Consolidated Financial Statements for the Nine Months Ended September 30, 2020 (IFRS)
These financial statements have been prepared for reference only.

November 12, 2020

Link and Motivation Inc.
Stock exchange listing: Tokyo
Code number: 2170
https://www.lmi.ne.jp/english
Representative: Ozasa Yoshihisa, Chairman and Representative Director
Contact: Ohno Shunichi, Director andManager of Group Design Office
Phone: +81-3-6779-9494
Filing of Quarterly Report (Shihanki Hokokusho) (scheduled):
November 12, 2020
Start of distribution of dividends (scheduled):
December 25, 2020
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, 2020
(January 1, 2020 – September 30, 2020)(1) Revenues and Income

Revenues(¥ million)
Nine months ended
September 30, 2020
Nine months ended
September 30, 2019

Nine months ended
September 30, 2020
Nine months ended
September 30, 2019

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

26,056

(8.8)

1,452

(25.0)

1,314(29.6)

867(24.9)

28,566

(4.4)

1,936

(36.4)

1,865(38.1)

1,151(40.7)Net income
attributable toowners of theparent(¥ million)

Change(%)

Comprehensive
income(¥ million)

Change(%)

Basic earnings
per share (¥)

790(31.5)(79)(108.1)

7.53

7.53

1,154

(41.5)

969(61.1)

10.94

10.91

(2) Financial Position
Total assets(¥ million)
As of September 30, 2020
As of December 31, 2019

42,85044,787

Total equity(¥ million)
7,356
7,033

Equity attributableto owners of theparent(¥ million)
6,189
7,043

Dilutedearnings per
share (¥)

Ratio of equity
attributable to ownersof the parent to total
assets (%)
14.4
15.7

2. Dividends

Dividends per share
3rd Qtr.
Year-end
2019
1.80
1.80
2020
1.80
2020 (est.)
1.80
Note: Revisions since the most recently announced dividend forecast: No
1st Qtr.
1.80
1.80

2nd Qtr.
1.80
1.80

Total
7.20
7.20

3. Forecast of Consolidated Results for 2020 (January 1, 2020 – December 31, 2020)(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)(%)(¥ millio(%)(¥ million)(%)(¥ million)
(%)
(¥)
n)
Full-year
35,000(8.4)(1,950)–(2,900)–(2,850)–(27.64)
Note: Revisions since the most recently announced forecast of results: Yes
Adjusted operating income for year ending December 31, 2020: ¥1,750 million (-41.0%)
Adjusted operating income is a profit indicator that measures operating results by excluding temporary factors such as
impairment of goodwill, right-of-use assets and fixed assets from operating income.

Notes(1)

Changes in Significant Subsidiaries during the Period (Change in Specified Subsidiaries Due to Change in Scopeof Consolidation: Yes
Added: 1 company (Name: OpenWork Inc.)(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)
Nine months ended September 30, 2020: 113,068,000; Year ended December 31, 2019: 113,068,000(b) Number of treasury shares at the end of the period:
Nine months ended September 30, 2020: 8,145,796; Year ended December 31, 2019: 8,145,796(c) Average number of shares outstanding (cumulative with earlier quarters):
Nine months ended September 30, 2020: 104,922,204; Nine months ended September 30, 2019: 105,552,043* These Financial Statements Are Not Subject to Review by a Certified Public Accountant or Auditing Firm
These “Consolidated Financial Statements for the Nine Months Ended September 30, 2020” are not subject to quarterly
review procedures pursuant to the Financial Instruments and Exchange Act although, as of the date of publication ofthese statements, the review procedures for quarterly financial statements pursuant to the Financial Instruments andExchange Act had been completed.
* 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, 2020 ............................ 2(2) Overview of Financial Position for the Nine Months Ended September 30, 2020 .................................. 8(3) Overview of Cash Flow for the Nine Months Ended September 30, 2020 ............................................... 8(4) Forecast ......................................................................................................................................................... 9(5) Important Information Regarding Assumption of Going Concern ......................................................... 9
2. Condensed Consolidated Financial Statements and Main Notes ................................................................. 10(1) Condensed Consolidated Statements of Financial Position ................................................................... 10(2) Condensed Consolidated Statements of Operations and Comprehensive Income ............................... 12(3) Condensed Consolidated Statements of Changes in Equity ................................................................... 16(4) Condensed Consolidated Statements of Cash Flow ................................................................................. 17(5) Notes to Condensed Consolidated Financial Statements ....................................................................... 18
Changes in Accounting Policies ............................................................................................................18
Notes Regarding Significant Accounting Estimates and Judgements .............................................. 18
Notes Regarding Assumption of Going Concern ............................................................................... 19
Significant Subsequent Events ............................................................................................................ 19

