Consolidated Financial Results for the 1Q of the Fiscal Year Ending December 2023 [Japanese GAAP]
Listed company name Frontier Management Inc.
Code No.
7038 URL https://www.frontier-mgmt.com/
Representative Director,
Representative(Title)
Co-President & Executive Officer
Executive Officer,
Contact(Title) Head of Company Planning and
Administration Department

May 12, 2023
Listing: Tokyo Stock Exchange
Shoichiro Onishi

Hiroaki Hamada

TEL 03-6862-8335

Scheduled date ofcommencement ofdividend payment

Scheduled date to file Quarterly
May 12, 2023
Securities Report-

Preparation of supplementary material on quarterly financial results: Yes
Quarterly results briefing: Yes(Millions of yen are rounded down)
1. Quarterly consolidated results for FY2023 1Q (January 1, 2023 to March 31, 2023)(1)Consolidated Operating Results (Cumulative)
Net sales

JPY mil.
2,653
2,224

FY 2023 1Q
FY 2022 1Q(NOTE)
Comprehensive
income

%
19.3
67.4

FY 2023 1Q

265

JPY
mil.

Operating income

Ordinary income

JPY mil.
480
408

JPY mil.
478
416(10.1%)

%
17.6
335.8

Net income attributable toowners of parent

%
15.1
318.8

FY2022 1Q

Net income per share

Fully diluted
Net income per share

JPY
22.75
20.77

JPY
22.40
20.46

FY 2023 1Q
1 Q of FY 2022

(Percentages indicate year-on-year changes.)

JPY mil.
260
236
241

JJPY
mil.

%
10.2
246.1

(259.6%)(2)Consolidated Financial Position
Total assets
FY 2023 1Q
End of FY 2022
Reference: Shareholders' equity
Net assets ratio

Net assets

Equity ratio

JPY mil.

JPY mil.

8,785
5,658

6,000
3,015

%
32.8
51.7

First Quarter of FY 2023

2,884 JPY mil.

FY12/2022

2,927First Quarter of FY 2023

68.3%

FY12/2022

53.3%

JPY mil.

The equity ratio is calculated by dividing (total net assets at the end of the period-stock subscription rights at the end of the period-stock
subscription rights to shares at the end of the period-non-controlling shareholders at the end of the period) by total assets at the end of the period.
Net assets ratio is calculated by dividing total net assets at the end of the fiscal year by total assets at the end of the fiscal year.
In the first quarter of the fiscal year ending December 31, 2023, Frontier Capital Corporation, a consolidated subsidiary, received 3 billion yen fromeight financial institutions and one company in accordance with the Company's business plan. As a result, the non-controlling interests of the Group
increased by 2.999 billion yen, resulting in a decrease in the equity ratio. Excluding the amount of such investment, the equity ratio was 49.8%. The
equity ratio excluding the said amount of investment is calculated by dividing (total net assets at the end of the period-share subscription rights at theend of the period-share subscription rights at the end of the period-non-controlling interests at the end of the period-increase in capital surplus due tothe said investment of 0.9 million yen) by (total assets at the end of the period-such investment of 3 billion yen).

2.Dividend Status
Dividend per share
End of First Quarter

FY2022
FY2023
FY2023 (Forecast)End of second quarter End of the third quarter

Yen-

Term end

Total

Yen
0.00

Yen
-

Yen
28.00

Yen
28.00

0.00

-

-

-

(NOTE)Revisions to the most recently announced dividend forecasts: None
We plan to pay a dividend for the fiscal year ending December 2023, but the amount of the dividend forecast remains undecided.

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3.Forecast for FY2023 (January 1, 2023-December 31, 2023)(Percentages indicate previous fiscal year changes.)
Net sales
JPY mil.

Full year

10,000Operating income

%
26.3

%
32.1

JPY mil.

1,200

Ordinary income
JPY mil.

1,200

Net income attributable toowners of parent%
30.2

JPY mil.

700

%
25.7

Net income
per share

Yen
61.06

(NOTE)Revisions to the most recently announced earnings forecasts: None
※ Due to the large fluctuation in business results during the fiscal year due to the timing of sales of incentive fees in the M&A Advisory Business, it is difficult to
calculate consolidated earnings forecasts for the second quarter (cumulative). In addition, because the Group manages its earnings over the course of theyear, the Group has announced its earnings forecasts only for the full fiscal year.

