These documents have been translated from Japanese originals for reference purposes only. In the event of any discrepancy between these translated documents and the Japanese originals, the originals shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translations.
Securities Code 9936
Naoto Watanabe President
OHSHO FOOD SERVICE CORP.
294-1 Ibanoue-cho, Nishinoyama, Yamashina-ku, Kyoto, Japan
NOTICE OF THE 51ST ORDINARY GENERAL MEETING OF SHAREHOLDERS (Items Not Listed in Paper-based Documents)Notes to Consolidated Financial Statements on pages 2 to 16 Notes to Non-Consolidated Financial Statements on pages 17 to 24
In accordance with the provisions of laws and regulations and Article 18, paragraph 2 of the Company's Articles of Incorporation, the Notes to Consolidated Financial Statements and Notes to Non-Consolidated Financial Statements are excluded from the paper-based documents delivered to shareholders (items subject to measures for electronic provision) who have made a request for delivery of such documents.
Notes to Consolidated Financial Statements
-
Notes on Important Matters that form the Basis for the Preparation of Consolidated Financial Statements
Scope of Consolidation
Number of consolidated subsidiaries: 2
Names of consolidated subsidiaries: OHSHO RESTAURANT SERVICE CO., LTD., OHSHO HEARTFUL CORP.
Application of Equity Method Not applicable
Fiscal Year-Ends of Consolidated Subsidiaries
The closing date of OHSHO RESTAURANT SERVICE CO., LTD. and OHSHO HEARTFUL
CORP. are December 31. In the preparation of consolidated financial statements, financial statements as of the above date are used, and adjustments necessary for consolidation are made for important transactions that occur between the above date and the date of the consolidation settlement of accounts.
Accounting Policies
Standards and methods for valuation of important assets Securities
Available-for-sale securities
Securities other than available-for-sale securities without quoted market prices are stated at the market value based on quoted market prices, etc., on the balance sheet date. (Unrealized gains and losses are reported, net of applicable taxes, in a separate component of Net assets. The cost of securities sold is determined by the moving-average method.)
Available-for-sale securities without quoted market prices are stated at cost determined by the moving-average method.
Inventories
Inventories are stated at cost determined by the weighted-average method. (The figures shown in the non-consolidated balance sheet have been calculated by writing them down based on a decline in profitability.)
Depreciation or amortization method for important depreciable or amortizable assets Property, plant and equipment
Straight-line method
The useful life of principal assets is as below. Buildings and structures: 10 to 38 years Machinery, equipment and vehicles: 6 to 10 years Intangible assets
Straight-line method
Computer software for internal use is amortized evenly over the estimated internal useful life of 5 years.
Accounting standards for important reserves Allowance for doubtful accounts
An allowance for doubtful accounts is provided based on the historical write-off rate for ordinary receivables, and the estimated amount of irrecoverable debt is stated based on the recoverability of individual cases for specified receivables such as doubtful accounts.
Provision for bonuses
A provision for bonuses is stated at the estimated amount of bonuses to be paid to employees and part-time workers during the fiscal year under review.
Accounting standards for revenue and cost
The Group engages in the Chinese food business with the aim of operations of directly operated stores and sales of Chinese food to franchised stores.
Revenue on directly operated stores is recognized when the food ordered by a customer, considering a user of the directly operated store to be a customer, is delivered, with the performance obligation satisfied at that time. If a customer uses coupons, etc., the amount covered by such coupons, etc., is deducted from the consideration. Based on the payment method selected by a customer, consideration is received at the same time with fulfillment of the performance obligation or within a short period of time after fulfillment of the performance obligation according to payment terms separately provided by credit card companies etc. and the amount of such consideration does not contain a significant financing component.
Revenue from franchised stores is based on sales of Chinese food from the Company to the franchised stores based on franchise agreements, and is recognized when merchandise is transferred to the franchised stores with the performance obligation satisfied at that time.
Considerations are received generally within one month and the amount of such considerations does not contain a significant financing component.
Basis for the translation of important foreign currency assets and liabilities into Japanese currency
The assets and liabilities of foreign subsidiaries are translated into yen based on the spot exchange rate on the closing date, while income and expenses are translated into yen based on the average exchange rate during the period under review. Any translation differences are included in Foreign currency translation adjustment difference under Net assets.
Other important matters in the preparation of the consolidated financial statements Method of attributing the projected benefit obligations to periods
Method of attributing the projected benefit obligations to periods:
In the calculation of retirement benefit obligation, the benefit formula basis is applied to attribute the projected benefit obligations to periods of service until the end of the fiscal year under review.
Method of amortizing actuarial differences
Actuarial differences are amortized on a straight-line basis over the determined period (3 years) within the average remaining service years of employees when the differences occur, beginning from the fiscal year following the time of occurrence.
Accounting treatment for unrecognized actuarial differences
Regarding the treatment of unrecognized actuarial differences, after adjusting for the tax effect, they are recorded as Remeasurements of retirement benefits under Accumulated other comprehensive income under Net assets.
-
Notes on Accounting Estimates
Impairment of non-current assets
Amount recorded in the consolidated financial statements for the fiscal year under review
(Millions of yen)
Carrying value on the consolidated balance sheet
Buildings and structures
15,394
Machinery, equipment and vehicles
1,769
Tools, furniture and fixtures
2,455
Land
19,902
Intangible assets
318
Total *1
39,840
*1 Non-current assets of ¥28,447 million have been recorded on directly operated stores (551).
Impairment loss recorded in the fiscal year under review is described in "Impairment loss" in 6. Notes to the Consolidated Statement of Income in the consolidated financial statements. (Impairment loss concerning non-current assets for stores for the fiscal year under review amounts to ¥48 million)
Information regarding details of material accounting estimates for identified items
The Group owns assets that include directly operated stores, plants, and a head office in order to operate the Chinese restaurant business.
The asset group is mainly made on the basis of each store operating as an independent unit generating cash flow, and the Company identifies signs of impairment when the operating profit and loss for each store has deteriorated or when there has been a significant reduction in the market value of the store's real estate. As a result of comparison of the total amount of undiscounted future cash flows generated from the asset group and the book value, an impairment loss is recognized on any asset group whose undiscounted future cash flows are lower than the book value.
The undiscounted future cash flows are estimated in accordance with the future profit and loss forecast based on the operation profit and loss performance. However, there is a possibility to recognize an impairment loss in the next fiscal year in case assumptions used in the estimation
require a review due to a significant deterioration in the business environment or decision made to closing or moving of stores.
-
Notes on Changes in Presentation
(Regarding the Consolidated Statement of Income)
"Disaster relief fund" (¥22 million in the current consolidated fiscal year) that was separately stated under "Non-operating expenses" in the previous consolidated fiscal year is included in "Other" under "Non-operating expenses" from the consolidated fiscal year under review as it has become less than 10 hundredths of the total of non-operating expenses.
"Insurance claim income" (¥33 million in the previous consolidated fiscal year) that was included in "Other" under "Non-operating income" in the previous consolidated fiscal year is shown separately from the consolidated fiscal year under review as it has exceeded 10 hundredths of the total of non-operating income.
- Notes on Changes in Accounting Estimates
(Changes in Estimates of Asset Retirement Obligations)
In the consolidated fiscal year under review, regarding asset retirement obligations recorded as the obligations for restoration to the original state required in real estate lease contracts of the Group, the Company obtained new information on the cost of restoration to the original state, which is required when vacating stores, and, accordingly, changed its estimate of the cost of restoration to the original state.
The increase of ¥496 million due to the change in this estimate has been added to the balance of asset retirement obligations before the change.