Consolidated Financial Results for the Fiscal Year Ended December 2023
[Japanese GAAP]
February 14, 2024
Frontier Management Inc.
Tokyo Stock Exchange
7038
URL: https://www.frontier-mgmt.com/
Shoichiro Onishi, Representative Director, President & Executive Officer
Hiroaki Hamada, Executive Officer, Head of Company Planning and Administration Department
TEL +81-3-6862-8335
Scheduled date of Annual General Meeting of Shareholders: March 27, 2024
Scheduled date of commencement of dividend payment:
March 28, 2024
Scheduled date of filing securities report:
March 27, 2024
Supplementary materials for annual financial results:
Yes
Information meeting for annual financial results:
Yes (for institutional investors and analysts)
Company name:
Listing:
Stock code:
Representative:
Contact:(Figures are rounded down to the nearest one million yen.)

1. Consolidated financial results for the fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)(Percentages represent year-on-year changes.)(1) Consolidated operating results
Net income attributable to
Net sales
Operating income
Ordinary income
owners of parent
JPY mil.
%
JPY mil.
%
JPY mil.
%
JPY mil.
%
FY 2023
10,025
26.6
1,251
37.8
1,238
34.4
780
40.2
FY 2022
7,915
37.9
908
81.2
921
79.1
556
64.4
(Note) Comprehensive income

FY 2023: 785 JPY mil. (38.9%)

Net income per share
Yen
67.51
48.67

FY 2023
FY 2022

Diluted net income
per share
Yen
66.47
47.93

(Reference) Equity in earnings (losses) of affiliates(2) Consolidated financial position
Total assets
JPY mil.
FY 2023
10,874
FY 2022
5,658(Reference) Shareholders’ equity
Net assets ratio

FY 2022: 565 JPY mil. (68.2%)

Return on equity
%
23.6
20.9

Ordinary income tototal assets
%
15.0
19.4

FY 2023: 4 JPY mil.

Operating income to
net sales
%
12.5
11.5

FY 2022: 8 JPY mil.

Net assets
JPY mil.
6,822
3,015

Equity ratio
%
34.0
51.7

FY 2023: 3,700 JPY mil.
FY 2023: 62.7%

Net assets per share
Yen
315.81
255.37FY 2022: 2,927 JPY mil.
FY 2022: 53.3%

The equity ratio is calculated using the following formula: (net assets at end of fiscal year – share award rights at end of fiscal year – share acquisitionrights at end of fiscal year – non-controlling shareholder’s equity at end of fiscal year) ÷ total assets at end of fiscal year.
The net assets ratio is calculated by dividing net assets at the end of the fiscal year by total assets at the end of the fiscal year. During the first threemonths of the fiscal year ended December 31, 2023, Frontier Capital Inc., a consolidated subsidiary, accepted investments worth a total of 3 billion
yen from eight financial institutions and one operating company under its business plan. As a result, Group’s non-controlling interests increased 2,999
million yen, and the equity ratio decreased. Except for the investments, the equity ratio was at 47.0%. The equity ratio except for the investments is
calculated using the following formula: (net assets at end of fiscal year – share award rights at end of fiscal year – share acquisition rights at end of
fiscal year – non-controlling shareholder’s equity at end of fiscal year – an increase in capital surplus of 0.9 million yen due to the investments) ÷(total assets at end of fiscal year – these investments of 3 billion yen).

(3) Consolidated cash flows
Cash flows fromoperating activities
JPY mil.
FY 2023225
FY 2022
1,250

Cash flows frominvesting activities
JPY mil.
(1,377)(486)

Cash flows fromfinancing activities
JPY mil.
3,787
646

Cash and cash equivalents
at end of period
JPY mil.
5,838
3,199

2. Dividends
Annual dividends

FY 2022
FY 2023
FY 2024 (Forecast)End of firstquarter

End of second
quarter

End of third
quarter

Yen
‒
‒
‒

Yen
0.00
0.00
0.00

Yen
‒
‒
‒

Year-end
Yen
28.00
41.00
‒

Annual
Yen
28.00
41.00
‒

Total dividend
Dividend
amountpayout ratio(Total)(consolidated)
JPY mil.
320
480

%
57.5
60.7
‒

Ratio ofdividends to
net assets(consolidated)
%
11.9
14.4

(Note) The Company plans to pay dividends for the fiscal year ended December 31, 2024. The year-end dividend amount is yet to be determined.