※ Notes(1)Significant changes in subsidiaries during the quarter under review (changes in specified subsidiaries resulting in changes in thescope of consolidation): None
(2)Application of special accounting methods for preparing quarterly consolidated financial statements: None
(3)Changes in accounting policies and changes or restatement of accounting estimates① Changes in accounting policies due to revision of accounting standards: Yes② Changes in accounting policies other than ①: None
③ Changes in accounting estimates: None
④ Restatement of revisions: None
(4)Number of shares outstanding (common shares)① Number of shares outstanding at the end of
the period (including treasury stock)

FY2023 1Q

11,481,998 Shares

FY2022

11,468,478 Shares② Number of treasury stock at the end of theperiodFY2023 1Q

5,821 Shares

FY2022

5,821 Shares③ Average number of shares outstanding(quarterly consolidated cumulative period)

FY2023 1Q

11,468,830 Shares

FY2022 1Q

11,395,620 Shares※ Quarterly financial results are not subject to quarterly review by a certified public accountant or auditing firm.
※ Explanations and other special notes concerning the appropriate use of business performance forecasts(Notes on forward-looking statements)
The earnings forecasts and other forward-looking statements herein are based on information currently available to theCompany and on certain assumptions deemed to be reasonable, and do not constitute guarantees by the Company of future
performance.
Actual results may differ materially from the forecast depending on a range of factors. Please refer to "1. Qualitative
Information on Quarterly Financial Results, (3) Explanation of Consolidated Earnings Forecasts and Other Forward-looking
Statements" on page 3 of the attached material for the assumptions on which the forecasts are based and notes for using theforecasts.

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○Accompanying Materials – Contents
1.Overview of Quarterly Financial Results ......................................................................................................................................................................

4(1)Operating Results ......................................................................................................................................................................................

4(2)Financial Position .............................................................................................................................................................................

5(3)Future Outlook ..................................................................................................................................................................................

5

2.Quarterly Consolidated Financial Statements ........................................................................................................................................

6(1) Quarterly Consolidated Balance Sheets .............................................................................................................................

6(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income .......

8

Consolidated income statement for the quarter
1st Quarter Consolidated Cumulative Period .........................................................................................................

9

Quarterly Consolidated Statements of Comprehensive Income
1st Quarter Consolidated Cumulative Period ..........................................................................................................

9(3)Notes to Quarter Consolidated Financial Statements ........................................................................................................................................

10(Notes on Going Concern) ..............................................................................................................................................

10(Notes in the Event of Significant Changes in Shareholders' Equity) ............................................................................

10(Changes in Accounting Policies.) ..................................................................................................................................

10(Additional Information) .................................................................................................................................................

10(Segment Information) ....................................................................................................................................................

