Qualitative

InformationonConsolidated

OperatingResults for the Nine Months Ended December 31, 2019(1) Analysis of consolidated operating results
The consolidated operating results of the JAIC Group for the nine months ended
December 31, 2019 (from April 1, 2019 to December 31, 2019) recorded operating
revenue of 1,801 million yen (down 6.6% year-on-year), operating gross profit of
548 million yen (up 3.1% year-on-year), operating loss of 391 million yen(compared to an operating loss of 448 million yen for the same period of theprevious year), ordinary loss of 614 million yen (compared to an ordinary loss of
647 million yen for the same period of the previous year) and loss attributable toowners of parent of 710 million yen (compared to a loss attributable to owners ofparent of 199 million yen for the same period of the previous year). The breakdownof operating results and the background of our business activities are as follows.
(1-1) Breakdown of Operating Results(a) Breakdown of operating revenue and operating cost
(Fund management fees and success fees)
Investment fund management fees decreased 14.3% by year-on-year to 101 million
yen. This was attributable primarily to a decline in fees from some investment funds
in line with the liquidation of investment funds and the changes in the fee system
during the previous consolidated fiscal year.
(Investment income)
While proceeds of sales of operational investment securities increased by 18.9%
year-on-year to 772 million yen, realized capital gains, which are calculated bydeducting cost of securities sold from proceeds of sales of operational investment
securities, decreased by 15.2% year-on-year to 294 million yen. These reflect a
decline in sales of listed shares with higher investment returns compared with thesame period of the previous fiscal year and the recording of a loss on sale as a resultof the sale of unlisted shares with a large amount of investment by prioritizing theliquidation of shares.
The total amount of investment write-offs and provision for allowance for possibleinvestment losses decreased by 57.8% year-on-year to 283 million yen. In both thefirst nine months of the current fiscal year under review and the same period of theprevious fiscal year, losses were recorded for investment assets whose sales were
expected to fall below the investment amount. In the first nine months of theprevious fiscal year, losses were recorded for the shares of an overseas investee
company in which JAIC has invested in a large amount for a long period of time.
Meanwhile, in the first nine months of the current fiscal year under review, theamount of loss declined since losses were recorded for shares of investee companies
both in Japan and overseas in which JAIC has invested in a smaller amount. As aresult, investment income, which is calculated by deducting investment write-offs
and provision for allowance for possible investment losses from realized capital gains,
returned to profitability at 10 million yen (compared to an investment loss of 325
million yen for the same period of the previous year).
(Fund interests income, etc.)
Fund interests income, etc. includes revenue from electricity sales and revenue fromvegetable sales of the projects operated by the JAIC Group, interests income fromthe projects operated by other companies (net profit from the projects sourced fromthe revenue from electricity sales, proceeds from the sale of projects), interests
income from private equity funds operated by other companies, interest anddividend income and other income.
The total amount of fund interests income, etc. for the first nine months of thecurrent fiscal year under review decreased by 20.2% year-on-year to 913 million
yen. Out of this, revenue from electricity sales and revenue from vegetable sales ofthe projects operated by the JAIC Group accounted for 818 million yen (down 5.2%
year-on-year). The revenues dropped from the same period of the previous fiscal
year since the decline in revenue from electricity sales of the projects sold during
the previous fiscal year could not be covered by the revenue from the new projects.
In addition, interests income from the private equity funds operated by othercompanies decreased by 76.3% year-on-year to 62 million yen owning to a decline
in gains on sale of shares by the funds.
(Fund interests losses, etc.)
Fund interests losses, etc. include cost of electricity sales and cost of producing
vegetables of the projects operated by the JAIC Group, interests losses (costs, etc.
of projects under construction) of the projects operated by other companies andinterests losses, etc. of the private equity funds operated by other companies.
The total amount of fund interests losses etc. for the first nine months of the current
fiscal year under review increased by 17.0% year-on-year to 486 million yen. Outof this, cost of electricity sales and cost of producing vegetables of the projects
operated by the JAIC Group accounted for 463 million yen (up 24.7% year-on-year),reflecting an increase in cost of producing vegetables at vegetable factories
compared with the same period of the previous fiscal year.
As a result, operating revenue decreased by 6.6% year-on-year to 1,801 million
yen, operating cost decreased by 10.3% year-on-year to 1,253 million yen andoperating gross profit increased by 3.1% year-on-year to 548 million yen.
(b) Selling, general and administrative expenses and operating income
The total amount of selling, general and administrative expenses decreased by 4.1%
year-on-year to 939 million yen. The main reason for the decrease was a reductionin personnel expenses and administration outsourcing costs.
