April 11, 2023
Script and Q&A regarding Today’s Timely Disclosure■ Brief summary of today’s announcement (Mr. Junji Tokunaga, ChiefFinancial Officer) over the presentation materials
P2. Today, we disclosed two matters.
(1) One is the revision of full-year financial forecast for FY2022. We haverevised net profit in our full-year financial forecast for FY2022 from 30.5
billion yen, which we announced in November 2022, to 20.4 billion yen,
due to impairment losses both in domestic and overseas businesses. On
the other hand, we have revised up adjusted net profit which is anindicator for dividend payment, from 39.1 billion yen to 41.0 billion yen.
(2) We also announced our intention to change in dividend policy andforecast of dividend increase. We have decided to set a target payout ratioof approx. 50% under the new mid-term management plan for April 2023
to March 2026, so as to strengthen shareholder returns based on a basic
management policy of growth and capital efficiency. In line with this policy
and the strong current business performance, we have decided to increase
the target of FY2022 payout ratio from approx. 25% to approx. 35%, with
2nd half dividend hike from 21 yen to 40 yen per share.
P4. First, I will explain details of the impairment loss and others. Regarding the
mid-term management plan of APAC SBU, which was announced in August
2022, steady progress is made to achieve the target ROIC of 10% and target
operating profit of 10.0 billion yen. We have reviewed the business portfolioofProgrammed.

Specifically, while

focusing

oureffortsonFacility

Management in the maintenance business, we reviewed CGUs from the endof last year to the spring of this year, positioning Property Services as a nonpriority area. As a result, while the overall maintenance business was not hit
by impairment previously, an impairment loss was recognized for Property
Services, which we classified as a non-focus business this time, in theimpairment test. We therefore posted 8.3 billion yen. We also posted 4.0
billion yen in an impairment loss on MIIDAS and other domestic businesses.
In addition, there was an increase that reflected the employment promotion
tax. As a result, we revised our net profit forecast from 30.5 billion yen to20.4 billion yen. On the other hand, regarding adjusted net profit as anindicatorfordividend

cash extraordinary

payment,

income/losses,

ourpolicy

impairment

isto reflect

loss,

and

thenon-othersin

determining the value as the base for dividend. The amount of theadjustment was 20.6 billion yen this time, so we revised it up from 39.1
billion yen to 41.0 billion yen.
P5. Among the forecast values that we announced in November 2022, operatingprofit and EBITDA remain unchanged, at 53.0 billion yen and 75.2 billion yen,respectively. We have revised net profit and adjusted net profit as I explained
earlier. As a result, we have revised adjusted EPS from 169.95 yen to 178.36
yen.
P6. This page shows details of the adjustment that I explained earlier. To profit
attributable to owners of parent at right, which is 20.4 billion yen, adjusted
items (extraordinary income of 13.1 billion yen and goodwill amortization of9.0 billion yen) has been reflected while tax reconciliation related to certain
adjusted

items, whichis-1.5 billion

yen, hasalso beenposted.

Consequently, adjusted net profit is 41.0 billion yen.
P7. I will move on to explain the change in dividend policy and dividend increase.
P8. Based on our basic management policy of growth and capital efficiency, we
have changed our dividend policy to increase the payout ratio under the new
mid-term management plan, from approx. 25% to approx. 50%, so as tostrengthen shareholder return.
P9. Reflecting this, regarding the dividend forecast for FY2022, we will increase
our year-end dividend from 21 yen to 40 yen, while we have already paid aninterim dividend of 21 yen. This will result in an annual dividend of 61 yen.
Consequently, the annual payout ratio has been increased from approx. 25%
to approx. 35%.
This concludes my explanation of (1) revision of financial forecast for FY2022 and(2) change in dividend policy and dividend increase.

■ Q&A
Questioner 1:
I have two questions. One is about the impairment in Australia. Regarding
properties in what you call non-focus area, while the method of evaluating theperformance and the direction remain completely unchanged, you havechanged the classification and you have also considered the current interestrate hike. Is that all? I would ask you to explain these points a little further.
CFO Tokunaga:
Thank you for your question. First, our answer to your question is Yes. To start
with, the Staffing business, the Facility Management business, and the Property
Services business that was subject to impairment this time are all making
progress as planned. I will explain about the Property Services business in somedetail. Its gross profit is about 100 million AUD and the bottom line is around 20
million AUD. Specifically, the Painting business is a business of painting buildings
and other public structures for preventing rust and checking them. In addition,
because Australia is large, the business includes the maintenance of parks andthe similar facilities. The third segment is electrical work. In the Japaneseclassification, these services are rather close to the construction business,classified as so-called painting, landscaping, and electrical construction. Actually,
these services are not very susceptible to the economic climate. I think it is ahighly stable business in this sense. On the other hand, if we are asked if thisbusiness is likely to see substantial double-digit growth in the future, our answer
is No. Therefore, we do not mean that this Property Services business has
declined in performance this time. From the viewpoint of future market
expansion, Staffing

