Consolidated Financial Statements for the Three Months Ended March 31, 2021 (IFRS)
These financial statements have been prepared for reference only.

Link and Motivation Inc.

May 13, 2021

Stock exchange listing: Tokyo, First Section
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):
May 13, 2021
Start of distribution of dividends (scheduled):
June 25, 2021
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, 2021
(January 1, 2021 - March 31, 2021)(1) Revenues and Income

Revenues(¥ million)
Three months ended
March 31, 2021
Three months ended
March 31, 2020Three months ended
March 31, 2021
Three months ended
March 31, 2020

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

8,962

(4.1)

630

4.3

575

1.8

280

(29.4)

9,345

1.7

604

42.5

565

40.1

397

101.3

Net income
attributable toowners of theparent(¥ million)

Change(%)

Comprehensive
income(¥ million)

Change(%)

Basic earnings
per share (¥)

Dilutedearnings per
share (¥)

245

(32.7)

268(736.6)

2.34

2.34

364

81.6

(42)

(109.7)

3.48

3.48

(2) Financial Position

As of March 31, 2021
As of December 31, 2020

Total assets(¥ million)

Total equity(¥ million)

32,64541,083

4,997
4,917

2. Dividends
1st Qtr.
1.80
1.80

2nd Qtr.
1.80

Equity attributableto owners of theparent(¥ million)
3,805
3,760

Ratio of equity
attributable to ownersof the parent to total
assets (%)
11.7
9.2

Dividends per share
3rd Qtr.
Year-end
1.80
1.80

Total
7.20

1.80

7.20

2020
2021
2021 (est.)
1.80
1.80
Note: Revisions since the most recently announced dividend forecast: No

3. Forecast of Consolidated Results for 2021 (January 1, 2021 - December 31, 2021)(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
37,700
6.9
1,370
467.2
670
—
Note: Revisions since the most recently announced forecast of results: No

570

—

5.43

Notes(1) Changes in Significant Subsidiaries during the Period (Changes in Specified Subsidiaries Due to Change in Scopeof Consolidation): No(2) Changes in Accounting Policies and Changes in Accounting Estimates(a) Changes in accounting policies required by IFRS: No(b) Changes in accounting policies other than (a) above: No(c) Changes in accounting estimates: Yes(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, 2021: 113,068,000; Year ended December 31, 2020: 113,068,000(b) Number of treasury shares at the end of the period:
Three months ended March 31, 2021: 8,145,796; Year ended December 31, 2020: 8,145,796(c) Average number of shares outstanding (cumulative with earlier quarters):
Three months ended March 31, 2021: 104,922,204; Three months ended March 31, 2020: 104,922,204* These Financial Statements Are Not Subject to Review by a Certified Public Accountant or Auditing Firm
* Explanation of the Proper Use of Performance Forecasts and Other Special Instructions
Consolidated forecasts and other statements regarding the future contained in this document are based on information
currently available to the Company and certain reasonable assumptions. Actual performance may differ substantially
due to numerous factors.

Contents of Attachments
1. Overview of Results of Operations and Other Information ............................................................................ 2(1) Overview of Results of Operations for the Three Months Ended March 31, 2021 ................................. 2(2) Overview of Financial Position for the Three Months Ended March 31, 2021 ....................................... 8(3) Overview of Cash Flow for the Three Months Ended March 31, 2021 ................................................... 8(4) Forecast ......................................................................................................................................................... 8(5) Important Information Regarding Assumption of Going Concern ......................................................... 8
2. Condensed Consolidated Financial Statements and Main Notes ................................................................... 9(1) Condensed Consolidated Statements of Financial Position ..................................................................... 9(2) Condensed Consolidated Statements of Operations and Comprehensive Income ............................... 11(3) Condensed Consolidated Statements of Changes in Equity ................................................................... 13(4) Condensed Consolidated Statements of Cash Flow ................................................................................. 14(5) Notes to Condensed Consolidated Financial Statements ....................................................................... 15
Changes in Accounting Policies ............................................................................................................15
Notes Regarding Significant Accounting Estimates and Judgements ............................................. 15
Changes in Presentation Method ........................................................................................................ 16
Notes Regarding Assumption of Going Concern ............................................................................... 16
Significant Subsequent Events ............................................................................................................ 16

