financial results overview for the 3rd quarter · financial results overview for the 3rd quarter...

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Financial Results Overview for the 3rd Quarter

Ended December 31, 2014Japan Asia Investment Co., Ltd. (JAIC)

( TSE 8518 )Announcement: February 5, 2015

The contents of this document are based on materials available at the time of its compilation and no guarantee can be made as to the continued accuracy and reliability of the material. The contents may be changed without prior notice. Risks and uncertainties including changes to economic circumstances may cause results and projections to differ materially from those presented in the document. The information in this document is for presentational purposes only and is not an inducement to invest in securities issued by JAIC.The figures in this document is based on consolidated financial statements.


Contents

Outline of Results･･････････････････････P3Statement of Income････････････････････P5Balance Sheet･･････････････････････････P10Cash Flows････････････････････････････P13Investment Execution･･････････････････P14Investment Portfolio ･･･････････････････P16JAIC Backed IPOs･･････････････････････P17


Outline of Results for the 3rd Quarter Ended December 31, 2014

Business Results （Previous Accounting Standards)・Though there remains uncertainty in the future economic circumstances, recent stock

market are in recovery trend.・Achieved investment exits of Healthy Service Corporation and other unlisted

Japanese portfolio companies, however, lack of large IPO resulted in decrease of revenues and profits year-to-year basis.

・Continuous cost saving measures resulted in decrease of SG&A expenses by 12% year-to-year basis.

Financial Position （Previous Accounting Standards)・ ¥3.8 billion was repaid based on the repayment plan.・ The balance of loans and bonds with subscription rights to shares was decreased by

56% from around ¥46 billion as of March 2009 to ¥20.1 billion as of Dec 2014.

Funds & Investment Activities・Invested in promising companies meeting the objectives of funds to be organized.・As for mega solar business, invested in projects in Mie Prefecture and Iwate Prefecture

and other several larger projects are under negotiation.・Issued stock acquisition rights with clause for exercise price adjustment in Dec. 2014 to

raise funds for mega solar investments. 8% of the stock acquisition rights was exercised and ¥138 million has been raised by the end of Jan. 2015.


Outline of Results for the 3rd Quarter Ended December 31, 2014

Note: ”PAS” Previous Accounting Standards, ”FCAS” Fund Consolidation Accounting Standards

Business results & financial position （Previous Accounting Standards)

Funds & investment activities

(JPY million) 11/3PAS

12/3PAS

13/3PAS

14/3PAS

14/3(3Q)PAS

15/3(3Q)PAS

Change(%)

14/3(3Q)FCAS

15/3(3Q)FCAS

Change(%)

Business ResultsOperating Revenues 10,979 5,396 3,784 6,155 5,071 4,221 (17%) 7,298 6,603 (10%)Operating Income 1,293 (1,878) (1,823) 852 1,243 129 (90%) 1,710 1,160 (32%)Ordinary Income 175 (2,477) (2,612) 374 856 (124) - 1,247 830 (33%)Net Income (2,044) (2,885) (2,575) 462 818 (334) - 686 (393) -Financial Position

Loans Payable, Bonds & Bondswith subscription rights to shares

32,327 28,275 25,433 24,010 24,010 20,193 -

(JPY million) 11/3 12/3 13/3 14/3 14/3(3Q) 15/3(3Q)

New & Increased Funds 1,330 11,926 4,548 - - -AUM of Funds 85,755 85,833 85,873 50,888 69,681 48,723New Investnemts 3,204 4,545 4,746 4,189 3,780 2,023Balance of Investments 42,268 36,706 33,886 25,862 26,534 19,381


Statement of Income – Break Down

(JPY:million)11/3PAS

12/3PAS

13/3PAS

14/3PAS

14/3(3Q)PAS

15/3(3Q)PAS

Change(%)

14/3(3Q)FCAS

15/3(3Q)FCAS

Change(%)

