Consolidated Financial Statements for the Six Months Ended June 30, 2023 (IFRS)
These financial statements have been prepared for reference only.

August 10, 2023
Link and Motivation Inc.
Stock exchange listing: Tokyo, Prime Market
Code number: 2170
http://www.lmi.ne.jp/english
Representative: Ozasa Yoshihisa, Chairman and Representative Director
Contact: Yokoyama Hiroaki, Corporate Officer andManager of Group Design Office
Phone: +81-3-6853-8111
Filing of Quarterly Report (Shihanki Hokokusho) (scheduled):
August 10, 2023
Start of distribution of dividends (scheduled):
September 25, 2023
Supplementary documents for quarterly results:
No
Quarterly results briefing:No(Amounts are rounded down to the nearest million.)

1. Consolidated Results for the Six Months Ended June 30, 2023
(January 1, 2023 – June 30, 2023)(1) Revenues and Income

Revenues(¥ million)
Six months ended
June 30, 2023
Six months ended
June 30, 2022

(Percentages represent change compared with the same quarter of the previous year.)
IncomeOperatingNet
ChangebeforeChangeChangeChangeincomeincome(%)
income taxes
(%)
(%)
(%)
(¥ million)(¥ million)(¥ million)

16,715

(0.3)

2,215

12.5

2,190

16.5

1,423

27.2

16,766

2.2

1,969

31.0

1,879

32.5

1,118

—

Net income
attributable toowners of theparent(¥ million)

Change(%)

Comprehensive
income(¥ million)

Change(%)

Basic earnings
per share (¥)

Dilutedearnings per
share (¥)

Six months ended
June 30, 2023
1,255
22.3
2,331
112.8
11.25
11.23
Six months ended
June 30, 2022
1,026
—
1,095
—
9.20
9.20
Note: The Company has adopted IAS 12 Income Taxes (May 2021 amendment) as of the first quarter of the fiscal year ending
December 31, 2023, and figures are retrospectively restated to reflect this change in accounting policy. The percentage change
from the same period of the previous year in the amounts of net income, net income attributable to owners of the parent, andcomprehensive income are not presented because retrospective adjustments were made in accordance with this change inaccounting policy.

(2) Financial Position

Equity attributable
Ratio of equity
to owners of theattributable to owners
parentof the parent to total(¥ million)
assets (%)
As of June 30, 2023
30,871
13,553
10,862
35.2
As of December 31, 2022
28,908
11,243
9,057
31.3
Note: The Company has adopted IAS 12 Income Taxes (May 2021 amendment) as of the first quarter of the fiscal year ending
December 31, 2023, and figures are retrospectively restated to reflect this change in accounting policy.
Total assets(¥ million)

Total equity(¥ million)

2. Dividends
1st Qtr.
1.90
2.80

2nd Qtr.
1.90
2.80

Dividends per share
3rd Qtr.
Year-end
1.90
2.00

Total
7.70

2.80

11.20

2022
2023
2023 (est.)
2.80
Note: Revisions since the most recently announced dividend forecast: No

3. Forecast of Results for 2023 (January 1, 2023 – December 31, 2023)(Percentages represent change compared with the previous fiscal year.)
Net income
Basic
Net
Revenues
Operating income
attributable toearnings
incomeowners of the parent
per share(¥ million)(%) (¥ million)(%)(¥ million)(%)(¥ million)(%)(¥)
Full-year
35,300
7.7
4,670
28.7
2,900
37.7
2,630
35.4
23.57
Note: Revisions since the most recently announced forecast of results: No

Notes(1) Changes in Significant Subsidiaries during the Period (Changes in Specified Subsidiaries Due to Change in Scopeof Consolidation): No(2) Changes in Accounting Policies and Changes in Accounting Estimates(a) Changes in accounting policies required by IFRS: Yes*(b) Changes in accounting policies other than (a) above: No(c) Changes in accounting estimates: No* Please refer to “(5) Notes to Condensed Consolidated Financial Statements” on page 17 for details.
(3)

Number of Shares Issued and Outstanding (Common Stock)(a) Number of shares at the end of the period (including treasury stock)Six months ended June 30, 2023: 113,068,000; Year ended December 31, 2022: 113,068,000(b) Number of treasury shares at the end of the period:
Six months ended June 30, 2023: 1,431,468; Year ended December 31, 2022: 1,506,468(c) Average number of shares outstanding (cumulative with earlier quarters):
Six months ended June 30, 2023: 111,588,051; Six months ended June 30, 2022: 111,561,557* These Financial Statements Are Not Subject to Review by a Certified Public Accountant or Auditing Firm
* Explanation of the Proper Use of Performance Forecasts and Other Special Instructions
Consolidated forecasts and other statements regarding the future contained in this document are based on information
currently available to the Company and certain reasonable assumptions. Actual performance may differ substantially
due to numerous factors.

