Prospect Co. Announcement: Notice on Submission of the Correction Report of the Past Financial Reports and Correction of Past Announcement of Closing, etc.

Prospect Co. Announcement: Notice on Submission of the Correction Report of the Past Financial Reports and Correction of Past Announcement of Closing, etc.

PR Newswire

ST. PETER PORT, Guernsey, Jan 8, 2019

ST. PETER PORT, Guernsey, Jan 8, 2019 /PRNewswire/ --

As the Company disclosed in the "Notice on Receipt of Investigation Report of Special Investigation Committee" as of December 13, 2018, based on the investigation results of a Special Investigation Committee and indication of the accounting auditor, the Company submitted on this date to the Kanto Local Finance Bureau a correction report of past financial reports and also disclosed the past announcement of closing, etc., and we hereby notify you.

The Company expresses its sincerest apologies to its shareholders, investors and all other stakeholders for any concern or inconvenience caused.

Note

1.  History and Reason for Correction

As the Company disclosed in the "Notice on the Establishment of a Special Investigation Committee and Appointment of the Committee Members" as of November 20, 2018, it was proved on the occasion of tax payment for a specific overseas project in a foreign country that there was an error in the amount of tax recorded in past years retroactively to the year ended March 31, 2017. Accordingly, the Company established a Special Investigation Committee, comprised of external experts who had no interests in the Company in November 20, 2018 and also added as of November 28, 2018 accounting treatment that made The Prospect Japan Fund Limited (hereinafter referred to as "PJF") a wholly owned subsidiary in the second quarter of the year ended March 31, 2018 as an investigation target and the Committee has conducted professional and objective investigations. The Company received an investigation report (hereinafter referred to as "Report") on this date from the Special Investigation Committee.

As it became necessary for the Company based on the Report and the indication of the accounting auditor to correct the past closing, the financial reports for the year ended March 31, 2017 and the year ended March 31, 2018, and quarterly reports from the first quarter of the year ended March 31, 2018 to the first quarter of the year ending March 31, 2019, under the Financial Instruments and Exchange Act, Article 24-2, paragraph 1 and the Financial Instruments and Exchange Act, Article 24-4-7, paragraph 4, the Company submitted a correction report of financial reports.

2.  Details of Correction of Closing

(1)      Correction of Past Tax Expenses, etc., for Overseas Projects

The Company submitted a final tax return and paid taxes in September 2018 with respect to the federal corporation income tax and state corporation income tax (hereinafter referred to as "Foreign Corporation Tax") imposed in the United States on the income gained by KL Holdings Company, LLLP, a Limited Liability Limited Partnership, organized under the laws of the state of Hawaii, U.S.A. Regarding the Foreign Corporation Tax, based on the Report of the Special Investigation Committee that the Tax shall be recorded as a corporation tax, etc., for the year ended March 31, 2017 and the year ended March 31, 2018 when corresponding taxable income accrued and also tax effect accounting shall be conducted for the portion of which reduction effect of taxable income is recognized for the following year as the Foreign Corporation Tax subject to deduction, the Company will record corporation tax, etc., and deferred tax assets retroactively to the year ended March 31, 2017 and the year ended March 31, 2018.

(2)      Correction of Consolidated Accounting, etc., of PJF

The Company consolidated PJF as a wholly owned subsidiary in the second quarter of the year ended March 31, 2018, and based on the Report of the Special Investigation Committee, the Company reviews and corrects the accounting to make more appropriate treatment of consolidated accounting in terms of investment judgment of the users of financial statements.

Specifically, as PJF, acquired on July 27, 2017, is a company with its closing period in December, September 30, 2017 shall be the date of deemed acquisition and in the accounting before the correction, for the second quarter of the year ended March 31, 2018, the balance sheet of PJF at the end of June, 2017 was consolidated and for the third quarter of the same year, the balance sheet of PJF as of September 30, 2017 and the statement of income for the period from July to September, 2017 were consolidated and in the same consolidated financial year, the balance sheet of PJF as of December 31, 2017 and the statement of income for the period from July to December, 2017 were consolidated. However, after the review, accounting shall be corrected as follows; for the second quarter of the year ended March 31, 2018, the balance sheet of PJF as of September 30, 2017, the date of deemed acquisition, shall be consolidated and in the third quarter of the same year, only the balance sheet of PJF as of September 30, 2017 shall be consolidated and in the same consolidated financial year, the balance sheet of PJF as of December 31, 2017 and the statement of income for the period from October to December of the same year shall be consolidated.

3.  Affected Amount of Correction of Closing

Affected amount in the consolidated financial statements and individual financial statements after correction of closing as stated above shall be as follows.