1

1. Overview of Results of Operations and Other Information(1) Overview of Results of Operations for the Nine Months Ended September 30, 2020
The Link and Motivation Group (the “Group”) supports the transformation of numerous companies and individuals
using “Motivation Engineering,” which is 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 and individuals and create a more meaningful society.” In industries
related to the Group, the market grew moderately as demand increased for facilitation of higher labor productivity andpersonnel recruiting associated with the promotion of work style reform. However, since February 2020, the novel
coronavirus (“COVID-19”) pandemic has had a substantial impact. After the end of the state of emergency in Japan,
personal consumption and hiring have trended toward recovery, but the economic outlook remains uncertain.
In this economic environment, the Group’s revenues were ¥26,056 million (an 8.8% decrease compared with the same
period of the previous year), gross profit was ¥10,729 million (a 2.1% decrease), operating income was ¥1,452 million (a25.0% decrease) and net income attributable to owners of the parent was ¥790 million (a 31.5% decrease).
The segment and business classifications of the Group are as shown below, and an overview of the nine months ended
September 30, 2020 (the “first nine months of 2020”) by segment and business follows. As of the first quarter of 2020,
business classifications have changed due to the inclusion of OpenWork Inc. in the scope of consolidation. Figures for thesame period of the previous year have been restated for the purpose of comparison.

Link and
Motivation Group

Organizational
Development Division

Individual
Development Division

Matching Division

Cloud Business

Career School Business

GlobalPersonnel Placement &Temp Staff Business

Link and Motivation Inc.

Link Academy Inc.

Link Interac Inc.

Link Global Solution Inc.

Dean Morgan K.K.

Link Japan Careers Inc.

Event & Media Business

Cram School Business

Domestic
Personnel Placement &Temp Staff Business

Link Corporate
Communications Inc.

Motivation Academia Inc.

Link Staffing Inc.

Consulting &Link Event Produce Inc.

Link-i Inc.

a2media Corporation

OpenWork Inc.

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.
In this segment, segment revenues for the first nine months of 2020 were ¥7,297 million (a 17.4% decrease), andsegment income was ¥5,010 million (a 14.0% decrease), both decreasing substantially compared with the same period of
the previous year. An overview of operating results by business for the first nine months of 2020 is as follows.
Consulting & Cloud Business
The Consulting & Cloud business acts under the concept of creating numerous “Motivation Companies” in which
employee motivation is the growth engine of an organization. As its method of providing services, the 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 2020 were ¥5,696 million (a 14.1% decrease) and gross profit
was ¥4,509 million (a 14.5% decrease). Results by product in the Consulting & Cloud business were as follows.
Table 1. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Consulting & Cloud Business

Nine months ended
September 30, 2019
6,628
[5,271]
4,939
1,689

Consulting
Cloud

Nine months ended
September 30, 2020
5,696
[4,509]
3,817
1,878

YoY change(%)(14.1)(14.5)(22.7)
11.2

In the first nine months of 2020, as a result of stepping up provision of value online from the first quarter onward, atrend toward recovery became apparent, centered on training, but there was a decrease in consulting related toformulating and establishing corporate philosophies, and revenues and gross profit both decreased substantially.
On the other hand, as remote work becomes widespread due to the COVID-19 pandemic, we perceive growing needs
to improve employee engagement. Moreover, the expansion of ESG investment is also increasing investor attention tohuman capital, and we see this as a major opportunity for the Group. Going forward, the business will steadily capture
these needs and create more “Motivation Companies” by providing diagnostics and transformation services using“Motivation Engineering.”
Meanwhile, 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.
Progress in the number of deliveries and monthly fee revenue was as follows.
Table 2. Number of Deliveries and Monthly Fee Revenue for the Motivation Cloud Series at Quarter-End
2019
Number of deliveries
Monthly fee revenue(¥ thousand)