Contents of Attachments
1. Overview of Results of Operations and Other Information ............................................................................ 2(1) Overview of Results of Operations for the Six Months Ended June 30, 2023 ......................................... 2(2) Overview of Financial Position for the Six Months Ended June 30, 2023 ............................................... 6(3) Overview of Cash Flow for the Six Months Ended June 30, 2023............................................................ 6(4) Forecast ......................................................................................................................................................... 7
2. Condensed Consolidated Financial Statements and Main Notes ................................................................... 8(1) Condensed Consolidated Statements of Financial Position ..................................................................... 8(2) Condensed Consolidated Statements of Operations and Comprehensive Income ............................... 10(3) Condensed Consolidated Statements of Changes in Equity ................................................................... 14(4) Condensed Consolidated Statements of Cash Flow ................................................................................. 15(5) Notes to Condensed Consolidated Financial Statements ....................................................................... 16
Change in Accounting Policies ..............................................................................................................16
Significant Accounting Policies .......................................................................................................... 16
Notes Regarding Significant Accounting Estimates and Judgements .................................................. 16
Notes Regarding Assumption of Going Concern ............................................................................... 17
Significant Subsequent Events ............................................................................................................ 171

1. Overview of Results of Operations and Other Information

Forward-looking statements in the following text are based on judgments as of June 30, 2023, the last day of theconsolidated accounting period under review. Because the Link and Motivation Group (the “Group”) transferred thedomestic temp staff business operated by its subsidiary Link Agent Inc. (formerly Link Staffing Inc.) to iDA K.K. as ofJanuary 1, 2022, these operations are classified as discontinued. Therefore, the amount from continuing operations isshown for revenues, gross profit and operating income, and the total from continuing and discontinued operations isshown for net income attributable to owners of the parent.
(1) Overview of Results of Operations for the Six Months Ended June 30, 2023
The Group supports the transformation of numerous organizations and individuals using “Motivation Engineering” (theGroup’s core technology), incorporating academic results in business administration, social systems theory, behavioral
economics, psychology and other disciplines, under its mission: “Through Motivation Engineering, we provide opportunities
to transform organizations and individuals and create a more meaningful society.” During the six months ended June 30,2023 (the “first half of 2023”), the Japanese economy continued to recover gradually with the normalization of social andeconomic activity following the easing of movement restrictions imposed to prevent the spread of COVID-19. However,
the economic outlook remains unclear due to price increases in Japan and the continuing risk of stagnation in the global
economy due to interest rate hikes in various countries. Under these economic conditions, the Group perceives a growing
need for companies to promote human capital management in order to deal with change.
In this economic environment, the Group’s revenues for the first half of 2023 were ¥16,715 million (a 0.3% decrease
compared with the same period of the previous year), gross profit was ¥8,838 million (a 4.3% increase), operating income
was ¥2,215 million (a 12.5% increase) and net income attributable to owners of the parent was ¥1,255 million (a 22.3%
increase). The Group has adopted IAS 12 Income Taxes (May 2021 amendment) as of the first quarter of the fiscal year
ending December 31, 2023. This amendment has been applied retrospectively. As a result, net income attributable toowners of the parent increased by ¥118 million in the first half of the previous year and decreased by ¥34 million in thefirst half of 2023. Net income attributable to owners of the parent for the first half of 2023 would have been ¥1,290
million before the retrospective application (a 42.1% increase compared with the same period of the previous year before
the retrospective application).
The segment and business classifications of the Group are as shown below, and an overview of the first half of 2023
by segment and business follows.
Link and
Motivation Group

Organizational
Development Division

Individual
Development Division

Matching Division

Consulting &Cloud Business

Career School Business

ALT Placement Business

Link and Motivation Inc.

Link Academy Inc.

Link Interac Inc.

Link Global Solution Inc.

Link Japan Careers Inc.

Link Event Produce Inc.

IR Support Business

Cram School Business

Personnel Placement
Business

Link Corporate
Communications Inc.

Motivation Academia Inc.

Link Agent Inc.
Link-i Inc.
OpenWork Inc.

