FinTech Global Incorporated : Summary of Financial Statements for the First Two Quarters of Fiscal 2023 (under Japanese…

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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 2023

		May 10, 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: May 12, 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 two quarters of fiscal 2023 (October 1, 2022 - March 31, 2023)

(1) Consolidated operating results						(Percentages indicate year-on-year changes.)
		Revenues	Operating income/(loss)	Ordinary profit/(loss)	Profit/(loss) attributable to
		owners of the parent
		Millions of yen	%	Millions of yen		%	Millions of yen		%		Millions of yen		%
First two quarters of fiscal 2023		4,530	2.5	645		-	628		-	477		-
First two quarters of fiscal 2022		4,421	(9.3)	(39)		-	(51)		-	(203)		-
(For reference) Comprehensive income:	654 million yen for the first two quarters of fiscal 2023	(－%)
			(84) million yen for the first two quarters of fiscal 2022	(－%)
		Net income/(loss)	Net income
		per share
		per share
		(diluted)
			Yen			Yen
First two quarters of fiscal 2023			2.37			2.36
First two quarters of fiscal 2022			(1.01)			-
(2) Consolidated financial position
		Total assets	Net assets		Equity ratio
		Millions of yen	Millions of yen			%
First two quarters of fiscal 2023			18,341			8,251	38.6
Fiscal 2022			17,933			7,842	36.7
(For reference) Shareholders' equity:		7,080 million yen for the first two 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	10,100	8.6	1,400	138.2	1,400	158.8	1,000	467.8	4.97

(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 two quarters:

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

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

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

201,301,966 shares for the first two quarters of fiscal 2023 201,213,740 shares for the first two 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 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 Business Results and Financial Position

(1) Business Results

In the first two quarters-October 1, 2022 to March 31, 2023-of the fiscal 2023 consolidated accounting period for FinTech Global Incorporated (FGI) ending September 30, 2023, the investment banking business promoted private equity services providing various solutions, including investment, to companies with business succession issues on their hands.

Business results for the first two quarters of fiscal 2023 reflect progress on several business succession projects and the booking of investment income and income on arrangement transaction services, which offset the exclusion of Rights and Brands Japan Co., Ltd. (RBJ), from the scope of consolidation in the first quarter and its change in status to equity-method affiliate. Revenues increased 2.5% year on year, to ¥4,530 million, and gross profit jumped 48.0%, to ¥2,381 million. Selling, general and administrative expenses rose 5.2%, compared with the first two quarters of fiscal 2022, to ¥1,735 million, mainly owing to an increase in staffing and wider use of outsourcing in some segments to support business expansion. Nevertheless, FGI achieved operating income of ¥645 million, reversing from an operating loss of ¥39 million in the corresponding period a year ago, and ordinary income of ¥628 million, rebounding from an ordinary loss of ¥51 million a year ago, underpinned by higher gross profit. The Company recorded ¥477 million in profit attributable to owners of the parent for the first two quarters of fiscal 2023, compared with a ¥203 million loss position for the first two 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 Two Quarters of	First Two Quarters of Fiscal	YOY Change
	Fiscal 2022	2023
Revenues	4,421	4,530	109
Investment banking business	2,193	3,284	1,091
Public management consulting business	201	182	(18)
Entertainment service business	2,179	1,211	(967)
Elimination	(153)	(148)	4
Gross profit	1,609	2,381	772
Investment banking business	1,081	2,200	1,118
Public management consulting business	103	95	(7)
Entertainment service business	489	148	(340)
Elimination	(64)	(62)	1
Operating income/ (loss)	(39)	645	685
〔Segment income/ (loss)〕
Investment banking business	310	1,193	882
Public management consulting business	12	(17)	(30)
Entertainment service business	(25)	(158)	(132)
Elimination or corporate expenses	(337)	(371)	(33)
Ordinary profit/ (loss)	(51)	628	680
Income/ (Loss) before income taxes	(37)	786	823
Income/ (Loss) attributable to owners of parent	(203)	477	680

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

a. Investment Banking Business

In the investment banking business, private equity operations provided broad-based solutions, with an emphasis on investment, for several business succession projects in major urban areas across Japan. Investment income and income on arrangement transaction services related to these services increased. The segment also marked favorable progress on new investments through funds set up with capital contributed by FGI to acquire target companies in business succession projects. In asset management activities, operations were newly entrusted by overseas investors to manage assets for residences and logistics facility investment, and booked income. Consequently, the balance of assets under management climbed 15.9% over the balance recorded at the end of September 2022, to ¥65.1 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 49.8% year on year, to ¥3,284 million, and segment income surged 283.7%, to ¥1,193 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 has firmed up, with the number of requests for contract services from prefectures to prepare financial documents for the fiscal year running from April 2022 through March 2023 rising by one, year on year, to eight, and from ordinance-designated cities and special zones, up two, to 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 ¥182 million, tumbling 9.2% compared with the first two 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. Reversing from segment profit of ¥12 million a year ago, a segment loss was recorded, at ¥17 million, for these first two quarters, reflecting an increase in expenses related to prior investment to address expanding requests for services.

c. Entertainment Service Business

Metsä, encompassing Metsä Village and Moominvalley Park, saw an 8.1% year-on-year drop in the site-wide guest count, to around 350,000 people. This reflects the many bad-weather weekends and statutory holidays in November and March, months that typically bring good crowds to Metsä.

Revenues from Metsä-related activities inched up 1.7% year on year, to ¥1,211 million, underpinned by revenue from "Illumori no Oto," an event running from October 2022 through January 2023 at Moominvalley Park and revenue from Moomin-character merchandise sold through an official online shop that went live in March 2022.

In licensing-related operations, FGI booked ¥988 million from RBJ in the first two 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-

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entertainment service business-but rather reported as investment income based on equity stake. Given the above, Metsä-related operations posted higher revenues and a year-on-year drop in

fixed expenses due to remodeling working at Moominvalley Park in December 2022. But with the exclusion of RBJ from the scope of consolidation, segment revenues tumbled 44.4% year on year, to ¥1,211 million, and the loss position deepened, hitting ¥158 million, compared with ¥25 million for the first two quarters of fiscal 2022.

1. Consolidated Financial Position Assets
   Total assets at the end of the second quarter of fiscal 2023 stood at ¥18,341 million, up 2.3% from the end of fiscal 2022 on September 30, 2022. This is largely because, despite decreases of ¥628 million in cash and time deposits, ¥173 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, operational investment securities increased ¥820 million, due to new investments and improved value of funds associated with business succession projects reaching exit stage, and investment securities increased ¥717 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 second quarter of fiscal 2023 settled at ¥10,089 million, largely unchanged from the end of fiscal 2022 on September 30, 2022. This primarily reflects the fact that increases of ¥200 million in accounts payable, trade and ¥226 million in current portion of long- term loans payable neutralized decreases of ¥334 million in long-term debt and ¥84 million in lease obligations on noncurrent assets.

Net assets

Net assets at the end of the second quarter of fiscal 2023 came to ¥8,251 million, up 5.2% from the end of fiscal 2022 on September 30, 2022. This is mainly because an increase in retained earnings on the booking of quarterly profit attributable to owners of the parent offset a decrease of ¥103 million 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.

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

			(Unit: Millions of yen)
	Fiscal 2023	Fiscal 2023 Full Year		Progress toward goal
	First Two Quarters
	(Forecast)
	(Actual)
Revenues	4,530	10,100		44.9 %
Operating income	645	1,400		46.1 %
Ordinary profit	628	1,400		44.9 %
Profit attributable to owners	477	1,000		47.7 %
of the parent
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