Consolidated Financial Statements for the Year Ended December 31, 2019 (IFRS)
These financial statements have been prepared for reference only.
February 13, 2020
Link and Motivation Inc.
Stock exchange listing: Tokyo, First Section
http://www.lmi.ne.jp/english
Code number: 2170
Representative: Ozasa Yoshihisa, Chairman and Representative Director
Contact: Ohno Shunichi, Director andGeneral Manager of Group Design Office
Phone: +81-3-6779-9494
Ordinary General Meeting of Shareholders (scheduled):
March 27, 2020
Start of distribution of dividends (scheduled):
March 25, 2020
Filing of Securities Report (Yuka Shoken Hokokusho) (scheduled): March 30, 2020
Supplementary documents for results:
No
Results briefing:No(Amounts are rounded down to the nearest million.)

1. Consolidated Results for the Year Ended December 31, 2019
(January 1, 2019 – December 31, 2019)(1) Revenues and Income(Percentages represent change compared with the same quarter of the previous year.)
Revenues

Year ended
December 31,
2019
Year ended
December 31,
2018

Income before
income taxes

Operating income

Net income
attributable toowners of the parent(¥ million)(%)

Net
income(¥ million)(%)(¥ million)(%)(¥ million)(%)(¥ million)(%)

38,191

(4.4)

2,007

(47.5)

1,904(43.8)

1,090(43.2)

1,086(44.2)

39,941

8.3

3,825

13.7

3,387

3.7

1,918

(8.5)

1,945

(7.7)

(¥ million)

(%)

(¥)

Dilutedearnings per
share
(¥)

1,103

(39.8)

10.30

10.28

14.7

5.3

5.3

1,832

(27.7)

18.42

18.36

27.1

12.2

9.6

Comprehensive
incomeYear ended
December 31,
2019
Year ended
December 31,
2018

Basic earnings
per share

Return on
equityReturn on
assetsOperatingmargin

(%)

(%)

(%)

(2) Financial Position

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

Total assets(¥ million)

Total equity(¥ million)

44,787
27,664

7,033
7,681

Equity attributableto owners of theparent(¥ million)
7,043
7,696

Ratio of equity
attributable toowners of the parent
to total assets (%)
15.7
27.8

Equity per share
attributable toowners of the parent
(¥)
67.13
72.87

(3) Cash Flow
Cash flow fromoperating activities(¥ million)
Year ended
December 31, 2019Year ended
December 31, 2018

Cash flow frominvesting activities(¥ million)

Cash flow fromfinancing activities(¥ million)

Cash and cash equivalents
at end of period(¥ million)

3,827(2,990)

(655)

2,160

3,611

(3,121)

(164)

1,979

2. Dividends
Dividends per share

2018
2019
2020 (est.)

1st Qtr.

Interim3rd Qtr.

Year-end

Full year

1.70
1.80
1.80

1.70
1.80
1.80

1.70
1.80
1.80

1.70
1.80
1.80

6.80
7.20
7.20

Total dividends
paid (full year)(¥ million)

Payout
ratio
(%)

707
758

36.9
69.6
—

Dividends/
Net assets(Consolidated)
(%)
10.0
10.3

3. Forecast of Consolidated Results for 2020 (January 1, 2020 – December 31, 2020)
Revenues
Full-year(¥ million)
41,000(%)
7.4(Percentages represent change compared with the previous fiscal year.)Net
Net income attributable
Basic earnings
Operating income
incometo owners of the parent
per share(¥ million)(%)(¥ million) (%)(¥ million)
(¥)
2,870
42.9
1,570
44.0
1,430
31.7
13.57

Notes
(1) Changes in Significant Subsidiaries during the Period (Changes in Specified Subsidiaries Associated with 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)
Year ended December 31, 2019: 113,068,000; Year ended December 31, 2018: 113,068,000(b) Number of treasury shares at the end of the period:
Year ended December 31, 2019: 8,145,796; Year ended December 31, 2018: 7,445,757(c) Average number of shares outstanding (cumulative with earlier quarters):
Year ended December 31, 2019: 105,406,071; Year ended December 31, 2018: 105,622,293(Reference) Summary of Non-consolidated Results
1. Non-consolidated Results for 2019 (January 1, 2019 – December 31, 2019)(1) Revenues and Income(Percentages represent change compared with the previous year.)Net salesYear ended
December 31, 2019Year ended
December 31, 2018

