FinTech Global Incorporated : Results for First Three Quarters of Fiscal 2016, ending September 30, 2017

The firm of innovative financing

• FinTech, in katakana script and English letters (registration 5113746), FinTech Global, in English letters (registration 5811521) and in katakana script (registration 5811522), and FGI (registration 5113748) are registered trademarks of FinTech Global Incorporated.

Investment Banking Business

Investment Banking

Favorable demand for real estate securitization arrangements. Expanded scope of target business sectors.

• Asset investment activities delivered ¥975 million in first quarter, through sale of renewable energy power generation facilities.

• Real estate securitization arrangements showed drop in number of transactions closed in third quarter. More inquiries for securitization arrangements contributing to local renaissance, such as large-scale repairs at commercial facilities.

  Corporate Investment

  Exited investments but also pursued new investment targeting companies with potential.

• In fund investment, booked gross profit of ¥228 million through transfer of money claims (in first quarter) and fund income capture.

• New investment in one high-revenue company (first quarter)

Metsä Project

Construction began July 2017. Partial transfer of real estate through securitization.

• Construction contracts signed for civil engineering work at Metsä Village and structures at MOOMINVALLEY PARK. After third-quarter books closed, real estate at MOOMINVALLEY PARK was securitized, but no revenue was recognized on an accounting basis even though ¥2.0 billion transferred to special purpose company.

Real Estate Business

Progress on building e-business structure. Revenue and income up year on year.

• Promoted measures to expand number of companies to which employee welfare services are provided and to encourage greater use of such services by employees of those companies.

• Leveraged new system architecture to boost usage of housing introduction services.

• Home sales business showed year-on-year increase in sales and income.

• Integrated property management services among Group companies. Number of units managed was up, due to new purchases. Housing services reinforced.

  Public Management Consulting Business

  Established and expanded consulting capabilities for public sector.

  (Segment included in consolidated statements of income from second quarter)

• Anticipate increase in requests for support in creating financial documents paralleling implementation of unified standard for fiscal accounting (all local governments required to comply by fiscal year ending March 31, 2018). Public management consulting capabilities of FGI Group centralized with PMC and structure established to address possible introduction of public-private partnership/public financial initiative techniques as well as public enterprise accounting for sewer works and other infrastructure projects.

★ Revenues were up, reflecting real estate securitization arrangements and investment exits in the investment banking business and an increase in the number of subsidiaries in the public management consulting business.

But revenue growth failed to absorb higher expenses due to increase in personnel and prior investment for Metsä business, leading to operating loss.

★ Booked ¥60 million in foreign exchange gains on foreign-currency-denominated investments under nonoperating income.

Business Summary by Segment Note: Revenue includes intersegment transactions.

Note: Better Life Property falls under the scope of consolidation from the third quarter of fiscal 2016. Toranomon Ham falls under the scope of consolidation from the first quarter of fiscal 2017.

The statements of income for Public Management Consulting Corporation (PMC) and New Public Accounting Laboratory Co., Ltd. (NPAL) are included in consolidated results from the second quarter of fiscal 2017. The public management consulting business is a reporting segment comprising these two companies.

• The ¥547 million operating loss for the first three quarters of fiscal 2017, under adjustment, includes intersegment elimination (¥39 million in the first three quarters of fiscal 2017) as well as corporate expenses (¥812 million in the same period) that are not allocated to any reporting segment. Corporate expenses are general and administrative expenses not associated with any reporting segment, mainly because it is difficult to justifiably allocate such expenses to any particular reporting segment.

• From the first quarter of fiscal 2017, FGI applies a different method to calculate reporting segment income and loss, based on a review of factors including the allocation standard for general and administrative expenses, to more appropriately evaluate results by each reporting segment. Segment information for the first three quarters of fiscal 2016, as noted above, was prepared according to the new calculation method for income and loss, leading to a discrepancy with segment income and loss disclosed for the first three quarters of fiscal 2016 that was calculated by the method that prevailed at that time.