2020

March

June

September

December

March

June

September

872

889

900

921

906

795

770

145,271

158,286

172,027

197,101

203,789

183,600

190,423

The Motivation Cloud series is a group of cloud-based services in the field of HR Tech (human resources combinedwith technology) for managing employee engagement (mutual understanding, empathy and commitment between
companies and employees). The business began providing these subscription-model products in July 2016.
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. In addition, the widespread adoptionof remote work due to the COVID-19 pandemic has made it difficult to monitor employees. As a result, it is the3business’s stance that importance of improving employee engagement, including visualization of organizational status, isincreasing.
During the first half, there were cancellations and suspensions of Motivation Cloud, mainly among small andmedium-sized enterprises and venture companies whose business environment has deteriorated. However, during the firstnine months of 2020, new introductions increased, mainly among major corporations, and monthly fee revenue for the
Motivation Cloud series of products is once again back on a growth track, totaling ¥190,423 thousand for the month of
September 2020.
The business will work to further step up new introductions at major corporations, mainly leading companies, inaddition to promoting the swift return of customers that have suspended service.
Event & Media Business
The Event & Media business produces events and media for various types of communication associated with businessactivities to support the “creation of Motivation Companies” at corporations. In its event production, the business assists
in stimulating the interest and promoting the understanding of stakeholders through support for creation of physical andvirtual 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 and annual
reports for shareholders, as well as web-based media such as corporate websites and investor relations (IR) sites andvisual media such as videos that explain products and webcasts of shareholders’ meetings.
In this business, revenues for the first nine months of 2020 were ¥1,980 million (a 25.6% decrease) and gross profit
was ¥729 million (a 17.0% 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
Media

Nine months ended
September 30, 2019
2,661
[879]
832
1,828

Nine months ended
September 30, 2020
1,980
[729]
406
1,574

YoY change(%)(25.6)(17.0)(51.2)(13.9)In the first nine months of 2020, revenues from the Event business continued their significant decline from the second
quarter as customers voluntarily refrained from holding events, and the Media business was impacted by a delay indelivery of IR-related media products beyond the end of the period, among other factors. As a result, segment revenues
and gross profit both decreased substantially compared with the same period of the previous year.
Going forward, the business will actively promote online events using its Internet and video production capabilities as
it continues to focus on its strongly performing IR-related media business.

4

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, segment revenues for the first nine months of 2020 were ¥4,935 million (a 17.8% decrease) andsegment income was ¥1,495 million (a 32.2% decrease). An overview of operating results by business for the first half of2020 is as follows.
Career School Business
The Career School business defines human resources who act independently and autonomously, without dependingon an organization, as “i-Companies” and supports the production of numerous “i-Companies.” As for specific services,
the business provides one-stop services for individual career advancement, targeting mainly university students andworking 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. Previously, the business mainly used classroom lectures to provide continuing learning support,
but currently provides both in-school and online services in response to Japan’s state of emergency and new lifestyles. In
addition, the “i-Company Club” subscription-model membership service supports continuous learning by students.
In this business, revenues for the first nine months of 2020 were ¥4,473 million (an 18.7% decrease) and gross profit
was ¥1,280 million (a 36.3% decrease). Results by product in the Career School business were as follows.
Table 4. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Career School BusinessIT
Qualifications
English conversation

Nine months ended
September 30, 2019

Nine months ended
September 30, 2020

YoY change
(%)

5,502
[2,008]
3,083
1,936
482

4,473
[1,280]
2,417
1,620
436

(18.7)(36.3)(21.6)(16.3)(9.5)

This business was significantly affected during the second quarter by temporary classroom closures nationwide in
April and May due to the announcement of a state of emergency, among other factors. Despite recovery in newenrollments and the progress of classes during the third quarter, it has not been enough to cover the period when schools
were closed and, as a result, revenues and gross profit both decreased substantially.
On the other hand, because the business provides both in-school and online services, revenues per student increased
compared with the same period of the previous year as students made progress in taking the courses they had registeredfor. Moreover, in October the business also made major improvements to “i-Company Club,” which supports habits ofself-improvement. Going forward, the business will promote additional contracts by acquiring more new subscribers andimproving the retention rate among existing students.
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 Japan’s state of emergency and new lifestyles.
In this business, revenues for the first nine months of 2020 were ¥465 million (a 7.3% decrease) and gross profit was¥215 million (a 9.1% increase).

