The English translation of this financial report was prepared for reference purposes only. The financial information contained in this report is delivered from our unaudited financial statements.
Consolidated Financial Report for the Nine-month Period Ended June 30, 2020 (IFRS)
August 12, 2020 | |||
Company name: LIFULL Co., Ltd. | Listed exchange: Tokyo Stock Exchange | ||
Stock code: | 2120 | URL: | https://lifull.com/en/ir/ |
Representative: | INOUE, Takashi | (Position) President and CEO | |
Contact: | FUKUZAWA, Hidekazu (Position) Managing Officer, General Manager of Group Company Business Development Department | ||
(TEL) +81-3-6774-1603 |
Scheduled quarterly securities report submission date: | August 12, 2020 |
Scheduled date of start of dividend payments: | - |
Preparation of supporting documentation for earnings: | Yes |
Earnings presentations: | None |
(Millions of yen; amounts have been rounded down to the nearest million yen)
1. Consolidated Financial Results for the Nine-month Period Ended June 30, 2020 (October 1, 2019 to June 30, 2020)
(1) Consolidated Operating Results | (Percentages indicate year-on-year change) | |||||||||||||||||||
Operating | Profit before | Profit attributable | Total | |||||||||||||||||
Revenue | Net profit | to owners of the | comprehensive | |||||||||||||||||
income | income taxes | |||||||||||||||||||
parent | income | |||||||||||||||||||
million yen | % | million yen | % | million yen | % | million yen | % | million yen | % | million yen | % | |||||||||
Nine months ended | 26,892 | (8.4) | 3,686 | 9.0 | 3,445 | 9.4 | 2,326 | 16.2 | 2,323 | 14.1 | 3,099 | 425.2 | ||||||||
June 30, 2020 | ||||||||||||||||||||
Nine months ended | 29,352 | 12.8 | 3,383 | (6.9) | 3,150 | (11.3) | 2,002 | (10.3) | 2,036 | (10.5) | 590 | (67.0) | ||||||||
June 30, 2019 | ||||||||||||||||||||
Basic earnings per share (yen) | Diluted earnings per share (yen) | |||||||||||||||||||
Nine months ended June 30, 2020 | 17.34 | - | ||||||||||||||||||
Nine months ended June 30, 2019 | 15.84 | - | ||||||||||||||||||
(Reference) EBITDA (operating income before depreciation and amortization) | Nine months ended June 30, 2020: | 5,180 million yen | ||||||||||||||||||
Nine months ended June 30, 2019: | 4,256 million yen |
Note: The provisional accounting procedures for corporate mergers were defined in the first and third three-month periods of the current fiscal year. These provisional accounting measures have also been applied for values for the fiscal year ended June 30, 2019.
(2) Consolidated Financial Position
Total assets | Total equity | Equity attributable to | Equity attributable to owners of | |
owners of the parent | the parent ratio (%) | |||
million yen | million yen | million yen | % | |
As of June 30, 2020 | 54,616 | 34,643 | 34,548 | 63.3 |
As of September 30, 2019 | 43,672 | 32,627 | 32,551 | 74.5 |
Note: The provisional accounting procedures for corporate mergers were defined in the first and third three-month periods of the current fiscal year. These provisional accounting measures have also been applied for values for the fiscal year ended June 30, 2019.
2. Dividends
Annual dividend | |||||
First | Second | Third | Fiscal year-end | Total | |
quarter-end | quarter- end | quarter-end | |||
yen | yen | yen | yen | yen | |
Fiscal year ended September 30, 2019 | - | 0.00 | - | 4.40 | 4.40 |
Fiscal year ending September 30, 2020 | - | 0.00 | |||
Fiscal year ending September 30, 2020 (forecast) | - | - | - | - | |
Note 1: There have been no changes to the dividend forecast.
Note 2: Dividend forecast for the fiscal year ending September 30, 2020, will be calculated based on a payout ratio of 25%.
3. Forecasts on the Consolidated Results for the Fiscal Year 2020 (October 1, 2019 to September 30, 2020)
(Percentages indicate year-on-year change)
Revenue | Operating income | Profit attributable to owners of the parent | Basic earnings per share | |||||
million yen | (%) | million yen | (%) | million yen | (%) | yen | ||
Fiscal Year 2020 | 30,760 | (21.7) | 977 | (76.7) | 269 | (88.8) | 2.01 | |
Note 1: There have been no changes in dividend forecast.
