October 7, 2022

Consolidated Financial Results
for the Second Quarter of the Fiscal Year Ending February 28, 2023
(Six Months Ended August 31, 2022)
Company name:Securities code:
Representative:
Contact:[Japanese GAAP]
Listing: Tokyo Stock Exchange
URL: https://www.freund.co.jp

Freund Corporation

6312
Iwao Fusejima, President & CEO
Masao Wakai, Managing Director, Division Director, Corporate Planning Division
Tel: +81-3-6890-0750
Scheduled date of filing of Quarterly Report:
October 7, 2022
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results:
Yes
Yes (for institutional investors andHolding of quarterly financial results meeting:securities analysts)(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter (March 1, 2022 – August 31, 2022) of the
Fiscal Year Ending February 28, 2023
(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales
Million yen

Six months ended Aug. 31, 2022
Six months ended Aug. 31, 2021
Note: Comprehensive income

Operating profit%

Million yen

Profit attributable toowners of parent

Ordinary profit

Million yen

%

8,534
6.0
(67)
32 (89.6)
(17)
8,048
14.3
293
17.1
314
16.0
204
Six months ended Aug. 31, 2022:
700 million yen(up 88.5%)
Six months ended Aug. 31, 2021:
371 million yen(up 321.1%)
Net income per share Diluted net income per share%

Million yen

11.5

Yen

%

Yen

Six months ended Aug. 31, 2022
Six months ended Aug. 31, 2021
Reference: Equity in earnings of affiliates(1.02)
12.24
Six months ended Aug. 31, 2022:(9) million yen
Six months ended Aug. 31, 2021:- million yen
Note: The provisional accounting treatment for a business combination with Cos.Mec S.r.l. was finalized in the third quarter ofthe fiscal year ended February 28, 2022 and figures for the six months ended August 31, 2021 reflect the finalized content
of the provisional accounting treatment.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Equity ratio

Million yen

23,031
14,694
22,273
14,354As of Aug. 31, 2022: 14,694 million yen

As of Aug. 31, 2022
As of Feb. 28, 2022
Reference: Equity capital

Net assets per share
%

Yen

63.8
877.5464.4
857.28
As of Feb. 28, 2022: 14,354 million yen

2. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Year-end

Total

Yen

Yen

Yen

Yen

Fiscal year ended Feb. 28, 2022
0.00
Fiscal year ending Feb. 28, 2023
0.00
Fiscal year ending Feb. 28, 2023 (forecast)
Note: Revision to the most recently announced dividend forecast: None

-

20.00

20.00

-

20.00

20.00

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 – February 28, 2023)
Net sales
Million yen(Percentages represent year-on-year changes)
Net income per
Profit attributable toOrdinary profit
owners of parent
share

Operating profit

Million yen%

Million yen%

Yen

Full year
18,5004.9
700(28.7)
720
Note: Revision to the most recently announced consolidated forecast: None%

Million yen%(30.3)

450(17.2)

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) Application of special accounting methods for presenting quarterly consolidated financial statements: Yes
Note: Please refer to page 10 “(4) Application of Special Accounting Methods for Presenting Quarterly Consolidated
Financial Statements” for details.

(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others:

Yes2) Changes in accounting policies other than 1) above:None3) Changes in accounting-based estimates:

None4) Restatements:

None(4) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of the period (including treasury shares)
As of Aug. 31, 2022:

18,400,000 shares

As of Feb. 28, 2022:

18,400,000 shares

As of Feb. 28, 2022:

1,655,480 shares

Six months ended Aug. 31, 2021:

16,744,520 shares

2) Number of treasury shares at the end of the period
As of Aug. 31, 2022:

1,655,480 shares

3) Average number of shares outstanding during the period
Six months ended Aug. 31, 2022:

16,744,520 sharesThis financial report is not subject to quarterly review by certified public accountants or auditing firms.
Cautionary statement with respect to forecasts of future performance and other special items
Forecasts regarding future performance in these materials are based on certain assumptions judged to be valid and information
currently available to the Company. Actual performance may differ significantly from these forecasts for a number ofreasons.Please refer to the section “Explanation of Consolidated Forecast and Other Forward-looking Statements” on page 3 ofthe attachments regarding preconditions or other related matters for forecasts shown above.