5During the first nine months of 2020, although the number of new enrollees has recovered from July onward, it was
not enough to cover the period when schools were closed in April and May, and revenues decreased compared with thesame period of the previous year. This business has only one product.
By continuing to provide value online and applying the know-how in training adults that has been cultivated in theConsulting & Cloud business, this business aims to offer one-stop services unattainable by conventional cram schools,
ranging from elementary 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 its personnel placement and temp staff businesses. Its main targets are foreign
nationals who want to work in Japan, students who want to find a job, employees who want to change jobs and temporary
workers.
In this segment, segment revenues for the first nine months of 2020 were ¥14,458 million (a 0.3% increase) andsegment income was ¥4,747 million (a 34.0% increase), with segment revenues increasing slightly and segment income
increasing substantially compared with the same period of the previous year. An overview of operating results bybusiness for the first nine months of 2020 is as follows.
Global Personnel Placement & Temp Staff Business
The Global Personnel Placement & Temp Staff business dispatches foreign assistant language teachers (ALTs) of
foreign languages to elementary, 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 placedon relationships of trust with customers and a company’s track record, the Group has established the predominant
number-one share among private companies. The business is also capturing needs for employment of foreigners byconducting a business that provides one-stop foreigner recruiting, training and labor support to companies seeking to hirethem.
In Japan, reforms of English education by the Ministry of Education, Culture, Sports, Science and Technology(MEXT) are promoting an earlier start for English-language learning. In fiscal 2020, English education will start from thethird grade of elementary school, and will be treated as a formal subject from the fifth grade of elementary school.
Accordingly, ALT placement is proceeding rapidly. Meanwhile, because dispatch to all local governments has not been
completed, the business expects continuing expansion of the English education market in Japan.
In this business, revenues for the first nine months of 2020 were ¥9,409 million (a 1.9% increase) and gross profit was¥2,760 million (an 11.6% increase).
During the first nine months of 2020, revenues increased slightly as many municipalities made up for school closuresin April and May by holding classes during summer vacation and gross profit increased substantially with the progress ofa thorough examination of projects with low gross profit. This business has only one product.
In the third quarter and thereafter, stable operations are expected as various municipalities are moving to increase thenumber of classes from July to make up for temporary school closures. The business will continue working to improve its
English instruction and profitability by hiring high-quality foreign teachers with a view toward further expanding English
education in Japan.
Domestic Personnel Placement & Temp Staff Business
The Domestic Personnel Placement & Temp Staff business provides services in the form of referrals and temp
staffing of the human resources an organization needs to grow. The main businesses include new graduate recruiting andreferral that connects university students looking for employment with company orientation meetings and interviews,
mid-career referral that matches working adults looking to change jobs with companies, and temp staffing that dispatches
personnel for sales, clerical work and other fields. OpenWork Inc., which was added to the scope of consolidation as of
the first quarter, operates OpenWork, one of Japan’s largest employee online review platforms for job seekers, and its
main source of income is from referrals to employment agencies.
In this business, revenues for the first nine months of 2020 were ¥5,079 million (a 2.4% decrease) and gross profit
was ¥2,017 million (an 84.6% increase). Results by product in the Domestic Personnel Placement & Temp Staff businesswere as follows.
6Table 5. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Domestic Personnel Placement & Temp Staff
Business
Temp staff dispatch
Personnel placement

Nine months ended
September 30, 2019
5,205
[1,092]
4,711
493

Nine months ended
September 30, 2020
5,079
[2,017]
3,526
1,553

YoY change
(%)
(2.4)
84.6
(25.2)
215.0

During the first nine months of 2020, although the decline in the number of temp staff dispatched bottomed out due toswitching the portfolio of customer companies from the former apparel-related businesses to supermarkets and callcenters, the slump continued and, as a result, revenues decreased. On the other hand, gross profit increased substantially
due to the addition to the Group of OpenWork Inc., which has a high profit margin.
In temp staff dispatch, the business will continue to reorient its portfolio toward the types of jobs for which it can
expect demand.
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 for 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 other components of equity on the statements of financial position.

