Konica Minolta 2015 Annual Report Download - page 24

As of the end of June 2015, the Konica Minolta Group has
138 consolidated subsidiaries in approximately 50 countries
around the world. The ratio of sales overseas is approximately
80% and foreign investors own about 45% of the outstanding
shares. One of the biggest reasons for the voluntary adoption
of IFRS beginning from this term is to strengthen our ability to
disseminate information to investors in and outside of Japan
as a global company, and further increase the reliability of the
Group. By adopting IFRS, the only accounting standards
utilized uniformly worldwide, we are now able to disseminate
financial information in a way that is easy for foreign investors
to understand and have simplified the method utilized by
Japanese investors to make international comparisons.
Another reason for utilizing IFRS is to strengthen
governance. Until now, after our 138 global subsidiaries
settled their accounts using the accounting standards of their
respective countries, figures were consolidated by converting
items to be consistent with Japanese standards. From this
The IFRS require that an impairment test be conducted
annually—regardless of any indications of impairment—for the
purpose of reevaluating goodwill. In other words, any risk that
cannot be eliminated through regular amortization can
suddenly amount to a large impairment risk if the performance
of the company or business targeted deteriorates.
The Konica Minolta Group began strengthening the risk
management of investment projects such as M&As from an
early stage, doing so with the plan to significantly reduce
impairment risk by adopting IFRS. More specifically, in addition
to executing the functions of normal management, several
committees have been established. These include the
Investment Assessment Committee, Business Assessment
Committee and Risk Management Committee, which review
individual projects based on a multifaceted approach.
Basically, the Group assesses investment projects using
the net present value (NPV) index, which calculates the
current investment target value from the cash flow during the
investment period. We endeavor to prevent impairment from
occurring after M&As by further improving NPV through
synergies of the Konica Minolta Group.
Return on equity (ROE) is one of the indicators overseas
investors place the most importance on when choosing a
stock. For this very reason, we believe it is vital to boost our
ROE into the double digits at the earliest possible time;
especially considering that 45% of Konica Minolta Group
Message from the CFO
Pursuing efficient business management as a global
company to meet the expectations of our investors.
Ken Osuga, Director and Senior Executive Officer
Q 1.
What does Konica Minolta aim to achieve by
applying International Financial Reporting
Standards (IFRS) beginning from this term?
A1.
We are aiming to strengthen our ability to
disseminate information to investors and improve
governance transparency and fairness.
Q2. Konica Minolta is proactively involved in M&As, but
how do you intend to deal with impairment risk?
A2.
We will strengthen risk management for investment
projects and improve value by fully leveraging
Group synergies.
Q3.
A ROE of 10% has been established as one of the
targets of the Medium Term Business Plan. Please
explain the policies and strategies implemented to
achieve this?
A3.
Our focus is on increasing profit for the year, raising
employee awareness and moving forward with the
formulation of a code of conduct.
time onward, by utilizing a common accounting standard
throughout the Group including overseas subsidiaries, it is
believed we can improve the transparency and fairness of the
Group’s governance, making more appropriate, more efficient
capital allocation possible.
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KONICA MINOLTA, INC. Annual Report 2015
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