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Consolidated Financial Results
for the Year Ended March 31, 2012 [Japanese Standards]
(Summary of Japanese announcement)
May 11, 2012 Company name: Japan Asia Investment Co., Ltd. Listed on: First Section of the Tokyo Stock Exchange (Stock code: 8518) URL: http://www.jaic-vc.co.jp/ Head office: Tokyo Representative: Moriyoshi Matsumoto, President and CEO Contact: Tetsuro Shimomura, Executive Managing Director Tel: +81-3-3259-8518 (main) Scheduled date for ordinary general meeting of shareholders: June 26, 2012 Scheduled date for submission of annual report: June 28, 2012 Scheduled date for start of payment of dividends: —
(Throughout this report, fractional amounts have been rounded down to the nearest one million yen.)
1. Consolidated business results for the year ended March 31, 2012 (April 1, 2011 to March 31, 2012) (1) Consolidated results of operations
(Percentages indicate year-on-year increase or decrease) Operating revenue Operating income Ordinary income Net income
Millions of yen % change Millions of yen % change Millions of yen % change Millions of yen % changeFor the year ended
March 31, 2012 6,860 (41.7) (2,449) — (3,111) — (3,078) —
For the year ended March 31, 2011 11,764 38.8 1,154 — 111 — (2,039) —
(Note) Comprehensive Income For the year ended March 31, 2012: (3,087 millions of yen) (-%) For the year ended March 31, 2011: (1,021 millions of yen) (-%)
Net income per share Diluted net income per share
Return on equity Ordinary income to total assets
Operating income to operating
revenues Yen Yen % % %
For the year ended March 31, 2012 (26.12) ― (105.9) (6.9) (35.7)
For the year ended March 31, 2011 (17.30) ― (42.6) 0.2 9.8
(Reference)Equity in earnings (loss) of affiliates For the year ended March 31 2012: (4 millions of yen) For the year ended March 31 2011: 5 millions of yen (2) Consolidated financial position
Total assets Net assets Equity ratio Net assets per share
As of March 31, 2012 As of March 31, 2011
Millions of yen 41,094 48,736
Millions of yen 10,063 13,171
% 3.5 9.0
Yen 12.08 37.26
(Reference) Total shareholders' equity As of March 31, 2012: 1,424 millions of yen As of March 31, 2011: 4,391 millions of yen
This document has been translated from Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. JAIC assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.
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(3) Cash flows Cash flow from operating
activities Cash flow from investing
activities Cash flow from financing
activities Cash and cash equivalents at
year-end Millions of yen Millions of yen Millions of yen Millions of yen
For the year ended March 31, 2012
738 396 (4,056) 6,813
For the year ended March 31, 2011
7,137 2,215 (7,886) 9,762
2. Dividends
Dividends per share (Base date) End of first quarter End of second quarter End of third quarter End of year Year
Yen Yen Yen Yen Yen Year ended March
31, 2011 — 0.00 — 0.00 0.00 Year ended March
31, 2012 — 0.00 — 0.00 0.00
Year ending March 31, 2013 (forecast) — — — — —
(Note) The expected dividend for the year ending March 31, 2013 has not yet been determined. 3. Outlook for the fiscal year ending March 31, 2013 (April 1, 2012 to March 31, 2013) The overall investment business conducted by the Group (including investment partnerships) is significantly affected by changing factors such as stock markets, given the characteristics of the business. In addition, it has been difficult to forecast results reasonably in the rapidly changing environment. We determined it is not always useful for stakeholders to disclose the result forecast based on a certain premise in this environment. We have therefore decided not to disclose the results forecast at this time. The Group will continue to make efforts to promptly disclose the results of the quarterly settlement of accounts, and when it becomes possible to generate a reasonable results forecast, we will disclose it without delay. 4. Other matters (1) Changes among significant subsidiaries (Changes among specific subsidiaries resulting in changes in the scope of
consolidation): Yes [New 3 companies (company name: 3 Investment Funds) Excluded 4 companies (company name: 4 Investment Funds)]
(2) Changes in accounting principles, accounting estimates and correction of prior period errors (i) Changes in accounting principles due to revisions to accounting standards: No (ii) Changes other than shown in (i) above: No (iii) Changes in accounting estimates: No (iv)Correction of prior period errors: No
(3) No. of shares issued and outstanding (common stock) (i) Shares issued and outstanding at the end of each period (including treasury stock) The year ended March 31, 2012: 119,993,475 shares Year ended March 31, 2011: 119,993,475 shares (ii) Shares of treasury stock at the end of each period The year ended March 31, 2012: 2,122,586shares Year ended March 31, 2011: 2,122,586shares (iii) Average number of shares during the period (cumulative quarterly consolidated period) The year ended March 31, 2012: 117,870,889shares The year ended March 31, 2011: 117,871,182shares
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Reference: Non-consolidated results 1. Business results for the year ended March 31, 2012 (April 1, 2011 to March 31, 2012) (1) Results of operations
(Percentages indicate year-on-year increase or decrease) Operating revenues Operating income Ordinary income Net income
Millions of yen % change Millions of yen % change Millions of yen % change Millions of yen % changeFor the year ended
March 31, 2012 4,758 (53.9) (1,458) ― (2,036) ― (2,227) ―
For the year ended March 31, 2011 10,324 52.9 898 ― 164 ― (1,914) ―
Net income per share Diluted net income
per share Yen Yen
For the year ended March 31, 2012
(18.90) ―
For the year ended March 31, 2011
(16.24) ―
(2) Financial position
Total assets Net assets Equity ratio Net assets per share
As of March 31, 2012 As of March 31, 2011
Millions of yen 31,484 37,753
Millions of yen 2,148 3,927
% 6.6
10.3
Yen 17.64 33.15
(Reference) Total shareholders' equity As of March 31, 2012: 2,079 millions of yen As of March 31, 2011: 3,906 millions of yen 2. Outlook for the fiscal year ending March 31, 2013 (April 1, 2012 to March 31, 2013) The overall investment business conducted by the Company is significantly affected by changing factors such as stock markets, given the characteristics of the business. In addition, it has been difficult to forecast results reasonably in the rapidly changing environment. We determined it is not always useful for stakeholders to disclose the result forecast based on a certain premise in this environment. We have therefore decided not to disclose the results forecast at this time. When it becomes possible to generate a reasonable results forecast, we will disclose it without delay. * Disclosure regarding the implementation of audit procedures
The above financial results are not subject to the audit procedures required under the Financial Instruments and Exchange Act. The audit procedures for consolidated financial statements under the Act had not been completed at the time of disclosure.
*Cautionary Statements with Respect to Forward-looking Statements and Other Notes The presentation material for the year ended March 31, 2012 was released on our website on May 11, 2012.
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1. Business Performance (1) Analysis of Business Performance 1) Overview of the Consolidated Fiscal Year Ended March 31, 2012 During the consolidated fiscal year under review (from April 1, 2011 to March 31, 2012), the future of the economy became
more uncertain due to the influence of the Great East Japan Earthquake, confused energy policies, a record strong yen,
disconnection of the supply chain as a result of flooding in Thailand, and other factors. Although the impact of the financial
crisis in Europe and the risk of further strengthening of the yen were temporarily reduced as we moved into 2012, the economic
recovery failed to continue and the environment remained uncertain.
Other countries in Asia, which have a vital link to the businesses of the Group, continued to maintain high economic growth,
although the stock market remained bearish due to the implementation of tight money policy to counter inflationary risks, and
other factors.
In this environment, the Group executed the following initiatives during the consolidated fiscal year under review.
i. Buildup of assets under management through the creation of funds and new quality investment assets
The Group has been taking “RM” (relationship management) steps to bolster our relations with financial institutions,
businesses, and government agencies both in Japan and overseas. As a result of these efforts, the Group achieved the
establishment and an increase in assets of six unique funds with a total commitment amount of 11,926 million yen during the
consolidated fiscal year under review. (For details, refer to page 53).
In the investment program, the Group focuses on investment in growing companies (growth equity) which seek to expand
their business in Asia where the Group has advantages. A joint venture company was established in China by the Group and
the Development Bank of Japan to promote growth equity investment in that country, and the joint venture is currently
operationally active. In addition, in China, Japan, and Southeast Asian countries the Group made efforts to select promising
investee companies in which investment will be made mainly by growth equity funds established in the consolidated fiscal
year under review.
ii. Investment exits through efforts for improvement of the value of companies included in the investment portfolio, and steady reduction of costs and borrowed indebtedness For each investment portfolio, the Group makes active efforts to improve the value of companies and increase the amount of
the investment exits. For example, the Group made exits which facilitated growth strategies and the capital policies of
companies, including IPOs. As a result, the total number of domestic and overseas companies which conducted IPOs
increased to 15 (as against 6 in the previous consolidated fiscal year). However, both domestic and overseas stock markets
abruptly turned bearish in and after August 2011 and the yen rose to a record level. Under this harsh external environment,
capital gains decreased and there was a loss from valuation of securities and an increase in allowances. As a result,
investment losses totaled 968 million yen (investment gains of 1,953 million yen in the previous consolidated fiscal year).
The Group achieved 7.4 % reduction in selling, general and administrative expenses as compared with the previous
consolidated fiscal year, due to successful continuous cost reduction efforts.
The Group also worked to steadily reduce indebtedness. The cumulative total of repayment of borrowings was 2,631million
yen in the consolidated fiscal year under review. The Group also repaid 2,632 million yen at the end of April 2011.
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As a result of the initiatives described above, operating revenues for the consolidated fiscal year under review totaled 6,860
million yen, a decrease of 41.7% year on year. Operating loss was 2,499 million yen, compared with an operating income of
1,154 million yen for the previous fiscal year. Ordinary loss was 3,111 million yen, compared with an ordinary income of 111
million yen for the previous fiscal year and a net loss came to 3,078 million yen, compared with a net loss of 2,039 million yen
for the previous fiscal year.
On 24 March 2009, the Group approached all transacting financial institutions concerned with its borrowings and corporate
bonds (private placement bonds) and requested changes to be made to the agreement conditions, mainly with respect to
repayment schedules. After discussions about this business turnaround plan, our proposal was accepted by the financial
institutions on 24 June 2009, including the changes to the repayment schedules. Since then, the Group has continued its efforts
to achieve the plan’s objectives until the consolidated fiscal year under review, which is the last year of the plan.
The “JAIC Business Turnaround Plan” had the following three main policies. Their progress is as follows: i. Transformation into a fund management company:
- Freeze principal investment (direct investment using equity funds) and integrate into investment from funds, and meanwhile
decrease the investment ratio in funds, so that the Group will reduce risk assets
- Reinforce the fund placement system, to ensure the investment fund utilizing external funds, and stable profits such as
management fees
As a result of limitations on principal investment, principal investment balance, which totaled 25,911 million yen (venture
capital investment) at the end of the term ending March 2009, decreased to 11,500 million yen in total (for venture capital
investment and other private equity investments) at the end of the term ending March 2012. As for the investment ratio for funds,
the Group made efforts to decrease its investment ratio in newly established funds through negotiations with other fund
stakeholders, including partner companies, at the planning stage.
