Consolidated Financial Results for the First Nine Monthsof the Fiscal Year Ending December 2023 [Japanese GAAP]
November 10, 2023
Frontier Management Inc.
Tokyo Stock Exchange
7038
URL: https://www.frontier-mgmt.com/
Shoichiro Onishi, Representative Director, Co-President & Executive Officer
Hiroaki Hamada, Executive Officer, Head of Company Planning and Administration Department
TEL +81-3-6862-8335
Scheduled date to file Quarterly Securities Report:
November 10, 2023
Scheduled date of commencement of dividend payment:‒
Preparation of supplementary material on quarterly financial results: Yes
Quarterly results briefing:
Yes (for institutional investors and analysts)
Company name:
Listing:
Stock code:
Representative:
Contact:(Figures are rounded down to the nearest one million yen.)

1. Quarterly consolidated results for the first nine months of fiscal year ending December 31, 2023
(January 1, 2023 to September 30, 2023)(1) Consolidated operating results (Cumulative)(Percentages represent year-on-year changes.)
Net income attributable
Net sales
Operating income
Ordinary income
to owners of parent
First nine months, FY 2023
First nine months, FY 2022

JPY mil.

%

JPY mil.

%

JPY mil.

%

JPY mil.

%

7,267
5,889

23.4
51.3

854
679

25.7
791.1

852
696

22.3
710.2

529
351

50.6
608.5

(Note) Comprehensive income

First nine months, FY 2023: 537 JPY mil. (49.2%)
First nine months, FY 2022: 360 JPY mil. (656.8%)

Net income per share(diluted)

Net income per share
YenFirst nine months, FY 2023
First nine months, FY 2022

Yen

45.96
30.73

45.33
30.22

(2) Consolidated financial position
Total assets
First nine months, FY 2023
FY 2022(Reference) Shareholders’ equity
Net assets ratio

Net assets

Equity ratio

JPY mil.

JPY mil.

%

10,544
5,658

6,566
3,015

32.9
51.7

First nine months, FY 2023: 3,469 JPY mil.
First nine months, FY 2023: 62.3%

FY 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 – shareacquisition rights 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 three months of the fiscal year ending 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 noncontrolling interests increased 2,999 million yen, and the equity ratio decreased. Except for the investments, the equity ratio was at 46.0%. 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).

2. Dividends
End of first quarterEnd of second quarter

Annual dividends
End of third quarter

Yen

Yen

Yen

Yen

Yen

‒
‒

0.00
‒

‒
‒

28.00

28.00

‒

‒

FY 2022
FY 2023

Year-end

Annual

FY 2023 (Forecast)(Notes) 1. Revisions to dividend forecasts published most recently: None
2. The Company plans to pay dividends for the fiscal year ending December 31, 2023. The dividend amount is yet to be determined.

3. Consolidated forecasts for the fiscal year ending December 31, 2023 (January 1, 2023 – December 31, 2023)(Percentages represent year-on-year changes.)

Net sales
Full year

Operating income

Net income attributableto owners of parent

Ordinary income

Net income per share

JPY mil.

%

JPY mil.

%

JPY mil.

%

JPY mil.

%Yen

10,000

26.3

1,200

32.1

1,200

30.2

700

25.7

61.06

(Note) Revisions to financial forecasts published most recently: None

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*

Notes
(1) Changes in important subsidiaries during the period (changes of specific subsidiaries in accordance with changes in the scopeof consolidation): None
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: None
(3) 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
(4) Number of shares outstanding (common shares)(i) Number of shares outstanding at end of period (including treasury shares)
First nine months, FY 2023
11,726,457 shares
FY 2022(ii) Number of treasury shares at end of period
First nine months, FY 2023
7,821 shares
FY 2022(iii) Average number of shares outstanding during the period
First nine months, FY 2023
11,510,401 sharesFirst nine months, FY 2022

11,468,478 shares
5,821 shares
11,431,396 shares* This financial summary is not subject to the statutory quarterly review by a certified public accountant or an audit corporation.
* 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 more information, such as theassumptions used in forecasting the results and remarks on their usage, please refer to 1. Qualitative information on consolidated
operating results for the first nine months of the fiscal year ending December 2023, (3) Explanation regarding financial results
forecasts and other forward-looking statements on page 5 of the accompanying materials.