[Consolidated Financial Statements]                                                (Unit: thousand yen)

Period

Item

Before Correction

Affected Amount (1)

Affected Amount (2)

After Correction

116th Term (year ended March 31, 2017) Full-year

Sales

14,143,071

-

-

14,143,071

Operating profit

Δ43,869

-

-

Δ43,869

Ordinary Profit

516,457

-

-

516,457

Net profit

488,588

Δ275,558

-

213,029

Total assets

27,368,038

64,491

-

27,432,530

Net assets

12,489,433

Δ275,558

-

12,213,875

117th Term (year ended March 31, 2018), First quarter

Sales

1,648,226

-

-

1,648,226

Operating profit

Δ303,396

-

-

Δ303,396

Ordinary Profit

Δ120,477

-

-

Δ120,477

Quarterly net profit

Δ212,560

Δ37,017

-

Δ249,577

Total assets

26,708,737

83,571

-

26,792,308

Net assets

11,754,144

Δ312,575

-

11,441,569

117th Term (year ended March 31, 2018), Second quarter

Sales

3,486,452

-

-

3,486,452

Operating profit

Δ1,006,619

-

-

Δ1,006,619

Ordinary Profit

Δ295,546

-

-

Δ295,546

Quarterly net profit

1,903,294

Δ142,622

108,729

1,869,400

Total assets

39,162,330

138,003

Δ11,793

39,288,540

Net assets

23,845,795

Δ418,180

157,352

23,584,968

117th Term (year ended March 31, 2018), Third quarter

Sales

8,086,679

-

Δ244,669

7,842,009

Operating profit

Δ461,686

-

Δ195,313

Δ657,000

Ordinary Profit

245,936

-

Δ196,948

48,987

Quarterly net profit

2,083,536

Δ142,622

182,031

2,122,944

Total assets

40,516,463

138,003

Δ435

40,654,031

Net assets

24,562,150

Δ418,180

268,044

24,412,014

117th Term (year ended March 31, 2018), Full-year

Sales

11,927,587

-

Δ238,870

11,688,717

Operating profit

Δ1,354,427

-

Δ189,328

Δ1,543,756

Ordinary Profit

Δ909,040

-

Δ189,328

Δ1,098,369

Net profit

1,720,037

Δ156,216

Δ80,023

1,483,797

Total assets

40,396,840

145,010

-

40,541,850

Net assets

25,650,456

Δ431,774

-

25,218,682

118th Term (year ending March 31, 2019), First quarter

Sales

1,840,738

-

2,773

1,843,511

Operating profit

Δ752,193

-

2,773

Δ749,419

Ordinary Profit

Δ560,070

-

2,773

Δ557,296

Quarterly net profit

Δ602,187

-

2,773

Δ599,414

Total assets

36,697,797

145,010

-

36,842,807

Net assets

23,031,659

Δ431,774

-

22,599,884

(Note): Affected Amount (1) indicates the amount affected by correction of the past tax expenses, etc., for overseas projects and Affected Amount (2) indicates the amount affected by correction of consolidated accounting, etc., of PJF.

[Individual Financial Statements]                                                      (Unit: thousand yen)

Period

Item

Before Correction

Affected Amount (1)

After Correction

116th Term (year ended March 31, 2017) Full-year

Sales

6,565,701

-

6,565,701

Operating profit

Δ96,371

-

Δ96,371

Ordinary Profit

643,691

-

643,691

Net profit

670,270

Δ275,558

394,712

Total assets

15,306,559

64,491

15,371,051

Net assets

11,493,053

Δ275,558

11,217,495

117th Term (year ended March 31, 2018) Full-year

Sales

5,103,662

-

5,103,662

Operating profit

Δ1,123,672

-

Δ1,123,672

Ordinary Profit

Δ299,823

-

Δ299,823

Net profit

Δ179,660

Δ156,216

Δ335,877

Total assets

32,654,226

145,010

32,799,237

Net assets

25,828,396

Δ431,774

25,396,621

(Note) Affected Amount (1) indicates the amount affected by correction of the past tax expenses, etc., for overseas projects.

4.  Corrected Financial Reports, etc., Submitted to the Kanto Local Finance Bureau as of This Date

(1)     Financial Reports

116th Term (from April 1, 2016 to March 31, 2017)

117th Term (from April 1, 2017 to March 31, 2018)

(2)     Quarterly Reports

117th Term, First Quarter (from April 1, 2017 to June 30, 2017)

117th Term, Second Quarter (from July 1, 2017 to September 30, 2017)

117th Term, Third Quarter (from October 1, 2017 to December 31, 2017)

118th Term, First Quarter (from April 1, 2018 to June 30, 2018)


5.  Corrected Announcement of Closing, etc., Submitted as of This Date

116th Term (from April 1, 2016 to March 31, 2017)

117th Term (from April 1, 2017 to March 31, 2018)

117th Term, First Quarter (from April 1, 2017 to June 30, 2017)

117th Term, Second Quarter (from July 1, 2017 to September 30, 2017)

117th Term, Third Quarter (from October 1, 2017 to December 31, 2017)

118th Term, First Quarter (from April 1, 2018 to June 30, 2018)

 

Company Name: Prospect Company Limited

Representative: President and CEO Curtis Freeze

(Security Code: 3528 TSE 2nd Section)

Contact: Representative Director Masato Tabata

(TEL: 03-3470-8411)

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