Consolidated Financial Results for the Second Quarter Ended September 30, 2019
Asahi Holdings, Inc. [IFRS]October 29, 2019

Stock code:

5857

Shares listed:Tokyo Stock Exchange (First Section)

URL:
Representative

https://www.asahiholdings.com
Tomoya Higashiura, Representative Director and President
Kunihiko Chogo, General Manager, Corporate Planning &For further information please contact:

Communications Department(Phone) +81-3-6270-1833

Filing date of Quarterly Report:
Start of dividend payment:

November 13, 2019
November 22, 2019

Supplementary materials for the financial results:

Yes

Investor conference for the financial results:

Yes (for institutional investors, analysts)(Rounded down to the nearest million yen)

1. Results of the six months ended September 30, 2019 (From April 1, 2019 to September 30, 2019)(1) Results of operations (cumulative)(Percentage: Changes relative to corresponding previous period)
OperatingincomeProfit before
tax

Profit%Millions of yen %Millions of yen %Millions of yen %70,152 16.2
60,380 5.0

8,505 23.9
6,864 7.5

Revenue
The six months ended
September 30, 2019
September 30, 2018

Millions of yen

7,225
6,486

11.4
4.3

4,506
4,541

(0.8)
5.1

Basic earnings per share

Diluted earnings per shareYen
114.53114.84Yen
114.14114.62The six months ended
September 30, 2019
September 30, 2018

Profitattributable toowners of parent

Total
comprehensive
incomeMillions of yen %Millions of yen %

4,506
4,541

(0.8)
6.0

3,557 (15.6)
4,213 4.0

(2) Financial Position

As of
September 30, 2019
March 31, 2019

Total assets

Total equity

Equity attributable toowners of parent

Equity attributable toowners of parent ratio

Millions of yen
209,966
160,272

Millions of yen
69,03667,804

Millions of yen
69,03667,804

32.9
42.3

%

2. Dividend payments
Dividends per share

Year ended March 31, 2019Year ending March 31, 2020
Year ending March 31, 2020
(Forecast)First quarter

Second quarter

Third quarter

Year-end

Annual

Yen

Yen
60.00
60.00

Yen
－

Yen
60.00

Yen
120.00－60.00

120.00－－(Note) Revisions in dividend forecast in the current quarter: No

3. Forecast (From April 1, 2019 to March 31, 2020)(Percentage: Changes relative to corresponding previous period)
OperatingincomeRevenue
Millions of yen

Year ending March 31, 2020

135,000%

4.9%

Millions of yen

19,000

Profit before
tax

31.2

Millions of yen

16,800%25.3

Profit attributable
Basic earnings
toper shareowners of parent
Millions of yen%
Yen

10,20013.3

259.22(Note) Revisions in forecast in the current quarter: Yes
For details, please refer to “Notice on the Revision of Financial Forecasts and Changes in the Reporting Segment ”
made public on October 29, 2019.
* Notes(1) Changes in significant subsidiaries during the current quarter: No(2) Changes in accounting policies and accounting estimates(i)

Changes in accounting policies required by IFRS: Yes(ii) Changes other than (i) above: No(iii) Changes in accounting estimates: No
For details, please refer to page 11“2. Condensed Consolidated Financial Statements (7) Notes on Condensed
Consolidated Financial Statements (3.Changes in accounting policies)”.
(3) Number of issued shares (common stock)(i) Number of issued shares at the quarter end (including treasury shares)
As of September 30, 201939,854,344 shares

As of March 31, 201939,854,344 shares(ii) Number of treasury shares at the quarter end
As of September 30, 2019505,487 shares

As of March 31, 2019505,487 shares(iii) Averaged number of shares during the period (quarterly cumulative period)
Six months ended September 30, 201939,348,857 shares

Six months ended September 30, 2018

39,547,943 shares*The quarterly financial statements are not subject to quarterly reviews by accounting auditors.
(Notes on forward looking statements, etc.)
These forecast performance figures are based on the information currently available to the company’s
management and certain assumptions judged rational. Accordingly, these might be cases in which actual resultsmaterially differ from forecasts of this report. Please refer to page 3 “1. Qualitative Information (3) Consolidated
Performance Forecasts” for the assumptions used and other notes.