The Group succeeded in establishing 12 funds for a total amount of 23,140 million yen (total of new establishment and asset
increase ) by focusing on relationship management (RM) (targeting customers) from the term ending March 2010 to the term
ending March 2012 inclusive. However, establishment of the funds was delayed beyond the original timeframe due to
deterioration in the environment for fund placement, including the public finance crisis in the U.S. and Europe and regulations
regarding the risk assets of financial institutions. For these reasons, revenue from management fees did not increase to a level at
which it could compensate for the decrease of fees due to the expiration of existing funds.
In the future, the Group aims at creating a framework by which business can be stabilized by further enhancing relations with
domestic and overseas partners, forming funds attractive to investors, improving investment performance and increasing
revenue from management fees.
ii. Strengthen competitiveness in Asia:
- Reinforce investment in Asia, centering on China, which is expected to grow in the future as well
- Reinforce the liaison function between Asia and Headquarters.
The Group positioned China as a priority investment region, and invested human resources, including placement of a director to
Beijing as General Manager for China, creation of a “China Business Development Department” which functions as a liaison
in Japan, and the employment of venture partners with a wealth of experience investing in China, in order to enhance
Japan Asia Investment Co., Ltd.Fund Consolidation
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cross-boundary investment activities between Japan and China. As a result, investment activities were enhanced, and four new
funds of a total amount of 7,558 million yen were established from the term ending March 2010 to the term ending March 2012
inclusive, and these funds are now operational. In addition, a joint venture company, which was established in China by the
Company and the Development Bank of Japan to promote growth equity investment in that country, is currently operationally
active. At present, the director is winding up his duties in China as an expatriate, and the China Business Development
Department is being transformed into a frontline department which mainly conducts investment activities in order to reinforce
investment operations and improve earning power.
In addition, a growth equity fund for the Southeast Asian region was established jointly with the Development Bank of Japan,
and started operations.
iii. Reinforcement of private equity investment business outside venture capital investment:
The Group will restructure its portfolio, from the focus on venture capital investments into innovative venture companies at
early stage to a portfolio oriented to investments into companies at sustainable growth stage, buyout investments and PE
secondary investments. As a result, the ratio of private equity investment other than venture capital investment to actual amount
of investment (11,751 million yen) from the term ending March 2010 to the term ending March 2012 stood at 43.2%.
As mentioned in item i above, the number of funds for growth equities in particular increased during the consolidated fiscal year
under review. Since it takes time to secure further increases in investment amount efforts to restructure the portfolios have not
yet been completed. However, the Group is now making efforts to change from the present investment style (focusing on the
IPOs as an exit strategy) to a new investment style (diversified exit strategies can be adopted) by further enhancing the function
of providing value to investee companies. In addition, the Group makes efforts to identify better investee companies, for
example, by targeting growing Asian companies seeking global business expansion.
Since remaining debts are coming due, we had negotiations on new repayment plans with all financial institutions concerned.
As a result, the repayment plans were accepted by all of the financial institutions. For management policy and key management
issues, as mentioned in the business plan, which are preconditions to the repayment plans, please refer to “2. Management
Policy (3) Medium-term management strategies” and “ (4) Key management issues” on page 13.
With a goal of becoming “the preferred equity partner” for all stakeholders, including investors, entrepreneurs and outstanding
management team, the Group is aiming to contribute to the improvement of value of investee companies, and makes positive
efforts to form funds as a source of revenues and to increase the number of quality investment assets.
Japan Asia Investment Co., Ltd.Fund Consolidation
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2) Business Performance and Financial Condition
(1) Revenue from Fund Activities
(Millions of yen) For the year ended
March 31, 2011 (April 1, 2010
to March 31, 2011)
For the year ended March 31, 2012 (April 1, 2011
to March 31, 2012)
Total investment funds’ management fees
729 543
Management fees 480 458 Contingency fees 248 84
(2) Capital Gains
(Millions of yen)
For the year ended
March 31, 2011 (April 1, 2010
to March 31, 2011)
For the year ended March 31, 2012 (April 1, 2011
to March 31, 2012) Proceeds of sales of operational investment
securities(A) 9,929 5,803
Cost of securities sold (B) (Note) 7,461 4,604
Realized capital gains (A)-(B) 2,468 1,199
Investment write-offs (C) 892 802
Provision for allowance for possible investment
losses (D) (377) 1,365
Investment income (A)-(B)-(C)-(D) 1,953 (968)
(Note)The amount of “Cost of securities sold (B)” in above table does not include the amount of “Investment write-offs (C)”.
(3)Unrealized Gains
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
Acquisition cost 1,229 1,579 Carrying value on consolidated balance sheet
1,294 1,898
Difference (Unrealized capital gains) 65 318
Japan Asia Investment Co., Ltd.Fund Consolidation
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(2) Risk Factors
Risks associated with the business of JAIC and the Group that may significantly influence the decisions of investors are
outlined below. JAIC recognizes the possibility of these risks occurring and works to avoid such risks and to respond
appropriately if they occur.
This section includes matters related to the future and reflects management’s assumptions and assessments based on
information available as of May 11, 2012.
1) Risk Relating to the Economic Environment and Investment Environment
The core business of the Group is based on investing in unlisted stocks, etc. primarily in Japan, Asia and the United States using
self-funding and the resources of funds managed and operated by the Group and then later selling the stock through IPOs of the
investee companies and to third parties for capital gains, as well as collecting success fees and management fees from funds
managed and operated by the Group. The business results and financial position of the Group are therefore affected by the stock
markets in countries around the world and the economic environments of target investment areas. In the event of a major
downturn in the world economy, the value of the assets in which the Group invests may decline with a downturn in the
performance of investee companies. Moreover, during the recovery phase for invested funds, if a weak stock market and
stagnant IPO market or unfavorable economic environment adversely affects sales negotiations, capital gains and success fees
earned by the Group may decrease, and the business performance and financial position of the Group may be adversely
affected.
2) Results Fluctuation Risk
One of the primary revenue sources for the Group is capital gains earned through sales on the stock market by IPOs of investee
companies and sales of stock and other assets to third parties. The selling prices of sales transactions may fluctuate
unexpectedly, affected by the stock market conditions in the accounting year when the revenues are recorded, characteristics of
individual investee companies and other factors. The capital gains earned by the Group in each accounting year therefore
fluctuates significantly and the business performance and financial position of the Group may be affected. The Group is also
active in making other PE investments*, including buyout and turnaround investments, which require a larger investment per
deal than venture capital investments. The size of the sale transactions and the contract signing time of the private equity
investments may affect the business performance and financial position of the Group for the accounting year concerned.
*Non-venture capital private equity investments, including buyout investments, turnaround investments and PE secondary
investments.
3) Investment Risk Involved in Unlisted Companies
The primary target for investments by the Group is unlisted stock, and the following risks are involved with investments in
unlisted stock:
i. The unlisted companies that are the primary targets for investment by the Group are companies in the growth phase, such as
recently established companies. They therefore include risk factors such as unstable profit and financial bases, and limited
management resources. Consequently, the Group may incur losses if an invested company suffers a decline in corporate value
or becomes bankrupt after investment.
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ii. There is generally quite a long lead time between the Group’s investment in unlisted stocks and the investee company's IPO
or the Group’s sale of the stock to third parties. There is therefore a risk that the corporate value of the invested company may
change contrary to initial predictions due to poor business performance, or other reasons. There is also a risk of a decline in
capital gains, or capital loss or valuation loss due to significantly lower than expected investment returns affected by external
factors such as the economic environment and stock market trends.
iii. Unlisted shares and other securities in which the Group invests are extremely illiquid compared with shares in listed
companies. The terms and conditions associated with investment recovery could therefore change materially, depending on the
intentions of transaction participants, and there is no guarantee that securities will be sold at the prices and timing that the Group
seeks. Moreover, the Group could incur capital losses or may be unable to sell securities for long periods.
4) Stock Market Risk
The Group holds marketable stocks due to the IPOs, etc. of investee companies. If stock prices fall in the stock market,
securities held by the Group may incur valuation losses and capital gains earned through the sale of stocks may decline, and the
business performance and financial position of the Group may be adversely affected. Moreover, sales of some newly listed
stocks may be restricted for a certain period of time after listing because of the relevant regulations of respective stock
exchanges or agreements with investee companies. Consequently, if the stock price declines during the period concerned, the
business performance and financial position of the Group may be adversely affected.
5) Exchange Risk
Given the attributes of private equity investment, the investment recovery period will be long, and the amounts recovered and
the time required for recovery cannot be identified. It is therefore difficult to forecast future cash flows, and JAIC does not make
seek to hedge the risks of exchange rate fluctuations, including the risks associated with foreign exchange contracts, except for
short-term transactions at the time of the sale of securities.
6) Deterioration Risk
The financing operations of the Group are regulated by the Money-Lending Business Control and Regulation Law, and the Law
Concerning the Regulation of Receiving of Capital Subscription, Deposits, and Interest on Deposits (hereinafter referred to as
“the Capital Subscription Act”). The Group calculates an allowance for doubtful accounts based on assumptions and
estimations about the borrowers’ financial positions, the value of collateral provided and general economic conditions.
However, actual bad debts may become greater than assumed or estimated as a result of changes in the positions of individual
borrowers and external factors such as changes in economic environments. As a result, the allowance for doubtful accounts may
become insufficient, and the business activities, business performance, and financial position of the Group may be adversely
affected.
7) Indemnity Risk Associated with the Provision of Non-Executive Directors
The Group dispatches its directors and employees as non-executive directors of investee companies. Should directors provided
by the Group to an invested company be subject to claim for damage or other legal action, the Group may be obliged to bear
employer’s liability and to pay the relevant compensation.
Japan Asia Investment Co., Ltd.Fund Consolidation
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8) Funding Risk
i. Owing to the length of time needed to recover an investment, the total amount of capital required for investment at any
particular time may exceed the total amount available from funding sources, including capital recovered from investments.
Such an imbalance may cause dramatic short-term fluctuations and deterioration in the Group’s financial position and cash
flow.
ii. JAIC needs to reliably raise the funds necessary for business through debt financing, due to the nature of its business as
mentioned in (i) above. If the financial position of JAIC deteriorates due to changes in factors such as the economic
circumstances and market trends, JAIC may encounter difficulty in financing, be forced to procure funding at a higher cost than
usual and be unable to raise funds easily through debt financing or refinancing. The emergence of such liquidity risk may cause
restrictions on the business of the Group and the financial position and business performance of the Group may be significantly
affected.
iii. On March 24, 2009, the Group requested all financial institutions concerned to agree to the change of contractual conditions
mainly the change of repayment schedule for borrowings and bonds (private placement bonds). On June 24, 2009, the Group
received approval from all financial institutions concerned for the “JAIC Business Restructuring Plan,” including the change of
contractual conditions. Since then, the Group has continued its efforts to achieve the plan targets before the end of the
consolidated fiscal year under review, which is the last fiscal year of the JAIC Business Restructuring Plan.
