01

・The following is the explanation of the Financial Results Summary for FY 3/2020 1Q.
・As a general remark, although the macro- and micro- economic environments in the world
as a whole have been moving in various ways, NISSO is proceeding smoothly according toplans made at the beginning of the fiscal year.

2

・The following is the explanation of NISSO's Non-consolidated Financial Results.
・Net sales amounted to 16,566 million yen (up 1,975 million yen or 13.5% year on year).
・Gross profit amounted to 2,794 million yen (up 279 million yen or 11.1% year on year).
・SG&A (selling, general and administrative) expenses amounted to 2,325 million yen (up 210
million yen or 9.9% year on year).
It has been explained that NISSO has devised and strived to control SG&A expenses, and the
SG&A ratio for FY 3/2020 1Q has decreased from 14.5% to 14.0% compared to thecorresponding period of the previous fiscal year.
・Operating profit amounted to 468 million yen (up 69 million yen or 17.3% year on year).
As it will be explained later, this profit amount came from various investments that weremade previously to go in effect after July.
・Ordinary profit amounted to 469 million yen (up 58 million yen or 14.2% year on year).
・Profit amounted to 342 million yen (up 82 million yen or 31.7% year on year).

3

・Shown above are graphs of NISSO's quarterly non-consolidated net sales and operating
profit trends.
・Net sales for FY 3/2020 1Q amounted to 16,566 million yen. Compared to FY 3/2019 4Q,
although staff enrollment increased, since there were more working days in FY 3/2019 4Q,
as a result, net sales were approximately the same.
・One of the characteristics of the manufacturing-related human resources services businessis that business performance fluctuates based on the number of working days per month. In
particular, the manufacturing industry tends to have a disproportionate amount ofoperations in 3Q and 4Q, and looking at the operation results in the previous fiscal year, 3Q
had the most amount of operations, followed by 4Q. Since a similar trend is expected in thecurrent fiscal year, NISSO expects that operations will increase in the second half of the fiscal
year.
・Operating profit also fluctuates depending on the number of working days, and there arecosts that are incurred annually in 1Q. For example, since June is a month when bonuses arepaid out, lump sum payments to skilled staff, as well as expenses for events such as theGeneral Meeting of Shareholders, are incurred. Since the number of skilled staff is increasing
year by year, the amount of bonuses that will be paid out will also increase, but these skilled
staff will contribute to NISSO's growth in 3Q and 4Q.
・In the graph above, the portion that is displayed with a dotted line above the actual value of
468 million yen depicts investments that were made in FY 3/2020 1Q (for growth after 2Q).
In terms of its content, the number of very favorable personnel-related projects (orders fromclients) increased from June to July, and in order to fulfill these requests for additional
personnel, in addition to increasing recruitment costs compared to the usual level, expenses
related to the housing for workers, and expenses accompanying the initial training for staff
retention stability, were incurred as upfront investments. Furthermore, new graduate
recruitment costs were also incurred in 1Q.

4

・The following is the explanation of the trend of NISSO's enrolled staff.
・The number of enrolled staff for FY 3/2020 1Q (end of June 2019) was 14,282.
・For NISSO to increase net sales and profits, it is important for us to know the number ofour enrolled staff.
At the end of FY 3/2020 1Q, the number of enrolled staff increased by 240 from the endof the previous fiscal year (end of March 2019). At the beginning of the fiscal year, client
manufacturers examined the effects of the trade friction between U.S. and China to respondto their needs for additional personnel. However, from around the end of the consecutive
holidays in May (Golden Week), NISSO received requests for personnel while learning about
the clients' forecasts for the entire year.
・Although the number of enrolled staff increased by 240 in FY 3/2020 1Q, as explained
earlier, NISSO made investments in order to cope with the clients' need for personnel from
June onwards, and as a result, the number of enrolled staff at the end of July increased by
352 from the end of June.
・This increase in enrolled staff came not only from the automobiles industry, but also fromcompanies in the electronic components and semiconductor industries. This was due to not
only the completion of inventory adjustments, but as a result of various factors that
contributed to the clients‘ need for additional personnel. One of the characteristics of NISSO
is that we have conducted business with many excellent manufacturers in various industries
throughout our 50 year history, and in June, many of these manufacturers requested that
we fulfill their needs for additional personnel.
・The number of enrolled staff in FY 3/2020 1Q, with the addition of staff acquired in July,amounts to approximately 600. In 1Q of the previous fiscal year, there was an increase ofabout 600 enrolled staff, so although there was a one month delay in the current fiscal year,
it can be said that a similar trend has been followed. Therefore, with regards to how muchthe number of enrolled staff at NISSO will increase in the current fiscal year, since economic
trends are expected to be similar to the previous fiscal year, we expect increases to bearound the same level as last year.