1

1. Overview of Results of Operations and Other Information
Forward-looking statements in the following text are based on judgments as of March 31, 2021, the last day of theconsolidated quarterly accounting period under review. During the first quarter of the previous fiscal year, provisional
accounting treatment was given to the business combination with OpenWork Inc., which was conducted on January 1,
2020. However, because the business combination was finalized at the end of the previous fiscal year, the amount after
the revision due to finalization of the provisional accounting treatment is used for comparison and analysis with regard to
the same period of the previous year.
(1) Overview of Results of Operations for the Three Months Ended March 31, 2021
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.” Since the second
quarter of 2020, the novel coronavirus (“COVID-19”) pandemic has had an ongoing impact, and the economic outlook
remains uncertain. On the other hand, the Group perceives rising needs for improving employee engagement during
telework and for individual learning.
In this economic environment, the Group’s revenues for the three months ended March 31, 2021 (the “first quarter of2021”) were ¥8,962 million (a 4.1% decrease compared with the same period of the previous year), gross profit was¥3,983 million (a 0.6% decrease), operating income was ¥630 million (a 4.3% increase) and net income attributable toowners of the parent was ¥245 million (a 32.7% decrease).
The segment and business classifications of the Group are as shown below, and an overview of the first quarter of2021 by segment and business follows.

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 quarter of 2021 were ¥2,487 million (a 0.2% decrease), and segment
income was ¥1,777 million (a 1.8% increase). An overview of operating results by business for the first quarter of 2021 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 quarter of 2021 were ¥2,082 million (a 2.6% increase) and gross profit was¥1,612 million (a 1.6% increase). Results by product in the Consulting & Cloud business were as follows.
Table 1. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Consulting & Cloud Business

Three months ended
March 31, 2020
2,029
[1,586]
1,352
676

Consulting
Cloud

Three months ended
March 31, 2021
2,082
[1,612]
1,419
662

YoY change
(%)
2.6
1.6
5.0
(2.1)

In the first quarter of 2021, both revenues and gross profit increased compared with the same period of the previous
fiscal year due to strong sales of online training of new employees and managers and personnel system planning. In
addition, due to the popularization of telework during the COVD-19 pandemic, there were growing needs for improving
employee engagement. Moreover, the expansion of ESG investment is also increasing investor attention to human capital,
and we see this as a major opportunity for the Group. The business will continue to steadily capture these needs andincrease sales per customer by providing one-stop solutions using “Motivation Engineering.”
Monthly fee revenue increased 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. The number of deliveries andmonthly fee revenue were as follows.
Table 2. Number of Deliveries and Monthly Fee Revenue for the Motivation Cloud Series at Quarter-End
2020
Number ofdeliveries

2021

March

June

September

December

March

906

795

770

759

747

203,789

183,600

190,423

200,927

206,485

Monthly fee
revenue(¥ 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). The business began providing these subscription-model products in July 2016.
Recently, shifting to adapt to the labor market, which consists of human resources, both employees and job
applicants, has been a management issue for many companies. Under these circumstances, improving employee
engagement at corporations has become a key management theme. In addition, the widespread adoption of telework due

3

to the COVID-19 pandemic has made it difficult to monitor employees. As a result, the premise of this business is that theimportance of improving employee engagement, including visualization of organizational status, is increasing.
During the first quarter, “Cloud” sales decreased compared with same period of the previous year as new
introductions slowed at small and medium-sized enterprises and venture companies, although new introductions
continued to increase at major corporations and monthly fee revenue was firm, totaling ¥206,485 thousand for the monthof March 2021 as average monthly fee revenue continued to rise, even during the COVID-19 pandemic.
The business will work to further step up new introductions at major corporations, mainly leading companies, andwill accelerate a rollout to companies nationwide, including superior local companies, by developing products that
customers can operate on their own to improve their organizations.
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 quarter of 2021 were ¥533 million (a 17.5% decrease) and gross profit was¥247 million (a 0.7% increase). 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

