JAFCO : Earnings Presentation For the Year Ended March 31, 2025

Published April 23, 2025 at 3:16 a.m. UTC

Source: MarketScreener

FY March 2025

Contents

•	Key Message	3 - 7
•	Section 1	Financial Results	8 - 22
•	Section 2 Management Mindful of Capital Costs and the Stock Price	23 - 28
•	Section 3	Fund Management Status	29 - 34
•	Section 4	Initiatives for Enhancing Corporate Value	35 - 45
•	Appendix		46 - 57

The contents of this document are based on materials available at the time of its compilation and no guarantee can be made as to the continued accuracy and reliability of the material. The contents may be changed without advance notification. Please note that even if this document contains forward-looking or forecast statements, such statements are not guarantees of future performance, and future performance may differ from actual results due to changes in the business environment and other factors. The information in this document is for presentational purposes only and is not an inducement to invest in securities issued by the Company or in private equity funds. JAFCO Group holds all rights to this document with the exception of material taken from other sources, and no part of the document may be used or reproduced for any purpose whatsoever without prior permission.

Key Message

• Sales: ¥29.7 billion (YoY increase of 21%) • Net income: ¥9.6 billion (YoY increase of 28%)

	Financial results	• Ordinary income: ¥13.2 billion


	Focusing on domestic	• We have decided to focus on domestic investmentto promote the growth strategy and improve capital efficiency
	and have therefore decided to transfer overseas subsidiaries in the US and Asia
	investment for enhancing
	• Decided to cease investment in funds managed by the Company Group in the US and Asia going forward
	corporate value
	(interests in existing funds will still be held, continuing involvement as a major investor)


	Dividends for FY March '25	• Dividends of ¥88 per share, representing 50% of net income, will be paid out as this is greater than ¥65
	representing 3% of shareholders' equity*
	and decision to implement
	• Decided to implement a maximum of ¥5 billion of share buybacksconsidering net available cash at end of FY
	share buybacks
	March 2025, resulting in an effective total return ratio of 102%

		• Starting in FY March 2026, the dividend policy will be to pay out the greater of either 6% DOE (ratio of annual dividends to
	Review of dividend policy	shareholders' equity at end of previous fiscal year) or a 50% payout ratio, further strengthening shareholder returns

	for strengthening	• Going forward, DOE will be calculated using shareholders' equity at the end of the previous fiscal year, and
	shareholder returns	projected minimum dividend amount will be announced at the beginning of the fiscal year
		• As such, projected (minimum) dividends for FY March 2026 are ¥133 (¥66.5 interim and ¥66.5 year-end)

	Management mindful of	• Average adjusted ROE** over the past 5 years was 6.0%
	capital costs and the	• Moving forward to achieve medium- to long-term ROE target of 15-20% through focus on domestic investment,
	stock price	active shareholder returns, and revision of dividend policy

*The dividend policy for FY March 2025 is to pay out the greater of either 3% of shareholders' equity (average for beginning and end of period) or 50% of net income.

**ROE excluding extraordinary income/loss from the sale of NRI shares, etc. (excluding period in the red) Adjusted ROE = (Net income - extraordinary income;/loss×70％) / Net assets

From a Tripolar Structure to Focusing on Domestic Investment

We have decided to focus on domestic investment to promote the growth strategy and improve capital efficiency. With the reform of the business portfolio, we aim to enhance corporate value with profit growth, evolution toward a stable revenue structure, and improved capital efficiency.

Late 1990s to 2000s

Launched buyout investment

Strengthened global collaboration

In Japan, established buyout division;

Established division specializing in

overseas portfolio companies, deepening

global collaboration

Late 1980s to 1990s

Expansion into overseas markets and full-scale development

Launched full-scale investment in Asia, US, and Europe; Investing in US which leads the startup market and Asia

where growth is expected

Business

expansion

Full-line

investment

phase

2010 onward

Highly selective,	Focusing on domestic investment, aiming to enhanced corporate value
	intensive
	investment
Changes in business environment and the Company's status

		• Startup ecosystem is expanding backed by government policies
Domestic		• Fundraising for startups is active, centering on promising ventures
	• Each year there are IPOs with more than ¥100 billion in market cap; Larger listings are expected with

		reforms in the Growth market and private equity market
		• AUM of domestic and overseas private equity funds targeting Japan have been growing for more than
		10 years
		• More than half of SMEs lack successors, and business succession needs are expected to accelerate
		• M&A involving Japanese companies are also on the rise

Overseas		• Unstable market trends in China and the US stemming from geopolitical risks, regulatory issues, etc.
	• Fundraising for our funds remains difficult while local costs are rising and profitability is decreasing

Launched

private equity

investment

phase

• Challenges in performance superiority of our funds compared to competitors

• VC business is highly local and replicating success models across regions is difficult

Domestic and Overseas Investments and Business Reform

We have decided to focus on domestic investment and withdraw from overseas investment to promote the growth strategy and improve capital efficiency.

