FAQs for 3Q of FY3/2024
February 9, 2024
UT Group Co., Ltd.
(Note) In 1Q of FY3/2024, dispatched workplaces of some clients moved from the Manufacturing Business to the Area Business and about
1,900 technical employees have been transferred from the Manufacturing Business to the Area Business as of the end of June 2023. As forreference, this document has retroactively revised some data of the two business segments for the past years. Please refer to "Financial
Results Briefing Material for 3Q of the FY3/2024" for details of the retroactively revised data.

Consolidated financial results
Q1
A

What were the factors behind the year-on-year decrease in sales and increase in profit
in the first nine months of FY3/2024?
Due to sluggish demand for human resources, particularly among semiconductor
manufacturing equipment (SME) makers and semiconductor makers, the number of technicalemployees in the Electronics subsegment and the Industrial & Commercial Machinery
subsegment decreased. This was the main reason for the decline in consolidated net sales.
Driven by the containment of personnel expenses, such as by reviewing of personnel plans,
and the absence of stock-based compensation expenses that were recorded in 3Q of
FY3/2023, SG&A expenses decreased year-on-year despite an increase in investments
related to the construction of a system for hiring 2,000 employees for further business growth
and an increase in hiring-related expenses to respond to a recovery in demand from existingclients and an increase in orders resulting from the development of new clients.
As a result of the above, consolidated net sales decreased year-on-year but operating profit
increased for the first nine months of FY3/2024. Profit attributable to owners of the parent
significantly increased, reaching a record-high for the first time in five years from the first ninemonths of FY3/2019.

Q2
A

What is the status of demand for human resources by sector?
While production activities of the manufacturing industry as a whole were stagnant, automobilerelated manufacturers’ production activities recovered, and demand for dispatched workers in
3Q was on a recovery trend compared to 1H of FY3/2024. Semiconductor manufacturing
equipment (SME) makers and semiconductor makers continued stagnant production activities
due to the impact of inventory adjustments that have continued since the fall of 2022, anddemand for workers in 3Q remained as weak as in 1H. In addition, some battery manufacturers(classified in the Industrial & Commercial Machinery subsegment of the Manufacturing
Business), which manufacture EV batteries, etc. , were affected by a decline in production
activities due to changes in the procurement policies of their customers.

Manufacturing Business
Q3
A

What is the status of the Manufacturing Business?
In the Industrial & Commercial Machinery subsegment and the Electronics subsegment,
demand for workers remained weak due to the continued impact of semiconductor inventory
adjustments and other factors. In the meantime, in the Transportation Equipment subsegment,
production activities by automobile-related manufacturers recovered due to the alleviation of
the shortage of parts, and hiring activities were enhanced from 3Q. As a result, the number oftechnical employees in the Manufacturing Business started to increase for the first time in sevenquarters.

Q4

Please explain your recent transfer of dispatched workplaces of some clientcompanies from the Manufacturing Business to the Area Business.
UT’s Manufacturing Business not only hires and assigns employees to needed workplaces ofmajor manufacturing industries, but also provides the human resource services that include
arrangements for retention, development, and mobilization of workers according to the needsof each client. In order to provide more optimal services to clients, UT’s section in charge ofsome clients has been moved from UT Aim (an operating company of the ManufacturingA

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Business) to UT Connect (an operating company of the Area Business). As a result,approximately 1,900 technical employees have been transferred from the Manufacturing
Business to the Area Business as of the end of June 2023.
Area Business
Q5
A

What is the status of the Area Business?
The Area Business segment strengthened “inside sales” and focused on developing clients andstrengthening its sales base in each area. The segment also focused on making our existingclient companies offer more diversified job openings and promoted hiring activities based onthese efforts. As a result, the Area Business recorded a net increase of 348 employees in this3Q.
And, as mentioned above, in order to provide optimal services for our client companies, wehave transferred dispatched workplaces of some clients from the Manufacturing Business to
the Area Business, which has resulted in a move-in of approximately 1,900 technical employees.
Expenses increased due to factors such as an increase of personnel in order to strengthen thesales structure and the acceleration of hiring activities in line with the development of projects.