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statements of Income and Comprehensive Income

6(3) Quarterly Consolidated Statement of Cash Flows

8(4) Notes to Quarterly Consolidated Financial Statements

10

Going Concern Assumption

10

Significant Changes in Shareholders’ Equity

10

Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements

10Additional Information

10

Changes in Accounting Policies

10

Segment and Other Information

12

Business Combinations

13

Revenue Recognition

14

3. Others

14

Orders and Sales

141

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
The Japanese economy recovered slowly during the first half of the current fiscal year as the number of
COVID-19 cases declined and pandemic restrictions were eased. However, the pace of the recovery is slow.
One reason is a rapid increase in the severity of the pandemic that started in July. The recovery is also held
down by supply-side limitations caused by the prolonged Ukraine crisis and China’s restrictions on economic
activities and inflation linked to the yen’s rapid depreciation.
Most major countries of the world, with the exception of China, are returning to normal economic activity as
they live with COVID-19. Despite this positive trend, the outlook remains uncertain. The primary reasons forthis uncertainty are the accelerating rate of inflation caused by increasing limitations on the supply of many
goods due to the Ukraine conflict and other events, the high price of energy and the tight supply of labor andconcerns about the impact of the upturn in interest rates in the United States and Europe on the global
economy.
In the pharmaceutical industry, which is the primary source of demand for Freund Group products, companies
need to deal with the challenges of the rising cost of R&D programs and increasing measures to hold down
healthcare expenditures. In Japan, drug prices will be affected because the national health insurance drug pricerevisions will be implemented annually instead of once every two years as in prior years. In the generic drug
market, the growth rate of sales is expected to decrease as the benefits of actions by the Japanese government
to increase the use of these drugs decline. Due to problems involving manufacturing operations at somecompanies, there is a need to build a sound infrastructure for ensuring the quality and supply reliability ofgeneric drugs. To ensure a stable supply of these drugs, several companies, primarily large generic drug
manufacturers, plan to enlarge factories and take other steps to raise production capacity.
The Freund Group is working on further strengthening sales capabilities in the machinery and chemicals
businesses and building a framework for utilizing the group’s technologies for meeting customers’ mostimportant needs. All of these initiatives will create a sound base for even more aggressive productdevelopment, manufacturing and sales activities worldwide. The Freund Group added to its operations in Japanand the United States by starting operations in India in 2019 and Italy in 2020. We plan to start operations in
China during the current fiscal year, which will enlarge our global infrastructure to five locations. Our goal is
to benefit from synergies among all group companies in order to give us even better access to markets
worldwide.
The fiscal year ending in February 2023 is the final year of the Eighth Medium-term Management Plan. All
group companies are working on reaching the consolidated targets of sales of 18,500 million yen and an
operating profit of 700 million yen.
Net sales increased 6.0% year-over-year to 8,534 million yen and there was an operating loss of 67 million yen(compared with operating profit of 293 million yen in the same period of the previous fiscal year), ordinary
profit decreased 89.6% year-over-year to 32 million yen and loss attributable to owners of parent was 17
million yen (compared with profit attributable to owners of parent of 204 million yen in the same period of theprevious fiscal year).
Business segment performance was as follows.
Machinery Business Segment
Granulating and coating equipment are the main products of this segment. The volume of orders has been highbecause generic drug manufacturers are raising production capacity and the order backlog rose to a new record.
At the U.S. subsidiary, there were significant delays in shipments of finished products because of the labor
shortage and the long time needed to procure parts and materials due to supply chain disruptions. Furthermore,
the higher cost of raw materials caused by rapid inflation exerted downward pressure on profit margins. In
Japan as well, lead times for shipments of finished products have increased because of the long time needed to
procure semiconductors and other parts and materials.
As a result, net sales increased 1.0% year-over-year to 5,420 million yen and segment loss was 268 million yen(compared with segment profit of 210 million yen in the same period of the previous fiscal year).
2