7

(2) Overview of Financial Position for the Nine Months Ended September 30, 2020
Total assets as of September 30, 2020 were ¥42,850 million, a decrease of ¥1,936 million from the end of theprevious year. This was mainly due to factors including a ¥2,236 million decrease in investments in associates inconnection with making OpenWork Inc. a consolidated subsidiary and a ¥1,394 million decrease in other non-current
financial assets, offset by a ¥3,657 million increase in cash and cash equivalents as a result of securing working capitaland making OpenWork Inc. a consolidated subsidiary.
Total liabilities as of September 30, 2020 were ¥35,494 million, a decrease of ¥2,260 million from the end of theprevious year. This was mainly due to factors including a ¥796 million decrease in interest-bearing and other financial
liabilities associated with a decision to relocate operating bases, in addition to decreases of ¥655 million in trade andother payables and ¥838 million in income tax payable, among other factors.
Total equity as of September 30, 2020 was ¥7,356 million, an increase of ¥323 million from the end of the previous
year. This was mainly due to factors including an increase in non-controlling interests in connection with making
OpenWork Inc. a consolidated subsidiary, offset by a decrease in other components of equity associated with a decreasein other non-current financial assets, among other factors.
(3) Overview of Cash Flow for the Nine Months Ended September 30, 2020
Cash and cash equivalents (“cash”) as of September 30, 2020 were ¥5,817 million, an increase of ¥3,657 million
during the period.
Cash flow during the nine months ended September 30, 2020 was as follows.
Cash Flow from Operating Activities
Net cash provided by operating activities was ¥1,512 million, a decrease of ¥472 million compared with the same
period of the previous year. The principal factor decreasing net cash was a decrease of ¥551 million in income before
income taxes, while the principal factors increasing net cash included an increase of ¥117 million in depreciation andamortization.
Cash Flow from Investing Activities
Net cash provided by investing activities was ¥2,169 million (in the same period of the previous year, investing
activities provided net cash totaling ¥210 million). Principal factors included a ¥2,290 million increase in proceeds fromacquisition of subsidiary stock in connection with a change in the scope of consolidation due to making OpenWork Inc. a
consolidated subsidiary.
Cash Flow from Financing Activities
Net cash used in financing activities was ¥22 million (in the same period of the previous year, financing activities
used net cash totaling ¥2,729 million). Principal factors increasing net cash included a ¥5,200 million net increase in
short-term financial liabilities, while the principal factors decreasing net cash included the absence of proceeds from longterm financial liabilities, which were ¥2,285 million in the same period of the previous year.

8(4) Forecast
In the first half of 2020, due to requests for people to voluntary refrain from going out and the declaration andextension of a state of emergency, the COVID-19 pandemic had a substantial impact, including postponement orcancellation of group training activities and other services in the Organizational Development Division, a decrease in thenumber of new enrollees due to the temporary closure of all schools nationwide in the Individual Development Division,and a decrease in the number of domestic personnel placements and temp staff dispatched in the Matching Division.
On the other hand, amid the significant transformation of working styles and lifestyles brought about by the COVID19 pandemic, the Group believes that needs for employee engagement and personal learning will further increase. To
steadily capture those needs, we intend to respond quickly to changes based on “Motivation Engineering” in each division.
During the third quarter of 2020, we strengthened the provision of new value including online services in the
Organizational Development Division, conducted thorough reductions of all types of costs and stepped up promotion of
online attendance of various courses in the Individual Development Division, and reorganized the portfolio of temp
staffing clients in the Matching Division, and as a result, both revenues and gross profit recovered in all divisions. Due tothe impact of an increase in work during the summer vacation and employment adjustment subsidies in the Global
Personnel Placement & Temp Staff Business of the Matching Division in particular, adjusted operating income has
already surpassed the target announced on August 7, 2020. Because it has become apparent that the pace of recovery isfaster than initially anticipated, the forecast for adjusted operating income has been revised upward to ¥1,750 million (ayear-on-year decrease of 41.0%).
Adjusted operating income is a profit indicator that measures operating results by excluding temporary factors such as
impairment of goodwill, right-of-use assets and fixed assets from operating income.
Meanwhile, we are aware that the impact of the COVID-19 pandemic persists. We recognize that among the Group’s
customers, there has still been no full recovery in the contraction of budgets for investment in personnel at small andmedium-sized enterprises as well as at major corporations that have been significantly impacted, or in the downturn inpersonal consumption. Particularly in the Individual Development Division, although a recovery is under way, the impactof the temporary closure of both career schools and cram schools in April and May due to the declaration of a state of
emergency was substantial, and we expect uncertain conditions to persist. Under these circumstances, to conduct
management that anticipates all potential future risks, we have continued to incorporate the maximum amount of
impairment of goodwill and other factors in the Individual Development Division in our forecast of financial results for2020. Moreover, we will focus not only on the short term consisting of the fiscal year ending December 31, 2020, butalso on establishing a foundation for recovery in the fiscal year ending December 31, 2021 and thereafter.
As a result of the above, for our results for the fiscal year ending December 31, 2020, we forecast ¥35,000 million inrevenues (a decrease of 8.4% year-on-year), an operating loss of ¥1,950 million, and ¥2,850 million in net loss
attributable to owners of the parent.
The impacts described above are based on information available as of October 2020. We will continue to carefully
assess the impact on the Group and announce and future revisions promptly, if they become necessary.
(5) Important Information Regarding Assumption of Going Concern
None applicable9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
Goodwill
Intangible assets
Investments in associates
Other non-current financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets

10

As of
December 31, 2019

As of
September 30, 2020

2,160
4,114
256
17
4,905
11,454

5,817
3,848
217
27
800
10,711

17,400
5,927
2,095
2,788
4,033
839
248
33,33344,787

14,835
10,902
2,145
551
2,639
820
244
32,13942,850(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

11

As of
December 31, 2019

As of
September 30, 2020

2,397
1,760
5,943
865
21
1,843
12,831

1,742
1,683
9,478
27
132
1,843
14,90824,092462
218
148
24,92237,754

19,761521
159
143
20,58535,494

1,380
1,987(1,733)
5,440
(31)
7,043
(10)
7,033
44,7871,380
1,855(1,733)
5,969(1,282)
6,189
1,167
7,356
42,850(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)

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Operating income
Financial revenues
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

Nine months
ended
September 30,
2019

Nine months
ended
September 30,
2020

28,566
17,61010,955
8,990
12
41
1,936
22
133
40
1,865
714
1,151

26,05615,326
10,729
9,462
208
23
1,452
17
187
31
1,314
446
867

1,154
(3)
1,151

790
76
867
(Yen)

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

10.94
10.91

12

7.53
7.53

Three Months Ended September 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 revenues
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

Three months
ended
September 30,
2019

Three months
ended
September 30,
2020

9,431
6,018
3,413
2,940
1
9
464
10
50
13
438
167
271

8,655
5,068
3,586
3,067
166
0
685
10
96
12
611
187
423

271
0
271

406
17
423
(Yen)

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

2.57
2.57

13

3.87
3.87

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, 2019

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

14

Nine months
ended
September 30, 2020

1,151

867

(180)

(944)

(180)

(944)

(0)

(1)

(0)
(181)
969

(1)
(946)
(79)

972
(3)
969

(155)
76
(79)

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

Three months
ended
September 30, 2019

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

15

Three months
ended
September 30, 2020

271

423

(87)

(102)

(87)

(102)

0

(0)

0
(86)
184

(0)
(103)
320

184
0
184

303
17
320

(3) Condensed Consolidated Statements of Changes in Equity
Nine Months Ended September 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
September 30, 2019

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

7,696

(15)

7,681

—

(640)

—

(640)

936
—

7,055
1,154

(15)
(3)

7,040
1,151

(181)

(181)

—

(181)

(181)

972

(3)

969

Other
componentsof equity

Share
capitalCapitalsurplusTreasurysharesRetainedearnings

1,380

1,989

(1,373)

4,763

936

—

—

—

(640)

1,380

1,989

(1,373)

4,122
1,154

—

—
1,380

—

—

(1)

(238)

(1)
1,988

(238)
(1,612)

1,154

(239)

(239)

(559)

—

(559)

(559)

587

(587)

—

—

(28)
5,305

(587)
167

(798)
7,230

—
(18)

(798)
7,212

Nine Months Ended September 30, 2020
(Millions of yen, rounded down to the nearest million)

Equity attributable to owners of the parent
SharecapitalJanuary 1, 2020
Net income
Other comprehensive
incomeTotal comprehensive
incomeChange due tobusiness combination
Change in ownershipinterest in
subsidiaries
Dividends fromsurplus
Exercise of shareoptions
Transfer from othercomponents ofequity to retained
earnings
Total transactions withthe owners
September 30, 2020

1,380

—

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

7,043
790

(10)
76

7,033
867

(946)