【Appendix】

Table of contents of the appendix
1. Qualitative Information ................................................................................................................................ 2(1) Consolidated Business Performance ........................................................................................................ 2(2) Consolidated Financial Position and Cash Flows for the six months ended September 30, 2019 ....... 2(3) Consolidated Performance Forecasts ....................................................................................................... 3
2. Condensed Consolidated Financial Statements........................................................................................... 4(1) Condensed Consolidated Statements of Financial Position ................................................................... 4(2) Condensed Consolidated Statements of Income for the six months ended September 30, 2019 ......... 6(3) Condensed Consolidated Statements of Comprehensive Income for the six months ended
September 30, 2019................................................................................................................................... 7(4) Condensed Consolidated Statements of Changes in Equity ................................................................... 8(5) Condensed Consolidated Statements of Cash Flows .............................................................................. 10(6) Notes on Assumptions for Going Concern ............................................................................................... 11(7) Notes on Condensed Consolidated Financial Statements ...................................................................... 11
1. Reporting entity ................................................................................................................................... 11
2. Basis of preparation ............................................................................................................................ 11
3. Changes in accounting policies ........................................................................................................... 11
4. Significant accounting estimates and associated judgments ............................................................ 12
5. Segment information ........................................................................................................................... 14
6. Subsequent events ............................................................................................................................... 15

－

1

－

1. Qualitative Information(1) Consolidated Business Performance
The Japanese economy continued to register moderate recovery during the second quarter of the current
fiscal year, backed by the improvement of employment and income environment. However, the opaquecondition of the economy remained due to concerns over the consumption tax hike in Japan and the U.S-China
trade conflict. Under these conditions, the group’s results in each business segment were as follows:
Precious Metals business
Revenue and operating income in the precious metal recycling business in Japan, South Korea andMalaysia increased from the same period in the previous year because of increase of collection volume andrising prices of precious metals. Revenue and operating income regarding precious metal refining business inNorth America expanded from the same period a year earlier due in part to increase of refining transactions
and expansion of financial trading. As a result, revenue and operating income in this segment exceeded thelevel during the same period in the previous year.
Environmental Preservation business
Revenue and operating income in this segment increased from the same period in the previous year on
account of the efforts to develop new business and reinforce coordination among group companies bycapitalizing on the strengths of each company.
Life & Health business
Revenue and operating income in this segment outpaced the level during the same period a year earlier as aresult of an expansion of the sales of various products prior to the consumption tax hike and solid results of
the air-conditioning equipment business. KOEIKOGYO CO., LTD., which specializes in fire-fighting
equipment works, was excluded from the list of consolidated subsidiaries in August.
As a result of the above, revenue during the second quarter of the current fiscal year was 70,152 million
yen, a year-on-year increase of 9,771 million yen (+16.2 percent). Operating income was 8,505 million yen, an
increase of 1,641 million yen (+23.9 percent) year-on-year. Profit before tax was 7,225 million yen, a year-onyear increase of 738 million yen (+11.4 percent). Profit was 4,506 million yen, a year-on-year decrease of 34
million yen (-0.8 percent). Profit attributable to owners of parent for the period was therefore 4,506 million
yen, an decrease of 34 million yen (-0.8 percent) year-on-year. By segment, revenue in the Precious Metal
business was 49,912 million yen, a year-on-year increase of 7,466 million yen (+17.6 percent). In theEnvironmental Preservation business, revenue was 9,043 million yen, and increase of 1,056 million yen (+13.2
percent) year-on-year. Revenue in the Life & Health business was 11,204 million yen, and increase of 1,227
million yen (+12.3 percent) year-on-year.