Operating income(%)(¥ million)(%)(¥ million)

8,394(10.5)

977(61.7)

797(67.0)

625(48.2)

9,375

18.1

2,549

52.1

2,416

58.8

1,207

64.5

(¥)

(%)

Net
income(¥ million)(%)(¥ million)

Basic earnings
per share
Year ended
December 31, 2019Year ended
December 31, 2018

Ordinary income

Dilutedearnings per
share
(¥)

5.94

5.93

11.43

—

(2) Financial Position
Total assets
Net assets
Net assets/
Net assets(¥ million)(¥ million)
Total assets (%)
per share (¥)
As of December 31, 2019
26,866
5,171
19.3
49.29
As of December 31, 201824,106
6,037
25.0
57.16
(Reference) Net worth: As of December 31, 2019: ¥5,171 million; As of December 31, 2018: ¥6,037 million* These Financial Statements Are Not Subject to Review by a Certified Public Accountant or Auditing Firm

* Explanation of the Proper Use of Performance Forecasts and Other Special Instructions
 Consolidated forecasts and other statements regarding the future contained in this document are based on
information currently available to the Company and certain reasonable assumptions. Actual performance may differ
substantially due to numerous factors.

Contents of Attachments
1. Overview of Results of Operations and Other Information ..................................................................................... 2(1) Overview of Results of Operations for 2019 ...................................................................................................... 2(2) Overview of Financial Position for 2019 ............................................................................................................ 8(3) Overview of Cash Flow for 2019 ......................................................................................................................... 8(4) Forecast ............................................................................................................................................................... 8(5) Important Information Regarding Assumption of Going Concern ................................................................ 8
2. Basic Policy Regarding Selection of Accounting Standards .................................................................................... 8
3. Consolidated Financial Statements and Main Notes ............................................................................................... 9(1) Consolidated Balance Sheets .............................................................................................................................. 9(2) Consolidated Statements of Operations and Comprehensive Income ............................................................11(3) Consolidated Statements of Changes in Equity ................................................................................................13(4) Consolidated Statements of Cash Flow..............................................................................................................14(5) Notes to Consolidated Financial Statements ................................................................................................... 15
Notes Regarding Assumption of Going Concern .......................................................................................15
Changes in Accounting Policies ...................................................................................................................15
Changes in Accounting Estimates ...............................................................................................................16
Segment Information, Etc. ............................................................................................................................16
Per Share Information ..................................................................................................................................19
Significant Subsequent Event ......................................................................................................................20

1

1. Overview of Results of Operations and Other Information(1) Overview of Results of Operations for 2019
The Link and Motivation Group (the “Group”) supports the transformation of numerous companies andindividuals 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 meaningfulsociety.” In industries related to the Group, the market grew moderately as demand increased for facilitation of higher
labor productivity and personnel recruiting associated with the promotion of work style reform.
In this economic environment, the Group’s revenues were ¥38,191 million (a 4.4% decrease compared with theprevious year), gross profit was ¥14,602 million (a 6.7% decrease), operating income was ¥2,007 million (a 47.5%
decrease) and net income attributable to owners of the parent was ¥1,086 million (a 44.2% decrease).
The segment and business classifications of the Group are as shown below, and an overview of 2019 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, segment revenues for 2019 were ¥11,729 million (an 11.7% decrease), and segment income was¥7,696 million (a 12.4% decrease), both decreasing substantially compared with the previous year. An overview ofoperating results by business for 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 motivation in an organization based on its original diagnostic framework and offers various onestop solutions for innovations related to organizations and personnel, including recruiting, training, framework andcorporate culture.
In this business, revenues in 2019 were ¥8,883 million (an 11.8% decrease) and gross profit was ¥6,977 million (a13.3% 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