１． Fund management operation

　　Fund management fees and others 1,088 966 815 733 551 401 (27%) 272 217 (20%) 　Success Fees 295 84 37 132 96 73 (24%) 96 75 (22%)

Operating Revenue 1,383 1,050 852 865 647 475 (27%) 368 292 (21%)Operating Cost - - - - - - - - - -Operating Gross Profit 1,383 1,050 852 865 647 475 (27%) 368 292 (21%)

２． Investment operations

　Proceeds of sales of securities 8,584 3,938 2,411 4,656 3,944 3,591 (9%) 6,250 6,064 (3%) 　Others 776 244 290 478 373 136 (63%) 562 219 (61%)

Operating Revenue 9,360 4,183 2,701 5,134 4,317 3,727 (14%) 6,812 6,283 (8%) 　Cost of securities sold 6,680 3,412 1,385 2,133 1,639 1,739 6% 2,798 2,861 2% 　Investment write-offs 627 394 174 45 24 987 3890% 184 1,079 484% 　Provision for allowance for possible investment losses

(296) 978 1,863 1,435 885 207 (77%) 1,343 296 (78%)

　Others 191 178 158 52 27 62 130% 63 137 115%

Operating Cost 7,203 4,964 3,582 3,666 2,576 2,997 16% 4,390 4,374 (0%)Operating Gross Profit 2,157 (780) (880) 1,468 1,740 730 (58%) 2,421 1,909 (21%)

３． OthersOperating Revenue 234 162 229 154 106 19 (82%) 117 28 (76%)Operating Cost 83 35 25 15 12 7 (39%) 24 7 (69%)Operating Gross Profit 151 126 204 139 94 11 (88%) 93 20 (78%)

TotalOperating Revenues 10,979 5,396 3,784 6,155 5,071 4,221 (17%) 7,298 6,603 (10%)Operating Cost 7,286 4,999 3,607 3,681 2,588 3,004 16% 4,414 4,381 (1%)Operating Gross Profit 3,692 396 176 2,474 2,482 1,217 (51%) 2,883 2,221 (23%)

SG&A Expenses 2,399 2,274 2,000 1,621 1,238 1,088 (12%) 1,173 1,061 (10%)Operating Income 1,293 (1,878) (1,823) 852 1,243 129 (90%) 1,710 1,160 (32%)Ordinary Income 175 (2,477) (2,612) 374 856 (124) - 1,247 830 (33%)Net Income (2,044) (2,885) (2,575) 462 818 (334) - 686 (393) -


Statement of Income - Fund Management

・Fund management fees total was decreased by 27% year to year basis due to decrement of balance of AUM and decrement of success fees. （PAS)

・ 63% of management fees etc. was generated from funds that will reach maturity after April 2017. （PAS)

Note: ”PAS” Previous Accounting Standards

New Funds & AUM of Funds

Fund Management fees (PAS)

(JPY million) 11/3 12/3 13/3 14/3 14/3(3Q) 15/3(3Q)

New & Increased Funds 1,330 11,926 4,548 - - -AUM of Funds 85,755 85,833 85,873 50,888 69,681 48,723


12/3PAS

13/3PAS

14/3PAS

14/3(3Q)PAS

15/3(3Q)PAS

Change(%)

Fund Management fees Total 1,383 1,050 852 865 647 475 (27%)Management fees etc 1,088 966 815 733 551 401 (27%)Success fees 295 84 37 132 96 73 (24%)


Statement of Income – Investment Income

・Progress of divestment of listed portfolio companies in Japan and achieved investment exits of unlisted portfolio companies in Japan such as Healthy Service Corporation.

・Lack of large IPO such as M&A Capital Partners Co., Ltd. in last year, proceeds and realized capital gains were decreased year-to-year basis (PAS).

・Due to loss from Hakugen Co., Ltd. investment write-offs increased year-to-year basis and resulted in decrease of 53% of investment income (PAS).

