investment did not improve, and remaining goodwill of ¥64.930 million and right-of-use assets of ¥1.982 million were impaired. In the business related to ビッコレ, the full ¥136.549 million of goodwill was also impaired. - FY2024-Q2MaterialisedAnnual report
「Goodwill in the insurance business arose when we acquired the shares of 株式会社アシロ少額短期保険 and made it a subsidiary in April 2022, initially recognizing goodwill of ¥163.265 million. Subsequently, in light of slower progress in building up policies in force than under the initial plan assumed at the time of acquisition, we recognized an impairment loss of ¥98.335 million on part of the goodwill at the end of the previous consolidated fiscal year. During the current fiscal year, in addition to web marketing, we worked on sales through agencies, but this did not result in a notable improvement in return on investment. We also decided to change our business policy by curbing investment in promoting existing products while promoting the development of new products. As this event indicated impairment, we conducted an impairment test and recognized impairment losses of ¥64.930 million, representing all remaining goodwill, and ¥1.982 million, representing the balance of right-of-use assets in the insurance business, because the profitability initially assumed was no longer expected to be achieved.」
In the insurance business arising from the conversion of 株式会社アシロ少額短期保険 into a subsidiary, return on investment did not improve, and the remaining goodwill of ¥64.930 million and right-of-use assets of ¥1.982 million were impaired. - FY2024-Q1WorsenedAnnual report
「Regarding 株式会社ビッコレ, for which we acquired all shares on 31 March 2023, profits had been exceeding the business plan prepared at the time of the acquisition. However, the principal source of customer referrals recently made substantial cuts to its advertising spending, forcing a change in referral sources, while the referral terms offered by alternative sources deteriorated significantly. We determined that returning to a growth trajectory would require additional costs and time, and therefore changed our policy to make this business a lower priority in order to optimize management resources. Accordingly, in the first-quarter financial results, we decided to recognize an impairment loss for the full ¥136.549 million of goodwill relating to the acquisition of ビッコレ.」
At ビッコレ, the main referral source reduced its advertising spending and the terms offered by alternative referral sources deteriorated, leading to a change in policy to make the business a lower priority. The full ¥136.549 million of goodwill relating to the acquisition was recognized as an impairment loss. - FY2023MaterialisedAnnual report
「After the acquisition of the shares, we identified matters that appeared to conflict in part with the provisions of the share transfer agreement. Following extensive discussions with the seller, Media Beats, we agreed to reduce the paid ordinary share acquisition price stipulated in the agreement from ¥300.000 million to ¥150.000 million and entered into an amendment agreement relating to the contract. As a result, ¥74.214 million, the difference between the amount paid for net cash of ¥75.786 million and the revised price, was refunded on the same date.」
Following a review of the contractual terms after the acquisition of ビッコレ, the acquisition price was reduced from ¥300.000 million to ¥150.000 million, and a refund of ¥74.214 million was received. - FY2023-Q2MaterialisedAnnual report
「After acquiring the shares of 株式会社ビッコレ on 31 March 2023, we identified matters that appeared to conflict in part with the provisions of the share transfer agreement. Following extensive discussions with the seller, Media Beats, we agreed to reduce the paid ordinary share acquisition price stipulated in the agreement from ¥300.000 million to ¥150.000 million and entered into an amendment agreement relating to the contract.」
Following the acquisition of ビッコレ, matters that appeared to conflict in part with the share transfer agreement were identified, resulting in a reduction in the acquisition price and a refund of ¥74.214 million. - FY2022RestatedAnnual report
「However, despite prior investigations and consideration, if market or competitive conditions change significantly after an acquisition, or if the acquired business fails to develop as planned, making it impossible to recover the funds invested or resulting in additional costs, our Group's operations and results may be affected.」
Even after the insurance business became a subsidiary, risks relating to changes in the market environment after M&A, failure to achieve plans and inability to recover investments remain. - FY2022-Q3RestatedAnnual report
「However, despite prior investigations and consideration, if market or competitive conditions change significantly after an acquisition, or if the acquired business fails to develop as planned, making it impossible to recover the funds invested or resulting in additional costs, our Group's operations and results may be affected.」
Risks relating to changes in market and competitive conditions after M&A, failure to achieve plans, inability to recover investments and additional costs continue to be disclosed. - FY2022-Q2First statedAnnual report
「However, despite prior investigations and consideration, if market or competitive conditions change significantly after an acquisition, or if the acquired business fails to develop as planned, making it impossible to recover the funds invested or resulting in additional costs, our Group's operations and results may be affected.」
New risks were explicitly identified in connection with M&A, including the conversion of カイラス社 into a subsidiary, relating to post-acquisition changes in the business environment, failure to achieve plans, inability to recover investments and additional costs.