-1-3. Consolidated forecasts for the fiscal year ending December 31, 2024 (January 1, 2024 – December 31, 2024)(Percentages represent year-on-year changes.)
Net income attributable Net income
Net sales
Operating income
Ordinary income
to owners of parent
per share
JPY mil.
%
JPY mil.
%
JPY mil.
%
JPY mil.
%
Yen
Full year
13,000
29.7
1,620
29.4
1,570
26.8
1,000
28.1
85.33
(Note) Given the large fluctuation in business results during the fiscal year attributable to the timing at which sales of incentive fees in the M&A Advisory
Business were recorded, it is difficult to calculate consolidated earnings forecasts for the second quarter (cumulative). In addition, because theGroup manages its earnings on an annual basis, the Group announces its earnings forecasts for the full fiscal year only.

* Notes(1) Changes in important subsidiaries during the period (changes of specific subsidiaries in accordance with changes in the scopeof consolidation): None
(2) Changes in accounting policies, accounting estimates and restatement(i) Changes in accounting policies caused by revision of accounting standards: Yes(ii) Changes in accounting policies other than (i): None(iii) Changes in accounting estimates: None(iv) Restatement: None
(3) Number of shares outstanding (common shares)(i) Number of shares outstanding at end of period (including treasury shares)
FY 2023
11,726,457 shares
FY 2022
11,468,478 shares(ii) Number of treasury shares at end of period
FY 2023
7,903 shares
FY 2022
5,821 shares(iii) Average number of shares outstanding during the period
FY 2023
11,562,872 shares
FY 2022
11,437,677 shares(Reference) Summary of Non-Consolidated Financial Results
1. Non-consolidated results for the year ended December 31, 2023 (January 1, 2023 to December 31, 2023)(1) Non-consolidated results of operations
Net sales
JPY mil.
%
FY 20239,557
26.7
FY 20227,546
31.6(Percentages represent year-on-year changes.)

Operating income
JPY mil.
%
1,629
51.0
1,078
110.3

Yen
103.08
65.96

Fully diluted net income
per shareYen
101.4964.96(2) Non-consolidated financial position
Total assets
JPY mil.
FY 2023
8,166
FY 2022
5,646

Net assets
JPY mil.
4,348
3,136

Net income per share
FY 2023
FY 2022(Reference) Shareholders’ equity

FY 2023: 4,292 JPY mil.

Ordinary income
JPY mil.
%
1,625
50.3
1,081
110.8

Equity ratio
%
52.6
54.9

Net income
JPY mil.
%
1,191
58.0
754
118.4

Net assets per shareYen
366.30270.56

FY 2022: 3,101 JPY mil.

* Summaries of consolidated financial results are not subject to audit by certified public accountants or audit corporations.
* Explanations and other special notes concerning the appropriate use of business performance forecasts(Notes regarding forward-looking statements)
The forward-looking statements in these materials, including financial prospects included in this report, are based on information
available to the Company when this report was prepared and assumptions that the management considers reasonable, which do notguarantee the achievement of such projected results.
Actual results may differ significantly from these statements for a number of reasons. For a discussion of the assumptions and otherfactors considered by Frontier Management in preparing the above projections, please refer to page 6 of the attachments, “1. Overview
of Financial Results, etc., (4) Future Outlook.”-2-

Accompanying materials – contents
1. Overview of Financial Results, etc. ..................................................................................................................................................... 4(1) Overview of Operating Results for the Fiscal Year ......................................................................................................................... 4(2) Overview of Financial Position for the Fiscal Year ......................................................................................................................... 5(3) Overview of Cash Flows for the Fiscal Year ................................................................................................................................... 5(4) Future Outlook ................................................................................................................................................................................ 6
2. Basic Concept to Selection of Accounting Standards .......................................................................................................................... 7
3. Consolidated Financial Statements and Key Notes ............................................................................................................................. 8(1) Consolidated Balance Sheets ........................................................................................................................................................... 8(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ..................................................... 10
Consolidated Statements of Income .................................................................................................................................................. 10
Consolidated Statements of Comprehensive Income ........................................................................................................................ 11(3) Consolidated Statements of Changes in Equity ............................................................................................................................. 12(4) Consolidated Statements of Cash Flows........................................................................................................................................ 14(5) Notes to Consolidated Financial Statements.................................................................................................................................. 16(Notes on the Going Concern) .......................................................................................................................................................... 16(Changes in Accounting Policies) ..................................................................................................................................................... 16(Additional Information)................................................................................................................................................................... 16(Segment Information)...................................................................................................................................................................... 16(Per Share Information) .................................................................................................................................................................... 18(Significant Subsequent Events) ....................................................................................................................................................... 18-3-

