JAFCO : Financial Results for the Six Months Ended September 30, 2023

JAFCO Group Co., Ltd.

The original disclosure in Japanese was released on October 25, 2023 at 12:00 (GMT+9).

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

JAFCO Group 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/
	October 25, 2023

Financial Results for the Six Months Ended September 30, 2023

[Japanese GAAP]

(Summary of Japanese Announcement)

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

1. Consolidated Performance for the Six Months Ended September 30, 2023 (April 1, 2023 - September 30, 2023)

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 Group Co.,

Ltd. stockholders

[¥ million]

[%]

For the six months ended

8,633

59.2

1,936

－

2,371

576.0

2,313

134.3

September 30, 2023

For the six months ended

5,421

(70.6)

(684)

－

350

(97.5)

987

(90.9)

September 30, 2022

Note:

Comprehensive income

Six months ended September 30, 2023:

¥7,253 million [-%]

Six months ended September 30, 2022:

(¥4,786 million) [-%]

Profit per share

Fully diluted net

income per share

[¥]

[¥]

For the six months ended

42.51

-

September 30, 2023

For the six months ended

13.88

-

September 30, 2022

(2) Consolidated Financial Position

		Total assets		Net assets		Equity ratio	Net assets
		[¥ million]		[¥ million]		[%]	per share [¥]
As of September 30, 2023		154,699			130,025		84.1	2,386.50
As of March 31, 2023		159,847			130,745		81.8	2,404.11
(Reference) Shareholders' equity	As of September 30, 2023:	¥130,025 million
		As of March 31, 2023:		¥130,745 million

1

JAFCO Group 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	-	-	-	150.00	150.00
March 31, 2023
For the year ending	-	-
March 31, 2024
For the year ending			-	-	-
March 31, 2024 (Forecast) *
Note:	The forecast of dividend for the year ending March 31, 2024 is unfixed.

The Company set a policy to pay dividends of approximately 3% of shareholders' equity (initial and term-end average value) effective fiscal year ended March 31, 2017, but the policy has been changed to pay the greater of 3% of shareholders' equity (initial and term-end average value) or 50% of net income from the fiscal year ending March 31, 2024 onwards.

3. Business Forecasts for the Year ending March 31, 2024 (April 1, 2023 - March 31, 2024)

Due to the nature of the Company's business, domestic and overseas stock markets as well as the IPO market may cause large fluctuations in its earnings level, as a result of which it is difficult to make meaningful performance forecasts. Therefore, instead of announcing financial forecasts, the Company 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 shares)

As of September 30, 2023: 56,060,000

As of March 31, 2023: 56,060,000

• Number of treasury shares

As of September 30, 2023: 1,576,350

As of March 31, 2023: 1,675,979

• Average number of shares

Six months ended September 30, 2023:	54,419,407
Six months ended September 30, 2022:	71,119,655

*Quarterly 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 six months ended September 30, 2023 will be released on the Company's website on October 25, 2023.

*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.

2

JAFCO Group Co., Ltd.

1. Outline of Operating Results

(1) Outline of Operating Results

In the consolidated fiscal six months ended September 30, 2023, the Company and its consolidated subsidiaries (hereinafter collectively referred to as the "Company Group") posted net sales of ¥8,633 million, (up 59.2% year- on-year from ¥5,421 million), operating income of ¥1,936 million (operating loss of ¥684 million in the same period of the previous year), ordinary income of ¥2,371 million (up 576.0% year-on-year from ¥350 million), and profit attributable to JAFCO Group Co., Ltd. stockholders of ¥2,313 million (down 134.3% year-on-year from ¥987 million).

During the period under review, there were three IPOs from the Company Group's portfolio (two in Japan and one overseas), resulting in an year-on-year increase in capital gains. Income from fund management fees also rose due to an increase in capital commitments from external investors for JAFCO SV7 Series ("SV7 Series") and JAFCO Taiwan II Venture Capital Limited Partnership ("Taiwan II fund"), both established in the previous fiscal year. The SV7 Series and Taiwan II fund closed at ¥97,800 million and NTD3,000 million respectively.

Because the Company's earnings may fluctuate widely for each three-month period due to the nature of its business, we also provide comparison of annualized second-quarter results and the previous full-year results.

(Outline of Capital Gains)

There were three IPOs from the Company Group's portfolio (two in Japan and one overseas) in the consolidated fiscal six months ended September 30, 2023. Capital gains on the sale of listed and unlisted shares both increased year on year.

