Consolidated Results of 1st half of
the Fiscal Year Ending in March
2020(FY2019 Q2)PERSOL HOLDINGS CO., LTD.
November 13, 2019

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

Today’s Agenda

1.

Summary of the Consolidated Financial Results for 2Q of FY2019

2.

2Q Results and Current Business Environment

3.

Financial Forecasts for FY2019

4.

Reference

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

1

Summary of the Consolidated
Financial Results for 2Q of FY2019(April 2019 – Sept. 2019)

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

Good morning. My name is Seki, in charge of Finance.
Thank you for attending the Briefing for the 2nd Quarter of the Fiscal Year Ending inMarch 2020 of PERSOL HOLDINGS CO., LTD.
To begin with, I outline financial results for the 1st Half of FY2019.

2

Financial Results Summary for 1st half of FY2019
Extraordinary losses were recorded including impairment losses in relation to a goodwill of PROGRAMMED Maintenance Services Limited(hereinafter PROGRAMMED) and others. As a result, the net profit attributable to parent company went negative.

1st Half

FY2018FY2019Year-onyear

452,260

478,956＋5.9％

Operating profit

20,453

20,116-1.6％

EBITDA

28,19628,948+2.7％

98-17,249

ーCurrent period net
profit attributable toparent company

11,987-5,177ーAdjusted EPS (yen)71.31

Unit: Million yen

Net sales

Extraordinary
profit/loss

68.30

-4.2%

Breakdown of Extraordinary Loss
Loss on valuation of securities(PROGRAMMED Marine business)-610 million yen

Provision of allowance for doubtful accounts
amount (PROGRAMMED Marine business)-1,114 million yen

Goodwill impairment loss
(Mainly including PROGRAMMED Staffing
business)-12,759 million yen

Extraordinary loss as a result of “an”
business discontinuation-2,868 million yen

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

3

As for the business environment, while there is a sign of weakness in some aspects of businessin the Japanese economy, HR and its related market has been steady due to the high demandagainst the background of continuous structural labor shortage on the whole. On the other
hand, in the Asia-Pacific region, the economy in Australia has been consistently sluggish, in
addition to the deceleration of the economic growth of China and other surrounding countries
as a result of the recent trade friction.
Under these circumstances, the consolidated net sales for the 1st Half of FY2019 amounted to478.9 billion yen. As a result of the continuously firm business conditions of the Temporary
staffing/BPO and Recruitment segments, our major businesses, net sales marked the highest in
our history on the half term base, achieving an increase compared to the same period last year.
The operating profit was 20.1 billion yen, a decrease from the same term of the previous year,
due to the significant profit decline of the overseas business attributed to the economic
deceleration and the impact of the exchange rate, in spite of the profit increases in Temporary
staffing /BPO and Recruiting segments.
2.8 billion yen of the business restructuring loss associated with the termination of the “an”
business as announced before, 12.5 billion yen of a goodwill impairment loss associated with
the Staffing business of PROGRAMMED segment and the loss of valuation of securities
associated with joint venture which is an equity method company to run the Marine businesswere booked as extraordinary losses. As a result, net loss of 5.2 billion yen was recorded.

Result Highlights by Segment (Six months ended Sept. 30, 2019)
Unit: billion yen

Sales
（YoY)

266.8

Operating profit
(YoY)

12.0

Temporarystaffing/BPO(+7.4%)(+8.1%)

Recruiting

45.8

9.0

PROGRAMMEDPERSOLKELLYITOEngineering(+11.6%)(+20.3%)

94.6

-0.14

(-7.7%)

41.9(+16.2%)

19.2(+25.4%)13.8(+1.2%)

(-%)

-0.14
(-%)

0.12

(-73.3%)0.66(-23.8%)

Cause
•

•
•
•
•

For 2Q, organic sales growth at 6.4% contributed by productivity improvement by “Genesis”
and price increase by increased number of staffs employed without contracted period. 3.2%of sales increase by the earnings from newly consolidated subsidiary: Avanti Staff
Corporation, acquired previous year.
1st half forecast: Sales 265.6 billion yen, operating profit JPY 11.7 billion yen
For the 1st half, sales growth of placement business was slowed down to 15.6% as decreased
number of matching decisions per consultant.
The campaign before discontinuation of “an” business has been successful.
1st half forecast: Sales 46.0 billion yen and operating profit 8.2 billion yen.

•Staffing sales was adversely affected by low growth of Australian economy in addition to
AUD depreciation
Total sales in JPY decreased by 7.7% (currency depreciation: -7.3％, Staffing at -6.5％ and
Maintenance at ＋6.2％, on a local currency basis: -0.4%)
1st half forecast: Sales 100.5 billion yen and operating profit 0.3 billion yen.

•••

Sales increased other than Australia due to Staffing business expanded.
A system trouble and its trouble shooting in Australian operation caused operating loss.
1st half forecast: Sales 41.0 billion yen and operating profit 0.4 billion yen.

•••

Sales increased by strong client companies’ demand for IT investments
Operating profit was declined due to lagged inspection timing and increased salary payment
1st half forecast: Sales 19.4 billion yen and operating profit 0.7 billion yen.