With the reform of the business portfolio, we aim to enhance corporate value with profit growth, evolution toward a stable revenue structure, and improved capital efficiency.

Major indices

Investment performance (ROI)		Ratio of external investors' interests

Revenue status

Initial targets

Results

2.5x or more

Domestic ROI exceeds 2.5x

	10-year	5-year
	average*	average**

Overall	2.2x	2.2x

Domestic	2.7x	2.6x

Overseas	1.6x	1.3x

80％

External investment accounts for 80% of most recent domestic funds

	Fund name	External capital
	contribution


Japan	SV６ Series	66%

	SV７ Series	80%

Asia	JAFCO ASIA S-8 Fund	38%
L.P.

US	Icon Ventures VII, L.P.	57%

Domestic

Overseas

Core income

Most recent SV7 fund (¥97.8 billion) was 80% external investment; Core income is generally in balance

Capital gains

While subject to the impact of the market, a degree of capital gains are continually realized through several IPOs, M&A, etc.

Core income

Requires a considerable amount of our investment; Core income remains in the negative

Capital gains

Target level	Average ROI for	Increase size of next domestic
going	domestic investment:	fund and aim for 80% external
3.0x or more
forward	capital contribution

Relies heavily on a small number of portfolio companies; ROI is relatively lower than domestic performance

Promote corporate value enhancement by focusing on domestic investment

Shareholder Returns Policy

Dividends

Standard

Dividend per

Frequency

Forecast

FY March 2025

The greater of 3% DOE* or

50% of net income

Pay out 50% of net income

Year-end dividends: ¥56

Annual dividends: ¥88

Interim dividends begun

Dividends implemented twice per year

No dividend forecast disclosed

FY March 2026 onward

The greater of 6% DOE*2or

a 50% payout ratio

FY March 2026

Projected annual dividends: ¥133 (minimum)

(Interim dividends: ¥66.5; Year-end dividends: ¥66.5)

Interim dividends continued Dividends implemented twice per year

Minimum dividend to be disclosed at start of fiscal year as dividend forecast

buybacks

¥5 billion of share buybacks resolved on April 23, 2025

With this, the effective total return ratio for FY March

2025 will be 102%

Continue to consider additional shareholder returns, taking into account progress in exits and the fundraising environment for funds

*Calculated using initial and term-end average of shareholders' equity

*2 Ratio of annual dividends to shareholders' equity at end of previous fiscal year

Update of Basic Policy for Enhancing Corporate Value

By focusing on domestic investment, the likelihood of achieving our target ROE of 15-20% will increase. We aim to meet our targets by increasing the size of new domestic funds and external capital commitments in line with market growth while continuing efforts to increase investment performance.

						Medium-term		Long-term
		Results			targets		targets

				2028.03-	2031.03-
2023.03	2024.03	2025.03	2025.03
[¥ billion]			2030.03	2033.03

[¥ billion]			(Domestic)

Changes in indices from shift to focusing on domestic investment and transferring overseas subsidiaries

• For FY March 2026 onward, only external capital commitments

among total capital commitments of new domestic funds will drive

increase in annual management fees

Funds	Total capital commitments*1 (AUM)
	External capital commitments*2
	Annual management fees*3
	JAFCO's investment ratio in new
	domestic funds*4
	Annual SG&A expenses (excl. business
	tax)

419.2	465.6	458.4	312.8	320.0	370.0
157.6	194.9	198.5	173.8	250.0	290.0
3.4	4.8	4.3	3.5	3.9	4.2
31%	32%	31%	20%	20%	20%
4.3	4.4	4.6	3.6	35.0-40.0	35.0-40.0

• Core income (management fees - SG&A expenses) to improve

with the transfer of the consolidated subsidiary in Asia

• We will hold our interests in Asian and US funds under

management until maturity; Target 2.5x-3.0x for ROI of domestic

funds for FY March 2026 onward; Expecting ROI of overseas

funds to continue at 1.7x

• Necessary funds will decrease as we will only target domestic

ROI	Investment multiple (ROI)	1.6x	1.7x	2.1x	2.1x			Domestic: 3x		Domestic: 3x
			5-year average: 2.2x	2.6x			(Overseas:		(Overseas:
					1.6x*5 )		1.6x*5 )



Financial structure	Available cash and deposits*6	28.2	50.6	52.0	－	25.0	30.0
	Operating investment securities	84.0	90.1	91.4	－	80.0	65.0
	(incl. listed cos. / after markdown)