5・The following is the explanation of the Consolidated Financial Results for FY 3/2020 1Q.
・Net sales amounted to 17,983 million yen (up 1,984 million yen or 12.4% year on year).
・Gross profit amounted to 2,964 million yen (up 302 million yen or 11.4% year on year).
・SG&A expenses amounted to 2,486 million yen (up 197 million yen or 8.6% year on year).
・Operating profit amounted to 477 million yen (up 104 million yen or 28.2% year on year).
In FY 3/2019, although investments were made to the nursing care facility Sweetpea
Higashi Totsuka in Other Businesses, it has improved slightly and contributed to profits.
・Ordinary profit amounted to 490 million yen (up 101 million yen or 26.0% year on year).
・Profit attributable to owners of parent amounted to 357 million yen (up 115 million yen or
47.6% year on year).

6

・Shown above are graphs of quarterly consolidated net sales and operating profit trends.

7

・The following is the explanation of the Overview of Activities for FY 3/2020 1Q.

8

・The following is the explanation of NISSO's non-consolidated net sales by industry.
・The above is the net sales by industry compared to the corresponding period of the previous
fiscal year (FY 3/2019 1Q).
・At NISSO, we have developed a business model that focuses on the types of jobs that
produce high-added value products.
・Net sales in the automobiles industry amounted to 7.5 billion yen in FY 3/2020 1Q,
compared to 5.2 billion yen in FY 3/2019 1Q. Although it is said that the macro-economy issomewhat sluggish in the world, NISSO's momentum has continued from the previous fiscal
year, and net sales have increased.
Automobiles manufacturers, who are considered as the core of our business, are planningto launch several new models during the current fiscal year, and will require additional
personnel. As just described, unlike the discussions talked about in society about what may
happen to the profits of manufacturers due to the impact of exchange rates, NISSO expects
incoming orders from our clients to continue as planned.
・Although the 1Q results of electronic devices and precision machinery decreased slightly
from the previous fiscal year, this trend is expected to change from 2Q onwards. Although
there are cases where the number of required personnel has started to increase after thecompletion of inventory adjustments, especially after the consecutive holidays in May(Golden Week), the production of automotive-related electronic components have begun toprogress steadily. Production adjustments for high-grade smartphone-related projects werestarted in FY 3/2019 3Q and 4Q, and as a result, production for electronic devices are also
expected to increase.

9・The following is the explanation of NISSO's net sales per capita.
・The monthly net sales per capita for FY 3/2020 1Q amounted to 391 thousand yen.
At NISSO, we have been making efforts to nurture and train highly skilled personnel as wellas raising unit pricing, and as one can see from past trends, net sales per capita isincreasing every year.
・The graph on the right shows the quarterly trend of net sales per capita from the previous
fiscal year (FY 3/2019). Looking at quarterly trends, the net sales per capita for FY 3/2019
1Q was 379 thousand yen, and has been steady since then.
・Net sales per capita is related to unit costs and monthly hours of operation. Net sales per
capita in 3Q and 4Q of the previous fiscal year were 410 thousand yen and 392 thousand
yen, respectively, due to high operating volumes. Since NISSO expects a similar operating
situation in the current fiscal year, we expect a similar increasing trend as in the previous
fiscal year.

10・The following is the explanation of NISSO's skilled staff.
・The number of skilled staff at FY 3/2020 1Q-end was 4,501 (3,904 at FY 3/2019-end).
・In order to become a company with even more attractive profits and profit margins, NISSO
is striving to increase the number of skilled staff who are indefinite-term employees, and thenumber of these skilled staff is increasing steadily.
・Although the number of skilled staff increased from the end of the previous fiscal year, from3,904 to 4,501, this increased number of personnel are not newly hired staff as explained in
the staff enrollment section earlier. There are many cases where skilled staff are promoted
to the position when the fiscal year changes, and more than 90% of those who have become
skilled staff from the beginning of the current fiscal year were formerly existing enrolled staff
who passed skills measurement tests and were recommended through discussions withclients.

11

・The following is the explanation of the status of NISSO’s Account Companies.
・At NISSO, we are expanding our Account Company strategy by thoroughly communicatingwith client companies, conducting discussions related to mid- to long-term personnel
strategies, and assigning our trained personnel to core divisions and departments ofmanufacturers.
・In order to strategically expand business with Account Company Groups, NISSO is investingin human resources development through various training programs, and as a result, theratio of our net sales increased from 41.9% in FY 3/2019 1Q to 44.1% in FY 3/2020 1Q.
・This shows that the transactions with Account Company Groups are going well, and is one of
the factors that enables NISSO to operate our business without being greatly affected by theexternal macro-economic situation.

12

・The following is the explanation of NISSO's turnover rates.
・The overall turnover rate for FY 3/2020 1Q was 4.4%.
・The turnover rate of skilled staff for FY 3/2020 1Q was 1.5%.
・When NISSO receives requests for personnel and the number of personnel assigned toclients increases, there is a possibility that the number of personnel who resign due to theoccurrence of mismatches, etc., increases. However, as previously explained, NISSO has
been making efforts to reduce such turnover rates by enhancing our workplace management
systems. By further developing these activities, NISSO anticipates that it will be possible tofurther reduce turnover rates in the future.

