FY2021-2023 Medium-Term Management Plan

February 9, 2021
Frontier Management Inc.

Chapter 1 Vision
Chapter 2 Environment

Contents

Chapter 3 Existing Businesses
Chapter 4 New Direction
Chapter 5 Sustainability

1Chapter 1 Vision
Chapter 2 Environment

Contents

Chapter 3 Existing Businesses
Chapter 4 New Direction
Chapter 5 Sustainability

2Vision1

Strive to accelerate value and growth- Aiming Japan’s leading consulting firm

Frontier
Management
Approach2

Provide a distinguished solution- Fulfill the unique comprehensive solution for each clients’ business challenge

3Launch principal investments- In meeting for the financing needs for clients’ corporate value

3

Vision1

Attract and recruit the finest people-

3 Key Strategies

2

Expand the business portfolio-

3Net-increase about 40 employees a year
Recruit key industries professionals
Recruit experts with marketing capabilities

Enhance solutions for today's issues such as DX consulting
Strengthen cross-border consulting business in addition to the M&A business
Strengthen collaboration with regional financial institutions

M&A, Alliances and Capital investments-Expand scale and diversity through in-house M&A, capital / business alliances, andlaunch joint ventures
Establish a new business model that incorporates capital investments in addition to theexisting consulting business

4Chapter 1 Vision
Chapter 2 Environment

Contents

Chapter 3 Existing Businesses
Chapter 4 New Direction
Chapter 5 Sustainability

5Vision

Environment

Existing Businesses

New Direction

Sustainability

Listed on TSE firstsection

3,000

Opened Nagoya Branch

4,000

Listed on Mothers

Operating income (right)

5,000

Nagano branch was opened
Opened an Osaka branch

Sales (Left scale)Singapore Branch established

6,000

Shanghai (China) subsidiary established(JPY Mil)

Opened a branch in New York (USA.)
Launch fund businessHistory(JPY Mil)
800

600

400

2,000200
1,000002007

2008

20092010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

(Fiscal Year)6

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Background of our professionals

OthersLegal Counsel

2%

2%

Accountant ・Certified Tax
Accountant

Operating15%

companies
16%

Financial
Institutions

24%

Consultant ・Analyst
41%

As of end of December 2020

7

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Japan’s Enterprise Management System Transformation- 10 years after the Companies Act came into effect in 2006, the Stewardship Code and the CGC were established.
- In recent years, both codes have been revised, protecting minority shareholders and tightening the qualification requirements andcomposition ratio for external directors.
- Further revisions are expected in future, and it will be necessary to provide comprehensive solutions in line with such an age.
Establishment and revision of varioussystems surrounding the company

Introduction of a governance system- In 2001
Guidelines on Private Arrangement
published- In 2003
Industrial Revitalization Corporation ofJapan established- In 2006
New Company Act enacted- In 2007
Business Revitalization ADR Systemestablished- In 2010IFRS application started- In 2014
Ito Report published- In 2014
Stewardship Code establishedStrengthening the Governance System- In 2017
Stewardship Code revised- In 2018
CGC revised- In 2015
CGC established- In 2020
Stewardship Code revised- In 2015
Company Act revised- In 2020
Guidelines for Liquidation of Debts ofVictims of Natural Disasters
established- In 2021
CGC revised- In 2021
Company Act revised

Frontier Management established in 20078

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Social changes and Business opportunities

Structural and institutional social changes
CGC, external director and compliancerequirement
Stronger vector for enhancing shareholder value

Shrinking domestic demand due to decline ofbirthrate and aging population
Business succession, overseas expansion of midsize companies

Increase in MBO due to expansion of discussion
on the issue of parent-subsidiary listings

Penetration of private arrangement
Increase in M&A

Business opportunities
Management Consulting

Financial Advisory
Social changes triggered by COVID-19

Business portfolio transformation
Corporate revitalization, financing needs

Further changes in corporate behavior due toprogressed DX in COVID-19

Revitalization Support9Chapter 1 Aims
Chapter 2 Environmental AwarenessContents

Chapter 3 Existing Businesses
Chapter 4 New Measures
Chapter 5 Sustainability

10Vision

Environment

Existing Businesses

New Direction

Sustainability

FY2023 Target and Vision
TargetFY2023SLS

JPY8.7 Bil (68% growth compared to FY2020)

OPM 20%
ROE 20% or more
VisionStrive to accelerate value andgrowth•••

Increase of 40 employees a year
Expansion of coverage areas
Recruit experts with marketing
capabilities•••

Provide a distinguishedsolution

Launch principal investments

DX consulting
Cross-border consulting
Enhance collaboration with
regional financial institutions•••