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

Chemicals Business Segment
Sales of pharmaceutical excipients increased in Japan and other countries and are growing at a pace that is
expected to result in fiscal year sales that surpass the prior fiscal year’s all-time high. Operating profit also
increased.
Food preservative sales and operating profit increased. Demand continues to increase because of the recovery
in demand for confectionery products and strong e-commerce sales of bread. Sales in this category are also at alevel that is expected to exceed the prior fiscal year’s all-time high.
Sales of health food products declined because of the completion of a contract for manufacturing products fora high-volume customer.
As a result, net sales increased 16.1% year-over-year to 3,113 million yen and segment profit increased 44.1%
to 478 million yen.
(2) Explanation of Financial Position
Total assets increased 757 million yen from the end of the previous fiscal year to 23,031 million yen at the endof the second quarter. This mainly reflected increases of 902 million yen in work in process and 268 million
yen in raw materials and supplies, while there were decreases of 604 million yen in notes and accounts
receivable-trade, and contract assets, and 506 million yen in cash and deposits.
Total liabilities increased 418 million yen from the end of the previous fiscal year to 8,337 million yen at theend of the second quarter. This mainly reflected an increase of 963 million yen in short-term borrowings, while
there were decreases of 340 million yen in electronically recorded obligations-operating and 265 million yen
in notes and accounts payable-trade.
Net assets increased 339 million yen from the end of the previous fiscal year to 14,694 million yen at the endof the second quarter. This mainly reflected an increase of 740 million yen in foreign currency translation
adjustment, while there was a decrease of 387 million yen in retained earnings.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements
There are no revisions to the full year consolidated forecasts for the fiscal year ending February 28, 2023,
which were disclosed in the Consolidated Financial Results for the Fiscal Year Ended February 28, 2022 dated
April 13, 2022.

3

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet
FY2/22(As of Feb. 28, 2022)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Notes and accounts receivable-trade, and contract assets
Electronically recorded monetary claims-operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Customer-related assets
Other
Total intangible assets
Investments and other assets
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term borrowings
Income taxes payable
Advances received
Contract liabilities
Provision for bonuses
Provision for bonuses for directors (and other officers)
Other
Total current liabilities
Non-current liabilities
Lease obligations
Retirement benefit liability
Asset retirement obligations
Provision for retirement benefits for directors (and otherofficers)
Other
Total non-current liabilities
Total liabilities

4(Thousands of yen)
Second quarter of FY2/23(As of Aug. 31, 2022)

4,145,207
4,902,513
326,231
667,070
2,390,278
2,032,755
211,030
341,948(12,624)
15,004,411

3,638,515
4,298,103
209,973
750,755
3,293,047
2,300,869
204,067
615,649(14,809)
15,296,172

2,014,906
1,141,676
1,406,379
4,562,962

2,160,833
1,145,948
1,403,704
4,710,486

643,241
31,945224,080
472,554
63,0081,434,830

662,992
26,758404,386
497,799
57,578
1,649,514

235,394
1,041,705(5,400)1,271,699
7,269,492
22,273,904

337,279
1,043,517(5,400)1,375,396
7,735,397
23,031,569

1,767,452
976,189
27,180
256,0872,805,781
252,662
29,918920,502
7,035,774

1,502,434
635,808
990,748
143,157
2,962,736
204,277
17,387994,200
7,450,750

376,253
316,216
67,130390,006
306,003
67,196

6,591

8,988

117,161
883,353
7,919,127

114,598
886,794
8,337,545

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

FY2/22(As of Feb. 28, 2022)(Thousands of yen)
Second quarter of FY2/23(As of Aug. 31, 2022)

