Consolidated Financial Statements for
the Three Months Ended March 31, 2019 (IFRS)
These financial statements have been prepared for reference only.

May 14, 2019
Link and Motivation Inc.
Stock exchange listing: Tokyo, First Section
http://www.lmi.ne.jp
Code number: 2170
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):
May 14, 2019
Start of distribution of dividends (scheduled):
June 25, 2019
Supplementary documents for quarterly results:
No
Quarterly results briefing:No(Amounts are rounded down to the nearest million.)

1. Consolidated Results for the Three Months Ended March 31, 2019
(January 1, 2019 - March 31, 2019)(1) Revenues and Income
Revenues(¥ million)
Three months ended
March 31, 2019
Three months ended
March 31, 2018

Three months ended
March 31, 2019
Three months ended
March 31, 2018

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

9,189

(4.7)

424

(50.7)

403(52.7)

197(63.0)

9,642

10.1

862

23.5

853

27.3

533

29.1

Net income
attributable toowners of theparent(¥ million)

Change(%)

Comprehensive
income(¥ million)

Change(%)

Basic earnings
per share (¥)

Dilutedearnings per
share (¥)

200

(63.5)

433

15.9

1.90

1.88

550

33.2

374

(51.6)

5.21—(2) Financial Position

As of March 31, 2019
As of December 31, 2018

Total assets(¥ million)

Total equity(¥ million)

43,794
27,664

7,295
7,681

Equity attributableto owners of theparent(¥ million)
7,313
7,696

Ratio of equity
attributable to ownersof the parent to total
assets (%)
16.7
27.8

2. Dividends
1st Qtr.
1.70
1.80

2nd Qtr.
1.70

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

Total
6.80

1.80

7.20

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

3. Forecast of Consolidated Results for 2019 (January 1, 2019 - December 31, 2019)(Percentages represent change compared with the previous fiscal year.)
Net income
Basic
OperatingNet
Revenues
attributable toearnings
incomeincomeowners of the parent
per share(¥ million)(%) (¥ million) (%) (¥ million)(%)(¥ million)(%)(¥)
Full-year
42,500
6.4
4,500
17.6
2,570
33.9
2,550
31.0
24.14
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 a Change in the
Scope of Consolidation): No(2) Changes in Accounting Policies and Changes in Accounting Estimates(a) Changes in accounting policies required by IFRS: Yes(b) Changes in accounting policies other than (a) above: No(c) Changes in accounting estimates: No(3) Number of Shares Issued and Outstanding (Common Stock)(a) Number of shares at the end of the period (including treasury stock)Three months ended March 31, 2019: 113,068,000; Year ended December 31, 2018: 113,068,000(b) Number of treasury shares at the end of the period:
Three months ended March 31, 2019: 7,445,757; Year ended December 31, 2018: 7,445,757(c) Average number of shares outstanding (cumulative with earlier quarters):
Three months ended March 31, 2019: 105,622,243; Three months ended March 31, 2018: 105,622,300* These Quarterly 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 Three Months Ended March 31, 2019 ................................ 2(2) Overview of Financial Condition for the Three Months Ended March 31, 2019.................................... 7(3) Overview of Cash Flow for the Three Months Ended March 31, 2019 ................................................... 7(4) Forecast ......................................................................................................................................................... 7(5) Important Information Regarding Assumption of Going Concern ......................................................... 7
2. Condensed Quarterly Consolidated Financial Statements and Main Notes ................................................. 8(1) Condensed Quarterly Consolidated Statement of Financial Position ..................................................... 8(2) Condensed Quarterly Consolidated Statements of Operations and Comprehensive Income ............. 10(3) Condensed Quarterly Consolidated Statement of Changes in Equity ................................................... 12(4) Condensed Quarterly Consolidated Statement of Cash Flow ................................................................ 13(5) Notes to Condensed Quarterly Consolidated Financial Statements ...................................................... 14
Changes in Accounting Policies ........................................................................................................... 14
Notes Regarding Assumption of Going Concern ................................................................................ 15
Significant Subsequent Events ............................................................................................................ 15

1

1. Overview of Results of Operations and Other Information(1) Overview of Results of Operations for the Three Months Ended March 31, 2019
In the Japanese economy during the first quarter of 2019 (January 1, 2019 – March 31, 2019), corporate
production activities and capital investment were on a recovery track and personal consumption, which had been in apersistent slump, 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,” 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.” The market also grewmoderately 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 ¥9,189 million (a 4.7% decrease compared with thesame period of the previous year), gross profit was ¥3,513 million (a 6.3% decrease), operating income was ¥424
million (a 50.7% decrease) and net income attributable to owners of the parent was ¥200 million (a 63.5% decrease).
The segment and business classifications of the Group are as shown below, and an overview of the first quarter 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.
In this segment, due to slower growth in the Consulting & Outsourcing Business, segment revenues for the firstquarter of 2019 were ¥2,555 million (a 17.5% decrease) and segment income was ¥1,772 million (a 15.8% decrease),decreasing substantially compared with the same period of the previous year. An overview of operating results bybusiness for the first quarter 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 quarter of 2019 were ¥2,019 million (a 19.4% decrease) and gross profit was¥1,608 million (a 17.5% 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

