May 8, 2023

Consolidated Financial Results for the Fiscal Year Ended February 28, 2023
[Japanese GAAP]
Listing: Tokyo Stock Exchange
Freund Corporation
6312
URL: https://www.freund.co.jp
Iwao Fusejima, President & CEO
Masao Wakai, Director, General Manager, Corporate Administration Division
Tel: +81-3-6890-0750
Scheduled date of Annual General Meeting of Shareholders:
May 30, 2023
Scheduled date of filing of Annual Securities Report:
May 31, 2023
Scheduled date of payment of dividend:
May 31, 2023
Yes
Preparation of supplementary materials for financial results:
Yes (Only video distribution)
Holding of financial results meeting:Company name :Securities code:
Representative:
Contact:(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended February 28, 2023
(March 1, 2022 – February 28, 2023)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales
Million yen

Fiscal year ended Feb. 28, 2023
Fiscal year ended Feb. 28, 2022
Note: Comprehensive income

Operating profit%

Million yen

Profit attributable toowners of parent

Ordinary profit%

Million yen%

Million yen%

19,65811.5
451 (54.0)
559 (45.9)(538)
17,6325.2
981 (11.6)
1,032 (21.1)
543 (44.0)
Fiscal year ended Feb. 28, 2023:
117 million yen(down 85.9%)
Fiscal year ended Feb. 28, 2022:
830 million yen(down 12.6%)
Net income per
Diluted net
Ordinary profit Operating profit
Return on equity
share
income per shareon total assets
on net sales
Yen

Fiscal year ended Feb. 28, 2023
Fiscal year ended Feb. 28, 2022
Reference: Equity in earnings of affiliates

Yen%(32.15)
(3.8)
32.46
3.9
Fiscal year ended Feb. 28, 2023: (15) million yen
Fiscal year ended Feb. 28, 2022: - million yen

%

%

2.5
4.8

2.3
5.6

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Feb. 28, 2023
As of Feb. 28, 2022
Reference: Equity capital

Equity ratio

Million yen

22,75822,273As of Feb. 28, 2023:

Net assets per share%

14,117
14,354
14,117 million yen

Yen

62.0
843.0964.4
857.28
As of Feb. 28, 2022: 14,354 million yen(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of the period

Million yen

Million yen

Million yen

Million yen

(196)
701

(666)
(680)

451
(427)

3,917
4,145

Fiscal year ended Feb. 28, 2023
Fiscal year ended Feb. 28, 2022

2. Dividends
Dividend per share
1Q-endFiscal year ended Feb. 28, 2022
Fiscal year ended Feb. 28, 2023
Fiscal year ending Feb. 29, 2024
(forecast)

2Q-end3Q-end Year-end

Total

Yen

Yen

Yen

Yen

-

0.00
0.00

-

20.00
20.00

20.00
20.00

-

0.00

-

20.00

20.00

Total
dividends

Dividend
Dividend on
payout ratio
equity(consolidated) (consolidated)

Yen Million yen

334
334

%

%

61.6
-

2.4
2.4

74.4

3. Consolidated Forecast for the Fiscal Year Ending February 29, 2024 (March 1, 2023 – February 29, 2024)
Net sales
Full year(Percentages represent year-on-year changes)
Profit attributable to
Net income per
Ordinary profit
owners of parent
share

Operating profit

Million yen%

Million yen%

Million yen%

Million yen%

Yen

20,000

1.7

700

55.0

650

16.3

450

-

26.87

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
Newly added: -Excluded: -(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others:
2) Changes in accounting policies other than 1) above:

Yes
None

3) Changes in accounting-based estimates:
4) Restatements:

None
None

(3) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of the period (including treasury shares)
As of Feb. 28, 2023:
18,400,000 shares
As of Feb. 28, 2022:

18,400,000 shares

2) Number of treasury shares at the end of the period
As of Feb. 28, 2023:
1,655,480 shares

As of Feb. 28, 2022:

1,655,480 sharesFiscal year ended Feb. 28, 2022:

16,744,520 shares

3) Average number of shares outstanding during the period
Fiscal year ended Feb. 28, 2023:

16,744,520 shares

Reference: Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2023
(March 1, 2022 – February 28, 2023)(1) Non-consolidated results of operations
Net sales
Fiscal year ended Feb. 28, 2023
Fiscal year ended Feb. 28, 2022

(Percentages represent year-on-year changes)
Ordinary profit
ProfitOperating profit

Million yen%

Million yen%

Million yen%

Million yen%

11,795
12,661

(6.8)
1.8

817
1,198

(31.8)
33.4

992
1,316

(24.6)
38.4

(315)
779

17.8

Net income per share Diluted net income per share
Fiscal year ended Feb. 28, 2023
Fiscal year ended Feb. 28, 2022

Yen

Yen

(18.85)46.55-(2) Non-consolidated financial position
Total assets
Million yen

As of Feb. 28, 2023
As of Feb. 28, 2022
Reference: Shareholders’ equity

Net assets

Equity ratio

Million yen

17,162
12,61917,366
13,312As of Feb. 28, 2023: 12,619 million yen

Net assets per share
%

Yen

73.5
753.66795.0276.7
As of Feb. 28, 2022: 13,312 million yen

This financial report is not subject to audit by certified public accountants or auditing firms.
Cautionary statement with respect to forecasts of future performance and other special items
Statements about future performance, including forecasts in this document are based on certain assumptions that the Company
considers to be reasonable and relies on and the information currently available. Actual performance may significantly differ due
to various reasons.
Information about the conditions for the forecasts and precautions regarding the use of forecasts is on page 3 of the Attachments,“1. Overview of Results of Operations, (4) Outlook”.

