Recognition of an Impairment Loss (Consolidated Financial Statements) and a Valuation Loss on Shares of an Affiliated Company (Non-Consolidated Financial Statements)
Nissha Co., Ltd. (filing company), USM HEALTHCARE MEDICAL DEVICES FACTORY JOINT STOCK COMPANY (USM)
As a result of an IFRS-based impairment test conducted in light of the transfer of the USM shares, the recoverable amount was below the estimate made at the time of acquisition. In the non-consolidated financial statements, the actual value of the USM shares had declined significantly relative to their carrying value. The company explained that it had determined that USM's business had no future prospects and that it would be difficult to achieve the original objectives of the acquisition.
Company response
The process leading to the board of directors' decision to acquire USM will be examined. Whether a third-party committee or special investigation committee was established, the chair's name and the establishment date are Not disclosed.
The company will consider developing measures to prevent similar incidents, further strengthening corporate governance, and determining how responsibility for this matter should be addressed.
The company will consider how responsibility for this matter should be addressed. Specific reductions in remuneration, resignations and disciplinary action are Not disclosed.
Consolidated financial statements: goodwill impairment loss of ¥6,759 million (other expenses). Non-consolidated financial statements: valuation loss on shares of an affiliated company of ¥6,133 million (extraordinary loss). The valuation loss in the non-consolidated financial statements is eliminated in the consolidated financial statements, and has no additional impact on consolidated results.
The cumulative second-quarter period of the fiscal year ending December 2026 in the consolidated financial statements and the interim period in the non-consolidated financial statements
The company will examine the decision-making process for the acquisition of USM and, based on the findings, consider measures to prevent similar incidents, strengthen corporate governance and determine how responsibility should be addressed. It will also seek to recover the losses recognized.
After completing an overall review, the company will disclose the matters considered. The specific timing is Not disclosed.
| Item | Details |
|---|---|
| Event name | Recognition of an Impairment Loss (Consolidated Financial Statements) and a Valuation Loss on Shares of an Affiliated Company (Non-Consolidated Financial Statements) |
| Date of occurrence | Recognized in the second quarter (interim period) of the fiscal year ending December 2026 (specific date of occurrence: Not disclosed) |
| Date recognized / date notice received | 26 June 2026 (improper accounting treatment at USM before the acquisition was identified) |
| Subject Entity | Nissha Co., Ltd. (filing company), USM HEALTHCARE MEDICAL DEVICES FACTORY JOINT STOCK COMPANY (USM) |
| Cause | As a result of an IFRS-based impairment test conducted in light of the transfer of the USM shares, the recoverable amount was below the estimate made at the time of acquisition. In the non-consolidated financial statements, the actual value of the USM shares had declined significantly relative to their carrying value. The company explained that it had determined that USM's business had no future prospects and that it would be difficult to achieve the original objectives of the acquisition. |
| Amount of Impact on Business Performance | Consolidated financial statements: goodwill impairment loss of ¥6,759 million (other expenses). Non-consolidated financial statements: valuation loss on shares of an affiliated company of ¥6,133 million (extraordinary loss). The valuation loss in the non-consolidated financial statements is eliminated in the consolidated financial statements, and has no additional impact on consolidated results. |
| Accounting period in which recognized | The cumulative second-quarter period of the fiscal year ending December 2026 in the consolidated financial statements and the interim period in the non-consolidated financial statements |
| Investigation structure | The process leading to the board of directors' decision to acquire USM will be examined. Whether a third-party committee or special investigation committee was established, the chair's name and the establishment date are Not disclosed. |
| Measures to prevent recurrence | The company will consider developing measures to prevent similar incidents, further strengthening corporate governance, and determining how responsibility for this matter should be addressed. |
| Directors' and officers' liability | The company will consider how responsibility for this matter should be addressed. Specific reductions in remuneration, resignations and disciplinary action are Not disclosed. |
| Outlook | The company will examine the decision-making process for the acquisition of USM and, based on the findings, consider measures to prevent similar incidents, strengthen corporate governance and determine how responsibility should be addressed. It will also seek to recover the losses recognized. |
| Planned follow-up disclosure | After completing an overall review, the company will disclose the matters considered. The specific timing is Not disclosed. |
Items this document does not state (13)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.Because the recoverable amount was below the estimate made at the time of acquisition in the impairment test conducted in light of the transfer of the USM shares. In the non-consolidated financial statements, because the actual value of the USM shares had declined significantly relative to their carrying value.