Solution Business
Q6
A

What is the status of the Solution Business?
In addition to promoting proposal activities aimed at acquiring new solution projects, we worked
to develop new clients (outside of the former Group companies) and to develop subcontracted
projects in which technical employees of a wide range of ages can be expected to play an activerole. In the meantime, sales decreased due to the completion of some subcontracting projects.

Q7

Would you elaborate more on the acquisition of shares (conversion into a subsidiary)of Hitachi Ibaraki Technical Service?
The Board of Directors’ meeting held on October 30, 2023, resolved that UT Group will acquire
51% of outstanding shares of Hitachi Ibaraki Technical Service Ltd. and make it a subsidiaryon March 1, 2024 (will rename to UT Hites Co., Ltd.) The deemed acquisition date is scheduled
to be March 31, 2024.

A

As a manufacturing subsidiary of Hitachi, Ltd., Hitachi Ibaraki Technical Service has
outstanding know-how and reliable technology, and provides contracting services and worker
dispatch services for design and manufacturing of electrical machinery and equipment andprocessed metal products. The company has approximately 500 technical employees andsupports manufacturing of Hitachi, Ltd. and the Hitachi Group in the energy, industrial andmobility fields.
Since UT’s acquisition of all shares of Mito Engineering Service Co., Ltd. (currently UT MESC
Co., Ltd.) from the Hitachi Group in July 2020, the Hitachi Group and the UT Group have
deepened their cooperation. The strengths and know-how of both groups will be further
integrated with this acquisition of shares, while UT will closely follow the changing needs ofclients with the changing times, and aim to pursue new service value.
Engineering Business
Q8
A

What is the status of the Engineering Business?
184 new graduates who joined UT Group in April 2023 have started work at an early stage. In
light of strong demand trends in the fields of construction engineers and IT engineers, we madeefforts to hire both of mid-career and new graduates who will join us in April 2024, and thisincreased hiring expenses. In the field of construction engineers, 103 employees transferred toclient companies in the first nine months with the aim of strengthening relationships with clientcompanies and supporting the career development of engineers.
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Q9
A

Please tell us about the sale of shares of operating companies in the Engineering
Business.
As described in Q13 below, we have resolved to sell all shares of our consolidated subsidiaries
UT Technology Co., Ltd. and UT Construction Co., Ltd. to Open Up Group Inc. on April 1, 2024.
As a result of this share transfer, the Engineering Business will be discontinued by the end of
FY3/2024.

Overseas Business
Q10
A

What is the status of the Overseas Business?
Production activities of Vietnam’s major export industries stagnated due to the impact of the
global economic slowdown, resulting in lower demand for human resources, particularly among
manufacturing client companies. However, efforts to acquire projects in the service sector led
to an increase in the number of technical employees. Also, in order to expand our businessarea, we expanded the scope of our activities from the southern region, centered on Ho Chi
Minh City, where we have a base, to the northern region, centered on Hanoi City, and focusedon acquiring projects from Japanese companies.
In addition, as the total conditional consideration for the acquisition of shares of Green Speed
Joint Stock Company in October 2020 was finalized, goodwill of ¥687 million was newly
recorded from 1Q of FY3/2024, and the goodwill amortization of ¥129 million corresponding to
the period from the initial share acquisition date to the determination of the consideration for theacquisition was recorded at the determination date (in 1Q) of acquisition price.
(With regard to the Overseas Business, as the subsidiary’s closing date of fiscal year is
December 31, actual results for the period from January to September 2023 are recorded in thefirst nine months of FY3/2023 with a delay of three months.)

