FinTech Global Incorporated : Summary of Financial Statements For the First Three Quarters of Fiscal 2020 (under Japanese GAAP)

UNOFFICIAL TRANSLATION

The following is a translation, for convenience only,

of the original document issued in Japanese

Summary of Financial Statements

for the First Three Quarters of Fiscal 2020

		August 12, 2020
Company Name: FinTech Global Incorporated	(Code Number: 8789 TSE Mothers)
	(URL:http://www.fgi.co.jp/english/)	TEL: [phone]
Representative:	President and Chief Executive Officer	Name: Nobumitsu Tamai
Contact:	Member of the Board,	Name: Seigo Washimoto

Senior Executive Officer

Scheduled date for filing of securities report: August 14, 2020

Scheduled date of commencement of dividend payment: －

Preparation of explanatory materials for quarterly financial results: Yes

Information meetings arranged related to quarterly financial results: None

(Rounded down to the nearest million)

1. Consolidated results for the first three quarters of fiscal 2020 (October 1, 2019 -June 30, 2020)

(1) Consolidated operating results				（Percentages indicate	year-on-year changes.）
		Revenues		Operating		Ordinary		Profit/(loss) attributable to
			income/(loss)		profit/(loss)			owners of the parent
		Millions of yen	%	Millions of yen	%	Millions of yen	%		Millions of yen	%
First three quarters of fiscal 2020		5,196	(22.3)	(893)	-	(989)	-		(1,045)	-
First three quarters of fiscal 2019		6,689	192.5	(1,307)	-	(1,445)	-		(1,210)	-

(For reference) Comprehensive income:	(1,340) million yen for the first three quarters of fiscal 2020	(－)%
		(1,378) million yen for the first three quarters of fiscal 2019	(－)%
	Net income/(loss)	Net income/(loss)
	per share
		per share
		(diluted)
		Yen	Yen
First three quarters of fiscal 2020		(5.20)		-
First three quarters of fiscal 2019		(6.22)		-
(2) Consolidated financial position
		Total assets		Net assets	Equity ratio
		Millions of yen		Millions of yen	%
First three quarters of fiscal 2020		16,922		7,480	37.8
Fiscal 2019		19,025		8,873	39.1

(For reference) Shareholders' equity: 6,390 million yen for the first three quarters of fiscal 2020 7,446 million yen for fiscal 2019

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2. Dividends
			Dividend per share
	End of	End of	End of	End of	Total
	first quarter	second quarter	third quarter	fiscal year
	Yen	Yen	Yen	Yen	Yen
Fiscal 2019	－	0.00	－	0.00	0.00
Fiscal 2020	－	0.00
Fiscal 2020 (Forecast)			－	－	－
(Note) Change from the latest dividend forecast: Yes

3. Full-year performance forecasts for fiscal 2020 (October 1, 2019 - September 30, 2020)

As Japanese government lifted state of emergency related to COVID-19 nationwide on May 21, 2020, Moomin Valley Park

resumed its operation on June 4, 2020. However, we have seen the rapid growth of infections cases from July to August 2020, and the situation remains unpredictable. Also, in investment banking segment, though we have several deals we have been working on to close by the end of fiscal 2020, it is difficult to predict the exact timing. Therefore, as it is impossible to reasonably calculate our forecast at this point, we decided not to disclose projection of consolidated results for fiscal 2020. We will disclose a consolidated forecast of business results when a reasonable projection becomes possible.

4. Notes

1. Changes in significant subsidiaries during the period: None
2. Adoption of specific accounting policies for quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatements:

(a). Changes in accounting policies required by accounting standard: None

(b). Changes other than those in (a) above: None

(c). Changes in accounting estimates: None

(d). Restatements: None

1. Number of shares issued (common shares)
   1. Number of shares issued (including treasury stock): 201,114,600 shares in the first three quarters of fiscal 2020 201,109,600 shares in fiscal 2019

2. Number of shares of treasury stock:

－ shares for the first three quarters of fiscal 2020

• shares for fiscal 2019

3. Average number of shares issued during the first three quarters:

201,113,629 shares in the first three quarters of fiscal 2020 194,751,237 shares in the first three quarters of fiscal 2019

• This summary of financial statements is exempt from the review procedures.
• Explanation of the appropriate use of performance forecasts and other related items.