					(Millions of yen)
		For the year ended	For the six months	For the six months	Annualized
		March 31, 2023	ended	ended	comparison
		(A)	September 30, 2022	September 30, 2023	[(B)x2]/(A)
				(B)	(%)
Revenues from operational	9,665	3,282	5,964	123.4
investment securities (1)
	Proceeds from sale of securities	9,523	3,216	5,891	123.7
	Dividend and interest income	142	66	73	102.4
Cost of operational investment	5,981	2,112	3,462	115.8
securities (2)
	Cost of securities sold	5,508	2,112	2,427	88.1
	Impairment	473	-	1,034	437.4
Capital gains (1) - (2)	3,684	1,169	2,502	135.8
Multiple (1) / (2)	1.62	1.55	1.72	-
Capital gains on listed shares	3,026	770	1,553	102.7
Capital gains on unlisted shares	658	399	948	288.3
	Gains on sale	2,153	657	2,453	227.8
	Losses on sale	1,495	257	1,504	201.2

3

JAFCO Group Co., Ltd.

(Outline of Investment Loss Reserves)

In the consolidated fiscal six months ended September 30, 2023, additions to investment loss reserves exceeded reversals and the balance of investment loss reserves increased year on year. The ratio of reserves to the balance of unlisted operational investment securities decreased.

										(Millions of yen)
		For the year ended	For the six months			For the six months	Annualized
					ended
		March 31, 2023	ended				comparison
				September 30, 2023
		(A)	September 30, 2022		[(B)x2]/(A) (%)
				(B)
Additions to investment loss	7,853		2,003				1,904	48.5
reserves (1)
	Company-by-company	7,969		2,000				1,904	47.8
	reserves
	(Reversal of general	(116)		3				-	-
	reserves)
Reversal of investment loss	2,369		988				1,461	123.3
reserves (2)
Net additions = (1)-(2)	5,484		1,014				443	16.2
(minus figures are reversals)
										(Millions of yen)
				As of March 31, 2023		As of September 30, 2023
Balance of investment loss reserves			14,490			14,970
	Company-by-company reserves			14,490			14,970
	General reserves					-			-
Ratio to all unlisted operational investment				17.0%			16.7%
securities

4

JAFCO Group Co., Ltd.

(Outline of Balance of Operational Investment Securities)

In the consolidated fiscal six months ended September 30, 2023, the balance of operational investment securities rose due to the impact of market value fluctuations of listed operational investment securities and foreign exchange rates.

								(Millions of yen)
				As of March 31, 2023		As of September 30, 2023
Difference between acquisition cost and market value of		10,809			13,478
listed operational investment securities
	Securities whose market value			10,990			13,640
	exceeds acquisition cost
	Securities whose market value			(181)			(161)
	falls below acquisition cost
								(Millions of yen)
			For the year	For the six months	For the six months
			ended	ended			ended
			March 31, 2023	September 30, 2022	September 30, 2023
(Reversal of) Unrealized losses on		181		26	(23)
operational investment securities

Balance of Operational Investment Securities			(Millions of yen)
	As of March 31, 2023	As of September 30, 2023
	Acquisition cost		Figures on the		Figures on the
		Acquisition cost	quarterly consolidated
		consolidated B/S
				B/S
Listed	2,462		13,271	2,609	16,088
Unlisted	80,507		85,258	81,416	89,415
Total	82,970		98,530	84,026	105,503

5

JAFCO Group Co., Ltd.

(Outline of Fund Operations)

In the consolidated fiscal six months ended September 30, 2023, management fees surged year on year due to an increase in capital commitments from external investors for the SV7 Series and Taiwan II fund, while success fees decreased year on year.

					(Millions of yen)
		For the year	For the six months	For the six months	Annualized
		ended	ended
		ended	comparison
		March 31, 2023	September 30, 2023
		September 30, 2022	[(B)x2]/(A) (%)
		(A)		(B)
Income from partnership	4,402	2,139	2,667	121.2
management
	Management fees	3,391	1,568	2,510	148.1
	Success fees	1,011	571	156	31.0

Note: Management fees and success fees are based on the commitment amount excluding the Company Group's interests.

(2) Outline of Financial Condition

(Outline of Assets, Liabilities, and Net Assets)

In the consolidated fiscal six months ended September 30, 2023, total assets, total liabilities, and net assets decreased mainly due to the payments of income taxes payable and dividends from retained earnings.

Non-current liabilities increased due to the issuance of ¥15,000 million of convertible bonds with stock acquisition rights.

			(Millions of yen)
		As of March 31, 2023	As of September 30, 2023
Total assets	159,847	154,699
	Current assets	156,079	150,406
	Non-current assets	3,767	4,293
Total liabilities	29,101	24,674
	Current liabilities	25,678	4,334
	Non-current liabilities	3,423	20,339
Net assets	130,745	130,025

.