Three months ended
March 31, 2020
646
[245]
162
483

Three months ended
March 31, 2021
533
[247]
104
428

YoY change(%)(17.5)
0.7(35.6)(11.4)In the first quarter of 2021, although productions of the Event business, which has been substantially impacted by the
COVID-19 pandemic, were on a recovery track, they did not exceed the same period of the previous year and segment
revenues decreased substantially. On the other hand, gross profit increased slightly compared with the same period of theprevious year due to factors including an improved gross profit margin for events associated with a shift online.
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 supports the creation of “i-Companies,” which it defines as individuals who
independently and autonomously develop their own careers and lives. Specifically, it applies “Motivation Engineering,”
which is the core technology of the Group, to businesses in areas including career schools and cram schools, to provide
one-stop services to customers from elementary school students to working adults. These services range from helping to
set goals to understanding individual issues and formulating and implementing study plans.
In this segment, segment revenues for the first quarter of 2021 were ¥1,831 million (a 0.3% increase) and segment
income was ¥652 million (a 0.5% increase). An overview of operating results by business for the first quarter of 2021 is
as follows.
Career School Business
The Career School business provides one-stop services for individual career advancement, targeting mainly university
students and working adults, under the 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 conducted classroom lectures, but currently
provides support of continuing learning by offering both in-school and online services.
In this business, revenues for the first quarter of 2021 were ¥1,684 million (a 1.2% increase) and gross profit was¥584 million (a 1.4% increase). 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

Three months ended
March 31, 2020Three months ended
March 31, 2021

YoY change
(%)

1,664
[577]
949
534
181

1,684
[584]
935
593
155

1.2
1.4
(1.4)
11.1
(14.3)

Despite the declaration of a state of emergency during the first quarter, due to an increase in the number of enrollees,
mainly in courses for civil servants, and promotion of online courses, revenues and gross profit both increased comparedwith the same period of the previous year.
Going forward, the business will continue helping to generate results for students by providing value in virtual space
without depending solely on business bases and ramping up matching with companies as employers. In addition, theevolution of “i-Company Club” as a platform to support these efforts will help to increase the true market value ofindividuals.
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 quarter of 2021 were ¥148 million (an 8.8% decrease) and gross profit was ¥67
million (a 6.2% decrease).
In first quarter of 2021, as with the Career Schools business, revenues and gross profit both decreased compared withthe same period of the previous year due to a slump in the contract rate for new enrollees, despite the promotion of a shift
to online classes. This business has only one product.

5

By proactively promoting a shift of classes and one-on-one meetings online and applying the know-how in training
adults that has been cultivated in the Consulting & Cloud business, this business aims to achieve 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 “engagement matching,” which applies “Motivation
Engineering,” the core technology of the Group, to its personnel placement and temp staff businesses. It creates affinities
between organizations with hiring needs and individuals who want to advance their careers by matching not only thetechnical skill requirements of companies but also the respective characteristics of individuals and companies based on
the Group’s proprietary data. Its main targets are foreign nationals who want to work in Japan, students who want to finda job, employees who want to change jobs and temporary workers.
In this segment, segment revenues for the first quarter of 2021 were ¥4,853 million (an 8.6% decrease) and segment
income was ¥1,731 million (a 6.8% decrease), with segment revenues and segment income both decreasing comparedwith the same period of the previous year. An overview of operating results by business for the first quarter of 2021 is asfollows.
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 throughits business that provides one-stop foreigner recruiting, training and labor support to companies seeking to hire them.
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. From fiscal 2020, English education starts from thethird grade of elementary school, and is 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 quarter of 2021 were ¥3,305 million (a 6.0% increase) and gross profit was¥1,056 million (a 4.8% increase).
During the first quarter of 2021, revenues and gross profit both increased despite restrictions on entry into Japan as aresult of the success of measures such as extension of employment terms and hiring within Japan. This business has only
one product.
While continuing to pay close attention to the immigration situation, 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 solutions 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 of 2020, 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 quarter of 2021 were ¥1,566 million (a 28.8% decrease) and gross profit was¥684 million (a 20.3% decrease). Results by product in the Domestic Personnel Placement & Temp Staff business wereas follows.