2

Organizational Development Division
The Organizational Development Division provides support for the creation of companies that are chosen byindividuals (“Motivation Companies”). In concrete terms, it offers services that provide support for increasing
engagement with a company’s stakeholders (employees, job applicants, customers, shareholders) by applying“Motivation Engineering,” which is the core technology of the Group.
In this segment, segment revenues for the first half of 2023 were ¥6,209 million (a 0.8% increase), and segment
income was ¥4,379 million (a 3.7% increase). An overview of operating results by business for the first half of 2023 is asfollows.
Consulting & Cloud BusinessTo increase employee engagement, the Consulting & Cloud business diagnoses engagement based on its original
diagnostic framework and offers one-stop solutions for innovations in recruiting, training, systems and corporate culture
related to organizations and personnel. The business also provides the Motivation Cloud series of cloud-based services
that allow customer companies to manage employee engagement themselves.
In this business, revenues for the first half of 2023 were ¥5,403 million (a 0.5% increase) and gross profit was ¥4,092
million (a 6.6% increase). Results by product in the Consulting & Cloud business were as follows.
Table 1. Revenues by ProductProduct (¥ million)(Figures in brackets are gross profit)

Six months ended
June 30, 2022

Six months ended
June 30, 2023

YoY change
(%)

5,376
[3,839]5,403[4,092]

0.5%
6.6%

Consulting

3,708

3,285

-11.4%

Cloud

1,667

2,117

27.0%

Consulting & Cloud BusinessIn the first half of 2023, revenues were flat compared with the same period of the previous year, reflecting the
temporary stagnation of services in the Consulting category. However, gross profit increased, led by growth of the highmargin Cloud category. In the Consulting category, results declined from the levels of the same period of the previous
year because companies continued to focus on responding to the requirement to disclose human capital information insecurities reports starting from the fiscal year ended March 31, 2023, and placed lower priority on “transformation.”
Strong growth is projected in the second half with the expected increase in needs for improvement of disclosure content
as the efforts by companies to respond to disclosure requirements settle down from July onward. In addition, promotinginter-organizational cooperation through changes in the management accounting system and expanding cross-selling will
improve the ability of the Consulting & Cloud business to meet the human capital management needs of a variety ofcustomers.
Monthly fee revenue increased substantially compared with the same period of the previous year for the Motivation
Cloud series of products, which are part of the Cloud category and are priority services for the Group. The number ofdeliveries and monthly fee revenue were as follows.
Table 2. Number of Deliveries and Monthly Fee Revenue for the Motivation Cloud Series at Quarter-End
2022
2023
March

Number ofdeliveries
Monthly fee
revenue(¥ thousand)

June

September

December

March

June

745

768

820

831

846

851

256,155

284,692

306,934

328,505

339,179

358,792

Since its founding in 2000, the Group has not only diagnosed the engagement status of companies and employees but
has also supported their transformation. The Motivation Cloud series is a group of cloud-based services in the field of HR
Tech (human resources combined with technology) for improving employee engagement. The Group migrated the3organization diagnosis service it has offered since its founding to the cloud and started providing the Motivation Cloud
service in July 2016. Motivation Cloud is currently ranked number one in share of sales by vendor in the employee
engagement market (the sixth consecutive year: fiscal 2017 to fiscal 2022 forecast) in ITR Market View: Human
Resources Management Market 2023, a market research report published by ITR Corporation.
The Group is forecasting ¥430,000 thousand in fee revenue from the Motivation Cloud series for the month ofDecember 2023 (a year-on-year increase of 30.9%). Monthly fee revenue for June 2023 was ¥358,792 thousand (a 26.0%
increase).
The Group will continue to promote the introduction of Motivation Cloud at major companies and lateral deployment
at their group companies. In addition, for Stretch Cloud, a human resource development cloud service, we plan to expandin the human resource development market, which exceeds ¥500 billion. By executing these growth strategies, the Groupwill achieve further growth.
IR Support Business
The IR Support business provides one-stop support for corporate branding through various media and events centeredon the field of investor relations for the “improvement of investor engagement” at corporations. In addition to productionof printed media such as integrated reports for shareholders and investors, web-based media such as investor relations(IR) sites, and visual media such as webcasts of financial results briefings, the business creates physical and virtualforums for shareholders’ meetings and other events.
In this business, revenues for the first half of 2023 were ¥918 million (a 0.2% increase) and gross profit was ¥353
million (a 20.6% decrease).
In the first half, although production of integrated reports, the core service, expanded, revenues were flat comparedwith the same period of the previous year because production of websites decreased. Gross profit decreased substantiallycompared with the same period of the previous year due to an increase in production-related personnel expenses.
Needs for disclosure of non-financial capital, particularly human capital information, are increasing further with therequirement to disclose human capital information in securities reports. The business will generate synergies with theConsulting & Cloud business by enhancing disclosure of human capital information based on diagnosis andtransformation.
Individual Development Division
The Individual Development Division supports the creation of individuals who are chosen by organizations (“iCompanies”). Specifically, it applies “Motivation Engineering,” which is the core technology of the Group, to businesses
in areas including career schools and cram schools, to provide one-stop services to customers from elementary school
students to working adults. These services range from helping to set goals to understanding individual issues andformulating and implementing study plans.
In this segment, segment revenues for the first half of 2023 were ¥3,158 million (a 13.8% decrease) and segment
income was ¥1,391 million (a 7.5% decrease). An overview of operating results by business for the first half of 2023 is asfollows.
Career School Business
The Career School business provides five services aimed at the career advancement of university students andworking adults: “Aviva” personal computer schools, “Daiei” qualification schools, “Rosetta Stone Learning Center,”“Rosetta Stone Premium Club” and “Hummingbird” foreign language schools.
In this business, revenues for the first half of 2023 were ¥2,816 million (a 16.2% decrease) and gross profit was¥1,260 million (an 8.4% decrease).
In the first half, revenues decreased substantially compared with the same period of the previous year as the repeat
rate became an issue in BtoB services (reskilling support for employees), and because of fewer schools in BtoC services.
Gross profit also decreased despite increased profitability due to the increase in online classes.
In BtoC services, the business continued to carry out structural reforms. Specifically, the business is relocating andclosing schools as it moves toward providing all courses and support for its BtoC services online in light of the changes inlearning needs brought on by the COVID-19 pandemic. The number of schools, which was 81 at the end of September
2022, decreased to 54 at the end of June 2023, and non-consolidated revenue from online courses increased from ¥66
million in the first nine months of 2022 to ¥127 million in the first six months of 2023. Going forward, this business will4

