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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  JAFCO Co., Ltd.    8595   JP3389900006

JAFCO CO., LTD.

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JAFCO : Matters available on the website in relation to the Notice of Convocation of the 47th Annual General Meeting of Shareholders(PDF:231KB)

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05/15/2019 | 07:58am EDT

Matters available on the website

in relation to the Notice of Convocation of

the 47th Annual General Meeting of Shareholders

(1)

Notes to Consolidated Financial Statements …………………………… 1

(2)

Notes to Non-Consolidated Financial Statements ………………………11

The above information is made available on the website of JAFCO Co., Ltd. (the "Company") at http://www.jafco.co.jp/english/ir/shareholder/meeting/

pursuant to relevant laws and Article 15 of the Companyʼs Articles of Incorporation.

JAFCO Co., Ltd.

This is a translation of the Japanese original for convenience only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Notes to Consolidated Financial Statements

1.Significant matters for the preparation of consolidated financial statements

(1) Scope of consolidation

1) Consolidated subsidiaries

Number of consolidated subsidiaries:

12

Names of major consolidated subsidiaries:Names of 4 major consolidated subsidiaries are as described in "6. Significant subsidiaries" of "I Current Status of JAFCO Group" of Business Report.

(Note) The other 8 subsidiaries are the entities held for the purpose of establishing funds that the JAFCO Group manages.

2)Non-consolidatedsubsidiaries

Names of unconsolidated subsidiaries: JAFCO America Ventures Inc.

JAFCO Super V-3(J) Investment Limited Partnership

JAFCO SV4-J Investment Enterprise Partnership

Rationale for exclusion from the scope of consolidation:

The rationale for excluding JAFCO America Ventures Inc. from the scope of consolidation from the current fiscal year is stated in "2. Note to change in accounting principles." With regard to JAFCO Super V-3(J) Investment Limited Partnership and JAFCO SV4-J Investment Enterprise Partnership, their sizes are small, and their total assets, net sales, net income or losses, retained earnings, etc. do not have a significant impact on the consolidated financial statements.

(2)Application of the equity method

1)Associates accounted for by the equity method

There is no associate accounted for by the equity method.

2)Unconsolidated subsidiaries and associates not accounted for by the equity method

JAFCO Super V-3(J) Investment Limited Partnership and JAFCO SV4-J Investment Enterprise Partnership are excluded from the application of the equity method since their total amounts of assets, liabilities, income and expenses are stated in proportion to the JAFCO Groupʼs interests and their impact on net income and retained earnings is therefore immaterial. Non-consolidated subsidiary JAFCO America Ventures Inc., Chushin Venture Capital Co., Ltd. and one other associate are also excluded from the application of the equity method as their impact on net income and retained earnings is immaterial.

3)Entities not treated as associates regardless of the Companyʼs ownership of between 20% and 50% of the voting rights

Names of the said companies

Pacific Rundum Co., Ltd.

Rationale for not being treated as an associate

Stocks of these entities were acquired with the Companyʼs main business objective of investment, not with the objective of control over such investeesʼ operations, personnel, funds and other transactions.

(3) Fiscal year of consolidated subsidiaries

For the consolidated subsidiaries with a fiscal-year end different from that of the Company, the tentative financial statements of the respective consolidated subsidiaries as of the consolidated balance sheet date are used for preparation of the consolidated financial statements.

(4)Accounting policies

1)Basis and method of valuation for securities

Available-for-sale securities (including operational investment securities) Available-for-sale securities with fair market value

Stated at fair market value based on the market price as of the consolidated balance sheet date. Unrealized gains

1

are recorded directly in net assets, and unrealized losses are recorded in the statements of income. The cost of securities sold is determined by the moving-average method.

Available-for-salesecurities without fair market value

Stated at cost determined by the moving-average

method.

2) Depreciation and amortization methods for depreciable and amortizable non-current assets

A. Property, plant and equipment

The declining-balance depreciation method is used at the

Company and its domestic subsidiaries, and the straight-

line method is used at its overseas subsidiaries in

accordance with accounting principles generally accepted

in their respective countries of domicile.

However, facilities attached to buildings and structures

obtained on or after April 1, 2016 are depreciated by the

straight-line method.