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Accompanying materials – contents
1. Qualitative information on consolidated operating results for the first nine moths of the fiscal year ending December 2023 ............ 4(1) Explanation regarding results of operations .................................................................................................................................... 4(2) Explanation regarding financial position ........................................................................................................................................ 5(3) Explanation regarding financial results forecasts and other forward-looking statements ............................................................... 5
2. Quarterly consolidated financial statements and key notes ................................................................................................................. 6(1) Quarterly consolidated balance sheets ............................................................................................................................................ 6(2) Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive income .............................. 8
Quarterly consolidated statement of income
First nine-month period .................................................................................................................................................................. 8
Quarterly consolidated statement of comprehensive income
First nine-month period .................................................................................................................................................................. 9(3) Notes to quarterly consolidated financial statements .................................................................................................................... 10(Notes on going concern assumption) ............................................................................................................................................. 10(Note on significant changes in the amount of shareholders’ equity) .............................................................................................. 10(Changes in accounting policies)..................................................................................................................................................... 10(Additional information) ................................................................................................................................................................. 10(Segment information) .................................................................................................................................................................... 11―3―

1. Qualitative information on consolidated operating results for the first nine months of the fiscal year ending
December 2023
(1) Explanation regarding results of operations
During the first nine months of the fiscal year under review (from January 1, 2023 to September 30, 2023), the Japanese
economy continued to face uncertainties mainly due to price hikes caused chiefly by the prolonged Russia-Ukraine war, theweaker yen and downside risks to overseas economies as a result of global monetary tightening. Meanwhile, social andeconomic activities were normalizing with the easing of the movement restrictions imposed amid the COVID-19 pandemic.
The economy was recovering moderately due to improvements in consumer spending and capital expenditure.
Amid this business environment, the Group continued to offer a wide range of services, including management consulting,
M&A advisory, and revitalization support as a one-stop provider of solutions to corporate issues. Frontier Capital Inc., which
was established in April last year, procured funds of 3,000.6 million and yen mainly from financial institutions through a
private placement of shares and started to invest in earnest.
Consequently, consolidated net sales for the first nine months under review increased 23.4% year on year, to 7,267.676
million yen, and consolidated operating income expanded 25.7% year on year, to 854.008 million yen. Consolidated ordinary
income rose 22.3% year on year, to 852.327 million yen, and net income attributable to owners of parent grew 50.6% year on
year, to 529.130 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 first nine months under review, the management consulting
business and the revitalization support business performed well. Net sales stood at 7,249.226 million yen (up 23.1% year onyear). Operating income was 1,146.932 million yen (up 45.0%).
The following is operating results by segment.
<Management Consulting Business>
Net sales in the management Consulting Business came to 3,761.395 million yen (up 11.9% 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) and IR (investor
relations), and 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 were 2,041.731 million yen (down 3.4% year on year). Despite a slight decrease in
net sales from a year ago, when multiple medium to large-scale M&A deals were concluded, the business performed well in
the fiscal year under review, with multiple large-scale M&A deals, including cross-border M&A deals.
<Revitalization Support Business>
Net sales in the Revitalization Support business stood at 1,279.807 million yen (up 335.1% year on year). The significant
year-on-year increase in net sales is mainly due to a rise in the number of revitalization projects from the second half of theprevious fiscal year and orders for large-scale revitalization projects and their execution.
<Other Business>
Net sales in the other businesses were 166.291 million yen (up 38.3% year on year).
Investment Business Segment
During the first nine months under review, the Group raised funds from financial institutions through a private placement ofshares and is closely examining investment opportunities in the Investment Business segment. The Group incurred personnel
expenses and other fixed costs. Net sales amounted to 39.696 million yen (up 2,546.4% year on year). The operating loss was
292.923 million yen (compared with an operating loss of 111.914 million yen in the year-ago period).

