JAFCO : Financial Results for the Nine Months Ended December 31, 2019（PDF：490KB）

JAFCO Co., Ltd.

The original disclosure in Japanese was released on January 24, 2020 at 12:00 (GMT+9).

This is a summary translation of a press release made in Japanese for convenience only.

JAFCO Co., Ltd. (Ticker: 8595)	Contact: Investor Relations
1-23-1 Toranomon, Minato-ku,	Tel: [phone]
Tokyo 105-6324 Japan	[e-mail]
http://www.jafco.co.jp/english/
	January 24, 2020

Financial Results for the Nine Months Ended December 31, 2019

[Japanese GAAP]

(Summary of Japanese announcement)

(Japanese yen figures less than one million yen are rounded down)

1. Consolidated Performance for the Nine Months Ended December 31, 2019 (April 1, 2019 - December 31, 2019)

1. Consolidated Operating Results

(figures with % indicate the rate of change from the same period of the previous fiscal year)

Net sales

Operating income

Ordinary income

Profit attributable to

[¥ million]

[%]

[¥ million] [%]

[¥ million]

[%]

JAFCO Co., Ltd.

stockholders

[¥ million]

[%]

For

the

nine

months

27,937

27.1

16,369

62.5

18,385

64.0

13,453

54.0

ended December 31, 2019

For

the

nine

months

21,987

(5.7)

10,073

(9.2)

11,208

(10.3)

8,737

(59.8)

ended December 31, 2018

Note:

Comprehensive income

Nine months ended December 31, 2019:

¥33,089 million [-%]

Nine months ended December 31, 2018:

(¥1,733 million) [-%]

Profit per share

Fully diluted net

income per share

[¥]

[¥]

For

the

nine

months

434.97

-

ended December 31, 2019

For

the

nine

months

282.49

-

ended December 31, 2018

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets

[¥ million]

[¥ million]

[%]

per share [¥]

As of December 31, 2019

227,803

192,839

84.7

6,234.60

As of March 31, 2019

184,213

163,215

88.6

5,276.80

(Reference) Shareholders' equity

As of December 31, 2019:

¥192,839 million

As of March 31, 2019:

¥163,215 million

1

JAFCO Co., Ltd.

2. Dividends

		Dividend per share [¥]
(Record date)	End of 1Q	End of 2Q	End of 3Q	End of	Total
the year
For the year ended	-	-	-	112.00	112.00
March 31, 2019
For the year ending	-	-	-
March 31, 2020
For the year ending				-	-
March 31, 2020 (Forecast)

Notes: The forecast of dividend amount is unfixed.

3. Business Forecasts for the Year ending March 31, 2020 (April 1, 2019 - March 31, 2020)

Volatility in stock markets and the IPO environment in Japan and overseas causes performance to fluctuate, as a result of which it is difficult to make meaningful forecasts in earnings. Therefore, instead of announcing projections, JAFCO makes timely disclosure of quarterly financial results.

*Other Information

1. Changes in significant subsidiaries during this period: None
2. Adoption of specific accounting methods for the preparation of quarterly consolidated financial statements: None
3. Changes in accounting principles, accounting estimates and correction of prior period errors

1. • Changes in accounting principles due to revisions to accounting standards: None
     ② Changes in accounting principles other than ① : None
     ③ Changes in accounting estimates: None
     ④ Correction of prior period errors: None
2. Number of issued shares (common stock)
3. • Number of issued shares (including treasury stock)

As of December 31, 2019: 32,550,000

As of March 31, 2019: 32,550,000

• Number of treasury stock

As of December 31, 2019: 1,619,494

As of March 31, 2019: 1,619,264

• Average number of shares

Nine months ended December 31, 2019:	30,930,637
Nine months ended December 31, 2018:	30,930,876

*These financial results are not subject to audit procedures.

*Cautionary statements with respect to forward-looking statements and other notes

(Access to the financial supplement materials)

The presentation material for the nine months ended December 31, 2019 will be released on JAFCO's website on January 24, 2020.

*Note to XBRL

Please note that the names of the English accounts contained in XBRL data, which are available through EDINET and TDNet, may be different from those of the English accounts in our financial statements.

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JAFCO Co., Ltd.

1. Outline of Operating Results

(1) Outline of Operating Results

In the consolidated fiscal nine months ended December 31, 2019, the JAFCO Group posted net sales of ¥27,937 million (up 27.1% from ¥21,987 million recorded in the same period a year ago), operating income of ¥16,369 million (up 62.5% from ¥10,073 million recorded in the same period a year ago), ordinary income of ¥18,385 million (up 64.0% from ¥11,208 million a year ago), and profit attributable to JAFCO Co., Ltd. stockholders of ¥13,453 million (up 54.0% from ¥8,737 million recorded in the same period a year ago).