Note 2: Details of the revision were announced on April 20, 2020. Refer to "Notice of Revisions to Consolidated Financial Results Forecast"
Note 3: The provisional accounting procedures for corporate mergers were defined in the first and third three-month periods of the current fiscal year. These provisional accounting measures have also been applied for values for the fiscal year ended June 30, 2019. In conjunction with these measures, year-on- year change ratios have been calculated with adjusted values.
- 1 -
* Notes
- There have been no changes in material subsidiaries during the term.
- Changes in accounting policies, changes in accounting estimates, restatement
[1] | Changes in accounting policies required by IFRS | : Yes |
[2] | Changes in accounting policies other than [1] | : No |
[3] | Changes in accounting estimates | : Yes |
(Note) For details, refer to "1. Condensed Consolidated Financial Statements and Significant Notes (5) Notes to the Condensed Consolidated Financial Statements 2. Significant Accounting Policies 4. Changes in Accouting Estimates" on Page 14.
- Number of shares issued (common stock)
- Number of shares issued at the end of the period (including treasury stock)
- Treasury shares at the end of the period
- Average shares during the period
As of June 30, 2020 | 134,239,870 | As of September 30, 2019 | 134,239,870 |
As of June 30, 2020 | 1,312,669 | As of September 30, 2019 | 74,441 |
As of June 30, 2020 | 134,052,823 | As of June 30, 2019 | 128,562,877 |
- This consolidated financial report is not subject to quarterly review procedures.
- Regarding appropriate use of result forecasts and other notes
- LIFULL also holds briefings as appropriate for individual investors. Please refer to the LIFULL IR website for more details. (https://lifull.com/en/ir/)
- 2 -
(Appendix) | ||
Contents | ||
Condensed Consolidated Statements of Profit or Loss and Condensed | ||
- 3 -
1. Condensed Consolidated Financial Statements and Significant Notes
(1)Condensed Consolidated Statements of Financial Position
(Thousands of yen) | |
As of | As of |
September 30, 2019 | June 30, 2020 |
Assets
Current assets
Cash and cash equivalents
Accounts receivable-trade and other current receivables
Other short-term financial assets Other current assets
Total current assets
9,239,027 | 15,233,745 |
5,494,381 | 4,440,504 |
281,916 | 246,002 |
1,139,444 | 2,145,508 |
16,154,769 | 22,065,761 |
Non-current assets
Tangible fixed assets Right-of-use assets Goodwill Intangible assets
Investments accounted for using the equity method
Other long-term financial assets Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
1,706,743 | 1,873,627 |
- | 4,700,007 |
19,857,589 | 20,317,625 |
2,464,202 | 2,156,625 |
671,210 | 535,272 |
1,843,408 | 2,058,697 |
962,652 | 893,218 |
12,047 | 15,208 |
27,517,855 | 32,550,283 |
43,672,624 | 54,616,044 |
- 4 -
(Thousands of yen) | |||
As of | As of | ||
September 30, 2019 | June 30, 2020 | ||
Liabilities and equity | |||
Liabilities | |||
Current liabilities | |||
Accounts payable and other current payables | 3,630,173 | 2,413,737 | |
Short-term loans | 3,300,000 | 8,300,020 | |
Lease liabilities | 5,201 | 840,784 | |
Accrued corporate income taxes | 687,308 | 775,975 | |
Provisions | - | 50,293 | |
Other current liabilities | 1,863,096 | 1,666,567 | |
Total current liabilities | 9,485,780 | 14,047,378 | |
Non-current liabilities | |||
Long-term loans | 258,300 | 843,235 | |
Lease liabilities | 75,398 | 3,933,833 | |
Provisions | 560,589 | 510,572 | |
Deferred tax liabilities | 650,189 | 587,704 | |
Other non-current liabilities | 14,882 | 50,216 | |
Total non-current liabilities | 1,559,359 | 5,925,562 | |
Total liabilities | 11,045,140 | 19,972,941 | |