(2) Consolidated Financial Position and Cash Flows for the six months ended September 30, 2019
As of September 30, 2019, total assets amounted to 209,966 million yen, up 49,693 million yen from theprevious fiscal year end. This was due mainly to the decrease of 3,525 million yen in cash and cash
equivalents and the increase of 46,359 million yen in trade and other receivables and 5,536 million yen in
inventories and 1,636 million yen in property, plant and equipment.
Total liabilities amounted to 140,929 million yen, up 48,461 million yen from the previous fiscal year end.
This was due mainly to the decrease of 1,848 million yen in other current liabilities, the increase of 46,948
million yen in loans payable and the increase of 3,278 million yen in other financial liabilities.
Total equity amounted to 69,036 million yen, up 1,232 million yen from the previous fiscal year end. Thiswas due mainly to comprehensive income of 3,557 million yen and dividends of 2,360 million yen.
As a result, the equity attributable to owners of parent ratio changed to 32.9%, from 42.3% at the end of theprevious fiscal year.
Net cash used in operating activities amounted to 47,623 million yen due mainly to 47,704 million yen ofincrease in trade and other receivables .
Net cash used in investing activities amounted to 1,134 million yen due mainly to 1,352 million yen ofpurchase of property, plant and equipment.
Net cash provided by financial activities amounted to 45,396 million yen due mainly to 48,005 million yen of－2－

net increase in short-term loans payable.
As a result, cash and cash equivalents as of September 30, 2019 decrease 3,525 million yen from March 31,
2019, to 12,772 million yen.

(3) Consolidated Performance Forecasts
The financial forecasts for the fiscal year were revised in view of the fact that precious metal prices arehovering above the assumptions at the beginning of the fiscal year and the volume of precious metals collected
for recycling is expected to exceed the level planned at the beginning of the fiscal year, among other reasons.
In this revised forecast, operating income, profit before tax and profit attributable to owners of parent are all
projected to be record high.
Today, Asahi Holdings, Inc.(hereinafter the “Company”) signed a basic agreement on the share transfer ofFuji Medical Instruments Mfg. Co., Ltd. (hereinafter “Fuji”), its consolidated subsidiary. Fuji will be classified
as discontinued operations by the third quarter of the year ending March 2020 and scheduled to be excluded
from the list of consolidated subsidiaries by the fourth quarter of the year ending March 2020. The details areshown in the “Notice on the Conclusion of Basic Agreement on Share Transfer (Change regarding
Subsidiary)”, which was announced separately today.
In case the share transfer of Fuji is not realized, approx. 20 billion yen will be added to revenue, approx. 0.9
billion yen to operating income, approx. 0.9 billion yen to profit before tax and approx. 1.4 billion yen to profit
attributable to owners of parent respectively. The projected figures are as shown in (Ref.-2) below.
Also the Company’s business had earlier been composed of three reporting segments: “Precious Metals
Business,” “Environmental Preservation Business” and “Life & Health Business.” When the transfer of Fuji toan equity method affiliate goes ahead as scheduled, the Company will change its reporting segmentcomposition to comprise two segments of “Precious Metals Business” and “Environmental Preservation
Business” beginning in the third quarter of the fiscal year ending March 31, 2020.
For details, please refer to “Notice on the Revision of Financial Forecasts and Changes in the Reporting
Segment" and “Notice on the Conclusion of Basic Agreement on Share Transfer (Change regarding
Subsidiary)" made public on October 29, 2019.

Revision of the Consolidated Financial Forecasts for the fiscal year ending March 31, 2020
(April 1, 2019 to March 31, 2020）(Millions of yen, %)Revenue

OperatingincomeProfit before
tax

Profitattributableto owners ofparentBasic earnings
per share(yen)Previous Forecast (A)(Announced on May 8, 2019)

140,000

14,50014,3009,400

238.89

Revised Forecast (B)135,000

19,00016,800

10,200259.22

Change (B－A)△5,000

4,500

2,500

800

－

Change (%)

△3.6

31.0

17.5

8.5

－

128,669

14,47813,4059,000

228.14

155,000

19,90017,70011,600292.26(Ref.-1) Results for theprevious FY (FY ended March
31, 2019)(Ref.-2) In case Fuji isconsolidated (FY ending March
31, 2020)－

3－

2. Condensed Consolidated Financial Statements(1) Condensed Consolidated Statements of Financial Position
As ofMarch 31,
2019