Considering that the remaining debts will become due for payment, the Company had consultations with all financial
institutions concerning a new repayment plan. As a result, the Company received approval from all financial institutions
concerned.
However, certain financial covenants are attached to the remaining debts. In case any such covenants are violated, the Company
will submit a proposal for improvement to all financial institutions concerned and have consultations with them.
If requested by majority lenders (creditors having 66.7% or more of the outstanding debt principal) after consultation, the
Company may lose the benefit of term. Therefore, such covenants may affect business activities, financial conditions and
business performance of the Group.
9) Exposure to Risk in Asia and the United States
The Group makes investments through group companies in Asia and the United States. There is therefore an inherent risk that in
the event of economic, political or legal changes, or occurrence of events that disrupt social order such as terrorist attacks or
disease outbreaks in countries where the Group carries out business activities, the business activities of the subsidiaries of the
Group and investee companies may be affected.
10) Personnel Turnover Risk
Nurturing and retaining top-quality venture capital professionals and fund managers is an essential prerequisite for success in
private equity investment. Retaining such staff is a key source of the Group’s competitive advantage. Reflecting this fact,
personnel costs may rise to accommodate the introduction of incentive programs and other measures to retain talented
employees. Furthermore, if it is unable to retain top employees, the future growth, business activities, business performance,
and financial position of the Group may be adversely affected.
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11) Legal and Regulatory Risk
i. The Group engages in fund management and investment businesses in Japan, Asia, the United States and in locations used for
offshore banking, such as the Cayman Islands. Consequently, the Group’s business is affected by legal regulations in these
regions (corporate laws, financial instruments and exchange laws, antimonopoly laws, taxation laws, laws relating to limited
liability partnership agreements, foreign exchange control laws, financial accounting related laws, etc.). The costs associated
with these laws may increase, and the business activities, business performance, and financial position of the Group may be
adversely affected.
ii. The Group includes companies that are registered to engage in the investment management business as well as the
investment advisory and agency businesses under the Financial Instruments and Exchange Law. Should these registrations be
annulled for some reason, execution of the relevant business may be hindered and public credibility of the Group may be
harmed, and the business activities, business performance and financial position of the Group may be adversely affected.
iii. Concerning specially permitted business for qualified institutional investors, etc. The Group includes JAIC and other
companies that have submitted a notification of engaging in specially permitted business for qualified institutional investors, etc.
pursuant to Article 63 of the Financial Instruments and Exchange Law with respect to fund management and operation business
that they conduct in Japan. In accordance with this notification, funds managed and operated by the Group must satisfy certain
requirements, such as limiting fund investors primarily to qualified institutional investors. If any event not satisfying the above
requirements occurred in the business conducted by one of the Group companies, or if such business ceased to fall within the
scope of a specially permitted business for qualified institutional investor, etc. due to a change in the official interpretation of
the applicable laws and ordinances or for any other reasons, execution of the business concerned may be hindered. In such case
the public credibility of the Group may be harmed, and the business activities, business performance, and financial position of
the Group may be adversely affected.
12) Risks Relating to Competition and Participation
Financial institutions, enterprises and foreign companies, etc. with significant funding ability may participate in the private
equity investment industry, which is engaged in the venture capital business and to which the Group belongs. If the venture
capital and private equity investment companies from these groups expand their investment activities aggressively, the business
activities, business performance, and financial position of the Group may be adversely affected due to a decrease in investment
opportunities for the Group, which is an independent group. Moreover, if competitors build up superior portfolios and realize
high investment returns and provide low-priced services and so forth, it may cause the relative competitiveness of the Group to
decline, and the business activities, business performance and financial position of the Group may be adversely affected.
13) Risks Associated with Investment Funds (Investment Partnerships, etc.)
i. Fundraising
Investment funds (including investment partnerships) are not only investment capital for the Group, but are also sources of
revenues such as management fees and success fees, and are effective vehicles for producing synergies through alliances with
various companies. If sufficient funds cannot be collected from fund investors via fundraising activities, investment activities
may be hindered and management fees may decrease, adversely affecting the business performance and financial position of the
Group.
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ii. Risk of lawsuits relating to fund management
The Group has established multiple funds, and there is a risk that as an unlimited liability partner or general partner, it will incur
losses that exceed the amount of its investment. Moreover, there is a risk of the Group being subject to a lawsuit grounded on
breach of due diligence obligations as an executive partner of a fund or because of a conflict of interest either between funds,
between the Group and a fund or fund investors, or between equity investors. In the event that the Group was to bear liability
due to such a lawsuit or other legal action against it, the business activities, business performance, and financial position of the
Group may be adversely affected, not only by the liability but also by a decline in public credibility.
14) Information Management Risks
With respect to the management and control of important information pertaining to trading partners and personal information
held by the Group, the Group has established various internal regulations, made the internal regulations fully known to all
executives and employees, reinforced the security of information systems and established an information management system.
However, if such information is leaked because of unexpected events in the future, the business activities, business performance,
and financial position of the Group may be adversely affected by claims for damages and a loss of social credibility.
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2.Management Policy
(1) Basic Management Policy, (2) Targeted Management Indicators Disclosures are omitted because there have been no material changes from those described in Consolidated Financial Results (Kessan Tanshin) for the fiscal year ended March 2010 (released on May 11, 2010). The relevant Consolidated Financial Results can be found on the following web pages: The Company's web page http://www.jaic-vc.co.jp/eng/investorrelations/financialresults/index.html
(3) Medium-term management strategies The Group has adopted the following medium-term management strategies:
(i) Preferred equity partner for all stakeholders:
Aiming to become an equity partner that is preferred by investors, entrepreneurs and outstanding management team, the Group will focus on developing professional human resources.
(ii) Strengthen competitiveness in Asia: The Group will further strengthen relationship management, primarily based on the network and partners it has developed, particularly in China and southeast Asia where the economy is likely to continue to grow in the future. It will also bolster the competitiveness of the Group by strengthening functions, in which the Group excels that link Asia and Japan. In particular, the Group will implement an investment policy in which priority is placed on investment in growing companies located mainly in Asia which seek global business. The Group will assist Japanese companies in entering Asian markets, and Asian companies in collaborating with Japanese companies.
(iii) Build up quality new investment assets and establish a well-balanced portfolio The Group will build up quality investment assets which can be the source of revenues in the future by adopting an investment style which emphasizes the provision of value to investee companies. The Group will restructure its portfolio, from the focus on venture capital investments in innovative companies at an early stage to a portfolio oriented to investments in companies at the sustainable growth stage, buyout investments and PE secondary investments.
(4) Key management issues The Group regards the following items as key management issues:
(i) Maximize the recovery of existing investment assets The Group will seek to improve its investment performance through comprehensive initiatives to improve the
corporate value of portfolio companies and through the provision and realization of optimum exit (investment recovery) scenarios for portfolio companies.
(ii) Build up AUM (assets under management) by establishing funds that meet investor needs
The Group will aim to improve investment results by establishing funds through attractive fund proposals and designs, appealing to investors based on an accurate understanding of investor needs and communications with investors, and creating a system to stabilize business management by increasing revenues from management fees.
(iii) Build up quality new investment assets and establish a well-balanced portfolio From the viewpoint of asset allocation by investment program, the Group will restructure its portfolio, by increasing a portfolio oriented to investments in companies at the sustainable growth stage, buyout investments and PE secondary investments. In venture capital investments, the Group will further strengthen the function of providing value to investee companies and invest by adding a new twist to the investment share and methods, considering exit strategies that do not depend on an IPO.
(iv) Review the existing operation system
The Group will continue to strengthen profitability management, promote efficient operations by establishing an operation system which is suitable for the size and particulars of assets, and improve profitability by taking measures such as development of human resources.
Japan Asia Investment Co., Ltd.Fund Consolidation
13
(v) Strengthen the network and the customer base The Group will take steps to strengthen relationships with financial institutions and businesses, and will seek to deepen and expand its network, thereby establishing funds, increasing the corporate value of portfolio companies, and maximizing the investment recovery.
