Consolidated Financial Statements for
the Six Months Ended June 30, 2019 (IFRS)
These financial statements have been prepared for reference only.
August 9, 2019
Link and Motivation Inc.
Stock exchange listing: Tokyo
Code number: 2170
http://www.lmi.ne.jp/english
Representative: Yoshihisa Ozasa, Chairman and Representative Director
Contact: Shunichi Ohno, Director andGeneral Manager of Group Design Office
Phone: +81-3-6779-9494
Filing of Quarterly Report (Shihanki Hokokusho) (scheduled):
August 9, 2019
Start of distribution of dividends (scheduled):
September 25, 2019
Supplementary documents for quarterly results:
No
Quarterly results briefing:
Yes(Amounts are rounded down to the nearest million.)

1. Consolidated Results for the Six Months Ended June 30, 2019
(January 1, 2019 – June 30, 2019)(1) Revenues and Income
Revenues(¥ million)
Six months ended
June 30, 2019
Six months ended
June 30, 2018

Six months ended
June 30, 2019
Six months ended
June 30, 2018

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

19,134

(4.3)

1,471

(30.4)

1,426(32.0)

879(34.6)

19,985

10.8

2,115

31.4

2,098

34.8

1,345

33.1

Net income
attributable toowners of theparent(¥ million)

Change(%)

Comprehensive
income(¥ million)

Change(%)

Basic earnings
per share (¥)

883(35.8)

785(54.6)

8.36

8.34

1,374

35.2

1,731

(15.9)

13.01—

Dilutedearnings per
share (¥)

(2) Financial Position
Total assets(¥ million)
As of June 30, 2019
As of December 31, 2018

43,392
27,664

Total equity(¥ million)
7,456
7,681

Equity attributableto owners of theparent(¥ million)
7,474
7,696

Ratio of equity
attributable to ownersof the parent to total
assets (%)
17.2
27.8

2. Dividends
1st Qtr.
1.70
1.80

2nd Qtr.
1.70
1.80

Dividends per share
3rd Qtr.
Year-end
1.70
1.70

Total
6.80

1.80

7.20

2018
2019
2019 (est.)
1.80
Note: Revisions since the most recently announced dividend forecast: No

3. Forecast of Results for 2019 (January 1, 2019 – December 31, 2019)(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
38,500(3.6)
1,880(50.9)
1,050(45.3)
1,030(47.1)
9.75
Note: Revisions since the most recently announced forecast of results: Yes
For the revision of the forecast of consolidated results for the year, see “Notice of Revision of Forecast of Consolidated Results
for the Year,” released on August 9, 2019. (Japanese only).

Notes(1) Changes in Significant Subsidiaries during the Period: 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(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, 2019: 113,068,000; Year ended December 31, 2018: 113,068,000(b) Number of treasury shares at the end of the period:
Six months ended June 30, 2019: 7,445,796; Year ended December 31, 2018: 7,445,757(c) Average number of shares outstanding (cumulative with earlier quarters):
Six months ended June 30, 2019: 105,622,237; Six months ended June 30, 2018: 105,622,300* These Financial Statements Are Not Subject to Quarterly 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, 2019 ........................................ 2(2) Overview of Financial Condition for the Six Months Ended June 30, 2019............................................ 7(3) Overview of Cash Flow for the Six Months Ended June 30, 2019............................................................ 7(4) Forecast ......................................................................................................................................................... 7(5) Important Information Regarding Assumption of Going Concern ......................................................... 7
2. Condensed Consolidated Financial Statements ............................................................................................... 8(1) Condensed Consolidated Balance Sheets ................................................................................................... 8(2) Condensed Consolidated Statements of Operations andCondensed Consolidated Statements of 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
Changes in Accounting Policies ........................................................................................................... 16
Notes Regarding Assumption of Going Concern ............................................................................... 16
Significant Subsequent Event .............................................................................................................. 16