Forward-looking statements included in this summary of financial statements are based on the assumptions, forecasts, and plans of the Company as of the date on which this document is made public. The Company's actual results may differ substantially from such statements due to various risks and uncertainties.

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FinTech Global Incorporated and Consolidated Subsidiaries

As of and for the nine months ended June 30, 2020

(1) Quarterly Consolidated Balance Sheets

				(Unit: Thousands of yen)
				First Three Quarters
			Fiscal 2019	of Fiscal 2020
			(As of September 30, 2019)	(As of June 30, 2020)
	Assets
	Current assets
	Cash and time deposits		2,533,187	2,022,051
	Accounts receivable, trade	727,499	497,819
	Investments in securities, trade		1,359,941	1,268,465
	Loans receivable, trade	548,625	518,287
	Real estate for sale		4,211,988	3,997,927
	Merchandise	208,577	300,816
	Other		948,410	349,185
	Allowance for doubtful accounts	(99,641)	(93,091)
	Total current assets		10,438,589	8,861,461
	Noncurrent assets
	Property, plant and equipment
	Buildings and structures	5,328,377	5,369,894
	Accumulated depreciation		(137,112)	(279,277)
	Buildings and structures, net		5,191,265	5,090,616
	Other		2,092,587	1,782,806
	Total property, plant and equipment		7,283,853	6,873,423
	Intangible fixed assets
	Goodwill	180,388	141,076
	Other		544,540	515,539
	Total intangible fixed assets		724,929	656,616
	Investments and other assets
	Investment securities	211,068	195,842
	Other		366,683	335,066
	Allowance for doubtful accounts	(110)	(231)
	Total investments and other assets		577,641	530,677
	Total noncurrent assets		8,586,424	8,060,716
	Total assets		19,025,014	16,922,178

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				(Unit: Thousands of yen)
				First Three Quarters
			Fiscal 2019	of Fiscal 2020
			(As of September 30, 2019)	(As of June 30, 2020)
	Liabilities
	Current liabilities
	Accounts payable, trade		213,256	138,422
	Short-term loans payable	373,904	121,459
	Current portion of long-term loans payable		752,968	762,968
	Income taxes payable	98,999	54,502
	Accrued employee bonuses		157,244	134,885
	Other	1,413,720	1,355,773
	Total current liabilities		3,010,093	2,568,011
	Noncurrent liabilities
	Long-term loans payable		6,086,260	5,998,254
	Net defined benefit liability	94,633	105,000
	Other		960,856	770,191
	Total noncurrent liabilities		7,141,750	6,873,446
	Total liabilities		10,151,843	9,441,457
	Net assets
	Shareholders' equity
	Common stock	6,461,911	6,462,062
	Additional paid-in capital		5,015,924	5,016,132
	Retained earnings	(3,997,770)	(5,043,494)
	Total shareholders' equity		7,480,064	6,434,700
	Accumulated other comprehensive income
	Valuation difference on available-for-sale securities		(3,935)	(7,576)
	Foreign currency translation adjustment	(29,558)	(37,067)
	Total accumulated other comprehensive income		(33,493)	(44,643)
	Stock acquisition rights		65,837	63,104
	Non-controlling interests		1,360,762	1,027,560
	Total net assets		8,873,170	7,480,720
	Total liabilities and net assets		19,025,014	16,922,178

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1. Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income Quarterly Consolidated Statements of Income

