FinTech Global Incorporated : Results for First Three Quarters of Fiscal 2023, ending September 30, 2023

The firm of innovative financing

Results for First Three Quarters of

Fiscal 2023, ending September 30, 2023

August 2023

FinTech Global Incorporated

TSE Standard Market Stock Code: 8789 https://www.fgi.co.jp/en/

• FinTech, in katakana script and English letters (registration 5113746), FinTech Global, in English letters (registration 5811521) and in katakana script (registration 5811522), and FGI (registration 5113748) are registered trademarks of FinTech Global Incorporated.

Index

Summary ・・・・・・・・・・・・・・・・・・ 2

Consolidated Performance ・・・・・・・・・・・ 3

Revisions to Consolidated Performance Forecast	・・ 4
Quarterly Changes in Consolidated Performance	・・ 5

Business Summary by Segment ・・・・・・・・・ 6

Investment Banking Business・・・・・・・・・・ 8

Public Management Business ・・・・・・・・・11

Entertainment Service Business ・・・・・・・・・12

Consolidated Financial Statements ・・・・・・・15

Changes in Key Financial Data ・・・・・・・・ 17

Corporate Data ・・・・・・・・・・・・・・・18

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Summary

Business succession solution services and private equity investments associated with these services expanded nationwide, driving up revenues and income.

Full-year performance forecast upwardly revised by 50% for profit attributable to owners of parent, as of July 13, largely reflecting favorable business status noted above and sale of shares in Rights and Brands Japan Co., Ltd. (RBJ).

At Sustained favorable demand for business succession solution services

• Sustained favorable demand for business succession solution services providing financial advice, asset management and other useful services to companies grappling with business succession issues.
• Activities to arrange new projects moved steadily ahead, including continued efforts in third quarter (from April to June) to obtain preferential negotiating rights.

Booked ¥700 million* in revenue and income, on private equity investment exits

• Sales contracts on investment funds bought into by third parties in second quarter were settled and recognized as revenue for FGI in third quarter. Other deals also reached investment exit stage, for aggregate ¥700 million* booked as revenue and operating income. (*Includes performance fees on asset management)

Balance of assets in custody jumped 48.7% year on year, to ¥83.5 billion

• Increase in assets entrusted by overseas institutional investors for investment into residence projects.

Moomin Monogatari determined to rebuild financial base, reorganize Moomin-related business

• Moomin Monogatari Ltd. erased excess liabilities and secured cash at the same time through a debt/equity swap on loan receivables of ¥500 million extended to the company by FGI and through a transfer of stock in Rights and Brands Japan Co., Ltd. (booking ¥671 million in gains from share transfer on non-consolidated basis).
• Relationship with financial institutions consolidated on review of loan repayment for Moomin Monogatari and special purpose company that owns Moominvalley Park real estate.

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Consolidated Performance

						(Millions of yen)
	Fiscal 2022 First		Fiscal 2023 First		YOY Change	YOY Change
	Three Quarters		Three Quarters		(Amount)	(Percentage)
Revenues	6,749		6,911		+161	+2.4%
Gross profit	2,680		3,839		+1,158	+43.2%
Operating income	150		1,142		+992	+661.0%
Ordinary profit	114		1,084		+970	+851.1%
Profit attributable	(140)		781		+922	－
to owners of the parent
EBITDA	575		1,492		+916	+159.1%

Note: EBITDA is calculated by returning depreciation costs and amortization of goodwill included in cost of revenue and selling, general and administrative expenses back to operating income.

Revenues

Gross profit

Operating income

Solid increase in revenues, reflecting favorable demand for business succession solution services, complemented by exits on private equity investments associated with these services.

Aircraft asset management also showed revenue growth.

Revenues up even though RBJ, which handles Moomin licensing business, removed from scope of consolidation.

Significant increase, fueled by higher revenues, especially from high-margin business succession solution services.

Selling, general and administrative expenses rose 6.5% year on year, parallelling expanded business activities. Nevertheless, every level of profit below operating income (loss) was significantly better, thanks to increase in gross profit.

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Revisions to Consolidated Performance Forecast (Announced July 13, 2023)

					(Millions of yen)
	Fiscal 2022	Fiscal 2023	YOY Change	YOY Change	Fiscal 2022
	Initial forcast	Revised forecast	Amount	Percentage	Actual
Revenues	10,100	9,500	-600	- 5.9%	9,301
Operating income	1,400	1,400	－	－	587
Ordinary profit	1,400	1,400	－	－	540
Profit attributable	1,000	1,500	+500	+50.0%	176
to owners of the parent

Revenues likely to come in below initial estimate, but situation should not affect operating income or ordinary profit, so no change to profit targets. Profit attributable to owners of the parent revised upward, owing to inflow of extraordinary income mainly from sale of shares in RBJ.

Revenues

Operating income

Ordinary profit

Profit attributable to owners of the parent

Anticipated revenues above initial expectations on demand for business succession solution services, but progress on sale of small-lot real estate products as well as start to promoting real estate development projects has fallen behind anticipated schedule, which will likely cause revenues to come in below target.

Despite lower than initially expected revenues, operating income and ordinary profit are on track with earlier estimates, thanks to favorable demand for high-margin business succession solution services, obviating the need to revise these line items.

Forecast for profit attributable to owners of the parent revised upward, reflecting ¥190 million in gain on negative goodwill from turning Trinity Japan co., ltd., into consolidated subsidiary and also reflecting planned fourth-quarter booking of ¥386 million in gain on sales of shares of subsidiaries and associates under extraordinary profit following sale of shares in RBJ.

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