1

1. Overview of Results of Operations and Other Information(1) Overview of Results of Operations for the Six Months Ended June 30, 2019
In the Japanese economy during the first half of 2019 (January 1, 2019 – June 30, 2019), corporate production
activities and capital investment were on a recovery track and personal consumption, which had been in a persistentslump, also grew in tandem with an increase in leisure time due to Japanese society’s promotion of work style reform.
As a result, the economy was on an overall moderate recovery trend. Moreover, the Link and Motivation Group (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 otherdisciplines, under its corporate philosophy: “Through Motivation Engineering, we provide opportunities to transformorganizations and individuals and create a more meaningful society.” The market also grew moderately in industries
related to the Group, with increased demand for higher labor productivity and facilitation of personnel recruiting
associated with the promotion of work style reform.
In this economic environment, revenues of the Group were ¥19,134 million (a 4.3% decrease compared with thesame period of the previous year), gross profit was ¥7,542 million (a 4.9% decrease), operating income was ¥1,471
million (a 30.4% decrease) and net income attributable to owners of the parent was ¥883 million (a 35.8% decrease).
The segment and business classifications of the Group are as shown below, and an overview of the first half of2019 by segment and business follows.

Link and
Motivation Group

Organizational
Development Division

Individual
Development Division

Matching Division

Consulting &Outsourcing Business

Career School Business

ALT Placement Business

Link and Motivation Inc.

Link Academy Inc.

Link Interac Inc.

Link Global Solution Inc.

Dean Morgan K.K.

Link Relation
Engineering Inc.

Event & Media Business

Cram School Business

Personnel Placement &Temp Staff Business

Link Corporate
Communications Inc.

Motivation Academia Inc.

Link Staffing Inc.
Link-i Inc.

Link Event Produce Inc.
Link Japan Careers Inc.
a2media Corporation

2

Organizational Development Division
The Organizational Development Division offers corporate customers services that provide support for building andstrengthening relationships with a company’s stakeholders (employees, job applicants, customers, shareholders) using“Motivation Engineering,” which is the core technology of the Group.
Results in this segment decreased compared with the same period of the previous year. Segment revenues for the firsthalf of 2019 were ¥5,840 million (a 12.9% decrease) and segment income was ¥3,848 million (a 14.8% decrease). An
overview of operating results by business for the first half of 2019 is as follows.
Consulting & Outsourcing Business
The Consulting & Outsourcing business acts under the concept of creating numerous “Motivation Companies” inwhich employee motivation is the growth engine of an organization. As its method of providing services, the business
diagnoses the state of a company’s motivation based on its original diagnostic framework and offers various one-stop
solutions for innovations related to organizations and personnel, including recruiting, training, framework and corporate
culture.
In this business, revenues for the first half of 2019 were ¥4,306 million (a 16.0% decrease) and gross profit was¥3,422 million (a 16.8% decrease). Results by product in the Consulting & Outsourcing business were as follows.
Table 1. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Consulting & Outsourcing Business
Package
Consulting
Member/database services
Outsourcing

Six months ended
June 30, 2018
5,126
[4,112]
1,455
2,286
909
475

Six months ended
June 30, 2019
4,306
[3,422]
1,255
1,488
1,216
345

YoY change(%)(16.0)(16.8)(13.7)(34.9)
33.8(27.4)In the first half of 2019, growth in Package and Consulting fell below the forecast, and both revenues and grossprofit decreased substantially compared with the same period of the previous year.
The reason for the decrease was that the Group proactively invested personnel, funds and other resources in the
Motivation Cloud subscription model, and as a result it was unable to focus on its existing consulting and outsourcing
model.
Going forward, the Group will aim to implement both models in parallel, promoting recovery of the consulting andoutsourcing model while steadily expanding the subscription model.
Progress in the number of contact points that have adopted the cloud-based service for organizational improvement
Motivation Cloud, which is a key indicator for the Group, was as follows.
Table 2. Number of Contact Points and Monthly Fee Revenue for Motivation Cloud at Quarter-End
2018
2019
March
June
September
December
March
June
Number of contact points
505
576
641
718
803
861
Monthly fee revenue (¥ thousand)
72,08692,998103,410130,663
140,201
153,064
Motivation Cloud is a cloud-based service in the field of HR Tech (human resources combined with technology) for
managing employee engagement (mutual understanding, empathy and commitment between companies and employees).
We began providing this monthly pay-as-you-go product in July 2016. The cumulative number of contact points that haveadopted Motivation Cloud reached 862 as of June 30, 2019. During the first half of 2019, there was steady progress in thenumber of contact points that have adopted Motivation Cloud.
The recent environmental change of shifting to adapt to the labor market to target human resources, both employees
and job applicants, is a management issue for many companies. Amid these circumstances, improving employee
engagement through corporate organizational activities is a key management theme. However, the absence of a“yardstick” for visualizing the state of the organization and of a PDCA cycle for truly achieving organizational3