				(Unit: Thousands of yen)
			First Three Quarters	First Three Quarters
			of Fiscal 2019	of Fiscal 2020
			(From October 1, 2018	(From October 1, 2019
			to June 30, 2019)	to June 30, 2020)
	Revenues		6,689,057	5,196,677
	Cost of revenues	4,413,854	3,526,593
	Gross profit		2,275,203	1,670,084
	Selling, general and administrative expenses		3,582,887	2,563,881
	Operating income/(loss)		(1,307,684)	(893,796)
	Non-operating income
	Interest income		3,042	770
	Subsidy income	500	21,508
	Settlement received		5,821	－
	Other	1,488	2,171
	Total non-operating income		10,852	24,449
	Non-operating expenses
	Interest expense		105,492	102,742
	Share of loss of entities accounted for using equity
	method		－	15,279
	Commission paid		31,334	1,500
	Other	12,121	364
	Total non-operating expenses		148,947	119,886
	Ordinary profit/(loss)		(1,445,779)	(989,233)
	Extraordinary income
	Gain on change in equity	120,722	－
	Gain on sales of non-current assets		－	1,185
	Gain on sales of subsidiaries and associates	58,845	－
	Gain on reversal of stock acquisition rights		2,988	4,486
	Total extraordinary income		182,556	5,672
	Extraordinary losses
	Loss on sales of non-current assets	891	－
	Loss on retirement of non-current assets		28,807	899
	Loss on valuation of investments in capital		－	2,140
	Loss on temporary closure		－	292,322
	Other	2,377	24
	Total extraordinary loss		32,076	295,386
	Income/(Loss) before income taxes		(1,295,300)	(1,278,947)
	Income taxes (current)		87,795	67,857
	Income taxes (deferred)	(31,242)	(21,103)
	Total income taxes		56,552	46,753
	Profit/(Loss)		(1,351,852)	(1,325,701)
	Profit (Loss) attributable to non-controlling interests		(141,430)	(279,977)
	Profit (Loss) attributable to owners of the parent		(1,210,422)	(1,045,723)

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Quarterly Consolidated Statements of Comprehensive Income

				(Unit: Thousands of yen)
			First Three Quarters	First Three Quarters
			of Fiscal 2019	of Fiscal 2020
			(From October 1, 2018	(From October 1, 2019
			to June 30, 2019)	to June 30, 2020)
	Profit/(Loss)		(1,351,852)	(1,325,701)
	Other comprehensive income
	Valuation difference on available-for-sale securities		(15,828)	(3,641)
	Foreign currency translation adjustment	(11,090)	(11,254)
	Total other comprehensive income		(26,919)	(14,895)
	Comprehensive income		(1,378,771)	(1,340,596)
	Comprehensive income attributable to
	Comprehensive income attributable to owners of the
	parent	(1,234,082)	(1,056,873)
	Comprehensive income attributable to non-controlling
	interests		(144,689)	(283,722)

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1. Notes to Quarterly Consolidated Financial Statements (Assumption of Going Concern)
   Not applicable.

(Material Change in Shareholders' Equity)

I. Nine months ended June 30, 2019 (October 1, 2018 to June 30, 2019)

During the first three quarters of fiscal 2019, the exercise of stock acquisition rights pushed common stock as well as additional paid- in capital up ¥910,492 thousand, respectively. Due to this and other changes, common stock reached ¥6,461,911 thousand and additional paid-in capital reached ¥4,997,873 thousand, as of June 30, 2019.

1. Nine months ended June 30, 2020 (October 1, 2019 to June 30, 2020) Not applicable.

(Additional Information)

(Accounting estimates related to the impact of COVID-19)

As Japanese government lifted a state of emergency related to COVID-19 on May 21, 2020 nationwide, Metsä, which includes Moomin Valley Park, resumed its operation on June 4, 2020. However, the number of guests coming to Metsä remained at lower level compared to before the spread of COVID-19. Though it is quite difficult to estimate when the spread of COVID-19 will end, the Group estimates related to fixed assets impairment accounting assume that the impact of COVID-19 will continue for a certain period.