Equity | |||
Attributable to the owners of the parent | |||
Capital stock | 9,716,363 | 9,716,363 | |
Capital surplus | 9,922,432 | 9,935,742 | |
Retained earnings | 16,086,854 | 18,004,631 | |
Treasury shares | (9,114) | (531,478) | |
Other components of equity | (3,165,034) | (2,576,674) | |
Attributable to the owners of the parent | 32,551,501 | 34,548,584 | |
Attributable to non-controlling interests | 75,982 | 94,518 | |
Total equity | 32,627,484 | 34,643,103 | |
Total liabilities and equity | 43,672,624 | 54,616,044 | |
- 5 -
-
Condensed Consolidated Statements of Profit or Loss and Condensed Consolidated Statements of Comprehensive Income
Condensed Consolidated Statements of Profit or Loss For the Nine-month Period Ended June 30, 2020
(Thousands of yen) | |||
Nine-month Period | Nine-month Period | ||
Ended June 30, 2019 | Ended June 30, 2020 | ||
Revenue | 29,352,758 | 26,892,309 | |
Cost of revenue | 3,342,045 | 3,143,453 | |
Gross profit | 26,010,712 | 23,748,856 | |
Selling, general and administrative expenses | 22,728,550 | 20,074,208 | |
Other revenue | 574,037 | 116,748 | |
Other expenses | 472,513 | 104,627 | |
Operating income | 3,383,686 | 3,686,769 | |
Financial revenue | 4,344 | 1,604 | |
Financial expenses | 27,510 | 75,689 | |
Share of profit (loss) of investments accounted for | (210,512) | (167,413) | |
using the equity method | |||
Profit before taxes | 3,150,008 | 3,445,271 | |
Income tax expenses | 1,147,264 | 1,118,724 | |
Profit for the period | 2,002,743 | 2,326,547 | |
Profit (loss) for the period attributable to: | |||
Owners of the parent | 2,036,031 | 2,323,861 | |
Non-controlling interests | (33,287) | 2,685 | |
Total | 2,002,743 | 2,326,547 | |
(yen) | |||
Profit for the period per share attributable to owners | |||
of the parent | |||
Basic profit for the period per share | 15.84 | 17.34 | |
Diluted profit for the period per share | - | - | |
- 6 -
For the Three-month Period Ended June 30, 2020
(Thousands of yen) | |||
Three-month Period | Three-month Period | ||
Ended June 30, 2019 | Ended June 30, 2020 | ||
Revenue | 9,753,221 | 7,706,988 | |
Cost of revenue | 1,035,432 | 869,359 | |
Gross profit | 8,717,788 | 6,837,629 | |
Selling, general and administrative expenses | 7,062,746 | 5,651,993 | |
Other revenue | 44,631 | 96,684 | |
Other expenses | 35,454 | 33,796 | |
Operating income | 1,664,219 | 1,248,523 | |
Financial revenue | 1,201 | 0 | |
Financial expenses | 5,384 | 28,851 | |
Share of profit (loss) of investments accounted for | (48,573) | (54,105) | |
using the equity method | |||
Profit before taxes | 1,611,463 | 1,165,566 | |
Income tax expenses | 543,710 | 317,172 | |
Profit for the period | 1,067,752 | 848,394 | |
Profit (loss) for the period attributable to: | |||
Owners of the parent | 1,073,685 | 846,993 | |
Non-controlling interests | (5,932) | 1,400 | |
Total | 1,067,752 | 848,394 | |
(yen) | |||
Profit for the period per share attributable to owners of | |||
the parent | |||
Basic profit for the period per share | 8.00 | 6.33 | |
Diluted profit for the period per share | - | - | |
- 7 -
Condensed Consolidated Statements of Comprehensive Income
For the Nine-month Period Ended June 30, 2020
(Thousands of yen) | ||
Nine-month Period | Nine-month Period | |
Ended June 30, 2019 | Ended June 30, 2020 | |
Profit for the period | 2,002,743 | 2,326,547 |
Other comprehensive income | ||
Items that will not be reclassified to profit or loss: | ||
Equity instruments measured at FVTOCI | (15,008) | 230,260 |
Total of items that will not be reclassified to profit or loss | (15,008) | 230,260 |
Items that may be reclassified subsequently to profit or | ||
loss: | ||