As of
September 30,
2019

Millions ofyenMillions ofyen

ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables

16,297
66,48912,772
112,848

Inventories

25,19130,728

Income tax receivables
Other financial assets

1,515
389

290
93

Other current assets

3,906

4,509

Total current assets

113,790

161,241

36,08337,719

8,243
697

8,243
627

Deferred tax assets
Net defined benefit asset
Financial assets
Other non-current assets

873
47
498
39

1,612
－

Total non-current assets

46,482

48,724160,272

209,966

Non-current assets
Property, plant and equipment
Goodwill
Intangible assets

Total assets

－

4

－

481
40

As ofMarch 31,
2019

As of
September 30,
2019

Millions ofyenMillions ofyen

LIABILITIES and EQUITY
Liabilities
Current liabilities
Trade and other payables
Loans payable

17,16944,712

16,803
110,746

Income tax payable
Other financial liabilities

2,405
1,537

2,968
3,073

Provision

1,207

1,082

Other current liabilities

3,540

1,692

Total current liabilities

70,573

136,365

19,085－

Deferred tax liabilities

1,360

1,349

Net defined benefit liability
Other financial liabilities
Other non-current liabilities

157
1,291
－

166
3,034
13

Total non-current liabilities

21,895

4,563

Total liabilities

92,468140,929

EquityCapital stock
Capital surplus

7,790
10,353

7,790
10,388Treasury stock
Retained earnings
Other components of equity(955)
55,547(4,931)(955)
57,662(5,849)Total equity attributable to owners of parent

67,804

69,036

Total equity

67,804

69,036160,272

209,966

Non-current liabilities
Loans payable

Total liabilities and equity

－

5

－

(2) Condensed Consolidated Statements of Income for the six months ended September 30, 2019
The six months
ended September 30,
2018

The six months
ended September 30,
2019

Millions of yen

Millions of yen

Revenue

60,38070,152

Cost of sales(46,600)(54,438)

Gross profit
Selling, general and administrative expenses

13,779(6,909)15,714(7,188)Other operating income
Other operating expenses

146
(152)

90
(109)

Operating income
Finance income

6,864
35

8,505
8

Finance cost

(413)
－

(1,225)

Other non-operating income
Other non-operating expenses

－

77
(140)

Profit before tax

6,486

7,225

Income tax expenses(1,944)(2,718)

Profit

4,541

4,506

Profit attributable to:
Owners of parent
Non-controlling interests

4,541
－

4,506
－

4,541

4,506

114.84114.62114.53114.14

ProfitEarnings per share
Basic earnings per share (Yen)
Diluted earnings per share (Yen)

－

6

－

(3) Condensed Consolidated Statements of Comprehensive Income for the six months ended
September 30, 2019

ProfitThe six months
ended September 30,
2018

The six months
ended September 30,
2019

Millions of yen

Millions of yen

4,541

4,506

Financial assets measured at fair value through othercomprehensive income

(3)

(3)

Remeasurements of defined benefit plans

48

(34)

Total items that will not be reclassified to profit or loss

44

(38)

Cash flow hedges
Translation adjustments of foreign operations

(648)
275

(754)
(156)

Total items that will be reclassified to profit or loss

(372)

(910)

Other comprehensive income
Items that will not be reclassified to profit or loss

Items that will be reclassified to profit or loss

Other comprehensive income, net of tax

(327)

(948)

4,213

3,557

Owners of parent
Non-controlling interests

4,213
－

3,557
－

Comprehensive income

4,213

3,557

Comprehensive income
Comprehensive income attributable to:

－

7

－

(4) Condensed Consolidated Statements of Changes in Equity(Millions of yen)
Equity attributable to owners of parent

Capitalstock

Balance at April 1, 2018
ProfitOther comprehensive
incomeTotal comprehensive
incomePurchase of treasury stock
Disposal of treasury stock
Dividends
Reclassified from othercomponents of equity toretained earnings
Share-based paymenttransactions
Total transactions withownersBalance at September 30,
2018

CapitalsurplusTreasurystock

Retainedearnings

Other components ofequityTranslation
adjustments Cash flowof foreign
hedgesoperations

