Dmg Mori Co., Ltd. TSE:6141
DMG Mori : Consolidated Financial Statements for the Fiscal Year 2024 ended December 31, 2024
Source: MarketScreener
Consolidated Financial Statements
DMG MORI CO., LTD.
Fiscal year ended 31 December 2024
with Independent Auditor's Report
DMG MORI CO., LTD. Consolidated Financial Statements
Fiscal year ended 31 December 2024
Contents
Consolidated Financial Statements
Independent Auditor's Report
Consolidated Statement of Financial Position ………………………………………………………………………………… 1
Consolidated Statement of Profit or Loss ……………………………………………………………………………………… 3
Consolidated Statement of Comprehensive Income ………………………………………………………………………… 4
Consolidated Statement of Changes in Equity ………………………………………………………………………………… 5
Consolidated Statement of Cash Flows ………………………………………………………………………………………… 8
Notes to Consolidated Financial Statements ………………………………………………………………………………… 10
Independent Auditor's Report
The Board of Directors
DMG MORI CO., LTD.
The Audit of the Consolidated Financial Statements
Opinion
We have audited the accompanying consolidated financial statements of DMG MORI CO., LTD. (the Company) and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2024, and the consolidated statements of profit or loss, comprehensive income, changes in equity, 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 December 31, 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards.
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.
Valuation of goodwill and other intangible assets with indefinite useful lives arising on business combination with DMG MORI AKTIEGESELLSCHAFT ("DMG MORI AG") | |
Description of Key Audit Matter | Auditor's Response |
As described in Note 11, "Goodwill and Other Intangible Assets," to the consolidated financial statements, the Company recorded goodwill of ¥89,951 million and other intangible assets with indefinite useful lives (mainly trademarks) of ¥42,756 million as of December 31, 2024, of which goodwill and other intangible assets with indefinite useful lives of ¥86,172 million and ¥42,756 million respectively that arose on the business combination with DMG MORI AG. The amount of forementioned goodwill and other intangible assets with indefinite useful lives represent 64.3% of total of goodwill and other intangible assets in the consolidated statement of financial position and 16.2% of total assets of the Group. The Company allocates the carrying amounts of goodwill and other intangible assets with indefinite useful lives arising on the business combination with DMG MORI AG to the group of cash generating units ("CGUs"), such as Machine Tools and Industrial Services, and performs impairment testing annually. The recoverable amount of goodwill and other intangible assets with indefinite useful lives is measured based on value in use of the CGU or group of CGUs to which they are allocated. As a result of the impairment test, the Company did not recognize an impairment loss for the year ended December 31, 2024 as the value in use exceeded the carrying amount. The value in use is calculated by discounting the estimated future cash flows based on the five-year business plan approved by management, using the pre-tax discount rate of 11.3%, considering the corresponding pre-tax WACC for similar industries and reflecting current market assessments of the time value of money and specific risks. For the period subsequent to the period covered by the business plan, the Company calculates the terminal value using 2.0% as the growth rate determined in consideration of the conditions of the country and industry to which the group of CGUs belongs. | The audit procedures we performed to assess the valuation of goodwill and other intangible assets with indefinite useful lives arose on the business combination with DMG MORI AG included the following, among others: ・We assessed the design and operating effectiveness of the Company's internal control for determining whether impairment loss should be recognized with regard to the valuation of goodwill and other intangible assets with indefinite useful lives. ・We compared the estimated future cash flows with the business plan approved by management to evaluate the consistency. ・We compared the Company's business plan for prior years with actual results to evaluate the effectiveness of management's estimation process. ・With the involvement of the valuation specialists from our network firm, we assessed the reasonableness of the valuation methodologies for value in use. ・We made inquiries with management about alternative assumptions and results to enhance our understanding of the degree of uncertainty with regard to management's estimate. ・We assessed the growth rate of sales revenues, which serves as the basis of the business plan, by making inquiries about the rationale for management determination, performing a trend analysis based on past performance, and conducting a comparison analysis and sensitivity analysis of the outcome with the growth rate. In addition, we conducted a comparison analysis involving the capital expenditure demand forecast in the machine tool market prepared by third parties with the growth rate. ・We assessed the operating profit ratio which serves as the basis of the business plan, by making inquiries about the rational for management determination and conducting a trend analysis based on past performance. |