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(2) Explanation regarding financial position<Assets>
The Group’s assets at the end of the first nine months under review stood at 10,544.275 million yen, an increase of 4,885.631
million yen from 5,658.644 million yen at the end of the previous fiscal year.
This was mainly attributable to an increase of 3,378.285 million yen in cash and deposits principally reflecting a private
placement of shares of Frontier Capital Inc., a consolidated subsidiary of the Company, an increase of 1,256.350 million yen
in shares of subsidiaries and associates chiefly due to the acquisition of shares in Athema, an increase of 94.413 million yen
in accounts receivable -trade, and an increase of 129.589 million yen in Other in current assets.
<Liabilities>
The Group’s liabilities at the end of the first nine months under review were 3,978.196 million yen, an increase of 1,335.507
million yen from 2,642.688 million yen at the end of the previous fiscal year.
This was attributable chiefly to an increase of 870.969 million yen in long-term borrowings (including the current portion of
long-term borrowings) and an increase of 500.000 million yen in short-term borrowings.
<Net assets>
The Group’s net assets at the end of the first nine months under review came to 6,566.079 million yen, an increase of
3,550.123 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 to Antema SAS, growth in non-controlling shareholders’equity of 2,999.700 million yen due to non-consolidated subsidiary Frontier Capital’s private placement of shares primarily
to financial institutions, and net income attributable to owners of parent of 537.371 million yen, which were partially offset
by dividends of retained earnings of 320.954 million yen.
(3) Explanation regarding financial results forecasts and other forward-looking statements
No changes have been made to the full-year forecasts of consolidated financial results for the fiscal year ending December 31,
2023 that were announced on February 10, 2023.

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2. Quarterly consolidated financial statements and key notes(1) Quarterly consolidated balance sheet(Thousands of yen)
End of the previous fiscal year
(As of December 31, 2022)

End of the 3Q ofcurrent fiscal year
(As of September 30, 2023)

3,199,089
912,827
23,833
164,580(24,214)

6,577,375
1,007,240
23,234294,170(19,565)

4,276,116

7,882,455

282,593
31,122

265,428
32,674

Total property, plant and equipment

313,716

298,103

Intangible assets
Software
Goodwill
Customer-related intangible assets
Other

10,471
265,130
18,750102

11,551
243,036
14,062
1,455

294,454

270,105

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

3,591
1,308,058
356,386
1,973
329,680
87,8442,087,534
2,655,743

7,379
7,379
5,658,644

6,077
6,077
10,544,275

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

Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Leasehold and guarantee deposits
Investments in capital of subsidiaries and associates
Deferred tax assets
Other
Total investments and other assets
Total non-current assets
Deferred assets
Organization expenses
Total deferred assets
Total assets―6―

(Thousands of yen)
End of the previous fiscal year
(As of December 31, 2022)

End of the 3Q ofcurrent fiscal year
(As of September 30, 2023)

71,030‒138,388
128,860
288,143764,486
5,050
13,924
458,742
1,868,624

96,713500,000
137,428
205,399
176,760
716,224
4,166
8,821
490,157
2,335,671

639,313
134,750
774,063

1,511,242
131,282
1,642,524

Total liabilities

2,642,688

3,978,196

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Foreign currency translation adjustment

210,062
577,5032,139,619(8,246)2,918,939

369,399752,490
2,347,794(8,246)
3,461,439

8,352

8,046

Liabilities
Current liabilities
Accounts payable - trade
Short-term borrowings
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 current liabilities
Non-current liabilities
Long-term borrowings
Asset retirement obligations
Total non-current liabilities

Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

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8,352

8,046

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

34,662
3,061,931
6,566,079
10,544,275

(2) Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive income(Quarterly consolidated statement of income)(First nine-month period)(Thousands of yen)First nine months ofprevious fiscal year
(January 1, 2022
to September 30, 2022)

First nine months ofcurrent fiscal year
(January 1, 2023
to September 30, 2023)