Useful lives of principal property, plant and equipment

are as follows:

Buildings

8 to 18 years

Furniture and fixture

3 to 20 years

B. Intangible assets

Software for internal use is amortized by the straight-line

method over the expected useful life (5 years).

3) Basis of significant reserves, allowances and provisions

A. Investment loss reserves

Investment loss reserves are provided for based on

estimated losses on operational investment securities

held as of the consolidated balance sheet date, assessing

business performance of investee companies. The

difference between the balances of investment loss

reserves as of the end of the current fiscal year and that

of previous fiscal year is presented as "(Reversal of)

Additions to investment loss reserves" in the consolidated

statements of income.

B. Provision for bonuses

For payment of employeesʼ bonuses, the provision for

employeesʼ bonuses is provided for in the amount that is

expected to be paid for the current fiscal year.

C. Allowance for extraordinary compensation for directors

For payment of extraordinary compensation for

directors, allowance is provided for in the amount that is

expected to be paid for the current fiscal year.

4) Other significant matters for the preparation of consolidated financial statements

A. Accounting for retirement benefits

For the calculation of projected benefit obligation and

benefit expenses, the simplified method, which assumes

the Company's benefit obligation to be equal to the benefits payable due to the voluntary retirement at the fiscal year-end, is applied.

B. Accounting treatment for investments in funds

With regard to the accounting treatment for investments in funds managed by the JAFCO Group, total amounts of assets, liabilities, income and expenses of the funds are stated in proportion to the JAFCO Groupʼs interests based on the financial statements as of the consolidated balance sheet date for the funds with the same balance sheet date, and based on the tentative financial statements as of the consolidated balance sheet date for the funds with a balance sheet date other than the consolidated balance sheet date.

C.Policy for translation of significant foreign-currency-denominated assets or liabilities into Japanese yen

2

Foreign-currency-denominated monetary receivables and payables are translated into Japanese yen at the spot exchange rates prevailing at the consolidated balance sheet date, and the differences arising from the translation are recognized in profit or loss. The assets and liabilities of foreign consolidated subsidiaries are translated into Japanese yen at the spot exchange rates prevailing at the consolidated balance sheet date. The income and expenses of foreign consolidated subsidiaries are translated into Japanese yen at the average exchange rates for the period. The translation differences are recorded in foreign currency translation adjustment and profit attributable to non-controlling interests under net assets.

D. Gross profit presentationIn the presentation of gross profit, realized gains and losses from the operational investment securities and unrealized gains and losses are distinctively recorded. Consequently, "Gross profit" in the consolidated statement of income is presented excluding the unrealized losses on the operational investment securities to show the investment performance more clearly. Unrealized losses on the operating investment securities are included in "Gross profit - net" to show the changes of estimated losses of holding securities. Unrealized losses are classified into "(Reversal of) Additions to investment loss reserves", which shows the difference in investment loss reserves between the current and previous fiscal year-ends; "(Reversal of) Unrealized losses on operational investment securities", which is the difference in unrealized losses on operating investment securities with fair market value between the current and previous fiscal year-ends; and "(Reversal of) Additions to reserve for success fee refunds", which is the difference in reserve for success fee refunds between the current and previous fiscal year-ends.

E. Accounting treatment of consumption taxes

Consumption taxes are excluded from transaction amounts. Non-deductible consumption taxes are expensed as selling, general and administrative expenses. However, non-deductible consumption taxes related to the acquisition of noncurrent assets are included in "Other" under "Investments and other assets" and amortized equally in accordance with the Corporation Tax Act.

2.Notes to change in accounting principles

From the current fiscal year, the Company changed the method for recording revenue from fund management fees that JAFCO America Ventures Inc. (a wholly owned subsidiary; "JAV") receives, and excluded JAV from the scope of consolidation accordingly.

As the fund management style whereby a parent company controls overseas investment activity does not fit with the highly localized nature of the venture capital ("VC") business, our investment activity in the US has been conducted by a team of local venture capitalists, which operates its own funds and makes its own investment decisions.

