Mazda 2015 Annual Report Download - page 43

12. Financial Accounting
Including the fi nancial accounting factors set
out below, the Group’s operating results and
fi nancial position could be affected by fi nan-
cial accounting assessment of its assets and
liabilities as well as changes in or new appli-
cations of accounting standards.
(i) Deferred Tax Assets
Provided on deductible temporary differ-
ences, deferred tax assets are recorded by
assessing the likelihood of recovery based on
expectations of future taxable income.
However, the amount of deferred tax assets
could be reduced by, for example, the record-
ing of valuation allowances against deferred
tax assets in the event that they are judged to
be unrecoverable due to a deterioration in
business conditions or in the event of tax
reforms that include changes in tax rates.
This could adversely affect the Group’s busi-
ness results and fi nancial position.
(ii) Impairment of Long-Lived Assets
With regard to long-lived assets, should the car-
rying amount be considered to be unrecover-
able due, for example, to a deterioration in
business conditions, an impairment loss against
the carrying value of assets will be recorded.
This could adversely affect the Group’s busi-
ness results and fi nancial position.
(iii) Retirement Benefi ts
Liability for retirement benefi ts changes in
accordance with trends in retirement benefi t
obligations and pension assets. However, in
the event of changes being made to the actu-
arial prerequisites or of a deterioration in fair
value of plan assets caused by lower returns,
the Group’s business results and fi nancial
position could be adversely affected.
13. Changes in Financing Procurement Envi-
ronment and Interest Rate Fluctuations
In addition to loans from banks, the Group
has been raising funds by issuing its shares
and bonds. However, in the event of turmoil in
fi nancial market tax reforms, institutional
changes being made to government-affi liated
fi nancial organizations, or the downgrading
of the Group’s credit rating, the Group’s busi-
ness results and fi nancial position could be
adversely affected due to such factors as the
increased funding costs and the diffi culties
associated with raising money for the amount
of funds required. Moreover, factoring in the
effect of interest rate changes on the Group’s
interest-bearing debt, were the costs of fi nanc-
ing to increase due to a rise in interest rates,
the Group’s business results and fi nancial
position could also be adversely affected. In
the event that any deterioration in the
Group’s fi nancial standing were to infringe
the fi nancial covenants of some of the loans
and lead to the forfeiture of the benefi t of
time, the Group’s business results and fi nan-
cial position could be adversely affected.
14. Compliance and Reputation
Commencing with information security efforts
to protect personal information and confi den-
tial information, the Group has taken preven-
tive measures regarding compliance, such as
compliance with the law. In addition, in the
event of a compliance-related incident being
detected, the Group has a rapid response
system in place to prevent any impact on the
Group’s social credibility and reputation.
However, the Group cannot guarantee that
there is no possibility of a legal violation occur-
ring in the future. Should there be evidence of
an illegal act or should the rapidity and content
of the response prove insuffi cient, the Group’s
social credibility and reputation could be
harmed, and the Group’s business results and
fi nancial position could be adversely affected.
15. Forecasts
The Group formulated its “Structural Reform
Plan” and “Structural Reform Stage 2” in
order to respond to the change in external
environment and ensure future growth. In
implementing the plans, however, in the event
of external environment changes that differ
greatly from assumptions or progress not
being made according to plan, the expected
outcome would not be realized and the
Group’s business results and fi nancial posi-
tion could be adversely affected.
Mazda Annual Report 2015
41
C
CONTENTS
Growth Strategy
Message from Management
Introduction
Review of Operations
Foundations Underpinning
Sustainable Growth