enhance customer value while at the same time improving business efficiency. For BtoB services, the business will shift
from one-off training for upgrading IT skills to services with a higher repeat rate, including as part of the “Cafeteria
Plan,” a program for companies that allows employees to select their own benefits from a menu of options.
Cram School Business
The Cram School business operates two cram schools—“Motivation Academia” cram schools for junior high andhigh school students and “SS-1,” an individualized instruction school for students preparing for junior high school
entrance exams—to improve the academic ability of elementary, junior high and high school students. In Motivation
Academia, unlike typical cram schools, students can not only prepare for school entrance exams but also acquire skills toplay an active role in society. The Cram School business utilizes its assets in programming education and English
conversation education to provide a place for students from elementary school straight through to high school to develop
skills that will be of use in society. Like the Career School business, it now offers both in-school and online services in
response to lifestyle changes brought on by the COVID-19 pandemic.
In this business, revenues for the first half of 2023 were ¥342 million (an 11.5% increase) and gross profit was ¥130
million (a 1.6% increase).
Revenues increased substantially in the first half due to an increase in the number of enrollees with improvement in
the continuation rate after completion of junior high school entrance exams. Gross profit increased slightly as an increasein personnel was reflected in cost of sales.
In addition to improving the continuation rate, this business will continue to increase the number of new enrollees by
providing learning opportunities to a wide range of students through online classes.
Matching Division
The Matching Division provides opportunities to connect organizations and individuals. In concrete terms, it applies“Motivation Engineering,” the core technology of the Group, to the placement of non-Japanese assistant language
teachers (ALTs) and to the placement of human resources. It creates matches with a high retention rate by going beyond
the skill requirements of companies and local governments to provide support for matching organizations and individuals
based on the characteristics of each individual using the Group’s proprietary data.
In this segment, segment revenues for the first half of 2023 were ¥7,831 million (a 4.6% increase) and segment
income was ¥3,490 million (an 8.2% increase). An overview of operating results by business for the first half of 2023 is
as follows.
ALT Placement Business
The ALT Placement business dispatches non-Japanese assistant language teachers (ALTs) to elementary, junior highand high schools throughout Japan and provides English-language instruction services on contract, with the aim ofmatching non-Japanese people who want to work in Japan with local governments. In this business, barriers to entry are
extremely high due to the importance placed on relationships of trust with customers and a company’s track record, and
the Group has established the predominant number-one share among private companies.
In this business, revenues for the first half of 2023 were ¥6,037 million (a 2.5% decrease) and gross profit was ¥1,729
million (an 11.3% decrease).
In the first half, revenues decreased slightly, but gross profit decreased substantially due to the expansion of social
insurance coverage for ALTs that took effect in October 2022. The Group will continue to aim for the stable growth of
the ALT Placement business by shifting some services online and utilizing ICT, in addition to enhancing the quality of
ALTs, one of its strengths, to meet the diversifying needs of local governments.
Personnel Placement Business
The Personnel Placement business operates a referral service for human resources that introduces the human resources
necessary for growth to businesses, with the goal of finding the right fit between job applicants and companies. Mainly, it
provides mid-career referrals that match working adults looking to change jobs with companies, and conducts new
graduate recruiting and referrals that connect university students looking for employment with company orientation
meetings and interviews.
In this business, revenues for the first half of 2023 were ¥1,816 million (a 39.1% increase) and gross profit was¥1,783 million (a 38.7% increase).
5