Year ended
December 31, 2018
10,071[8,051]
2,503
4,879
1,951
736

Year ended
December 31, 2019
8,883
[6,977]
2,298
3,302
2,660
621

YoY change(%)(11.8)(13.3)(8.2)(32.3)
36.4(15.5)In 2019, as a result of deploying personnel and other resources in the first half to focus on Member/database services,primarily the Motivation Cloud series of cloud-based organizational improvement services, full-year revenues from
Consulting decreased substantially compared with the previous year.
Revenues grew steadily for the Motivation Cloud series of cloud-based organizational improvement services, which
are part of the Member/database category and are priority services for the Group. Progress in the number of deliveries andmonthly fee revenue was as follows.
Table 2. Number of Deliveries and Monthly Fee Revenue for the Motivation Cloud Series at Quarter-End
2018
2019
March
June
September
December
March
June
September December
Number of
435
527
563
662
688
718
749
783
deliveries
Monthly fee
revenue
72,08692,998103,410130,663
140,201 153,064
167,497
192,961(¥ thousand)
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). We began providing these monthly pay-as-you-go services 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. However, the absence of a“yardstick” for visualizing the state of the organization and of a PDCA cycle for truly achieving organizational
improvements has been an issue for many organizational activities. Against this backdrop, capturing companies’ rising3

needs for organizational transformation has led to growth in the number of deliveries of the Motivation Cloud series ofservices. Total monthly fee revenue for the Motivation Cloud series in December 2019 was ¥192,961 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 assists in stimulating the interest and promoting the understanding of stakeholders through support for creationof 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 in 2019 were ¥3,430 million (a 17.6% decrease) and gross profit was ¥1,131 million (a3.5% 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

Year ended
December 31, 2018
4,163
[1,172]
1,829
2,334

Year ended
December 31, 2019
3,430
[1,131]
1,076
2,353

YoY change(%)(17.6)(3.5)(41.1)
0.8

In 2019, revenues decreased substantially and gross profit decreased slightly compared with the previous year due toan effort to stabilize the business by focusing on IR-related media, which has low sensitivity to economic conditions,rather than Event production, in addition to the impact of weak revenues from Consulting.
The business will work for growth by developing products with greater advantages using “Motivation Engineering,”
the Group’s core technology.

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 2019 were ¥7,838 million (a 0.5% decrease) and segment income was ¥2,822
million (a 5.4% decrease). An overview of operating results by business for 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 in 2019 were ¥7,139 million (a 0.2% increase) and gross profit was ¥2,536 million (a 3.5%
decrease). Results by product in the Career School business were as follows.
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

Year ended
December 31, 2018
7,122
[2,629]
3,030
984
568
676
1,252
169
444

Year ended
December 31, 2019

YoY change
(%)

7,139
[2,536]
2,883
947
582
693
1,179
186
667

0.2
(3.5)
(4.9)
(3.7)
2.5
2.6
(5.8)
9.8
50.3

During 2019, gross profit decreased slightly compared with the previous year due to investment in new schools,
among other factors. As a result of steady performance by Accounting, National exam and English conversation courses,
revenues grew steadily, increasing slightly compared with the previous year.
The business will provide greater support for individual career planning by focusing on sales of i-Company-Club, asubscription model service launched in November 2019 to support habits of self-improvement.
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 school for students preparing for junior high school entrance exams. The Cram School businesswill utilize 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.
In this business, revenues in 2019 were ¥704 million (a 7.1% decrease) and gross profit was ¥288 million (an 18.7%
decrease).
During 2019, revenues decreased and gross profit decreased substantially compared with the previous year due to theimpact of lower-than-expected growth in enrollment in the first half. 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.
5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 2019 were ¥19,487 million (a 3.1% decrease) and segment income was ¥4,845
million (a 2.3% decrease), both decreasing slightly compared with the previous year. An overview of operating results bybusiness for 2019 is as follows.
ALT Placement Business
The ALT Placement business dispatches foreign assistant language teachers (ALTs) of foreign languages toelementary, junior high and high schools throughout Japan and provides English-language instruction services on contract.
In this business, where barriers to entry are extremely high due to the importance placed on relationships of trust withcustomers and a company’s track record, the Group has established the predominant number-one share among privatecompanies. Japan’s English education market continues to expand due to the impact of the upcoming Tokyo Olympics
and other factors.
In this business, revenues in 2019 were ¥12,617 million (a 3.5% increase) and gross profit was ¥3,421 million (a 2.1%
increase).
During 2019, revenues and gross profit both increased compared with the previous year due to stable growth fromprecisely capitalizing on the expansion of English education promoted by the Ministry of Education, Culture, Sports,
Science and Technology (MEXT). This business has only one product.
The business will work to raise the quality of its 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 referrals and temp staffing of thehuman resources an organization needs to grow. The main businesses include a new graduate recruiting and referralbusiness that connects university students looking for employment with company orientation meetings and interviews, a
mid-career referral business that matches working adults looking to change jobs with companies, and a temp staff
business that dispatches personnel for sales, clerical work, and other fields. In addition, to capitalize on rising needs for
employment of foreigners, the Personnel Placement & Temp Staff business also conducts a business that provides onestop foreigner recruiting, training and labor support for companies that want to hire them.
In this business, revenues in 2019 were ¥7,635 million (a 10.8% decrease) and gross profit was ¥1,938 million (a 7.2%
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

