FinTech Global Incorporated : Summary of Financial Statements for the First Three Quarters of Fiscal 2023 (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 2023

		August 9, 2023
Company Name:	FinTech Global Incorporated	(Code Number: 8789 Tokyo Stock Exchange)
	(URL:https://www.fgi.co.jp/en/)	TEL: [phone]
Representative:	President and Chief Executive Officer	Name: Nobumitsu Tamai
Contact:	Director, Senior Executive Officer	Name: Takashi Senda
Scheduled date for filing of securities report: August 14, 2023
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 2023 (October 1, 2022 - June 30, 2023)

(1) Consolidated operating results						(Percentages indicate year-on-year changes.)
	Revenues		Operating income	Ordinary profit	Profit/(loss) attributable to
		owners of the parent
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen		%
First three quarters of fiscal 2023	6,911		2.4	1,142	661.0	1,084	851.1	781		-
First three quarters of fiscal 2022	6,749		5.3	150	(67.7)	114	(73.9)	(140)		-

(For reference) Comprehensive income:	1,079 million yen for the first three quarters of fiscal 2023	－%
		91 million yen for the first three quarters of fiscal 2022	(68.9%)
		Net income/(loss)	Net income
		per share
		per share
		(diluted)
		Yen	Yen
First three quarters of fiscal 2023		3.88	3.87
First three quarters of fiscal 2022		(0.70)	-

(2) Consolidated financial position

		Total assets	Net assets	Equity ratio
		Millions of yen	Millions of yen	%
First three quarters of fiscal 2023		18,574	8,678	40.1
Fiscal 2022		17,933	7,842	36.7
(For reference) Shareholders' equity:	7,453 million yen for the first three quarters of fiscal 2023
		6,585 million yen for fiscal 2022

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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 2022	－	0.00	－	0.00	0.00
Fiscal 2023	－	0.00	－
Fiscal 2023 (Forecast)				－	－
(Notes)

1. Change from the latest dividend forecast: None
2. Year-enddividend forecast for the fiscal year ending September 30, 2023 has not been made.

3. Consolidated financial forecasts for fiscal 2023 (October 1, 2022 - September 30, 2023)

(Percentages indicate year-on-year changes.)

	Revenues		Operating income	Ordinary profit	Profit attributable to	E.P.S.
		owners of the parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Fiscal 2023	9,500	2.1	1,400	138.2	1,400	158.8	1,500	751.7	7.45

(Note) Change from the latest consolidated financial forecasts: None

*Notes

1. Changes in significant subsidiaries during the period (Changes in specified subsidiaries accompanying change in scope of consolidation): 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: Yes

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

(c). Changes in accounting estimates: None

(d). Restatements: None

Note: For details, please refer to "Consolidated Financial Statements and Primary Notes (3) Notes to Quarterly Consolidated Financial Statements (Change in accounting policies)".

1. Number of shares issued (common shares)
2. 1. Number of shares issued (including treasury stock):
   2. Number of shares of treasury stock:
   3. Average number of shares issued during the first three quarters:

* This summary of financial statements is exempt from the review procedures.

201,305,200 shares for the first three quarters of fiscal 2023 201,295,200 shares for fiscal 2022

20 shares for the first three quarters of fiscal 2023 20 shares for fiscal 2022

201,303,037 shares for the first three quarters of fiscal 2023 201,240,893 shares for the first three quarters of fiscal 2022

* Explanation of the appropriate use of performance forecasts and other related items.

The forward-looking statements included in this summary of financial statements are based on the assumptions, forecasts, and plans of FinTech Global Incorporated (hereafter, "FGI" and "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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1. Qualitative Information on Quarterly Consolidated Performance

(1) Business results

During the first three quarters-October 1, 2022 to June 30, 2023-of the fiscal 2023 consolidated accounting period for FinTech Global Incorporated (FGI) ending September 30, 2023, the investment banking business promoted business succession solution services providing financial advice, asset management and other services helpful to companies grappling with business succession issues, and private equity investment where these client companies are the investment targets.