Q11
A

What is the positioning and objective of the Overseas Business?
Japan's domestic labor population is on a declining trend, and we believe it is certain that the
shortage of manpower will become more serious in the future. In the manufacturing industry,
there is a trend to utilize non-Japanese workers, including foreign technical interns, and thenumber of non-Japanese working in Japan is on an increasing trend (despite a temporary
decline caused by the COVID-19 pandemic). However, it is also true that after returning fromJapan, those workers who have acquired skills in Japan have no job or are unable to work in a
job that demonstrates their skills. In Japan, UT Group has been engaged in the foreign technicalinterns’ management agency business in the Manufacturing Business. By connecting this with
the Overseas Business, we will support the career formation of foreign technical interns andaim to create a workplace where they can reliably work in their home country.

Other matters
Q12A

Why did you revise the earnings forecasts for FY3/2024 at the time of your 2Q results
announcement? Also, what will be the impact on the ongoing Fourth Medium-term
Business Plan?
The current consolidated fiscal year started with a stagnation in production activity in the
manufacturing industry as a whole due to the impact of the global economic slowdown that hascontinued since last year. The business plan for FY3/2024 under review has assumed thathuman resources would gradually recover in the first half of the fiscal year, and that strong
demand would continue from the second half onwards. However, regarding first-half results,
the number of technical employees at the end of September 2023 was lower than planned due
to weaker-than-expected demand trends, mainly from semiconductor-related customer
companies. We reviewed demand trends from 3Q onward, and found out that it would takemore time for a full-scale recovery and that a significant deviation from our business plan for
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FY3/2024 would be most likely. In light of these circumstances, while UT Group is steadily
making strategic investments such as building a system for hiring 2,000 employees per monthfor further business growth, we are curbing costs such as hiring-related expenses andpersonnel expenses by reviewing personnel plans. However, these efforts will not be sufficientenough to compensate for the decline in gross profit caused by the decline in sales mentioned
above. We have therefore revised our forecast for EBITDA downward by 5.3 billion yen fromthe previous forecast. (Please refer to the ”Notice of Revision of Consolidated Earnings
Forecasts” announced November 13, 2023 for the detail.)n addition, based on the above situation, a further delay of six months to one year is most likely
to occur before a full-scale recovery in the semiconductor-related business. Moreover, in lightof recent changes in the business environment and trends in the manufacturing dispatch
industry, we have revised the concept and strategy of the ongoing Fourth Medium-term
Business Plan. On February 9, 2024, we announced the rolling plan, which has moved forward
the final year of the Fourth Medium-term Business plan by one year.
Q13
A

Please tell us about the Acquisition of shares (conversion into subsidiary) of BeNEXT
Partners Inc., and change in consolidated Subsidiaries (share transfer)
The Board of Directors’ meeting of UT Group Co., Ltd., held on November 27, 2023, resolvedthat on April 1, 2024 1) UT Group will acquire all outstanding shares of BeNEXT Partners Inc.,a consolidated subsidiary of Open Up Group Inc. and make it a subsidiary (“Share Acquisition”),
and 2) UT Group will sell all shares of its consolidated subsidiaries UT Technology Co., Ltd.
and UT Construction Co., Ltd. to Open Up Group Inc. (“Share Transfer”). As a result of the
Share Transfer, UT Technology and UT Construction will be excluded from the scope of
consolidation of UT Group.
As a subsidiary of Open Up Group in the manufacturing dispatch sector, BeNEXT Partners,
which we will acquire at this time, operates business in 25 locations nationwide and employs
approximately 2,800 persons. Its strength is ability to secure employment in various sectors
and job types of the manufacturing industry, and to match job seekers and employees from allover the country with their workplace, placing the highest priority on their wishes andpreferences.
UT Technology and UT Construction both belong to the Engineering Business Segment of UTGroup, and provide engineer dispatch and outsourcing services in the electromechanical andIT sector and the construction sector, respectively. Under the theme of “cultivating the field ofhigh-skill engineers,” the Engineering Business Segment has been seeking to build a businessfoundation by strengthening functions through alliances with leading companies and M&As ofengineer dispatch companies.
As a leading company in manufacturing dispatch, UT Group currently provides humanresources services in multiple business segments, and while reviewing the optimization of theGroup’s business portfolio and the optimal allocation of management resources, we have been
engaged in discussions with Open Up Group. To sum up, UT Group has decided to executethe transaction as stated above for the purpose of prioritizing the allocation of management
resources to its core business of manufacturing worker dispatch.
Going forward, UT Group will build a solid business foundation as a career platform company
that can respond to the desires and interests of more and more workers, and will contribute toresolving major social issues such as the rapid decline in the working-age population envisaged
in the medium term and structural changes in human resource utilization in the manufacturingindustry. In addition, we will establish a solid position as a leading company in manufacturing
dispatch and realize high growth over the medium to long term.

