PERSOL HOLDINGS CO., LTD.
Announcement of the end of “an” businessAugust 01, 2019

Event Summary[Company Name]PERSOL HOLDINGS CO., LTD.

[Event Type]

Analyst Meeting[Event Name]

Announcement of the end of “an” business[Fiscal Period]

FY2019 Q1[Date]

August 1, 2019

[Number of Pages]

15[Time]

17:00 – 17:32(Total: 32 minutes, Presentation: 11 minutes, Q&A: 21 minutes)[Venue]1-15-5 Minami Aoyama, Minato-ku, Tokyo, 107-0062[Venue Size][Participants][Number of Speakers][Analyst Names]

1
Kiyoshi Seki

Director, Executive Officer (CFO)

Hirofumi Oda
Shinnosuke Takeuchi
Junpei Yoshida
Katsumi Arai

SMBC Nikko Securities
Jefferies Japan Limited
Nomura Securities
Mitsubishi UFJ Morgan Stanley Securities*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
1

Presentation
Operator: We will hold a conference call on termination of the part-time job information service "an" of
PERSOL HOLDINGS CO., LTD.
Moderator: Thank you for participating in our teleconference. Today, CFO Seki will comment on thetermination of part-time job information service "an." Please refer to the PowerPoint material that has alreadybeen posted on our IR page.
After completing the explanation, we will move on to a question and answer session. The telephone
conference is scheduled to end at around 17:30. We appreciate the cooperation.
In order to ensure fair disclosure of information, we set the period from the day following the quarterly
settlement date to the scheduled date of announcement. As today is the silent period, we refrain from
responding to any questions regarding the financial results or financial forecasts of existing businesses otherthan this issue.
Seki: Thank you very much for your participation in the teleconference. At the meeting of the Board of
Directors today, we have decided to terminate the "an" business, which was operated within the Recruiting
segment.

Please refer to page two. As you know, "an" was founded in 1967 as a daily part-time employment newsletter,and this year marks its 52nd year. It has opened up the market as the most historical job information service
in Japan, and has been providing optimal matching between many people and organizations. However, theSupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
2

environment surrounding the job advertisement market in the part-time job information field has been
extremely severe. In particular, since 2011, the competitiveness of "an" has gradually declined as it fell behindin transition to a service that looks ahead to the WEB and smartphone era.
In the fourth quarter of the fiscal year ended March 31, 2018, the Company realized a loss of approximately
8.6 billion yen due to impaired fixed assets as a whole, including goodwill, related to the "an" business.
In fiscal year ended March 31, 2019, we have been reinforcing our "an" business through promotions andproduct investments. However, the market environment for part-time jobs remains challenging, and further
productivity improvements will take time.
Against this backdrop, we decided to close the "an" business and concentrate our management resources on
the more productive "doda" business in view of the future of the entire Group.
Today's termination of "an" business can be seen as a forward-looking decision to concentrate management
resources on "doda," about which we are confident of future medium-to long-term growth, and to realize
growth that meets the expectations of stakeholders.
As the greatest bottleneck to the growth of the "doda" business is the increase in the number of strategic
personnel, this relocation is expected to lead to continued growth in the future.