Japan Asia Investment Co., Ltd.Fund Consolidation
14
3.Consolidated Financial Statements(1) Consolidated Balance Sheets
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
Consolidated balance sheetsAssets
Current assetsCash and deposits 15,698 13,280Short-term investment securities 78 73Operational investment securities 35,268 29,422Allowance for possible investment loss (7,973) (6,601)Operating loans 711 756Deferred tax assets - 0Other 670 376Allowance for doubtful accounts (19) (19)
Total current assets 44,435 37,288Noncurrent assets
Property, plant and equipmentBuildings and structures 85 102
Accumulated depreciation (39) (47)Buildings and structures, net 46 55
Vehicles, tools, furniture and fixtures 60 78Accumulated depreciation (46) (46)Vehicles, tools, furniture and fixtures, net 13 32
Land 24 109Lease assets 3 3
Accumulated depreciation (1) (2)Lease assets, net 1 1
Total property, plant and equipment 86 198Intangible assets
Other 94 118Total intangible assets 94 118Investments and other assets
Investment securities 3,230 2,744Claims provable in bankruptcy, claims provable inrehabilitation and other
1,175 945
Deferred tax assets 4 3Other 149 113Allowance for doubtful accounts (439) (320)
Total investments and other assets 4,120 3,488Total noncurrent assets 4,301 3,805
Total assets 48,736 41,094
Japan Asia Investment Co., Ltd.Fund Consolidation
15
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
LiabilitiesCurrent liabilities
Short-term loans payable 1,865 2,842Current portion of bonds with subscription rights to shares 1,420 -
Lease obligations 0 0Accrued expenses 401 494Income taxes payable 209 144Accrued consumption taxes 20 8Deferred tax liabilities 0 -
Provision for bonuses 25 15Provision for loss on liquidation of subsidiaries and affiliates
- 95
Other 523 229Total current liabilities 4,466 3,831Noncurrent liabilities
Long-term loans payable 30,052 26,444Lease obligations 1 0Deferred tax liabilities 1 0Provision for retirement benefits 218 129Provision for directors' retirement benefits 62 62Deposits received from silent partnership 703 536Other 59 25
Total noncurrent liabilities 31,098 27,199Total liabilities 35,564 31,030Net assets
Shareholders' equityCapital stock 27,166 4,000Capital surplus - 2,118Retained earnings (19,794) (1,825)Treasury stock (415) (415)
Total shareholders' equity 6,956 3,878Accumulated other comprehensive income
Valuation difference on available-for-sale securities (1,043) (1,001)Deferred gains or losses on hedges (1) -
Foreign currency translation adjustment (1,520) (1,452)Total accumulated other comprehensive income (2,565) (2,453)Subscription rights to shares 20 69Minority interests 8,760 8,570
Total net assets 13,171 10,063Total liabilities and net assets 48,736 41,094
Japan Asia Investment Co., Ltd.Fund Consolidation
16
(2) Consolidated Statements of Income
(Millions of yen)For the year ended
March 31, 2011(April 1, 2010, to March 31,
2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Consolidated statements of incomeOperating revenue 11,764 6,860Operating cost 8,371 7,235Operating gross profit (loss) 3,393 (375)
Salaries and allowances 754 691Operations consignment expenses 168 245Provision for bonuses 25 31Retirement benefit expenses 56 46Provision of allowance for doubtful accounts - (81)Rent expenses 264 188Depreciation 25 24Bad debts expenses 42 11Fund interests expenses 222 288Other 679 627
Selling, general and administrative expenses 2,239 2,073Operating income (loss) 1,154 (2,449)Non-operating income
Interest income 12 15Dividends income 55 30Equity in earnings of affiliates 5 -
Gain on hedge trading 105 53Cancelation income 80 -
Gain on investments in partnership - 87
Miscellaneous income 57 13Total non-operating income 316 200Non-operating expenses
Interest expenses 832 649Commission fee 0 1Equity in losses of affiliates 0 4Loss on investments in partnership - 11Foreign exchange losses 519 193Miscellaneous loss 7 1
Total non-operating expenses 1,359 862Ordinary income (loss) 111 (3,111)
Japan Asia Investment Co., Ltd.Fund Consolidation
17
(Millions of yen)For the year ended
March 31, 2011(April 1, 2010, to March 31,
2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Extraordinary incomeReversal of allowance for doubtful accounts 17 -
Gain on sales of investment securities 46 -
Gain on redemption of investment securities - 45Gain on sales of subsidiaries and affiliates' stocks - 7Gain on retirement by purchase of bonds with subscriptionrights to shares
374 -
Gain on sales of noncurrent assets - 4Reversal of provision for business restructuring 28 -
Total extraordinary income 466 58Extraordinary loss
Impairment loss 61 -
Loss on sales of investment securities 1,094 -
Loss on valuation of investment securities 100 136Loss on redemption of investment securities - 57Provision for loss on liquidation of subsidiaries and affiliates - 95Business restructuring expenses 1,203 157Loss on disposition of foreign currency translation adjustments 92 -
Expenses incurred as a result of the revision of personnel plans 53 -
Loss on change in equity - 3Total extraordinary losses 2,606 449
Loss before dividends distribution from silent partnership,income taxes (2,028) (3,503)
Dividends distribution from silent partnership (15) (167)Loss before income taxes and minority interests (2,013) (3,335)Income taxes-current 164 81Refund of income taxes - (30)Income taxes-deferred (0) 0Total income taxes 164 51Loss before minority interests (2,177) (3,387)Minority interests in loss (137) (308)Net loss (2,039) (3,078)
Japan Asia Investment Co., Ltd.Fund Consolidation
18
(3) Consolidated Statements of Comprehensive Income
(Millions of yen)For the year ended
March 31, 2011(April 1, 2010, to March 31,
2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Consolidated statements of comprehensive incomeLoss before minority interests (2,177) (3,387)Other comprehensive income
Valuation difference on available-for-sale securities 1,092 145Deferred gains or losses on hedges 8 1Foreign currency translation adjustment 303 147Share of other comprehensive income of associatesaccounted for using equity method
(248) 5
Total other comprehensive income 1,156 299Comprehensive income (1,021) (3,087)Comprehensive income attributable to
Comprehensive income attributable to owners of the parent (787) (2,967)Comprehensive income attributable to minority interests (233) (120)
Japan Asia Investment Co., Ltd.Fund Consolidation
19
(4)Consolidated Statements of Changes in Net Assets
(Millions of yen)
PeriodAccount
For the year endedMarch 31, 2011
(April 1, 2010, to March 31,2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Shareholders' equityCapital stock
Balance at the beginning of current period 27,166 27,166Changes of items during the periodTransfer to other capital surplus from capital stock - (23,166)Total changes of items during the period - (23,166)Balance at the end of current period 27,166 4,000
Capital surplusBalance at the beginning of current period - -Changes of items during the periodTransfer to other capital surplus from capital stock - 23,166Deficit disposition - (21,047)Total changes of items during the period - 2,118Balance at the end of current period - 2,118
Retained earningsBalance at the beginning of current period (17,754) (19,794)Changes of items during the periodDeficit disposition - 21,047Net loss (2,039) (3,078)Total changes of items during the period (2,039) 17,969Balance at the end of current period (19,794) (1,825)
Treasury stockBalance at the beginning of current period (415) (415)Changes of items during the periodPurchase of treasury stock (0) -Total changes of items during the period (0) -Balance at the end of current period (415) (415)
Total shareholders' equityBalance at the beginning of current period 8,996 6,956Changes of items during the periodTransfer to other capital surplus from capital stock - -Deficit disposition - -Net loss (2,039) (3,078)Purchase of treasury stock (0) -Total changes of items during the period (2,039) (3,078)Balance at the end of current period 6,956 3,878
Japan Asia Investment Co., Ltd.Fund Consolidation
20
(Millions of yen)
PeriodAccount
For the year endedMarch 31, 2011
(April 1, 2010, to March 31,2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Accumulated other comprehensive incomeValuation difference on available-for-sale securities
Balance at the beginning of current period (2,137) (1,043)Changes of items during the periodNet changes of items other than shareholders' equity 1,094 41Total changes of items during the period 1,094 41Balance at the end of current period (1,043) (1,001)
Deferred gains or losses on hedgesBalance at the beginning of current period (9) (1)Changes of items during the periodNet changes of items other than shareholders' equity 8 1Total changes of items during the period 8 1Balance at the end of current period (1) -
Foreign currency translation adjustmentBalance at the beginning of current period (1,670) (1,520)Changes of items during the periodNet changes of items other than shareholders' equity 149 68Total changes of items during the period 149 68Balance at the end of current period (1,520) (1,452)
Total accumulated other comprehensive incomeBalance at the beginning of current period (3,817) (2,565)Changes of items during the periodNet changes of items other than shareholders' equity 1,251 111Total changes of items during the period 1,251 111Balance at the end of current period (2,565) (2,453)
Subscription rights to sharesBalance at the beginning of current period - 20Changes of items during the periodNet changes of items other than shareholders' equity 20 49Total changes of items during the period 20 49Balance at the end of current period 20 69
Minority interestsBalance at the beginning of current period 9,763 8,760Changes of items during the periodNet changes of items other than shareholders' equity (1,003) (189)Total changes of items during the period (1,003) (189)Balance at the end of current period 8,760 8,570
Total net assetsBalance at the beginning of current period 14,942 13,171Changes of items during the periodTransfer to other capital surplus from capital stock - -Deficit disposition - -Net loss (2,039) (3,078)Purchase of treasury stock (0) -Net changes of items other than shareholders' equity 268 (29)Total changes of items during the period (1,770) (3,108)Balance at the end of current period 13,171 10,063
Japan Asia Investment Co., Ltd.Fund Consolidation
21
(5)Consolidated Statements of Cash Flows
(Millions of yen)
PeriodAccount
For the year endedMarch 31, 2011
(April 1, 2010, to March 31,2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Ⅰ Cash flows from operating activities :Loss before income taxes and minority interests (2,013) (3,335)Depreciation and amortization 25 24Impairment loss 61 -Increase (decrease) in allowance for investment loss (2,796) (855)Increase (decrease) in provision for business restructuring (25) -Gain on hedge trading (105) (53)Increase (decrease) in allowance for doubtful accounts (479) (142)Increase (decrease) in provision for bonuses 23 (10)Increase (decrease) in provision for retirement benefits 6 (88)Increase (decrease) in provision for directors' retirement benefits (5) -Increase (decrease) in provision for loss on liquidation ofsubsidiaries and affiliates - 95
Interest and dividends income (64) (34)Interest expenses 800 609Equity in (earnings) losses of affiliates (4) 4Loss (gain) on sales of noncurrent assets - (4)Loss (gain) on sales of investment securities 1,048 -Loss (gain) on valuation of investment securities 100 136Loss (gain) on redemption of investment securities - (39)Loss (gain) on sales of stocks of subsidiaries and affiliates 2 (7)Business restructuring expenses 1,203 -Loss on valuation of operational investment securities 505 216Decrease (increase) in investment securities for sale 8,665 4,121Decrease (increase) in operating loans receivable 99 72Decrease (increase) in claims provable in bankruptcy, claimsprovable in rehabilitation 585 247Gain on retirement of bonds with subscription rights to shares (374) -Payment for purchase of investment funds (683) (3,122)Dividends from investment funds 1,977 3,006Loss on disposition of foreign currency translation adjustments 92 -Increase (decrease) in investment funds of minority interest 147 521Loss (gain) on investments in partnership - (75)Other, net (654) 117
Subtotal 8,139 1,401Interest and dividends income received 63 33Interest expenses paid (833) (616)Income taxes paid (231) (111)Income taxes refund - 30Net cash provided by (used in) operating activities 7,137 738
Ⅱ Cash flows from invesitng activities:Purchase of property, plant and equipment (9) (47)Proceeds from sales of property, plant and equipment 332 2Purchase of intangible assets (0) (6)Purchase of investment securities (11) (135)Proceeds from sales of investment securities 1,468 6Proceeds from liquidation of investment securities 5 94Proceeds from redemption of investment securities - 455Decrease (increase) in time deposits 333 (45)Proceeds from repayment of deposits 34 25Deposits paid for office rental (9) (1)Decrease (increase) in other investments 3 15Proceeds from purchase of investments in subsidiaries resulting inchange in scope of consolidation - 36
Payments for sales of investments in subsidiaries resulting in changein scope of consolidation - (4)
Proceeds from sales of investments in subsidiaries resulting inchange in scope of consolidation 68 -
Net cash provided by (used in) investing activities 2,215 396
Japan Asia Investment Co., Ltd.Fund Consolidation
22
(Millions of yen)
PeriodAccount
For the year endedMarch 31, 2011
(April 1, 2010, to March 31,2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Ⅲ Cash flows from financing activities:Increase (decrease) in short-term borrowings, net (126) -Proceeds from long-term loans payable 443 -Repayment of long-term loans payable (6,782) (2,631)Redemption of bonds -Redemption of bonds with subscription rights to shares - (1,420)Payments for retirement by purchase of bonds with subscriptionrights to shares (1,381) -
Cash dividends paid (1) (1)Cash dividends paid to minority shareholders (37) (2)Purchase of treasury stock (0) -Repayments of lease obligations (0) (0)Other, net 0 -Net cash provided by (used in) financing activities (7,886) (4,056)
Ⅳ Effect of exchange rate change on cash and cash equivalents (34) (26)Ⅴ Net increase (decrease) in cash and cash equivalents 1,431 (2,948)Ⅵ Cash and cash equivalents at beginning of period 8,330 9,762Ⅶ Cash and cash equivalents at end of period 9,762 6,813
Japan Asia Investment Co., Ltd.Fund Consolidation
23
(6) Notice Concerning Notes on Matters Regarding the Assumption of Going Concern No applicable items
(7) Others ⅰ)Notes related to Consolidated Balance Sheets
As of March 31, 2011 As of March 31, 2012
1.Assets as collateral (Millions of yen)
Operational investment securities 2,341 Investment securities 327 Land 24
Corresponding debt to collateral of operational investment securities of 2,100 millions of yen
Long-term loans payable 1,010 2 . -
1.Assets as collateral (Millions of yen)
Operational investment securities 2,341 Investment securities - Land -
Corresponding debt to collateral of operational investment securities of 2,100 millions of yen
Long-term loans payable 1,010
2 . Financial covenants The Company received the approval of all financial institutions for its repayment plan covering 25,643 million yen (long-term loans payable: 25,433 million yen, short-term loans payable: 210 million yen) out of the outstanding loans payable as of March 31, 2012. These loans payable are subject to the following financial covenants with effect from May 1, 2012. In case the Company violates any of these covenants, it will submit an improvement plan, etc. to all financial institutions and have consultations with them. If requested by majority lenders (creditors having 66.7% or more of the outstanding loans payable principal) after consultation, the Company may lose the benefit of term.