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Q14
A

Please explain the outline of the Rolling Plan of the Fourth Medium-term Business Plan
1) Concept
The aggregation of the personal growth of each employee leads to the growth of UT Group.
This is the concept at the roots of UT Group's human capital management. By continuing to
expand the multiplication of “diversity (creating workplaces where diverse people can work
comfortably), market value (improving the value of each individual), and engagement (building
long-term relationships with workers),” UT Group will be able to achieve sustainable growth andthe purpose of the Group.
Against the backdrop of a decline in the working-age population due to the declining birthrate
and aging population, the increasing severity of Japan's labor shortage is requiring our client
manufacturers to work harder to secure a sufficient labor force and improve productivity. As aresult, these manufacturers’ way of utilizing dispatched workers is changing from securing theconventional temporary labor force to the use of dispatched workers who would replace regular
employees. For dispatching companies, it is not sufficient to only have the function of aconventional hiring agency that gathers and dispatches workers. Also, it is becoming
increasingly important for dispatching companies to create an environment in which diverse
people can work and increase productivity through career development. Expectations that
dispatching companies that can shift to this mode of operation will rise even further.
These various large-perspective changes represent a major turning point for UT Group. "Whatshould we do to be chosen by the people who work in manufacturing?" This is the core of all
our thinking for the Rolling Plan. We view the “dispatch” workstyle as a service we provide toworkers, and by making it more convenient, we will sharpen our focus on creating a situation
wherein we are chosen by workers, with the aim of becoming the most preferred company inthe manufacturing dispatch market. We plan to increase the number of our technical employees
in Japan from the current 32,000 to around 50,000 by the final year of the Rolling Plan.
Moreover, we are committed to creating a new form of manufacturing dispatch. This is theproper role of UT Group as a leader in manufacturing dispatch and this is our commitment.
2) Strategy
We will make the “dispatch” workstyle more convenient and achieve the target of regularmonthly hiring of 2,000 employees. UT Group’s core operations of the Manufacturing Businessand the Area Business will be drivers of growth in our efforts to expand our share in the
manufacturing dispatch market. In the Manufacturing Business we aim to maximize our sharein the client companies’ factories by increasing the value of our workers there. In the Area
Business we aim at becoming the “best local outlet” in various parts of Japan by responding to
the needs of people working locally. In other businesses, we intend to develop a business thatwill become the third pillar of business, in addition to the existing two pillars of the Manufacturing
Business and the Area Business, so that we can provide working opportunities for a greaternumber of diverse workers, such as by increasing the utilization of Nikkei (Japanese origin)workers. In addition, while we will continue to focus on expanding the scale of the businessthrough M&As, the key of our strategy is to make it meaningful to “those working in
manufacturing dispatch in Japan.”
The numerical targets are stated in 4) below. Our aim is to improve profitability and achievesustainable EPS growth by consolidating management and other operations in line with the
expansion of the scale of the dispatch business.
3) Period of the Plan
The final year will be FY3/2026, one year later than the Initial Plan.