Freund Corporation (6312) Financial Results for FY2/23

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

3(3) Cash Flows3(4) Outlook

3(5) Basic Policy for Profit Distribution, and Dividends in the Current and Next Fiscal Years

4

2. Basic Approach to the Selection of Accounting Standards

4

3. Consolidated Financial Statements and Notes

5(1) Consolidated Balance Sheet

5(2) Consolidated Statements of Income and Comprehensive Income

7(3) Consolidated Statement of Changes in Equity

9(4) Consolidated Statement of Cash Flows

11(5) Notes to Consolidated Financial Statements

13

Going Concern Assumption

13

Changes in Accounting Policies

13

Segment and Other Information

15

Revenue Recognition

18

Per Share Information

18

Subsequent Events18

4. Others

20

Orders and Sales

20

1Freund Corporation (6312) Financial Results for FY2/23

1. Overview of Results of Operations(1) Results of Operations
During the fiscal year that ended in February 2023, the Japanese economy began returning to normal economic
activities as the people lived with the COVID-19. Prices increased in Japan because of inflation triggered by the
Ukraine conflict. In addition, shifts in the monetary policies of many countries caused a significant depreciation of
the yen. As a result, the economic environment continues to be uncertain.
Although the global economy slowly recovering from the pandemic, there are still many uncertainties. There are
growing concerns about the economic slowdown in the United States caused by inflation and tighter monetary
policy. Inflation is also increasing in Europe due to surging energy prices accompanied by rising interest rates.
Moreover, economic growth in China is slowing down.
In the pharmaceutical industry, a key user of Freund Group products, companies must deal with the challenges ofincreasing R&D expenses and government measures to control healthcare expenditures. The revision of healthinsurance drug prices, which used to occur every two years, now takes place every year. In the generic drug market,
growth is expected to slow as the effects of the government’s measures to increase the use of generic drugs have run
their course. Due to deficiencies of some manufacturers in their manufacturing systems, the industry as a wholeneed to build a sound infrastructure for ensuring the quality and stable supply of generic drugs. To build thisinfrastructure, major generic drug manufacturers plan to expand their operations, such as by building additional
plants.
In this environment, the Freund Group aims to further strengthen its sales capabilities in the machinery andchemicals businesses. The Group is also establishing a framework for utilizing its technologies to meet customers’true needs. All of these initiatives will create a sound base for even more product development, manufacturing andsales activities worldwide. The Group operates in Japan and the United States, and started operations in India in
2019 and Italy in 2020. The Group is planning to commence activities in China in the second quarter of the fiscal
year ending in February 2024, thereby constructing a five-pole global structure. With this structure, the FreundGroup will take many actions to maximize synergies among group companies to enhance its presence in Japan andinternational markets.
In the fiscal year ended February 2023, which was the final year of the Eighth Medium-term Management Plan, net
sales increased 11.5% year-over-year to 19,658 million yen, operating profit was down 54.0% to 451 million yen,ordinary profit decreased 45.9% to 559 million yen, and there was a loss attributable to owners of parent of 538
million yen compared with profit attributable to owners of parent of 543 million yen in the previous fiscal year.
In the machinery business, orders remained strong throughout the fiscal year, driven by substantial capital
expenditures by generic drug manufacturers in Japan, resulting a record-high order backlog. Sales increased partly
due to the depreciation of the yen, which raised yen-denominated sales of overseas subsidiaries. In the chemicals
business, sales grew due to the strong performance of pharmaceutical excipients and food preservatives.
Earnings were lower primarily due to material shortages resulting from supply chain disruptions in Japan and othercountries, as well as the impact of soaring raw material prices. Furthermore, impairment losses on goodwill andintangible assets related to consolidated subsidiary Cos. Mec S.r.l. further impacted earnings, resulting in asignificant decline.
Operating results by segment are as follows
Machinery Business Segment
Granulating and coating equipment are the main products of this segment. Earnings declined at the U.S. subsidiary
due to significant shipment delays caused by the tight labor supply and long time required to procure parts/materials
caused by supply chain disruptions. Furthermore, the higher cost of raw materials caused by rapid inflation exerted
significant downward pressure on earnings. In Japan as well, in addition to the sharp rise in raw materials/parts
prices, long lead times for the procurement and shipment of semiconductors and other parts/materials adversely
affected earnings.
As a result, net sales increased 13.6% year-over-year to 13,448 million yen but segment profit decreased 90.5% to59 million yen.
2

