CHUGOKU MARINE PAINTS, LTD.
Consolidated Financial Statements
for the years ended March 31, 2023 and 2022
Independent Auditor's Report
The Board of Directors
CHUGOKU MARINE PAINTS, LTD.
Opinion
We have audited the accompanying consolidated financial statements of CHUGOKU MARINE PAINTS, LTD and its consolidated subsidiaries (the Group), which comprise the Consolidated balance sheet as at March 31, 2023, and the consolidated statements of income, comprehensive income, changes inequity, and cash flows for the year then ended, and notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters.
Determination of whether to recognize impairment losses on non-current assets used by Kobe Paints, Ltd.
Description of Key Audit Matter | Auditor's Response | |||
As of March 31, 2023, the Group recorded | We mainly performed the following audit | |||
property, plant and equipment and intangible | procedures to evaluate the estimate of total | |||
assets of ¥25,120 million in the consolidated | undiscounted future cash flows used in | |||
balance sheet, which includes land of ¥1,782 | determining whether to recognize impairment | |||
million and manufacturing facilities of ¥180 | losses on the asset group consisting of land and | |||
million being used by Kobe Paints, Ltd. | manufacturing facilities being used by Kobe | |||
("Kobe Paints"), a consolidated subsidiary, | Paints: | |||
which manufactures and sells marine paints. | We compared the estimation period for future | |||
As described in (Significant Accounting | cash flows with the remaining useful life of the | |||
Estimates) in Notes to Consolidated Financial | major assets to assess whether the estimation | |||
Statements, during the year ended March 31, | period is reasonable. | |||
2023, the Group determined that there is an | We reviewed the future cash flows to ensure | |||
indication that an asset group consisting of | ||||
that they are consistent with the business plan | ||||
land and manufacturing facilities being used | ||||
approved by the Board of Directors. | ||||
by Kobe Paints may be impaired as the | ||||
We compared past business plans with actual | ||||
market value of the asset group had declined | ||||
by approximately 50% from the carrying | results to assess the effectiveness of the | |||
amount. However, the Group did not | estimation process used by management in | |||
recognize any impairment losses as the total | formulating business plans. | |||
amount of undiscounted future cash flows | We made inquiries of management of the | |||
arising from operating activities of Kobe | Company and Kobe Paints regarding the | |||
Paints exceeded the carrying amount of the | predictions of sales volume and gross profit | |||
asset group. The estimates of future cash | margin in the business plan and also reviewed | |||
flows are based on a business plan prepared | the reports provided to the Board of Directors. | |||
by Kobe Paints which is approved by the | We compared the expected sales volumes with | |||
Company's Board of Directors and estimates | ||||
available external data on future projections of | ||||
for the period beyond that covered by the | marine cargo movement which is relevant to | |||
business plan are determined based on the | Kobe Paints' key products and performed trend | |||
growth rates which are estimated to the extent | analysis based on historical data. | |||
of the long-term average market growth rates. | To evaluate the gross profit margin forecasts, | |||
As described in (Significant Accounting | we conducted trend analysis based on past | |||
Estimates) in Notes to Consolidated Financial | results. | |||
Statements, the significant assumptions in the | For growth rates after the period covered by the | |||
estimation of future cash flows are | ||||
business plan, we compared the growth rates | ||||
predictions of sales volume and gross profit | ||||
with available | external | data | on future | |
margin in the business plan and the growth | ||||
projections of | the marine | cargo | movement | |
rate after the period covered by the business | ||||
which is relevant to Kobe Paints' key products | ||||
plan. | ||||
and performed trend analysis based on | ||||
The above assumptions in the estimation of | historical data. | |||
future cash flows require management | ||||
judgment and involve uncertainty since |
estimates of sales volume in particular are affected by future marine cargo movement and accompanying fluctuations in tonnage. Accordingly, we have determined that the determination of whether to recognize impairment losses on the asset group used by Kobe Paints is a key audit matter.
Other Information
The other information comprises the information included in the disclosure document that contains audited consolidated financial statements but does not include the consolidated financial statements and our auditor's report thereon.
We have concluded that the other information does not exist. Accordingly, we have not performed any work related to the other information.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern and disclosing, as required by accounting principles generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
- Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for our risk assessments, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on the effectiveness of the Group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation in accordance with accounting principles generally accepted in Japan.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statement that we have complied with the ethical requirements regarding independence that are relevant to our audit of the consolidated financial statements in Japan, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Corporate Auditor and the Board of Corporate Auditors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
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CMP - Chugoku Marine Paints Ltd. published this content on 08 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 August 2023 06:34:01 UTC.