1. Overview of Financial Results, etc.
(1) Overview of Operating Results for the Fiscal Year
During the fiscal year under review (January 1, 2023 to December 31, 2023), the Japanese economy staged a moderate recovery
with the normalization of social and economic activities following the easing of the movement restrictions imposed amid the
COVID-19 pandemic as well as improvements in consumer spending and capital expenditure. Nonetheless, the economy continued
to face uncertainties, mainly associated with price hikes caused by geopolitical risks such as conflicts between Russia and Ukraine
and in the Middle East as well as a weaker yen, in addition to downside risks to overseas economies linked to global monetary
tightening.
Amid this business environment, the Group continued to focus on proposing and executing one-stop solutions to corporate issues
by offering comprehensive services that leverage management consulting, M&A advisory, revitalization support and otherfunctions. Frontier Capital Inc. (“FCI”), a consolidated subsidiary of the Company which was in its second year of establishment,
also commenced full-fledged business activities, including signing two investment contracts and investing in one of them, after
raising funds of 3,000.6 million yen mainly from financial institutions through a private placement of shares.
Consequently, consolidated net sales for the fiscal year under review increased 26.6% year on year, to 10,025.083 million yen, andconsolidated operating income expanded 37.8% year on year, to 1,251.629 million yen. Consolidated ordinary income rose 34.4%
year on year, to 1,238.574 million yen, and net income attributable to owners of parent grew 40.2% year on year, to 780.683 million
yen.
Operating results by business segment are as follows: Net sales include inter-segment sales.
Consulting and Advisory Business Segment
In the Consulting and Advisory Business segment, during the fiscal year under review, the management consulting business andthe M&A advisory business remained strong, in addition to a significant increase in sales in the revitalization support business. Net
sales stood at 10,003.683 million yen (up 26.4% year on year), and operating income was 1,645.950 million yen (up 49.7%).
The following is operating results by segment.
<Management Consulting Business>
Net sales in the Management Consulting Business for the fiscal year under review came to 5,084.124 million yen (up 16.8% year
on year). This is attributable to an increase in personnel due to active recruitment, strategic assistance in helping manufacturers
enhance their corporate value, the expansion of solutions, particularly consulting services related to SR (shareholder relations), IR(investor relations) and DX (digital transformation). In addition, there was an increase in orders from large companies.
<M&A Advisory Business>
Net sales in the M&A Advisory Business for the fiscal year under review were 3,023.043 million yen (up 8.2% year on year). Net
sales increased year on year as a result of the successful completion of multiple large-scale M&A deals, including cross-border
M&A deals.
<Revitalization Support Business>
Net sales in the Revitalization Support business for the fiscal year under review stood at 1,648.476 million yen (up 174.2% year onyear). The significant year-on-year increase in net sales was mainly due to a continued rise in the number of revitalization projects
in the fiscal year under review as well as orders for large-scale revitalization projects and their execution.
<Other Business>
Net sales in the Other Businesses for the fiscal year under review were 248.038 million yen (up 49.4% year on year).
Investment Business Segment
During the fiscal year under review, FCI raised funds from financial institutions through a private placement of shares and started
business activities in earnest, investing in its first project. However, as a result of the advanced recording of fixed costs such as
personnel expenses due to the pushing back of the investment period to the end of the year, net sales amounted to 42.646 million
yen (up 142.3% year on year), and the operating loss was 394.320 million yen (compared with an operating loss of 191.272 million
yen in the year-ago period).