11

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1.Overview of Quarterly Financial Results(1)Operating Results
During the first quarter of the current fiscal year (from January 1, 2023 to March 31, 2023), Japanese economy continued to
face uncertainty, including the prolonged situation in Russia and Ukraine, rising prices, and the risk of a downturn in overseas
economies due to global monetary tightening, despite moves toward normalization of social and economic activities as a resultof the gradual relaxation of behavioral restrictions caused by a new type of coronavirus infectious disease.
Under such a company environment, our Group continues to focus on proposing and executing one-stop solutions tocorporate issues by providing comprehensive services utilizing management consulting, M&A advisory, revitalization support,
and other functions. Frontier Capital Co., Ltd., established in April last year, procured funds totaling JPY3,000,6000k fromfinancial institutions and other entities through a third-party allocation of new shares and began full-fledged investment
execution.
As a result of the above, our Group's consolidated results for the first quarter under review were net sales of JPY2,653,539k(up 19.3% year on year), operating income of JPY480,451k (up 17.6%), ordinary income of JPY478,845k (up 15.1%), andprofit attributable to owners of parent of JPY260,963k (up 10.2%).
Operating results by segment are as follows. Net sales include inter-segment sales.
In addition, since the second quarter of the previous fiscal year, our Group's segments have been reclassified into two
categories, the Consulting and Advisory Business Segment and the Investment Business Segment. Therefore, we do notcompare or analyze the Investment Business Segment with the same period of the previous fiscal year in the first quarter of the
fiscal year under review.
(Consulting and Advisory Business Segment)
In the consulting and advisory business segment, performance in the first quarter of this fiscal year was favorable in the
management consulting business and the revitalization support business. As a result, net sales were JPY2,650,539k (up 19.1%)
and operating income was JPY581,135k (up 42.3%).
Results by business segment are as follows.
< Management Consulting Business >The business results of the management consulting business for the first quarter of this fiscal year were JPY1,292,991k in
net sales (up 13.8%). In the first quarter of the fiscal year under review, sales increased compared with the same quarter of theprevious fiscal year. This was attributable to the benefits of increased personnel resulting from aggressive recruitment, as wellas to the contribution of strategic support for improving the corporate value of the manufacturing industry and the enhancementof SR/IR and DX related consulting services.
<M&A Advisory Business>
In the M&A advisory business, sales for the first quarter of the current fiscal year amounted to JPY902,673k (down 5.8%).
Net sales declined slightly compared with the first quarter of the previous fiscal year, when several large-and medium-sized
M&A deals were concluded. However, in the first quarter of the fiscal year under review, there were several large-scale M&A
deals, including cross-border M&A deals, which resulted in steady growth.
< Revitalization Support Business >In the Revitalization Support Business, consolidated net sales for the first quarter of the current fiscal year were
JPY379,223k (up 327.6%). Although the need for revitalization support shrank due to the continuation of emergency loans byfinancial institutions to companies, the number of revitalization projects began to increase from the second half of the previous
fiscal year, and there were also large-scale revitalization projects executed. As a result, net sales increased significantly
compared with the same quarter of the previous fiscal year.
< Other Business >In the Other Business, consolidated net sales for the first quarter of the current fiscal year were JPY75,651k (up 84.3%).
(Investment Business Segment)
In the first quarter of the fiscal year under review, the Investment Business Segment raised funds from financial institutions
through the allocation of new shares to a third party and began full-scale investment. However, due to the recording of fixed
costs such as personnel expenses, net sales were JPY9,246k and operating loss was JPY100,683k.

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(2)Financial Position<Assets>
The balance of assets of our group at the end of the first quarter of the current fiscal year was JPY8,785,833k (comparedwith JPY5,658,644k at the end of the previous fiscal year), up JPY3,127,189k from the end of the previous fiscal year.
This was mainly due to an increase of JPY2,652,128k in cash and deposits, an increase of JPY635,218k in notes andaccounts receivable-trade and contract assets, and a decrease of JPY181,025k in deferred tax assets.
<Liabilities>
The balance of liabilities of our group at the end of the first quarter of the current fiscal year was JPY2,784,994k (comparedwith JPY2,642,688k at the end of the previous fiscal year), an increase of JPY142,306k from the end of the previous fiscal
year.
This was mainly due to increases of JPY500,000k in short-term loans payable, JPY73,989k in accounts payable-trade,
JPY53,565k in provision for directors' bonuses, and JPY284,756k in other current liabilities due to an increase in deposits
received, and decreases of JPY508,598k in provision for bonuses and JPY236,643k in income taxes payable.
<Net assets>
The balance of net assets of our group at the end of the first quarter of the current fiscal year was JPY6,000,839k (comparedwith JPY3,015,956k at the end of the previous fiscal year), up JPY2,984,882k from the end of the previous fiscal year.
This was mainly due to the recording of JPY2,999,700k in non-controlling interests through a third-party allotment of sharesof consolidated subsidiary Frontier Capital Inc. and the recording of JPY260,963k in quarterly net income attributable toowners of the parent in the first quarter under review. On the other hand, there was a decrease due to JPY320,954k in dividends
from retained earnings.
(3)Future Outlook
The full-year consolidated earnings forecast has not changed from the consolidated earnings forecast announced on February
10, 2023.