As a result, operating loss amounted to 391 million yen (compared to an operating
loss of 448 million yen for the same period of the previous year).
(c) Non-operating income, non-operating expenses and ordinary income
Non-operating income decreased by 75.6% year-on-year to 22 million yen due
mainly to a decline in foreign exchange gains that occur at the time of the collectionof investment assets denominated in foreign currencies.
Non-operating expenses decreased by 15.6% year-on-year to 245 million yen
primarily reflecting a drop in interest expenses. In addition to the reduction of loans
payable on a non-consolidated basis, loans payable for the projects sold during theprevious fiscal year decreased. Meanwhile, interest expenses related to the projects
under construction are recorded under construction in progress instead of expenses.
For this reason, interest expenses decreased compared with the same period of theprevious fiscal year, while the balance of loans payable by project finance increased.
As a result, ordinary loss amounted to 614 million yen (compared to an ordinary
loss of 647 million yen for the same period of the previous year).
(d) Extraordinary income and profit attributable to owners of parent(Extraordinary income)For the first nine months of the previous fiscal year, total extraordinary incomeamounted to 465 million yen due mainly to the recording of gain on redemption of
investment securities of 425 million yen. On the other hand, for the first nine monthsof the current fiscal year under review, total extraordinary income amounted to 17
million yen reflecting the recording of gain on sales of shares of subsidiaries andassociates and gain on liquidation of subsidiaries and associates as a result of thedisposition of dormant Group companies. Gain on sales of land, etc. was also
recorded.
For the first nine months of the previous fiscal year, total extraordinary loss
amounted to 102 million yen due mainly to the provision for loss on liquidation ofsubsidiaries and associates of 73 million yen. On the other hand, extraordinary loss
was not recorded for the first nine months of the current fiscal year under review.
As a result, loss before income taxes amounted to 596 million yen (compared to aloss before income taxes of 284 million yen for the same period of the previousyear).
(Profit attributable to owners of parent)
Total income taxes of 15 million yen (up 19.9% year-on-year) were recorded
primarily for subsidiaries. In terms of tax, since tax loss carryforwards are expected
to occur both in the first nine months of the current fiscal year under review andthe same period of the previous fiscal year, JAIC conservatively estimated tax effectaccounting and did not recognize deferred tax assets.
Profit/loss attributable to non-controlling interests represents the portion of
profit/loss from the investment funds and projects operated by the JAIC Group
which is attributable to investors other than the JAIC Group. In the first nine monthsof the current fiscal year under review, the amount of profit from theaforementioned investment funds and projects exceeded the amount of loss,
resulting in profit attributable to non-controlling interests of 98 million yen(compared to a loss attributable to non-controlling interests of 97 million yen forthe same period of the previous year).
As a result, loss attributable to owners of parent amounted to 710 million yen(compared to a loss attributable to owners of parent of 199 million yen for the same
period of the previous year).
(1-2) Business Position(a) Investment activities(Note) The aggregation method has been changed from the first nine months of

the current fiscal year under review to better reflect JAICʼs investment performance.
In the past, investments in funds managed by third parties other than JAIC, forwhich the JAIC Group is not involved in fund management, had not been included.
However, from the first nine months of the current fiscal year under review,
investments in such funds for which the investment targets are specified and thosefor which JAIC actually can select investment targets have been included. As a result,the amount of new investments in project oriented investment for the first ninemonths of the current fiscal year under review increased by 623 million yen,
compared with the amount aggregated by using the previous method. Meanwhile,the changes in aggregation method have no impact on the results for the first ninemonths of the previous fiscal year and the previous fiscal year. Balance ofinvestments as of December 31, 2019 also increased by 623 million yen, comparedwith the balance of investments aggregated by using the previous method.
Meanwhile, the changes in aggregation method have no impact on the balance ofinvestments as of March 31, 2019 and as of December 31, 2018.
For the first nine months of the current fiscal year under review, new investments
increased by 3.8% year-on-year to 2,927 million yen in 18 companies/projects. As
of December 31, 2019, the balance of investments increased year-on-year to
14,490 million yen in 135 companies/projects (compared to 13,951 million yen in
134 companies/projects as of March 31, 2019).
As for private equity investment, when JAICʼs own capital is used, JAIC makes
strategic investment in partner companies for project oriented investment in a
selective manner based on business themes in line with its management philosophy
in principle. When the capital of a fund is used, JAIC makes investment pursuant to
the fundʼs investment policy.