(3) Consolidated Financial Forecasts and Other Forward-Looking Statements

Due to the nature of the Company's business, domestic and overseas stock markets as well as the IPO market may cause large fluctuations in its earnings level, as a result of which it is difficult to make meaningful performance forecasts. Therefore, instead of announcing financial forecasts, the Company makes timely disclosure of quarterly financial results.

6

JAFCO Group Co., Ltd.

2. Consolidated Financial Statements and Main Notes

(1) Consolidated Balance Sheets

			(Millions of yen)
		As of March 31, 2023	As of September 30, 2023
Assets
Current assets
Cash and deposits	69,481	56,825
Operational investment securities	98,530	105,503
Investment loss reserves	(14,490)	(14,970)
Other	2,556	3,047
Total current assets	156,079	150,406
Non-current assets
Property, plant and equipment
Buildings, net	182	296
Furniture and fixture	47	58
Total property, plant and equipment	229	354
Intangible assets
Software	95	63
Total intangible assets	95	63
Investments and other assets
Investment securities	2,497	2,881
Long-term loans receivable	281	298
Deferred tax assets	284	319
Other	377	375
Total investments and other assets	3,442	3,875
Total non-current assets	3,767	4,293
Total assets		159,847	154,699

7

JAFCO Group Co., Ltd.

					(Millions of yen)
				As of March 31, 2023	As of September 30, 2023
Liabilities
Current liabilities
Current portion of long-term borrowings	34	32
Income taxes payable				21,813	446
Provision for bonuses				344	341
Allowance for extraordinary compensation for	48	－
directors
Other				3,437	3,514
Total current liabilities				25,678	4,334
Non-current liabilities
Long-term borrowings				115	100
Convertible bonds with stock acquisition rights	－	15,000
Retirement benefit liability			382	375
Deferred tax liabilities				2,883	4,723
Other				42	140
Total non-current liabilities			3,423	20,339
Total liabilities				29,101	24,674
Net assets
Shareholders' equity
Share capital				33,251	33,251
Capital surplus				32,806	32,806
Retained earnings				55,148	49,243
Treasury shares				(4,115)	(3,871)
Total shareholders' equity			117,090	111,429
Accumulated other comprehensive income
Valuation difference	on	available-for-sale	11,513	15,786
securities
Foreign currency translation adjustment	2,141	2,808
Total accumulated	other	comprehensive	13,655	18,595
income
Total net assets				130,745	130,025
Total liabilities and net assets				159,847	154,699

8

JAFCO Group Co., Ltd.

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

		(Millions of yen)
	Six months ended	Six months ended
	September 30, 2022	September 30, 2023
Net sales
Revenue from operational investment securities	3,282	5,964
Income from investment partnership management	2,139	2,667
Other sales	0	0
Total net sales	5,421	8,633
Cost of sales
Cost of operational investment securities	2,112	3,462
Other costs	770	515

Total cost of sales

Gross profit

(Reversal of) Additions to investment loss reserves

(Reversal of) Unrealized losses on operational investment securities

2,8823,977

2,5394,655

1,014443

26(23)

Gross profit - net		1,497	4,235
Selling, general and administrative expenses		2,182	2,298
Operating profit (loss)		(684)	1,936
Non-operating income
Interest income		59	171
Dividend income		543	47
Foreign exchange gains		371	110
Gain on investment in other funds		45	140
Miscellaneous income		27	59
Total non-operating income		1,047	529
Non-operating expenses
Interest expenses		0	0
Loss on valuation of investment securities		1	－
Contribution to an investee		7	－
Commission for purchase of treasury shares		1	－
Bond issuance costs		-	93
Miscellaneous losses		0	1
Total non-operating expenses		12	94
Ordinary profit		350	2,371
Extraordinary income
Recoveries of written off receivables		888	－
Total extraordinary income		888	－
Extraordinary losses
Total extraordinary losses		－	－
Profit before income taxes		1,239	2,371
Income taxes - current		248	64
Income taxes - deferred		3	(6)
Total income taxes		252	57
Profit		987	2,313
Profit attributable to non-controlling interests		－	－
Profit attributable to JAFCO Group Co.,	Ltd.	987	2,313
stockholders

9

JAFCO Group Co., Ltd.

(Consolidated Statements of Comprehensive Income)

						(Millions of yen)
					Six months ended	Six months ended
					September 30, 2022	September 30, 2023
Profit					987	2,313
Other comprehensive income
Valuation difference	on available-for-sale	(6,979)	4,273
securities
Foreign currency translation adjustment			1,205	667
Total other comprehensive income			(5,773)	4,940
Comprehensive income				(4,786)	7,253
Comprehensive income attributable to
Comprehensive	income	attributable to	JAFCO	(4,786)	7,253
Group Co., Ltd. stockholders
Comprehensive	income	attributable	to	non-	－	－
controlling interests

10