Freund Corporation (6312) Financial Results for FY2/23

Chemicals Business Segment
Sales of pharmaceutical excipients were strong in Japan and other countries, surpassing the prior fiscal year’s record
high sales.
Sales and operating profit of food preservatives increased. This growth is the result of a recovery in demand forconfectionery products and strong e-commerce sales of bread. Sales in this category also exceeded the prior fiscal
year’s all-time high. An improvement in capacity utilization contributed to an increase in profitability.
Sales of health food products declined significantly due to the termination of a contract for manufacturing products
for a high-volume customer.
As a result, net sales increased 7.1% year-over-year to 6,209 million yen and segment profit increased 10.3% to 976
million yen.
(2) Financial Position
Total assets increased 484 million yen from the end of the previous fiscal year to 22,758 million yen at the end of
the current fiscal year. This increase is primarily the result of increases of 327 million yen in work in process and336 million yen in software in progress. There was a decrease of 228 million yen in cash and deposits.
Total liabilities increased 722 million yen from the end of the previous fiscal year to 8,641 million yen at the end of
the current fiscal year. This increase is mainly the result of an increase of 868 million yen in short-term borrowings.
As a result, net assets decreased 237 million yen from the end of the previous fiscal year to 14,117 million yen at theend of the current fiscal year.
(3) Cash FlowsThe balance of cash and cash equivalents at the end of the current fiscal year was 3,917 million yen, down 228
million yen over the end of the previous fiscal year (this compares with a decrease of 353 million yen in theprevious fiscal year).
The cash flow components during the current fiscal year and the main reasons for changes are as described below.
Cash flows from operating activities
Net cash used in operating activities was 196 million yen (compared with net cash provided of 701 million yen in
the previous fiscal year). Depreciation of 565 million yen was a major source of cash and income taxes paid of
412 million yen and a decrease in contract liabilities of 356 million yen were major uses of cash.
Cash flows from investing activities
Net cash used in investing activities was 666 million yen (compared with net cash used of 680 million yen in theprevious fiscal year). This was primarily due to expenditures of 269 million yen for acquisition of property, plantand equipment and expenditures of 330 million yen for acquisition of intangible assets.
Cash flows from financing activities
Net cash provided by financing activities was 451 million yen (compared with net cash used of 427 million yen in
the previous fiscal year). An increase of 852 million yen in short-term borrowings more than offset cash used for
dividends paid of 333 million yen.
(4) Outlook
The Japanese and global economies are recovering slowly from the pandemic. However, there are still uncertainties
due to factors as such as the prolonged Ukraine crisis that raised energy and resource prices, the increase in interest
rates in major economies in North America and Europe driven by global inflation, and the ongoing depreciation ofyen.
The Freund Group specializes in the production of machinery and additives, including chemicals, used for
manufacturing pharmaceutical products such as tablets and granules. Freund is the only corporate group in the worldin the pharmaceutical industry that encompasses both machinery and chemical additives.
3

Freund Corporation (6312) Financial Results for FY2/23

In the pharmaceutical industry, a major user of Freund Group products, sales volumes in Japan are expected toincrease due to the aging population. However, the industry’s growth is anticipated to slow down due to various
challenges. These challenges include government policies aimed at holding down drug prices, the diminishingeffectiveness of measures to promote the use of generic drugs, and supply constrains caused by manufacturingissues at certain generic drug manufacturers, among other issues.
On the other hand, the global pharmaceutical market is expected to continue growing because of factors such as theincreasing world population and the aging populations of many countries.
The Freund Group had originally intended to announce its Ninth Medium-term Management Plan which would havestarted in the fiscal year ending in February 2024. However, due to the prolonged Ukraine crisis and the resulting
uncertainty about material and energy prices, as well as supply constraints, the Group has designated the fiscal year
ending in February 2024 as a year for laying the groundwork for the next medium-term plan. During the fiscal year,
the Group will implement a single-year plan to take effective actions to deal with the existing challenges.
Consequently, the Ninth Medium-term Management Plan is now expected to commence in the fiscal year ending in
February 2025.
In the fiscal year ending in February 2024, the Group forecasts sales of 20,000 million yen (a 1.7% increase
compared to the previous fiscal year), operating profit of 700 million yen (a 55.0% increase), ordinary profit of 650
million yen (a 16.3% increase), and profit attributable to owners of the parent company of 450 million yen(compared to a loss of 538 million yen in the previous fiscal year).
For the performance of foreign subsidiaries, the Group assumes an average exchange rate of 130 yen to the U.S.
dollar and 140 yen for the euro during the fiscal year.
(5) Basic Policy for Profit Distribution, and Dividends in the Current and Next Fiscal Years
Freund Corporation considers the maximization of shareholder value as the most critical management objective. The
goals are to enhance its corporate structure to effectively respond to changes in the business environment anddistribute profits to its shareholders. Regarding profit distribution, the basic principle is to allocate earnings basedon performance, targeting an annual consolidated dividend payout ratio of 30%. The policy is to pay a consistentand stable dividend while using a comprehensive approach that includes the retention of earnings for strengthening
business operations and future growth and other considerations.
For the fiscal year that ended in February 2023, despite the decrease in earnings, Freund plans to pay an ordinary
year-end dividend of 20 yen per share, which is the same as for the previous fiscal year in line with the policy ofmaintaining a consistent and stable dividend.
Similarly, for the fiscal year ending February 2024, Freund plans to pay an ordinary year-end dividend of 20 yen per
share.
2. Basic Approach to the Selection of Accounting Standards
The Freund Group uses Japanese GAAP for the preparation of its consolidated financial statements, which allows
comparisons across different fiscal years and with other Japanese companies.