Three months ended
March 31, 2018
2,505
[1,949]
595
1,238
437
234

Three months ended
March 31, 2019
2,019
[1,608]
434
847
578
157

YoY change(%)(19.4)(17.5)(26.9)(31.6)
32.3(32.6)In the first quarter of 2019, revenues and gross profit from Package and Consulting both decreased substantiallycompared with the same period a year earlier. At the end of the previous fiscal year, the staff of the Consulting &Outsourcing Business concentrated on sales of Member/database services (Motivation Cloud) and as a result, Package
and Consulting sales did not grow in first quarter of 2019. As a recovery measure, the business has been divided into one
organization specializing in Member/database services (Motivation Cloud) and another specializing in Package andConsulting sales, and their respective roles were clearly delineated.
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
Number of contact points
505
576
641
718
803
Monthly fee revenue (¥ thousand)
72,08692,998103,410130,663
140,201
Motivation Cloud is a cloud-based service in the field of HR Tech (human resources technology) for managing
employee engagement (mutual understanding, empathy and commitment between companies and employees). We beganproviding this monthly pay-as-you-go product in July 2016. The cumulative number of contact points that have adopted
Motivation Cloud has grown steadily to 803 as of March 31, 2019.
During the first quarter of 2019, there was steady progress in the number 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 smoothly generating stable revenue, and total monthly fee revenue for March 2019 was¥140,201 thousand. Inquiries from major companies are currently increasing and the average fee is expected to rise.
Consequently, by enhancing its response to major companies, centered on product development, the Company believes
that matters will proceed smoothly in the future, including meeting annual targets.
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 quarter of 2019 were ¥733 million (a 13.0% decrease) and gross profit was¥255 million (a 4.6% 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

Three months ended
March 31, 2018
842
[268]
324
517

Three months ended
March 31, 2019
733
[255]
306
426

YoY change(%)(13.0)(4.6)(5.5)(17.7)In the first quarter of 2019, with the intention of stabilizing operations, the Event & Media business focused on IRrelated media with low sensitivity to economic swings and cut back on other products, as well as on intentionallyreducing orders with a high cost ratio for the business overall. As a result, revenues decreased substantially and grossprofit 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, growth slowed in the Cram School business but was firm in the Career School business. As a result,segment revenues for the first quarter of 2019 were ¥1,893 million (a 1.0% increase) and segment income was ¥633
million (a 4.6% decrease). An overview of operating results by business for the first quarter 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 quarter of 2019 were ¥1,731 million (a 1.8% increase) and gross profit was ¥573
million (a 2.8% 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

Three months ended
March 31, 2018

Three months ended
March 31, 2019

YoY change
(%)

1,700
[589]
735
230
141
156
309
43
83

1,731
[573]
717
229
159
156
278
48
140

1.8
(2.8)
(2.4)
(0.5)
12.4
0.0
(9.9)
12.5
68.1

During the first quarter of 2019, revenues increased as a result of a focus on sales of Accounting and English
conversation courses. On the other hand, school relocations to raise efficiency temporarily increased expenses at thoseschools, and gross profit decreased slightly.
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 quarter of 2019 were ¥163 million (a 5.9% decrease) and gross profit was ¥60
million (an 18.6% decrease).
During the first quarter 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 quarter of 2019 were ¥5,029 million (a 1.0% decrease) and segment
income was ¥1,369 million (a 5.6% 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 quarter 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” by5

the Ministry of Education, Culture, Sports, Science and Technology (MEXT), looking ahead to the Tokyo Olympics to beheld in 2020.
In this business, revenues for the first quarter of 2019 were ¥3,144 million (an 8.2% increase) and gross profit was¥911 million (a 13.1% increase).
During the first quarter 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 quarter of 2019 were ¥2,067 million (an 11.4% decrease) and gross profit was¥592 million (a 4.0% 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