•

Operating profit declined because orders decreased from our major client manufacturing
companies influenced by the U.S.-China trade friction.
1st half forecast: Sales 14.5 billion yen and operating profit 1.1 billion yen.

•••

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

4Here, I explain highlights of each segment.
Temporary staffing/BPO segment increased both sales and operating profit due to thepromotion of the change to open-ended contracts and the improved productivity by thesystem integration.
For Recruiting segment, although the growth rate of the placement business slowed down
due to the insufficient productivity with expansion of the organization, both sales andoperating profit increased as a result of review of cost rationalization.
For PROGRAMMED segment, in spite of sales increase of Maintenance business, the overallsales decreased because sales of Staffing business declined due to slowdown of theAustralian economy and the impact of depreciation of the Australian dollar. As a result,operating loss recorded.
For PERSOLKELLY segment, sales increased in the regions other than Australia even with theimpact of the deceleration of the economy in China. However, operating loss recorded due
to decreased sales caused by the system trouble in Australia.
For ITO segment, although sales increased significantly as a result of high demand of ourclients, operating profit decreased because of the active promotion for recruitment ofengineers and staff retention and the improvement of staff treatment.
For Engineering segment, orders from the highly profitable core customers decreased dueto the impact of the trade friction. As a result, sales were flat and operating profit
decreased.

Difference in operating profit between actual results and forecast
In Japan, temporary/BPO and recruiting segments, major businesses, made up for poor performed
ITO and Engineering segments. However, they could not do unachieved result from oversea businessand JPY20.1 billion of actual operating profit was lower than JPY 20.8 billion of the forecasts
announced in August 2019.
Recruiting

+0.8

ITO

△0.5

Staffing/BPO
Augustforecast+0.3（Unit: Billion）
Engineering

△0.4
Japan

HD
+0.1
PROGRAMMED△0.4

PERSOLKELLY

20.8

△0.5
Oversea

ActualResults

20.1

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

Next, I explain difference between August forecast and actual results of operating profit
for the 1st Half.
In Japan, operating profits of Temporary staffing/BPO and Recruiting were better thanthose of August forecast and they made up for unachieved results of ITO andEngineering segments. However, they could not do operating losses of suffering oversea
businesses. As a result, 20.1 billion yen of actual operating profit was lower than 20.8
billion yen of the forecasts announced in August 2019.

PROGRAMMED Impairment Losses
・Recorded impairment loss on a goodwill of PROGRAMMED Staffing business affected by weak Australianeconomy・Because Marine business was stagnated by declined oil price, its devaluation loss on the security of a joint
venture and allowance for doubtful account regarding the loan to the JV partner were recorded. (Moredetails, see next page)
Relation withPERSOL HOLDINGS

Maintenance

Goodwill: 27.6 billion yen*

Consolidated
subsidiary

Staffing

Goodwill: 18.7 billion yen*

MarineRelevant assets: 3.7 billion
yen*

Equity method
company
JV with Atlas
Professionals* Applied exchange rate: 77.74 yen/AUD

Characteristics andcurrent status ofbusiness

Impairment test
result

Maintenance business(Airports, public facilities,etc.)- Stable profit structure withmany long-term based
contracts for public facilities- Growth rate at 6.2% on a local
currency basis

No problem

Staffing business(mainly blue-collar worker
staffing)- With slow Australian economic
growth, local mining industry issluggish particularly- Sales declined by 6.5% on a
local currency basis

Deployment of labor foroffshore oilfields/gas
development sites andrelated services

Business environment is severe
due to an effect of plunged oil
price and other factors

Business outline

Goodwill
impairment loss

12.5 billion yen

Extraordinaryloss

1.7 billion yen
6

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

6

Next topic is the impairment losses of PROGRAMMED segment, which is a very
important issue in this announcement.
In October 2017, we acquired PROGRAMMED Maintenance Services Limited in Australia,
where had a large market scale next to Japan in the Asia-Pacific region, with about 66
billion yen to become the largest comprehensive HR service group company in thisregion.
The main businesses of PROGRAMMED are Staffing and Maintenance. While
Maintenance business grows steadily, Staffing business mainly for blue-collar workers is
suffering due to the stagnation of the resource prices. Business forecasts of Staffing
business that were planned at the time of the acquisition are unlikely to reach. As aresult of the impairment test that was conducted and the examination on the possibilityof recovery in the future based on the current business environment, we decided torecord an impairment loss of 12.5 billion yen associated the “goodwill” that occurred at
the acquisition, as an extraordinary loss.
For Marine business that is operated by the joint venture, equity method company,
established with Atlas before the time of acquisition of PROGRAMMED, anotherextraordinary loss was recorded.

Supplemental Explanation on Marine Business run by JV with Atlas••

Marine business, subject to equity method, worsened its profitability due to stagnated crude oil price.
Recorded total 1.7 billion yen extraordinary losses as a result of impairment test on invested shares of the
JV and the loans to the JV partner.