During the three-month period ended December 31, 2019, capital gains and success fees increased due to large exits by Asian and domestic unlisted portfolio companies. Fund management fees also rose in line with an increase in capital commitments from external investors to JAFCO SV6 Fund Series established in June 2019.

Because JAFCO's earnings may fluctuate sharply for each three-month period due to the nature of its business, we provide annualized comparison as well as year-on-year comparison for the period under review.

(Outline of Capital Gains)

During the three-month period ended December 31, 2019, capital gains and success fees increased due to large exits by Asian and domestic unlisted portfolio companies.

					(Millions of Yen)
		For the year ended	For the nine	For the nine months	Annualized
		months ended	ended	comparison
		March 31, 2019
		December 31,	December 31, 2019	[(B)/3×4]/(A)
		(A)
		2018	(B)	(%)
Revenues from operational	23,291	20,033	22,680	129.8
investment securities (1)
	Proceeds from sale of securities	23,177	19,957	22,567	129.8
	Dividend and interest income	113	75	112	132.5
Cost of operational investment securities	9,274	8,600	7,166	103.0
(2)
	Cost of securities sold	9,274	8,600	7,166	103.0
	Impairment	-	-	-	-
Capital gains (1) - (2)	14,016	11,432	15,513	147.6
Multiple (1) / (2)	2.51	2.33	3.16	－
Capital gains on listed shares	5,264	5,209	2,334	59.1
Capital gains on unlisted shares	8,751	6,223	13,179	200.8
	Gains on sale	11,069	8,478	16,643	200.5
	Losses on sale	2,317	2,255	3,463	199.2

3

JAFCO Co., Ltd.

(Outline of Investment Loss Reserves)

The reserve ratio to unlisted operational investment securities declined in the consolidated nine months ended December 31, 2019 due mainly to the progress in new investment and the sale of portfolio holdings which had been marked down substantially.

Additions to general reserves have not been made since January 2017 because more accurate valuation of individual companies became possible as a result of the highly selective, intensive investment strategy and deeper involvement in the management of portfolio companies.

										(Millions of Yen)
		For the year ended	For the nine months		For the nine months		Annualized
				ended		comparison
		March 31, 2019		ended
				December 31, 2019		[(B)/3×4]/(A)
		(A)	December 31, 2018
					(B)		(%)
Additions to investment loss	1,687	1,766			1,816		143.6
reserves (1)
	Company-by-company	2,541	2,103			2,114		111.0
	reserves
	(Reversal of) General	(854)	(337)			(298)		-
	reserves
Reversal of investment loss	2,399	2,201			3,421		190.1
reserves (2)
Net additions = (1)-(2)	(712)	(435)			(1,604)		-
(minus figures are reversals)
									(Millions of Yen)
				As of March 31, 2019		As of December 31, 2019
Balance of investment loss reserves			9,501			7,892
	Company-by-company reserves			8,651			7,340
	General reserves				850			552
Ratio to all unlisted operational investment securities			18.4%			14.3%

4

JAFCO Co., Ltd.

(Outline of Balance of Operational Investment Securities)

The balance of operational investment securities rose because of portfolio IPOs and steady investment focusing on start-up companies.

													(Millions of Yen)
						As of March 31, 2019		As of December 31, 2019
Difference between acquisition cost and market value of				6,153				9,047
listed operational investment securities
	Securities whose market value							6,394				9,261
	exceeds acquisition cost
	Securities whose market value							(240)				(214)
	falls below acquisition cost
													(Millions of Yen)
				For the year		For the nine months		For the nine months
					ended			ended				ended
				March 31, 2019		December 31, 2018		December 31, 2019
(Reversal of) Unrealized losses on			24				14		(26)
operational investment securities
Balance of Operational Investment Securities
													(Millions of Yen)
		As of March 31, 2019			As of December 31, 2019
		Acquisition cost	Figures on the					Figures on the
		Acquisition cost	quarterly
		consolidated B/S
									consolidated B/S
Listed		1,590			7,744		1,826	10,874
Unlisted		49,067			49,803		53,110	53,654
Subtotal		50,657			57,547		54,936	64,529
Investments in		1,632			1,719		1,334	1,391
other funds
	Total		52,289			59,267		56,271	65,920
Note: 1. "Investments in other funds" is investment in funds managed by third parties.

2. The differences in "Acquisition cost" and "Figures on the consolidated balance sheets" for "Unlisted" securities and "Investments in other funds" only reflect foreign exchange translation difference.