Year ended
December 31, 2018
8,558
[2,089]
6,742
624
619
572

Year ended
December 31, 2019
7,635
[1,938]
5,759
573
687
616

YoY change(%)(10.8)(7.2)(14.6)
(8.1)
10.9
7.7

During 2019, revenues decreased substantially and gross profit decreased compared with the previous year due to
weak growth in revenues from Store sales temp staff and Office temp staff, which account for the majority of sales,
caused by the trend toward promoting regular employment.
The business intends to 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 andreferrals.

6

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 statement of financial position.

7

(2) Overview of Financial Position for 2019
Total assets as of December 31, 2019 were ¥44,787 million, an increase of ¥17,122 million from the end of theprevious year. This was mainly due to factors including a ¥15,549 million increase in property, plant and equipment due
to an increase in right-of-use assets and other items in connection with the application of IFRS 16.
Total liabilities were ¥37,754 million, an increase of ¥17,771 million from the end of the previous year. This was
mainly due to an ¥18,828 million increase in interest-bearing and other financial liabilities as a result of an increase inlease liabilities and other items in connection with the application of IFRS 16, among other factors.
Total equity was ¥7,033 million, a decrease of ¥648 million from the end of the previous year. This was mainly due tofactors including a decrease of ¥640 million in retained earnings in connection with the application of IFRS 16.
(3) Overview of Cash Flow for 2019
Cash and cash equivalents (“cash”) as of December 31, 2019 were ¥2,160 million, an increase of ¥180 million during
the period.
Cash flow during 2019 was as follows.
Cash Flow from Operating Activities
Net cash provided by operating activities was ¥3,827 million, an increase of ¥215 million compared with the previous
year. The principal factor decreasing net cash was income before income taxes of ¥1,904 million, a decrease of ¥1,483
million compared with the previous year, while the principal factor increasing net cash was depreciation and amortization
totaling ¥2,480 million (compared with ¥751 million in the previous year).
Cash Flow from Investing Activities
Net cash used in investing activities was ¥2,990 million, a decrease in cash used of ¥130 million compared with theprevious year. The principal factor increasing net cash was a ¥1,673 million increase in proceeds from sale of investment
securities, while the principal factor decreasing net cash was ¥4,075 million in advance payments.
Cash Flow from Financing Activities
Net cash used in financing activities was ¥655 million. In the previous year, net cash used in financing activities was¥164 million. The principal factor increasing net cash was a ¥2,434 million increase in proceeds from long-term financial
liabilities, while the principal factor decreasing net cash was a ¥1,827 million increase in repayment of lease liabilities.
(4) Forecast
The Group will work to increase revenues from taking advantage of companies’ rising expectations for HR Tech, a
return to form in the Organizational Development Division and steady growth of the Motivation Cloud series.
Furthermore, with the addition of OpenWork Inc. as a new consolidated subsidiary, the Group aims for greater synergy
with the Organizational Development Division and forecasts increases in revenues and income.
(5) Important Information Regarding Assumption of Going Concern
None applicable
2. Basic Policy Regarding Selection of Accounting Standards
The Group has applied International Financial Reporting Standards (IFRS) since the first quarter of the year ended
December 31, 2017 to improve the international comparability of its financial information in capital markets. The Group
formerly applied generally accepted accounting principles in Japan (Japanese GAAP).

83. Consolidated Financial Statements and Main Notes(1) Consolidated Balance Sheets(Millions of yen, rounded down to the nearest million)

As ofDecember 31, 2018ASSETS
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

9

As of
December 31, 2019

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

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

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

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

(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

10

As of
December 31, 2018

As ofDecember 31, 2019

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

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

6,458
435
724
261
7,881
19,98224,092462
218
148
24,92237,754

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

1,380
1,987(1,733)
5,440
(31)
7,043
(10)
7,033
44,787

(2) Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Operations(Millions of yen, rounded down to the nearest million)
Year ended
Year ended
December 31, 2018
December 31, 2019
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