7,790
－

10,381－(386)－

50,282
4,541(3,624)
－

(34)
－

－

－

－

－

275

(648)

－

－

－

4,541

275

(648)

－

－

(744)

－

－

－

－
－

24
－

70
－

－
(1,306)

－
－

－
－

－

－

－

53

－

－

－

(52)

104

－

－

－

－

(27)

(568)

(1,253)

－

－

7,790

10,353(955)

53,570(3,348)(683)(Millions of yen)
Equity attributable to owners of parent
Other components of equity
FinancialassetsRemeasuremeasured atments offair value
definedthrough
benefitotherplanscomprehensive income
Balance at April 1, 2018
ProfitOther comprehensive
incomeTotal comprehensive
incomePurchase of treasury stock
Disposal of treasury stock
Dividends
Reclassified from othercomponents of equity toretained earnings
Share-based paymenttransactions
Total transactions withownersBalance at September 30,
2018

Total

Total

Total equity

27
－

－
－

(3,632)－64,4354,541

64,435
4,541

(3)

48

(327)

(327)

(327)

(3)

48

(327)

4,213

4,213

－
－
－

－
－
－

－
－
－

(744)
95
(1,306)(744)
95(1,306)

(4)

(48)

(53)

－

－

－

－

－

52

52

(4)

(48)

(53)

(1,903)(1,903)18－(4,013)66,74566,745－8－

(Millions of yen)
Equity attributable to owners of parent

CapitalsurplusCapitalstock

Balance at April 1, 2019
ProfitOther comprehensive
incomeTotal comprehensive
incomeDividends
Reclassified from othercomponents of equity toretained earnings
Share-based paymenttransactions
Total transactions withownersBalance at September 30,
2019

Treasurystock

Retainedearnings

Other components ofequityTranslation
adjustments Cash flowof foreign
hedgesoperations

7,790
－

10,353－(955)－

55,547
4,506(3,737)－(1,203)
－

－

－

－

－

(156)

(754)

－

－

－

4,506

(156)

(754)

－

－

－

(2,360)

－

－

－

－

－

(30)

－

－

－

35

－

－

－

－

－

35

－

(2,391)

－

－

7,790

10,388(955)

57,662(3,893)(1,957)(Millions of yen)
Equity attributable to owners of parent
Other components of equity
FinancialassetsRemeasuremeasured atments offair value
definedthrough
benefitotherplanscomprehensive income
Balance at April 1, 2019
ProfitOther comprehensive
incomeTotal comprehensive
incomeDividends
Reclassified from othercomponents of equity toretained earnings
Share-based paymenttransactions
Total transactions withownersBalance at September 30,
2019

Total

Total

Total equity

8
－

－
－

(4,931)－67,804
4,506

67,804
4,506

(3)

(34)

(948)

(948)

(948)

(3)

(34)

(948)

3,557

3,557

－

－

－

(2,360)(2,360)

(3)

34

30

－

－

－

－

－

35

35

(3)

34

30

(2,325)(2,325)1－(5,849)69,03669,036－9－

(5) Condensed Consolidated Statements of Cash FlowsThe six
months ended
September 30,
2018

The six
months ended
September 30,
2019

Millions of yen

Millions of yen

Net cash provided by (used in) operating activities
Profit before tax
Depreciation and amortization

6,486
1,163

7,225
1,448

Impairment loss
Finance income and finance cost

15
368
－

0
1,206

Decrease (increase) in inventories
Decrease (increase) in trade and other receivables

1,203(2,427)(5,889)(47,704)

Increase (decrease) in trade and other payables

(218)

969

Other, net

1,607(1,498)Subtotal

8,199(44,177)

Interest and dividends income received
Interest expenses paid
Income taxes paid
Income taxes refund

22
(419)
(4,191)1,364

8(1,067)(3,780)
1,394

4,975

(47,623)

Other non-operating income and expenses

Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Payments into time deposits

63

－

(95)

Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets(1,176)196(83)(1,352)
95(107)

Proceeds from sales and redemption of investments
Other, net

12
(14)

216
110

Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Proceeds from sales of treasury stock
Purchase of treasury stock
Cash dividends paid
Other, net(1,064)(1,134)