5

JAFCO Co., Ltd.

(Outline of Fund Operations)

Fund management fees increased due to an increase in capital commitments from external investors to JAFCO SV6 Fund Series established in June 2019. Higher success fees were attributed to the realization of success fees form JAFCO SV4 Fund Series and JAFCO Asia Technology Fund VI L.P.

					(Millions of Yen)
		For the year	For the nine months	For the nine months	Annualized
		comparison
		ended	ended	ended
		[(B)/3×4]/(A)
		March 31, 2019	December 31, 2018	December 31, 2019
		(%)
		(A)		(B)
Income from partnership	2,586	1,954	5,255	271.0
management
	Fund management	1,750	1,311	1,817	138.4
	fees
	Success fees	836	643	3,438	548.4
Note:	Fund management fees and success fees are based on commitment amount excluding the JAFCO Group's commitment.

(2) Outline of Financial Condition

(Outline of Assets, Liabilities, and Net Assets)

Total assets, total liabilities and net assets increased mainly due to an increase in operational investment securities and a rise in the market value of investment securities.

			(Millions of Yen)
		As of March 31, 2019	As of December 31, 2019
Total assets	184,213	227,803
	Current assets	115,636	132,508
	Non-current assets	68,577	95,295
Total liabilities	20,998	34,964
	Current liabilities	2,475	7,687
	Non-current liabilities	18,523	27,277
Net assets	163,215	192,839

.

(3) Qualitative Analysis of Consolidated Business Forecasts

Volatility in stock markets and the IPO environment in Japan and overseas causes performance to fluctuate, as a result of which it is difficult to make meaningful forecasts in earnings. Therefore, instead of announcing projections, JAFCO makes timely disclosure of quarterly financial results.

6

JAFCO Co., Ltd.

2. Consolidated Financial Statements

(1) Consolidated Balance Sheets

										(Millions of yen)
					As of March 31, 2019		As of December 31, 2019
		Assets
		Current assets
		Cash and deposits			*(i) 61,378					*(i) 69,271
		Operational investment securities	59,267				65,920
		Investment loss reserves			9,501)					7,892)
		Securities			( 2,500					( 2,500
		Other	1,991				2,708
		Total current assets	115,636				132,508
		Non-current assets
		Property, plant and equipment	312				469
		Intangible assets			188					197
		Investments and other assets
		Investment securities			67,646					93,749
		Investments in capital			17					0
		Long-term loans receivable			7					121
		Deferred tax assets			7					362
		Other			397					395
		Total investments and other assets	68,076				94,628
		Total non-current assets			68,577					95,295
		Total assets	184,213				227,803

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JAFCO Co., Ltd.

							(Millions of yen)
				As of March 31, 2019		As of December 31, 2019
	Liabilities
	Current liabilities
	Current portion of long-term borrowings			116			149
	Income taxes payable	1,193		4,368
	Provision for bonuses	194		415
	Allowance for extraordinary compensation for	89			－
	directors
	Other		881		2,754
	Total current liabilities	2,475		7,687
	Non-current liabilities
	Long-term borrowings			249			132
	Retirement benefit liability	453		435
	Deferred tax liabilities	17,779		26,562
	Other			42			147
	Total non-current liabilities		18,523		27,277
	Total liabilities	20,998		34,964
	Net assets
	Shareholders equity
	Share capital			33,251			33,251
	Capital surplus	32,806		32,806
	Retained earnings	59,268		69,258
				(			(
	Treasury shares
			7,586)			7,587)
	Total shareholders equity	117,739		127,728
	Accumulated other comprehensive income
	Valuation difference on available-for-sale	44,719		64,682
	securities
	Foreign currency translation adjustment		755		428
	Total accumulated other comprehensive income		45,475		65,110
	Total net assets		163,215		192,839
	Total liabilities and net assets		184,213		227,803

8

JAFCO Co., Ltd.

