FinTech Global Incorporated : Summary of Financial Statements for the First Two Quarters of Fiscal 2021 (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 Two Quarters of Fiscal 2021

		May 12, 2021
Company Name: FinTech Global Incorporated	(Code Number: 8789 TSE 2nd Section)
	(URL:http://www.fgi.co.jp/english/)	TEL: [phone]
Representative:	President and Chief Executive Officer	Name: Nobumitsu Tamai
Contact:	Executive Vice President, Senior Executive Officer	Name: Seigo Washimoto
Scheduled date for filing of securities report: May 14, 2021

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 two quarters of fiscal 2021 (October 1, 2020 -March 31, 2021)

(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 two quarters of fiscal 2021		4,874	14.2	840	-	831	-		618	-
First two quarters of fiscal 2020		4,269	30.3	(495)	-	(560)	-		(581)	-

(For reference) Comprehensive income:	651 million yen for the first two quarters of fiscal 2021	(－)%
		(660) million yen for the first two quarters of fiscal 2020	(－)%
	Net income/(loss)	Net income/(loss)
	per share
		per share
		(diluted)
		Yen	Yen
First two quarters of fiscal 2021		3.07	3.07
First two quarters of fiscal 2020		(2.89)	-

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
First two quarters of fiscal 2021	17,430	7,800	39.1
Fiscal 2020	16,583	7,304	37.7

(For reference) Shareholders' equity: 6,810 million yen for the first two quarters of fiscal 2021 6,258 million yen for fiscal 2020

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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 2020	－	0.00	－	0.00	0.00
Fiscal 2021	－	0.00
Fiscal 2021 (Forecast)			－	0.00	0.00
(Note) Change from the latest dividend forecast: None

3. Consolidated financial forecasts for fiscal 2021 (October 1, 2020 - September 30, 2021)

(Percentages indicate year-on-year changes.)

	Revenues		Operating income	Ordinary profit	Profit/(loss) attributable to	E.P.S.
		owners of the parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Fiscal 2021	9,000	31.6	540	-	370	-	250	-	1.24

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

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

(4) Number of shares issued (common shares)
1. Number of shares issued (including treasury stock):	201,115,600 shares in the first two quarters of fiscal 2021
	201,114,600 shares in fiscal 2020
2. Number of shares of treasury stock:	－ shares for the first two quarters of fiscal 2021
3. Average number of shares issued during the first two quarters:	－ shares for fiscal 2020
	201,115,303 shares in the first two quarters of fiscal 2021
	201,113,146 shares in the first two quarters of fiscal 2020

• This summary of financial statements is exempt from the review procedures.
• 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 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.For such performance forecasts, please refer to

"1. Qualitative Information on Business Results and Financial Position

1. Information on Forward-Looking Statements, including Consolidated Performance Forecasts"

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1. Qualitative Information on Business Results and Financial Position

(1) Business Results

During the first two quarters-October 1, 2020 to March 31, 2021-of the fiscal 2021 consolidated accounting period for FinTech Global Incorporated (FGI) ending September 30, 2021, the investment banking business pursued arrangement activities, driven by a strategy to reinforce private equity investment geared toward such issues as business succession. In the Metsä business, the focus was on an account- balancing strategy designed to reduce costs and offset the impact of fewer guests to Moominvalley Park due to the COVID-19 pandemic. The guest count rallied in the first quarter, reflecting measures to attract guests with crowd-pleasing events while ensuring appropriate protocols to prevent the spread of COVID-19. But in January 2021, as the second quarter began, a state of emergency was declared and the guest count subsequently decreased significantly. On a positive note, the licensing-related business successfully expanded domestic demand for Moomins through effective branding.