(1) Net assets on the consolidated balance sheets based on the previous accounting standards (refer to the following note) should not be negative as of the last day of each term ending March 2013 and subsequent years.
(2) Ordinary income on the consolidated statements of income based on the previous accounting standards should not be negative for two terms in succession in and after the term ending March 2013.
(3) Operating income on the consolidated statements of income based on the previous accounting standards for each quarter should not be negative for three quarters in succession in and after the first quarter of the term ending March 2013, and net assets on the consolidated balance sheets based on the previous accounting standards as of the last day of the first quarter of the term ending March 2013 and subsequent quarters should not be less than 50% of net assets on the
Japan Asia Investment Co., Ltd.Fund Consolidation
24
consolidated balance sheets based on the previous accounting standards as of the last day of the term ended March 2012.
(Note) Previous accounting standards
As of the term ended March 2007, the Group has adopted the “Practical Solution on Application of Control Criteria and Influence Criteria to Investment Associations” (Accounting Standards Board of Japan Practical Issues Task Force No. 20 issued on September 8, 2006), and consolidated financial statements are prepared by including investment partnerships, etc. managed by the Company and its subsidiaries in the scope of consolidation. To meet the requests of investors, market participants and creditors, the Company separately prepared financial statements based on the “previous accounting standards”, and this information is continuously disclosed in the earnings summary (“Kessan Tanshin”) as reference information. In those financial statements, assets, liabilities, revenues and expenses for investment funds (limited-partnership type) were reported based on the investment portion by the Company and its subsidiaries and by excluding the portion held by external investors. In addition, the consolidated financial statements in which company-type funds are excluded from the scope of consolidations in those financial statements.
Japan Asia Investment Co., Ltd.Fund Consolidation
25
ⅱ)Notes related to Consolidated Statements of Income
For the year ended March 31, 2011 (April 1, 2010, to March 31, 2011)
For the year ended March 31, 2011 (April 1, 2010, to March 31, 2011)
1. Gain on Sales of Noncurrent Assets ―
2.Losses on Business Restructuring
In the fiscal year ended March 31,2011, the company decided not to define certain assets in which it is unlikely to be proactively involved, as “operational investment assets”. Associated with this change, the difference between the book value and expected collectable amount of the assets are posted as “Business restructuring expenses”.
1. Gain on Sales of Noncurrent Assets (Millions of yen) Vehicles 2 Membership Rights 2 2.Losses on Business Restructuring
The Company has recorded expenses incurred in relation to business restructuring based on business restructuring plans. A breakdown of losses on business restructuring is as follows:
.(Millions of yen)Advisory fee for business restructuring 30Addition to retirement pay 127
Japan Asia Investment Co., Ltd.Fund Consolidation
26
ⅲ)Securities 1. Trading securities No applicable items 2. Held-to-maturity securities for which market quotations are available No applicable items 3. Other securities for which market quotations are available Fiscal year ended March 31, 2011 (As of March 31, 2011)
(Millions of yen) Type Carrying value on
consolidated balance sheet
Acquisition cost Difference
(1)Shares 421 255 165(2)Bonds - - -(3)Others 13 12 0
Securities whose carrying value exceeds their acquisition cost
Subtotal 434 268 165(1)Shares 471 572 (101)(2)Bonds 458 458 -(3)Others 339 443 (103)
Securities whose carrying value falls below their acquisition cost
Subtotal 1,270 1,474 (204)Total 1,704 1,743 (38)
Fiscal year ended March 31, 2012 (As of March 31, 2012)
(Millions of yen) Type Carrying value on
consolidated balance sheet
Acquisition cost Difference
(1)Shares 818 326 491(2)Bonds - - -(3)Others 12 12 0
Securities whose carrying value exceeds their acquisition cost
Subtotal 831 339 491(1)Shares 599 781 (182)(2)Bonds 529 529 -(3)Others 337 438 (100)
Securities whose carrying value falls below their acquisition cost
Subtotal 1,466 1,749 (283)Total 2,298 2,089 208
Note: The following items are not included above tables because they have no market value and it is extremely difficult to evaluate the fair value. Fiscal year ended March 31, 2011 (As of March 31, 2011)
(Millions of yen) Carrying value on consolidated balance sheet Other securities
Unlisted shares 34,126 Unlisted bonds 340 Others 1,969
Total 36,436
Japan Asia Investment Co., Ltd.Fund Consolidation
27
Fiscal year ended March 31, 2012 (As of March 31, 2012) (Millions of yen)
Carrying value on consolidated balance sheet Other securities
Unlisted shares 27,014 Unlisted bonds 816 Others 1,670
Total 29,501 4. Other securities which were sold For the year ended March 31, 2011 (from April 1, 2010 to March 31, 2011)
(Millions of yen) Type Proceeds from sales Total gain on sales Total loss on sales
Shares 11,402 3,430 2,031Bonds 20 20 ‐
For the year ended March 31, 2012 (from April 1, 2011 to March 31, 2012)
(Millions of yen) Type Proceeds from sales Total gain on sales Total loss on sales
Shares 5,797 1,786 593Bonds 6 6 ‐
5. Impairment of securities Impairment losses of 938 million yen were recorded in the fiscal year under review against “Other securities” (including those securities on which it is extremely difficult to evaluate the fair value) of which 802 million yen were against operational investment securities and 136 million yen were against investment securities.
Japan Asia Investment Co., Ltd.Fund Consolidation
28
ⅳ)Per-share Data 1. Net assets per share
As of March 31, 2011 As of March 31, 2012 Net assets per share ¥37.26 Net assets per share ¥12.08 2. Net loss per share
For the year ended March 31, 2011 (April 1, 2010, to March 31, 2011)
For the year ended March 31, 2012 (April 1, 2011, to March 31, 2012)
Net loss per share ¥17.30 Net loss per share ¥26.12 Note: ⅰ)Diluted net income per share is not disclosed because of net loss. ⅱ)The basis for the calculation of net loss per share is as follows. For the year ended March 31, 2011
(April 1, 2010 to March 31, 2011) For the year ended March 31, 2012 (April 1, 2011 to March 31, 2012)
Net loss per share Net loss (Millions of yen) 2,039 3,078
Amount not attributable to common shareholders (Millions of yen)
-
Net loss relating to common stock (Millions of yen)
2,039 3,078
Average no. of shares outstanding during the term (Thousands)
117,871 117,871
ⅴ) Important Subsequent Events
No applicable items
Japan Asia Investment Co., Ltd.Fund Consolidation
29
(Millions of yen)
Operating revenues Percentageof total Operating cost Operating gross
profit
% 729 6.2 - 729
10,788 91.7 8,287 2,500246 2.1 83 163
11,764 100.0 8,371 3,393
(Millions of yen)
Operating revenues Percentageof total Operating cost Operating gross
profit (loss)
% 543 7.9 - 543
6,143 89.6 7,199 (1,056)173 2.5 35 137
6,860 100.0 7,235 (375)
OthersTotal
For the year ended March 31, 2012(April 1, 2011 to March 31, 2012)
(8) Breakdown of Operating Revenues and Operating Gross Profit
Period
Account
Fundmanagement operation
Fundmanagement operationInvestment operation
Period
Account
For the year ended March 31, 2011(April 1, 2010 to March 31, 2011)
Investment operationOthers
Total
Japan Asia Investment Co., Ltd.Fund Consolidation
30
4.Financial Statements(1) Balance Sheets
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
AssetsCurrent assets
Cash and deposits 11,423 9,089Short-term investment securities 78 73Operational investment securities 24,864 20,304Allowance for possible investment loss (6,417) (4,866)Operating loans 680 649Prepaid expenses 113 98Accounts receivable-other 440 190Other 142 24Allowance for doubtful accounts (21) (17)
Total current assets 31,304 25,545Noncurrent assets
Property, plant and equipmentBuildings 51 51
Accumulated depreciation (13) (17)Buildings, net 38 34
Tools, furniture and fixtures 23 36Accumulated depreciation (16) (22)Tools, furniture and fixtures, net 6 14
Land 24 92Lease assets 3 3
Accumulated depreciation (1) (2)Lease assets, net 1 1
Total property, plant and equipment 71 141Intangible assets
Software 3 6Telephone subscription right 3 3Other 0 0
Total intangible assets 7 10Investments and other assets
Investment securities 2,594 2,174Stocks of subsidiaries and affiliates 2,983 3,001Investments in other securities of subsidiaries andaffiliates 126 67
Allowance for investment loss (174) (167)Leasehold Deposits 78 64Membership Rights 9 1Claims provable in bankruptcy, claims provable inrehabilitation and other 1,158 924
Long-term prepaid expenses 0 1Other 18 18Allowance for doubtful accounts (425) (298)Total investments and other assets 6,370 5,786
Total noncurrent assets 6,449 5,939Total assets 37,753 31,484
Japan Asia Investment Co., Ltd.Fund Consolidation
31
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
LiabilitiesCurrent liabilities
Short-term loans payable to subsidiaries and affiliates 252 249Current portion of long-term loans payable 1,865 2,842Current portion of bonds with subscription rights to shares 1,420 -
Lease obligations 0 0Accrued expenses 331 361Income taxes payable 58 22Accrued consumption taxes 13 -
Advances received 25 28Unearned revenue 119 90Provision for bonuses 25 8Other 333 83
Total current liabilities 4,446 3,686Noncurrent liabilities
Long-term loans payable 29,042 25,433Lease obligations 1 0Provision for retirement benefits 214 126Provision for directors' retirement benefits 62 62Other liabilities 59 25
Total noncurrent liabilities 29,380 25,648Total liabilities 33,826 29,335Net assets
Shareholders' equityCapital stock 27,166 4,000Other capital surplus - 2,118Retained earnings brought forward (21,047) (2,227)Treasury stock (415) (415)
Total shareholders' equity 5,703 3,475Valuation and translation adjustments
Valuation difference on available-for-sale securities (1,795) (1,395)Deferred gains or losses on hedges (1) -
Total valuation and translation adjustments (1,796) (1,395)Subscription rights to shares 20 69Total net assets 3,927 2,148
Total liabilities and net assets 37,753 31,484
Japan Asia Investment Co., Ltd.Fund Consolidation
32
(2) Statements of Income