For the first nine months of the current fiscal year under review, new investments
significantly increased by 614.7% year-on-year to 977 million yen in 9 companies
as a result of an increase in strategic investment.
In terms of return on investment, JAIC sold domestic listed shares and endeavored
to secure return on investment in overseas unlisted shares. As a result, the balanceof investments as of December 31, 2019 decreased year-on-year to 8,298 million
yen in 103 companies (compared to 8,437 million yen in 108 companies as of March
31, 2019).

Looking at project oriented investment for the first nine months of the current fiscal
year under review, new investments decreased by 27.3% year-on-year to 1,950
million yen in 9 projects. The decline reflecting the fact that the size of mega solar
projects that JAIC invested in during first nine months of the current fiscal year
under review was smaller than those during the same period of the previous fiscal
year.
JAIC invested in three new and one existing mega solar projects. In addition, JAIC
made additional investment in plant factories and invested in an operator of anintermediate treatment facility for waste that can be used as law materials forbiogas power generation. In addition, as new fields for project oriented investment,
JAIC invested in logistics facility construction projects and a commercial building inJapan.
In terms of return on investment, while JAIC sold one 1.2MW mega solar project
during the same period of the previous fiscal year, JAIC did not sell any projects
during the first nine months of the current fiscal year under review. Meanwhile, thebalance of existing projects decreased due to the receipt of dividends. As a result,the balance of investments as of December 31, 2019 increased year-on-year to
6,191 million yen in 32 projects (compared to 5,514 million yen in 26 projects asof March 31, 2019).
As of December 31, 2019, JAIC invested in 24 mega solar projects with the capacityof 99.8ＭＷ which are either currently selling electricity or are under construction
or planning. Out of these mega solar projects, the portion that attributable to JAIC
is 56.4ＭＷ in capacity. JAIC also invested in renewable energy projects other thanmega solar projects including two biogas projects with the capacity of 1.6ＭＷ (oneproject with the capacity of 0.03ＭＷ is currently selling electricity), one woody
biomass project with the capacity of 2.0ＭＷ (currently selling electricity), and one
wind power project with the capacity of 25.2ＭＷ (under planning).
(b) Management of investment funds
As of December 31, 2019, the number of investment funds, for which the JAIC
Group is responsible for management, operation or provision of investment
information, totaled 10, and the balance of total commitment amounts undermanagement amounted to 16,094 million yen (compared to 10 investment fundswith 16,494 million yen as of March 31, 2019). While there were no changes dueto the establishment of new investment funds or the liquidation of existing
investment funds, the balance of total commitment amounts under management

decreased year-on-year as a result of foreign exchange fluctuations.
(2) Cash flows(Cash flow from operating activities)
Net cash used in operating activities totaled 950 million yen (compared to net cash
generated from operating activities of 994 million yen for the same period of theprevious fiscal year), due mainly to the recording of a loss before income taxes andthe payment for purchase of investment funds of 1,383 million yen (compared to
payment for purchase of investment funds of 260 million yen for the same periodof the previous fiscal year) in line with the progress in investment activities.
(Cash flow from investing activities)
Net cash generated from investing activities decreased year-on-year to 64 million
yen (compared to net cash generated from investing activities of 703 million yen
for the same period of the previous fiscal year) mainly due to a decline in proceedsfrom redemption of investment securities to 47 million yen (compared to proceedsfrom redemption of investment securities of 696 million yen for the same period of
the previous fiscal year).
(Cash flow from financing activities)
Net cash used in financing activities amounted to 1,617 million yen (compared to
net cash used in financing activities of 2,173 million yen for the same period of theprevious fiscal year), due to repayments of long-term borrowings.
Net cash used in financing activities decreased year-on-year reflecting a decrease
in repayments as a result of changes in financing policy that had prioritized
repayments.
Cash and cash equivalents as of December 31, 2019 decreased by 2,524 million
yen from March 31, 2019 to 1,557 million yen, after deducting effect of exchange
rate change on cash and cash equivalents of 20 million yen.
(3) Financial position(Assets)
Total assets as of December 31, 2019 increased year-on-year to 29,433 million yen(compared to total assets of 28,845 million yen as of March 31, 2019), due mainly
to an increase in renewable energy power plants and a vegetable factory for theprojects operated by the JAIC Group.
Cash and deposits decreased year-on-year to 3,370 million yen (compared to cash
and deposits of 7,108 million yen as of March 31, 2019), as a result of repaymentsof loans payable and new investments. Meanwhile, the amount included deposits
attributable to the investment funds operated by the JAIC Group. They are funds
that must be managed in accordance with each fundʼs partnership agreement, andare managed clearly separately from cash and deposits belonging to the JAIC Group.