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(Segment Information)

I. Nine months ended June 30, 2019 (October 1, 2018 to June 30, 2019)

1. Information about the amount of revenues, profits or losses pursuant to each reporting segment

（Unit: Thousands of yen）

			Reporting Segments
	Investment		Public		Entertainment				Other		Total		Adjustment		Consolidated
		Management								(Note 2)		(Note 3)
	Banking			Service		Total		(Note 1)
		Consulting
	Business			Business
		Business
Revenues
Revenues to	2,400,483		584,795		3,679,049		6,664,328		24,729		6,689,057		－		6,689,057
third party
Inter-segment
revenues and	211,055		9,000		6,713		226,769		－		226,769		(226,769)		－
transfers (Note
4)
Total	2.611,539		593,795		3,685,763		6,891,098		24,729		6,915,827		(226,769)		6,689,057
Segment	(378,172)		72,719		(345,434)		(650,886)		(12,130)		(663,017)		(644,666)		(1,307,684)
income (loss)

Notes:

1. Other is a segment for businesses that do not fall under reporting segments. This includes software development and sales business and other businesses.
2. Adjustment of segment income (loss), at ¥ (644,666) thousand, includes elimination of transactions among segments of ¥182,773 thousand and corporate expenses of ¥ (827,439) thousand, which are not allocatable to reporting segments. Corporate expenses are mainly general and administrative expenses, which do not belong to any reporting segments.
3. Segment income (loss) is reconciled with operating loss in the quarterly consolidated statements.
4. Intersegment revenues and transfers in the investment banking business include Metsä Village rental income of

¥186,190 thousand that FGI, under the investment banking business, receives from Moomin Monogatari, a consolidated subsidiary under the entertainment service business.

2. Information related to goodwill and impairment loss on fixed assets by reporting segment Significant impairment loss on fixed assets

Not applicable.

Significant change in amount of goodwill

In the entertainment service business, bringing Rights and Brands Japan Co., Ltd., under consolidation generated goodwill of ¥43,121 thousand.

Significant gain on negative goodwill

Content has been omitted because significance is negligible.

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II. Nine months ended June 30, 2020 (October 1, 2019 to June 30, 2020)

1. Information about the amount of revenues, profits or losses pursuant to each reporting segment

（Unit: Thousands of yen）

				Reporting Segments
		Investment		Public		Entertainment				Adjustment		Consolidated
			Management					(Note 1)		(Note 2)
		Banking			Service		Total
			Consulting
		Business			Business
			Business
Revenues
Revenues to third		1,754,409		161,131		3,281,136		5,196,677		－		5,196,677
party
Inter-segment
revenues and		147,563		9,000		17,144		173,708		(173,708)		－
transfers (Note 3)
Total		1,901,972		170,131		3,298,281		5,370,385		(173,708)		5,196,677
Segment income		(8,399)		(25,936)		(414,192)		(448,528)		(445,268)		(893,796)
(loss)

Notes:

1. Adjustment of segment income (loss), at ¥ (445,268) thousand, includes elimination of transactions among segments of ¥174,312 thousand and corporate expenses of ¥ (619,581) thousand, which are not allocatable to reporting segments. Corporate expenses are mainly general and administrative expenses, which do not belong to any reporting segments.
2. Segment income (loss) is reconciled with operating loss in the quarterly consolidated statements.
3. Intersegment revenues and transfers in the investment banking business include Metsä Village rental income of

¥117,211 thousand that FGI, under the investment banking business, receives from Moomin Monogatari, a consolidated subsidiary under the entertainment service business.

2. Changes in reporting segments

Adacotech Incorporated which was indicated under the "Other" segment executed mainly a third-party allocation of shares in June 2019. Because FGI's ratio of voting rights declined, Adacotech has been removed from the scope of consolidation and is now accounted for by the equity method. As such, the "Other" segment is no longer indicated as a reporting segment in fiscal 2020.

3. Information related to goodwill and impairment loss on fixed assets by reporting segment Significant impairment loss on fixed assets

Not applicable.

Significant change in amount of goodwill

Not applicable.

Significant gain on negative goodwill

Not applicable.

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