Consolidated Financial Statements for the Nine Months Ended September 30, 2022 (IFRS)
These financial statements have been prepared for reference only.

November 11, 2022

Link and Motivation Inc.
Stock exchange listing: Tokyo, Prime Market
Code number: 2170
https://www.lmi.ne.jp/english
Representative: Ozasa Yoshihisa, Chairman and Representative Director
Contact: Yokoyama Hiroaki, Corporate Officer andManager of System Design Office
Phone: +81-3-6853-8111
Filing of Quarterly Report (Shihanki Hokokusho) (scheduled):
November 11, 2022
Start of distribution of dividends (scheduled):
December 23, 2022
Supplementary documents for quarterly results:
No
Quarterly results briefing:No(Amounts are rounded down to the nearest million.)

1. Consolidated Results for the Nine Months Ended September 30, 2022
(January 1, 2022 – September 30, 2022)(1) Revenues and Income

Revenues(¥ million)
Nine months ended
September 30, 2022
Nine months ended
September 30, 2021

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

24,399

0.3

3,143

48.6

3,034

53.2

1,877

46.3

24,338

—

2,115

—

1,980

—

1,283

50.9

Net income
attributable toowners of theparent(¥ million)

Change(%)

Comprehensive
income(¥ million)

Change(%)

Basic earnings
per share (¥)

Dilutedearnings per
share (¥)

Nine months ended
September 30, 2022
1,745
47.2
1,930
56.9
15.64
15.64
Nine months ended
September 30, 2021
1,185
53.3
1,230
—
11.30
11.30
Note: As of the fiscal year ended December 31, 2021, the domestic temp staff business of Link Agent Inc. (formerly Link Staffing Inc.)
has been classified as discontinued operations. As a result, profits from discontinued operations are presented separately fromcontinuing operations in the condensed consolidated statements of operations. Accordingly, revenues, operating income andincome before taxes present the amounts for continuing operations. Because amounts for the nine months ended September 30,
2021 have been restated in the same manner for presentation, rates of increase or decrease from the same period of the previous
fiscal year are not presented for these items.

(2) Financial Position
Total assets(¥ million)
As of September 30, 2022
As of December 31, 2021

27,49430,062

Total equity(¥ million)
9,983
8,648

Equity attributableto owners of theparent(¥ million)
8,695
7,493

Ratio of equity
attributable to ownersof the parent to total
assets (%)
31.6
24.9

2. Dividends

Dividends per share
3rd Qtr.
Year-end
2021
1.90
1.90
2022
1.90
2022 (est.)
2.00
Note: Revisions since the most recently announced dividend forecast: Yes
1st Qtr.
1.80
1.90

2nd Qtr.
1.80
1.90

Total
7.40
7.70

3. Forecast of Consolidated Results for 2022 (January 1, 2022 – December 31, 2022)(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
35,000
7.2
4,000
93.6
2,200
115.6
2,050
123.1
19.48
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: No(b) Changes in accounting policies other than (a) above: No(c) Changes in accounting estimates: No(3)