Net assets
Shareholders’ equity
1,035,600

Share capital

1,035,600

Capital surplus

1,289,513

1,289,513

Retained earnings

12,808,681

12,421,305

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

Total shareholders’ equity

14,360,432

13,973,056

Accumulated other comprehensive income
39,68824,902Foreign currency translation adjustment(37,972)

702,130

Remeasurements of defined benefit plans(7,371)(6,065)

Total accumulated other comprehensive income(5,655)

720,968

14,354,776

14,694,024

22,273,904

23,031,569

Valuation difference on available-for-sale securities

Total net assets
Total liabilities and net assets

5Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)(Thousands of yen)First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

Net sales

8,048,226

8,534,707

Cost of sales

5,243,813

5,853,465

Gross profit

2,804,413

2,681,241

Selling, general and administrative expenses

2,510,435

2,748,835

293,977(67,593)

Operating profit (loss)
Non-operating income
Interest income

2,621

39

Dividend income

5,655

5,809

Technical support fee income
Foreign exchange gains

5,469

9,897

1,151

95,044

Other

11,975

11,259Total non-operating income

26,873122,050

4,867

9,519

-

9,051

1,259

3,219

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Other

6,127

21,790314,723

32,666

Gain on sale of non-current assets

1,617

13,834Gain on sale of investment securities

1,298

-

Total extraordinary income

2,915

13,834

Total non-operating expenses
Ordinary profit
Extraordinary income

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

795

1,309

4,532

2,442

-

1,907

5,328

5,659

Profit before income taxes

312,310

40,841

Income taxes

107,374

57,953

Profit (loss)

204,936(17,111)

Profit (loss) attributable to owners of parent

204,936(17,111)

Total extraordinary losses

6Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)(Thousands of yen)First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

204,936(17,111)

19,691(14,785)

145,578

714,927

1,362

1,306

-

16,122

166,632

717,571

371,569

700,459

371,569

700,459

Profit (loss)
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparent7

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23(3) Quarterly Consolidated Statement of Cash FlowsFirst six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)(Thousands of yen)First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

Profit before income taxes

312,310

40,841

Depreciation

299,652

275,968

Amortization of goodwill

37,586

37,849Cash flows from operating activities

826

370

(45,850)(50,319)(24,930)(12,531)(8,277)(5,849)

4,867

9,519

Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using
equity method
Loss (gain) on sale of property, plant and equipment(2,604)(97,171)

-

9,051

(821)

(12,525)

Loss on retirement of property, plant and equipment

4,532

2,442

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

Loss (gain) on sale of securities
Loss (gain) on valuation of securities(1,298)

-

-

1,907

Decrease (increase) in trade receivables

824,375

884,571

Decrease (increase) in inventories(680,911)(717,203)

Decrease (increase) in other assets

72,054(145,185)

Increase (decrease) in trade payables(762,179)(674,651)

Increase (decrease) in contract liabilities

820,734(164,103)

Increase (decrease) in other liabilities(160,682)(90,700)

Other, net

5766

Subtotal

689,443(707,653)

8,277

5,849

(4,867)(9,519)

8,929

1,343

(196,842)(236,301)

504,940(946,281)(310,447)(130,942)

21,84428,941

Interest and dividends received
Interest paid
Income taxes refund
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for retirement of property, plant andequipment
Purchase of intangible assets(2,043)(3,556)(67,448)(160,411)

Purchase of investment securities(1,501)(1,581)

Proceeds from sale of investment securities

9,096

-

Payments of guarantee deposits(853)(3,509)218

100(351,135)(270,960)

Proceeds from refund of guarantee deposits
Net cash provided by (used in) investing activities

8

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)(Thousands of yen)First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)(43,623)900,083

Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings

25,978-

Repayments of long-term borrowings
Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Repayments of lease obligations(4,229)(3,375)(41,224)-(19,211)(20,908)

Dividends paid

(334,449)(334,276)

Net cash provided by (used in) financing activities(416,760)

541,523

23,285

169,026

Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(239,668)(506,692)

Cash and cash equivalents at beginning of period

4,498,482

4,145,207

Cash and cash equivalents at end of period

4,258,813

3,638,515

9

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements
The tax expenses are calculated by first estimating the effective tax rate after the application of tax effectaccounting with respect to profit before income taxes during the fiscal year in which the period falls, andmultiplying that rate by the profit before income taxes for the period. However, Freund uses the statutory
effective tax rate to calculate tax expenses for cases in which using the estimated effective tax rate gives a
noticeably irrational result.
Additional Information
Effect of COVID-19 on accounting estimates
There are no significant changes in the assumptions concerning COVID-19, including the expected end of thispandemic, that are stated in the supplementary information section of the Securities Report for the previous
fiscal year.
Changes in Accounting Policies
Application of Accounting Standard for Revenue Recognition
The Company has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board ofJapan (ASBJ) Statement No. 29, March 31, 2020) and the Implementation Guidance on Accounting Standard
for Revenue Recognition (ASBJ Guidance No. 30, March 26, 2021) from the beginning of the first quarter ofthe current fiscal year. Based on these standards, revenue expected to be received in exchange for theprovision of goods and services is recognized when the control of the goods and 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 saleof machinery and the completion of construction are identified separately. Transaction prices are allocatedbased 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
the percentage of completion can be accurately determined. The completed-contract method was used for allother construction contracts. Due to the new revenue recognition standard, revenue is now recognized over a
designated period as the performance obligation is fulfilled.
3) Revenue recognition for agent transactions
In previous years, the entire amount received from customers was recognized as revenue. Due to the newrevenue recognition standard, for transactions where the Freund Group functions as an agent for the provisionof goods or services to customers, net revenue is now recognized by deducting payments to suppliers from theamount received from customers.
For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional
measures in the proviso to Paragraph 84 of this standard, the cumulative effect of the retrospective applicationof the new accounting standard, if it is applied prior to the first quarter of the current fiscal year, is added to or
subtracted from retained earnings at the beginning of the first quarter of the current fiscal year. The new10Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

standard is then applied beginning with this amount of retained earnings. However, the Company has applied
the method prescribed in Paragraph 86 of this standard and has not retrospectively applied the new accounting
policy to contracts in which almost all revenue were recognized in accordance with the previous treatment
prior to the beginning of the first quarter of the current fiscal year. In addition, the Company has applied themethod prescribed in Paragraph 86, Article 1 of the Accounting Standard for Revenue Recognition, andaccounted for contract changes made prior to the beginning of the first quarter of the current fiscal year basedon the contract terms after reflecting all contract changes, and added or subtracted the cumulative effect ofsuch changes to retained earnings at the beginning of the first quarter of the current fiscal year.
As a result, net sales decreased 44,225 thousand yen and cost of sales decreased 69,102 thousand yen, while
operating profit increased 24,876 thousand yen and ordinary profit and profit before income taxes increased
24,222 thousand yen each in the first six months of the current fiscal year. In addition, there was a decrease of
35,373 thousand yen in retained earnings at the beginning of the current fiscal year.
“Notes and accounts receivable-trade” presented in the current assets section of the consolidated balance sheet
in the previous fiscal year is, from the first quarter of the current fiscal year, included in “Notes and accounts
receivable-trade, and contract assets.” “Advances received,” that was presented in the current liabilities sectionis, from the current fiscal year, presented as “Contract liabilities.” In accordance with the transitional measuresprescribed in Paragraph 89-2 of the Accounting Standard for Revenue Recognition, no reclassification has
been made to the prior year’s consolidated financial statements to conform to the new presentation.
Furthermore, in accordance with the transitional measures prescribed in Paragraph 28-15 of the AccountingStandard for Quarterly Financial Reporting (ASBJ Statement No. 12, March 31, 2020), the Company has notpresented information on revenue from contracts with customers broken down for the first half of the previous
fiscal year.
Application of the Accounting Standard for Fair Value Measurement
The Company has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July4, 2019) from the beginning of the first quarter of the current fiscal year, and has applied the new accounting
policies set forth by the Accounting Standard for Fair Value Measurement prospectively in accordance with thetransitional measures prescribed in Paragraph 19 of the Accounting Standard for Fair Value Measurement andParagraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019).
The application of this standard has no effect on the quarterly consolidated financial statements.