In the first half, OpenWork Inc., which has a particularly high growth rate, continued to steadily accumulate
registered users and data on employee online reviews and evaluation scores. The direct recruiting service (OpenWork
Recruiting) saw an increase in the number of website visits through natural searches, and stronger marketing efforts led to
an increase in the number of new online resume registrations. The cumulative number of online resume registrations(working adults and students) has grown to approximately 890,000. In addition, as a result of efforts in the previous fiscal
year to revitalize existing customers and increase the number of job listings, recruiting by employers and registeredagencies increased, and revenues from this service were ¥887 million.
This business will continue to expand synergy with the Organizational Development Division, and will ramp up its
matching services by considering not only the skills of individuals but also the type of job seekers.
Venture Incubation
In addition to its divisions, the Group conducts venture incubation. In venture incubation, the Group provides its
know-how in organizational and personnel consulting in addition to funding, as well as support on an organizational levelfor growing venture companies that aim to list their stock. The two main criteria for selection of investees are (1)sympathy with the idea of “creation of Motivation Companies” and (2) aim to list stock. Gains on sales and other results
generated from venture incubation are recorded in retained earnings on the condensed consolidated statements offinancial position, or under other income or other expenses on the consolidated statements of operations.
(2) Overview of Financial Position for the Six Months Ended June 30, 2023
Total assets as of June 30, 2023 were ¥30,871 million, an increase of ¥1,963 million from the end of the previous
year. This was mainly due to a ¥1,013 million increase in cash and cash equivalents and an ¥889 million increase in othernon-current financial assets.
Total liabilities as of June 30, 2023 were ¥17,318 million, a decrease of ¥346 million from the end of the previous
year. This was mainly due to factors including an increase of ¥142 million in income tax payable and decreases of ¥345
million in trade and other payables and ¥308 million in interest-bearing and other financial liabilities.
Total equity as of June 30, 2023 was ¥13,553 million, an increase of ¥2,310 million from the end of the previous year.
This was mainly due to factors including a ¥1,078 million increase in other components of equity, and a ¥519 million
increase in capital surplus associated with posting net income attributable to owners of the parent, partially offset by thepayment of dividends from surplus.
(3) Overview of Cash Flow for the Six Months Ended June 30, 2023
Cash and cash equivalents (“cash”) as of June 30, 2023 were ¥7,126 million, an increase of ¥1,013 million during theperiod.
Cash flow during the six months ended June 30, 2023 was as follows.
Cash Flow from Operating Activities
Net cash provided by operating activities was ¥2,141 million, an increase of ¥782 million in the same period of theprevious year. The principal factors increasing cash included a ¥310 million increase in income before income taxes
compared with the same period of the previous year, and a ¥531 million increase in other.
Cash Flow from Investing Activities
Net cash used in investing activities was ¥257 million (compared with net cash provided of ¥402 million in the same
period of the previous year). Principal factors increasing cash included a ¥255 million decrease in payments foracquisition of intangible assets and a ¥240 million decrease in payments for fulfillment of asset retirement obligations,while the principal factors decreasing cash included the non-recurrence of proceeds from business transfer that occurredin the same period of the previous year and a decrease of ¥781 million in proceeds from refund of security deposits andguarantees compared with the same period of the previous year.
Cash Flow from Financing Activities
Net cash used in financing activities was ¥871 million a decrease of ¥988 million compared with the same period of
the previous year. The principal factor decreasing cash was a decrease of ¥1,300 million in proceeds from long-term
financial liabilities compared with the same period of the previous year, while the principal factors increasing cash
6

included a ¥1,100 million net increase in short-term financial liabilities, a decrease of ¥723 million in repayment of longterm financial liabilities, and an increase of ¥452 million in proceeds from payments from non-controlling interests.
(4) Forecast
The temporary decline in profit in the Career School business compared with the same period of the previous year wasoffset by the highly profitable Personnel Placement business. As a result, while revenues were flat compared with theprevious year, operating income increased substantially. For the fiscal year ending December 31, 2023, the Group has
forecast revenues of ¥35,300 million (a 7.7% year-on-year increase) and operating income of ¥4,670 million (a 28.7%
increase).
Among the Group’s businesses, the Consulting & Cloud business in the Organizational Development Division has thestrongest growth prospects in the medium term. Changes in the external environment of companies, such as the humancapital disclosure requirement for listed companies, are accelerating. Under these circumstances, this business aims togrow by applying the organizational personnel consulting expertise and knowledge cultivated since the Group’s
inception, primarily targeting Japanese companies that still have substantial room for expansion. In the fiscal year ending
December 31, 2023, after the response to mandatory human capital disclosure by companies settles down from July
onward, needs for improvement of disclosure content for next year are expected to increase. To address this opportunity,
the Group will work to enhance its ability to respond to the diversifying human capital management needs of customers
by visualizing employee engagement through cloud services (diagnosis), providing one-stop consulting on people andorganizations (transformation), and expanding cross-selling of disclosure in integrated reports (disclosure).