(Millions of yen)For the year ended
March 31, 2011(April 1, 2010, to March 31,
2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Statements of incomeOperating revenue
Investment funds' management fees 666 509Revenues from operational investment securities 8,794 3,902Dividend income from operational investment securities 480 143Interest income from operational investment securities 30 26Consultancy fees 20 30Commercial loan interest 72 97Other operating revenue 259 48Operating revenue 10,324 4,758
Operating costCost of operational investment securities 7,513 3,777Provision(Reversal ) of allowance for possible investment loss (284) 499Financial cost 56 35Other operating cost 201 145Operating cost 7,487 4,458
Operating gross profit 2,837 299Selling, general and administrative expenses
Directors' compensations 57 97Salaries and allowances 522 476Retirement benefit expenses 52 42Provision for bonuses 25 25Provision of allowance for doubtful accounts - (86)Traveling and transportation expenses 32 44Book expenses 8 5Taxes and dues 123 82Rent expenses 110 89Entertainment expenses 3 7Communication expenses 11 10Advertising expenses 3 3Operations consignment expenses 302 292Depreciation 13 14Bad debts expenses 42 0Fund interests expenses 370 401Other 257 251Selling, general and administrative expenses 1,938 1,757
Operating income (loss) 898 (1,458)
Japan Asia Investment Co., Ltd.Fund Consolidation
33
(Millions of yen)For the year ended
March 31, 2011(April 1, 2010, to March 31,
2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Non-operating incomeInterest income 7 7Dividends income 372 34Rental revenues 1 0
Fiduciary obligation fee 20 10Gain on hedge trading 105 53Cancelation income 80 -
Gain on investments in partnership - 87
Miscellaneous income 47 7Total non-operating income 635 202
Non-operating expensesInterest expenses 811 615Commission fee 0 1Foreign exchange losses 550 149Loss on investments in partnership - 11Miscellaneous loss 7 1Total non-operating expenses 1,369 780
Ordinary income (loss) 164 (2,036)Extraordinary income
Reversal of allowance for investment loss 32 -
Reversal of allowance for doubtful accounts 16 -
Gain on sales of investment securities 46 -
Gain on redemption of investment securities - 45Gain on sales of subsidiaries and affiliates' stocks - 39Gain on retirement by purchase of bonds with subscriptionrights to shares
374 -
Gain on sales of noncurrent assets - 2Total extraordinary income 469 87
Extraordinary lossLoss on support to subsidiaries and affiliates 35 -
Loss on liquidation of subsidiaries and affiliates - 4Impairment loss 61 -
Loss on sales of investment securities 1,095 -
Loss on valuation of investment securities 101 136
Loss on redemption of investment securities - 5Provision of allowance for investment loss 6 -
Business restructuring expenses 1,201 157Expenses incurred as a result of the revision of personnel plans 41 -
Total extraordinary losses 2,542 304Loss before income taxes (1,908) (2,252)Income taxes-current 5 5Refund of income taxes - (30)Total income taxes 5 (24)Net loss (1,914) (2,227)
Japan Asia Investment Co., Ltd.Fund Consolidation
34
(3)Statements of Changes in Net Assets
(Millions of yen)
PeriodAccount
For the year endedMarch 31, 2011
(April 1, 2010, to March 31,2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Shareholders' equityCapital stock
Balance at the beginning of current period 27,166 27,166Changes of items during the period
Transfer to other capital surplus from capital stock - (23,166)Total changes of items during the period - (23,166)
Balance at the end of current period 27,166 4,000Capital surplus
Other capital surplusBalance at the beginning of current period - -Changes of items during the period
Transfer to other capital surplus from capital stock - 23,166Deficit disposition - (21,047)Total changes of items during the period - 2,118
Balance at the end of current period - 2,118Total capital surplus
Balance at the beginning of current period - -
Changes of items during the periodTransfer to other capital surplus from capital stock - 23,166Deficit disposition - (21,047)Total changes of items during the period - 2,118
Balance at the end of current period - 2,118Retained earnings
Other retained earningsRetained earnings brought forward
Balance at the beginning of current period (19,133) (21,047)Changes of items during the period
Deficit disposition - 21,047Net loss (1,914) (2,227)Total changes of items during the period (1,914) 18,819
Balance at the end of current period (21,047) (2,227)Total retained earnings
Balance at the beginning of current period (19,133) (21,047)Changes of items during the period
Deficit disposition - 21,047Net loss (1,914) (2,227)Total changes of items during the period (1,914) 18,819
Balance at the end of current period (21,047) (2,227)Treasury stock
Balance at the end of previous period (415) (415)Changes of items during the period
Purchase of treasury stock (0) -Total changes of items during the period (0) -
Balance at the end of current period (415) (415)Total shareholders' equity
Balance at the beginning of current period 7,617 5,703Changes of items during the periodTransfer to other capital surplus from capital stock - -Deficit disposition - -Net loss (1,914) (2,227)Purchase of treasury stock (0) -Total changes of items during the period (1,914) (2,227)
Balance at the end of current period 5,703 3,475
Japan Asia Investment Co., Ltd.Fund Consolidation
35
(Millions of yen)
PeriodAccount
For the year endedMarch 31, 2011
(April 1, 2010, to March 31,2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Valuation and translation adjustmentsValuation difference on available-for-sale securities
Balance at the beginning of current period (2,853) (1,795)Changes of items during the period
Net changes of items other than shareholders' equity 1,058 399Total changes of items during the period 1,058 399
Balance at the end of current period (1,795) (1,395)Deferred gains or losses on hedges
Balance at the beginning of current period (9) (1)Changes of items during the period
Net changes of items other than shareholders' equity 8 1Total changes of items during the period 8 1
Balance at the end of current period (1) -Total valuation and translation adjustments
Balance at the beginning of current period (2,862) (1,796)Changes of items during the period
Net changes of items other than shareholders' equity 1,066 400Total changes of items during the period 1,066 400
Balance at the end of current period (1,796) (1,395)Subscription rights to shares
Balance at the beginning of current period - 20Changes of items during the period
Net changes of items other than shareholders' equity 20 49Total changes of items during the period 20 49
Balance at the end of current period 20 69Total net assets
Balance at the beginning of current period 4,754 3,927Changes of items during the period
Transfer to other capital surplus from capital stock - -Deficit disposition - -Net loss (1,914) (2,227)Purchase of treasury stock (0) -Net changes of items other than shareholders' equity 1,086 449Total changes of items during the period (827) (1,778)
Balance at the end of current period 3,927 2,148
Japan Asia Investment Co., Ltd.Fund Consolidation
36
Information for Reference Purposes:
Consolidated Financial Results
for the Year Ended March 31, 2012
May 11, 2012
Consolidated Financial Statements, etc., under the Previous Accounting Standards
for the Year Ended March 31, 2012 (As of March 31, 2012)
Disclosure of consolidated financial statements, etc., under the Previous accounting standards
As of Fiscal year ended March 31, 2007 the JAIC Group has adopted “Practical Solution on Application of Control Criteria and Influence Criteria to Investment Associations”(Accounting Standards Board of Japan Practical Issues Task Force No. 20 issued on September 8, 2006),and consolidated financial statements, etc., are being prepared with the inclusion in the consolidation of some of the operational investment funds managed by the Group. Nevertheless, to enable investors and shareholders to have an accurate understanding of the JAIC Group’s business results and financial position, we consider it essential also to disclose financial statements, etc., prepared in accordance with the previous accounting standards. Therefore, for reference purposes, the Group will continue to disclose financial statements, etc., in accordance with the previous accounting standards.
(Throughout this report, fractional amounts have been rounded down to the nearest one million yen.)
1. Consolidated business results for the year ended March 31, 2012 (April 1, 2011 to March 31, 2012) (1) Consolidated results of operations
(Percentages indicate year-on-year increase or decrease) Operating revenue Operating income Ordinary income Net income
Millions of yen % change Millions of yen % change Millions of yen % change Millions of yen % changeFor the year ended
March 31, 2012 5,396 (50.8) (1,878) — (2,477) — (2,885) —
For the year ended March 31, 2011 10,979 48.1 1,293 — 175 — (2,044) —
Net income per share Diluted net income per share
Return on equity Ordinary income to total assets
Operating income to operating revenues
Yen Yen % % % For the year ended
March 31, 2012 (24.48) — (90.9) (7.1) (34.8)
For the year ended March 31, 2011 (17.34) — (41.9) 0.4 11.8
(2) Consolidated financial position
Total assets Net assets Equity ratio Net assets per share
As of March 31, 2012 As of March 31, 2011
Millions of yen 31,731 38,463
Millions of yen 2,290 4,604
% 6.2
11.4
Yen 16.71
37.13
(Reference) Total shareholders' equity As of March 31, 2012: 1,969 millions of yen As of March 31, 2011: 4,376 millions of yen
Japan Asia Investment Co., Ltd.Previous Accounting Standard
37
2. Outlook for the fiscal year ending March 31, 2013 (April 1, 2012 to March 31, 2013) The overall investment business conducted by the Group will be significantly affected by changing factors such as stock markets, given the characteristics of the business. In addition, it has been difficult to forecast results reasonably in the rapidly changing environment. We determined it is not always useful for stakeholders to disclose the result forecast based on a certain premise in this environment. We have therefore decided not to disclose the results forecast at this time. The Group will continue to make efforts to promptly disclose the results of the quarterly settlement of accounts, and when it becomes possible to generate a reasonable results forecast, we will disclose it without delay.