(946)

—

(946)

(946)

(155)

76
1,050

(79)
1,050

(94)

4

(90)

CapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

1,987(1,733)

5,440
790

(31)
—

—

—

790

(94)
(566)

—

(37)

—
1,380

(132)
1,855

(566)
(37)

—
(1,733)

305

(305)

—

(261)
5,969

(305)
(1,282)

(698)
6,189

16

(566)
45

8

—
1,101
1,167

402
7,356

(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
Loss (gain) on step acquisition
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 acquisition of subsidiary stock associatedwith a change in the scope of consolidation
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 for acquisition of interests in subsidiaries from
non-controlling interests
Payments of cash dividends
Repayment of lease liabilities
Payments from non-controlling interests
Payments for purchase 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 quarter

17

Nine months
ended
September 30, 2019

Nine months
ended
September 30, 2020

1,865
1,882
12
111
(40)
355
—
(19)
(282)
(168)
3,715
8
(107)
62
(1,695)
1,984

1,314
1,999
1
169
(31)
423
16
38
(703)
101
3,329
5
(170)
28
(1,681)
1,512

(289)
(600)

(175)
(530)

—
(99)
1,227
(85)
113
(55)
210

2,290
—
636
(25)
45
(70)
2,169

(1,400)2,285(1,442)3,800—(1,683)—(557)(1,374)—(239)(2,729)
(0)
(535)
1,979
1,444

(90)
(565)
(1,492)
8
—
(22)
(1)
3,657
2,160
5,817

(5) Notes to Condensed Consolidated Financial Statements(Changes in Accounting Policies)
The significant accounting policies applied to these condensed consolidated financial statements are the same as theaccounting policies applied to the consolidated financial statements for the previous fiscal year, except for the following.
Income tax expenses for the nine months ended September 30, 2020 have been calculated using the estimatedaverage annual effective tax rate.
As of the second quarter of the current fiscal year, the Group has adopted early application of the following
standard.
Overview of New Standard/Amendment

IFRS
IFRS 16

LeasesAmended accounting treatment for COVID-19-related rent concessions

This amendment recognizes the selection of simplified accounting treatment for lessees of leases that have received
rent concessions as a direct consequence of the novel coronavirus (“COVID-19”) pandemic.
This amendment permits lessees, as a practical expedient, to choose not to assess whether particular rent
concessions related to COVID-19 that meet specified requirements are “lease modifications” as stipulated in IFRS 16.
The Group has applied this expedient to rent concessions that meet the above requirements.
The application of this expedient increased income before income taxes by ¥27 million in the nine months ended
September 30, 2020.
(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 judgments that have a significant impact on the amounts in these condensed consolidated financial
statements are the same as those in the consolidated financial statements for the previous fiscal year in principle, but
include the following factors in consideration of the impact of COVID-19.
Due to requests for people to voluntarily refrain from going out and the declaration of a state of emergency
associated with the COVID-19 pandemic, the Group lost opportunities to provide its services. These lost opportunities
included the postponement or cancellation of group training activities and other services in the Organizational
Development Division, a decrease in the number of new enrollees due to the temporary closure of all schools nationwide
in the Individual Development Division, and a decrease in the number of domestic personnel placements and temp staff
dispatched in the Matching Division. Consequently, consolidated business results for the nine months ended September
30, 2020 worsened in comparison with a typical year, and revenues for the full fiscal year are projected to drop by about
one-tenth compared with the previous fiscal year. However, the business environment has gradually been recovering since
the third quarter, when the state of emergency was completely lifted, and the business results of the Individual
Development Division, which was most impacted by COVID-19, are on a recovery track, despite the closure of its
schools for approximately two months, as the Group perceives a growing trend for greater needs for individual learning.
As a result, the demand forecast for 2021 and thereafter is expected to be the same as the forecast as of the end of 2019.
Despite the extreme difficulty of predicting factors such as the timing of the end of the spread of COVID-19 and thescope of infection, in light of the above, the Group has made accounting estimates regarding impairment of fixed assets,
including goodwill, the recoverability of deferred tax assets and other matters based on the information available as of thedate of preparation of these condensed consolidated financial statements.
The financial position and operating results of the Group may be affected by the state of the spread of infection in the
future.
18

(Notes Regarding Assumption of Going Concern)
None applicable(Significant Subsequent Events)
None applicable19