Cash and deposits belonging to the JAIC Group were cash and cash equivalents of
1,557 million yen as of December 31, 2019 (compared to cash and cash equivalentsof 4,082 million yen as of March 31, 2019) in the consolidated statements of cash
flows.
In addition, private equity investments conducted by the JAIC Group are highly
affected by factors such as stock market fluctuations due to the nature of theirbusiness, and it is difficult to make a reasonable forecast of business results in thecurrent volatile environment. As a result, the amount of funds recovered fromprivate equity investments could decline significantly. Under these circumstances,
the JAIC Group must maintain a certain balance of cash and deposits at all times toensure not only the payment of expenses and interest and the repayment of loans
payable but also the investment for future growth.
In assets, property, plant and equipment as of December 31, 2019 increased yearon-year to 14,030 million yen (compared to property, plant and equipment of
10,656 million yen as of March 31, 2019), primarily reflecting an increase inrenewable energy power plants and a vegetable factory for the projects operated
by the JAIC Group.
In assets, operational investment securities as of December 31, 2019 amounted to
10,232 million yen (compared to operational investment securities of 10,242 million
yen as of March 31, 2019). Both the recovery of investments and the execution of
new investments progressed, the amount remained virtually unchanged year-onyear.
Allowance for possible investment losses as of December 31, 2019 increased yearon-year to 1,624 million yen (compared to allowance for possible investment lossesof 1,538 million yen as of March 31, 2019), due to the provision for investment
losses in line with the devaluation of investment assets, despite the sale ofinvestment assets with the provision for investment losses and the reversal resulting
from the recording of valuation losses.
As a result, the investment loss provision ratio (ratio of allowance for possible
investment losses to operational investment securities) as of December 31, 2019was 15.9%, up 0.9 points from March 31, 2019.
(Liabilities)
Total liabilities as of December 31, 2019 increased year-on-year to 21,117 million
yen (compared to total liabilities of 20,444 million yen as of March 31, 2019),
reflecting an increase in project finance for the projects operated by the JAIC Group.
In liabilities, total of loans payable and bonds as of December 31, 2019 amounted
to 20,325 million yen (compared to total of loans payable and bonds 19,552 million
yen as of March 31, 2019). Of the foregoing, JAICʼs non-consolidated base loans
payable as of December 31, 2019 were 8,166 million yen (compared to nonconsolidated base loans payable of 9,784 million yen as of March 31, 2019). Thebalance of loans payable by project finance and bonds for the projects operated by
the JAIC Group as of December 31, 2019 amounted to 12,158 million yen(compared to loans payable by project finance and bonds for the projects operated
by the JAIC Group 9,768 million yen as of March 31, 2019).
JAICʼs non-consolidated base loans payable decreased year-on-year, reflecting therepayments of 1,617 million yen for the first nine months of the current fiscal year
under review. JAIC will continue to reduce its non-consolidated loans payable in the
future. On the other hand, project finance for the projects operated by the JAIC
Group will not affect the financial soundness of the JAIC Group, since its source of
payments is limited to the assets and revenues of the projects. Therefore, JAIC has
a policy to continue to promote leveraged investment by expanding fund raisingthrough project finance, etc. in a wide range of projects including renewable energy
projects operated by the JAIC Group, thus enhancing its profitability withoutcompromising on financial soundness.
(Net assets)
In net assets, total shareholdersʼ equity as of December 31, 2019 decreased yearon-year to 6,424 million yen (compared to total shareholdersʼ equity of 6,796 million
yen as of March 31, 2019), due to the recording of a loss attributable to owners ofparent. As a result, the equity ratio as of December 31, 2019 decreased by 1.8
points year-on-year to 21.8% (compared to the equity ratio of 23.6% as of March
31, 2019). Meanwhile, JAICʼs non-consolidated equity ratio as of December 31,
2019 rose 2.8 points year-on-year to 41.7% (compared to the equity ratio of 38.9%
as of March 31, 2019). This is as a result of improvement in financial soundness inline with the reduction of loans payable.
Total net assets as of December 31, 2019 remained virtually unchanged year-onyear at 8,316 million yen (compared to total net assets of 8,400 million yen as ofMarch 31, 2019), due to an increase in non-controlling interests. Non-controllinginterests increased, reflecting profits and unrealized gains attributable to investorsother than the JAIC Group in the investment funds and projects operated by the
JAIC Group.
(End)