improvements has been an issue for many organizational activities. Against this backdrop, capturing companies’ risingneeds for organizational transformation has led to a substantial increase in the number of contact points for Motivation
Cloud. Motivation Cloud is generating stable revenue, and total monthly fee revenue for June 2019 was ¥153,156
thousand.
Event & Media Business
The Event & Media business produces events and media for various types of communication associated withbusiness activities to support the “creation of Motivation Companies” at corporations. In its event production, thebusiness offers assistance in stimulating the interest and promoting the understanding of stakeholders through support for
creation of forums such as anniversary events, recruiting presentations, promotional events and shareholders’ meetings.
In its media production, the business is involved in printed media such as company newsletters, corporate brochures andannual reports for shareholders, as well as web-based media such as corporate websites and investor relations (IR) sites
and visual media such as videos that explain products and webcasts of shareholders’ meetings.
In this business, revenues for the first half of 2019 were ¥1,866 million (a 6.8% decrease) and gross profit was ¥593
million (a 3.1% decrease). Results by product in the Event & Media business were as follows.
Table 3. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Event & Media Business
Event production
Media production

Six months ended
June 30, 2018
2,001
[612]
787
1,213

Six months ended
June 30, 2019
1,866
[593]
683
1,182

YoY change
(%)
(6.8)
(3.1)
(13.2)(2.6)

In the first half of 2019, with the intention of stabilizing operations, the Event & Media business focused on IR-related
media with low sensitivity to economic swings and cut back on other products, as well as on intentionally reducing orders
with a high cost ratio for the business overall. As a result, revenues decreased and gross profit decreased slightly
compared with the same period of the previous year.
The business will work for growth by developing products with greater advantages using “Motivation Engineering,”
the Group’s core technology.
Individual Development Division
The Individual Development Division applies “Motivation Engineering,” which is the core technology of the Group,
to businesses in areas including career schools and cram schools, to offer individual customers “career navigation”
services, which provide total support for independent and autonomous career creation.
In this segment, due to solid performance in each business, segment revenues for the first half of 2019 were ¥3,944
million (a 0.8% increase) and segment income was ¥1,404 million (a 3.2% decrease). An overview of operating results bybusiness for the first half of 2019 is as follows.
Career School Business
The Career School business defines human resources who act independently and autonomously, without depending onan organization, as “i-Companies” and supports the production of numerous i-Companies. As for specific services, thebusiness provides one-stop services for individual career advancement, targeting mainly university students and working
adults, under the six service brands of “Aviva” personal computer schools, “Daiei” qualification schools, “Aviva Pro”
programming schools, and “Rosetta Stone Learning Center,” “Rosetta Stone Premium Club” and “Hummingbird” foreign
language schools.
In this business, revenues for the first half of 2019 were ¥3,639 million (a 1.6% increase) and gross profit was ¥1,294
million (a 1.3% decrease). Results by product in the Career School business were as follows.

4

Table 4. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Career School Business
OfficePro Series
Accounting courses
National exam courses
Civil servant courses
Educational materials/other
English conversation

Six months ended
June 30, 2018

Six months ended
June 30, 2019

YoY change
(%)