Exchange differences on translation of foreign | (1,385,157) | 546,329 |
operations | ||
Share of other comprehensive income of investments | (12,469) | (3,944) |
accounted for using the equity method | ||
Total of items that may be reclassified subsequently to profit or loss
Other comprehensive income, net of tax
Total comprehensive income for the period
(1,397,627)542,384
(1,412,635)772,645
590,1083,099,192
Comprehensive income for the period attributable to: | ||
Owners of the parent | 623,546 | 3,096,464 |
Non-controlling interests | (33,438) | 2,727 |
Total | 590,108 | 3,099,192 |
- 8 -
For the Three-month Period Ended June 30, 2020
(Thousands of yen) | ||
Three-month Period | Three-month Period | |
Ended June 30, 2019 | Ended June 30, 2020 | |
Profit for the period | 1,067,752 | 848,394 |
Other comprehensive income | ||
Items that will not be reclassified to profit or loss: | ||
Equity instruments measured at FVTOCI | (11,122) | (1,137) |
Total of items that will not be reclassified to profit or loss | (11,122) | (1,137) |
Items that may be reclassified subsequently to profit or | ||
loss: | ||
Exchange differences on translation of foreign | (482,059) | 517,147 |
operations | ||
Share of other comprehensive income of investments | (12,300) | (14,570) |
accounted for using the equity method | ||
Total of items that may be reclassified subsequently to profit or loss
Other comprehensive income, net of tax
Total comprehensive income for the period
(494,359)502,577
(505,481)501,439
562,2701,349,833
Comprehensive income for the period attributable to: | ||
Owners of the parent | 568,319 | 1,348,297 |
Non-controlling interests | (6,048) | 1,536 |
Total | 562,270 | 1,349,833 |
- 9 -
(3) Condensed Consolidated Statements of Changes in Equity
For the Nine-month Period Ended June 30, 2019 (October 1, 2018 to June 30, 2019)
(Thousands of yen)
Other | Equity | |||||||
attributable | Non- | Total | ||||||
Capital | Capital | Retained | Treasury | components | ||||
stock | surplus | earnings | shares | the of | to the | controlling | shareholder | |
owners of | interests | s' equity | ||||||
equity | ||||||||
the parent | ||||||||
Balance as of October 1, 2018 | 3,999,578 | 4,256,942 | 14,394,920 | (8,694) | (761,446) | 21,881,301 | 115,025 | 21,996,326 |
Profit for the period | - | - | 2,036,031 | - | - | 2,036,031 | (33,287) | 2,002,743 |
Other comprehensive income | - | - | - | - | (1,412,484) | (1,412,484) | (150) | (1,412,635) |
Total comprehensive income | - | - | 2,036,031 | - | (1,412,484) | 623,546 | (33,438) | 590,108 |
for the period | ||||||||
New stock issues | 5,716,784 | 5,687,694 | - | - | - | 11,404,479 | - | 11,404,479 |
Dividends of surplus | - | - | (714,666) | - | - | (714,666) | (507) | (715,173) |
Purchase of treasury shares | - | - | - | (390) | - | (390) | - | (390) |
Capital transaction with | - | 3,154 | - | - | - | 3,154 | (5,045) | (1,891) |
owners of non-controlling | ||||||||
interests | ||||||||
Increase (decrease) | - | - | 125 | - | - | 125 | (125) | - |
attributable to consolidation | ||||||||
Total transactions with owners | 5,716,784 | 5,690,849 | (714,541) | (390) | - | 10,692,701 | (5,678) | 10,687,023 |
Balance as of June 30, 2019 | 9,716,363 | 9,947,792 | 15,716,410 | (9,085) | (2,173,930) | 33,197,549 | 75,908 | 33,273,458 |
For the Nine-month Period Ended June 30, 2020 (October 1, 2019 to June 30, 2020)
(Thousands of yen)
Equity | ||||||||
Capital | Capital | Retained | Treasury | Other | attributable | Non- | Total | |
components | to the | controlling | shareholder | |||||
stock | surplus | earnings | shares | of equity | owners of | interests | s' equity | |
the parent | ||||||||