Previously, fundraising for these funds was entirely dependent on capital contributions from the Company and its domestic funds, but in 2013, the US team started raising funds by themselves in response to a trend in larger fund sizes in the US VC industry. As a result, the ratio of funds raised from external investors is increasing. Also, to strengthen its brand presence in the US, the team changed its name to Icon Ventures.

3

Under such circumstances, the Company adopted the new Corporate Accounting Standard No. 29 Accounting Standard for Revenue Recognition and decided to offset JAVʼs expenses with JAVʼs revenues. Due to the resultant decrease in JAVʼs materiality in consolidated financial statements, the Company decided to exclude JAV from the scope of consolidation.

(Adoption of accounting standard for revenue recognition)

As the "Accounting Standard for Revenue Recognition" (Corporate Accounting Standard No. 29 issued on March 30, 2018; "Revenue Recognition Standard") and the "Application Guidance for Accounting Standard for Revenue Recognition" (Corporate Accounting Standard Application Guideline No. 30 issued on March 30, 2018) became applicable from the beginning of the consolidated fiscal year starting on or after April 1, 2018, the Company adopted the Revenue Recognition Standard at the beginning of the first quarter of the current fiscal year and made the following changes:

1)Change in the method for recording fund management fees received by JAV

The Company changed the method for recording fund management fees received by JAV, and now records fund management fees, net of JAVʼs selling, general and administrative expenses. As a result, net sales decreased by 1,351 million, cost of sales increased by 512 million, and selling, general and administrative expenses decreased by 1,863 million for the current fiscal year.

2)Change in the method for recognizing revenue from success fees

With regard to success fees that the Company receives from its funds, the Company now records the amount that is deemed unlikely to drop significantly as of the fiscal year end as accrued income. As a result, net sales, operating income, ordinary income and profit before income taxes for the current fiscal year each increased by 124 million, and the opening balance of retained earnings increased by 87 million.

The adoption of the Accounting Standard for Revenue Recognition is in accordance with the transitional treatment set forth in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition. The aggregate amount of the impact on retroactive application of the new accounting standard prior to the beginning of the current fiscal year is added to/subtracted from retained earnings at the beginning of the current fiscal year and the new accounting standard is applied to the balance at the beginning of the current fiscal year.

Provided, however, based on Paragraph 86 of the Accounting Standard for Revenue Recognition, retroactive application of the new accounting standard was not made to contracts whose revenue had mostly been recognized based on the previous treatment prior to the beginning of the current fiscal year. Also, based on the method specified in Paragraph 86 subparagraph (1) of the Accounting Standard for Revenue Recognition, for contract changes made prior to the beginning of the current fiscal year, the following processes from 1) to 3) are performed based on the contract terms reflecting all such changes, and the cumulative impact is added or subcontracted to retained earnings at the beginning of the current fiscal year.

1)Classification of filled and unfilled portion of performance obligations

2)Calculation of transaction price

3)Allocation of transaction price to filled and unfilled portion of performance obligations

(Change in the method of calculating projected benefit obligation)

At the JAFCO Group, the number of employees eligible for defined benefit plans decreased due to changes in the employment system, and it became clear that items in the financial statements associated with defined benefit plans lacked materiality as of the end of the current fiscal year. As a result, the method of calculating projected benefit obligation was changed from the principle method to the simplified method from the current fiscal year-end.

As the above change in the accounting method does not cause material impact on overall financial statements, comparative information for prior periods will not be restated, but the effect of the change will be accounted for in profit or loss for the current fiscal year.

The effect of this change on consolidated financial statements is minimal.

3. Notes to changes in methods of presentation

(Changes caused by the adoption of "Partial Amendments to Accounting Standard for Tax Effect Accounting")

The Company adopted "Partial Amendments to Accounting Standard for Tax Effect Accounting" (Corporate Accounting Standard No. 28, February 16, 2018), from the beginning of the current fiscal

4

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

JAFCO Co. Ltd. published this content on 15 May 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 15 May 2019 11:57:08 UTC

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P/E ratio 2020 8,29x
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Mean consensus HOLD
Number of Analysts 3
Average target price 3 783,33 JPY
Last Close Price 3 740,00 JPY
Spread / Highest target 31,0%
Spread / Average Target 1,16%
Spread / Lowest Target -18,4%
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Shinichi Fuki President & Representative Director
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