Growth through in-house M&A
Consulting business with capital
Incorporates capital investments

11

VisionEnvironment

Existing Businesses

New Direction

Sustainability

350 Professionals by end of FY2023
350

227

2007

2008

(Fiscal Year)

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023
12

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Key Industries Professionals
Experts

Industry

2019

2020

2021～2023

Machinery, Plant●Transportation●

Chemical, paper, materials●

Steel, non-ferrous metals●ICT●Banks, securities, insurance●Utility●

Motor vehicles and equipment●

Construction, real estate●●

Food products●●

Medical, Healthcare, Pharmaceuticals●●

Toiletries, cosmetics

●

●

●

Entertainment, entertainment

●

●

●

Industrial eiectronic equipment

●

●

●

Appliances, Electronic Components

●

●

●

Precision machinery, Semiconductor

●

●

●

Accommodations

●

●

●

Wholesale, retail, distribution

●

●

●
13

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Unit Price Increase

Unit Price of Projects and Sales Trends

Cross-border consulting projects(JPY Mil)

12(JPY Mil)
16.6

Net sales

Unit price of the project

11.915.3
14.3

12.0
Net sales
Number of projects
339
4,690

3,337

4,771

5,192

43,880
2

2
16
2016(Fiscal Year)20172018

2019

2020

12016
2017
(Fiscal Year)

95

22018

2019

2020
14

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Trends in Unit Price- Unit price has been driven by business revitalization projects referred by financial institutions.
- Unit price of direct sales projects for business entities is rising as the scale of clients expands.

Trends in unit prices of consulting and business revitalization projects(JPY Mil)20

Referral projects from financial institutions

Direct sales projects for business entities

1816141210862011(Fiscal Year)

2012

2013

2014

2015

2016

2017

2018

2019

2020
15

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Number of Clients and Financial Institutions

Number of clients by prefecture(number)80

Number of correspondent
financial institutions

70
60
50
40
30
20
10
1 to 45 to 910 or more
※Tokyo: approx. 400 clients, Osaka: approx. 70 clients

Prepared based on our project management materials(as of end of December 2020)

0
2016
2017
(Fiscal Year)

2018

2019

2020

16

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Trends of Japan’s M&A deals and TOPIX(case)
4,500

Number of M&A deals with Japanese companies (left scale)

2,500

Closing price at the end of TOPIX year (rhs)

4,000
3,500

2,000

3,000

1,500

2,500
2,000

1,000
1,500
1,000

500

500
00
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020(Years)
17

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Our Financial Advisory Department and Market Trend(case)
5,000(case)
Number of transactions of our Financial
Advisory Department* (right)
100

4,000

3,000

Number of Japan companies’
M&A deals (left)

50

2,000

1,000002011(Years)

2012

2013

2014

2015

2016

2017

2018

*Including M&A deals and other peripheral services

2019

2020
18

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Financial Advisory Business Performance
Net Sales by Unit Price(JPY Mil)
2,500

2,000

(JPY Mil)

Backlog by Unit Price at Fiscal Year-End

2,500
JPY100 mil. or more

JPY100 mil. or more

JPY100 mil. or less

JPY100 mil. or less

JPY50 mil. or less

25% of cross-border deals are
JPY100 Mil. or more

2,000

JPY20 mil. or less
JPY5 mil. or less
1,500

1,500

1,000

1,00050050000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(Fiscal Year)20162017201820192020(Fiscal Year)
19

Chapter 1 Vision
Chapter 2 Environment

Contents

Chapter 3 Existing Businesses
Chapter 4 New Direction
Chapter 5 Sustainability

20

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Expand Business Portfolio
Shareholders

Frontier Management
Solutions Domain

HR

IR・SR

Financial
Advisory

Executive
Development

Business Revitalization

Think tank

Management/Strategy

MarketEmployees

DX Solutions
ICTMarketing21

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Business Positioning

Frontier
Business SchoolNew businesses

DX Solutions
Consulting
Existing businesses

Time to effectManagement
Execution
SupportExecutive
Development

Management
Consulting
Revitalization
supportFinancialAdvisory

Corporate culture/sustainability of effects
22

VisionEnvironment

Existing Businesses

New Direction

Sustainability

DX Solutions

Businessareas

Future Service Contents• DX/IT consulting
supportBusinessspecialization• Support for DX/IT
implementation andoperation• CDO/CMO dispatch• Hands-on marketing
support proposal• Support for DX Platform
Concept andConstruction• Digital marketing
supportExisting business• Support for business
transformation and newbusiness thru DX
Overallmanagement• Managementconsulting• CxO dispatch

Management Consulting Business• Support for start-up andestablishment of digitalsubsidiaries
DX businessBusinessDomain23

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Alliances

Business alliance with The Hiroshima Bank and Hirogin Capital Partners

Announced on December 17, 2020
The three companies will together contribute to the economic revitalization and development ofthe region by providing the consulting services, hands-on management execution supports andimplementations to raise the corporate value to the business partners and investees of The
Hiroshima Bank and HiCAP.
24

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Fund-related business- Provide our expertise to support the private equity funds formulated by clients.