	Net assets	130.7	137.6	141.1	－	130.0	115.0


Profit level / capital	Ordinary income level	(3.0)	8.8	13.2	－	20.0	26.0
efficiency	Net income level	40.6*7	7.5	9.6	－	14.0	18.0
	ROE level	24.7%*7	5.6%	6.9%	－	10-15%	15-20%


Shareholder returns	Effective total payout ratio*8	125%	50%	102%(E)	－	60-100%	60-100%
		or more		or more

funds for investment in FY March 2026 onward; Net assets will

also decrease

Aim to achieve target ROE by promoting the growth strategy and improving capital efficiency

Note: 1. Total capital commitments: The total amount of capital commitments of all JAFCO-managed funds in Japan, Asia, and the US. Due to focusing on domestic investment, figures for medium- and long-term targets only apply to domestic funds.

2. External capital commitments: Of total capital commitments, JAFCO's interest, funds managed by US subsidiary which is unconsolidated, and funds under extension are excluded. It is the amount subject to fund management fees. Due to focusing on domestic investment, figures for medium- and long-term targets only apply to domestic funds.

Annual management fees: Amount subject to management fees × approximately 2%
JAFCO's investment ratio in new domestic funds: Ratio of JAFCO's investment in capital commitments to funds in Japan established around once every 3.5 years.
Future ROI for Asian and US funds are calculated as 1.6x, the average over the past five years.
Available cash and deposits is calculated by deducting fixed-purpose cash and deposits such as cash in funds (JAFCO's

interests), expected dividend payments, accrued income taxes, and accrued expenses from cash and deposits. Figures for medium- and long-term targets are necessary funds.

Includes ¥63.8 billion of gain on sale of shares of Nomura Research Institute, Ltd.
Effective total payout ratio: Ratio of total amount of dividends paid and share buybacks (buybacks resolved at the earning announcement in the next fiscal year are treated as buybacks for the current fiscal year) against net income.

Section 1 Financial Results

Executive Summary for Fiscal Year Ended March 2025

Changes in business	•	In an increasingly uncertain market environment, the TSE Growth Market is continuing to stagnate as well
environment and	•	Achieved an IPO with a large offering that attracted global institutional investors
impact on portfolio	•	Continue close monitoring of political trends and financial policies in Japan and abroad as well as startup-related
companies		policies in Japan

	•	Capital gains of ¥12.7 billion on sale of listed/unlisted shares (¥7.9 billion in the previous fiscal year)
Performance	•	8 IPOs in Japan (2 from our buyout portfolio)
	Astroscale Holdings, a space venture company, and Timee, which operates a matching service for spare time jobs,

		achieved large IPOs, each with a first price-based market cap exceeding ¥100 billion

Investment	•	¥39.4 billion on a global basis (¥30.7 billion in the previous fiscal year)

Transferred part of our interests in SV6 and SV7 to Japan's first publicly offered investment trust that incorporates

Funds

unlisted securities (second quarter)

	•	Disclosed climate-related risks and opportunities using scenario analysis in addition to greenhouse gas emissions
		following the TCFD framework
Sustainability	•	Formulated the Harassment Prevention Policy
	•	Enhanced the internal reporting system (added external contact point and made it available to all individuals
		involved in the Company's operations including portfolio companies)

	•	Annual dividends of ¥88 per share, representing 50% of net income (¥32 interim and ¥56 year-end), will be paid out
Shareholder Returns	•	Decided to implement a maximum of ¥5 billion of share buybacks, resulting in an effective total return ratio of 102%
	•	Projected annual dividends (minimum) for FY March 2026 are ¥133 per share (¥66.5 interim and ¥66.5 year-end)

Financial Performance

			[¥ billion]
	Year ended	Year ended	Comparison
	March 31, 2024	March 31, 2025

	Total A	Total B	B/A

Total net sales	24.4	29.7	121%

Gross profit	12.2	17.4	143%
Capital gains	7.9	12.7	160%
Income from fund management	5.4	5.9	108%
Management fees	4.8	4.3	88%
Success fees	0.6	1.6	277%
Others *	(1.2)	(1.2)	-
Additions to investment loss reserves	(0.8)	(0.3)	-
(Reversal of) unrealized losses on operational investment securities	(0.0)	(0.0)	-
SG&A expenses	4.8	5.2	107%
(SG&A expenses exclueding buisiness tax)	4.4	4.6	106%

Operating income	8.2	12.5	153%

Ordinary income	8.8	13.2	150%
Profit attributable to JAFCO Group Co., Ltd. stockholders	7.5	9.6	128%

ROE	5.6%	6.9%	-

*Amount calculated by deducting "Other costs" from "Other sales"