(2) Consolidated Statements of Income and Consolidated Statement of Comprehensive Income (Consolidated Statements of Income)

												(Millions of yen)
							Nine months ended			Nine months ended
							December 31, 2018			December 31, 2019
	Net sales
	Revenue from operational investment securities					20,033				22,680
	Income from investment partnership management				1,954				5,255
	Other sales				0				1
	Total net sales			21,987				27,937
	Cost of sales
	Cost of operational investment securities			8,600				7,166
	Other cost			637				3,035
	Total cost of sales				9,237				10,201
	Gross profit	12,749			17,735
	(Reversal of) Additions to investment loss reserves				(435)				(1,604)
	(Reversal of) unrealized losses on operational						14					(26)
	investment securities
	Gross profit - net					13,170				19,366
	Selling, general and administrative expenses	3,097			2,996
	Operating profit				10,073				16,369
	Non-operating income
	Interest income				126				72
	Dividend income				1,258				2,036
	Miscellaneous income				14				28
	Total non-operating income	1,399			2,137
	Non-operating expenses
	Interest expenses				2				1
	Foreign exchange losses				231			87
	Miscellaneous loss				29				33
	Total non-operating expenses			263				122
	Ordinary profit	11,208			18,385
	Extraordinary income
	Gain on sales of investment securities				57					－
	Total extraordinary income				57					－
	Extraordinary losses
	Total extraordinary losses					－					－
	Profit before income taxes	11,266			18,385
	Income taxes - current				2,570				5,319
	Income taxes - deferred				(41)				(387)
	Total income taxes					2,528				4,931
	Profit	8,737			13,453
	Profit attributable to non-controlling interests					－					－
	Profit attributable to JAFCO Co., Ltd. stockholders		8,737			13,453

9

JAFCO Co., Ltd.

(Consolidated Statement of Comprehensive Income)

(Millions of yen)

Nine months ended

Nine months ended

December 31, 2018

December 31, 2019

Profit

8,737

13,453

Other comprehensive income

Valuation difference on available-for-sale securities

(11,292)

19,962

Foreign currency translation adjustment

816

(327)

Remeasurements of defined benefit plans, net of tax

4

－

Total other comprehensive income

(10,471)

19,635

Comprehensive income

(1,733)

33,089

Comprehensive income attributable to

Comprehensive income attributable to JAFCO Co.,

(1,733)

33,089

Ltd. stockholders

Comprehensive income attributable to non-

－

－

controlling interests

10

JAFCO Co., Ltd.

1. Notes for Consolidated Financial Statements (Notes on premise of going concern)
   None

(Related to Consolidated Quarterly Balance Sheets)

*(i) Breakdown of JAFCO's interests in funds out of cash and cash equivalents

		(Millions of yen)
	As of March 31, 2019	As of December 31, 2019
Cash and deposits	7,484	13,898

1. JAFCO's uncalled commitments to JAFCO-managed funds as of December 31, 2019 were ¥37,310 million, compared with ¥18,515 million as of December 31, 2018 and ¥14,601 million as of the end of previous full year.

As for JAFCO SV6 Series, JAFCO's uncalled commitments is ¥34,910 million, reflecting the transfer of existing interests which JAFCO held to external investors by January 20, 2020

(Notes on significant changes in the shareholder's equity) None

11

JAFCO Co., Ltd.

(Notes on marketable securities)

1. Held-to-maturitybonds None

(ii) Available-for-sale securities					(Millions of Yen)
			As of March 31, 2019		As of December 31, 2019
		Type	Figures on the	Acquisition cost			Figures on the	Acquisition cost
			Difference	quarterly		Difference
			consolidated B/S
							consolidated B/S
	Operational
	investment securities
	(1)	Stock	7,526	1,131		6,394	10,629	1,368		9,261
	(2)	Bond	-	-		-	-	-		-
	(3)	Others	-	-		-	-	-		-
		Subtotal	7,526	1,131		6,394	10,629	1,368		9,261
Securities	Investment securities
(1)	Stock	66,606	9,348		57,258	92,729	9,339		83,390
whose B/S
amount	(2)	Bond	-	-		-	-	-		-
exceeds	(3)	Others	-	-		-	-	-		-
acquisition
cost		Subtotal	66,606	9,348		57,258	92,729	9,339		83,390
	Marketable securities
	(1)	Stock	-	-		-	-	-		-
	(2)	Bond	-	-		-	-	-		-
	(3)	Others	-	-		-	-	-		-
		Subtotal	-	-		-	-	-		-
		Total	74,132	10,479		63,652	103,359	10,707		92,652
	Operational
	investment securities
	(1)	Stock	218	458		(240)	244	458		(214)
	(2)	Bond	-	-		-	-	-		-
	(3)	Others	-	-		-	-	-		-
		Subtotal	218	458		(240)	244	458		(214)
Securities	Investment securities
(1)	Stock	44	61		(17)	24	32		(7)
whose B/S
amount	(2)	Bond	-	-		-	-	-		-
falls below
acquisition	(3)	Others	-	-		-	-	-		-
cost		Subtotal	44	61		(17)	24	32		(7)
	Marketable securities
	(1)	Stock	-	-		-	-	-		-
	(2)	Bond	-	-		-	-	-		-
	(3)	Others	2,500	2,500		-	2,500	2,500		-
		Subtotal	2,500	2,500		-	2,500	2,500		-
		Total	2,762	3,020		(258)	2,769	2,990		(221)
	Grand total	76,894	13,500		63,394	106,129	13,698		92,430

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JAFCO Co., Ltd.