11

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

Segment and Other Information
Segment information
I First six months of FY2/22 (Mar. 1, 2021 – Aug. 31, 2021)
1. Information related to net sales and profit or loss for each reportable segment
MachineryBusiness

Chemicals
Business(Thousands of yen)Amounts shwon onquarterly consolidated
statement of income(Note 2)Adjustment(Note 1)Total

Net sales(1) External sales(2) Inter-segment sales andtransfers

5,366,094

2,682,131

8,048,226-

8,048,226

-

-

-

-

-

Total

5,366,094

2,682,131

8,048,226-

8,048,226

Segment profit
210,209
Notes: 1. Contents of adjustments are as follows.

331,766

541,975(247,997)

293,977

The negative adjustment of 247,997 thousand yen to segment profit includes corporate expenses that are notallocated to any of the reportable segments. Corporate expenses mainly consist of general and administrative
expenses that are not attributable to any of the reportable segments.
2. Segment profit is adjusted to be consistent with operating profit recorded in the quarterly consolidated statementof income.
3. Segment information for the first six months of FY2/22 reflects the revision of the information stated in“Significant revision of the initial allocation of the acquisition cost in the comparative information” in “Business
Combinations.”

2. Information related to impairment losses on non-current assets for each reportable segment and goodwill,etc.
Significant change in goodwill
In the first half of FY2/22, a provisional amount of goodwill was used for the business combination with
Cos.Mec S.r.l. on November 5, 2020 because the allocation process of the acquisition cost had not been
completed. With completion of the allocation process during the third quarter of FY2/22, Freund adjusted
the amount of goodwill in the Machinery Business segment that had been accounted for on a provisional
basis.
3. Information by region
Net sales
In addition to the disclosure of information required by the “Accounting Standard for Quarterly Financial
Statements,” the Company provides information by region (net sales) based on the “Accounting Standard forDisclosures about Segments of an Enterprise and Related Information” for the purpose of providing investors
with useful information.
(Thousands of yen)Japan

United States

Latin America

777,358

442,713

5,654,278

Europe457,825

Asia
575,687

Other
140,363

Notes: 1. Classification of net sales is based on the location of the client and categorized by country or region.
2. Groupings of countries and regions other than Japan are determined by geographic proximity and mutual
operational relationships. Major countries and regions in each geographic segment are as follows.
(1) Latin America:

Brazil, etc.

(2) Europe:

France, Italy, UK, etc.

(3) Asia:

China, India, etc.

(4) Other:

Middle East, etc.

12

Total
8,048,226

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

II First six months of FY2/23 (Mar. 1, 2022 – Aug. 31, 2022)
1. Information related to net sales and profit or loss for each reportable segment
MachineryBusiness

Chemicals
Business(Thousands of yen)Amounts shown onquarterly consolidated
statement of income(Note 2)Adjustment(Note 1)Total

Net sales(1) External sales(2) Inter-segment sales andtransfers

5,420,924

3,113,783

8,534,707-

8,534,707

-

-

-

-

-

Total

5,420,924

3,113,783

8,534,707-

8,534,707

Segment profit (loss)(268,657)
Notes: 1. Contents of adjustments are as follows.