3,583
[1,310]
1,523
484
289
335
673
93
182

3,639
[1,294]
1,481
490
314
343
617
89
302

1.6
(1.3)
(2.8)
1.3
8.8
2.4
(8.4)
(4.8)
66.1

During the first half of 2019, revenues increased slightly and gross profit decreased slightly due to good performanceby Accounting, National exam and English conversation courses.
In addition to working to enhance its lineup of courses and to improve their quality in order to raise its value as a total
career school, the business will promote career navigation by focusing on comprehensive services from providing career
guidance to offering employment opportunities in collaboration with the Personnel Placement & Temp Staff business.
Cram School Business
Unlike typical cram schools, the Cram School business operates under the business concept of producing numerous “iCompanies” 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 cram school for students preparing for junior high school entrance exams. The Group’s Cram
School business will utilize its assets in programming education and English conversation education to provide places forstudents from elementary school straight through to high school to develop skills that will be of use in society.
In this business, revenues for the first half of 2019 were ¥307 million (a 6.7% decrease) and gross profit was ¥110
million (a 20.8% decrease).
During the first half of 2019, revenues decreased and gross profit decreased substantially compared with the same
period of the previous year because enrollment did not proceed as in most years. This business has only one product.
By further applying the know-how in training adults that has been cultivated in the Consulting & Outsourcing
business, this business aims to achieve one-stop services unattainable by conventional cram schools, ranging fromelementary to high school students and adults.
Matching Division
The Matching Division provides services under the concept of matching organizations with hiring needs andindividuals who want to advance their careers through “motivation matching,” which applies “Motivation Engineering,”
the core technology of the Group, to personnel placement and temp staff dispatch.
In this segment, segment revenues for the first half of 2019 were ¥9,841 million (a 3.4% decrease) and segment
income was ¥2,699 million (a 3.5% increase), a slight decrease in segment revenues and an increase in segment income
compared with the same period of the previous year. An overview of operating results by business for the first half of2019 is as follows.
ALT Placement Business
The ALT Placement business dispatches foreign assistant language teachers (ALTs) to elementary, junior high andhigh schools throughout Japan and provides English-language instruction services on contract. In this business, wherebarriers to entry are extremely high due to the importance placed on relationships of trust with customers and acompany’s track record, the Group has established the number-one share among private companies. In addition, Japan’sEnglish education market is expanding with the creation of a “Reform Plan for Cultivating Global Human Resources” by
the Ministry of Education, Culture, Sports, Science and Technology (MEXT), looking ahead to the Tokyo Olympics to beheld in 2020.
5

In this business, revenues for the first half of 2019 were ¥6,332 million (a 5.7% increase) and gross profit was ¥1,920
million (an 11.7% increase).
During the first half of 2019, revenues increased and gross profit increased substantially compared with the same
period of the previous year due to firm performance from precisely capitalizing on the expansion of English education
promoted by MEXT. This business has only one product.
The business will work to strengthen hiring of foreign teachers with a view toward further growth in demand for
ALTs in Japan.
Personnel Placement & Temp Staff Business
The Personnel Placement & Temp Staff business provides solutions in the form of introductions and temp staffing of
the human resources an organization needs to grow. The main businesses include a new graduate recruiting andintroduction business that connects university students looking for employment with company orientation meetings andinterviews, a mid-career introduction business that matches working adults looking to change jobs with companies, and atemp staff business that dispatches personnel for sales, clerical work, and other fields. In addition, to capitalize on risingneeds for employment of foreigners, the Personnel Placement & Temp Staff business also conducts a business thatprovides one-stop foreigner recruiting, training and labor support for companies that want to hire them.
In this business, revenues for the first half of 2019 were ¥3,899 million (a 13.9% decrease) and gross profit was¥1,051 million (an 8.4% decrease). Results by product in the Personnel Placement & Temp Staff business were as follows.
Table 5. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Personnel Placement & Temp Staff BusinessStore sales temp staff
Office temp staff
Foreign worker support
Recruiting/introductions

Six months ended
June 30, 2018
4,527
[1,148]
3,537
317
286
386

Six months ended
June 30, 2019
3,899
[1,051]
2,857
300
333
408

YoY change(%)(13.9)(8.4)(19.2)
(5.2)
16.4
5.5

During the first half of 2019, revenues decreased substantially and gross profit decreased slightly compared with thesame period of the previous year due to slow growth by Store sales temp staff, which accounts for the majority ofrevenues, resulting from a trend toward regular employment.
The business will raise matching efficiency and improve profitability through business synergy that links individuals
who have improved their skills through the Group’s Career School business to corporate dispatch and introductions.
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 supporting growing venturecompanies on an organizational level with the aim of listing 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 as equity on the balance sheet.