(Millions of Yen)

Note: 1. The following items are not included in the above table because they have no market value, making it difficult to determine fair value.

		(Millions of Yen)
	As of March 31, 2019	As of December 31, 2019
	Figures on the consolidated B/S	Figures on the quarterly
	consolidated B/S
Available-for-sale securities
Operational investment securities
Unlisted stock	49,137	51,835
Unlisted domestic and foreign bonds	660	946
Others	1,724	2,263
Investment securities
Unlisted stock	802	800

Note: 2. No impairment was recorded (write down) on available-for-sale securities (including items that are extremely difficult to determine fair value) in the previous full year or in the nine months ended December 31, 2019.

13

JAFCO Co., Ltd.

3. Other Information

1. Investments and IPOs
2. 1. Investments

(Millions of Yen)

		For the year	For the nine months	For the nine months
		ended		ended
			ended
		March 31, 2019		December 31, 2019	Annualized
		December 31, 2018
		(A)		(B)		comparison
		Amount		No.	Amount		No.	Amount		No.	[(B)/3×4]/(A)
		(A)		of cos.		of cos.	（B）		of cos .	(%)
Equity
	(Japan)	11,379		26	8,922		19	21,172		28	248.1
	(USA)	10,753		19	8,883		14	4,506		18	55.9
	(Asia)	3,014		11	2,894		10	893		8	39.5
	Total	25,147		56	20,700		43	26,572		54	140.9

	Notes: 1. Investment amount is a total of investments by the JAFCO Group and funds.
	2. Investments denominated in foreign currencies are translated into yen on a quarterly basis using the
	exchange rate at the end of each quarter.
	3．Overseas investments made by the venture investment division in Japan are included in Japan.
(ii) IPOs
(Japan)			(Millions of Yen)
		For the year ended	For the nine months ended	For the nine months ended
		March 31, 2019	December 31, 2018	December 31, 2019
	Number of IPOs	2	2	3
	Investment cost (1)	900	900	1,293
	Market value at IPOs (2)	7,128	7,128	13,396
	Multiple (2)/(1)	7.9	7.9	10.4

Notes: 1. "Investment cost" and "Market value at IPO" are total amounts by the JAFCO Group and funds.

2. "Market value at IPO" is calculated by multiplying the number of shares held prior to the IPO by first price.

(Overseas)			(Millions of Yen)
	For the year ended	For the nine months ended	For the nine months ended
	March 31, 2019	December 31, 2018	December 31, 2019
Number of IPOs	-	-	1
Investment cost (1)	-	-	886
Market value at IPOs (2)	-	-	13,881
Multiple (2)/(1)	-	-	15.7

Notes: 1. "Investment cost" and "Market value at IPO" are total amounts by the JAFCO Group and funds. Exchange rate at the time of IPO is used for conversion.

1. "Market value at IPO" is calculated by multiplying the number of shares held prior to the IPO by first price.
2. As JAFCO had transferred its interest in Icon Ventures IV, L.P., which held shares in the above IPO company, the impact of the above IPO on JAFCO's performance is minimal.

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JAFCO Co., Ltd.

(2) Establishment of Funds

Nine months ended December 31, 2019 (April 1, 2019 - December 31, 2019)

(i) Newly established funds:

	(Millions of yen)
	Total commitments
Fund name	as of
	December 31, 2019
JAFCO SV6 Series	80,000
	(Millions of TWD)
	Total commitments
Fund name	as of
	December 31, 2019
JAFCO Taiwan I Venture	1,037 *
Capital Limited Partnership

*Yen equivalent based on the exchange rate as of Dec. 31, 2019: ¥3,753 million

1. Funds established in previous years whose total commitments increased in this period None

Previous full year (April 1, 2018 - March 31, 2019)

1. Newly established funds: None
2. Funds established in previous years whose total commitments increased

(Millions of US$)

	Total commitments	Total commitments	Increase in
Fund name	as of	as of
commitments
	March 31, 2019	March 31, 2018
JAFCO Asia Technology Fund	140	128	12
VII L.P.
			(Millions of US$)
	Total commitments	Total commitments	Increase in
Fund name	as of	as of
commitments
	March 31, 2019	March 31, 2018
Icon Ventures VI, L.P.	375	262	112

15