Balance as of October 1, 2019 | 9,716,363 | 9,922,432 | 16,086,854 | (9,114) | (3,165,034) | 32,551,501 | 75,982 | 32,627,484 |
Profit for the period | - | - | 2,323,861 | - | - | 2,323,861 | 2,685 | 2,326,547 |
Other comprehensive income | - | - | - | - | 772,603 | 772,603 | 42 | 772,645 |
Total comprehensive income | - | - | 2,323,861 | - | 772,603 | 3,096,464 | 2,727 | 3,099,192 |
for the period | ||||||||
Transfer to retained earnings | - | - | 184,243 | - | (184,243) | - | - | - |
Dividends of surplus | - | - | (590,327) | - | - | (590,327) | (1,209) | (591,537) |
Purchase of treasury shares | - | - | - | (522,363) | - | (522,363) | - | (522,363) |
Increases attributable to | - | - | - | - | - | - | 1,000 | 1,000 |
mergers | ||||||||
Capital transactions with | - | 13,309 | - | - | - | 13,309 | 16,690 | 30,000 |
owners of non-controlling | ||||||||
interests | ||||||||
Increase (decrease) | - | - | - | - | - | - | (672) | (672) |
attributable to consolidation | ||||||||
Total transactions with owners | - | 13,309 | (406,084) | (522,363) | (184,243) | (1,099,381) | 15,808 | (1,083,573) |
Balance as of June 30, 2020 | 9,716,363 | 9,935,742 | 18,004,631 | (531,478) | (2,576,674) | 34,548,584 | 94,518 | 34,643,103 |
- 10 -
(4) Condensed Consolidated Statements of Cash Flows
(Thousands of yen) | |
Nine-month Period | Nine-month Period |
Ended June 30, 2019 | Ended June 30, 2020 |
Net cash from operating activities
Profit for the period before tax
Depreciation and amortization
Impairment loss
Financial revenue
Financial expenses
Decrease (increase) in accounts receivable-trade and other current receivables
Increase (decrease) in accounts payable-trade and other current payables
Other
Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Net cash from operating activities
Net cash used in investing activities
Purchase of financial instrument assets
Purchase of financial instrument assets
Purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets
Purchase of intangible assets
Purchase of subsidiaries
Proceeds from sales of shares in subsidiaries Purchase of shares of affiliates Payments of loans receivable
Collection of loans receivable
Other
Net cash from investing activities
Net cash provided by (used in) financing activities
Proceeds from short-term loans payable
Proceeds from long-term loans payable
Repayment of short-term loans
Repayment of long-term loans
Dividends paid
Repayment of lease obligations
Dividends paid for non-controlling interests
Purchase of shares in subsidiary interests from non- controlling interests
Proceeds from payment of non-controlling interests Purchase of treasury shares
Deposit for repurchase of treasury shares
Other
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
- 11 -
3,150,008 | 3,445,271 |
891,981 | 1,507,032 |
298,071 | - |
(4,344) | (1,604) |
27,510 | 75,689 |
(201,493) | 1,180,799 |
(315,001) | (1,331,056) |
(429,736) | (358,799) |
3,416,995 | 4,517,331 |
1,763 | 16,778 |
(14,905) | (73,919) |
(2,104,052) | (1,289,965) |
1,299,800 | 3,170,225 |
(93,920) | (68,802) |
- | 505,127 |
(141,013) | (480,780) |
377 | 1,113 |
(254,374) | (234,562) |
(1,645,463) | - |
473,216 | - |
(70,000) | - |
(773,492) | (727,500) |
258,947 | 468,715 |
(86,793) | (1,495) |
(2,332,515) | (538,184) |
3,600,000 | 7,230,000 |
- | 2,168,300 |
(200,000) | (3,230,000) |
- | (583,345) |
(714,016) | (590,226) |
(3,068) | (670,855) |
(507) | (1,881) |
(1,891) | - |
- | 31,000 |
(390) | (522,363) |
- | (497,693) |
(42,074) | - |
2,638,050 | 3,332,934 |
(263,831) | 29,742 |
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period
1,341,5045,994,717
7,571,3129,239,027
8,912,81715,233,745
- 12 -
(5) Notes to the Consolidated Financial Statements
- Note Regarding Going Concern Assumption Not applicable.