4

Freund Corporation (6312) Financial Results for FY2/23

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet
FY2/22(As of Feb. 28, 2022)(Thousands of yen)
FY2/23(As of Feb. 28, 2023)

AssetsCurrent assets
Cash and deposits

4,145,207

3,917,128

Notes and accounts receivable-trade, and contract assets

4,902,513

4,915,548

Electronically recorded monetary claims-operating

326,231619,666

Merchandise and finished goods

667,070

760,326

Work in process

2,390,278

2,717,692

Raw materials and supplies

2,032,755

2,108,285

Advance payments to suppliers

173,035

414,129

Prepaid expenses

211,030

199,546

Other

168,912232,922

Allowance for doubtful accounts(12,624)(15,226)

15,004,411

15,870,019

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

4,103,299

4,279,200

Accumulated depreciation(2,088,393)(2,273,390)

Buildings and structures, net

2,014,906

2,005,809

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment

2,725,284

2,673,424(1,859,522)(1,978,021)

865,761

695,402

1,141,676

1,145,522

177,492

204,971

1,621,454

1,828,426(1,258,329)(1,438,679)

363,125

389,746

4,562,962

4,441,453

Intangible assets
Goodwill

643,241-

Software

31,94532,499Software in progress

224,080

560,486

Customer relationship472,554324,848

Other

63,00849,621

1,434,830

967,456

Investment securities

592,710

657,433

Business insurance funds

269,227

269,227

Deferred tax assets

235,394366,398

429

-

Other

179,337

192,286

Allowance for doubtful accounts(5,400)(5,400)Total investments and other assets

1,271,699

1,479,946

Total intangible assets
Investments and other assets

Retirement benefit asset

Total non-current assets
Total assets

57,269,492

6,888,855

22,273,904

22,758,875

Freund Corporation (6312) Financial Results for FY2/23

FY2/22(As of Feb. 28, 2022)(Thousands of yen)
FY2/23(As of Feb. 28, 2023)

Liabilities
Current liabilities
Notes and accounts payable-trade

1,767,452

1,896,836

Electronically recorded obligations-operating

976,189

833,521

Short-term borrowings

27,180896,092

Income taxes payable

256,087

130,135

Accrued expenses

340,643435,497

Contract liabilities

2,805,781

2,913,026

Provision for bonuses

252,662

220,553

Provision for bonuses for directors (and other officers)

29,91817,185

Other579,858

472,396

7,035,774

7,815,246

Lease liabilities

376,253408,206

Retirement benefit liability

316,216

267,351

Asset retirement obligations
Provision for retirement benefits for directors (and otherofficers)
Other

67,13067,263

6,591

12,096

117,161

71,522

Total current liabilities
Non-current liabilities

Total non-current liabilities
Total liabilities

883,353

826,439

7,919,127

8,641,685

1,035,600

1,035,600

Net assets
Shareholders’ equity
Share capital
Capital surplus

1,289,513

1,289,513

Retained earnings

12,808,681

11,899,999

Treasury shares(773,363)(773,363)

Total shareholders’ equity

14,360,432

13,451,750

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

39,68832,992Foreign currency translation adjustment(37,972)

612,727

Remeasurements of defined benefit plans(7,371)

19,719Total accumulated other comprehensive income(5,655)

665,439

14,354,776

14,117,189

22,273,904

22,758,875

Total net assets
Total liabilities and net assets

6

Freund Corporation (6312) Financial Results for FY2/23(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)

FY2/22(Mar. 1, 2021 – Feb. 28, 2022)
Net sales

17,632,243

19,658,519

Cost of sales

11,620,336

13,665,247

Gross profit

6,011,906

5,993,272

Selling, general and administrative expenses

5,030,033

5,541,697

981,872

451,574824

299

Operating profit
Non-operating income
Interest income
Dividend income

7,210

7,714

Technical support fee income

12,97919,098

Rental income

1,285

1,325

Insurance claim income

3,357

-

Foreign exchange gains

16,568109,030

Other

22,12732,332

Total non-operating income

64,353

169,800

10,672

34,511-

15,4292,774

12,415Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses

13,44662,356

1,032,779

559,018

Gain on sale of non-current assets

2,083

31,063Gain on sale of investment securities

1,298

-

Total extraordinary income

3,381

31,063

4,558

33,051795

1,124

Ordinary profit
Extraordinary income

Extraordinary losses
Loss on retirement of non-current assets
Loss on sale of non-current assets
Loss on valuation of investment securities-

28,456

Impairment losses

75,353933,929

Litigation expenses

126,984-

Total extraordinary losses

207,692

996,562

Profit (loss) before income taxes

828,469(406,480)

Income taxes - current

376,098

284,763

Income taxes - deferred(91,196)(152,826)

Total income taxes

284,902

131,936

Profit (loss)

543,566(538,417)

Profit (loss) attributable to owners of parent

543,566(538,417)

7

Freund Corporation (6312) Financial Results for FY2/23

Consolidated Statement of Comprehensive Income
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)
Profit (loss)(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)

543,566(538,417)

17,538(6,695)

Foreign currency translation adjustment

290,668

633,343

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income(23,101)

27,091

2,007

1,926

287,114655,664

830,680

117,247

830,680

117,247

Other comprehensive income
Valuation difference on available-for-sale securities

Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparent8

Freund Corporation (6312) Financial Results for FY2/23(3) Consolidated Statement of Changes in Equity
FY2/22 (Mar. 1, 2021 – Feb. 28, 2022)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodChanges during period
Dividends of surplus
Loss attributable toowners of parent
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period

Capital surplus

1,035,600

1,289,513

Retained earnings

Treasury shares

Total shareholders’equity12,600,004(773,363)

14,151,755(334,890)(334,890)

543,566

543,566--

208,676-

208,676

1,035,600

1,289,513

12,808,681(773,363)

14,360,432(Thousands of yen)

Accumulated other comprehensive income
Valuation difference Foreign currency Remeasurements ofon available-fortranslation
defined benefit
sale securities
adjustment
plans
Balance at beginning of
periodChanges during period
Dividends of surplus
Loss attributable toowners of parent
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period

22,149(330,648)

15,729Total accumulated
othercomprehensive
income(292,769)

Total net assets

13,858,986(334,890)
543,566
17,538292,676(23,101)