6Table 5. Revenues by ProductProduct (¥ million)[Gross profit in brackets]
Domestic Personnel Placement & Temp Staff
Business
Temp staff dispatch
Personnel placement

Three months ended
March 31, 2020
2,200
[858]
1,563
636

Three months ended
March 31, 2021
1,566
[684]
1,042
524

YoY change(%)(28.8)(20.3)(33.4)(17.6)

During the first quarter of 2021, although there was a recovery in revenues from temp staff dispatch, which weresignificantly affected by the COVID-19 pandemic, it did not result on a year-on-year increase, and revenues and grossprofit both decreased compared with the same period of the previous year.
In temp staff dispatch, the business will continue to conduct a portfolio shift to supermarkets and call centers, where
demand is expected. In personnel placement, the number of registered users and employee online reviews have grownsteadily during the pandemic, but neither recovered to the level of the same period of the previous year before the impact
of COVID-19. By linking the assets held by OpenWork Inc. with the organizational and individual data assets held by theGroup, the business will increase the number of job offers and enhance its matching engine to expedite engagement
matching that achieves true mutual understanding and affinity between organizations and individuals.
Venture Incubation
In addition to its divisions, the Group conducts venture incubation. In venture incubation, the Group provides its
know-how in organizational and personnel consulting in addition to funding, as well as support 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 consolidated statements of financial
position.

7

(2) Overview of Financial Position for the Three Months Ended March 31, 2021
Total assets as of March 31, 2021 were ¥32,645 million, a decrease of ¥8,438 million from the end of the previous
year. This was mainly due to factors including a ¥8,775 million decrease right-of-use assets associated with a decision to
relocate the Tokyo integrated office.
Total liabilities as of March 31, 2021 were ¥27,647 million, a decrease of ¥8,519 million from the end of the previous
year. This was mainly due to factors including a ¥8,839 million decrease in lease liabilities associated with a decision to
relocate the Tokyo integrated office.
Total equity as of March 31, 2021 was ¥4,997 million, an increase of ¥79 million from the end of the previous year.
This was mainly due to factors including a ¥56 million increase in retained earnings.
(3) Overview of Cash Flow for the Three Months Ended March 31, 2021
Cash and cash equivalents (“cash”) as of March 31, 2021 were ¥6,458 million, an increase of ¥8 million during theperiod.
Cash flow during the three months ended March 31, 2021 was as follows.
Cash Flow from Operating Activities
Net cash provided by operating activities was ¥482 million, an increase of ¥362 million compared with the same
period of the previous year. The principal factors were an increase of ¥210 million in depreciation and amortization, a¥446 million decrease in trade and other payables (compared with a ¥566 million decrease in the same period of theprevious year), and a decrease of ¥395 million in income taxes paid, offset by a ¥44 million increase in trade and otherreceivables (compared with a ¥279 million decrease in the same period of the previous year) and negative ¥14 million inother (compared with positive ¥47 million in the same period of the previous year).
Cash Flow from Investing Activities
Net cash used in investing activities was ¥382 million (in the same period of the previous year, net cash provided byinvesting activities was ¥2,064 million). Principal factors included an increase of ¥122 million in payments for security
deposits and guarantees and the absence of proceeds from acquisition of subsidiary stock associated with change in scopeof consolidation (in the same period a year earlier, cash and cash equivalents increased ¥2,290 million as a result of
making OpenWork Inc. a subsidiary).
Cash Flow from Financing Activities
Net cash used in financing activities was ¥94 million (in the same period of the previous year, net cash provided byfinancing activities was ¥557 million). The principal factors included a ¥1,000 million net increase in short-term financial
liabilities (compared with a ¥1,800 million increase in the same period of the previous year) and ¥106 million in proceedsfrom long-term financial liabilities.

(4) Forecast
There is no change from the forecast of consolidated results for 2021 announced in “Consolidated Financial
Statements for the Year Ended December 31, 2020” dated February 12, 2021.

(5) Important Information Regarding Assumption of Going Concern
None applicable82. Condensed Consolidated Financial Statements and Main Notes(1) Condensed Consolidated Statements of Financial Position(Millions of yen, rounded down to the nearest million)

As ofDecember 31, 2020

ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current financial assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Other non-current financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets

9

As of
March 31, 2021

6,449
3,680
187
14
1,057
11,389

6,458
3,732
226
0
1,192
11,6101,162
12,790
9,376
2,266
3,203
646
245
29,69441,083

975
4,015
9,376
2,316
3,210
885
253
21,03432,645

(Millions of yen, rounded down to the nearest million)

LIABILITIES AND EQUITY
LIABILITIESCurrent liabilities
Trade and other payables
Contract liabilities
Interest-bearing and other financial liabilities
Lease liabilities
Income tax payable
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Interest-bearing and other financial liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to owners of the parent
Share capital
Capital surplus
Treasury shares
Retained earnings
Other components of equity
Total equity attributable to owners of the parent
Non-controlling interests
Total equity
Total liabilities and equity