Looking at business results for the first three quarters of fiscal 2023, revenues rose 2.4% year on year, to ¥6,911 million, while gross profit surged 43.2% year on year, to ¥3,839 million. FGI achieved these results, despite the exclusion of Rights and Brands Japan Co., Ltd. (RBJ) from the scope of consolidation and the change into equity method affiliate in the first quarter of fiscal 2023, thanks to an increase in income on arrangement transaction services as well as investment income driven by favorable demand for business succession solution services and steady private equity investment exits, and further complemented by brisk demand for aircraft asset management services.

Selling, general and administrative expenses rose 6.5%, compared with the first three quarters of fiscal 2022, to ¥2,696 million, mainly owing to an increase in staffing and wider use of outsourcing in some segments to support business expansion. Nevertheless, operating income jumped 661.0% year on year, to ¥1,142 million, and ordinary income soared 851.1% to ¥1,084 million, underpinned by higher gross profit. The Company recorded ¥781 million in profit attributable to owners of the parent for the first three quarters of fiscal 2023, compared with a ¥140 million loss position for the first three quarters of fiscal 2022. The turnaround stems from the booking of ¥190 million in gain on negative goodwill under extraordinary income from turning Trinity Japan co., ltd., into a consolidated subsidiary.

		(Unit: Millions of yen)
	First Three Quarters	First Three Quarters	YOY
	of Fiscal 2022	of Fiscal 2023	Change
Revenues	6,749	6,911	161
Investment banking business	3,461	5,081	1,620
Public management consulting	263	248	(15)
business
Entertainment service business	3,252	1,796	(1,456)
Elimination	(228)	(214)	13
Gross profit	2,680	3,839	1,158
Investment banking business	1,855	3,541	1,686
Public management consulting	143	136	(6)
business
Entertainment service business	777	258	(518)
Elimination	(95)	(98)	(3)
Operating income	150	1,142	992
[Segment income/ (loss)]
Investment banking business	570	1,948	1,378
Public management consulting	(1)	(41)	(40)
business
Entertainment service business	6	(224)	(230)
Elimination or corporate expenses	(425)	(539)	(114)
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	First Three Quarters	First Three Quarters	YOY
	of Fiscal 2022	of Fiscal 2023	Change
Ordinary income	114	1,084	970
Income before income taxes	129	1,250	1,121
Income/ (Loss) attributable to owners	(140)	781	922
of parent

A breakdown of performance by business segment is presented below. Revenues include intersegment revenues and transfers.

a. Investment Banking Business

The investment banking business marked a favorable shift in the formation of investment transactions integral to business succession solution services and increased its number of new private equity investments. The sale of investments arranged by FGI was also brisk. These trends underpinned growth in income on arrangement transaction services, including upfront fees on asset management services for arranged funds, management fees during the contract period and performance fees, as well as investment income through exits. In investment management activities, FGI saw an increase in assets entrusted by overseas institutional investors for investment into residences. The balance of assets in custody jumped 48.7%, to ¥83.5 billion, and the foundation for stock-typeearnings-that is, recurring fee revenues-was reinforced. In aircraft asset management services, requests for aircraft inspections and technical services, such as those that accompany the return of aircraft, slowed, as the pandemic transitioned into an endemic state and catalysts of demand changed. Nevertheless, revenues remained at a high level. Aircraft asset management services moved in a favorable direction, thanks to an increase in aircraft registrations and fresh pursuits, including aircraft remarketing.