-4-

(2) Overview of Financial Position for the Fiscal Year
(Assets)
The total assets at the end of the fiscal year under review stood at 10,874.682 million yen, an increase of 5,216.038 million yen
from 5,658.644 million yen at the end of the previous fiscal year. The breakdown shows 8,159.931 million yen in current assets(4,276.116 million yen at the end of the previous fiscal year), 2,709.108 million yen in non-current assets (1,375.149 million yen
at the end of the previous fiscal year) and 5.642 million yen in deferred assets (7.379 million yen at the end of the previous fiscal
year). As a result, current assets and non-current assets increased by 3,883.815 million yen and 1,333.959 million yen,respectively, from the end of the previous fiscal year. Deferred assets decreased 1.736 million yen. The main changes in current
assets were an increase of 2,639.656 million yen in cash and deposits due to the private placement of shares by FCI, an increaseof 581.492 million yen in notes and accounts receivable - trade, and contract assets and an increase of 493.071 million yen in
operational investment securities. The main components of the change in non-current assets were a 1,250.092 million yen
increase in investments in affiliates mainly due to the acquisition of shares in Athema (registered trade name: AT Conseil), an
86.246 million yen increase in other investments, and a 73.091 million yen increase in deferred tax assets. The change in deferredassets was a decrease of 1.736 million yen in founding costs.
(Liabilities)
The total liabilities at the end of the fiscal year under review were 4,052.318 million yen, an increase of 1,409.630 million yen
from 2,642.688 million yen at the end of the previous fiscal year. Of this, current liabilities were 2,569.015 million yen (1,868.624
million yen at the end of the previous fiscal year), and non-current liabilities were 1,483.303 million yen (774.063 million yen
at the end of the previous fiscal year). As a result, current liabilities and non-current liabilities increased 700.390 million yen and709.239 million yen, respectively, from the end of the previous fiscal year. The main changes in current liabilities were a 229.599
million yen increase in provision for bonuses, a 133.133 million yen increase in income taxes payable, a 98.925 million yen
increase in current portion of long-term loans payable, a 93.603 million yen increase in other current liabilities due to increases
in accrued consumption taxes and accrued expenses, a 54.179 million yen increase in accounts payable - other, and a 40.519
million yen increase in accounts payable - trade. The main change in non-current liabilities was an increase of 712.687 million
yen in long-term loans payable.
(Net assets)
The net assets at the end of the fiscal year under review came to 6,822.364 million yen, an increase of 3,806.407 million yen
from 3,015.956 million yen at the end of the previous fiscal year. This increase was primarily due to a rise in common stock of
153.819 million yen and an increase in capital surplus of 153,819 million yen resulting from a private placement of shares toAthema SAS, growth in non-controlling shareholders’ equity of 2,999.700 million yen due to FCI’s private placement of sharesprimarily to financial institutions, and net income attributable to owners of parent of 792.280 million yen, which were partially
offset by dividends of retained earnings of 320.954 million yen.
(3) Overview of Cash Flows for the Fiscal Year
Cash and cash equivalents (hereinafter referred to as “cash”) at the end of the fiscal year under review totaled 5,838.745 million
yen, an increase of 2,639.656 million yen from the end of the previous fiscal year.
The following is a summary of cash flows and major factors for the fiscal year under review.
(Cash flows from operating activities)
Net cash provided by operating activities was 225.607 million yen (compared with net cash provided by operating activities of
1,250.257 million yen in the previous fiscal year). This was mainly attributable to factors behind the increase in cash, such as net
income before income taxes of 1,240.249 million yen, an increase of 229.599 million yen in provision for bonuses, depreciation
and amortization of 67.567 million yen, an increase of 60.362 million yen in accounts payable - other, and an increase of 45.322
million yen in stock-based compensation expenses, as well as factors behind the decrease in cash, such as an increase of 581.178
million yen in accounts receivable - trade, an increase of 493.071 million yen in operational investment securities and 412.331
million yen income taxes paid.
(Cash flows from investing activities)
Net cash used in investing activities was 1,377.671 million yen (compared with net cash used of 486.911 million yen in the previous
fiscal year). This was mainly due to a 1,252.492 million yen disbursement for investment in affiliated company, 87.842 million yen
in payments for investments and other assets and 37.192 million yen for the purchase of property, plant and equipment.

-5-

(Cash flows from financing activities)
Net cash provided by financing activities was 3,787.732 million yen (compared with net cash provided by operating activities of
646.534 million yen in the previous fiscal year). This was mainly due to factors behind the increase in cash, such as 1,000.000
million yen in proceeds from long-term loans payable, 2,900.098 million yen in proceeds from capital increase of consolidated
subsidiaries, and 306.231 million yen in proceeds from issuance of shares, as well as factors behind the decrease in cash, such as
320.408 million yen in cash dividends paid and 188.388 million yen in repayments of long-term loans payable.
(4) Future Outlook
The 17th fiscal year (fiscal year ended December 2023) is the final year of the Medium-Term Management Plan for Fiscal 20212023 announced on February 9, 2021. With regard to numerical targets (consolidated net sales of at least 8.7 billion yen, aconsolidated operating income margin of at least 20%, ROE of at least 20%) for the fiscal year ended December 2023, we achieved
the targets, with consolidated sales and ROE of 10 billion yen and 23.5%, respectively, but the consolidated operating income
margin was 12.5%, falling short of the target. The consolidated operating income margin would be 16.4% if subtracting the losses
of FCI, which we did not anticipate when we formulated the Medium-Term Management Plan for Fiscal 2021-2023, but we
recognize an improvement in profit margins as a future issue.
Based on the above, we developed and adopted a medium-term management plan covering the fiscal year ending December 31,
2024 to the fiscal year ending December 31, 2026 at a meeting of the Board of Directors held on February 14, 2024.
Our vision and growth strategies (business strategies and organization reinforcement) in the new medium-term management plan
are as follows.
* For more details, please refer to the Medium-Term Management Plan for Fiscal 2024-2026 announced today (February 14, 2024).
1. Our Vision
We aim to become a global independent professional firm that supports the realization of results that will enhance corporate
value by providing optimal services tailored to the characteristics of our clients’ businesses.
2. Growth Strategies (Business Strategies and Organization Reinforcement)
We will work on the business strategies and organizational strengthening described below in order to enhance corporate value
by realizing results that will strengthen and develop the value-creating capability of companies’ management resources and create
new growth businesses.
(1) Consulting and M&A Advisory BusinessWe will focus on solutions that will strengthen and develop the value-creating capability of client companies’ management
resources.
(i) Providing one-stop support for strategy formulation, M&A execution, and PMI related to the business portfolio(ii) Improving customer productivity by providing hands-on support for digitalization(iii) Equipped with full-spec support functions such as planning, hands-on, investment, and CxO dispatch for revitalization
projects(iv) Strengthening the global competitiveness of clients by providing one-stop support for mid-cap cross-border M&A andPMI(v) Supporting the formation of management teams and the development of management personnel responsible for future
growth tailored to management strategies(2) Investment BusinessWe will work on the full-scale investment of FCI and the formation of a new fund with diverse investment policies.
(i) Strengthening the investment business that will increase our involvement in the realization of results(ii) FCI will achieve the dramatic growth of client companies by accelerating full-scale investment in regional core companies,
and will also contribute to the expansion of the Group's scale through consolidated investments.
(iii) Launching new funds (Revital Funds, Venture Funds, etc.)(3) Strengthening the Organization
We will aim for quantitative expansion and productivity improvement through active recruitment, as well as non-continuous
growth through M&A.
(i) Increasing personnel by 200 over three years (on a non-consolidated basis). Diversifying recruitment methods to achieveboth a quantitative expansion and improved efficiency-6-