13

・ The following is the explanation of NISSO's educational achievements.
・The educational achievement for FY 3/2020 1Q amounted to 1,190 participants.
・Although expenses will be incurred by conducting education, NISSO will proceed with thiscommitment to provide education in order to increase net sales and profits, and be able toemploy the necessary personnel for manufacturers even if there are fluctuations in
production.

14

・The following is the explanation of Other Businesses.
・Although there was a deficit (operating loss) of 247 million for the full year in FY 3/2019, a
surplus (operating profit) of 9 million yen was recorded in FY 3/2020 1Q as a result of thepromotion of reviews regarding expenses, the continued high occupancy rates of existing
facilities, and the increase in the number of residents at Sweetpea Higashi Totsuka (Bldg. 6).
・In Other Businesses, profitability is expected for the current fiscal year, and in FY 3/2020
1Q, this profitability is progressing ahead of schedule.

15

・ The following is the summary of the contents explained thus far.
・With regard to business performance (financial results), net sales remain steady despite theuncertainty of the economy, and this trend is expected to continue. In FY 3/2020 1Q, NISSO
made investments for 2Q and beyond, and although the trend in profits appear to havedeclined, these investments have contributed to performance from July onwards, and results
have remained strong.
・Net sales by industry and staff enrollment is as explained earlier.
・With regards to net sales per capita, NISSO has received orders from companies that are
expected to become next (future) Account Companies, and in these projects, we have beenable to start with unit costs based on the clients' understanding of the cost structures that
we have established over the years.

16・The following is the explanation of Future Prospects for FY 3/2020.

17

・The following is the explanation of future market trends.
・Although the 3 environments consisting of "Demand", "Recruiting", and "Client" arementioned above, in this industry, it is thought that the client environment is the one
environment that does not change. The trend in which client manufacturers utilize external
human resources, instead of direct employment, is not one which ended in one year overthe past year, but rather, still currently continues, which is one of the factors that we believe
enabled NISSO to achieve net sales in FY 3/2020 1Q which was on par with the previous
period (FY 3/2019 4Q).
・In the recruiting environment, although the effective opening-to-application ratio of jobs iscertainly high, job openings in the manufacturing industry are on a downward trend.
However, the demand for personnel from companies that NISSO has received orders fromcontinues to increase.
・In the demand environment, when looking at new vehicle launch plans and production plans
for the automobiles and automotive parts industries for 2Q and onwards, they are as NISSO
expected at the beginning of the fiscal year. In the electronic devices industry, as an
example, the demand for parts for accident prevention functions has increased, andconsequently, production has increased.
・As just described, manufacturers and factories tend to have different behavior, or
movement, than that of the world's economic climate.
Since NISSO believes that client trends are strong, and expects that demand for humanresources will continue to increase, we will continue to thoroughly respond to the requests
and needs of our clients responsibly.

18

・The following is the explanation of the basic agreement on collaboration that was concluded
with Nikon Corporation and Nikon Staff Service Corporation, which was announced on July 12.
・The contents of the collaboration will be considered in the near future.
Although this initiative is not expected to produce immediate results, NISSO will undertakethe theme of the different work-styles of various types of people.

19

・The following is the explanation of the utilization of overseas human resources.
・With regards to the utilization of overseas human resources, NISSO complies with relevantlaws to utilize new graduate Chinese nationals, and is cultivating our expertise through such
utilization.
・Although there are still institutional issues regarding the Technical Internship Program,depending on the revision of relevant laws hereafter, NISSO is considering its use andconducting necessary preparations for its utilization.
・Although there are other companies in our industry that specialize in the utilization offoreigners of Japanese decent, NISSO is promoting efforts to utilize such personnel on asmall scale.

20

・The following is the explanation of NISSO's ESG Activities.
・The Appreciation Festival for Nisso Pure Co., Ltd., NISSO's special-purpose subsidiary, washeld on July 25 and 26.
・NISSO co-sponsored the reconstruction support activities that Yokohama FC (Japanese
professional soccer team) has been conducting in Fukushima Prefecture for eight years.

21

・The following is the explanation of the Earnings Forecast for FY 3/2020.

22

・The following is the explanation of the Earnings Forecast for FY 3/2020.
・The condition of the business environment is as explained thus far, and remained steadythrough July due to the investments and measures made by NISSO earlier.
・For the full year, NISSO expects to achieve initial targets for net sales and operating profit.

23

・The following is the explanation of Shareholder Returns.

24

・The following is the explanation of the Shareholder Return Policy.
・As explained thus far, NISSO believes that returns will be made that will satisfy ourshareholders. In addition, it is our belief that dividends will increase further as NISSO
continues to develop, and by taking into consideration such a balance, a dividend payout
ratio of 30% will be made as in the previous fiscal year.

25

26