39
(135)
95
(744)
(1,306)(21)

48,005－－－(2,354)(254)

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents(2,073)
158

45,396(163)

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period

1,996
24,140(3,525)
16,297

Cash and cash equivalents at end of period

26,136

12,772－10－

(6) Notes on Assumptions for Going Concern
Not applicable(7) Notes on Condensed Consolidated Financial Statements
1. Reporting entity
Asahi Holdings, Inc.(hereinafter the “Company”) is a company located in Japan. The Company’s condensed
consolidated financial statements for the six months ended September 30, 2019 comprise the financial
statements of the Company as well as its subsidiaries (hereinafter the “Group”).
For the main activities of the Group, please refer to Note 5. “Segment information.”

2. Basis of preparation(1) Statement of compliance with IFRSThe condensed consolidated financial statements of the Group have been prepared based on IAS 34“Interim Financial Reporting.”
Having met the requirements for a Specified Company under the Designated International AccountingStandards, as prescribed in Article 1-2 of the Ordinance on the Terminology, Forms, and Preparation
Methods of Quarterly Consolidated Financial Statements (Cabinet Office Ordinance No. 64 of 2007), theGroup adopts the provisions of Article 93 of the aforementioned rules.
(2) Basis of measurement
The condensed consolidated financial statements of the Group have been prepared based on costs ofacquisition, except for the specified financial instruments that have been measured at fair value.
(3) Functional currency and presentation currency
The condensed consolidated financial statements of the Group are presented in Japanese yen, which isthe functional currency of the Company, and figures less than one million yen are rounded down to thenearest million yen.

3. Changes in accounting policies
The significant accounting policies adopted for the condensed consolidated financial statements are thesame as those for the consolidated financial statements for the fiscal year ended March 31, 2019, with the
exception of the items described below.
The income tax for the six months ended September 30, 2019 was calculated based on the estimated averageannual effective tax rate.
The Group adopted the standards shown below in the first quarterly consolidated accounting period.
IFRS
IFRS 16

Overview of new and revised items
Leases

Revision of accounting procedures on leases

The Group adopted IFRS 16 “Leases” (announced in January 2016, hereinafter referred to as “IFRS 16”)
in the first quarterly consolidated period.
IFRS 16, which replaces the former IAS 17 for lease transactions of the lessee, prescribes the eliminationof the classification between operating leases and finance leases and introduction of a single accounting
model to record assets and liabilities in relation to all important lease transactions.
As of the lease commencement date, right-of-use assets are measured at acquisition cost, and leaseliabilities are measured at the present value of remaining lease payments as of the lease commencement
date. When the ownership of the underlying asset is transferred to the Group prior to the termination of thelease period, or when the exercise of a purchase option is reflected in the acquisition price of the right-of-use
asset, the right-of-use asset is depreciated using the straight-line method based on its useful life. In othercases, right-of-use assets are depreciated using the straight-line method based on either the useful life or at
the termination of the lease period, whichever is shorter. Lease payments are apportioned between financecosts and repayment of lease obligations based on the interest method, and financial costs are recognized in
the consolidated statement of profit and loss.
－