Support for structuring of funds

CxO dispatch and financial support

Frontier Management

Frontier Management

Structuring andoperational support

Consulting
CxO dispatch
Financial support

Clients

Clients

Financial Institutions

Headquarters

Investment fund

Subsidiaries
Initiate of New BusinessRealize of growth and revitalization

Investee25

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Executive Education

CurrentNew••

Our services

Clients

Management consulting

President

Support for Executive Education

Seniormanagement

Provide Executive Education services
combining management consulting
Business alliance with Scholar Consult
supporting corporate culture
innovation

Current

Business school

ManagementEmployee26

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Organizational Strategy
Frontier Management

Structural and institutional social changes

Departments

Solutions

Corporate Strategy

Management Consulting

ManagementConsulting

Revitalization Support

Management
Execution Support
Tie-upFinancial Advisory

CGC, external director and compliance requirement
Stronger vector for enhancing shareholder value
Shrinking domestic demand due to decline of birthrateand aging population
Business succession, overseas expansion of mid-size
companies
Increase in MBO due to expansion of discussion on theissue of parent-subsidiary listings

Penetration of private arrangement
Increase in M&A

Financial Advisory

Industrial ResearchBusinessDevelopment

DX Solutions

Social changes triggered by COVID-19
Business portfolio transformation
Corporate revitalization, financing needs

Executive Development

Further changes in corporate behavior due to progressed
DX in COVID-1927

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Online Marketing Strategy
Owned media
800,000PVs
February 2020 to January 2021

Increase our brand awarenessWebbiner

Business school
1500 students
2016 to 2020

2,000 viewers

Accumulated
Knowledge

September 2020 to January 2021

Existing client base
“Practical” lectures that help the clients’business issues solution

New client base

From September 202028

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Targets
FY2023 Targets
SLS

JPY8.7 Bil

OPM

20%

ROE

20% or more

(JPY Mil)

8,700

Others17%

Revitalization
Support49%

Management
Consulting

6,500
4,690
6%
41%

4,771
12%
42%

5,193

18%

18%
43%
47%

50%

43%

34%

2018

2019

2020

33%

37%
2021

...

Financial
Advisory2023(Fiscal Year)
29

Chapter 1 Vision
Chapter 2 Environment

Contents

Chapter 3 Existing Businesses
Chapter 4 New Direction
Chapter 5 Sustainability

30

VisionEnvironment

Existing Businesses

New Direction

Sustainability

ESG

Environment•

Established “Team Energy”,
a cross-divisionalorganization, to propose
solutions to energy
business companies tobuild a carbon neutralsociety.

Society••

Contribute to local
companies and job creation
thru the revitalization
support and collaboration
with regional banks
Contribute to the businessperson development byproviding training programs.

Governance••Comply the CGC such ascontinuous assessment ofthe board effectiveness,increase of the number ofexternal board members,
Thorough management oftrade secret including
personal information.

31

VisionEnvironment

Existing Businesses

New Direction

Sustainability

SDGs

Impact on stakeholders

Creation of projects aiming for anenvironmentally sustainable society✓ Proposing Solutions to Realize Renewable
Energy for Carbon Neutral

Development of training business✓ Seminars by experts from diverse
backgrounds, and training sessions
aimed at implementing solutions tobusiness issues

Solutions through a group of experts from diverse
backgrounds✓ One-stop support for the development andtransformation of clients based on our variety ofpartnerships✓ Contribution to industrial revitalization andeconomic growth from increased value forclients
Regional Revitalization for Regional Economyand Job Creation✓ Propose revitalization of local
enterprises, enhancement of financial
services and value chains throughcollaboration with financial institutions

Relevance to Frontier Management32

VisionEnvironment

Existing Businesses

New Direction

Sustainability

Corporate Governance- FY2018 Appoint external director
Listed on the Mothers section of the Tokyo Stock Exchange- FY2020 Establish Nomination Advisory Committee and Compensation Advisory Committee
Listed on the First Section of the Tokyo Stock Exchange
Launch the evaluation of the effectiveness of the Board of Directors33© 2021 Frontier Management Inc.