■ Background
Prior to the Company's acquisition in October 2017,
PROGRAMMED had sold its international division of Marine
business to Atlas Professionals (hereinafter Atlas), a Dutch
company. PROGRAMMED and Atlas established a JV, 50:50
share, for running remaining Australia/New Zealand marine
business.
■ Management structures
Management is entrusted to Atlas that possesses marine
business know-how.
■ Reason for impairment
Marine business’s profitability was worsened by declined
oil price. As a result of present value calculation of cashflowfrom invested securities of the JV and the loan to the JV
partner, both assets were subject to be devalued.

PROGRAMMEDPROGRAMMED社
staffing
人材派遣

Loan
AUD 21.5m

Atlas社
Maintenance
メンテナンス

Payment of
元本＋金利
Capital ＋支払い
interest

50%

50%

Joint
venture withAtlas

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

For the Marine business, before the time of the acquisition in 2017, a joint venture wasestablished with Atlas in Holland as a spin-off of the marine business, which was a partof the Maintenance business, at the holding ratio of 50% each and the joint venture run
the Marine business.
As the Marine business has slowed down due to the plunge of the oil prices, the present
cash flow value was evaluated in relation to the PROGRAMMED’s investment securities
in the joint venture and the PROGRAMMED’s loan to the other party in the joint venture.
Based on the current value calculation, an evaluation loss and an allowance for doubtful
account of 1.7 billion yen were booked as extraordinary losses.
To sum up, we recorded severe 1st Half financial results because of the temporary
extraordinary losses. For the 2nd Half, we are planning to make profit by pursuing ourbusiness plans. Thank you for your understanding.

2Q Results and Current Business
Environment

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

8

My name is Mizuta, I am President and CEO. Thank you for coming to this conference.
I would like to explain our business environment and full-year forecasts.

Highlights for 1st Half of FY2019
1st Half results:
The highest half-year sales ever was achieved while operating profit decreased.
Consolidated sales

478.956 billion yen（+ 5.9% year-on-year)Operating profit

20.116 billion yen (- 1.6% year-on-year)Temporary staffing/BPO and Recruiting segments, our major businesses, exceeded OP target for each segment.
They offset unreached operating profit of ITO and Engineering segments compared to forecasted ones.
Overseas business continued struggling due to slowdown of Australian economy, the confusion caused by thesystem introduction and Australian dollar depreciation.

Related to PROGRAMMED, recorded total 14.4 billion yen extraordinary losses, including
impairment losses on Staffing business and devaluated loss on Marine businesses. As a result, thebottom line of 1st half result was net loss.

Point of focus in 2nd Half:

Measures of domestic Temporary staffing business in accordance with coming related law revision－ Promote clients’ understanding on actions to be taken for “equal pay for equal work” that will be enforced in April
2020.

Restructuring of the overseas business－ Turnaround of PROGRAMMED’s Staffing business and settling the system trouble of PERSOLKELLY in Australia.

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

9

As explained by Mr. Seki, business condition for the 1st Half was that business in Japanhas progressed steadily while the overseas business was struggling as recorded as
impairment losses.
As for the business in Japan, Temporary staffing/BPO and Recruiting segments, both corebusinesses, which are showing stable profit growths, while the profit of the Engineering
sector, in particular, decreased due to the end of the project of the highly profitable corecustomers.
In the overseas business, significant impairment losses were recorded in the Staffing
business of PROGRAMMED and the Marine business run by the joint venture arranged
before the acquisition. We sincerely apologize for causing your concern regarding theseissues.
We will reestablish the business through the reinforcement of the management
structure by new management team of PROGRAMMED through measures as explainedlater.
The issues of the 2nd Half are to reorganize the overseas business and address therevision of Laws that will be introduced within Japan from April 2020. I will explain our
measures for the re-growth starting from the next fiscal year.

Temporary
staffing/BPO

Organic Growth :Temporary staffing/BPO segment

Organic operating profit margin, excluding the effects of fewer workdays, PMI cost and M&A of Avanti Staff that was
included into the consolidation in fourth quarter of FY2018, was improved to 5.1% for the 1st Half of FY2019 (4.5% 1H of
FY2018).
1st Half of FY2019

Sales

266.8

Fewer workdays(3 days less thanprevious year)

PMI cost(Assuming away)billion yen

billion yen

6.7

-

12.0

1.0

0.6

Operatingprofitbillion yen

Operatingprofitmargin

(4.5％:
1H of FY2018)

4.5%

M&A effect(Excluded)-8.6

billion yen-0.2

After adjustment(Organic)

264.9

billion yen

13.4

billion yen

billion yen

billion yen

billion yen

-

-

-

5.1%

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

10Firstly, I explain the situation of the Temporary staffing/BPO segment. This segment is
one of our core businesses and its continuous growth is also important towards the
future.
In the 1st Half, the sales growth rate stayed at 4.5% and the growth of the organic basereached an increase of 5.1%. Profitability improved. The special factors of this year are
the number of working days, which was 3 days less than normal due to the change ofname of the era to Reiwa and an increase of sales by Avanti Staff Corp. that joined to the
PERSOL group last fiscal year.
One of the points for future profitability improvement is to ensure the proper
improvement of the matching decision rates by the introduction of the GENESIS system.
The second point is to reinforce the management of the staff members whose statuses
are changed to open-ended contracts according to the revision of the Worker
Dispatching Act and also to ensure proper price transfer to clients for “Equal Pay for
Equal Work” principle. We think that these points are the factors for a significant profit
increase.
I will explain each of them from the next slides.