11

－

The lease period is determined by adjusting the period subject to an option to extend or terminate the leasethat can be exercised with reasonable certainty during the non-cancelable period as set forth in the lease
contract. The rate used in calculating the present value of the lease payments is the interest rate implicit in
the lease or the lessee’s incremental borrowing rate.
Short-term leases with a lease term of 12 months or less and leases of low-value underlying assets arerecognized as expenses on either a straight-line basis or another systematic basis over the lease term for the
total lease payments.
The method adopted in the application of IFRS 16 is to recognize the cumulative effect of applying thisstandard at the date of initial application that is approved as an interim measure without retrospectively
adjusting the balance in the earlier reporting periods.
In transitioning to IFRS 16, the Company chose to adopt the practical expedient of succeeding the previous
assessment of which transactions constitute leases. IFRS 16 is applied only to contracts that were identified
as leases under the previous IAS 17 and IFRIC 4 and a review on whether the contracts correspond to leases
is not performed on contracts not previously identified as leases.
Consequently, the identification of leases based on IFRS 16 is applied solely to contracts that were signed
or changed after the initial date of application.
For leases that were classified as operating leases under IAS 17, lease liabilities on transition are initiallymeasured at the present value of the total remaining leases as of the date of transition, discounted at theincremental borrowing rate of the lessee. Right-of-use assets are recorded at the same value as leaseliabilities. The weighted-average for incremental borrowing rate of the lessee applied to lease liabilities
recognized in the summary quarterly consolidated financial statements as of the date of initial application
is 0.4%.
Also, the Company has used the practical expedients in the past as shown below prior to the applicationof IFRS 16 to leases classified as operating leases with the application of IAS 17:* Rely on an assessment of whether leases are onerous in accordance with IAS 37 “Provisions, Contingent
Liabilities and Contingent Assets” immediately before the date of initial application as an alternative toperforming an impairment review.
* Apply a single discount rate to a portfolio of leases with reasonably similar characteristics* Account for leases for which the lease term ends within 12 months of the date of initial application in thesame way as short-term leases* Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application* Use hindsight: e.g. in determining the lease term of the contract that contains options to extend or
terminate the lease.
The differential between the lease liabilities recognized on the day of initial application and total future
minimum lease payments on operating leases that cannot be terminated, disclosed by applying IAS 17, as ofthe end of the consolidated accounting year immediately before the date of initial application is 1,652 million
yen. A major reason behind this differential is a review of the lease period performed upon the application of
IFRS 16.
The carrying amount of right-of-use assets and lease liabilities as of April 1, 2019 for leases classified as
finance leases under IAS 17 is calculated at the carrying amount of lease assets and lease liabilities according
to IAS 17 as of the day immediately preceding the above date.
In transitioning to IFRS 16, the Company recorded 2,138 million yen, 507 million yen and 1,631 million
yen as Property, plant and equipment, other financial liabilities (current) and other financial liabilities (noncurrent), respectively, at the beginning of the period.
The impact of the transition on the quarterly profits and cash flow during the current second quarter
consolidated cumulative period remains minimal.

4. Significant accounting estimates and associated judgments
In preparing condensed consolidated financial statements, the management is required to make judgment,
estimates and assumptions that affect the adoption of accounting policies and the amounts of assets, liabilities,
revenues and expenses. Actual results may differ from such estimates.
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12

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The estimates and underlying assumptions are reviewed on an ongoing basis. The effect of a change inaccounting estimates is recognized as the accounting period in which such change occurs as well as theaccounting periods to be affected in the future.
The estimates and judgments made by the management that may have material impacts on the figures in
the condensed consolidated financial statements are the same as those for the consolidated financial
statements for the fiscal year ended March 31, 2019.

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5. Segment information(1) Overview of reporting segments
The Group’s reporting segments are those Group constituent units for which separate financial
information is obtainable, and which the Board of Directors subjects to regular examination in order todecide the allocation of management resources and evaluate business results.
As a pure holding company, the Company is in charge of overall strategic function for the Group, whereas
operating companies of the Group engage in the precious and rare metals recycling business and therefining and processing business, industrial waste management and other environmental preservation
business, and life & health business including manufacturing and selling of health equipment.
Therefore, the Group is composed of product and service segments based on business sectors. The threereporting segments are the Precious Metal Business, the Environmental Preservation Business, and theLife & Health Business. Meanwhile, these reporting segments are not be aggregated.
The Precious Metals Business engages mainly in recycling and selling of precious and rare metals suchas gold, silver, palladium, and platinum, as well as refining and processing of precious metals such as goldand silver. The main work of Environmental Preservation Business is the collection, transport andintermediate processing of industrial waste. In the Life & Health Business, the main work is the
manufacture and sales of massagers, hearing aids, and other health equipment, the manufacture and salesof electric heaters, the design and installation of radiant heating and air conditioning systems.
(2) Segment revenue and performance
Accounting policies of the reporting segments are the same as those of the Group stated in “Note 3.
Changes in accounting policies.”
Revenue and other performance of each reportable segment of the Group are as follows.
For the six months ended September 30, 2018 (from April 1, 2018 to September 30, 2018)(Millions of yen)
Reporting segment
Environmental
Preservation
Business