- Significant Accounting Policies
The significant accounting policies applied by the Group in preparing these statements are the same as those applied to Consolidated Financial Statements for the fiscal year ended September 30, 2019, except for the following:
The Group has adopted the IFRS standards and interpretation guidelines described below from the first three- month period of the current fiscal year:
Date of initial application | The Group is to | |||
Standard | Category | (Start of reporting | implement application | Additions/Revisions |
period with application) | beginning from | |||
IFRS 16 | Leases | January 1, 2019 | Fiscal year ending | Accounting procedures regarding |
September 30, 2020 | leases and disclosure requirements | |||
- Adoption of IFRS 16, Leases
In accordance with the transitional provisions of IFRS 16, Leases (hereinafter, IFRS 16), the Group has made adjustments by recognizing the cumulative effect as an adjustment to the beginning balance of retained earnings as of the date of initial application. Accordingly, no adjustment or restatement has been made to the condensed quarterly consolidated financial statements for the second quarter of the prior consolidated fiscal year or the condensed quarterly consolidated statements of financial position as of the end of the prior consolidated fiscal year.
IFRS 16 "Leases" does not require that a lessee's leases be classified as either finance or operating leases, but rather that a single accounting model be introduced in which right-to-use assets and lease liabilities (obligation to pay rent) are recognized for all leases. While lease payments for operating leases are recorded as rental payments under IAS 17, Leases, under IFRS 16 they are recorded as depreciation of right-of-use assets and interest expenses for lease liabilities.
The Group has adopted a practical expedient which does not require a review of whether an agreement is or includes a lease in adopting IFRS 16. Because of this, IFRS 16 is applied to agreements that have been identified as leases up to now, and is not applied to agreements that have not been identified as leases by means of applying IAS 17 and IFRIC 4, Determining Whether an Arrangement Contains a Lease. Consequently, identification of leases based on IFRS 16 is only applied to any agreement entered into or revised on or after the adoption start date.
In addition to the above, the Group has adopted the following practical expedients among those in the transitional measures. Whether or not these practical expedients are applied is determined based on each lease: - Allowing a lessee to rely on an appraisal to determine whether an agreement is onerous according to IAS 37, Provisions, Contingent Liabilities and Contingent Assets on the adoption start date, instead of performing an impairment review of the right-of-use asset
- Allowing a lessee to exclude initial direct costs from measurement of right-of-use assets as of the date of application
- Where an agreement includes an option to extend or terminate a lease, allowing a lessee to use after-the- fact determination when the lessee assesses a lease term
As a result of the transition to IFRS 16, as of the date of application, mainly right-of-use assets and lease liabilities included in interest-bearing debt, increased by 6,039,810 thousand yen and 6,063,585 thousand yen, respectively, and accrued expenses included for other liabilities decreased by 23,775 thousand yen.
Right-of-use assets are measured at the amount of lease liabilities adjusted using prepaid and accrued lease payments
Lease liabilities are measured at the present value for which lease payments unpaid as of the date of application are discounted using the lessee's incremental borrowing rate for the Group on that date. The weighted average of the lessee's incremental borrowing rate applied to the lease liabilities is 1.18%. The following table shows adjustments between the amount discounted using the lessee's incremental borrowing rate on the date of application with regard to the discount on future minimum lease payments under operating leases disclosed by adopting IAS 17 at the end of the previous fiscal year and the amount of lease liabilities recognized on the Consolidated Statement of Financial Position on the date of application.
- 13 -
(Thousands of yen) | ||
Undiscounted future minimum lease payments under operating leases | ||
5,213,920 | ||
as of September 30, 2019 | ||
Discount on future minimum lease payments under operating leases described above | (320,079) | |
Discounted future minimum lease payments under operating leases on October 1, 2019 | 4,893,840 | |
Leases classified as finance leases | 80,600 | |
Adjustments due to the reassessment of lease terms | 1,252,711 | |
Adjustments for other reasons | (82,965) | |
Lease liabilities as of October 1, 2019 | 6,144,185 | |
- Significant accounting policies that have changed by adopting new standards and interpretations
The Group determines at the start of an agreement whether the agreement constitutes a lease or if it includes any leases. On the start date or revaluation date of an agreement that includes a lease, the consideration of an agreement is allocated to each lease component based on the proportion to the total uncontrolled price of lease components and non-lease components. In addition, the lease term is the combination of a non- cancellable period of the lease, the period subject to an extension option that is reasonably certain to be exercised and the period subject to a termination option that is reasonably certain not to be exercised.