(ii) Significantly improving business productivity through knowledge DB advancement, generative AI and business BPO(iii) Actively implementing M&A and alliances with companies where synergies are expected
Based on the above, the numerical targets for the fiscal year ending December 31, 2026 (the 20th fiscal year of the Company), thefinal year of the Medium-term Management Plan, are consolidated net sales of 23 billion yen, consolidated ordinary income of 3.5
billion yen, and consolidated net income of 2.4 billion yen, and the major KPIs are (i) consolidated ordinary income of 3.5 billion
yen or more, (ii) consolidated ordinary profit margin of 20% or more excluding FCI, (iii) ROE of at least 30%, (iv) a consolidated
number of personnel (excluding FCI's consolidated portfolio companies) of at least 620, (v) 8 investment projects in the Investment
Business (2 projects on a consolidated basis) and an investment amount of 15 billion yen, and (vi) the annual number of dispatched
CxOs of at least 50.
Our consolidated earnings forecasts for the 18th fiscal year (ending December 31, 2024) are net sales of 13,000 million yen (up29.7% year on year), operating income of 1,620 million yen (up 29.4% year on year), ordinary income of 1,570 million yen (up26.8% year on year) and net income attributable to owners of parent of 1,000 million yen (up 28.1% year on year).

2. Basic Concept to Selection of Accounting Standards
The Group prepares consolidated financial statements under Japanese GAAP, considering the comparability of consolidated
financial statements between different fiscal years and comparability between different companies. The Group plans to respond
appropriately if international accounting standards are to be applied after giving due consideration to conditions both in Japan andoverseas.

-7-3. Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(As of December 31, 2022)

Fiscal year under review(As of December 31, 2023)

3,199,089

5,838,745

912,827

1,494,319

23,833
164,580(24,214)516,904
325,208(15,247)

4,276,116

8,159,931

282,593
31,122

252,933
29,353

Total property, plant and equipment
Intangible assets
Software
Goodwill
Customer-related intangible assets
Other313,716

282,287

10,471
265,130
18,750102

10,222
235,671
12,5001,420

Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital of subsidiaries and associates
Leasehold and guarantee deposits
Deferred tax assets
Other294,454259,814

3,591
51,707
2,485
361,403
346,194
1,595

296
1,301,800
1,963
355,817419,285
87,842

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade, and contract
assetsOperational investment securities
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings, net
Tools, furniture and fixtures, net

766,978

2,167,006

Total non-current assets

Total investments and other assets

1,375,149

2,709,108

Deferred assets
Organization expenses

7,379

5,642

Total deferred assets

7,379

5,642

5,658,644

10,874,682

Total assets-8-

(Thousands of yen)Previous fiscal year
(As of December 31, 2022)

Fiscal year under review(As of December 31, 2023)

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

111,549
237,313183,039421,277
994,085
43,55525,849552,345

Total current liabilities
Non-current liabilities
Long-term borrowings
Asset retirement obligations

1,868,624

2,569,015

639,313
134,750

1,352,000
131,303

Total non-current liabilities

774,063

1,483,303

2,642,688

4,052,318

210,062
577,5032,139,619(8,246)

374,743734,0192,599,348(8,363)

2,918,939

3,699,747

8,352

1,198

8,352

1,198

‒
34,67353,99019,00037,1303,065,287

Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Accounts payable - other
Income taxes payable
Provision for bonuses
Provision for bonuses for directors (and other officers)
Provision for shareholder benefit program
Other

Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive income
Share award rights
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets-9-3,015,956

6,822,364

5,658,644

10,874,682

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Thousands of yen)Previous fiscal year
(January 1, 2022
to December 31, 2022)
7,915,655
3,230,126