478,130

209,472(277,066)(67,593)

The negative adjustment of 277,066 thousand yen to segment profit (loss) includes corporate expenses that are
not allocated to any of the reportable segments. Corporate expenses mainly consist of selling, general andadministrative expenses that are not attributable to any of the reportable segments.
2. Segment profit (loss) is adjusted to be consistent with operating loss recorded in the quarterly consolidated
statement of income.

2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Not applicable.
3. Information by region
Net sales
In addition to the disclosure of information required by the “Accounting Standard for Quarterly Financial
Statements,” the Company provides information by region (net sales) based on the “Accounting Standard forDisclosures about Segments of an Enterprise and Related Information” for the purpose of providing investors
with useful information.
(Thousands of yen)Japan

United States

Latin America

677,661

717,318

5,517,286

Europe380,502

Asia
1,185,629

Other56,307

Total
8,534,707

Notes: 1. Classification of net sales is based on the location of the client and categorized by country or region.
2. Groupings of countries and regions other than Japan are determined by geographic proximity and mutual
operational relationships. Major countries and regions in each geographic segment are as follows.
(1) Latin America:

Brazil, etc.

(2) Europe:

France, Italy, UK, etc.

(3) Asia:

China, India, etc.

(4) Other:

Middle East, etc.

Business Combinations
Significant revision of the initial allocation of the acquisition cost in the comparative information
A provisional accounting treatment was used in the second quarter of the previous fiscal year for the FreundGroup’s acquisition of Cos.Mec S.r.l on November 5, 2020, and this treatment was finalized in the third
quarter of the previous fiscal year.
Based on the finalization of this provisional accounting treatment, a significant revision has been reflected in
the initially allocated amount of the acquisition cost in the comparative information included in the quarterly
consolidated financial statements for the first half of the current fiscal year.
As a result, in the quarterly consolidated statement of income for the first six months of the previous fiscal
year, operating profit, ordinary profit and profit before income taxes decreased 35,411 thousand yen each, andprofit and profit attributable to owners of parent decreased 21,487 thousand yen each.

13

Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23

Revenue Recognition
Information of breakdown on revenue from contracts with customers
First six months of FY2/23 (Mar. 1, 2022 – Aug. 31, 2022)(Thousands of yen)
Reportable segments

Machinery Business

Chemicals Business

Total

2,574,616

2,942,670

5,517,286

United States

677,541120

677,661

Latin America

717,318-

717,318

Europe275,877

104,625

380,502

Asia

1,119,262

66,367

1,185,629

Japan

56,307-56,307

Revenue from contracts with customers

5,420,924

3,113,783

8,534,707

External sales

5,420,924

3,113,783

8,534,707

Other

3. Others
Orders and Sales(1) Orders received
Operating segment(Thousands of yen)First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)

First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

AmountAmountYear-on-year (%)

Year-on-year (%)

7,695,049
114.8
8,409,179
109.3
Machinery BusinessNotes: 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.
3. Orders received do not include consumption taxes.
(2) Order backlog
Operating segment(Thousands of yen)First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)

First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

AmountAmountYear-on-year (%)

Year-on-year (%)

9,034,195
123.2
14,275,985
158.0
Machinery BusinessNotes: 1. No order backlog is shown for the Chemicals Business because production is based on sales plans rather thanspecific orders.
2. Order backlog is based on selling prices; inter-segment transactions have been eliminated.
3. Order backlog does not include consumption taxes.
(3) Sales
Operating segment(Thousands of yen)First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)
AmountFirst six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

Composition (%)
66.7

AmountComposition (%)

Machinery Business

5,366,094

5,420,924

Chemicals Business

2,682,131

33.3

3,113,783

36.5

8,048,226

100.0

8,534,707

100.0

Total
Notes: 1. Sales are based on selling prices; inter-segment transactions have been eliminated.
2. Sales do not include consumption taxes.

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

14

63.5