Increased efficiency by “GENESIS,” staffing back-end process system

Temporarystaffing/BPO- Introduction of Genesis enabled a offsite matching center to be opened which has led to a 1.7 times increase in the number of matchingdecisions per coordinator.
- Additionally, the Genesis has been introduced in all the companies (except Avanti Staff) of temporary staffing in business area throughmerger of the Group companies.

Job Coordinate Center (JCC)
roll-out area

Genesis was introduced to subsidiaries in temporary staffing segment andthe companies that newly joined the Group through merger.
GENESIS

September
2017

Introduced to PERSOL TEMPSTAFF CO., Ltd.

GENESIS

October2018

Merged 7 subsidiaries and introduced
GENESIS

GENESISMay 2019

Introduced to Tempbros Co., Ltd.

GENESIS

August 2019

Introduced to PERSOL Panasonic HR
PARTNERS, CO., LTD.

2020
(planned)

Plan to introduce to PERSOL TEMPSTAFF
KAMEI, CO., LTD.

introduced

introduced

introduced

introduced

GENESIS

to be
introduced

Sapporo JCC

Kurume JCC
Started its
operation in
April 2019

Introduction of GENESIS has been completed in temporary staffing in business area. *1

The number of matchingdecisions in the Tokyo
metropolitan area

x1.7up*2

Aim to increase of the number ofmatching decisions in the western Japan*1: Except Avanti Staff Corp. that joined the Group in Jan. 2019
*2: Results for the period from April to June 2019
Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

11

Firstly, I will discuss GENESIS, which is a large scale backbone system of the Temporary
staffing business developed by our Group.
By integrating the acquired group companies, the cost reduction can be achieved, and at
the same time, introduction of GENESIS makes the productivity improved and leads tosales increase. In the 23 wards in Tokyo and the central district of Osaka, the number ofmatching decisions increased to 1.7 times from that prior to the introduction of GENESIS
and the profit improvement effect is regarded as approx. 1.1 billion yen annually.
In April this year, a job coordination center commenced its operation in Kurume, Kyushu
area and its improvement is progressing rapidly to achieve the number of matchingdecisions that is 1.7 times also in the metropolitan areas including Yokohama, Nagoya
and Fukuoka.

Response to Revision of Law (Temporary staffing/BPO segment)

Temporarystaffing/BPO

Although profitability may decrease temporarily due to an effect of the revision of laws/regulations, active measures have been taken in response
to it as a business opportunity.

Related laws/regulations

Description

April 2018
Proposal of allJapanese working
society was published.
April 2018
Labor Contracts Act
was enforced.

••

Target: Contract employees and dispatched workers
Content: When fixed-term contracts have been repeatedly rolled-over for a total
period in excess of 5 years, the contract must be converted to an open-ended
work contract.

October 2018
Worker Dispatching
Act was enforced.

••

Target: Dispatched workers
Content: For dispatched workers at the same organization in excess of 3
years, the staffing agency must take employment stabilization measures (having
obligation to convert to an open-ended work contract with thedispatching/dispatched companies or offer a new job placement).

••

Target: Contract employees and dispatched workers
Content: The dispatching/dispatched companies must provide equal treatment
including salaries and bonuses, allowances and social benefits according to the job
and the level of responsibility.

From April 2020
Equal pay for equal
work system will be
enforced.

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

12Now, I wish to review the addressing of the revision of Laws regarding the Temporary
staffing/BPO segment.
The current issue of the segment is how temporary staff can be secured under theenvironment of a labor shortage. We believe this issue is extremely important in termsof the strategy planning.
Our Group is reinforcing the labor supply by actively increasing open-ended contract
staff in response to the revision of the Worker Dispatching Act enforced in October 2018
and in addition, achieving an increase of unit billing rate.
“Equal Pay for Equal Work”, which is to be introduced from April 2020 will also be an
important issue to be addressed.

Response to Revision of Laws regarding Temporary Staffing BusinessTemporarystaffing/BPO

Continuously and actively increase the number open-ended contract workers, focusing on the reinforcement of staffing capacity.

Full year
results for
FY20191H resultsfor FY 2020

Full year
forecast for FY
2020

Comments- Unit billing rates increased
by about 10％ on average# of workers
turned to openended contract

About
10,000*1

About 2,500

About 5,000

Targeted workers
in total

About
25,000

About 5,000

About 12,000- Dispatching ratio of openended contact workers isalmost 100％.*2*1 : Number of temporary workers who transitioned to open-ended employment contracts as a consequence of revisions to Japan's Labor Contract

Act and Japan's Worker Dispatching ('Temp') Act (excludes 2,600 open-ended contract temps for IT fields who previously transitioned).
*2:Dispatching ratio excludes nonworking time for training/education activities.
Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

13

As a response to the revision of the Worker Dispatching Act that was enforced last year,
the number of open-ended contract staff members has been increased.
During the 1st Half of FY2019, the number increased by about 2,500 and we areplanning to increase the number by about 5,000 by the end of FY2019. By increasing theunit billing rates of the temporary staff to the corporate clients by 10% on average, we
aim to increase the sales even further. The dispatching ratio of the temporary staff
members who transformed to open-ended contracts is almost 100%, excluding the nonoperating periods of training and education.