Fiscal year under review(January 1, 2023
to December 31, 2023)
10,025,083
4,497,697

Gross profit
Selling, general and administrative expenses
Salaries and allowances
Provision for bonuses
Provision for bonuses for directors (and other officers)
Recruiting
Retirement benefit expenses
Provision for shareholder benefit program
Provision of allowance for doubtful accounts
Other

4,685,528

5,527,385

1,419,541
364,8202,025
469,080
23,2596,845
6,903
1,484,921

1,594,497
446,90740,227
406,633
24,892
11,924‒
1,750,672

Net sales
Cost of sales

Total selling, general and administrative expenses

3,777,396

4,275,756

Operating income
Non-operating income
Interest income
Share of profit of entities accounted for using equity
methodDividend income of insurance
Administrative service fee income
Reversal of allowance for doubtful accounts
Gain on forfeiture of unclaimed dividends
Foreign exchange gains
Other

908,1311,251,629

158

135

8,059

4,053

1,802
1,502
‒
‒
9,158
375

2,130
1,247
520
1,467
1,013
17

Total non-operating income
Non-operating expenses
Interest expenses
Share issuance costs
Other

21,057

10,586

7,429
‒
247

11,403
11,908330

Total non-operating expenses

7,676

23,642

921,5111,238,574

‒

1,675

‒

1,675

Ordinary income
Extraordinary income
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities

53,505‒

Total extraordinary losses

53,505‒

Net income before income taxes
Income taxes - current
Income taxes - deferred

868,006
366,689(65,019)

1,240,249
521,059(73,091)

Total income taxes

301,670

447,968

Net income

566,336792,280

Net income attributable to non-controlling interests
Net income attributable to owners of parent

9,614
556,722

11,597780,683- 10 -

Consolidated Statements of Comprehensive Income(Thousands of yen)

Net income
Other comprehensive income
Foreign currency translation adjustment
Share of other comprehensive income of entities accounted
for using equity method

Previous fiscal year
(January 1, 2022
to December 31, 2022)
566,336

Fiscal year under review(January 1, 2023
to December 31, 2023)
792,280(1,027)(178)‒(6,975)(1,027)(7,154)565,308

785,126555,694

773,529

9,614

11,597

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 11 -

(3) Consolidated Statements of Changes in Equity
Previous fiscal year (January 1, 2022 to December 31, 2022)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at the beginning of period

Capital surplus

Retained earnings

178,723558,745

1,696,822

26,80626,806

Treasury shares(36,575)

Total shareholders'equity2,397,717

Changes during period
Issuance of new shares - exercise of shareacquisition rights

53,613

Dividends of surplus(113,925)

Net income attributable to owners of parent

556,722

Restricted stock compensation

4,532(8,048)(113,925)
556,722
28,32924,812

Capital increase of consolidated subsidiaries
Net changes in items other thanshareholders’ equity
Total changes during period

31,33818,758442,796

28,329521,222

Balance at end of period

210,062

577,5032,139,619(8,246)2,918,939

Accumulated other comprehensive income

Balance at the beginning of period

Foreign currencytranslation
adjustment

Total accumulated
othercomprehensive
incomeShare acquisitionrightsNon-controllinginterests

Total net assets

9,380

9,380

46,969‒2,454,066

Changes during period
Issuance of new shares - exercise of shareacquisition rights

53,613

Dividends of surplus(113,925)

Net income attributable to owners of parent

556,722

Restricted stock compensation

24,812

Capital increase of consolidated subsidiaries
Net changes in items other thanshareholders’ equity(1,027)(1,027)(12,295)

53,990Total changes during period(1,027)(1,027)(12,295)

53,990561,889

Balance at end of period

8,352

8,352

34,67353,9903,015,956- 12 -

40,666

Fiscal year under review (January 1, 2023 – December 31, 2023)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at the beginning of period

Treasury shares

Total shareholders’equityCapital surplus

Retained earnings

210,062

577,5032,139,619

153,819

153,819

307,638

5,518

5,518

11,036(8,246)2,918,939

Changes during period
Issuance of new shares
Issuance of new shares - exercise of shareacquisition rights
Dividends of surplus(320,954)

Net income attributable to owners of parent

780,683(320,954)
780,683

Purchase of treasury shares
Restricted stock compensation

(117)
5,343

(117)

(3,722)

1,621

900

900

Capital increase of consolidated subsidiaries
Net changes in items other thanshareholders’ equity
Total changes during period

164,680

156,515459,729(117)

780,807

Balance at end of period

374,743734,0192,599,348(8,363)3,699,747

Accumulated other comprehensive
incomeTotal
Foreign currency accumulatedtranslationotheradjustment
comprehensive
incomeBalance at the beginning of period