10

As of
December 31, 2020

As ofMarch 31, 2021

2,174
1,786
7,440
1,778
484
129
2,149
15,944

1,792
1,925
9,935
1,647
245
341
2,372
18,261

7,104
12,056560
362
138
20,222
36,166

5,208
3,347
303
388
137
9,386
27,6471,380
1,855(1,733)
3,989(1,731)
3,760
1,157
4,917
41,083

1,380
1,855(1,733)
4,045(1,743)
3,805
1,192
4,997
32,645

(2) Condensed Consolidated Statements of Operations and Comprehensive Income
Condensed Consolidated Statements 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 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
March 31, 2020Three months ended
March 31, 2021

9,345
5,338
4,007
3,384
0
19
604
1
46
4
565
167
397

8,962
4,978
3,983
3,310
18
60
630
1
57
—
575
294
280

364
32
397

245
35
280
(Yen)

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

3.48
3.48

11

2.34
2.34

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

Three months ended
March 31, 2020Three months ended
March 31, 2021

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

397

280

(439)
(439)

(15)
(15)

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

(0)
(0)
(439)
(42)

3
3
(11)
268

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

(74)
32
(42)

233
35
268

12

(3) Condensed Consolidated Statements of Changes in Equity
Three months ended March 31, 2020
(Millions of yen, rounded down to the nearest million)

Equity attributable to owners of the parent

January 1, 2020
Net income
Other comprehensive
incomeTotal comprehensive
incomeChange due to businesscombination
Dividends fromsurplus
Exercise of share options
Total transactions withthe owners
March 31, 2020

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

7,043
364

(10)
32

7,033
397

(439)

(439)

—

(439)

364

(439)

(74)

32

(42)

—

—

—

—

1,050

1,050

—
(37)

—
—

(188)
—

—
—

(188)
(37)

—
45

(188)
8

(37)
1,950

—
(1,733)

(188)
5,616

—
(470)

(226)
6,742

1,096
1,118

870
7,861

Share
capitalCapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

1,380
—

1,987
—

(1,733)
—

5,440
364

(31)
—

—

—

—

—

—

—

—

—

—

—
—
—
1,380

Three months ended March 31, 2021
(Millions of yen, rounded down to the nearest million)

Equity attributable to owners of the parent

January 1, 2021
Net income
Other comprehensive
incomeTotal comprehensive
incomeDividends fromsurplus
Total transactions withthe owners
March 31, 2021

Total equity
attributableto owners of
the parent

Noncontrollinginterests

Total
equity

3,760
245

1,157
35

4,917
280

(11)

(11)

—

(11)

245

(11)

233

35

268

—

(188)

—

(188)

—

(188)

—
(1,733)

(188)
4,045

—
(1,743)

(188)
3,805

—
1,192

(188)
4,997

Share
capitalCapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

1,380
—

1,855
—

(1,733)
—

3,989
245

(1,731)
—

—

—

—

—

—

—

—

—

—

—
1,380

—
1,855

13

(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 losses (earnings) of associates
Decrease (increase) in trade and other receivables
Loss (gain) on step acquisitions
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 change in scope of consolidation
Payments for security deposits and guarantees
Proceeds from refund of security deposits and guarantees
Other
Net cash provided by (used in) investing activities
Cash flow from financing activities
Net increase (decrease) in short-term financial liabilities
Proceeds from long-term financial liabilities
Repayment of long-term financial liabilities
Payments of cash dividends
Repayment of lease liabilities
Payments from non-controlling interests
Net cash provided by (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

14

Three months ended
March 31, 2020Three months ended
March 31, 2021

565
642
0
44
(4)
279
16
(12)
(566)
47
1,013
0
(44)
4
(853)
119

575
853
56
55
—
(44)
—
(38)
(446)
(14)
996
0
(56)
—
(458)
482

(60)
(166)

(31)
(187)

2,290
(19)
16
3
2,064

—
(142)
55
(76)
(382)