The key assumptions used for the calculation of value in use are the growth rate of sales revenues, operating profit ratio incorporated in the business plan, the growth rate for the period subsequent to the period covered by the business plan and pre-tax discount rate used in the calculation of present value. The above key assumptions, such as the growth rate of sales revenues and the growth rate for the period subsequent to the period covered by the business plan tends to be affected significantly by any increase or decrease in capital expenditure demand in the machine tool market, and the operating profit ratio is affected by the aforementioned factor as well as rising costs due to inflation. Furthermore, the pre-tax discount rate is determined based on considerations to the future interest rate trend, along with selections regarding the calculation method and input data, and therefore a high level of expertise relating to the evaluation and significant judgments made by management are required. Therefore, we determined that the valuation of goodwill and other intangible assets with indefinite useful lives arising on business combination with DMG MORI AG to be a key audit matters due to its high level of uncertainly and subjective judgments by management. | ・With the involvement of valuation specialists from our network firm, we assessed the growth rates for the period subsequent to the period covered by the business plan and the pre-tax discount rate by evaluating the consistency of the inputs used in the calculations with publicly available data. In addition, we conducted a sensitivity analysis. |
Classification of Ulyanovsk Machine Tools ooo ("UMT") as discontinued operations and related accounting treatment due to expropriation of shares by Russian government | |
Description of Key Audit Matter | Auditor's Response |
As discussed in Note "32. Discontinued Operations" to the consolidated financial statements, on 19 February 2024, the shares of UMT were expropriated by the Russian government. The Group deemed it has lost control of UMT, and therefore excluded UMT from the scope of consolidation effective from the fiscal year 2024. As a result, the Company recognized a loss of ¥15,069 million on the expropriation of its shares in the consolidated statement of profit or loss, including a reclassification adjustment of ¥4,262 million from the cumulative effect of the exchange differences on translation of foreign operations to | The audit procedures we performed, involving the component auditor, to consider the classification of UMT as discontinued operations and the related accounting treatment due to the expropriation of its shares included the following, among others: ・We inspected the official announcement issued by the Russian government on 19 February 2024 in order to corroborate the facts of the expropriation of the UMT shares by the Russian government. ・We inspected the legal opinion by the legal counsel of DMG MORI AG, which supervises of the Russian business including UMT and the |
profit or loss. In addition, the business related to UMT has been classified as discontinued operations and reclassified as discontinued operations for the previous fiscal year. The Group purchased an overseas direct investment insurance policy with the Federal German government and has filed insurance claims in relation to the aforementioned expropriation. However, the amount of the compensation claim has not been finalized as of the end of the fiscal year. The classification as discontinued operations and the related accounting treatment include important management decisions based on the situation in Russia and Ukraine, where there are political uncertainties. In addition, current losses from discontinued operations have a material impact on the consolidated financial statements for the current fiscal year. Therefore, we determined that the classification of UMT as discontinued operations and the related accounting treatment due to the expropriation of its shares by Russian government to be a key audit matter. | minutes of the Board of Directors of DMG MORI AG in order to consider whether or not the Company has retained control of UMT. ・We inspected the documents prepared by the Company in order to assess the valuation of the shares of UMT, in addition to the procedures described above. ・We made inquiries with the management about the Company's decision to classify the business of UMT as discontinued operations, and inspected the documentation prepared by the Company in light of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations." ・With regard to the status of insurance claims, we inspected the insurance contract and the documents related to the claims, and made inquiries with the management of DMG MORI AG. ・We evaluated the consistency of the disclosures in Note 32 "Discontinued Operations" to the consolidated financial statements with the results of procedures described above. |
Other Information
The other information comprises the information included in the annual report (Yukashoken Hokokusho) that contains audited consolidated financial statements but does not include the consolidated financial statements and our auditor's report thereon. Management is responsible for preparation and disclosure of the other information. The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing the Group's reporting process of the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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 IFRS Accounting Standards, 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 IFRS Accounting Standards, 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 IFRS Accounting Standards.
・Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review 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, actions taken to eliminate threats or safeguards applied to reduce threats to an acceptable level.
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.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended December 31, 2024 are presented solely for convenience. Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 2 to the consolidated financial statements.
Fee-related Information
The fees for the audits of the financial statements of the Company and its subsidiaries and other services provided by us and other EY member firms for the year ended December 31, 2024 are ¥373 million and ¥216 million, respectively.
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.
Ernst & Young ShinNihon LLC
Tokyo, Japan
March 27, 2025
/s/Yoshitomo Matsuura Designated Engagement Partner Certified Public Accountant
/s/Hironori Ogawa
Designated Engagement Partner Certified Public Accountant
/s/Ryuichi Minami
Designated Engagement Partner Certified Public Accountant
Consolidated Statement of Financial Position
31 December 2024
Assets Current assets:
Cash and cash equivalents (Notes 7 and 24) Trade and other receivables (Notes 8, 24 and 25) Other financial assets (Notes 12 and 24) Inventories (Note 9)
Other current assets
Total current assets from continuing operations Assets held for sale
Total current assets
Non-current assets:
Property, plant and equipment (Note 10) Right-of-use assets (Note 17)
Goodwill (Note 11)
Other intangible assets (Note 11)
Other financial assets (Notes 12 and 24) Investments in associates and joint ventures (Note 13)
Deferred tax assets (Note 20) Other non-current assets Total non-current assets Total assets
¥
¥
See accompanying notes to consolidated financial statements.
- 1-
Millions of yen
2024
41,747 ¥
2023
39,212 $ 263,973
66,728
62,927 421,929
2,696
5,713 17,048
190,009
200,843
15,877
14,277
317,059
322,974
652
799
317,711
323,773
Thousands of U.S. dollars
2024
1,201,452
100,397
2,004,801
4,125
2,008,927
212,710
189,231
1,344,990
28,605
24,637 180,876
89,951
85,587 568,776
110,585
100,909 699,245
19,296
26,246 122,016
7,489
6,322 47,354
6,662
5,334 42,124
4,554
3,764 28,795
479,855
442,033
797,567
¥
765,806
3,034,180
$
5,043,107
Millions of yen
2024
Liabilities and equity Liabilities
Current liabilities:
Trade and other payables (Notes 14 and 24) Interest-bearing bonds and borrowings (Notes 15 and 24)
Contract liabilities (Note 25)
Other financial liabilities (Notes 16, 17, 24 and 35) Income taxes payable
Provisions (Note 19) Other current liabilities Total current liabilities Non-current liabilities:
Interest-bearing bonds and borrowings
(Notes 15 and 24)
Other financial liabilities (Notes 16, 17 and 24)
Net employee defined benefit liabilities (Note 18)
Provisions (Note 19)
Deferred tax liabilities (Note 20) Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity (Note 21)
Share capital Capital surplus
Other equity instruments Treasury shares Retained earnings
Other components of equity
Equity attributable to owners of the parent Non-controlling interests
Total equity
Total liabilities and equity
¥
¥
See accompanying notes to consolidated financial statements.
- 2-
75,119 ¥
2023
82,914 $ 474,991
104,692
61,187 661,980
84,576
93,430 534,787
77,662
71,967 491,065
8,700
9,657 55,011
40,809
50,998 258,043
7,859
6,477 49,699
399,420
376,633
Thousands of U.S. dollars
2024
2,525,577
1,758
52,474 11,118
52,515
40,309 332,058
5,755
5,192 36,389
5,704
6,371 36,071
12,725
9,340 80,462
3,208
2,939 20,289
481,087
81,667
116,627 493,261
516,390 3,041,968
71,230
51,115 450,397
18,496
208 116,955
110,822
110,822 700,740
(862)
(883)
(5,452)
85,866
92,283 542,945
28,969
14,444 183,175
314,522
316,480
1,957
267,990 4,555 272,545
797,567
¥
765,806
1,988,762 12,377 2,001,139
$
5,043,107