7

2. Condensed Consolidated Financial Statements and Main Notes(1) Condensed Consolidated Statements of Financial Position(Millions of yen, rounded down to the nearest million)

ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current financial assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Other non-current financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets

8

As of
December 31, 2022

As ofJune 30, 2023

6,112
3,299
183
12
1,025
10,633

7,126
3,698
199
38
548
11,610

599
3,308
9,347
2,417
1,947
572
81
18,27528,908

635
3,523
9,347
2,280
2,836
561
74
19,26030,871

(Millions of yen, rounded down to the nearest million)

LIABILITIES AND EQUITY
LIABILITIESCurrent liabilities
Trade and other payables
Contract liabilities
Interest-bearing and other financial liabilities
Lease liabilities
Income tax payable
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Interest-bearing and other financial liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to owners of the parent
Share capital
Capital surplus
Treasury shares
Retained earnings
Other components of equity
Total equity attributable to owners of the parent
Non-controlling interests
Total equity
Total liabilities and equity

9

As of
December 31, 2022

As ofJune 30, 2023

1,858
1,461
5,064
905
712
8
1,725
11,737

1,513
1,461
5,329
1,016
854
41
1,681
11,898

2,332
2,824
318
328
124
5,927
17,664

1,758
2,823
337
380
120
5,420
17,318

1,380
4,464
(320)
5,358
(1,851)
9,057
2,185
11,24328,908

1,380
4,639
(288)
5,905
(773)
10,862
2,690
13,55330,871

(2) Condensed Consolidated Statements of Operations and Comprehensive Income
Condensed Consolidated Statements of Operations
Six Months Ended June 30(Millions of yen, rounded down to the nearest million)

Continuing Operations
Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Operating income
Financial revenues
Financial expenses
Income before income taxes
Income taxes
Net income
Discontinued Operations
Profit from discontinued operations
Net income(Attributable to)
Owners of the parent
Non-controlling interests
Total

Six months ended
June 30, 2022

Six months ended
June 30, 2023

16,766
8,293
8,472
6,427
129
204
1,969
8
99
1,879
808
1,070

16,715
7,877
8,838
6,613
138
147
2,215
10
35
2,190
766
1,423

48
1,118

—

1,423

1,026
92
1,118

1,255
167
1,423
(Yen)

Earnings per share attributable to owners of the parent
Basic earnings per share
Continuing operations
Discontinued operations
Basic earnings per share
Diluted earnings per share
Continuing operations
Discontinued operations
Diluted earnings per share

10

8.77
0.43
9.20

11.25

8.77
0.43
9.20

11.23

—

11.25

—

11.23

Three Months Ended June 30(Millions of yen, rounded down to the nearest million)

Continuing Operations
Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Operating income
Financial revenues
Financial expenses
Income before income taxes
Income taxes
Net income
Discontinued Operations
Profit (loss) from discontinued operations
Net income(Attributable to)
Owners of the parent
Non-controlling interests
Total

Three months ended
June 30, 2022

Three months ended
June 30, 2023

8,818
4,365
4,452
3,227
113
169
1,169
6
19
1,156
555
600

8,707
4,023
4,684
3,376
49
7
1,349
9
17
1,341
425
915

(2)
598

—

915

549
48
598

833
82
915
(Yen)

Earnings per share attributable to owners of the parent
Basic earnings (loss) per share
Continuing operations
Discontinued operations
Basic earnings (loss) per share
Diluted earnings (loss) per share
Continuing operations
Discontinued operations
Diluted earnings (loss) per share

11

4.95
(0.02)
4.93

—

7.47

4.95
(0.02)
4.93

—

7.47
7.45
7.45

Condensed Consolidated Statements of Comprehensive Income
Six Months Ended June 30(Millions of yen, rounded down to the nearest million)

Six months ended
June, 2022

Net income
Other comprehensive income
Items that will not be reclassified to profit or loss:
Net gain (loss) on revaluation of financial assets
measured at fair value through other comprehensive income
Total of items that will not be reclassified to profit or loss

Six months ended
June, 2023

1,118

1,423

(16)
(16)

910
910

Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total of items that may be reclassified to profit or loss
Total other comprehensive income
Total comprehensive income

(7)
(7)
(23)
1,095

(1)
(1)
908
2,331

(Attributable to)
Owners of the parent
Non-controlling interests
Comprehensive income

1,003
92
1,095

2,164
167
2,331

12

Condensed Consolidated Statements of Comprehensive Income
Three Months Ended June 30(Millions of yen, rounded down to the nearest million)