5/74) Numerical targets［100 million yen］

FY3/2024

FY3/2025

FY3/2026(Current year forecast)
Forecasts(Final year of the Plan)% of totalPlan% of totalPlan% of total

Net sales

1,690

100.0%

2,150

100.0%

2,765

100.0%EBITDA

111

6.5%

160

7.4%

250

9.0%

Operating Profit

95

5.6%

136

6.3%

224

8.1%

Profit attributableto owners of parent

61

3.6%

130

6.1%

145

5.3%

EPS ［yen］

153

-

275

-

306

-

-

-

44,641-54,478

-

-

-

23%

-

23％

-

(Reference indicator)
Technical employees(Domestic)(Reference indicator)

ROE ［%］

Note: Profit attributable to owners of parent for FY3/2025 is incorporated the rough estimate of the impact of theExtraordinary Income as announced in “Notice Regarding Recording of Extraordinary Income (Gain on Saleof Shares of Subsidiaries and Associates)” released today.
Note: EPS for FY3/2025 and FY3/2026 are fully diluted.
Note: ROE for FY3/2025 and FY3/2026 are calculated based on an increased shareholders’ equity as stockacquisition rights are fully exercised.

5) Approach to profit distribution and change in shareholder return policy
We will appropriately manage cash allocation with an emphasis on balancing the improvementof capital efficiency, the maintenance of financial soundness, and the enhancement ofshareholder return. We also aim to optimize internal reserves by taking into account the cost ofcapital and business investment plans including M&As. The Plan’s numerical targets and target
levels are as follows.


Goodwill equity ratio:

50% or less

Net D/E ratio:

Less than 0.5 times



Dividend payout ratio:

60%

We have reconsidered the shareholder return policy. We expect to be able to secure a sufficient
cash position even after taking into account the balance of business investments including M&A
activities, which are necessary for the sustainable growth of the Group, as well as financial
soundness. Therefore, we have decided to provide a stable dividend payout ratio of 60%,
instead of a total return ratio of 30% through dividends or share buybacks. For details, pleaserefer to the “Notice Regarding Change in Shareholder Return Policy, Decision on Shareholder
Return Method for FY3/2024, and Dividend Forecast for FY3/2024” announced on February 9,
2024.

BeforechangeDeliver shareholder returns through dividend payments or share buybacks that
help to improve capital efficiency, using a total return ratio of 30% as the baselinetarget, and making a comprehensive assessment of the share price level,business environment, and other factors.

AfterchangeDeliver shareholder returns through dividend payments, using a total payout ratioof 60% as the baseline target.

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Q15
A

Tell me about shareholder return for FY3/2024.
Based on the shareholder return policy described above, shareholder return by dividend
payment will be carried out, using a payout ratio of 60.0% as the baseline. Based on theearnings forecasts for FY3/2024, we plan to pay the year-end dividend of 93.03 yen and toachieve a payout ratio of 60.0%.

Q16

What is the extraordinary income to be recorded in 1Q of FY3/2025?

A

As announced in the "Notice Regarding Acquisition of Shares (Conversion into Subsidiary) of
BeNEXT Partners Inc. and Change in a Consolidated Subsidiary (Share Transfer)" as ofNovember 27, 2023, UT Group will sell all of its holding shares of its consolidated subsidiaries
UT Technology Co., Ltd. and UT Construction Co., Ltd. to Open Up Group Inc. on April 1, 2024
(planned). Accordingly, UT Group is expecting to record extraordinary income of approximately
6.3 billion yen on a consolidated basis and approximately 6.6 billion yen on a non-consolidated
basis as gain on sale of shares of subsidiaries and associates in the first quarter of FY3/2025.
the numerical targets for FY3/2025, described in Q14 above, has incorporated the roughestimate of the impact of this change.

Disclaimer
Although this document has been prepared based on the assumption of the accuracy or completeness of
information available to the Company, the Company does not make any representation or warranties as to theaccuracy or completeness of any information contained herein. The forward-looking statements expressed in thisdocument are subject to diverse risks and uncertainties. Actual results may differ materially from the forwardlooking statements, expressed or implied. The forward-looking statements should therefore not be relied uponentirely. This material and its details must not be redistributed or reproduced without the prior written consent of
the Company.

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