Japan Asia Investment Co., Ltd.Previous Accounting Standard
38
3. Business Performance and Financial Condition
(1) Revenue from Fund Activities
(Millions of yen) For the year ended
March 31,2011 (April 1, 2010
to March 31, 2011)
For the year ended March 31, 2012 (April 1, 2011
to March 31, 2012)
Total investment funds’ management fees 1,383 1,050 Management fees 1,088 966 Contingency fees 295 84
(2) Capital Gains
(Millions of yen)
For the year ended
March 31, 2011 (April 1, 2010
to March 31, 2011)
For the year ended March 31, 2012 (April 1, 2011
to March 31, 2012) Proceeds of sales of operational investment
securities(A) 8,584 3,938
Cost of securities sold (B) (Note) 6,680 3,412
Realized capital gains (A)-(B) 1,904 526
Investment write-offs (C) 627 394
Provision for allowance for possible investment
losses (D) (296) 978
Investment income (A)-(B)-(C)-(D) 1,573 (847)
(Note)The amount of “Cost of securities sold (B)” in above table does not include the amount of “Investment write-offs (C)”.
(3)Unrealized Gains
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
Acquisition cost 824 981 Carrying value on consolidated balance sheet 769 1,145 Difference (Unrealized capital gains) (55) 163
Japan Asia Investment Co., Ltd.Previous Accounting Standard
39
4. Consolidated Financial Statements(1) Consolidated Balance Sheets
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
Consolidated balance sheetsAssets
Current assetsCash and deposits 12,950 10,513Short-term investment securities 78 73Operational investment securities 26,386 21,879Allowance for possible investment loss (6,488) (5,416)Operating loans 685 668Deferred tax assets - 0Other 653 351Allowance for doubtful accounts (19) (19)Total current assets 34,247 28,050
Noncurrent assetsProperty, plant and equipment
Buildings and structures 85 102Accumulated depreciation (39) (47)Buildings and structures, net 46 55
Vehicles, tools, furniture and fixtures 60 78Accumulated depreciation (46) (46)Vehicles, tools, furniture and fixtures, net 13 32
Land 24 92Lease assets 3 3
Accumulated depreciation (1) (2)Lease assets, net 1 1
Total property, plant and equipment 86 181Intangible assets
Other 10 11Total intangible assets 10 11
Investments and other assetsInvestment securities 3,231 2,744Claims provable in bankruptcy, claims provable inrehabilitation and other
1,159 924
Deferred tax assets 4 3Other 149 113Allowance for doubtful accounts (426) (298)Total investments and other assets 4,118 3,488
Total noncurrent assets 4,215 3,681Total assets 38,463 31,731
Japan Asia Investment Co., Ltd.Previous Accounting Standard
40
(Millions of yen)
As of March 31, 2011 As of March 31, 2012
LiabilitiesCurrent liabilities
Short-term loans payable 1,865 2,842Current portion of bonds with subscription rights to shares 1,420 -
Lease obligations 0 0
Accrued expenses 353 414Income taxes payable 209 144Accrued consumption taxes 20 8Deferred tax liabilities 0 -
Provision for bonuses 25 15Provision for loss on liquidation of subsidiaries and affiliates
- 95
Other 579 267Total current liabilities 4,474 3,788
Noncurrent liabilitiesLong-term loans payable 29,042 25,433Lease obligations 1 0Deferred tax liabilities 1 0Provision for retirement benefits 218 129Provision for directors' retirement benefits 62 62Other 59 25Total noncurrent liabilities 29,384 25,652
Total liabilities 33,858 29,441Net assets
Shareholders' equityCapital stock 27,166 4,000Capital surplus - 2,118Retained earnings (19,704) (1,541)Treasury stock (415) (415)Total shareholders' equity 7,046 4,161
Accumulated other comprehensive incomeValuation difference on available-for-sale securities (2,009) (1,436)Deferred gains or losses on hedges (1) -
Foreign currency translation adjustment (659) (755)Total accumulated other comprehensive income (2,670) (2,191)Subscription rights to shares 20 69
Minority interests 207 251Total net assets 4,604 2,290
Total liabilities and net assets 38,463 31,731
Japan Asia Investment Co., Ltd.Previous Accounting Standard
41
(2) Consolidated Statements of Income
(Millions of yen)For the year ended
March 31, 2011(April 1, 2010, to March 31,
2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Consolidated statements of incomeOperating revenue 10,979 5,396Operating cost 7,286 4,999Operating gross profit 3,692 396
Salaries and allowances 754 691Operations consignment expenses 168 245Provision for bonuses 25 31Retirement benefit expenses 56 46Provision of allowance for doubtful accounts - (83)Rent expenses 264 188Depreciation 25 24Bad debts expenses 42 11Fund interests expenses 382 414Other 679 703
Selling, general and administrative expenses 2,399 2,274Operating income (loss) 1,293 (1,878)Non-operating income
Interest income 10 11Dividends income 57 30Equity in earnings of affiliates 4 -
Gain on hedge trading 105 53Cancelation income 80 -
Gain on investments in partnership - 87
Miscellaneous income 57 9Total non-operating income 316 192
Non-operating expensesInterest expenses 800 607Commission fee 0 3
Equity in losses of affiliates 0 4Loss on investments in partnership - 11Foreign exchange losses 622 161Miscellaneous loss 10 1Total non-operating expenses 1,433 791
Ordinary income (loss) 175 (2,477)
Japan Asia Investment Co., Ltd.Previous Accounting Standard
42
(Millions of yen)For the year ended
March 31, 2011(April 1, 2010, to March 31,
2011)
For the year ended ,March 31, 2012
(April 1, 2011, to March 31,2012)
Extraordinary incomeReversal of allowance for doubtful accounts 16 -
Gain on sales of investment securities 46 -
Gain on redemption of investment securities - 45Gain on sales of subsidiaries and affiliates' stocks - 7Gain on retirement by purchase of bonds with subscriptionrights to shares
374 -
Gain on sales of noncurrent assets - 4Reversal of provision for business restructuring 35 -
Total extraordinary income 472 58Extraordinary loss
Impairment loss 61 -
Loss on sales of investment securities 1,094 -
Loss on valuation of investment securities 100 136Loss on redemption of investment securities - 5Provision for loss on liquidation of subsidiaries and affiliates - 95Business restructuring expenses 1,203 157
Expenses incurred as a result of the revision of personnel plans 53 -
Total extraordinary losses 2,514 394Loss before income tax and minority interests (1,865) (2,813)Income taxes-current 163 80Refund of income taxes - (30)Income taxes-deferred (0) 0Total income taxes 162 49Loss before minority interests (2,027) (2,863)Minority interests in income 16 22Net loss (2,044) (2,885)
Japan Asia Investment Co., Ltd.Previous Accounting Standard
43
(3) Notice Concerning Notes on Matters Regarding the Assumption of Going Concern No applicable items
(4) Others
(Securities) 1. Trading securities No applicable items 2. Held-to-maturity securities for which market quotations are available No applicable items 3. Other securities for which market quotations are available Fiscal year ended March 31, 2011 (As of March 31, 2011)
(Millions of yen) Type Carrying value on
consolidated balance sheet
Acquisition cost Difference
(1)Shares 140 105 35(2)Bonds - - -(3)Others 13 12 0
Securities whose carrying value exceeds their acquisition cost
Subtotal 154 118 36(1)Shares 352 444 (91)(2)Bonds 333 333 -(3)Others 339 443 (103)
Securities whose carrying value falls below their acquisition cost
Subtotal 1,025 1,221 (195)Total 1,180 1,339 (159)
Fiscal year ended March 31, 2012 (As of March 31, 2012)
(Millions of yen) Type Carrying value on
consolidated balance sheet
Acquisition cost Difference
(1)Shares 414 146 267(2)Bonds - - -(3)Others 12 12 0
Securities whose carrying value exceeds their acquisition cost
Subtotal 426 158 268(1)Shares 367 480 (112)(2)Bonds 412 412 -(3)Others 337 438 (100)
Securities whose carrying value falls below their acquisition cost
Subtotal 1,118 1,332 (213)Total 1,545 1,490 54
Note: The following items are not included above tables because they have no market value and it is extremely difficult to evaluate the fair value. Fiscal year ended March 31, 2011 (As of March 31, 2011)
(Millions of yen) Carrying value on consolidated balance sheet Other securities
Unlisted shares 25,670 Unlisted bonds 300 Others 2,107
Total 28,079
Japan Asia Investment Co., Ltd.Previous Accounting Standard
44
Fiscal year ended March 31, 2012 (As of March 31, 2012) (Millions of yen)
Carrying value on consolidated balance sheet Other securities
Unlisted shares 20,764 Unlisted bonds 430 Others 1,516
Total 22,711 4. Other securities which were sold For the year ended March 31, 2011 (from April 1, 2010 to March 31, 2011)
(Millions of yen) Type Proceeds from sales Total gain on sales Total loss on sales
Shares 10,058 2,791 1,955Bonds 19 19 -
For the year ended March 31, 2012 (from April 1, 2011 to March 31, 2012)
(Millions of yen) Type Proceeds from sales Total gain on sales Total loss on sales
Shares 3,931 1,033 513Bonds 6 6 -
5. Impairment of securities Impairment losses of 530 million yen were recorded in the fiscal year under review against “Other securities” (including those securities on which it is extremely difficult to evaluate the fair value) of which 394 million yen were against operational investment securities and 136 million yen were against investment securities.
Japan Asia Investment Co., Ltd.Previous Accounting Standard
45
(Millions of yen)
Operating revenues Percentageof total Operating cost Operating gross
profit
% 1,383 12.6 - 1,3839,360 85.3 7,203 2,157
234 2.1 83 15110,979 100.0 7,286 3,692
(Millions of yen)
Operating revenues Percentageof total Operating cost Operating gross
profit(loss)
% 1,050 19.5 - 1,0504,183 77.5 4,964 (780)
162 3.0 35 1265,396 100.0 4,999 396
Total
Investment operationOthers
For the year ended March 31, 2011(April 1, 2010 to March 31, 2011)
5.Breakdown of Operating Revenues and Operating Gross Profit
Period
Account
Fundmanagement operation
Fundmanagement operationInvestment operation
Period
Account
For the year ended March 31, 2012(April 1, 2011 to March 31, 2012)
OthersTotal
Japan Asia Investment Co., Ltd.Previous Accounting Standard
46
Business Position ① Investment activities (JAIC+Funds) The funds changed the classification under process of business restructuring are excluded from balance of investment in last fiscal year.
i) New investment For the year ended
March 31,2011 (from April 1, 2010 to
March 31, 2011)
For the year ended March 31,2012
(from April 1, 2011 to March 31, 2012)
Number of companies
Amount (Millions of
yen)
Number of companies
Amount (Millions of
yen) JAIC 3 21 3 59
Funds 65 3,183 57 4,486
Total 66 3,204 58 4,545
ii) Balance of investment
As of March 31, 2011 As of March 31, 2012
Number of companies
Amount (Millions of
yen)
Number of companies
Amount (Millions of
yen) JAIC 304 15,401 243 11,500
Funds 398 26,867 359 25,206
Total 513 42,268 450 36,706 Note: 1. The funds changed the classification under process of business restructuring are excluded from last fiscal year. The
effect is 3,457 millions of yen of 44 companies as of March 2011. 2. The "Funds" investments include investments from funds for which the Company and the JAIC Group are responsible
for provision of essential information. The number of companies and amounts are 12 companies, 209 millions of yen in new investments and 3 companies, 94 millions of yen in balance of investments as of March 2011.