287,114287,114

17,538292,676(23,101)

287,114495,790

39,688(37,972)(7,371)(5,655)

14,354,776

9

Freund Corporation (6312) Financial Results for FY2/23

FY2/23 (Mar. 1, 2022 – Feb. 28, 2023)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus

1,035,600

1,289,513

Retained earnings

Treasury shares

Total shareholders’equity12,808,681(773,363)

14,360,432(35,373)
1,035,600

1,289,513

12,773,307(35,373)(773,363)

14,325,058

Changes during period
Dividends of surplus
Loss attributable toowners of parent
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period(334,890)(334,890)(538,417)(538,417)--(873,307)-(873,307)

1,035,600

1,289,513

11,899,999(773,363)

13,451,750(Thousands of yen)

Accumulated other comprehensive income
Valuation difference Foreign currency Remeasurements ofon available-fortranslation
defined benefit
sale securities
adjustment
plans
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

39,688(37,972)(7,371)

Total accumulated
othercomprehensive
income(5,655)

Total net assets

14,354,776(35,373)

39,688(37,972)(7,371)(5,655)

14,319,403

Changes during period
Dividends of surplus
Loss attributable toowners of parent
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period(334,890)(538,417)(6,695)

650,699

27,091

671,094

671,094(6,695)

650,699

27,091

671,094(202,213)

32,992

612,727

19,719665,439

14,117,189

10

Freund Corporation (6312) Financial Results for FY2/23(4) Consolidated Statement of Cash Flows
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)

828,469(406,480)

Depreciation
Impairment losses
Amortization of goodwill
Insurance claim income

570,385
75,35374,180(3,357)565,043
933,929
77,811-

Settlement-related costs
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for
directors (and other officers)
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses

126,984(7,613)(33,987)(13,788)(12,733)

1,668(8,035)
10,672964(8,013)34,511(12,185)(92,707)

Cash flows from operating activities
Profit (loss) before income taxes

Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using
equity method
Loss (gain) on sale of property, plant and equipment
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Loss on retirement of property, plant and equipment
Decrease (increase) in trade receivables
Decrease (increase) in inventories-

15,429(1,287)(1,298)4,558(299,214)(1,430,220)(29,938)
28,45633,051(171,232)(54,315)

Decrease (increase) in other assets
Increase (decrease) in trade payables
Increase (decrease) in contract liabilities
Increase (decrease) in other liabilities
Other, net

17,908(154,909)
1,565,469(150,896)
130(147,044)(78,886)(356,219)(56,941)
132

Subtotal

1,192,973

240,830

Interest and dividends received
Interest paid
Proceeds from insurance income
Income taxes refund
Income taxes paid
Settlement-related costs paid

8,035
(10,672)
3,357
10,146(394,188)(110,721)

8,013(34,511)2,450(412,829)
-

3,000

-

701,930(196,046)

Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments from sales of property, plant and equipment
Payments for retirement of property, plant andequipment
Purchase of intangible assets(460,797)
22,191-(269,229)
40,877(1,124)(2,068)(7,088)(236,970)(330,339)

Purchase of investment securities
Proceeds from sale of investment securities
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Proceeds from withdrawal of negotiable certificates ofdepositNet cash provided by (used in) investing activities(232,927)
7,883
(984)
410

(97,422)(3,604)
1,269

222,980-(680,282)(666,663)

Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities

11Freund Corporation (6312) Financial Results for FY2/23

FY2/22(Mar. 1, 2021 – Feb. 28, 2022)(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)

Net increase (decrease) in short-term borrowings(30,039)852,796

Proceeds from long-term borrowings

25,982-

Repayments of long-term borrowings(7,477)(6,956)

Repayments of lease liabilities
Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Dividends paid

(39,759)(60,201)(41,224)-(335,128)(333,960)(427,646)

451,677

52,724

182,952

Cash flows from financing activities

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(353,274)(228,079)