(Lessee side) - Lease transactions for intangible assets
The Group has not adopted IFRS 16 for lease transactions for intangible assets. - Right-of-useassets
The Group recognizes right-of-use assets on the lease commencement date. Right-of-use assets are measured on a historical cost basis on the commencement date. The historical costs comprise the sum of initially measured amount of lease liabilities, lease payments made at or before the lease commencement date less lease incentives received, initial direct costs incurred by the lessee, and estimates of costs to be incurred by the lessee in dismantling and removing the underlying assets, restoring the site on which the underlying assets are located or restoring the underlying assets to the condition required by the terms and conditions of the agreement.
The Group adopts a cost model after the commencement date and the right-of-use assets are measured by deducting accumulated depreciation and accumulated impairment loss from the historical costs. The Group depreciates the right-of-use assets from the commencement date to the earlier of the end of the useful life of the underlying assets or the end of the lease term, unless it is reasonably certain that the ownership of the underlying assets will be transferred to the Group at the end of the lease term. The useful life of the right-of-use assets is determined in the same manner as property and equipment. - Lease liabilities
The Group recognizes lease liabilities on the lease commencement date. The lease liabilities are measured at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee's incremental borrowing rate. The lease payments included in the measurement of the lease liabilities comprise mainly fixed lease payments, the lease payment for the extension period if the Group is reasonably certain to exercise its extension option, and payments of penalties for terminating the lease unless it is reasonably certain that there will be no early termination.
After the commencement date, the Group measures the lease liabilities by increasing or decreasing the carrying amount to reflect interest on the lease liabilities and the lease payments made. The Group re- measures the lease liabilities and corrects the right-of-use assets to reflect any reassessment of the lease liabilities or lease modifications.
- Lease transactions for intangible assets
3. Important Accounting Estimates and Decisions
In the preparation of these financial statements, the management has applied accounting policies; made decisions that affect the reported amounts of assets, liabilities, earnings, and expenses and made estimates and assumptions for the future. The results of these accounting estimates may differ from actual results.
Assumptions forming the basis for estimates are reviewed continuously. The impact of revising accounting estimates is recognized in the fiscal year in which such estimates are revised as well as in future years. Important accounting estimates and decisions made for these financial statements are the same as in the fiscal year ended September 30, 2019, with the exception of the following:
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Impairment of Goodwill
The effects of the of the novel coronavirus COVID-19 pandemic on stock prices around the world, lower needs for moving house and lower revenue due to real estate businesses' temporary suspension of advertising have affected the recoverable amount of some assets.
For these reasons, the Company has revised its business plans for the third quarter of the current fiscal year and reviewed its assets. However, none of the recoverable amounts were lower than the respective book values, and no impairment has been recognized. The Group bases its assumptions on the prediction that the negative effects on revenue from COVID-19 will continue until the end of September 2020 after which recovery will begin.
However, there is a possibility of impairment of assets should the current situation continue longer than expected.
4. Changes in Accounting Estimates
(Changes in Lease Conditions)
The Company and its subsidiaries have resolved to terminate a portion of its office leases. As a result, lease liabilities have been recalculated and the book balance for right-of-use assets have been adjusted according to this change at the end of the current three-month period.
Right-of-use assets and lease liabilities have, thus, been reduced by 795,125 thousand yen and 795,125 thousand yen respectively as of the end of the current three-month period.
5. Corporate Mergers
Definition of Provisional Measures Relating to the Treatment of Corporate Mergers
(Mitula Group Limited)
Concerning the corporate merger of Mitula as of January 8, 2019, although provisional accounting measures were taken during the previous consolidated fiscal year, these have been defined for the three-month period of the current consolidated fiscal year. With the definition of the provisional accounting measures, information for comparison included in the quarterly consolidated financial statements of the first three-month period of the current consolidated fiscal year have been altered to reflect the important changes in the distribution of acquisition costs.