8,352

8,352

Share award
rights‒Share acquisition Non-controllingrightsinterests

34,67353,990Total net assets

3,015,956

Changes during period
Issuance of new shares

307,638

Issuance of new shares - exercise of shareacquisition rights

11,036

Dividends of surplus(320,954)

Net income attributable to owners of parent

780,683

Purchase of treasury shares(117)

Restricted stock compensation

1,621

Capital increase of consolidated subsidiaries
Net changes of items other thanshareholders’ equity

900(7,154)(7,154)19,000Total changes during period(7,154)(7,154)19,000

Balance at end of period

1,198

1,198

19,000- 13 -

2,457

3,011,297

3,025,600

2,457

3,011,297

3,806,407

37,1303,065,287

6,822,364

(4) Consolidated Statement of Cash Flows(Thousands of yen)Previous fiscal year
(January 1, 2022
to December 31, 2022)
Cash flows from operating activities
Net income before income taxes
Depreciation and amortization
Amortization of deferred assets
Amortization of goodwill
Customer-related intangible assets
Share of loss (net income) of entities accounted for using
equity method
Share-based payment expenses
Share issuance costs
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for directors(and other officers)
Increase (decrease) in provision for shareholder benefit
programIncrease (decrease) in allowance for doubtful accounts
Interest income
Interest expenses
Decrease (increase) in trade receivables
Decrease (increase) in operational investment securities
Increase (decrease) in trade payables
Increase (decrease) in accounts payable - other
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Payments for asset retirement obligations
Payments for investments in capital of subsidiaries andassociates
Proceeds from sale of investment securities
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee deposits
Payments for deferred assets
Payments for investments and other assets
Net cash provided by (used in) investing activities- 14 -

Fiscal Year under review(January 1, 2023
to December 31, 2023)

868,006
47,495
1,302
29,4586,250

1,240,249
67,567
1,736
29,4586,250(8,059)(4,053)

88,167‒‒53,505
211,471

45,322
11,908(1,675)229,599

5,050

38,505

6,845

11,924

6,952
(158)
7,429
215,932(13,995)
11,792
22,16042,018(8,967)(135)
11,403(581,178)(493,071)
40,35660,362(55,094)

1,601,625
158(8,433)(343,093)

650,469
135(12,665)(412,331)

1,250,257

225,607(87,142)(3,133)(37,192)(7,224)(238,932)‒‒(3,530)(2,500)(1,252,492)‒(148,174)
1,652(8,681)‒4,970(2,046)
7,685‒(87,842)(486,911)(1,377,671)

(Thousands of yen)Previous fiscal year
(January 1, 2022
to December 31, 2022)
Cash flows from financing activities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Proceeds from issuance of shares
Proceeds from capital increase of consolidated subsidiaries
Proceeds from exercise of employee share options

Fiscal Year under review(January 1, 2023
to December 31, 2023)

860,000(90,284)‒(113,750)(11,100)‒‒
1,669

1,000,000(188,388)(117)(320,408)‒
306,2312,990,098
316

Net cash provided by (used in) financing activities

646,534

3,787,732

Effect of exchange rate change on cash and cash equivalents

4,991

3,988

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period

1,414,871
1,784,218

2,639,656
3,199,089

Cash and cash equivalents at end of period

3,199,089

5,838,745- 15 -

(5) Notes for Consolidated Financial Statements(Notes on the Going Concern)
None(Changes in Accounting Policies)(Application of Implementation Guidance on Accounting Standard for Fair Value Measurement)
The Company adopted the Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Statement
No. 31, June 17, 2021; “Guidance”) at the beginning of the fiscal year under review, and decided to apply the new accounting
policies described in the Guidance in future periods in accordance with the transitional procedures set out in Paragraph 27-2of the Guidance. There is no impact for the consolidated financial statements.
(Additional Information)(Increase in non-controlling shareholders’ equity due to capital increases at a subsidiary)
At meetings of the Board of Directors held on December 27, 2022, and February 10, 2023, the Company resolved that Frontier
Capital Inc., a consolidated subsidiary, would raise funds through private placements of shares. The payments for theseplacements were completed on January 18, 2023, and on February 28, 2023, and Frontier Capital raised a total of 3,000.6
million yen.
The private placements resulted in a 0.9 million yen increase in capital surplus and a 2,999.7 million yen increase in noncontrolling shareholders’ equity.
In the private placements, a total of 30,006 shares were issued, consisting of 29,997 Class A shares and 9 Class B shares. The
following is descriptions of Class A and Class B shares.
[Class A shares]
The holder of Class A shares receives priority payment of dividends of surplus in cash over the shareholders of shares ofother classes.
The holder of Class A shares receives residual assets before the shareholders of shares of other classes.
The holder of Class A shares may not exercise any voting rights at shareholders’ meetings of Frontier Capital Inc.
Once ten years from the date of the first issuance of the Class A shares have passed, the holder of these shares may demandthat Frontier Capital Inc. purchases all or part of their shares in exchange for cash.
[Class B shares]
No dividends of surplus are paid to the holder of Class B shares.
After the distribution of residual assets to Class A share holders, the Class B share holders receive residual assets before
Class C share holders and common shareholders.
The holder of Class B shares has a voting right per Class B share at shareholders’ meetings of Frontier Capital Inc.
(Segment Information)
1. Description of reporting segments
The reportable segments of the Group are constituent units of the Group for which separate financial information isavailable, and which are subject to periodic review by decision-making bodies such as the Board of Directors in order todetermine the allocation of management resources and evaluate business performance.
The Group consists of segments by business type, and we have two reportable segments: the Consulting and Advisory
Business and the Investment Business.
The Consulting and Advisory Business operates a management consulting business, an M&A advisory business and arevitalization support business. The Investment Business operates an investment business involving the dispatch ofmanagement personnel with the aim of enhancing the long-term and sustainable corporate value of the investee.
2. Methods of calculating net sales, income or loss, assets, liabilities and other items by reportable segment
The accounting policies of the reportable segments are generally consistent with the summary of significant accounting
policies.
Segment income as reported in this section is based on operating income.
Internal income and the transfer amount among the segments are based on the actual market prices.