■ ”PAS” Previous Accounting Standards■ “Cost of securities sold” in above table doesn’t include “Investment write-offs”


12/3PAS

13/3PAS

14/3PAS

14/3(3Q)PAS

15/3(3Q)PAS

Change(%)

Proceeds of sales ofsecurities 8,584 3,938 2,411 4,656 3,944 3,591 (9%)Cost of securities sold 6,680 3,412 1,385 2,133 1,639 1,739 6%Realized capital gains 1,904 526 1,025 2,523 2,304 1,851 (20%)Investment write-offs 627 394 174 45 24 987 3890%Provision for allowance forpossible investment losses (296) 978 1,863 1,435 885 207 (77%)Investment income 1,573 (847) (1,012) 1,042 1,394 656 (53%)


Statement of Income – Investment Income

PAS

Note: ”PAS” Previous Accounting Standards


Statement of Income - Selling, General and Administrative Expenses

Continuous cost saving measures resulted in decrease of SG&A expenses by 12% year-to-year basis (PAS).

PAS

9 months

11/3 12/3 13/3 14/3 15/3(3Q)

Consol 133 109 80 46 43Non-consol 80 66 42 23 23

NO.ofemployee


Balance Sheet - Debt Outstanding

• ¥3.8 billion was repaid based on the repayment plan.• Outstanding balance of loans payable and bonds with subscription rights to shares were decreased by 56% from

around ¥46 billion as of March 2009 to ¥20.1 billion as of Dec 2014.

PAS


Balance Sheet - Allowance For Possible Investment Losses

■Since it is considered that improving the correlation of above indication data and financial statements makes the indication data more useful, allowance reserve ratio was calculated without considering balance of taxable write-offs from FY12/3.

■Because of above mentioned change, balance of operational investment securities and balance of allowance for possible investment losses are coincident with the balances in consolidated balance sheets (PAS) respectively.

PAS

Due to divestment and loss disposition of portfolio companies with allowance, allowance reserve ratio was 23.6% (PAS) down by 6.2 points compared to last fiscal year.


Balance Sheet – Breakdown of Operational Investment Securities

◆By Area ◆By Industry

（JPY Million）（JPY Million）

14/3PAS

15/3(3Q)PAS

14/3PAS

15/3(3Q)PAS

Japan 11,091 7,562 QOL(Quality of Life) 6,027 3,212China, Hong Kong, Taiwan 3,568 2,985 IT/Internet 3,734 2,857Southeast Asia 807 448 Material/Chemical 264 264Others 1 1 Machinery/Automobile 1,604 1,323

Consumer related 190 294Construction/Real estate/Finance 921 844Retail/Restaurant 523 468Service 1,199 735Others 1,001 996

Total ① 15,469 10,997 Total ① 15,469 10,997

Investment in funds ② 2,378 3,113Investment from subsidiaries ③ 490 396Valuation and translation adjustments ④ 176 1,181

Total ①+②+③+④ 18,514 15,687


Cash Flows - Overview

・ Divestment of portfolio companies has progressed and cash flows provided by operating activities resulted in 525 million yen. Compared to 14/3(3Q), income before income taxes and minority interests was decreased and payment forpurchase of investment funds was increased. Cash flows provided by operating activities decreased 68% year-to-year basis.

・Cash flows provided by investing activities was 215 million yen mainly due to increase of proceeds from redemption of investment securities (16% decrease year-to-year basis).

・Cash provided by stock acquisition rights and repayments of loans resulted in use of 3,791 million yen in financing activities (1,424 million yen was used in 14/3(3Q))

・3,011 million yen decreased from Mar. 2014 in net cash flow.（FCAS）

(JPY million) 11/3 12/3 13/3 14/3 14/3(3Q) 15/3(3Q) Change(%)Operating CF 7,137 738 1,196 3,624 1,657 525 (68%)Investing CF 2,215 396 277 437 255 215 (16%)Financing CF (7,886) (4,056) (2,838) (1,424) (1,424) (3,791) -Change in CF 1,431 (2,948) (1,259) 2,758 562 (3,011) -Cash & Cash Equivalentsat End of Period 9,762 6,813 5,554 8,313 6,116 5,301 (13%)


Investment Execution Case

Company name Execution date

Country Business

ExaScaler Inc. Nov ’14 Japan

The development, the production and the selling of the high efficiency & small-footprint super computing system and server system

Access Bright, Inc. Sep ‘14 JapanPublishing mobile game centering on smartphone in China

Plus One marketing Ltd. Sep ‘14 Japan Planning, developing and selling SIM free mobile tools

Shenyang RMS Medical Tech Co.,Ltd.