As a result, segment revenues jumped 46.8% year on year, to ¥5,081 million, and segment income surged 241.7%, to ¥1,948 million.

b. Public Management Consulting Business

In the public management consulting business, which hinges on Public Management Consulting Corporation, marketing efforts to promote consultations on the preparation of financial documents targeted large local governments. Demand was steady, with the number of requests for contract services from prefectures to prepare financial documents for the fiscal year running from April 1, 2023 through March 31, 2024-rising by one, to nine, while requests from ordinance-designated city/special wards remained at 11. In addition, in regard to reviews of general management plans for public facilities, the Ministry of Internal Affairs and Communications gave local public entities that had not finished their reviews until March 31, 2024, to do so, and PMC vigorously pushed ahead on marketing activities related to services that would help these entities execute such reviews. Segment revenues stalled at ¥248 million, tumbling 5.9% compared with the first three quarters of fiscal 2022, when PMC generated revenue from the sale of software from business partners paralleling the end of support for accounting software distributed to local governments by the national government. The segment showed a loss of ¥41 million, a steep drop from the loss of ¥1 million recorded a year ago, reflecting an increase in expenses related to prior investment to address expanding requests for services.

c. Entertainment Service Business

Metsä-comprising Metsä Village and Moominvalley Park-welcomed about about 500,000 guests over the first three quarters of fiscal 2023, down 13.7% year on year. But thanks to higher spending per guest on merchandise and food and beverages, along with upward revision to admission fees for

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Moominvalley Park, Metsä-related revenues slipped only 3.6% year on year, to ¥1,796 million. In licensing-related operations, FGI booked ¥1,390 million from RBJ in the first three

quarters of fiscal 2022. But RBJ was excluded from the scope of consolidation, effective from the first quarter of fiscal 2023, and is now an affiliate accounted for by the equity method. Consequently, RBJ business results from licensing-related operations are no longer booked under this segment-entertainment service business-but rather reported as investment income based on equity stake. On July 13, 2023, FGI decided through a resolution by the Board of Directors that all shares in RBJ held by Moomin Monogatari would be transferred to Matsuya Co., Ltd., and based on this resolution, Moomin Monogatari signed a share transfer agreement on the same day, with shares transferred the next day, on July 14, 2023. Consequently, RBJ is excluded from FGI's scope of equity method affiliates from the fourth quarter of fiscal 2023.

Given the above, the entertainment service business posted revenues of ¥1,796 million, down 44.8% year on year, and a segment loss of ¥224 million, reversing from a ¥6 million profit position a year ago.

1. Consolidated Financial Position Assets
   Total assets at the end of the third quarter of fiscal 2023, stood at ¥18,574 million, up 3.6% from the end of fiscal 2022 on September 30, 2022. This is largely because, despite decreases of ¥262 million in noncurrent assets, mainly depreciation and amortization on Moominvalley Park buildings and interior and exterior fixtures, and ¥333 million in trademark rights included in other intangible fixed assets due to the exclusion of RBJ from the scope of consolidation, increases of ¥145 million in cash and time deposits, operational investment securities increased ¥496 million, due to new investments and improved value of funds associated with business succession projects reaching exit stage, and investment securities increased ¥698 million, mainly due to a change in the status of RBJ, which was removed from the scope of consolidation and is now accounted for as an equity- method affiliate.

Liabilities

Total liabilities at the end of the third quarter of fiscal 2023, came to ¥9,896 million, down 1.9% from the end of fiscal 2022 on September 30, 2022. This change is primarily due to decreases of ¥23 million in accounts payable, trade, ¥57 million in lease obligations on current liabilities, and ¥95 million in lease obligations on noncurrent liabilities, which outweighed increases of ¥68 million in short-term loans payable and ¥104 million in deferred tax liabilities.

Net assets

Net assets at the end of the third quarter of fiscal 2023 came to ¥8,678 million, up 10.7% from the end of fiscal 2022 on September 30, 2022. This change is mainly due to an increase in retained earnings on the booking of ¥781 million in quarterly profit attributable to owners of the parent, which offset a ¥51 million decrease in non-controlling interests.

Note that, with approval granted by shareholders at the General Meeting of Shareholders on December 22, 2022, FGI reduced common stock and legal capital surplus by ¥1,098 million and ¥4,036 million, respectively, with these amounts transferred to other capital surplus. In conjunction with this, legal retained earnings were reduced by ¥47 million and transferred to retained earnings brought forward and, along with the increased other capital surplus, appropriated to cover a deficit in retained earnings brought forward.

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