Life & HealthBusiness

42,445
－

7,959

9,976

27

0

Total

42,445

7,986

Operating income by businesssegment

6,495

1,441

Precious Metals
Business

Revenue
External revenue
Intersegment revenue

Total

Adjustment

Consolidated

60,380

－

27

(27)

60,380－9,976

60,408(27)

60,380254

8,191(1,327)

6,864

Finance income
Finance costs

35
(413)

Profit before tax

6,486(Note) 1. Intersegment transactions are based on prevailing market prices.
2. Adjustments of operating income by business segment are mainly corporate expenses that are notallocated to each reporting segment.

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For the six months ended September 30, 2019 (from April 1, 2019 to September 30, 2019)(Millions of yen)
Reporting segment
Precious Metals
Business

Environmental
Preservation
Business

Life & HealthBusiness

Total

Adjustment

Consolidated

Revenue
External revenue
Intersegment revenue
Total
Operating income by businesssegment

70,152－

7

11,204－7(7)

70,152－

49,912

9,043

11,20470,159(7)

70,152

7,241

1,714

698

9,654

(1,148)

8,505

49,912－

9,035

Finance income

8

Finance costs
Other non-operating income(1,225)
77

Other non-operating expenses(140)

Profit before tax

7,225(Note) 1. Intersegment transactions are based on prevailing market prices.
2. Adjustments of operating income by business segment are mainly corporate expenses that are notallocated to each reporting segment.

6. Subsequent events
This is to notify that Asahi Holdings, Inc. (hereinafter the “Company”), at the meeting of its Board of
Directors held October 29, 2019, resolved to execute the basic agreement (hereinafter “LOI”) to transfer 60%
of all the shares of Fuji, a consolidated subsidiary of the Company, to Johnson Health Tech Co., Ltd.
(hereinafter “Johnson Health Tech”), a company listed on the Taiwan Stock Exchange, and to enter into
negotiations towards the official share transfer agreement (hereinafter “Definitive Agreement”). Fuji isscheduled to become an equity method affiliate of the Company, which will own 40% of Fuji’s shares, after
share transfer.
Following the share transfer, Fuji will be classified as discontinued operations from the third quarter of theyear ending March 2020, and is expected to be excluded from the list of consolidated subsidiaries of theCompany from the fourth quarter of the year ending March 2020 due to loss of control. As for amount of its
financial impact on the Company’s consolidated performance for the year ending March 2020, following theclassification of Fuji as discontinued operations, revenue from ongoing operations is projected to drop byapprox. 20.0 billion yen and operating income by approx. 0.9 billion yen. The company is investigating theimpact due in part to corporate tax charges that accompany the sale of shares and the revaluation of shares inpossession.
The outline is as follows.
(1) Outline of subsidiary to transfer shares
Name

Fuji Medical Instruments Mfg. Co., Ltd.

Business content

Manufacture and sales of health equipment, etc.

Capital30 million yen

Major shareholder andshareholding ratio

Asahi Life & Health Corporation: 100%(2) Name of the transferee
Name

Johnson Health Tech. Co., Ltd.

Business content

Manufacture and sales of fitness equipment, etc.

Capital3,036 million New Taiwan dollars (10,626 million yen)

(Note): Calculated at 1 New Taiwan dollar = 3.5 yen
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(3) Number of shares transferred, value of share transfer and number of shares owned before and after transfer
Number of shares owned
300,000
before transfer(Ratio of voting rights held by the company: 100%)
Number of shares to be
180,000transferred(Ratio of voting rights held by the company: 60%)
Number of shares owned
120,000
after transfer(Ratio of voting rights held by the company: 40%)
Value of share transfer
6,700 million yen(Note): Value of share transfer will be finalized at Definitive Agreement.
(4) Schedule
Date of the conclusion of
LOI
Date of the conclusion ofDefinitive Agreement
Date of share transfer

October 29, 2019

Early December 2019 (scheduled)

Early February 2020 (scheduled)－16－