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2.Quarterly Consolidated Financial Statements(1)Balance Sheets(Thousands of yen)
The previous fiscal year
(As of Dec 31, 2022)
AssetsCurrent assets
Cash and deposits
Notes, accounts receivable and contract assets
Operational investment securities
Other
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible assets
Buildings, net
Tools, furniture and fixtures, net
Net property, plant and equipment
Intangible fixed assets
Software
Goodwill
Customer related asset
Other
Total intangible assets
Investments and other assets
Investment securities
Investments in affiliates
Contribution to affiliated company
Lease deposits
Deferred tax assets
Other
Total investments and other assets
Total fixed assets
Deferred assets
Organization expenses
Total deferred assets
Total assets-6-

The 1Q of current fiscal year
(As of Mar 31, 2023)

3,199,089
912,827
23,833
164,580△24,214
4,276,116

5,851,217
1,548,046
23,185
191,907△20,650
7,593,706

282,593
31,122
313,716

282,530
33,174
315,705

10,471
265,130
18,750102
294,4549,539
257,765
17,187
102
284,595

3,591
51,707
2,485
361,403
346,194
1,595
766,978
1,375,149

3,591
53,821
2,952
357,766
165,168
1,581
584,881
1,185,182

7,379
7,379
5,658,644

6,945
6,945
8,785,833

(Thousands of yen)
The previous fiscal year
(As of Dec 31, 2022)
Liabilities
Current liabilities
Accounts payable
Short-term borrowings
Current portion of long-term debt
Accounts payable
Income taxes payable
Accrued bonuses
Provision for directors' bonuses
Provision for shareholder benefit program
Other
Total current liabilities
Fixed liabilities
Long-term debt
Asset retirement obligations
Total long-term liability
Total liabilities
Net assets
Shareholders' equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Other accumulated comprehensive income
Foreign currency translation adjustments
Total accumulated other comprehensive income
Stock purchase warrants
Stock acquisition rightNon-controlling shareholders' equity
Total net assets
Total liabilities and net assets-7-

The 1Q of current fiscal year
(As of Mar 31, 2023)

71,030138,388
128,860
288,143764,486
5,050
13,924
458,742
1,868,624

145,019500,000
137,428
148,067
51,500255,887
58,615
8,898
743,498
2,048,916

639,313
134,750
774,0632,642,688

604,837
131,241
736,0782,784,994

210,062
577,5032,139,619△8,2462,918,939

215,559
589,150
2,079,627△8,2462,876,092

8,352
8,352
34,67353,9903,015,956
5,658,644

8,269
8,269
28,61429,466
3,058,397
6,000,839
8,785,833

(2)Statements of Income and Comprehensive Income(Statements of Income)(1st Quater Consolidated Cumulative Period)(Thousands of yen)
1Q of previous fiscal year
(Jan 1, 2022 to Mar 31, 2022)
Net sales
Cost of sales
Gross income
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Equity in earnings of affiliates
Insurance dividend income
Reversal of allowance for doubtful accounts
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expense
Stock issuance
Other
Total non-operating expenses
Ordinary income
Current net income for the quarter before income taxes
and minority interests
Income taxes
Income taxes-deferred
Total income taxes
Net income
Quarterly net income attributable to non-controllingshareholders
Quarter income attributable to owners of parent-8-

1Q of current fiscal year
(Jan 1, 2023 to Mar 31, 2023)

2,224,878
797,962
1,426,916
1,018,511
408,404

2,653,539
1,082,611
1,570,927
1,090,476
480,451

40
1,825
1,802
3,935
809
8,413

37
2,580
2,130
3,506
456
1,944
10,656695
58753
416,064

1,620
10,502
139
12,262478,845

416,064

478,845

69,339105,446
174,786
241,277

32,148181,025
213,174
265,670

4,564

4,707

236,713260,963

(Statements of Comprehensive Income)(1st Quarter Consolidated Cumulative Period)(Thousands of yen)
1Q of previous fiscal year
(Jan 1, 2022 to Mar 31, 2022)
Net income
Other comprehensive income
Foreign currency translation adjustments
Other total comprehensive income
Quarterly comprehensive income(Comprehensive income attributable to)
Quarterly comprehensive income attributable toowners of parent
Quarterly comprehensive income attributable to noncontrolling shareholders-9-