39,941
24,29015,651
11,592
24
258
3,825
29
132
(335)
3,387
1,468
1,918

38,191
23,58914,602
11,773
171
992
2,007
24
170
43
1,904
814
1,090

1,945
(27)
1,918

1,086
4
1,090
(Yen)

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

18.42
18.36

11

10.30
10.28

Consolidated Statements of Comprehensive Income(Millions of yen, rounded down to the nearest million)
Year ended
Year ended
December 31, 2018 December 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 othercomprehensive income
Total of items that will not be reclassified to profit or loss
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(Attributable to)
Owners of the parent
Non-controlling interests
Comprehensive income

12

1,918

1,090

(85)
(85)

13
13

(0)
(0)
(86)
1,832

(0)
(0)
13
1,103

1,859
(27)
1,832

1,099
4
1,103

(3) Consolidated Statements of Changes in Equity
Year ended December 31, 2018
(Millions of yen, rounded down to the nearest million)
Equity attributable to owners of the parent
SharecapitalJanuary 1, 2018
Net income
Other comprehensive
incomeTotal comprehensive
incomeAcquisition of treasury
stock
Changes in ownershipinterest in subsidiaries
Dividends from surplus
Transfer from othercomponents of equity
to retained earnings
Total transactions with theowners
December 31, 2018

1,380

—

Capitalsurplus2,137—

TreasurysharesRetainedearnings

Other
componentsof equity

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity(1,373)

3,426
1,945

1,121
—

6,692
1,945

4
(27)

6,697
1,918

(86)

(86)

—

(86)

(86)

1,859

(27)

1,832

—

1,945

(0)

(0)

(147)

—
1,380

(147)
1,989

(0)
(1,373)

(707)

—

(147)
(707)

98

(98)

—

(608)
4,763

(98)
936

(855)
7,696

(0)
7

(140)
(707)
—

7
(15)

(848)
7,681

Year ended December 31, 2019
(Millions of yen, rounded down to the nearest million)
Equity attributable to owners of the parent
SharecapitalJanuary 1, 2019
Impact of change inaccounting policy
Balance at beginning of
period after reflectingchange in accounting
policyNet income
Other comprehensive
incomeTotal comprehensive
incomeAcquisition of treasury
stock
Dividends from surplus
Transfer from othercomponents of equity
to retained earnings
Total transactions with theowners
December 31, 2019

1,380

Capitalsurplus

1,989

TreasurysharesRetainedearnings

Other
componentsof equity

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity(1,373)

4,763

936

7,696

(15)

7,681

(640)

1,380

—

—
1,380

1,989

(1,373)

—

—

(1)

(360)

(1)
1,987

(360)
(1,733)

4,122
1,086

(640)

(640)

936
—

7,055
1,086

(15)
4

7,040
1,090

13

13

—

13

1,086

13

1,099

4

1,103

(749)

—

(362)
(749)

(362)
(749)

980

(980)

—

—

231
5,440

(980)
(31)

(1,111)
7,043

13

—
(10)

(1,111)
7,033

(4) Consolidated Statements of Cash Flow
(Millions of yen, rounded down to the nearest million)
Year ended
Year ended
December 31, 2018 December 31, 2019
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
Loss (gain) on sales of investments accounted for using the equity
methodDecrease (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 acquisition of investments accounted for using theequity method
Proceeds from sales of investments accounted for using the equity
methodPayments for security deposits and guarantees
Proceeds from recovery of security deposits and guarantees
Advance payments
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
Repayments of lease liabilities
Payments for acquisition of interest in subsidiary from noncontrolling interests
Payments for acquisition of treasury shares
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 year
Cash and cash equivalents at end of year

14

3,387
751
207
102
335

1,904
2,480
959
146
(43)

—
395
(91)
6
(102)
4,992
14
(108)
17
(1,304)
3,611

(160)
418
22
8
(43)
5,693
9
(155)
62
(1,783)
3,827

(275)
(731)
(135)
293

(337)
(772)
(204)
1,966

(2,252)

—

—
(163)
155
—
(12)
(3,121)

498
(122)
120
(4,075)(63)(2,990)506
2,821(2,531)(710)—(1,000)5,255(1,972)(747)(1,827)