As a result of the definition of the accounting procedures, the goodwill amount calculated at 9,099,075 thousand yen has been reduced by 340,668 thousand yen to 8,758,407 thousand yen. The reduction of goodwill is a result of the increase of 440,869 thousand yen in intangible assets and the increase of 100,201 thousand yen in deferred tax
liabilities.
The following table has been adjusted to the amounts after definition.
Recognized amount of acquired assets and liabilities succeeded on the day of the business combination
(Thousands of yen) | |
Consideration for acquisition | |
Common shares and cash of the Company | 13,786,004 |
Assets acquired and liabilities assumed | 1,836,197 |
Cash and cash equivalents | 691,740 |
Accounts receivable-trade and other current receivables | |
67,858 | |
Property, plant and equipment | |
Intangible assets | 3,307,355 |
Other assets | 61,653 |
Accounts payable and other current payables | (496,737) |
Other liabilities | |
(440,468) | |
Total | 5,027,597 |
Goodwill1, 2 | 8,758,407 |
Note 1: Goodwill mainly includes existing businesses that are expected to be generated from the acquisition, synergies, and excess earnings strength, each of which does not meet the requirements for recognition.
Note 2: For goodwill, no deductible expenses for tax purposes are included.
In addition, as a result of the definition of provisional accounting measures, goodwill amounting to 316,579 thousand yen as of the ending of the previous consolidated fiscal year has decreased while intangible assets amounting to 481,017 thousand yen and deferred tax labilities amounting to 118,441 thousand yen have increased.
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(Resem Corporation Limited)
Although provisional account procedures were used for the consolidation of Resem Corporation Limited on May 21, 2019, these measures have been defined in the third quarter of the current accounting period. With the definition of the provisional accounting procedures, significant revisions have been made to allocation of acquisition costs included in the third quarter financial statements.
As a result of the definition of the accounting procedures, the goodwill amount calculated at 980,867 thousand yen has been reduced by 72,382 thousand yen to 908,484 thousand yen. The reduction of goodwill is a result of the increase of 100,392 thousand yen in intangible assets and the increase of 28,009 thousand yen in deferred tax liabilities.
The following table has been adjusted to the amounts after definition.
Recognized amount of acquired assets and liabilities succeeded on the day of the business combination
(Thousands of yen) | |
Consideration for acquisition | |
Common shares and cash of the Company | 1,158,837 |
Assets acquired and liabilities assumed | 29,611 |
Cash and cash equivalents | 45,269 |
Accounts receivable-trade and other current receivables | 1,435 |
Property, plant and equipment | 333,310 |
Intangible assets | |
2,773 | |
Other assets | |
Accounts payable and other current payables | (47,614) |
Other liabilities | |
(114,433) | |
Total | 250,352 |
Goodwill1, 2 | 908,484 |
Note 1: Goodwill mainly includes existing businesses that are expected to be generated from the acquisition, synergies, and excess earnings strength, each of which does not meet the requirements for recognition.
Note 2: For goodwill, no deductible expenses for tax purposes are included.
In addition, as a result of the definition of provisional accounting measures, goodwill amounting to 70,171 thousand yen as of the ending of the previous consolidated fiscal period has decreased while intangible assets amounting to 94,375 thousand yen and deferred tax labilities amounting to 26,330 thousand yen have increased.
6. Subsequent events
(Business combination by acquisition)
At the Meeting of the Board of Directors held on July 20, 2020, LIFULL resolved to acquire all outstanding shares of Kenbiya Co., Ltd. making it a subsidiary as of July 31, 2020.
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Name of the acquired company and nature of its businesses Name of the acquired company: Kenbiya Corporation Limited
Primary Field of Business: Operation of the real estate investment and property information platform "Kenbiya" - Primary reason for the business combination
LIFULL and Kenbiya expect to build upon their investment property listings and client base, attract more users to both websites, increase revenue in the real estate investment sector, and ultimately accelerate their growth strategies by energizing the secondary real estate market.
- Date of acquisition July 31, 2020
- Acquisition method Cash acquisition
- Consideration for acquisition Cash 1,335,000 thousand yen
- Amounts and reasons for goodwill, assets and liabilities obtained on date of merger Not currently finalized
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Lifull Co. Ltd. published this content on 12 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2020 08:17:12 UTC