Consolidated results for the first two quarters of fiscal 2021 moved in a good direction. The entertainment service business struggled to generate revenues, as the number of people visiting Metsä retreated 24.9% year-on-year. However, in the investment banking business, several private equity investments reached exit, complemented by brisk demand for aircraft asset management services, and this led to solid segment revenues. As a result, consolidated revenues rose 14.2%, to ¥4,874 million. Gross profit soared 83.2%, to ¥2,384 million, reflecting this revenue growth, fueled mainly by arrangement services on investment banking deals which have low cost of revenue. Selling, general and administrative expenses were down 14.1%, to ¥1,543 million, thanks to progress on cost reduction groupwide, especially at Metsä, that began in fiscal 2020. Consequently, on a consolidated basis, FGI recorded operating income, at ¥840 million, compared with an operating loss of ¥495 million a year ago, as well as ordinary income, at ¥831 million, a turnaround from an ordinary loss of ¥560 million a year ago, and income attributable to owners of the parent, at ¥618 million, reversing from a loss position of ¥581 million a year ago.

			(Unit: Millions of yen)
	First Two Quarters	First Two Quarters		YOY Change
	of Fiscal 2020	of Fiscal 2021
Revenues	4,269	4,874		604
Investment banking business	1,404	2,669		1,265
Public management consulting business	126	118		(8)
Entertainment service business	2,850	2,231		(618)
Elimination	(111)	(144)		(33)
Gross profit	1,301	2,384		1,083
Investment banking business	719	1,991		1,272
Public management consulting business	68	70		1
Entertainment service business	567	391		(175)
Elimination	(53)	(69)		(15)
Operating income/ (loss)	(495)	840		1,335
〔Segment income/ (loss)〕
Investment banking business	(35)	1,322		1,357
Public management consulting business	(13)	(3)		9
Entertainment service business	(160)	(155)		5
Elimination or corporate expenses	(286)	(323)		(37)
Ordinary income/ (loss)	(560)	831		1,391
Income /(Loss) before income taxes	(629)	833		1,462
Income/ (Loss) attributable to owners of parent	(581)	618		1,199

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

a. Investment Banking Business

The investment banking business was involved in several arrangements, mostly related to business succession, and the associated private equity investments reached a point for exit. In aircraft asset management operations, the COVID-19 pandemic led to an increase in requests from financial institutions and owners (lessors) for technical services, such as aircraft inspection and aircraft returns. This pushed revenues upward. Selling, general and administrative expenses gradually decreased, reflecting efforts to build on the progress made in fiscal 2020, especially in the area of personnel costs.

As a result, the investment banking business generated ¥2,669 million in revenues, skyrocketing 90.1% year on year. In addition, the segment returned to profitability, with income of ¥1,322 million, compared with a loss of ¥35 million a year ago.

b. Public Management Consulting Business

In the public management consulting business, the public accounting business directed efforts into marketing activities to promote consultations for creating financial documents based on unified standards for local governments as well as contract services, including preparation of financial analysis reports, introduction of public enterprise accounting and the formation of management strategies for public enterprises, with a particular emphasis on large local governments and authorities.

The regional revitalization business focused on contract services, including discussions pursuant to the introduction of public-private partnership/public financial initiative techniques, for which demand is expected to grow.

The segment saw revenues slip 6.3% year on year, to ¥118 million, and while a loss of ¥3 million was recorded, it was an improvement over the ¥13 million loss booked a year ago.

c. Entertainment Service Business

Moomin Monogatari's Moominvalley Park and Rights and Brands Japan's Moomin character licensing business are the two wheels of the entertainment service business cart. The basic strategy for the segment hinged on expanding licensing fees by reinforcing Moomin branding activities to drive demand in Japan.

At Metsä, thorough measures to prevent the spread of COVID-19 were put in place at Moominvalley Park, and then the push was on to draw crowds to the site through various events and enhanced services. Moominvalley Park Harvest, for example, took place in the autumn, Winter Wonderland brightened up the winter, and Spring Festival debuted in March 2021. Thanks to these events, the guest count charted an upward path, to around 240,000 in the first quarter, or 37.2% more than in the immediately preceding fourth quarter of fiscal 2020. But in January 2021, as the second quarter began, a second state of emergency was called, and the guest count plummeted. February and March brought a gradual recovery in the number of visitors, but the second quarter ended with a year-on-year decrease of 24.9%. Consequently, Metsä-related revenues dropped 37.1%, to ¥ 1,301 million, compared with the first two quarters of fiscal 2020.