1Q of current fiscal year
(Jan 1, 2023 to Mar 31, 2023)

241,277

265,670△163△163
241,114△82△82
265,587

236,549

260,880

4,564

4,707

(3)Notes to Quarter Consolidated Financial Statements(Going Concern)
Not applicable.
(Significant Changes in Shareholders' Equity)
Not applicable.
(Changes in accounting policies)(Application of Implementation Guidance on Accounting Standard for Calculation of Market Value)
The Company will apply the "Implementation Guidance on Accounting Standard for Calculation of Market Value" (ASBJ
Guidance No. 31, June 17, 2021; hereinafter referred to as the "Guidance on Accounting Standard for Market Value
Calculation") from the beginning of the first quarter of the current fiscal year, and apply the new accounting policy
stipulated by the Implementation Guidance on Accounting Standard for Market Value Calculation in accordance with thetransitional treatment stipulated in Article 27-2 of the Guidance on Accounting Standard for Market Value Calculation in the
future. There is no impact on the quarterly consolidated financial statements.
(Additional Information)(Increase in non-controlling interests due to capital increase of subsidiaries)
At the meetings of the Board of Directors held on December 27, 2022 and February 10, 2023, we resolved to raise funds
through a third-party allotment of shares by Frontier Capital Inc., a consolidated subsidiary. Payments were completed on
January 18, 2023 and February 28, 2023, respectively, for a total of JPY3,000,6000k.
As a result, capital surplus of our group increased by JPY900,000k and non-controlling interests increased by JPY2,999,7000k.
The shares issued through the third-party allotment totaled 30,006 shares, consisting of 29,997 shares of Class A stock and9 shares of Class B stock. Details of each class of shares are as follows:[Class A stocks]
・Dividends of surplus in cash shall be paid to Class A Shareholders prior to the shareholders, etc. who hold shares ofother classes.
・Distribution of residual assets to the allotment destination shall take place prior to the shareholders, etc. holding theshares of other classes.
・Allottees may not exercise their voting rights at the shareholders' meeting of Frontier Capital Inc.
・Class A Shareholders may request Frontier Capital Inc. to acquire all or part of Class A Shares in exchange for thepayment of monies ten years after the day of the first Class A Shares issue.
[Class B shares]
・Dividends of surplus will not be paid to Class B Shareholders, etc.
・In the event that residual assets are further distributed to Class A Shareholders after distribution of residual assets toClass A Shareholders, the distribution of residual assets to Class B Shareholders shall be made prior to Class C
Shareholders, etc. and Ordinary Shareholders, etc.
・The allottee has one voting right for each Class B share at the shareholders' meeting of Frontier Capital Inc.

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(Segment Information)
Previous 1st Quarter (From January 1, 2022 to March 31, 2022)
Disclosure is omitted because the business segments of our group are single segments.
First Quarter (January 1, 2023-March 31, 2023)
1.Information on net sales and income (loss) by reportable segment and breakdown of revenue(Thousands of yen)
Reportable Segments
Consulting
Advisory
Business

Investment
businessAmount recorded inquarterly consolidated
financial statements(Note)

Adjusted
amountTotal

Net sales
Sales to customers

2,650,539

3,000

2,653,539-

2,653,539

Intersegment sales

-

6,246

6,246

△6,246-2,650,539

9,246

2,659,785△6,2462,653,539

581,135△100,683

480,451-

480,451

Total
Segment profit (loss) (△)(NOTE)"Segment income (loss)" is the same as operating income in the quarterly consolidated statements of income.
2.Changes in reportable segments
The reportable segments of our group were single segments until the first quarter of the previous fiscal year.
However, from the second quarter of the previous fiscal year, Frontier Capital Inc. was established and the Investment
Business was newly added as a reportable segment following the start of an investment business involving the dispatchof management personnel. The Company has changed its classification into two segments: the Consulting and Advisory
Business and the Investment Business.
Information prepared using the segment information for the first quarter of the previous fiscal year using thereportable segment classification method for the first quarter of the current fiscal year is not disclosed because the"Investment Business" was added from the previous second quarter of the fiscal year.

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