Number of Shares Issued and Outstanding (Common Stock)(a) Number of shares at the end of the period (including treasury stock)
Nine months ended September 30, 2022: 113,068,000; Year ended December 31, 2021: 113,068,000(b) Number of treasury shares at the end of the period:
Nine months ended September 30, 2022: 1,506,443; Year ended December 31, 2021: 1,506,443(c) Average number of shares outstanding (cumulative with earlier quarters):
Nine months ended September 30, 2022: 111,561,557; Nine months ended September 31, 2021: 104,922,204* 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 Nine Months Ended September 30, 2022 ............................ 2(2) Overview of Financial Position for the Nine Months Ended September 30, 2022 .................................. 7(3) Overview of Cash Flow for the Nine Months Ended September 30, 2022 ............................................... 7(4) Forecast ......................................................................................................................................................... 7
2. Condensed Consolidated Financial Statements and Main Notes ................................................................... 9(1) Condensed Consolidated Statements of Financial Position ..................................................................... 9(2) Condensed Consolidated Statements of Operations and Comprehensive Income ............................... 11(3) Condensed Consolidated Statements of Changes in Equity.................................................................... 15(4) Condensed Consolidated Statements of Cash Flow ................................................................................. 16(5) Notes to Condensed Consolidated Financial Statements ....................................................................... 17
Significant Accounting Policies ........................................................................................................... 17
Notes Regarding Significant Accounting Estimates and Judgements ............................................. 17
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 September 30, 2022, the last day of theconsolidated accounting period under review. Because the Link and Motivation Group (the “Group”) transferred the domestic
temp staff business operated by its subsidiary Link Agent Inc. (formerly Link Staffing Inc.) to iDA K.K. as of January 1, 2022,
these operations are classified as discontinued. Therefore, the amount from continuing operations is shown for revenues, grossprofit and operating income, and the total from continuing and discontinued operations is shown for net income attributable toowners of the parent. In addition, for comparisons with the same period of the previous year, figures for the same period of theprevious year have been restated according to the classification after the transfer.
(1) Overview of Results of Operations for the Nine Months Ended September 30, 2022
The Group supports the transformation of numerous companies and individuals using “Motivation Engineering,” whichis the Group’s core technology, backed by psychology, behavioral economics, social systems theory and other disciplines,
under its corporate philosophy: “Through Motivation Engineering, we provide opportunities to transform organizations andindividuals and create a more meaningful society.” During the nine months ended September 30, 2022 (the “first ninemonths of 2022”), the Japanese economy continued on a gradual recovery track amid progress in shifting to a new stageof coexistence with COVID-19. However, the economic outlook remains unclear due to the worsening situation in
Ukraine and the rapid depreciation on the yen, among other factors. Under these conditions, the Group perceives theimportance for companies to secure and develop human resources capable of dealing with change—specifically, the risingneeds for improving employee engagement (mutual understanding, empathy and commitment between companies andemployees) and for enhancing the skills of individuals due to Digital Transformation (“DX”).
In this economic environment, the Group’s revenues for the first nine months of 2022 were ¥24,399 million (a 0.3%
increase compared with the same period of the previous year), gross profit was ¥12,070 million (a 4.4% increase),
operating income was ¥3,143 million (a 48.6% increase) and net income attributable to owners of the parent was ¥1,745
million (a 47.2% increase).
The segment and business classifications of the Group are as shown below, and an overview of the first nine monthsof 2022 by segment and business follows.
As of the first quarter of 2022, business classifications and business names have changed. Figures for the same periodof the previous year have been restated for purposes of comparison.
Link and
Motivation Group

Organizational
Development Division

Consulting &Cloud Business
Link and Motivation Inc.

Individual
Development Division

Matching Division

Career School Business

ALT Placement Business

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.

Note: Link Staffing Inc. changed its corporate name to Link Agent Inc. on April 1, 2022.
2

Organizational Development Division
The Organizational Development Division defines companies that use employee motivation as the engine of corporate
growth as “Motivation Companies,” and provides support for the creation of many such “Motivation Companies.” In
concrete terms, it offers corporate customers services that provide support for increasing engagement with a company’s
stakeholders (employees, job applicants, customers, shareholders) using “Motivation Engineering,” which is the coretechnology of the Group.
In this segment, segment revenues for the first nine months of 2022 were ¥8,917 million (a 10.3% increase), andsegment income was ¥6,128 million (a 7.2% increase). An overview of operating results by business for the first ninemonths of 2022 is as follows.
Consulting & Cloud BusinessTo turn corporations into “Motivation Companies,” the Consulting & Cloud business diagnoses employee
engagement based on its original diagnostic framework and offers one-stop solutions for innovations related toorganizations and personnel, including hiring, training, systems and culture. The business is also rolling out the
Motivation Cloud series of cloud-based services that allow customer companies to manage employee engagement
themselves.
In this business, revenues for the first nine months of 2022 were ¥7,729 million (a 12.6% increase) and gross profit
was ¥5,553 million (a 7.1% increase). Results by product in the Consulting & Cloud business were as follows.
Table 1. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Consulting & Cloud Business
Consulting
Cloud