Requirements in “Equal Pay for Equal Work” Principle andOur Company’s Activity■ Temp clients have obligation to consider
temporary staffing fee.
•

Eliminate the differences in treatment with regular
employees such as commuting expenses and social
benefits•

On the labor-management agreement basis, raise thewage of those workers paid lower than the minimum
wage based on the job type x area•

Consideration of temporary
staffing fee
Reviewing of the structure of
employment systems throughincreasing cost

■Our company’s policy and activity•

Toward the enforcement of the law revision in April
2020, we started negotiation with our client firms in
2H of FY2019 regarding wage increase including
commuting expenses.

Improving working treatment of staffers andincreasing employment opportunity

Temp
clients•

Temporarystaffing/BPO

Individuals•

Permeation ofdiversification ofwork-styles throughimproved working
treatment

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

14

The next topic is the introduction of the “Equal Pay for Equal Work” system. The aim of
this system is to apply the same working conditions as those of regular employees tocontract staff, temporary staff, part-time staff, and casual staff. The system will be
enforced from April 2020.
For the temporary staff that are deployed by our company, clients of temporary staff are
obliged to consider commuting expenses and social benefits to eliminate differences intreatment of working conditions from regular employees.
For the improvements of working conditions of temporary staff and an increase of
employment opportunities, we are gradually promoting the understanding of this system
by conducting negotiations for a wage increase including commuting expenses withclients from the 2nd Half.

Recruiting

Recruiting segment (Placement Business)

Placemen business sales growth rate slowed down due to productivity per consultant anddecreased demand mainly from manufacturing companies.
Reason of growth rate slowing down
70.0%

■ Expansion of organization due to rapid growth

60.0%
50.0%
40.0%

[Our company] Placemen
business sales growth rate YoY

Growth rate
slowing
down

30.0%

•

Placement business sales have been increasing at a pace of over 20%
for the past 3 years and new hires continued at a high level.

•

As a result, number of new staff each consultant has to manage totrain increased.

■ The number of matching decisions per consultant

20.0%

decreased

10.0%

•

To address current issue, some consultants were assigned as leaders
to train staff members, but time was not enough to make themproficient staff members. As a result, the number of matchingdecisions per consultant decreased.

•

Reestablishment of the placement business is estimated to takesome time because new staff members joined to the business as aresult of withdrawal from “an” business.

0.0%[Market] Number of individuals
changing jobs YoY-10.0%-20.0%1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2016

2017

2018

2019

Note: Created by PERSOL HOLDINGS based on the materials of Statistics Bureau,
the Ministry of Internal Affairs and Communications

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

15

Next, I will explain the Recruiting segment.
Regarding the placement business, the job-changing market is showing a high growth
associated with transition of the number of individuals changing jobs at a high level forthe past 3 years. To respond to the market growth, we have actively increased thenumber of consultants each fiscal year. However, due to the rapid expansion of theorganizations, the deterioration of productivity has surfaced as the issue. In spite of theinitial growth forecast of around 20% for this fiscal year, the growth rate is expected tofall to around 10% this fiscal year.
From the 2nd Half, we assume that it will take some time to improve the productivity
due to the requirement of education as a result of staff reassignment associated withthe withdrawal from the “an” business which is the recruitment advertisement of parttime employee and casual staff.
In the 2nd Half, we will make our utmost effort for productivity improvement byreinforcing the management structure for further growth of the placement business.

PROGRAMMED Segment: New Management Team-PROGRAMMED

Top management was renewed in October 2019.
As officer in charge of overseas business, Mr. Yamazaki, who has a rich experience in overseas business,
was newly appointed.
Mr. Glenn Thompson, who has rich experiences in both staffing and maintenance businesses, wasappointed as group CEO of PROGRAMMED.

Glenn Thompson

New
appointment

Chief Executive Officer

Takayuki
Yamazaki(PERSOL HOLDINGS)
Executive Officer
Head of overseas
business

Since joined Skilled Group in 1987,
having taken charge of both staffing
and maintenance businesses
1987 Skilled Group Regional Manager
2001 Symphony Commerce CEO2012 PROGRAMMED
CEO in charge of Property Services
CEO in charge of Maintenance Div.
Managing Director

Devoted to the Company’s overseas
business since 20122004 Intelligence Holdings Executive Officer
2012 Intelligence Holdings Asia Director
2016 Persol Holdings Executive Officer
Kelly Services (Singapore) CEO
2017 PERSOLKELLY Director (CEO)2019 PERSOLKELLY Director (Chairman)