1,800
—
(570)
(189)
(490)
8
557
(0)
2,741
2,160
4,901

1,000
106
(506)
(189)
(504)
—
(94)
3
8
6,449
6,458

(5) Notes to Condensed Consolidated Financial Statements(Changes in Accounting Policies)
The significant accounting policies applied in these condensed consolidated financial statements are the same as those
applied in the consolidated financial statements for the previous fiscal year.
Income taxes expense for the three months ended March 31, 2021 was calculated using the estimated average annual
effective tax rate.
(Notes Regarding Significant Accounting Estimates and Judgements)
In preparing the consolidated financial statements, management makes judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The
results of accounting estimates may differ from actual results.
The estimates and their underlying assumptions are reviewed on an ongoing basis. The effects of a review ofaccounting estimates are recognized in the accounting period in which the estimates are reviewed as well as in future
periods.
Estimates and estimate-related judgments that have a significant impact on the condensed consolidated financial
statements are the same as those in the consolidated financial statements for the previous fiscal year.
(Useful Life of Property, Plant and Equipment)
The Group passed a resolution in February 2021 to relocate its Tokyo head office, and the move is expected to becompleted by the end of 2021. Therefore, the Group has shortened the future useful life of the building equipment,
appliances and fixtures belonging to the Tokyo head office that will become unusable due to relocation from the date of
the relocation resolution to the scheduled relocation date.
In addition to the above change, as of the three months ended March 31, 2021 the Group has changed the useful lifeof some property, plant and equipment from 15 years to 6 years. This change has been made to reflect a more realistic
useful life for the right-of-use assets related to each integrated office nationwide, primarily the head office, inconsideration of the actual usage of each integrated office, based on the abovementioned relocation resolution.
As a result of the above two changes, right-of-use assets and lease liabilities decreased approximately ¥8,814 million
compared with their previous useful life, and the operating income and income before income tax for the three months
ended March 31, 2021 each decreased ¥82 million yen, respectively.
(Accounting Estimates Related to the COVID-19 Pandemic)
Estimates and judgments that have a significant impact on the amounts in these consolidated financial statements are
the same as those in the consolidated financial statements for the previous fiscal year in principle, but include thefollowing 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 associatedwith 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. However, the business environment has gradually been recovering since the third quarter of 2020,
when the state of emergency that had been declared on April 7, 2020 was completely lifted, and the Group perceives a
growing trend for greater needs for individual learning in the Individual Development Division, which was most impacted
by COVID-19. Even since the declaration of a state of emergency on April 25, 2021, the impact on business results has
been minor, despite temporary closures of commercial facilities, and therefore the Group has made various estimates andjudgments regarding the demand forecast for 2022 onward assuming that recovery will continue in 2021 and thereafter,
and the impact of the COVID-19 pandemic will not be prolonged.
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,
15

including goodwill, the recoverability of deferred tax assets and other matters based on the information available as of thedate of preparation of these 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.
(Changes in Presentation Method)
Related to the Consolidated Financial Statements“Right-of-use assets,” which was included in “Property, plant and equipment” under non-current assets in theprevious fiscal year, has been presented independently as of the current fiscal year for a clearer, more realisticpresentation.
The consolidated financial statements for the previous fiscal year have been changed to reflect this change inpresentation method.
As a result, in the consolidated statement of financial position for the previous fiscal year, ¥13,953 million in“Property, plant and equipment” under non-current assets has been restated as ¥1,162 million in “Property, plant andequipment” and ¥12,790 million in “Right-of-use assets.”
In addition, “Lease liabilities,” which were included in “Interest-bearing and other financial liabilities” under current
liabilities and non-current liabilities in the previous consolidated fiscal year, has been presented independently as of thecurrent fiscal year for a clearer, more realistic presentation.
The consolidated financial statements for the previous fiscal year have been changed to reflect this change inpresentation method.
As a result, in the consolidated statement of financial position for the previous fiscal year, ¥9,218 million in “Interestbearing and other financial liabilities” under current liabilities has been restated as ¥7,440 million in “Interest-bearing andother financial liabilities” and ¥1,778 million in “Lease liabilities,” and ¥19,161 million in “Interest-bearing and otherfinancial liabilities” under non-current liabilities has been restated as ¥7,104 million in “Interest-bearing and otherfinancial liabilities” and ¥12,056 million in “Lease liabilities.”(Notes Regarding Assumption of Going Concern)
None applicable(Significant Subsequent Events)
None applicable16