6(2) Overview of Financial Condition for the Six Months Ended June 30, 2019
Total assets as of June 30, 2019 were ¥43,392 million, an increase of ¥15,727 million from the end of the previous year.
This was mainly due to factors including a ¥16,379 million increase in property, plant and equipment due to an increasein right-of-use assets and other items in connection with the application of IFRS 16.
Total liabilities as of June 30, 2019 were ¥35,936 million, an increase of ¥15,953 million from the end of the previous
year. This was mainly due to factors including a ¥16,714 million increase in interest-bearing and other financial liabilities
due to an increase in lease liabilities and other items in connection with the application of IFRS 16.
Total equity as of June 30, 2019 was ¥7,456 million, a decrease of ¥225 million from the end of the previous year. Thiswas mainly due to factors including a ¥640 million decrease in retained earnings at the beginning of the period in
connection with the application of IFRS 16.
(3) Overview of Cash Flow for the Six Months Ended June 30, 2019
Cash and cash equivalents (“cash”) as of June 30, 2019 were ¥1,364 million, a decrease of ¥615 million during theperiod.
Cash flow during the six months ended June 30, 2019 was as follows.
Cash Flow from Operating Activities
Net cash provided by operating activities was ¥2,002 million, an increase of ¥63 million compared with the same
period of the previous year. The principal factors included a ¥671 million decrease in income before income taxes and a¥924 million increase in depreciation and amortization.
Cash Flow from Investing Activities
Net cash used in investing activities was ¥753 million, an increase in cash used of ¥266 million compared with thesame period of the previous year. The principal factors included a ¥172 million increase in payments for acquisition ofproperty, plant and equipment.
Cash Flow from Financing Activities
Net cash used in financing activities was ¥1,862 million, an increase in cash used of ¥44 million compared with thesame period of the previous year. The principal factors included a ¥993 million increase in proceeds from borrowings anda ¥1,025 million increase in repayment of lease liabilities compared with the same period of the previous year.
(4) Forecast
For the revision of the forecast of consolidated results for the year, see “Notice of Revision of Forecast ofConsolidated Results for the Year,” released on August 9, 2019. (Japanese only).
(5) Important Information Regarding Assumption of Going Concern
None applicable72. Condensed Consolidated Financial Statements(1) Condensed Consolidated Balance Sheets(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
Goodwill
Intangible assets
Investments in associates
Other non-current financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets

8

As of
December 31, 2018

As ofJune 30, 2019

1,979
4,533
278
9
1,015
7,817

1,364
4,610
317
38
604
6,935

1,851
6,551
1,841
3,080
5,821
440
260
19,847
27,664

18,230
6,551
1,999
3,107
5,718
588
261
36,45643,392

(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
Income tax payable
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Interest-bearing and other financial 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, 2018

As ofJune 30, 2019

2,394
1,573
4,749
1,077
18
2,287
12,101

2,457
1,791
6,850
551
15
1,834
13,501

6,458
435
724
261
7,881
19,982

21,072468
635
258
22,43435,936

1,380
1,989(1,373)
4,763
936
7,696
(15)
7,681
27,664

1,380
1,989(1,373)
4,579
898
7,474
(18)
7,456
43,392

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

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Operating income
Financial revenue
Financial expenses
Equity in earnings of associates
Income before income taxes
Income taxes
Net income(Attributable to)
Owners of the parent
Non-controlling interests
Total

Six months
ended
June 30, 2018

Six months
ended
June 30, 2019

19,985
12,056
7,929
5,803
5
15
2,115
5
49
26
2,098
752
1,345

19,134
11,591
7,542
6,050
10
31
1,471
11
83
27
1,426
547
879

1,374
(28)
1,345

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

13.01
—

10

883
(3)
879
(Yen)
8.36
8.34

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

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Operating income
Financial revenue
Financial expenses
Equity in earnings of affiliates
Income before income taxes
Income taxes
Net income(Attributable to)
Owners of the parent
Non-controlling interests
Total

Three months
ended
June 30, 2018

Three months
ended
June 30, 2019

10,342
6,162
4,179
2,914
2
14
1,253
2
14
3
1,245
432
812

9,945
5,915
4,029
2,983
7
7
1,046
9
40
7
1,023
341
682

824
(11)
812

682
0
682
(Yen)