3.The JAIC portion in funds is not included in the “JAIC” investments. 4. Investments in funds managed by third parties other than the Company, in which the JAIC Group is not involved in
the management, are not included. 5. In cases of parallel investments in the same company in both JAIC and Funds portions, the company is counted in
each,and owing to this duplication these numbers do not match the total number of companies. 6 .On the PE secondary investments, the number of companies represent the number of funds those invested from
mother funds.
Japan Asia Investment Co., Ltd.Business Position
47
iii) Breakdown of investments(JAIC+Funds) New investment
For the year ended March 31,2011
(from April 1, 2010 to March 31, 2011)
For the year ended March 31,2012
(from April 1, 2011 to March 31, 2012)
Number of companies
Amount (Millions of
yen)
Number of companies
Amount (Millions of
yen) Area
Japan 31 1,280 34 2,489 China, Hong Kong, Taiwan 8 781 12 1,187 Southeast Asia 4 239 2 57
Others 23 902 10 811 Industry
QOL(Quality of Life) 16 295 12 773 IT/Internet 16 1,098 23 1,055 Material/Chemical 9 729 6 1,021 Machinery/Automobile 1 100 3 486 Consumer related 3 162 2 90 Construction/Real estate/ Finance - - 1 9 Retail/Restaurant - - 1 121
Service 5 98 1 144 Others 16 718 9 842 Total 66 3,204 58 4,545
Japan Asia Investment Co., Ltd.Business Position
48
Balance of investment
As of March 31, 2011 As of March 31, 2012
Number of companies
Amount (Millions of
yen)
Number of companies
Amount (Millions of
yen) Area
Japan 374 26,675 312 22,682
China, Hong Kong, Taiwan 62 7,632 66 7,781
Southeast Asia 34 4,683 33 4,040 Others 43 3,277 39 2,202 Industry
QOL(Quality of Life) 94 9,835 83 8,784 IT/Internet 188 12,926 173 12,122 Material/Chemical 22 2,079 21 1,796 Machinery/Automobile 29 4,101 25 3,781 Consumer related 22 1,190 22 1,020 Construction/Real estate/ Finance 31 2,328 22 1,120 Retail/Restaurant 22 1,686 16 1,038
Service 60 2,844 46 2,582 Others 45 5,276 42 4,460 Total 513 42,268 450 36,706
Note: 1.The funds changed the classification under process of business restructuring are excluded from last fiscal year. The effect is 3,457 millions of yen of 44 companies as of March 2011.
2.The JAIC portion in funds, and investments in funds managed by third parties other than the Company in which the JAIC Group is not involved in the management, are not included. 3. QOL (Quality of Life); Biotechnology, Medical Service, Welfare Service, Medical Device, Drug Medicine, etc. 4. “Others” include the PE secondary investments. On the PE secondary investments, the number of companies represents the number of funds those invested from mother funds.
Japan Asia Investment Co., Ltd.Business Position
49
② JAIC-Backed IPOs (JAIC+Funds) i)Number of IPOs
For the year ended March 31,2011
(April 1, 2010 to March 31, 2011)
For the year ended March 31,2012
(April 1, 2011 to March 31, 2012)
Japan 3 companies 12 companies Overseas 3 companies 3 companies Total 6 companies 15 companies
Note: The above numbers include companies whose listed shares the group acquired as a result of equity swaps between its invested companies and previously listed companies: 1 domestic company for the year ended March 31, 2011.
ii) First price multiple
For the year ended March 31, 2011
(April 1, 2010 to March 31, 2011)
For the year ended March 31,2012
(April 1, 2011 to March 31, 2012)
Japan 1.9 times 1.4 times Overseas 0.6 times 1.9 times
Note: 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 number of companies whose listed shares the group acquired as a result of equity swaps.
iii) JAIC-Backed IPOs Fiscal year ended March 31, 2012 (From April 1, 2011 to March 31, 2012)
Company Name
Date of IPO Market Business Head
quarters
Digital Media Professionals Inc. 23-Jun-11 TSE Mothers
Development and sales of graphics processor and development support and licensing of IP related to 3D graphics technology
Japan
Mebiopharm Co., Ltd. 15-Jul-11 TOKYO AIMDevelopment of drugs and medicines based on the company’s unique liposome technologies
Japan
RaQualia Pharma Inc. 20-Jul-11 JASDAQ Growth
Discovery, development and marketing of clinical and preclinical candidates
Japan
Tudou Holdings Ltd. 17-Aug-11 NASDAQ Providing online video sharing site “Tudou.com” China
EP-Mint Co., Ltd. 16-Sep-11 JASDAQ Standard Site management organization(SMO) Japan
KLab Inc. 27-Sep-11 TSE Mothers Social applications, system integration(SI), cloud services and license business
Japan
Unitel High Technology Corporation 29-Sep-11 Taiwan OTC
Manufacture of keypad for mobile devices such as smartphones and rubber products for IT products
Taiwan
Taimide Technology, Inc. 5-Oct-11 Taiwan TSE
Development, production and sales service of Polymide film (heat-resistant macromolecule synthesis film)
Taiwan
SymBio Pharmaceuticals Limited 20-Oct-11 JASDAQ
Growth
The wholesale distribution of prescription and proprietary drugs, in a specific therapeutic areas (cancer, blood, autoimmune diseases)
Japan
3-D Matrix, Ltd. 24-Oct-11 JASDAQ Growth
Research, development and sales of medical products by using self-assembly peptide technology
Japan
Berg Earth co., ltd. 29-Nov-11 JASDAQ Standard
Production and sales of grafted nursery plants for vegetables, purchase and sales of agricultural materials
Japan
Japan Asia Investment Co., Ltd.Business Position
50
Company
Name Date of
IPO Market Business Head quarters
Sansei Landic Co.,Ltd 13-Dec-11 JASDAQ Standard
Real Estate Sales, detached custom home construction business, etc. Japan
Chiome Bioscience Inc. 20-Dec-11 TSE Mothers Research and development of antibody drugs Japan
Star Flyer Inc. 21-Dec-11 TSE 2nd Sec. Air transportation business based in Kitakyushu Airport Japan
istyle Inc. 8-Mar-12 TSE Mothers Providing cosmetics portal site, media business, etc. Japan
From April 1, 2012 to May 11, 2012
Company Name
Date of IPO Market Business Head
quarters
UCHIYAMA HOLDINGS Co., Ltd. 20-Apr-12 JASDAQ
Standard
Holding company of operating nursing care business, karaoke-boxes and restaurants, etc..
Japan
Fiscal year ended March 31, 2011 (From April 1, 2010 to March 31, 2011)
Company Name
Date of IPO Market Business Head
quarters
Dong A Plastic Group Joint Stock Company 8-Apr-10 Ho Chi Minh
Trading and producing PVC plastic products in the field of construction and interior-exterior decoration
Vietnam
Alphanam M&E Joint Stock Company 2-Jun-10 Hanoi
Design, manufacturing, and sales of equipment related to electric power and electricity
Vietnam
PAPYLESS Co., Ltd. 23-Jun-10 JASDAQ Distributer of electronic books Japan
KINX, Inc. 8-Feb-11 KOSDAQ Data processing, hosting, portals and other internet information media service activities
Korea
THE SHIMANE BANK, LTD 15-Mar-11 TSE Second Section
Banking Japan
Note: In addition to the above, 1 domestic company was listed by the equity swap with a listed company from April 1, 2010 to March 31, 2011.
Japan Asia Investment Co., Ltd.Business Position
51
③ Management of Investment Funds (Funds for which JAIC and its Group are responsible for management and provision of essential information) The funds changed the classification under process of business restructuring are excluded from previous fiscal year. ⅰ) Balance of funds under management As of March 31, 2011 As of March 31, 2012 Total commitment amount in investment funds (Millions of yen)
85,755 85,833
No. of funds 48 43Note: 1. The funds changed the classification under process of business restructuring are excluded from previous fiscal year.
The effect is 11,562 millions of yen of 9 funds as of March 31, 2011. 2. The funds with provision of the essential information for the management by the JAIC Group amount to
1,134 millions of yen of 1 fund as of March 31, 2011. 3. Funds being wound up after their maturity are not included in the data above.
ii) Funds newly established or whose assets were increased
For the year ended March 31, 2011 (April 1, 2010 to March 31, 2011)
Newly established Assets increased
Total commitment amount in investment funds (Millions of yen)
1,330 Increase in fund value (Millions of yen) -
No. of funds 1 No. of funds -
For the year ended March 31, 2012 (April 1, 2011 to March 31, 2012)
Newly established Assets increased
Total commitment amount in investment funds (Millions of yen)
8,981 Increase in fund value (Millions of yen) 2,944
No. of funds 4 No. of funds 2
Japan Asia Investment Co., Ltd.Business Position
52
ⅲ) Funds newly established and main funds whose assets were increased (April 1, 2011 to March 31, 2012)
Fund name Establishment date
Total commitment Amount
(as of March 31, 2012)
DFJ-JAIC Technology Partners, LP April 15, 2011 36.9 million USD
Beijing ZhongDian New Energy Investment Fund (Limited Partnership) (“CITIC Guodian Fund”)
June 20, 2011 138 million RMB
Japan-Asia (Tianjin) Venture Capital Investment Enterprise (“Tianjin Fund”)
August 26, 2011 120 million RMB
Japan South East Asia Growth Fund L.P. November 17, 2011 3,000 million YEN
Suzhou Japan-Asia Wuzhong International Development Venture Capital Investment Enterprise (Limited Partnership) (“Wuzhong Fund”)
December 29, 2011 200 million RMB
Note: “JAIC OPEN INNOVATION FUND,LP” established on October 20, 2009 increased its assets from 4 million USD and changed into “DFJ-JAIC Technology Partners, LP”.
ⅳ) Funds to reach maturity within three years of the fiscal year-end For the year ending
March 31, 2013 (April 1, 2012 to March 31, 2013)
For the year ending March 31, 2014 (April 1, 2013 to March 31, 2014)
For the year ending March 31, 2015 (April 1, 2014 to March 31, 2015)
Total commitment amount in investment funds(Millions of yen)
9,631 18,035 15,137
No. of funds 4 8 11 Notes to tables i) to ⅳ) above: 1. The amounts stated for funds denominated in foreign currencies are calculated on the basis of the exchange rate
prevailing on the final day of the fiscal year-end. Therefore, changes in assets under management include the amount affected by exchange rates.
2. The total amount of fund is listed as the amount of commitment base.
Japan Asia Investment Co., Ltd.Business Position
53