(140)
—
(110)
(164)
(0)
325
1,654
1,979

—
(362)
—
(655)
(0)
180
1,979
2,160

(5) Notes to Consolidated Financial Statements(Notes Regarding Assumption of Going Concern)
None Applicable(Changes in Accounting Policies)
Significant accounting policies applied in these consolidated financial statements are the same as those applied to theconsolidated financial statements for the previous fiscal year, except for the following.
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 leaseliabilities for lease transactions are measured at the present value of the remaining total lease payments at thecommencement date of 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, anddepreciated over the term of the lease on a straight-line basis.
The Group presents right-of-use assets in “property, plant and equipment” and “intangible assets,” and leaseliabilities in “interest-bearing and other financial liabilities” on the 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”)and IFRIC 4 “Determining whether an Arrangement contains a Lease.” From the date of application, this assessment
is determined 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
and lease liabilities are recognized at the date of initial application. These lease liabilities have been measured at thepresent value of the remaining lease payments discounted using the lessee’s incremental borrowing rate at the date ofinitial application. The weighted average of the lessee’s incremental borrowing rates is 0.44%. Right-of-use assets
are initially measured 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 amountsof right-of-use assets and lease liabilities at the date of initial application are the carrying amounts of lease assets andlease liabilities, 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 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 realestate.

15

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 theprevious 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.
(Changes in Accounting Estimates)
None applicable(Segment Information, Etc.)(Segment Information)
1. Overview of Reportable Segments
The reportable segments of the Group are based on available financial information divided among the constituent
units of the Group and are subject to periodic analysis by the Board of Directors to determine allocation of management
resources and to evaluate operating results.
The Group draws up comprehensive strategies and conducts business activities for the services it handles.
The Group is composed of divisional segments based on the form in which services are provided, with four reportablesegments: the “Organizational Development Division,” the “Individual Development Division,” the “Matching Division
ALT Placement Business,” and the “Matching Division Personnel Placement & Temp Staff Business.”
2. Revenues, Income or Loss, and Other Items in Reportable Segments
The accounting policies for reportable segments are the same as the Group’s accounting policies presented in Note 3.
Income of reportable segments is based on gross profit on the Consolidated Statement of Operations.
Figures for intersegment transactions are decided using the same method as for sales to outside customers.

16

Revenues, income or loss, and other items for each reportable segment of the Group are as follows.
Year ended December 31, 2018
(Millions of yen)
Reportable Segment
Matching Division
Organizational
Development
Division

Individual
Development
Division

ALT
Placement
Business

Personnel
Placement& TempStaff
Business

Total

Other
(Note 1)

Adjustment(Note 2)

Consolidated

Segment revenues
Revenue to outside
customers
12,4497,851
12,072
7,538
39,91130—
39,941
Intersegment revenues
and transfers
828
28
118
1,020
1,996
91
(2,087)—
Total
13,277
7,879
12,191
8,558
41,907121(2,087)39,941
Segment income
8,786
2,983
3,352
2,089
17,211—(1,560)15,651
Selling, general andadministrative expenses
11,592Other revenue/expenses
(net)
(233)
Financial
revenue/expenses (net)(102)
Equity in earnings ofassociates(335)
Income before income
taxes
3,387
Other items
Depreciation
400
245
33
70
750
0
—
751
Impairment loss
16
179
—
11
207
—
—
207
Notes: 1. The Other segment consists of the restaurant business and other operations not included in the other reportable segments.
2. Adjustment is the elimination of intersegment transactions.

17Year ended December 31, 2019
(Millions of yen)
Reportable Segment
Matching Division
Organizational
Development
Division

Individual
Development
Division

ALT
Placement
Business

Personnel
Placement& TempStaff
Business

Total

Other
(Note 1)

Adjustment(Note 2)

Consolidated

Segment revenues
Revenue to outside
customers
11,288
7,824
12,472
6,575
38,16030—
38,191
Intersegment revenues
and transfers
441
14
144
1,060
1,661
65
(1,726)—
Total
11,7297,838
12,617
7,635
39,82295(1,726)38,191
Segment income
7,696
2,822
3,421
1,938
15,878(15)(1,261)
14,602
Selling, general andadministrative expenses
11,773
Other revenue/expenses
(net)
(820)
Financial
revenue/expenses (net)(146)
Equity in earnings ofassociates
43
Income before income
taxes
1,904
Other items
Depreciation
1,585
719
57
116
2,479
0
—
2,480
Impairment loss
54
802
—
102
959
—
—
959
Notes: 1. The Other segment consists of the restaurant business and other operations not included in the other reportable segments.
2. Adjustment is the elimination of intersegment transactions.