Stephen Leach
Chief Financial Officer

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

16

In this section, I will explain the reorganization measures of the PROGRAMMED segment.
Effective October 1, 2019, the local management team was changed. The local CEO was
replaced by Glenn Thompson, who has much experiences in the Maintenance andStaffing businesses and the new management team with Stephen Leach, CFO has started.
To create a synergy effect with the Asia-Pacific region, Takayuki Yamazaki, Executive
Officer of PERSOL HOLDINGS and Chairman of PERSOLKELLY, is in charge of the
PROGRAMMED segment for the firm commitment to the local management.
Yamazaki was promoted to Executive Office in INTELLIGENCE in 2004 and has been
engaged in the overseas business since 2012, and currently is engaged in the business as
the head of the PERSOLKELLY segment. By appointing Yamazaki as the person
responsible for both PROGRAMMED and PERSOLKELLY segments, we are planning tocreate a synergy effect through two companies.

PROGRAMMEDPROGRAMMED Segment: Current status

Maintenance business grows while Staffing business is suffering due to slow local economy.

Sale YoY: Maintenance Business

Sales YoY : Staffing Business
10.0%

10.0%

5.0%

5.0%

0.0%

0.0%

-5.0%

-5.0%

-10.0%-10.0%
1Q

2Q

3Q

4Q

1Q

FY20182Q

1Q

FY2019-Reflecting slow GDP growth in Australian economy, orders frommanufacturing companies, our main customers decreased.

-

EBITDA margin dropped to 2.2% in this six-month period from
4.0% in the same period last year due to decrease of SMEs’
customers with high margin.

-

As s result, a good will impairment loss was booked.

2Q

3Q
FY20184Q

1Q

2Q
FY2019-

Sales of Facility Management business grew by 18% inthis six-month period, compared to the same periodprevious year. High profitability Property Services
business recorded 8% decrease YOY due to unstable
weather.

-

As a result, EBITDA margin decreased to 4.7% in thissix-month from 4.9% in the same period last year.
Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

17

The next topic is the status of each business of the PROGRAMMED segment.
For the Maintenance business, while the facility management business has shown a highgrowth of 18% for the 1st Half, the Property Service business, which is a founding
business, is struggling due to the bad weather as one of the reasons. Even so, since thisbusiness has many long-term contract agreements with public facilities, this business has
a stable profit structure. Therefore, we believe this business will continuously grow in
the future also.
For the Staffing business, due to the stagnant economy in Australia, restructuring isnecessary urgently. Under the new management team, in addition to the cost cutting,
we are planning to restructure the business strategy towards the expansion of the small
to medium scale customer layer. We will make our utmost effort to create a synergy
effect with the PERSOLKELLY segment as soon as possible.
By establishing a new management infrastructure in the 2nd Half, we are planning totackle the issue with a full force through the closer communication between the Head
Office in Tokyo and the local office for steady profit creation.

PERSOLKELLYPERSOLKELLY Segment

Profit in Australia declined due to a system trouble. The gross profit margin in other main markets was stable
continuously even in the severe economic environment.
YoY

-1.8%

YoY

+10.1

Malaysia

%

China

YoY

-3.7%

• Staffing business was stable
while placement businessproductivity decreased.
• Effect of the retirement of a key
employee in previous year isbeing recovered.

• Productivity declined temporarily
due to an effect of the staff
turnover in previous year in
addition to deteriorating businesstrend in Hong Kong.

YoY+17.5%

Hong Kong

Singapore• Economic growth rate slowed down
due to an effect of the economic
downturn caused by the U.S.-China
trade friction.
• Priority policy is to cultivate newcustomers from non-Japanesecompanies.

YoY-58.9%• Staffing business was performing very well.
• The business was growing steadily based on
its strong presence in the market.
* Figure in each circles is gross profit margins on a local currency basis for six-month period of FY2019.
The size of circles shows the scale of the amount of gross profit margins.

Australia• Sales decreased as a result of asystem trouble and economic
downturn.
• Aims to completely solve thesystem trouble within this FY.
Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

18

The next topic is the status of the PERSOLKELLY segment.
This segment achieved a 2-digit sales increase within the core countries except Australiain spite of the impact of the recent trade frictions in some regions. However, the system
trouble that occurred in Australia resulted in operating loss. Although the system trouble
itself has been dealt with, we need to reorganize the local sales structure urgently and
we are currently taking measures for re-growth from the next fiscal year.
In this fiscal year, some amount of loss will be recorded due to the delay of debt
recovery and some unrecoverable debt as a result of the system trouble. However, in thenext fiscal year, we assume that the business will be nomadized by fixing the system
trouble and we will be able to turn this balance into a profitable one.

Status of Innovation/in New Businesses•(Million yen)

•

Sales

Innovation/New Businesses

DONE

The number of corporate accounts has increased in September at a high pace of about 3 times the number
in April, 2019.
“Miidas competency diagnostic search function*” developed by our company was granted the best award of"Professional Recruitment/Employment category" in "HR Award 2019" held by "Nihon no Jinjibu".

2,000
1,500

1st Half

1,000
500
FY2017

1st Half••

FY2018FY2019* It is a useful function to find the best matching corporate or organization culture for job-changers, considering the chemistry
between a job-changer and his/her potential superior or subordinates and stressful environment for the job-changer.