Three months ended
March 31, 2018
2,332
[617]
1,834
160
141
196

Three months ended
March 31, 2019
2,067
[592]
1,488
156
165
258

YoY change(%)(11.4)(4.0)(18.9)
(2.6)
16.8
31.5

During the first quarter of 2019, revenues decreased substantially and gross profit decreased slightly compared withthe same 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 Three Months Ended March 31, 2019
Total assets as of March 31, 2019 were ¥43,794 million, an increase of ¥16,130 million from the end of the previous
year. This was mainly due to factors including a ¥16,797 million increase in property, plant and equipment due to anincrease in right-of-use assets and other items in connection with the application of IFRS 16.
Total liabilities as of March 31, 2019 were ¥36,499 million, an increase of ¥16,516 million from the end of the previous
year. This was mainly due to factors including a ¥17,627 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 March 31, 2019 was ¥7,295 million, a decrease of ¥386 million from the end of the previous year.
This was 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 Three Months Ended March 31, 2019
Cash and cash equivalents (“cash”) as of March 31, 2019 were ¥1,349 million, a decrease of ¥630 million during theperiod.
Cash flow during the three months ended March 31, 2019 was as follows.
Cash Flow from Operating Activities
Net cash provided by operating activities was ¥397 million, a decrease of ¥177 million compared with the same periodof the previous year. The principal factors included a ¥449 million decrease in income before income taxes.
Cash Flow from Investing Activities
Net cash used in investing activities was ¥342 million, an increase in cash used of ¥14 million compared with thesame period of the previous year. The principal factors included a ¥52 million increase in payments for acquisition ofproperty, plant and equipment.
Cash Flow from Financing Activities
Net cash used in financing activities was ¥685 million, an increase in cash used of ¥333 million compared with thesame period of the previous year. The principal factors included a ¥516 million increase in repayment of lease liabilities.
(4) Forecast
There is no change from the forecast of consolidated results for 2019 announced in “Consolidated Financial
Statements for the Year Ended December 31, 2018” dated February 14, 2019.
(5) Important Information Regarding Assumption of Going Concern
None applicable72. Condensed Quarterly Consolidated Financial Statements and Main Notes(1) Condensed Quarterly Consolidated Statement 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

8

As of
December 31, 2018

As ofMarch 31, 2019

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

1,349
4,063
330
0
939
6,683

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

18,648
6,551
1,879
3,100
6,094
576
261
37,111
43,794

(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 ofMarch 31, 2019

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

2,456
1,700
6,898
201
6
1,804
13,067

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

21,937476
758
259
23,43236,4991,380
1,989(1,373)
4,763
936
7,696
(15)
7,681
27,664

1,380
1,989(1,373)
4,087
1,229
7,313
(18)
7,295
43,794

(2) Condensed Quarterly Consolidated Statements of Operations and Comprehensive Income
Condensed Quarterly Consolidated Statement of Operations(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

Three months ended
March 31, 2018

Three months ended
March 31, 2019

9,642
5,893
3,749
2,889
3
1
862
3
34
22
853
320
533

9,189
5,675
3,513
3,066
3
24
424
2
43
19
403
206
197

550
(16)
533

200
(3)
197
(Yen)

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

5.21
—

10

1.90
1.88

Condensed Quarterly Consolidated Statement of Comprehensive Income(Millions of yen, rounded down to the nearest million)

Three months ended
March 31, 2018

Three months ended
March 31, 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 other comprehensive income
Total of items that will not be reclassified to profit or loss

533

197

(156)
(156)

235
235

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

(2)
(2)
(158)
374

0
0
236
433

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

391
(16)
374

437
(3)
433

11

(3) Condensed Quarterly Consolidated Statement of Changes in Equity
Three months ended March 31, 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 of equity toretained earnings
Total transactions withthe owners
March 31, 2018

SharecapitalCapitalsurplusTreasurysharesRetainedearnings

1,380

2,137

(1,373)

3,426
550

—

—

—

550

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

1,121

6,692
550

4
(16)

6,697
533

(158)

(158)

—

(158)

(158)

391

(16)

374

Other
componentsof equity

(168)

—
1,380

—
2,137

—
(1,373)

(168)

(168)
—

0

(0)

—

(168)
3,807

(0)
962

(168)
6,914

—
(12)

(168)
6,902

Three months ended March 31, 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
incomeDividends fromsurplusTransfer from othercomponents of equity toretained earnings
Total transactions withthe owners
March 31, 2019

SharecapitalCapitalsurplusTreasurysharesRetainedearnings

1,380

1,989

(1,373)

4,763

Other
componentsof equity

936

(640)

1,380

—

1,989

—

(1,373)

—

4,122
200

200

—
1,989

—
(1,373)12

Noncontrollinginterests

Total
equity

7,696

(15)

7,681

(640)

(640)

936
—

7,055
200

(15)
(3)

7,040
197

236

236

—

236

236

437

(3)

433

(179)

—
1,380

Total equity
attributableto owners of
the parent

(179)

(179)
—

(56)

56

—

(235)
4,087

56
1,229

(179)
7,313

—
(18)

(179)
7,295

(4) Condensed Quarterly Consolidated Statement 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 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 quarter
Cash and cash equivalents at end of quarter

13

Three months ended
March 31, 2018

Three months ended
March 31, 2019

853
148
—
31
(22)
282
(121)
75
127
1,374
0
(29)
11
(779)
575

403
639
1
40
(19)
469
(51)
(65)
(12)
1,405
0
(36)
—
(971)
397

(60)
(175)
(120)
11
(28)
45
0
(328)

(113)
(176)
—
—
(66)
29
(15)
(342)

306
—
(460)
(171)
—
(26)
(352)
(2)
(107)
1,654
1,546

200
300
(489)
(179)
(516)
—
(685)
0
(630)
1,979
1,349

(5) Notes to Condensed Quarterly Consolidated Financial Statements(Changes in Accounting Policies)
Significant accounting policies applied in these condensed quarterly 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 three months ended March 31, 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 quarterly 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 quarterly consolidated statement of financial position at the date ofinitial application is mainly due to the difference in estimates for periods exceeding the non-cancellable period of the realestate.

14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.
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 incalculating the lease term.
(Notes Regarding Assumption of Going Concern)
None applicable(Significant Subsequent Events)
None applicable15