Nine months ended
September 30, 2021
6,866
[5,185]
4,746
2,120

Nine months ended
September 30, 2022
7,729
[5,553]
5,125
2,603

YoY change
(%)
12.6
7.1
8.0
22.8

In the first nine months of 2022, revenues increased substantially and gross profit increased compared with the same
period of the previous fiscal year as both the Consulting business and the Cloud business steadily captured the needs ofmajor companies for improving employee engagement. Today, with greater demands for employee productivity, needs
for improving employee engagement and developing human resources are rising. In addition, attention is increasingly
being given to the practice of human capital management and related information disclosure due to factors including the
May 2022 publication by the Ministry of Economy, Trade and Industry of the Ito Review 2.0 on Human Capital, whichrefers to the practice of human capital management, and the August 2022 publication by the Cabinet Office of Guidelines
for Visualizing Human Capital. The Group, which has supported the organizational transformation of numerous
companies since its establishment in 2000, is taking advantage of the major opportunity presented by these needs and thechanging external environment. The business will continue to promote introduction of its products, particularly at major
companies, to achieve increased sales per customer and further growth.
Monthly fee revenue increased substantially compared with 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 of deliveries andmonthly fee revenue were as follows.
Table 2. Number of Deliveries and Monthly Fee Revenue for the Motivation Cloud Series at Quarter-End
2021
2022
March
June
September December
March
June
September
Number of deliveries
747
743
772
738
745
768
820
Monthly fee revenue
206,485
218,928
235,859
240,545
256,155
284,692
306,934(¥ thousand)Since its founding in 2000, Link and Motivation has not only diagnosed the engagement status of companies andemployees 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 Company
3migrated the organization diagnosis service it has offered since its founding to the cloud and started providing theMotivation Cloud service in July 2016. The service is currently ranked number one in share of sales by vendor in theemployee engagement market for the fifth consecutive year (fiscal 2017 to fiscal 2021 forecast) in ITR Market View:
Human Resources Management Market 2022, a market research report published by ITR Corporation.
The Group has forecast ¥320,000 thousand in fee revenues from the Motivation Cloud series for the month ofDecember 2022 (a year-on-year increase of 33.0%). During the first nine months of 2022, the business continued topromote the introduction of this product at major companies, and monthly fee revenue for September 2022 was ¥306,934
thousand, making steady progress toward the forecast.
In addition to ramping up introductions at major companies, where there is still substantial room for development, thebusiness will promote introductions at Japanese subsidiaries of global corporations and local governments. In July 2022,
the business launched Stretch Cloud, which is a cloud-based version of a human resource development service that
already has a track record. By utilizing its knowhow from Motivation Cloud to support human resource development that
contributes to business growth, the business plans to expand in the human resource development market, which exceeds¥500 billion yen. Implementation of these growth strategies will accelerate further growth and drive the employee
engagement market.
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 “creation of Motivation Companies” at corporations. In addition to printed media
such as integrated reports for shareholders and investors, web-based media such as investor relations (IR) sites, and visualmedia such as videos that explain products and webcasts of shareholders’ meetings, the business creates physical andvirtual forums for shareholders’ meetings and other events.
In this business, revenues for the first nine months of 2022 were ¥1,357 million (a 4.3% decrease) and gross profit
was ¥656 million (a 1.0% increase). This business has only one product.
In the first nine months of 2022, revenues decreased compared with the same period of the previous year as thegreater complexity and difficulty of non-financial information disclosure led to delays in the publication of integrated
reports. On the other hand, gross profit increased slightly compared with the same period of the previous year due toefforts to improve the gross profit margin of video production.
Going forward, the business will ramp up its response to needs for disclosure of information on non-financial capital,
particularly human capital information, and generate synergies with the Consulting & Cloud business by disclosing theresults of its diagnosis and transformation initiatives.
Individual Development Division
The Individual Development Division supports the creation of “i-Companies,” which it defines as individuals who
independently and autonomously develop their own careers and lives. 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 and formulating and implementing study plans.
In this segment, segment revenues for the first nine months of 2022 were ¥5,360 million (a 5.3% decrease) andsegment income was ¥2,180 million (a 0.3% decrease). An overview of operating results by business for the first ninemonths of 2022 is as follows.
Career School Business
The Career School business provides one-stop services for individual career advancement, targeting mainly university
students and working adults, under the five service brands of “Aviva” personal computer schools, “Daiei” qualification
schools, and “Rosetta Stone Learning Center,” “Rosetta Stone Premium Club” and “Hummingbird” foreign language
schools. Previously, the business mainly conducted classroom lectures, but currently provides support of continuing
learning by offering both in-school and online services.
In this business, revenues for the first nine months of 2022 were ¥4,857 million (a 6.7% decrease) and gross profit
was ¥1,961 million (a 0.9% decrease). Results by product in the Career School business were as follows.