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

7.80
—

11

6.46
6.46

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

Six months
ended
June 30, 2018
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 othercomprehensive income
Total items that will not be reclassified to profit orloss
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign
operations
Total 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 income

12

Six months
ended
June 30, 2019

1,345

879

385

(93)

385

(93)

(0)

(0)

(0)
385
1,731

(0)
(94)
785

1,759
(28)
1,731

788
(3)
785

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, 2018
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 othercomprehensive income
Total items that will not be reclassified to profit orloss
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign
operations
Total 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 income

13

Three months
ended
June 30, 2019

812

682

542

(329)

542

(329)

1

(1)

1
544
1,356

(1)
(330)
351

1,368
(11)
1,356

351
0
351

(3) Condensed Consolidated Statements of Changes in Equity
Six Months Ended June 30, 2018
(Millions of yen, rounded down to the nearest million)
Equity attributable to owners of the parent

January 1, 2018
Net income
Other comprehensive
incomeTotal comprehensive
incomeDividends fromsurplusTransfer from othercomponents ofequity to retained
earnings
Total transactions withthe owners
June 30, 2018

SharecapitalCapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

1,380

2,137

(1,373)

3,426
1,374

1,121
—

6,692
1,374

4
(28)

6,697
1,345

385

385

—

385

1,374

385

1,759

(28)

1,731

(348)

—

(348)

(348)

58

(58)

—

—

(289)
4,510

(58)
1,448

(348)
8,104

—

—
1,380

—

—
2,137

—

—
(1,373)

—
(23)

(348)
8,080

Six Months Ended June 30, 2019
(Millions of yen, rounded down to the nearest million)
Equity attributable to owners of the parent

January 1, 2019
Impact of change inaccounting policy
Balance at beginning of
period after reflectingchange in accounting
policyNet income
Other comprehensive
incomeTotal comprehensive
incomeAcquisition oftreasury shares
Dividends fromsurplusTransfer from othercomponents ofequity to retained
earnings
Total transactions withthe owners
June 30, 2019

SharecapitalCapitalsurplusTreasurysharesRetainedearnings

1,380

1,989

(1,373)

4,763

Other
componentsof equity

936

(640)

1,380

—

1,989

—

(1,373)

4,122
883

—

883

—
1,989

(0)
(1,373)

Noncontrollinginterests

Total
equity

7,696

(15)

7,681

(640)

(640)

936
—

7,055
883

(15)
(3)

7,040
879

(94)

(94)

—

(94)

(94)

788

(3)

785

(0)

—
1,380

Total equity
attributableto owners of
the parent

(0)

(0)

(369)

—

(369)

(369)

(56)

56

—

—

(426)
4,579

56
898

(369)
7,474

14

—
(18)

(369)
7,456

(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
Depreciation and amortization
Loss on impairment
Financial revenues and financial expenses
Equity in (earnings) losses of associates
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
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
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
Payments of cash dividends
Repayment of lease liabilities
Other
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 period
Cash and cash equivalents at end of the period15

Six months
ended
June 30, 2018

Six months
ended
June 30, 2019

2,098
327
8
43
(26)
(127)
(110)
322
203
2,740
4
(44)
17
(779)
1,938

1,426
1,251
5
71
(27)
(76)
(38)
59
329
3,002
8
(71)
57
(995)
2,002

(112)
(365)
(120)
154
(61)
45
(27)
(487)

(285)
(391)
(99)
35
(70)
110
(52)
(753)