- 16 -

3. Information on net sales, income or loss, assets, liabilities and other items by reportable segment
Previous fiscal year (January 1, 2022 - December 31, 2022)(Thousands of yen)
Reportable segments
Consulting
Advisory
Business
Net sales
Sales to external customers
Intersegment internal sales andtransfers
Total
Segment income (loss)
Segment assets

Investment
Business

Total

Amounts inconsolidated
financialstatements

Adjustment

7,912,655

3,000

7,915,655‒

7,915,655‒

14,603

14,603(14,603)‒

7,912,655

17,6037,930,258(14,603)

7,915,655

1,099,403(191,272)

908,131‒

908,1314,800,439

858,204

5,658,644‒

5,658,644

Other items
Depreciation and amortization
47,495‒47,495‒
Amortization of goodwill
29,458‒29,458‒Depreciation of customer-related
6,250
‒
6,250
‒
assetsInvestment in equity method
54,193‒54,193‒affiliates
Increase in property, plant and
473,430‒
473,430‒
equipment and intangible assets(Note) Segment income (loss) matches the operating income in the consolidated statements of income.

47,49529,4586,250
54,193
473,430

Fiscal year under review (January 1, 2023 – December 31, 2023)(Thousands of yen)
Reportable segments

Net sales
Sales to external customers
Intersegment internal sales andtransfers
Total
Segment income (loss)
Segment assets

Amounts inconsolidated
financialstatements

Consulting
Advisory
Business

Investment
Business

10,003,683

21,40010,025,083‒

10,025,083‒

21,246

21,246(21,246)‒

10,003,683

42,646

10,046,330(21,246)

10,025,083

Total

Adjustment

1,645,950(394,320)

1,251,629‒

1,251,629

7,262,775

3,611,907

10,874,682‒

10,874,682

Other items
Depreciation and amortization
67,460106
67,567‒
Amortization of goodwill
29,458‒29,458‒Depreciation of customer-related
6,250
‒
6,250
‒
assetsInvestment in equity method
1,245,516
58,2471,303,764‒
affiliates
Increase in property, plant and
35,777
1,425
37,202‒equipment and intangible assets(Note) Segment income (loss) matches the operating income in the consolidated statements of income.

- 17 -

67,56729,4586,250
1,303,764
37,202

(Per Share Information)(Yen)
Previous fiscal year
(January 1, 2022
to December 31, 2022)

Fiscal year under review(January 1, 2023
to December 31, 2023)

Net assets per share

255.37315.81

Net income per share

48.67

67.51

Diluted net income per share

47.93

66.47

(Note) The basis for the calculation of net income per share and diluted net income per share is as follows.
Previous fiscal year
(January 1, 2022
to December 31, 2022)

Fiscal year under review(January 1, 2023
to December 31, 2023)

Net income per share
Net income attributable to owners of parent(thousand yen)

556,722780,683‒‒

Net income attributable to owners of parent
pertaining to common stock (thousand yen)

556,722780,683

Average number of shares of common stock
outstanding during the period (shares)

11,437,677

11,562,872

Adjustments to net income attributable to owners ofparent(thousand yen)‒‒

Increase in the number of common shares (shares)

176,925

180,779[Of which number of share acquisition rights(shares)][176,925][180,779]‒‒

Amount not attributable to common shareholders(thousand yen)

Diluted net income per share

Descriptions of potentially dilutive common stock thatwere not included in the computation of diluted
earnings per share because of their anti-dilutive effect(Significant Subsequent Events)
None- 18 -