Cash and cash equivalents at beginning of period

4,498,482

4,145,207

Cash and cash equivalents at end of period

4,145,207

3,917,12812

Freund Corporation (6312) Financial Results for FY2/23(5) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in Accounting Policies
Application of Accounting Standard for Revenue Recognition
The Freund Corporation has applied the Accounting Standard for Revenue Recognition (Accounting Standards
Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and the Implementation Guidance on AccountingStandard for Revenue Recognition (ASBJ Guidance No. 30, March 26, 2021) from the beginning of the current
fiscal year. Based on these standards, revenue is recognized at the estimated amount expected to be received in
exchange for the provision of goods and/or services when the control of the goods and/or services is transferred tocustomers. The major revisions due to the application of this new standard are as follows.
1) Identification of performance obligations and allocation of transaction prices
For construction contracts that include the sale of machinery, the performance obligations concerning the sale ofmachinery and the completion of construction are identified separately. Transaction prices are allocated based on
independent selling prices and revenue is now recognized when each obligation has been fulfilled.
2) Revenue recognition for construction contracts
In previous years, the percentage-of-completion method was used for construction contracts for projects where thepercentage of completion can be accurately determined. The completed-contract method was used for all otherconstruction contracts. Under the new revenue recognition standard, revenue is now recognized over a designatedperiod as the performance obligation is fulfilled.
3) Revenue recognition for agent transactions
In previous years, revenue was recognized based on the entire amount received from customers. Under the newrevenue recognition standard, for transactions where the Freund Corporation acts as an agent, revenue is now
recognized as the net amount after deducting payments to suppliers from the amount received from customers.
Regarding the application of the Accounting Standard for Revenue Recognition, Freund Corporation adheres to thetransitional treatment outlined in the Paragraph 84 of this standard. In accordance with this treatment, the retained
earnings at the beginning of the current fiscal year have been adjusted to incorporate the cumulative impact of theretrospective application of the new accounting policy. The new standard is then applied based on the adjusted
retained earnings. However, the Company has not retrospectively applied the new accounting policy to contracts inwhich almost all revenue was recognized in accordance with the previous accounting method before the beginningof the current fiscal year, in line with the treatment specified in Paragraph 86 of the Revenue Recognition
Accounting Standard. Furthermore, contract changes made prior to the current fiscal year have been accounted forbased on the contract terms after reflecting all changes, following the method prescribed in Paragraph 86, Article 1of the Accounting Standard for Revenue Recognition. Retained earnings at the beginning of the fiscal year that
ended in February 2023 were adjusted to reflect the cumulative impact of these changes.
As a result, in the consolidated statement of income for the current fiscal year, net sales decreased by 121,988
thousand yen, cost of sales decreased by 136,350 thousand yen, and loss before income taxes decreased by 36,361
million yen, while gross profit increased by14,361 thousand yen and operating profit and ordinary profit increased
by 36,361 thousand yen each.
The cumulative impact on net assets at the beginning of the current fiscal year was a decrease of 35,373 thousand
yen in retained earnings at the beginning of the current fiscal year in the consolidated statement of changes in equity.
“Notes and accounts receivable-trade” presented in the current assets section of the consolidated balance sheet in theprevious fiscal year is, from the current fiscal year, included in “Notes and accounts receivable -trade, and contract
assets.” “Advances received,” that was presented in the current liabilities section is, from the current fiscal year,

13Freund Corporation (6312) Financial Results for FY2/23

presented as “Contract liabilities.”
Furthermore, in accordance with the transitional measures prescribed in Paragraph 86-3 of the Accounting Standard
for Revenue Recognition, the Group has not presented the Revenue Recognition, Note, for the previous fiscal year.
Application of the Accounting Standard for Fair Value Measurement
The Freund Group has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July4, 2019) from the beginning of the current fiscal year. In accordance with the transitional measures prescribed in
Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the AccountingStandard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the Group will prospectively apply the
new accounting policies specified by the Accounting Standard or Fair Value Management. The application of thisstandard has no impact on the consolidated financial statements

14

Freund Corporation (6312) Financial Results for FY2/23

Segment and Other Information
Segment information
1. Overview of reportable segments
The reportable segments of the Freund Group are components for which discrete financial information is available.
These segments are subject to regular reviews by the Board of Directors to make decisions regarding resource
allocation and to evaluate performance.
The Freund Group is engaged in manufacturing and sale of machinery and chemical products. Consequently, theFreund Group has two reportable business segments: the Machinery Business and the Chemicals Business.
Main products and services of each reportable segment
Machinery Business:

Granulating devices; construction of granulating machinery plants; measuring
instruments and parts; and outsourced granulation of synthetic resins

Chemicals Business:

Pharmaceutical excipients and dietary supplements; food preservatives; R&D,
formulation studies and other projects for pharmaceuticals, food, chemicals and otherproducts; and development and technology licensing of new dosage forms ofpharmaceutical products

2. Calculation method for net sales, profit or loss, assets, liabilities, and other items for each reportable segment
The reportable segments follow the accounting methods that are generally consistent with those adopted for
preparation of the consolidated financial statements.
Segment profit (loss) for reportable business segments is determined based on operating profit (loss).
Inter-segment sales are derived from prices in third-party transactions.
3. Information related to net sales, profit or loss, assets, liabilities, and other items for each reportable segment
FY2/22 (Mar. 1, 2021 – Feb. 28, 2022)(Thousands of yen)
MachineryBusiness

Reportable segment
Chemicals
BusinessAmounts shown on
consolidated financial
statements (Note 2)

Adjustment(Note 1)Total

Net sales
External sales
Inter-segment sales and transfers
Total

11,836,513

5,795,729

17,632,243-

17,632,243

-

-

-

-

-

11,836,513

5,795,729

17,632,243-

17,632,243

Segment profit

623,434

884,892

1,508,326(526,454)

981,872

Segment assets

13,630,268

4,707,537

18,337,806

3,936,098

22,273,904

Other items
Depreciation
421,367
143,884565,251
5,133
570,385
Investment in equity-method
236,218
236,218
236,218
affiliate
Increase in property, plant and
338,721
190,059
528,780
43,024
571,805
equipment and intangible assets
Notes: 1. The adjustment includes the following items.
(1) The negative adjustment of 526,454 thousand yen to segment profit is corporate expenses that are not allocated toany of the reportable segments. Corporate expenses mainly consist of general and administrative expenses thatare not attributable to any of the reportable segments.
(2) The 3,936,098 thousand yen adjustment to segment assets is corporate assets that are not allocated to any of thereportable segments. Corporate assets mainly consist of Freund’s surplus funds (cash and deposits), long -term
investment funds (investment securities and insurance funds), and assets of the administrative operations ofFreund.
(3) The 5,133 thousand yen adjustment to depreciation is mainly depreciation of corporate assets that are notallocated to any of the reportable segments.
(4) The 43,024 thousand yen adjustment to increase in property, plant and equipment and intangible assets is mainly
the sum of corporate assets that are not allocated to the reportable segments.
2. Segment profit is adjusted to be consistent with operating profit recorded in the consolidated financial statements.