(493)
—
(919)
(350)
—
(55)
(1,818)
(0)
(367)
1,654
1,286

200
300
(968)
(368)
(1,025)(0)(1,862)
(0)
(615)
1,979
1,364

(5) Notes to Condensed Consolidated Financial Statements(Changes in Accounting Policies)
Significant accounting policies applied in these condensed consolidated financial statements are the same as those
applied to the consolidated financial statements for the previous fiscal year, except for the following.
Income taxes for the six months ended June 30, 2019 are calculated using the estimated average annual effective tax
rate.
The Group has applied IFRS 16 “Leases” (issued in January 2016) (hereafter, “IFRS 16”) from the three months
ended March 31, 2019.
(1) Policies applied from the date of initial application
At the commencement of a contract, the Group determines whether the contract contains a lease. The lease liabilities
for lease transactions are measured at the present value of the remaining total lease payments at the commencement dateof the lease, discounted using the lessee’s incremental borrowing rate. The cost of right-of-use assets is initially measured
at the amount of the initial measurement of lease liabilities, adjusted by any initial direct costs and any lease incentives
received plus costs such as restoration obligation required under the contract, and depreciated over the term of the leaseon a straight-line basis.
The Group presents right-of-use assets in “property, plant and equipment” and “intangible assets,” and lease liabilities
in “interest-bearing and other financial liabilities” on the condensed consolidated statement of financial position.
The Group has elected not to recognize right-of-use assets and lease liabilities in accordance with the recognition
exemption provisions in IFRS 16 for short-term leases for which the lease term ends within 12 months and leases inwhich the underlying asset is of low value. The Group recognizes the lease payments associated with those leases as an
expense on a straight-line basis over the lease term.
(2) Impact of application of IFRS 16
As a transitional measure upon the adoption of IFRS 16, the Group applies this standard retrospectively without
restating comparative information, with the cumulative effect of initially applying this standard at the date of initial
application recognized in the balance of retained earnings at the beginning of the period.
In transitioning to IFRS 16, the Group has chosen the practical expedient detailed in IFRS 16 paragraph C3 andgrandfathered its assessments of whether contracts contain leases based on IAS 17 “Leases” (hereafter, “IAS 17”) andIFRIC 4 “Determining whether an Arrangement contains a Lease.” From the date of application, this assessment isdetermined based on the provisions of IFRS 16.
For leases that the Group as lessee previously classified as operating leases applying IAS 17, right-of-use assets andlease liabilities are recognized at the date of initial application. These lease liabilities have been measured at the present
value of the remaining lease payments discounted using the lessee’s incremental borrowing rate at the date of initial
application. The weighted average of the lessee’s incremental borrowing rates is 0.44%. Right-of-use assets are initiallymeasured at the initial measurement amount of the lease liability adjusted for the prepaid lease payments and other factors.
For leases that the Group as lessee previously classified as finance leases applying IAS 17, the carrying amounts ofright-of-use assets and lease liabilities at the date of initial application are the carrying amounts of lease assets and leaseliabilities, respectively, immediately before that date measured applying IAS 17.
The difference in amount between non-cancellable operating lease contracts applying IAS 17 as of December 31,
2018 and lease liabilities recognized in the condensed consolidated statement of financial position at the date of initial
application is mainly due to the difference in estimates for periods exceeding the non-cancellable period of the real estate.
Due to the application of IFRS 16, right-of-use assets increased ¥16,109 million and lease liabilities increased¥16,934 million at the beginning of the first quarter ended March 31, 2019, compared with the application of the previous
accounting standard. In addition, retained earnings decreased ¥640 million.
16

The Group uses the following practical expedient in the application of IFRS 16.


For contracts that include an option to extend or cancel a lease, the Group uses ex post facto judgment in calculating
the lease term.

(Notes Regarding Assumption of Going Concern)
None applicable(Significant Subsequent Event)
Determination of matters related to share repurchase
At a Board of Directors meeting held on August 9, 2019, the Company resolved on matters related to the repurchase of its
own shares pursuant to Article 459, Paragraph 1 of the Companies Act and the provisions of the Company’s Articles ofIncorporation.
1. Reason for conducting share repurchase
The Company will repurchase its own shares to conduct a flexible capital policy in response to changes in the businessenvironment.
2. Details of matters related to acquisition(1) Type of shares subject to acquisition:

Common stock of the Company(2) Total number of shares that can be acquired:

700,000 shares (maximum)(Percentage of total number of issued shares issued(excluding treasury shares): 0.66%)(3) Total acquisition price of shares:¥500 million (maximum)(4) Acquisition period:

August 13, 2019 to November 12, 2019(5) Acquisition method:

Market purchase by a trust bank(Reference)
Status of treasury shares as of June 30, 2019
Total number of issued shares (excluding treasury shares): 105,622,204 shares
Number of treasury shares:

7,445,796 shares17