1H sales has increased by 182% YOY due to the special demand before a roll-out of reduced tax rates
accompanying consumption tax increases.
Awarded in “Good Design Award 2019” (held by Japan Institute of Design Promotion)(Million yen)

Sales

2,000

1st Half

1,500
1,000
500
FY2017FY2018FY2019Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

19This topic is the status of new businesses. We are actively promoting investment in new
businesses that will become a core part of the next generation.
A direct recruiting “Miidas” is showing a steady growth in sales. Sales of the cloud typemobile POS system “POS+” also are increasing as the special demand prior to thecommencement of reduced tax rate involved in the consumption tax increase introducedin October 2019 in Japan. These businesses are growing steadily. Although they are at
the investment prospect status, we will contribute to the growth of these businesses
even further.

Financial Forecasts for FY2019

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

Now, I explain the financial forecasts for this fiscal year.

20Consolidated Financial Forecasts- We aim to achieve the sales target of 980 billion yen in the Medium-term Management Plan.
- Operating profit forecast is 40.7 billion yen as a result of withdrawal from “an” business and sluggish overseas business. The target in the Mediumterm Management Plan became difficult to achieve.
- The net profit attributable to parent company has significantly decreased due to an extraordinary loss.

Full Year (Million yen)

•
•
•
•

FY2018 Actual

FY2019 Previous
Forecasts in August
2019

FY2019 Present
Forecasts

Objective in Mediumterm Management Plan

Sales

925,818

990,000

980,000

980,000

Operating profit

44,111

43,00040,70048,000EBITDA

59,97261,00058,00066,000Net profit attributable toparent company

24,361

21,7005,500

ーAdjusted EPS (yen)150.26143.71141.06ーBased of the background of rapidly shrinking workforce, there is strong needs of hiring from clients. However, there is also an emerging trend of
postponing new hiring in some industries in the changing external environment such as increasing uncertainties in the world economy.
In Japan, business has secured stable profits mainly in the Temporary staffing/BOP segment while orders from manufacturing and automobile
industries are on the decline due to the effects of the trade friction and foreign currency fluctuations.
Operating profit of overseas businesses is expected to decline because PROGRAMMED was affected by the sluggish Australian economy andPERSOLKELLLY faced the system trouble.
Extraordinary loss will be recorded in relation to the Staffing business and the Marine business-related assets of PROGRAMMED, in addition towithdrawal from “an” business.
Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

21

Today, the financial forecasts were revised downwards.
Up to the previous fiscal year, we achieved both increases of sales and profits continuously
and we expected to have the same condition for this year also. Subsequently, the financial
forecasts was revised downwards in August 2019 as a result of our decision on
discontinuation of the “an” business. At that time, the forecasts of the existing businessexcept the segments related to “an” business were not changed. This time, we reviewed
the financial forecasts again and decided to revise the full-year forecasts downwards.
For the business in Japan, while stable profits have been secured mainly from the
Temporary staffing/BPO and the Recruiting segments, the sense of deceleration is surfacing
mainly in the manufacturing sector and automobile manufacturers due to the unsettled
external environment including uncertainty in the prospect of the world economy such as
the trade frictions between the USA and China.
For the overseas business, both sales and operating profit were revised downwards due tothe system trouble in Australia in the PERSOLKELLY segment and sluggish results of theStaffing business in the PROGRAMMED segment. Also, impairment losses of
PROGRAMMED in the 1st Half recorded and the net profit for FY2019 will be significantly
lower than the previous forecasts.
This fiscal year is the final year of the 3-year medium term business plan. However, theconsolidated operating profit will not reach the initial target of 48 billion yen regrettably.
Towards a new medium term business plan to be announced in the spring of next year, we
will make our efforts towards grasping the current condition and planning strategies toexpand our business in the future.

Business Forecasts By Segment (FY2019 ending March 2020)
Sales

Unit: Billion yen

Temporarystaffing/BPO

Operating profit

Previous
forecasts *Present
forecasts/change

Previous
forecasts*

Present
forecasts/change

Cause

549.0

552.0

26.5

27.5

・ Both sales and operating profit were better thanprevious forecasts based on the steady sales
increase and improved unit prices.

84.0

13.4

13.6

・ Sales growth rate of placement business is
expected to decrease to around 10%. Operating
profit will be up due to cost reduction.

192.0

1.0

0.0

85.0

1.0

+3.0

Recruiting

89.0

PROGRAMMED

204.0

PERSOLKELLY

84.0

ITO

41.5

41.5

2.2

Engineering

31.0

29.8

3.0

-5.0

-12.0

-1.2

＋0.2

-1.0

+1.0

±0.0

＋1.0

・ Blue collar Staffing business sales will decline due toslowdown of Australian economy and depreciation ofAustralian dollar.
・ Amortization costs will decrease by 0.7 billion yen in
2H due to a goodwill impairment loss.

-0.8

・ Sales will increase in regions other than Australia
despite an effect of slowdown of Chinese economy.
・ Increased cost to deal with the system trouble inAustralia leads to operating loss.