Three months ended
June 30, 2022

Net income
Other comprehensive income
Items that will not be reclassified to profit or loss:
Net gain on revaluation of financial assets
measured at fair value through other comprehensive income
Total of items that will not be reclassified to profit or loss

Three months ended
June 30, 2023

598

915

26
26

767
767

Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total of items that may be reclassified to profit or loss
Total other comprehensive income
Total comprehensive income

(4)
(4)
21
619

(1)
(1)
765
1,681

(Attributable to)
Owners of the parent
Non-controlling interests
Comprehensive income

571
48
619

1,599
82
1,681

13

(3) Condensed Consolidated Statements of Changes in Equity
Six months ended June 30, 2022
(Millions of yen, rounded down to the nearest million)

Equity attributable to owners of the parent

January 1, 2022
Cumulative effect of changein accounting policy
Balance at beginning of
period reflecting change inaccounting policy
Net income
Other comprehensive
incomeTotal comprehensive
incomeDividends fromsurplus
Share-based paymenttransactions
Transfer from othercomponents of equity
to retained earning
Total transactions withthe owners
June 30, 2022

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

7,493

1,154

8,648

—

(219)

—

(219)

4,187
1,026

(1,853)
—

7,274
1,026

1,154
92

8,429
1,118

—

—

(23)

(23)

—

(23)

—

—

1,026

(23)

1,003

92

1,095

—

—

—

(423)

—

(423)

—

(423)

—

—

—

—

28

28

—

28

—

—

—

(12)

12

—

—

—

—
1,380

—
3,879

—
(320)

(436)
4,777

41
(1,835)

(395)
7,881

—
1,247

(395)
9,129

Share
capitalCapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

1,380

3,879

(320)

4,406

(1,853)

—

—

—

(219)

1,380
—

3,879
—

(320)
—

—

—

—

Six months ended June 30, 2023
(Millions of yen, rounded down to the nearest million)

Equity attributable to owners of the parent

January 1, 2023
Net income
Other comprehensive
incomeTotal comprehensive
incomeChange in ownership interestin subsidiaries
Dividends fromsurplus
Exercise of stock acquisitionrightsShare-based paymenttransactions
Transfer from othercomponents of equity
to retained earning
Total transactions withthe owners
June 30, 2023

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

9,057
1,255

2,185
167

11,243
1,423

908

908

—

908

1,255

908

2,164

167

2,331

—

—

—

175

337

512

—

—

(535)

—

(535)

—

(535)

—

30

—

—

(30)

—

—

—

—

(30)

31

—

0

1

—

1

—

—

—

(200)

200

—

—

—

—
1,380

174
4,639

31
(288)

(735)
5,905

170
(773)

(358)
10,862

337
2,690

(21)
13,553

SharecapitalCapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

1,380
—

4,464
—

(320)
—

5,385
1,255

(1,851)
—

—

—

—

—

—

—

—

—

175

—

14

(4) Condensed Consolidated Statements of Cash Flow
(Millions of yen, rounded down to the nearest million)

Cash flow from operating activities
Income before income taxes
Profit before tax from discontinued operations
Depreciation and amortization
Loss on impairment(Profit) loss from business transfer
Financial revenues and financial expenses
Decrease (increase) in trade and other receivables
Decrease (increase) in inventories
Increase (decrease) in trade and other payables
Other
SubtotalInterest and dividends received
Interest paid
Income tax refund
Income taxes paid
Net cash provided by operating activities
Cash flow from investing activities
Payments for acquisition of property, plant and equipment
Payments for acquisition of intangible assets
Proceeds from business transfer
Payments for acquisition of investment securities
Proceeds from sale of investment securities
Payments for security deposits and guarantees
Proceeds from refund of security deposits and guarantees
Payments for fulfillment of asset retirement obligations
Other
Net cash provided (used in) investing activities
Cash flow from financing activities
Net increase (decrease) in short-term financial liabilities
Proceeds from long-term financial liabilities
Repayment of long-term financial liabilities
Proceeds from exercise of stock acquisition rights
Payments of cash dividends
Repayment of lease liabilities
Proceeds from payments from non-controlling interests
Payments for acquisition of treasury shares
Net cash used in financing activities
Cash and cash equivalents translation adjustment
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the quarter
Cash and cash equivalents at end of the quarter15

Six months
ended
June 30, 2022

Six months
ended
June 30, 2023

1,879
20
859
148
(50)
90
(337)
(52)
(291)
(135)
2,131
5
(97)
2
(683)
1,359

2,190

(50)
(516)
441
(79)
1
(22)
913
(279)
(5)
402

(66)
(261)

(800)
1,400
(1,431)