4

Table 3. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Career School BusinessIT
Qualifications
English conversation

Nine months ended
September 30, 2021

Nine months ended
September 30, 2022

YoY change
(%)

5,206
[1,978]
2,887
1,856
462

4,857
[1,961]
2,699
1,765
392

(6.7)
(0.9)
(6.5)
(4.9)
(15.1)In the first nine months of 2022, the impact of COVID-19 on B2C services persisted, and revenues decreased
compared with the same period of the previous year. On the other hand, revenue from DX support for individuals at
companies (a B2B service), which has a high profit margin, grew a substantial 35.8%, and gross profit decreased slightly
compared with the same period of the previous year.
Lifestyles have changed significantly due to COVID-19, and learning needs have shifted from in-person to online. As
its policy going forward, the business intends to increase value for its customers by porting all courses and support for its
B2C services online in response to these changing needs. It also intends to reduce fixed costs and improve businessefficiency by reducing the number of its schools. Amid rapidly expanding corporate needs for DX and re-skilling, thebusiness will achieve further growth in its DX support for individuals at companies (a B2B service) by utilizing thecustomer assets cultivated by the Organizational Development Division and the Matching Division, in addition to the IT
skill support know-how it has cultivated.
Cram School Business
Unlike typical cram schools, the Cram School business operates under the business concept of producing numerous“i-Companies” in addition to improving the academic ability of its students. Its services consist of operating “Motivation
Academia” cram schools for junior high and high school students to provide a place where students can not only prepare
for school entrance exams but also develop skills to play a role in society. The business also operates “SS-1,” anindividualized instruction school for students preparing for junior high school entrance exams. The Cram School business
utilizes its assets in programming education and English conversation education to provide a place for students fromelementary 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 caused by the COVID-19
pandemic.
In this business, revenues for the first nine months of 2022 were ¥502 million (a 9.4% increase) and gross profit was¥218 million (a 4.4% increase). This business has only one product.
Both revenues and gross profit increased in the first nine months of 2022 due to recovery in the number of enrollees.
In addition to continuing to increase the number of new enrollees and provide stable services by further improving thequality of its online classes and one-on-one meetings, this business aims to achieve one-stop services for students fromelementary to high school that conventional cram schools cannot provide.
Matching Division
The Matching Division provides opportunities to connect organizations and individuals under the concept of“engagement matching.” In concrete terms, it applies “Motivation Engineering,” the core technology of the Group, to theplacement of non-Japanese assistant language teachers (ALTs) of foreign languages to schools and human resources toother businesses. It creates matches with a high retention rate by going beyond the skill requirements of companies andlocal governments for matching with the characteristics of each individual based on the Group’s proprietary data.
In this segment, segment revenues for the first nine months of 2022 were ¥10,783 million (a 3.3% decrease) andsegment income was ¥4,341 million (a 3.9% increase). An overview of operating results by business for the first ninemonths of 2022 is as follows.