Net sales
Cost of sales
Gross profit

5,889,465
2,360,912
3,528,552

7,267,676
3,320,020
3,947,655

Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Share of profit of entities accounted for using equity method
Dividend income of insurance
Reversal of allowance for doubtful accounts
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share issuance costs
Other
Total non-operating expenses
Ordinary income
Extraordinary losses
Loss on valuation of investment securities

2,849,340
679,211

3,093,647
854,008

131
6,026
1,802
‒
12,601
2,233
22,794

113
3,345
2,130
4,589
5,208
2,745
18,134

5,153
‒
191
5,345
696,661

7,391
11,908515
19,816852,327

53,505‒

Total extraordinary losses

53,505‒

Net income before income taxes

643,156

852,327

Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Net income (loss) attributable to non-controlling interests
Net income attributable to owners of parent

277,078
4,970
282,049
361,107
9,769
351,338

298,440
16,514
314,955
537,3718,241
529,130―8―

(Quarterly consolidated statements of comprehensive income)(First nine-month period)(Thousands of yen)First nine months ofprevious fiscal year
(January 1, 2022
to September 30, 2022)
Net income
Other comprehensive income
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests―9―

First nine months ofcurrent fiscal year
(January 1, 2023
to September 30, 2023)

361,107537,371(1,096)(306)(1,096)(306)

360,010537,065

350,241

528,823

9,769

8,241

(3) Notes to quarterly consolidated financial statements(Notes on going concern assumption)
None(Note on significant changes in the amount of shareholders’ equity)
During the first nine months under review, the Company received payment for the privately placed shares from Antema SAS,
which is the parent company of Athema that the Company incorporated in the scope for entities accounted for using equity
method, with a payment date of August 31, 2023. As a result, there was an increase of 153.819 million yen in common stock
and an increase of 153.819 million yen in capital surplus. As of the end of the first nine months, common stock and capitalsurplus stood at 369.399 million yen and 752.490 million yen, respectively.
(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 first three months of the fiscal year under review, and decided toapply the new accounting policies described in the Guidance in future periods in accordance with the transitional procedures
set out in Paragraph 27-2 of the Guidance. There is no impact for the quarterly 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 forthese placements 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
demand that 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.

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(Segment information)
First nine months of previous fiscal year (From January 1, 2022 to September 30, 2022)
1. Information on net sales and income (loss) by reportable segment(Thousands of yen)Amount recordedin quarterly
consolidated
financialstatements (Note)

Reportable segments
Consulting
Advisory BusinessNet sales
Sales to external customers
Intersegment internal sales
and transfers
Total

Investment
Business

Adjustment

Total

5,889,465‒

5,889,465‒

5,889,465

‒

1,500

1,500

(1,500)‒5,889,465

1,500

5,890,965(1,500)5,889,465

Segment income (loss)
791,126(111,914)
679,211‒(Note) Segment income (loss) matches the operating income in the quarterly consolidated statements of income.

679,211

2. Information on assets by reportable segment
Assets in the Investment Business segment in the first nine months under review increased 930.536 million yen from the endof the previous fiscal due to the consolidation of Frontier Capital Inc. in the second quarter.
First nine months of current fiscal year (From January 1, 2023 to September 30, 2023)
1. Information on net sales and income (loss) by reportable segment(Thousands of yen)Amount recordedin quarterly
consolidated
financialstatements (Note)

Reportable segments
Consulting
Advisory BusinessNet sales
Sales to external customers
Intersegment internal sales
and transfers
Total

Investment
Business

Total

Adjustment

7,249,226

18,4507,267,676‒

7,267,676‒

21,246

21,246(21,246)‒

7,249,226

39,696

7,288,922(21,246)

7,267,676

Segment income (loss)
1,146,932(292,923)
854,008‒(Note) Segment income (loss) matches the operating income in the quarterly consolidated statements of income.

854,008

2. Information on assets by reportable segment
In the first quarter, Frontier Capital Inc., a consolidated subsidiary, raised funds totaling 3,000.6 million yen mainly fromfinancial institutions through a private placement. Due to the private placement, assets in the Investment Business segment in
the third quarter increased 2,779.871 million yen from the end of the previous fiscal year.

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