Sep ‘14Aug ‘14 China

Developing, producing and selling medical equipment(respiration equipment & oxygen generating equipment）


Investment Execution Case

Company name Execution date

Country Business

iHeart Japan Corporation Sep ‘14 Japan

Innovative next-generation therapy that uses cardiovascular cells derived from human iPScell

Twenty Five Miles Limited Jul ‘14 China Operating free market mobile app “小交易” in China

KOYO ELECTRIC CORPORATION May ’14 Japan

ESCO business, mega-solar EPC business, service for energy saving, etc,

FANGDD NETWORK GROUP LTD May ‘14 China

Real –estate service centering on website,”房多多” for real estate agency


8,423 6,290

6,849

5,140

1,578

700

3,354

2,685

317

357

993

832

579

470

2,050

1,301

1,715

1,602

0

10,000

20,000

30,000

14/3 15/3(3Q)

Others

Service

Retail・Restaurant

Construction・Real Estate・Financial RelatedConsumer Related

Machinery・Automobile Related

Material・Chemical Related

IT・Internet Related

QOL(Quality of life) Related14,933

10,859

9,756

8,025

1,161

492

10

4

0

10,000

20,000

30,000

14/3 15/3(3Q)

Others

Southeast Asia

Greater China

Japan

Note ： Investments in funds managed by third parties and in which the JAIC Group is not involved in the management, are not included.

（Principal ＋Funds）

(¥ million)

Investment Portfolio Breakdown

◆By Area ◆By Industry

19,381

25,862

19,381

(¥ million)

25,862


43

12

9

4 4

5

3

3

3

4

1

0

2

4

6

8

10

12

14

16

18

20

10/3 11/3 12/3 13/3 14/3 15/3(3Q)

No. of new IPOs (Overseas)

No. of new IPOs (Domestics)

JAIC-Backed IPOs

10/3 11/3 12/3 13/3 14/3 15/3(3Q)

Domestics 1.3 1.9 1.4 1.5 15.2 4.9

Overseas 1.6 0.6 1.9 3.4 2.2 1.8

Investment multiple by Initial price (First price multiple)

（number of IPO）

(Investment multiple)

Note1: IPOs include acquisition by listed company as a result of equity swap etc. (1 in 2010/3, 1 in 2011/3, 2 in 2014/3 and 2 in 2015/3(3Q)).2: First price multiple = Gross market capitalization at first price/Total our acquisition cost. However, the calculation of the first price multiple does not include the companies

whose shares are acquired by listed companies as a result of equity swaps etc.

（Principal + Funds）

9

6

15

12

8

5

9months


JAICJapan Asia Investment Co., Ltd.

Seiko-Takebashi-Kyodo Bldg., 3-11 Kandanishiki-cho, Chiyoda-ku, Tokyo 101-8570TEL +81-3-3259-8518 Fax +81-3-3259-8511

http://www.jaic-vc.co.jp/

Contact to:Tetsuro Shimomura, Executive Managing DirectorKenji Kishimoto, Administration GroupMiyuki Maruyama, Administration GroupIR e-mail : [email protected]

The contents of this document are based on materials available at the time of its compilation and no guarantee can be made as to the continued accuracy and reliability of the material. The contents may be changed without prior notice. Risks and uncertainties including changes to economic circumstances may cause results and projections to differ materially from those presented in the document. The information in this document is for presentational purposes only and is not an inducement to invest in securities issued by JAIC.The figures in this document is based on consolidated financial statements.

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