serviceandFacility

Management

servicewillgrowsignificantly. We therefore intend to focus more efforts on these services. This is
why we have separated the CGU, for which we recognized an impairment loss
this time. It is for this technical reason that we have posted an impairment loss
for the Property Services business. There is no impact on the businessperformance itself at all.
Questioner 1:
Thank you for the in-depth explanation. Next, my second question is about theMIIDAS business. Quarterly values in the fiscal year show that it was clearlyslowing down, which I believe is why you have impaired it this time. First, you
now make considerable investments in solutions, which are not limited to MIIDAS.
I would like to know whether your policy, investment, and the strategic positionof MIIDAS will change in the future or not. The other is my request for you. Whenyou explain quarterly results, you mostly explain the Solution SBU part nicely.
This time, however, you said that MIIDAS has been impaired. I think this is outof the blue for some people. Regarding communications about these points, I
know that you cannot say "We will post an impairment loss," but there shouldhave been more communications about them. That's just my feeling.
CFO Tokunaga:
Regarding MIIDAS, customer acquisition and sales activities have been going well.
I think that the values we have disclosed are also favorable. On the other hand,
while we would have made a plan to turn a profit next fiscal year or the fiscal
year after next and return cash under normal circumstances, we have chosen astrategy to expand our customer base, and there was a suggestion that weshould impair it this time. This is why we impaired it. We ask you to understandthat, in this sense, our policy of continuing customer expansion and sales
expansion has remained unchanged.
Questioner 1:
I really understand it. That is all from me. Thank you very much.

Questioner 2:
Aren't you considering a withdrawal from the Property Services of Programmed,MIIDAS, and Meetscare? For the former Solution SBU, investment rather thanoperating expenses has somehow remained untouched while the performance ofthe overall Group has been enhanced. Is the exit in sight? Can you show theposition of each and the balance between future new investments and theirrecovery in the next mid-term management plan? Please explain your policy on
discipline about the exit. In addition, here is a point that I am concerned about
regarding the bloated investment of the former Solution SBU. Are POS+ andShareful all right?
CFO Tokunaga:
First, I will explain about the Australian business and then about the formerSolution SBU. First, in the Australian business, cost reduction and review of thebusiness portfolio are making steady progress toward the achievement of ROIC
at 10% and operating profit at 10.0 billion yen as the FY2025 targets that we
disclosed in August 2022. At the management team, we expect these targets tobe achieved. We would like to move forward to achieve the targets withoutchanging the strategy significantly. Of course, we would like to expand or
downsize each one of the small businesses and services included in it in a flexible
manner, but the target ROIC of 10%, which we aim to achieve in three years,
has not changed at all. I understand that your second question is about whatstrategies we will take in the future for various services of the former Solution
SBU. On April 1, we have changed the position of the former Solution SBU to theR&D Function Unit. I will explain the purpose. The former Solution SBU has many
services, and we changed it to the R&D Function Unit for the purpose ofconsidering and checking whether to exit from the services or develop them, one
by one, every year. This is the background to the change. Regarding MIIDAS,POS+, and Shareful as major services, we are not planning a major strategy
change for any of them. While we posted an impairment loss for MIIDAS, sales
activities themselves have been going well, and we would like to continue
differentiating the services. POS+ has a certain level of competitiveness in Japan
from the viewpoint of Cloud POS, so we will continue customer expansion.
Shareful has a major competitor, but we would like to continue customer
expansion as the No.2 in the industry. On the other hand, regarding services
other than these three, we would like to exit from whichever we should by
evaluating the performance and market value of each.
Questioner 2:
Regarding the new R&D Function Unit, can we expect that the mid-termmanagement plan will clarify what investment discipline you will follow, when you
will give up if you do so, and what indexes you will use?
CFO Tokunaga:
Yes, you can. We would like to explain about them, too.

Questioner 3:
I took it that you recognized impairment for Programmed and MIIDAS, a domestic
business, in a fairly preliminary manner. Am I correct in understanding that you
have done what you should do as immediate measures associated with the shift
to IFRS, thus having become fully compliant with it? In addition, the presentationmaterials say that you have advanced your financial policy considerably tostrengthen shareholder returns. Can I expect that, in the mid-term management
plan, you will also disclose how to make investments for increasing the return,or investment cost efficiency such as ROIC in particular?
CFO Tokunaga:
Let me start by answering your first question. It was not because of the change
to IFRS but because we followed the accounting principle that we posted theimpairment loss. However, while the plan for Programmed remains unchanged
from the one announced in August 2022, in consideration of the new mid-term
management plan starting in April, we revised the business plan for MIIDAS andother domestic businesses of the former Solution SBU in line with the new midterm plan. I think this was one of our conclusions. Regarding the second question
about shareholder return and others, we are planning to explain the content of
the new mid-term management plan at the time of the announcement of financial
results on May 15. We plan to announce financial indexes, including financial
discipline, cash allocation, and our approach to investment, as well on thatoccasion. I have refrained from referring to them today because we have yet toannounce them.