18(Per Share Information)
1. Basic earnings per share and diluted earnings per share
Year ended
December 31, 2018
18.42
18.36

Basic earnings per share (Yen)
Diluted earnings per share (Yen)

2. Basis for calculating basic earnings per share and diluted earnings per share
Year ended
December 31, 2018
Profit used to calculate basic and diluted earnings per share
Net income attributable to owners of the parent(Millions of yen)
1,945
Amount not attributable to ordinary shareholders of theparent (Millions of yen)—
Profit used to calculated basic earnings per share(Millions of yen)
1,945Profit adjustment amount
Adjustment for share options to be issued by associates(Millions of yen)
(6)
Profit used to calculated diluted earnings per share(Millions of yen)
1,939
Weighted average number of ordinary shares used to calculate
basic and diluted earnings per share (Shares)
Weighted average number of ordinary shares used to
calculate basic earnings per share (Shares)
105,622,293
Effect of dilutive shares: stock options—
Weighted average number of ordinary shares used to calculate
diluted earnings per share (Shares)
105,622,293

19Year ended
December 31, 2019
10.30
10.28

Year ended
December 31, 2019

1,086
—
1,086

(2)
1,084

105,406,071—
105,406,071

(Significant Subsequent Event)(Acquisition of Additional Shares of OpenWork Inc.)
At a Board of Directors meeting held on November 14, 2019, the Company resolved to acquire additional shares of
OpenWork Inc. (former name: Vorkers Inc.), an equity-method associate, and to make it a subsidiary, as detailed below,
and entered into a share transfer agreement on the same date. Pursuant to said agreement, the Company paid the sharetransfer price on December 30, 2019, and accepted the share transfer and made OpenWork Inc. a consolidated subsidiaryon January 1, 2020. The amount of the share transfer price is included in “Other current assets” on the Consolidated
Balance Sheets.
1. Purpose of the Share Acquisition
In cooperation with the Company, OpenWork Inc. has been operating OpenWork Recruiting, which matches
individuals seeking jobs with companies that have high scores for their organizational conditions on OpenWork, aplatform operated by OpenWork Inc. that uses online employee reviews to provide information to job seekers.
The purpose of this share acquisition is to support corporate adaptation to the labor market to help realize a society
with many companies with high employee engagement together with OpenWork Inc.
With a rapid increase in the number of registrants for OpenWork, which is operated by OpenWork Inc., and anincrease in the number of online reviews of organizational conditions, corporate organizational conditions will become
more open. This is expected to accelerate polarization between companies with good organizational conditions, which job
seekers will choose to work for, and companies with poor organizational conditions, which job seekers will choose not towork for. As a result, the Company intends to use its Motivation Cloud series and consulting to support companies in theirefforts to further raise employee engagement in order to become companies that jobs seekers choose to work for.
The trend described above will overturn the previous ground rules in the labor market, in which companies that
conduct large-volume advertising attract applicants, and create new ground rules, in which companies with a high level of
employee engagement attract applicants. The Company also intends to support this course of events through OpenWork
Recruiting, which OpenWork Inc. operates in cooperation with the Company. The Company will accelerate this trend by
making OpenWork Inc. its subsidiary through this additional share acquisition, with the aim of helping to realize a society
with many companies with high employee engagement.
2. Overview of the Company Subject to the Share Acquisition (OpenWork Inc.)(1) Company Name

OpenWork Inc.

(2) Location

Shibuya, Shibuya-ku, Tokyo(3) Business Description Operation of information service and fee-based introduction
business for job seekers using the Internet and other media(4) Paid-in Capital¥645 million

3. Acquisition Cost of Company Acquired and Breakdown
Consideration for Acquisition (Cash)¥4,075 million

Acquisition Cost

¥4,075 million

4. Funding and Payment Method
Allocated from funds on hand and borrowings from financial institutions
5. Impact on Business Results
This matter had no impact on the Company’s consolidated business results for the fiscal year ended December 31,
2019. In addition, because accounting treatment of this share acquisition has not been completed, detailed
information on accounting treatment of business combination is not presented.
6. Fair Value of Assets Acquired and Liabilities Assumed at the Date of Business Combination
20

Not determined at this time.
7. Amount of Goodwill Generated, Etc.
Because allocation of acquisition cost has not been completed, undetermined at this time.

21