5

ALT Placement Business
The ALT Placement business dispatches non-Japanese assistant language teachers (ALTs) of foreign languages toelementary, junior high and high schools throughout Japan and provides English-language instruction services on contract.
In this business, where barriers to entry are extremely high due to the importance placed on relationships of trust withcustomers and a company’s track record, the Group has established the predominant number-one share among privatecompanies. The business also provides one-stop foreigner recruiting, training and labor support to companies seeking tohire foreigners.
In this business, revenues for the first nine months of 2022 were ¥8,901 million (a 7.7% decrease) and gross profit
was ¥2,494 million (a 7.8% decrease). This business has only one product.
In the first nine months of 2022, due to price adjustments by the business as a result of the expansion of social
insurance coverage that will take effect in October 2022, some local governments withdrew their bids because the priceexceeded their expectations. As a result, both revenues and gross profit decreased compared with the same period of theprevious year.
On the other hand, there was a steady increase in the number of schools using “Teachers Cloud,” a cloud-based
service launched in June 2021 to improve the efficiency of teachers’ preparation for English classes, their English ability
and their teaching skills. As of September 30, 2022, 5,500 schools were using the product, and the business plans toprovide it to 14,000 schools, or about 45% of all public elementary, junior high or high schools in Japan, by 2024. The
Group will continue to roll out Teachers Cloud as a part of classroom infrastructure and expand the market share of the
ALT Placement business.
Personnel Placement Business
The Personnel Placement business provides the human resources an organization needs to grow in the form of areferral service for human resources. Mainly, it conducts new graduate recruiting and referrals that connect university
students looking for employment with company orientation meetings and interviews, and mid-career referrals that matchworking adults looking to change jobs with companies.
In this business, revenues for the first nine months of 2022 were ¥1,894 million (a 24.0% increase) and gross profit
was ¥1,859 million (a 24.2% increase).
During the first nine months of 2022, OpenWork Inc., which has a particularly high growth rate, continued to steadily
accumulate registered users and data on employee online reviews and evaluation scores despite the COVID-19 pandemic.
Amid the increasing activity in the market for people changing jobs, revenues from OpenWork’s direct hiring service
have grown substantially, increasing about 82% compared with the same period of the previous year.
By continuing to utilize the customer base of the Organizational Development Division, to add to its stockpile ofresumes of job seekers, and to improve its matching rate, this business will ramp up “engagement matching” that achieves
true mutual understanding and affinity between organizations and individuals.
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 creating a “Motivation Company” and (2) aim to list stock. Gains on sales and other results generated
from venture incubation are recorded in other components of equity on the condensed consolidated statements offinancial position, or under other income or other expenses on the condensed consolidated statements of operations.

6(2) Overview of Financial Position for the Nine Months Ended September 30, 2022
Total assets as of September 30, 2022 were ¥27,494 million, a decrease of ¥2,568 million from the end of theprevious year. This was mainly due to factors including decreases of ¥883 million in right-of-use assets and ¥648 million
in other non-current financial assets associated with the transfer of the domestic temp staff business and the relocation of
the Tokyo integrated office, as well as decreases of ¥549 million in cash and cash equivalents and ¥480 million in tradeand other receivables.
Total liabilities as of September 30, 2022 were ¥17,510 million, a decrease of ¥3,903 million from the end of theprevious year. This was mainly due to factors including decreases of ¥718 million in trade and other payables, ¥877
million in interest-bearing and other financial liabilities and ¥1,391 million in lease liabilities.
Total equity as of September 30, 2022 was ¥9,983 million, an increase of ¥1,335 million from the end of the previous
year. This was mainly due to factors including a ¥1,096 million increase in retained earnings associated with posting net
income attributable to owners of the parent and other reasons, partially offset by the payment of dividends from surplus.
(3) Overview of Cash Flow for the Nine Months Ended September 30, 2022
Cash and cash equivalents (“cash”) as of September 30, 2022 were ¥4,368 million, a decrease of ¥549 million during
the period.
Cash flow during the nine months ended September 30, 2022 was as follows.
Cash Flow from Operating Activities
Net cash provided by operating activities was ¥1,655 million, a decrease of ¥753 million compared with the same
period of the previous year. The principal factors increasing cash were a ¥1,053 million increase in income before income
taxes and a ¥725 million decrease in trade and other receivables compared with the same period of the previous year,
while the principal factors decreasing cash included a ¥971 million decrease in depreciation and amortization, a ¥330
million decrease in trade and other payables, a ¥473 million decrease in other, a ¥436 million decrease in income tax
refund and a ¥377 million increase in income taxes paid compared with the same period of the previous year.
Cash Flow from Investing Activities
Net cash provided by investing activities was ¥212 million (in the same period of the previous year, net cash used ininvesting activities was ¥333 million). Principal factors decreasing cash included a ¥512 million decrease in proceedsfrom sale of investment securities compared with the same period of the previous year, while the principal factors
increasing cash included ¥441 million in proceeds from business transfer and an increase of ¥639 million in proceedsfrom refund of security deposits and guarantees compared with the same period of the previous year.
Cash Flow from Financing Activities
Net cash used in financing activities was ¥2,416 million, a decrease of ¥1,339 million compared with the same periodof the previous year. The principal factor decreasing cash was a ¥500 million net decrease in short-term financial
liabilities compared with the same period of the previous year, while the principal factors increasing cash included anincrease of ¥894 million in proceeds from long-term financial liabilities, a decrease of ¥549 million in repayment of leaseliabilities and the absence of payments for acquisition of interests in subsidiaries from non-controlling interests, whichwere incurred in the same period of the previous year.
(4) Forecast
Due to progress in the relocation or closure of schools in the Career School business, in addition to the impact ofstructural reforms that included the transfer of the domestic temp staff business and office relocations, the Group
substantially increased operating income in the first nine months of 2022 compared with the same period of the previous
year and has evolved into a robust management structure. For the fiscal year ending December 31, 2022, the Company
has forecast ¥4,000 million in operating income (an increase of 93.6% year on year), which will be a record high.
Over the medium term, the Group’s policy will be to grow businesses that have synergies with the Organizational
Development Division, which is the Group’s core division. Attention is increasingly being given to the practice of humancapital management and related information disclosure due to factors including the May 2022 publication by the Ministryof Economy, Trade and Industry of the Ito Review 2.0 on Human Capital, which refers to the practice of human capital7