2.2

・ IT investments of client companies continue to bestrong and both sales and operating profit targets
will be achieved

2.1

・ Due to an effect of macro environment such as
trade frictions, decreased orders from mainclients will make sales and profit down.

-1.8

±0.0

-0.9

22

*Previous forecasts announced in August 2019

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

Now, I discuss the general condition of the full-year forecasts for each segment.
The Temporary staffing/BPO segment is progressing steadily. Consequently, the forecast of theoperating profit throughout the year is revised upwards from the previous forecast by 1 billion yen.
For Recruiting segment, compared to the previous forecast, the sales forecast is down by 5 billion yen
due to slow growth rate of the placement business. Based on the examination of the cost, theoperating profit is expected to increase by 0.2 billion yen.
For PROGRAMMED segment, while there is a significant deterioration of profitability mainly in the
Staffing business, a decrease of goodwill depreciation of 0.7 billion yen in the 2nd Half is expected as
the reaction to the impairment loss in the 1st Half. As a result, we revise the profit forecast from 1
billion yen to zero.
For PERSOLKELLY segment, due to the significant loss in the business in Australia as well as the impactof the current unsteady business conditions in Hong Kong and China, operating loss of 0.8 billion yen is
expected.
For ITO segment, although the result did not reach the target in the 1st Half, we expect that it willreach the target within the full year.
Finally, for Engineering segment, due to the end of the project for the highly profitable customer, theprofit forecast throughout the year is down by 0.9 billion yen from the previous forecast to 2.1 billion
yen.

Interim Dividend and Year-end Dividend (Plan)
Our company’s dividend policy is to continue return to shareholders by stable dividend payment and weplan to provide an annual dividend of 30 yen per share as announced in May 2019, even though the net
profit attributable to parent company will decrease because of extraordinary loss that is noncash
expense.

Fiscal Year ended March 2019

Dividend amount
per share

Fiscal Year ending March 2020

InterimYear-end

InterimYear-end(Plan)

10 yen15 yen15 yen15 yenCopyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

23

Finally, I discuss the dividend.
The net profit of this fiscal year is significantly lower than that of the previous
fiscal year because of extraordinary losses. However, as this is regarded as atemporary cost, we decided to pay 15 yen per share as an interim dividend asannounced in May. At the moment, we will pay 15 yen per share as the yearend dividend as planned.
This is all I would like to share with you. Thank you very much for your kindunderstanding and continued support.

Reference

Directors Structure (As of October 1, 2019)

・Board Members

・Executive Officers

Representative Director, President and CEO
Masamichi Mizuta

Executive Officer (Governance, Risk management, Compliance Officer)
Daisuke Hayashi

Director, Deputy President and COO (Group Function Control
Officer)
Hirotoshi Takahashi

Executive Officer (Corporate Strategy Officer, Chief Human Resources
Officer)
Hirotaka Mino

Director, Senior Executive Officer (Sales Strategy Officer,
Temporary Staffing/BPO Segment Lead)
Takao Wada

Executive Officer (Recruiting Segment Lead)
Taro Mineo

Director, Executive Officer (Chief Financial Officer)
Kiyoshi Seki

Executive Officer (PROGRAMMED Segment Lead, PERSOLKELLY Segment
Lead)
Takayuki Yamazaki

External Director
Ryosuke Tamakoshi

Executive Officer (ITO Segment Lead)
Koichi Yokomichi

Director (Member of Audit and Supervisory Committee)
Hiroshi Shimazaki

Executive Officer (Engineering Segment Lead)
Mikio Miyamura

Director (Member of Audit and Supervisory Committee)
Toshihiro Ozawa

Executive Officer (Temporary Staffing/BPO Segment, PERSOL PanasonicGroup Business Officer)
Kazunari Kimura

External Director (Member of Audit and Supervisory
Committee)
Naoshige Shindo

Executive Officer (Temporary Staffing/BPO Segment, BPO Business Officer)
Toshiyuki Takakura

External Director (Member of Audit and Supervisory
Committee)
Naohiro Nishiguchi

Executive Officer (Temporary Staffing/BPO Segment, Temporary Staffing
Services Innovation Officer)
Shinji Masaki

External Director (Member of Audit and Supervisory
Committee)
Chisa Enomoto

Executive Officer (Recruiting Segment, Works Business Officer, Permanent
Job Board Business Officer)
Yu Senoo* Mr. Peter W. Quigley has retired from his position as external director of PERSOL HOLDINGS at the end of September 2019. Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

24

Disclaimer

Results forecasts etc. used in this material contain forward-looking
statements which are based on a certain number of assumptions theCompany deems rational, and the information at hand as of November 13,
2019 which are not meant in any way by the Company to be assurances thatplans will be realized. Actual results etc. may vary greatly due to various
causes.
The figures, indicators, PERSOL Group results, and details of financial status
included in this material have been released to facilitate an appropriate
understanding. Kindly note that not all the figures and indicators have been
subjected to audit and review by external auditors.

Copyright © since 2017 PERSOL HOLDINGS CO., LTD. All Rights Reserved.

25