15

Freund Corporation (6312) Financial Results for FY2/23

FY2/23 (Mar. 1, 2022 – Feb. 28, 2023)(Thousands of yen)
MachineryBusiness

Reportable segment
Chemicals
Business

Total

Amounts shown on
consolidated financial
statements (Note 2)

Adjustment(Note 1)

Net sales
External sales

6,209,537-

19,658,519--

19,658,519

Inter-segment sales and transfers

13,448,982
-

Total

13,448,982

6,209,537

19,658,519-

19,658,519

Segment profit

59,461

976,289

1,035,751(584,177)

451,574

Segment assets

13,706,794

4,946,841

18,653,635

4,105,239

22,758,875-

Other items
Depreciation
413,697
145,723
559,4215,622
565,043
Investment in equity-method
332,714332,714332,714affiliate
Increase in property, plant and
323,859
268,681592,541
53,861
646,402
equipment and intangible assets
Notes: 1. The adjustment includes the following items.
(1) The negative adjustment of 584,177 thousand yen to segment profit is corporate expenses that are not allocated toany of the reportable segments. Corporate expenses mainly consist of general and administrative expenses thatare not attributable to any of the reportable segments.
(2) The 4,105,239 thousand yen adjustment to segment assets is corporate assets that are not allocated to any of thereportable segments. Corporate assets mainly consist of Freund’s surplus funds (cash and deposits), long -term
investment funds (investment securities and insurance funds), and assets of the administrative operations ofFreund.
(3) The 5,622 thousand yen adjustment to depreciation is mainly depreciation of corporate assets that are notallocated to any of the reportable segments.
(4) The 53,861 thousand yen adjustment to increase in property, plant and equipment and intangible assets is mainly
the sum of corporate assets that are not allocated to the reportable segments.
2. Segment profit is adjusted to be consistent with operating profit recorded in the consolidated financial statements .

Related information
FY2/22 (Mar. 1, 2021 – Feb. 28, 2022)
1. Information by product or service
This information is omitted because the same information is presented in segment information.
2. Information by region(1) Net salesJapan
12,503,682(Thousands of yen)
US

Latin America

1,388,615

EuropeAsia

1,009,661

1,516,878

882,062

Other
331,342

Total
17,632,243

Note: Classification of net sales is based on the location of the client and categorized by country or region.

(2) Property, plant and equipment
Japan2,790,103

US
1,186,308(Thousands of yen)
Italy

Total

586,550

4,562,962

3. Information by major client
This information is omitted because no specific external client accounts for 10% or more of consolidated net sales
on the consolidated statement of income.
FY2/23 (Mar. 1, 2022 – Feb. 28, 2023)
1. Information by product or service
This information is omitted because the same information is presented in segment information.

16

Freund Corporation (6312) Financial Results for FY2/23

2. Information by region(1) Net sales(Thousands of yen)

Japan

US

Latin America

11,716,020

1,716,232

EuropeAsia

1,042,741

2,322,929

2,506,738

Other

Total

353,857

19,658,519

Note: Classification of net sales is based on the location of the client and categorized by country or region.

(2) Property, plant and equipment
Japan2,616,743(Thousands of yen)

US

Italy

1,373,598

Total

451,110

4,441,453

3. Information by major client
This information is omitted because no specific external client accounts for 10% or more of consolidated net sales
on the consolidated statement of income.
Information related to impairment losses on non-current assets for each reportable segment
FY2/22 (Mar. 1, 2021 – Feb. 28, 2022)(Thousands of yen)
Reportable segment

Machinery
Impairment loss

25,658Chemicals

Subtotal

49,694

Adjustment

75,353Total

FY2/23(Mar. 1, 2022 – Feb. 28, 2023)(Thousands of yen)
Reportable segments

Machinery
Impairment loss

933,094

75,353-Chemicals

Subtotal
624

933,719

Adjustment
210

Total
933,929

Note: The 905,976 thousand yen is an impairment loss mainly for goodwill involving consolidated subsidiary Cos. Mec S.r.l. andintangible assets. There was no unamortized balance of goodwill.

Information related to goodwill amortization and the unamortized balance for each reportable segment
FY2/22 (Mar. 1, 2021 – Feb. 28, 2022)
Goodwill amortization of 74,180 thousand yen was recorded in the Machinery Business segment. Unamortizedbalance of this goodwill was 643,241 thousand yen.
FY2/23 (Mar. 1, 2022 – Feb. 28, 2023)
Goodwill amortization of 77,811 thousand yen was recorded for consolidated subsidiary Cos. Mec S.r.l. in the
Machinery Business segment. There is no unamortized balance of this goodwill.
Information related to gain on bargain purchase for each reportable segment
Not applicable.

17Freund Corporation (6312) Financial Results for FY2/23

Revenue Recognition
Information of breakdown on revenue from contracts with customers
FY2/23 (Mar. 1, 2022 – Feb. 28, 2023)(Thousands of yen)
Reportable segments
Machinery BusinessJapan

Chemicals Business

Total

5,845,815

5,870,204

11,716,020

United States

1,716,112

120

1,716,232

Latin America

2,506,738-

2,506,738

Europe833,865

208,875

1,042,741

Asia

2,193,002

129,926

2,322,929

Other353,447410

353,857

Revenue from contracts with customers

13,448,982

6,209,537

19,658,519

External sales

13,448,982

6,209,537

19,658,519

Per Share Information
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)(Yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)