management, and the August 2022 publication by the Cabinet Office of Guidelines for Visualizing Human Capital. In
addition to greater demand for support in conducting human capital management, the Group anticipates growing needs
for improving employee engagement so that companies can disclose more positive information in their human capital
information disclosure, and the Group considers this an advantageous trend, particularly for the Consulting & Cloudbusiness in the Organizational Development Division. The Group will continue to provide one-stop solutions fordiagnosis and transformation, mainly for major companies with strong needs for human capital management, as it rolls
out Stretch Cloud and other cloud-based services. By doing so, the Group aims for accelerated growth in fiscal 2023 andbeyond.

8

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

9

As of
December 31, 2021

As of
September 30, 2022

4,917
3,851
200
9
753
9,732

4,368
3,371
272
15
945
8,972

637
4,149
9,410
2,234
2,744
984
168
20,32930,062

593
3,266
9,410
2,364
2,096
712
79
18,521
27,494

(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

10

As of
December 31, 2021

As of
September 30, 2022

2,094
1,615
7,161
1,079
716
274
2,075
15,018

1,375
1,448
6,195
854
493
137
1,679
12,186

1,716
3,929
359
256
134
6,395
21,413

1,805
2,763
319
307
128
5,324
17,510

1,380
3,879
(320)
4,406
(1,853)
7,493
1,154
8,648
30,062

1,380
3,879
(320)
5,503
(1,747)
8,695
1,287
9,983
27,494

(2) Condensed Consolidated Statements of Operations and Comprehensive Income
Condensed Consolidated Statements of Operations
Nine Months Ended September 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

Nine months ended
September 30, 2021

Nine months ended
September 30, 2022

24,33812,781
11,557
9,323
55
173
2,115
12
147
1,980
690
1,290

24,39912,32912,070
9,464
776
238
3,143
20
129
3,034
1,062
1,971

(6)
1,283

(93)
1,877

1,185
97
1,283

1,745
132
1,877
(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

11.36
(0.07)
11.30

16.48(0.84)
15.64

11.36(0.07)
11.30

16.48(0.84)
15.64

Three Months Ended September 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
September 30, 2021

Three months ended
September 30, 2022

7,939
4,359
3,579
2,956
26
37
611
10
60
562
185
376

7,633
4,035
3,598
3,037
647
34
1,173
11
30
1,154
276
878

1
377

(1)
877

350
27
377

837
40
877
(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

12

3.33
0.01
3.34

7.51
(0.01)
7.50

3.33
0.01
3.34

7.51
(0.01)
7.50

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

Nine months ended
September 30, 2021
1,283

Nine months ended
September 30, 2022
1,877

(56)
(56)

62
62

Exchange differences on translation of foreign operations

3

(10)

Total of items that may be reclassified to profit or loss

3

(10)

(52)

52

1,230

1,930

1,132

1,797

97

132

1,230

1,930

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
Items that may be reclassified to profit or loss:

Total other comprehensive income
Total comprehensive income(Attributable to)
Owners of the parent
Non-controlling interests
Comprehensive income13Three Months Ended September 30(Millions of yen, rounded down to the nearest million)

Three months ended
September 30, 2021
377

Net income

Three months ended
September 30, 2022
877

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

(89)
(89)

78
78

Exchange differences on translation of foreign operations

(0)

(3)

Total of items that may be reclassified to profit or loss

(0)

(3)

(89)