300
100
(708)
61
(533)
(542)
452
(0)
(871)
1
1,013
6,112
7,126

—

(422)
(605)
—
—

(1,860)
(1)
(100)
4,917
4,817

—

810
137
—

24
(398)
(16)
(340)
395
2,801
8
(33)
45
(680)
2,141

—

(79)
120
(35)
131
(39)
(28)
(257)

(5) Notes to Condensed Consolidated Financial Statements(Change in Accounting Policies)(Income Taxes)
The Group has adopted the following standard as of the first quarter of 2023.
IFRS
Summary of New Establishment or Amendment
IAS 12

Income Taxes (May 2021
amendment)

Clarifies deferred tax accounting for leases and decommissioning
obligations

This amendment clarifies that entities should recognize deferred tax liabilities and deferred tax assets on certaintransactions (e.g., leases and decommissioning obligations) that give rise to equal amounts of taxable and deductible
temporary differences on initial recognition.
This amendment is applied retrospectively to the condensed quarterly consolidated financial statements and theconsolidated financial statements for the same period of the previous fiscal year and for the previous fiscal year.
As a result, in the consolidated statements of financial position for the previous fiscal year, deferred tax assets
decreased by ¥44 million, deferred tax liabilities increased by ¥58 million and retained earnings decreased by ¥102
million compared with the amounts before the retrospective application. In the condensed quarterly consolidated financial
statements for the six months ended June 30, 2023, deferred tax liabilities increased by ¥34 million and retained earnings
decreased by ¥34 million. In the condensed consolidated statements of operations, income taxes increased by ¥21 million
and profit from continuing operations decreased by ¥21 million. In addition, profit from discontinued operations
increased by ¥140 million and net income increased by ¥118 million. In the condensed quarterly consolidated statementsof operations for the six months ended June 30, 2023, income taxes increased by ¥34 million and net income decreasedby ¥34 million.
Basic earnings per share from continuing operations and diluted earnings per share from continuing operations forthe six months ended June 30, 2022 each decreased by ¥0.20. Basic earnings per share from discontinued operations anddiluted earnings per share from discontinued operations each increased by ¥1.26, and basic earnings per share and diluted
earnings per share each increased by ¥1.06. Basic earnings per share and diluted earnings for the six months ended June30, 2023 each decreased by ¥0.31.
Because the cumulative effect was reflected in equity at the beginning of the six months ended June 30, 2022, thebeginning balance of retained earnings in the condensed consolidated statements of changes in equity after retrospective
application decreased by ¥219 million.
(Significant Accounting Policies)
The significant accounting policies applied in these condensed consolidated financial statements are the same as those
applied in the consolidated financial statements for the previous fiscal year except for those noted in “Change in
Accounting Policies” and in the item below.
Income taxes expense for the six months ended June 30, 2023 was calculated using the estimated average annual
effective tax rate.
(Stock-Based Compensation)
The Group has introduced a restricted stock compensation plan as an equity-settled, share-based compensation plan for
executive officers effective from the six months ended June 30, 2023. Restricted stock compensation is measured byreferring to the fair value on the date the shares are granted, and is recognized as an expense over the vesting period fromthe grant date, with the corresponding amount recognized as an increase in equity.
(Notes Regarding Significant Accounting Estimates and Judgements)
In preparing the consolidated financial statements, management makes judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The
results of accounting estimates may differ from actual results.
The estimates and their underlying assumptions are reviewed on an ongoing basis. The effects of a review ofaccounting estimates are recognized in the accounting period in which the estimates are reviewed as well as in future
periods.
Estimates and estimate-related judgments that have a significant impact on these condensed consolidated financial
16

statements are the same as those in the condensed consolidated financial statements for the same period of the previous
fiscal year.
(Notes Regarding Assumption of Going Concern)
None applicable(Significant Subsequent Events)
At a management meeting held on June 29, 2023, the Group decided to enter into an agreement to sell shares of
YARUKI Switch Group Holdings Co., Ltd. that it holds. The Group sold the shares on July 31, 2023.
(1) Details of the Sale of Investment Securities
1) Shares to be soldYARUKI Switch Group Holdings Co., Ltd.
2) Number of shares to be sold912,500
3) Purchaser of shares
TBS Holdings, Inc.
4) Sale dateJuly 31, 2023
5) Gain on saleNon-consolidated accounts (Japanese GAAP): ¥807 million(2) Outlook
1) Impact on Non-Consolidated Results (Japanese GAAP)The Group plans to recognize the gain on sale of investment securities as extraordinary income in the financial
statements for the fiscal year ending December 31, 2023. In addition, the Group expects to incur a corresponding tax
expense.
2) Impact on Consolidated Results (IFRS)The change in fair value of these shares is included in other comprehensive income and will be recognized as retained
earnings in the financial statements for the fiscal year ending December 31, 2023.

17