857.28843.09Net assets per share

32.46
Net (loss) income per share
Notes: 1. Diluted net income per share is not presented since the Company has no outstanding dilutive shares.
2. The basis of calculating the net income (loss) per share is as follows:(32.15)

FY2/22(Mar. 1, 2021 – Feb. 28, 2022)
543,566(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)(538,417)--

Profit (loss) attributable to common shareholders of parent

543,566(538,417)

Average number of common shares outstanding during theperiod (Thousand shares)

16,744

16,744

Profit (loss) attributable to owners of the parent
Amounts not attributable to common shareholders

Subsequent Events
Establishment of Restricted Stock Compensation PlanOn May 8, 2023, the Board of Directors of Freund Corporation reviewed the compensation plan for officers andresolved to establish a restricted stock compensation plan (the “Plan”). The proposal regarding the Plan will bepresented for deliberation at the 59th Annual General Meeting of Shareholders to be held on May 30, 2023.
1. Objectives and conditions of the Plan
(1) Objectives of the Plan
The objective of the Plan is to provide incentives to the company’s directors excluding external directors (“Eligible
Directors”) to achieve the sustainable growth of corporate value and to align the interests of Eligible Directors withthose of shareholders.
(2) Conditions for the Plan
Under the Plan, restricted stock will be granted to Eligible Directors as compensation, or monetary claims for theissuance of restricted stock will be provided as compensation. Therefore, the establishment of the Plan is subject tothe approval of shareholders at the 59th Annual General Meeting of Shareholders for the payment of thiscompensation.
An annual limit of 300 million yen for the total amount of compensation for the company's directors has alreadybeen approved by shareholders at the 48th Annual General Meeting of Shareholders held on May 29, 2012. At theupcoming 59th Annual General Meeting of Shareholders, shareholders will be requested to approve a separate
provision for the Compensation Plan for Eligible Directors within the existing limit.
18

Freund Corporation (6312) Financial Results for FY2/23

2. Overview of the Compensation Plan
The distribution of restricted stock under the Plan will be conducted by using one of the following methods: i)
issuing or disposing of common stock of Freund Corporation as compensation to Directors, without requiring
payment of money or provision of assets, or ii) distributing monetary remuneration claims to Eligible Directors whowill then contribute these claims as in-kind investments in conjunction with the issuance or disposal of common
stock of Freund Corporation.
The total number of shares of common stock to be issued or disposed of under the Plan will not exceed 70,000 per
year. Furthermore, the aggregate amount of remuneration will not exceed 50 million yen per year, which falls within
the existing limit for monetary compensation (However, if the number of shares issued by Freund Corporation
changes due to a stock merger or split (including a gratis allocation of stock), the maximum number of shares will
be adjusted accordingly.
The stock price is determined by the Board of Directors within a range that is not specifically favorable to the
Eligible Directors. This price is based on the closing price of common stock of Freund Corporation on the Tokyo
Stock Exchange on the trading day prior to the date of the resolution of the Board of Directors to issue or dispose ofstock for the Plan (if the stock of Freund Corporation was not traded on that day, the closing price of the most recent
preceding trading day).
One of the objectives of the Plan is to achieve the sharing of interests with shareholders over the medium to longterm. To accomplish this, the transfer restriction period begins on the date of issuance of restricted stock and ends onthe date on which the Eligible Director is no longer a director or leaves any other position designated by the Boardof Directors. The timing and allocation of restricted stock to each Eligible Director will be determined by the Boardof Directors.
In order to receive stock under the Plan, Eligible Directors are required to enter into a restricted stock allocationagreement (the “Allocation Agreement”) with Freund Corporation. The Allocation Agreement will include thefollowing provisions.
i) During the period from the date of stock allocation until an Eligible Director is no longer a Director of Freund
Corporation or leaves any other position designated by the Board of Directors, the Director is prohibited fromtransferring, pledging as collateral or engaging in any other form of disposition of the restricted stock.
ii) In the event that an Eligible Director violates any laws, regulations, or the terms of the Allocation Agreement orthere are any other reasons deemed legitimate by the Board of Directors, Freund Corporation has the right toacquire the restricted stock from the Director without any payment.

19

Freund Corporation (6312) Financial Results for FY2/23

4. Others
Orders and Sales(1) Orders received
Operating segment

FY2/22(Mar. 1, 2021 – Feb. 28, 2022)
AmountYear-on-year (%)(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)
AmountYear-on-year (%)

Machinery Business
15,621,186
126.1
14,630,593
Notes: 1. No orders received are shown for the Chemicals Business because production is based on sales plans rather thanspecific orders.
2. Orders received are based on selling prices; inter-segment transactions have been eliminated.

(2) Order backlog
Operating segment

FY2/22(Mar. 1, 2021 – Feb. 28, 2022)
AmountYear-on-year (%)

93.7(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)
AmountYear-on-year (%)

Machinery Business
10,574,211
159.8
12,826,511
121.3
Notes: 1. No order backlog is shown for the Chemicals Business because production is based on sales plans rather than specificorders.
2. Order backlog is based on selling prices; inter-segment transactions have been eliminated.

(3) Sales
Operating segment

FY2/22(Mar. 1, 2021 – Feb. 28, 2022)
AmountComposition (%)(Thousands of yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)
AmountComposition (%)

Machinery Business

11,836,513

67.1

13,448,982

68.4

Chemicals Business

5,795,729

32.9

6,209,537

31.6

19,658,519

100.0

Total
17,632,243
100.0
Note: Sales are based on selling prices; inter-segment transactions have been eliminated.

This summary report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been preparedin accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer
an English translation.

20