In the licensing-related business, growth was temporarily dulled in fiscal 2020 when a state of

emergency forced many events to cancel and large commercial facilities, which are a key sales channel for licensees to market their merchandise, to close in April and May 2020. Later, when the economy reopened, signs of recovery emerged. To reinforce the Moomin brand, the licensing business was involved in a couple of touring events in Japan: "Moomin: The Art and the Story," a selection of original Moomin artwork, and Moomin Comic Strips Exhibition, an exhibition of comic drawings and sketches. And even though the pandemic restricted event activities, Rights and Brands Japan took a vigorous approach that included joint efforts with licensees to hammer out various Moomin-using plans. This underpinned a 19.4% increase in revenues, year on year, to ¥929 million, exceeding pre-pandemic results.

All told, the entertainment service business recorded revenues of ¥2,231 million, dropping 21.7% year on year. On the profit front, cost-cutting efforts at Metsä initiated in fiscal 2020 helped push operating

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expenses down 20.7%, to ¥2,386 million, but this was not enough to compensate for the drop in revenues, and the segment ended the second quarter with an operating loss of ¥155 million, only slightly better than the ¥160 million loss posted for the first two quarters of fiscal 2020.

1. Consolidated Financial Position Assets
   Total assets at the end of the second quarter on March 31, 2021 stood at ¥17,430 million, up 5.1% from the end of fiscal 2020 on September 30, 2020. The change reflects increase of ¥436 million in cash and time deposits, ¥669 million in accounts receivable, ¥100 million in investments in securities, which offset a decrease of ¥250 million in property, plant and equipment due to depreciation and amortization on Moominvalley Park buildings and interior and exterior fixtures.

Liabilities

Total liabilities amounted to ¥9,629 million at the end of the second quarter on March 31, 2021, up 3.8% from the end of fiscal 2020 on September 30, 2020. The change is primarily due to increases of ¥75 million in accounts payable, trade, ¥131 million in income taxes payable, and ¥225 million in accounts payable included in other current liabilities, which offset a decrease of ¥42 million in short-term loans payable.

Net assets

Net assets reached ¥7,800 million at the end of the second quarter on March 31, 2021, up 6.8% from the end of fiscal 2020 on September 30, 2020. The change is mainly due to an increase of ¥551 million in retained earnings, reflecting the booking of quarterly income attributable to owners of the parent company, which overshadowed a decrease of ¥52 million in non-controlling interests.

1. Information on Forward-Looking Statements, including Consolidated Performance Forecasts
   (Unit: Millions of yen)

				Profit/(loss）
	Revenues	Operating	Ordinary income	attributable to
	income (loss）	(loss）	owners of the
				parent
Fiscal 2021	9,000	540	370	250
(forecast)
Fiscal 2020	6,841	(992)	(1,135)	(1,186)
(actual)
YOY change	31.6%	-	-	-
(ratio)
YOY change	2,158	1,532	1,505	1,436
(amount)

The consolidated performance forecast for fiscal 2021, ending September 30, 2021, is unchanged from the outlook presented the summary of financial statements for fiscal 2020 released on November 10, 2020.

The investment banking business made steady progress in the formation of arrangements, including deals for private equity investment, during the first two quarters of fiscal 2021, with a high rate of improvement on all profit fronts that exceeds full-year performance expectations. Going forward, efforts will continue on formation of arrangements. In addition, management anticipates additional exits from corporate investments and asset investments.

Meanwhile, in April 2021, the government another declared a state of emergency in some areas and imposed stricter countermeasures and other priority measures to prevent the spread of COVID-19. How pandemic responses will impact Metsä going forward is uncertain. Hanno, Saitama Prefecture, where Metsä is located, currently falls outside the state of emergency zone. Nevertheless, the prevailing situation could still create a challenging business environment, and potential unknowns preclude a consolidated performance

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