75

288

952

Owners of the parent

260

912

Non-controlling interests

27

40

288

952

Items that may be reclassified to profit or loss:

Total other comprehensive income
Total comprehensive income(Attributable to)Comprehensive income

14(3) Condensed Consolidated Statements of Changes in Equity
Nine Months Ended September 30, 2021
(Millions of yen, rounded down to the nearest million)

Equity attributable to owners of the parent

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

3,760
1,185

1,157
97

4,917
1,283

(52)

(52)

—

(52)

1,185

(52)

1,132

97

1,230

—

—

—

(649)

(103)

(753)

—

—

(566)

—

(566)

—

(566)

—

—

—

120

(120)

—

—

—

—
1,380

(649)
1,206

—
(1,773)

(446)
4,728

(120)
(1,904)(1,216)
3,676

(103)
1,151

(1,320)4,827

CapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

1,380
—

1,855
—

(1,773)
—

3,989
1,185

(1,731)
—

—

—

—

—

—

—

—

—

(649)

—

Share
capitalJanuary 1, 2021
Net income
Other comprehensive
incomeTotal comprehensive
incomeChange in ownershipinterest in
subsidiaries
Dividends fromsurplusTransfer from othercomponents ofequity to retained
earnings
Total transactions withthe owners
September 30, 2021

Nine Months Ended September 30, 2022
(Millions of yen, rounded down to the nearest million)

Equity attributable to owners of the parent

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

7,493
1,745

1,154
132

8,648
1,877

52

52

—

52

1,745

52

1,797

132

1,930

—

(635)

—

(635)

—

(635)

—

—

—

40

40

—

40

—

—

—

(12)

12

—

—

—

—
1,380

—
3,879

—
（320）

(648)
5,503

53
(1,747)

(594)
8,695

—
1,287

(594)
9,983

CapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

1,380
—

3,879
—

(320)
—

4,406
1,745

(1,853)
—

—

—

—

—

—

—

—

—

—

—

Share
capitalJanuary 1, 2022
Net income
Other comprehensive
incomeTotal comprehensive
incomeDividends fromsurplus
Share-based paymenttransactions
Transfer from othercomponents ofequity to retained
earnings
Total transactions withthe owners
September 30, 202215

(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 (loss) before tax from discontinued operations
Depreciation and amortization
Loss on impairment(Profit) loss from business transfer
Loss (gain) on sales of fixed assets
Loss (gain) on valuation of investment securities
Gain on cancellation of insurance
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
Proceeds from sale 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 recovery of security deposits and guarantees
Payments for fulfillment of asset retirement obligations
Proceeds from cancellation of insurance
Other
Net cash provided by (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
Payments for acquisition of interests in subsidiaries from
non-controlling interests
Payments of cash dividends
Repayment of lease liabilities
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 quarter

16

Nine months
ended
September 30, 2021

Nine months
ended
September 30, 2022

1,980
(18)
2,263
122
—
(0)
—
(8)
135
(244)
(72)
(413)
(802)
2,940
0
(137)
439
(835)
2,408

3,034
19
1,291
160
(50)
—
20
—
109
481
(72)
(743)
(1,276)
2,975
5
(115)
2
(1,212)
1,655

(155)
0
(655)
—
—
513
(272)
284
(137)
85
3
(333)

(71)
—
(693)
441
(79)
1
(22)
924
(282)
—
(4)
212

—
506
(1,486)

(500)
1,400
(1,777)

(753)
(567)
(1,454)(3,755)
3(1,676)
6,449
4,773

—
(634)
(904)
(2,416)
(1)
(549)
4,917
4,368

(5) Notes to Condensed Consolidated Financial Statements(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.
Income taxes expense for the nine months ended September 30, 2022 was calculated using the estimated averageannual effective tax rate.
(Notes Regarding Significant Accounting Estimates and Judgements)
In preparing the condensed consolidated financial statements, management makes judgments, estimates andassumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income andexpenses. 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
statements are the same as those in the condensed consolidated financial statements for the same period of the previous
fiscal year.
In the nine months ended September 30, 2022, there was no change to the “Accounting Estimates Related to the
COVID-19 Pandemic” presented in the Securities Report for the previous fiscal year.
(Notes Regarding Assumption of Going Concern)
None applicable(Significant Subsequent Events)
None applicable17