Uncertainty in estimates for the allowance for doubtful accounts, retirement benefits, deferred tax assets, etc.

「For the asset groups of the three core companies in China, 大橋汽車配件（広州）有限公司, 大橋精密件（上海）有限公司 and 大橋精密件製造（広州）有限公司, the Company reviewed the profit and loss generated by business activities and examined future recoverability in light of declining profitability caused by changes in the business environment, including intensifying sales competition among local manufacturers and reduced production by Japanese automotive manufacturers that are customers. As a result, the Company reduced the carrying amount of fixed assets used in the businesses of these asset groups to their recoverable amount and recognized the resulting reduction of ¥603.743 million as an impairment loss under extraordinary losses.」

「Although no impairment loss was recognized in the current consolidated fiscal year, indications of impairment due to declining profitability were identified for certain asset groups in the China segment, comprising ¥1,021.524 million in property, plant and equipment and ¥61.403 million in intangible assets.」

「Although no impairment loss was recognized in the current consolidated fiscal year, indications of impairment due to declining profitability were identified for the asset group related to the consolidated subsidiary オーハシ技研工業株式会社, comprising ¥2,089.847 million in property, plant and equipment and ¥0.909 million in intangible assets.」

「During the cumulative third quarter, there were no material changes to the significant accounting estimates or the assumptions used in those estimates described in the previous fiscal year's Annual Securities Report under "Management's Analysis of Financial Position, Operating Results and Cash Flows."」

「In the current consolidated fiscal year, after reviewing the profit and loss generated by business activities and examining future recoverability in light of declining profitability caused by changes in the business environment, including the prolonged spread of COVID-19, production cuts by customers due to shortages of semiconductors and other components, and surging raw material prices, for the asset group related to the consolidated subsidiary オーハシ技研工業株式会社, the Company reduced the carrying amount of fixed assets used in its business, including land, buildings and machinery, to their recoverable amount and recognized the resulting reduction of ¥410.411 million as an impairment loss under extraordinary losses.」

「During the cumulative second quarter, there were no material changes to the significant accounting estimates or the assumptions used in those estimates described in the previous fiscal year's Annual Securities Report under "Management's Analysis of Financial Position, Operating Results and Cash Flows."」

「During the cumulative first quarter, there were no material changes to the assumptions concerning the impact of the spread of COVID-19, as described in the previous fiscal year's Annual Securities Report under "Part V. Financial Information, Notes (Significant Accounting Estimates)." However, if the further spread of COVID-19 causes changes that have a significant impact on the Group's business, it could affect estimates of impairment of fixed assets and the recoverability of deferred tax assets.」

「The recoverable amount of leased assets and other assets fell below their carrying amount because of declining profitability resulting from delays in the expected recovery of sales due to the semiconductor shortage and other factors, as well as rising ocean freight costs. The Company therefore recognized an impairment loss in the current consolidated fiscal year.」

「The Group groups operating assets into the smallest units that generate largely independent cash flows. For operating assets held by the Company's consolidated UK subsidiary OHASHI TECHNICA UK, LTD., the recoverable amount of leased assets and other assets fell below their carrying amount because of declining profitability resulting from delays in the expected recovery of sales due to the semiconductor shortage and other factors, as well as rising ocean freight costs. The Group therefore recognized an impairment loss.」

「Although no impairment loss was recognized in the current consolidated fiscal year, indications of impairment due to declining profitability were identified for certain asset groups in the Japan segment, comprising ¥2,813.062 million in property, plant and equipment and ¥13.988 million in intangible assets.」

「Regarding the impact of COVID-19, in light of the recovery trend in economic activity following the lifting of the state of emergency in Japan and the subsequent declaration of a second state of emergency, the Company made accounting estimates concerning the recoverability of deferred tax assets and impairment of fixed assets based on assumptions reflecting the Group's results for the cumulative third quarter, recent order trends, and information and forecasts available at that time.」

「Regarding the impact of COVID-19, following the resumption of economic activity after the lifting of the state of emergency in Japan, the Company made accounting estimates concerning the recoverability of deferred tax assets and impairment of fixed assets based on assumptions reflecting the Group's results for the cumulative second quarter, recent order trends, and information and forecasts available at that time.」

「Regarding the impact of COVID-19, as economic activity began to show signs of resuming following the lifting of the state of emergency in Japan, the Company made accounting estimates concerning the recoverability of deferred tax assets and impairment of fixed assets based on assumptions reflecting the Group's results for the cumulative first quarter, recent order trends, and information and forecasts available at that time.」

「With no clear visibility on when the COVID-19 pandemic will end or how it will affect the Company's business, the Company believes that, particularly with respect to the accounting estimates concerning the recoverability of deferred tax assets and impairment of fixed assets described below, revisions to assumptions and other factors in response to changes in circumstances could have a material impact on its financial position and operating results.」

「These estimates are determined reasonably after considering past results and other factors, but may differ from actual results because of the uncertainty inherent in estimates.」