Q&A: Decline in Gross Margin Ratio

Moderator: We have questions that ask, "Will the burden of strategic costs, such as companyentrance benefits in the first half, continue to increase? The gross margin ratio decreased 1.1
percentage points year-on-year. What is the ratio of the impact of reduced hours, such asovertime, and strategic costs?”
Shimizu: As I explained earlier, the company-entrance benefits were 0.7% in total. However, I
believe this operating situation is not favorable, which has had a significant impact onsimulations.
The reason for this is the increase in the unit costs of orders, which is naturally reflected in thetreatment of staff themselves, but simulations have shown that the gross profit margin willcertainly increase more than before when operations return to normal.
There is no doubt that the rate of operational decline due to supply chain problems is high.
However, the results can vary greatly depending on when the simulation is performed undernormal conditions.
When we simulate the impact of reduced hours at a pre-COVID-19 pandemic average of 25 to26 hours of overtime per month, which is not an excessive work level, we have the ability togenerate figures that are higher than our original gross profit.
In addition, the continuation of company-entrance benefits is closely related to, among otherthings, the extent to which we can handle inquiries from auto body manufacturers. In thissecond quarter, we also actively worked to increase the number of staff with companyentrance benefits that are on par with other companies, in preparation for recovery production
from the fall, but it probably won't continue for a long period.
In the future, if there are even stronger requests, mainly from auto body manufacturers, there isa slight possibility that we may provide equivalent company-entrance benefits.

Q&A: Progress in the first half against the full-year
forecast

Moderator: We have a question that asks, “Although you have left the full-year forecast
unchanged, am I correct to assume that the first half went in line with your original plan?"Shimizu: Although the first quarter was worse than initially planned, exceeded previous levels,and the second quarter was slightly below the initial plan.
The reason for this was that around July, I heard from clients, mainly automobiles

manufactures, that the operation rate might increase in line with the recovery of the supply
chain from around the beginning of fall, so we responded to this by strongly promoting it andproactively offering company-entrance benefits.
In the second quarter, we made upfront investments ahead of the initial plan, so although sales
were growing, profits were slightly below the plan.

Q&A: Outlook for the second half
Moderator: We have a question that asks, "Although production is likely to return to someextent in the second half, mainly for automobiles, final demand is likely to weaken due tomacroeconomic impact. What is your outlook for the second half?"
Shimizu: It’s a very difficult question but let me give you the answer based on the information
we have available. As you mentioned, on a macro level, semiconductors and other industries
have been affected. We also expect automobiles to recover moderately and normalize from thebeginning of next year. Although this current view remains unchanged, since we cannot predict
everything that will happen in the future, it depends on how much the supply chain will recover.
Our approach to profit is usually based on a profit structure of “ first half 1: second half 2”.
However, just to give you an idea, in terms of revenue, the simulation draws a rapid curve fromapproximately 800 million yen in the third quarter to 1.4 billion yen in the fourth quarter.
However, these figures are based on the current information we have and are not promises. Asfor sales, there is no doubt that we will make progress as planned as the situation normalizes.

Q&A: Trends in the number of enrolled staff and net sales
Moderator: We have a question that asks, "I believe that the number of enrolled staff and net
sales have exceeded the plan, but is this also on schedule?"
Shimizu: The number of enrolled staff and net sales have exceeded our expectations. In
addition, I believe that the operating status and whether we can incorporate high value-added
areas in the current fiscal year onward will lead to the results for the next fiscal year and thefiscal year after.

"Key points for achieving the Medium-term ManagementPlan” by Mr. Shimizu

Shimizu: I would like to talk about some very important points for achieving our Medium-termManagement Plan.
We expect a significant shortage of equipment maintenance personnel in industries such as
semiconductor equipment manufacturers, semiconductor manufacturers, non-semiconductor
component manufacturers, and automobiles manufacturers.
We are also promoting a human resources development model that emphasizes training rather
than the traditional matching, even in dispatching. It is extremely important to differentiate
ourselves from other companies and how we respond to the needs of our clients through these
efforts in order to accomplish this Medium-term Management Plan.
Although this "investment for development" may seem like a less speedy initiative compared toother companies in the same industry, we are making this investment with the belief that we willdefinitely produce results in the medium to long term.