On page three, the presentation materials for the first half of the fiscal year ended March 31, 2019 arerestated, so the explanation will be omitted.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
3See page four. As I explained, the Company has achieved a certain degree of success in recent years, such as
shifting its sales growth rate to plus 4% YoY by reinforcing its "an" business. However, the market environment
for part-time job advertising continues to be severe, and market share of "an" has been sluggish.
On the other hand, as explained at the financial results briefing held in May, in the permanent employee
turnover markets, the sales growth rate for "doda" recruitment services in fiscal year ended March 31, 2019
was plus 29% YoY and the sales growth rate for the "doda" recruitment advertising business was plus 31%
YoY.
The field of full-time employees is highly profitable, and when compared with productivity per sales person,the "doda" is approximately twice that of "an."As a result of comprehensive consideration of future growth potential, the Board of Directors decided toconcentrate management resources, including human resources, on strengthening the rapidly growing"doda," and aim for stronger growth.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
4Next, I would like to explain the impact of the termination of "an" business. See page five.
Due to the termination of the "an" business, we expect to suffer negative impacts to net sales of 10 billion
yen, 5 billion yen of operating profit, and extraordinary losses of 3.5 billion yen on the financial results
forecasts announced at the time of the full fiscal year's settlement in May.
As for the net sales decline of 10.0 billion yen, we expect 8.0 billion yen due to the decline in net sales resulting
from the termination of the "an" business, and 2.0 billion yen due to the decline in net sales resulting fromthe temporary decline in productivity resulting from the reallocation of approximately 500 employees to"doda."In the ITO segment, net sales are expected to decline 0.5 billion yen due to a decline in internal orders related
to "an," which will be offset by adjustments
Negative 5.0 billion yen in operating income is composed of 1.0 billion yen for the impact of the decline insales due to the termination of the "an" business, 3.8 billion yen for the decline in "doda" operating income
due to an increase in personnel expenses associated with the acceptance of personnel from the "an" business.
Also, an increase in training expenses for strategic development, and 0.2 billion yen due to an increase inpersonnel costs in the ITO segment associated with the acceptance of personnel from the "an" business.
Extraordinary losses of 3.5 billion yen are mainly due to payments to distributors for support of migration to"doda" and impairment losses on software-related assets.
Having explained the costs associated with the termination of "an" business, I would like to explain thepositive impacts on our business performance from this fiscal year onwards.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
5

As I explained earlier, we anticipate a temporary negative impact on sales and profits for the current fiscal
year. From the next fiscal year onwards, however, we expect a sales increase and its contribution to profits inline with the shift of personnel from "an" to the fighting force.
In terms of net sales, we expect to see an increase of 15.0 billion yen in the Placement business and an increaseof 9.0 billion yen in the Job Advertising business for full-time Employees in the cumulative total of the fiscal
years ending March 31, 2021 to 2023. This is in addition to the existing organic growth.
On the earnings side, we expect to recover the 5.0 billion yen decrease in operating income and 3.5 billion
yen in extraordinary losses by the fiscal year ending March 31, 2023.
We will further accelerate the expansion of "doda," our core business, by reallocating human resources in
conjunction with the termination of our "an" business.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
6

In light of the above, the Group has revised its full-year consolidated earnings forecast for the current fiscal
year. See page seven.
The revised forecasts are net sales of 990.0 billion yen, EBITDA of 61.0 billion yen, and operating income of
43.0 billion yen. The revision to the consolidated earnings forecast only reflects the impact of the terminationof "an" business, and no revision has been made to the consolidated earnings of existing businesses. We willcontinue to work toward achieving our earnings forecasts.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
7

Please refer to page eight. After the disclosure of today, we will provide the future schedule to our business
partners and distributors. The operation of "an" business is scheduled to close on September 27, and the "an"business and its website are scheduled to close on November 25.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
8

Lastly, I would like to explain the acquisition of treasury stock, which we announced in a timely manner today
in conjunction with the termination of "an" business. See page nine.
We have announced that we will repurchase up to 5.0 billion yen of our own shares from August 2, tomorrow,to December 30. We revised our results in line with the termination of the "an" business, but through theannouncement of the share buyback, we would like to communicate that the impact of the business results
is temporary, and we are confident in the medium-to long-term growth of "doda."
Last but not least, the termination of the "an" business is a positive decision to concentrate management
resources on "doda," about which we are confident of future growth over the medium to long term. We willterminate the "an" business, but we will continue to provide services of our group in the short -term labormarket, including Sharefull, to meet the expectations of job seekers.
I would like to conclude my brief explanation.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
9Questions and answers

Moderator: The operator names the questioner.
The first questioner is Mr. Oda of SMBC Nikko Securities. So, Mr. Oda, please.
Oda: Oda of SMBC Nikko Securities. Thank you.
Seki: Thanks.
Oda: Please tell me two things.
First, there was a brief explanation from Mr. Seki, but I would like to hear more about why it was at this timing.
As for "an," I think you may have heard for a long time, perhaps two or three years, that the market
environment and your company's positioning have been quite tough, and you should quit it. Please provide
more detailed information on the background of your decision at this time.
The second question. It is about the reallocation of the 600 employees of "an," on page six of the material.
First, I think there are two major types of personnel placement, or media, in "doda," but how many employees
will be allocated to each media? Then, at which timing do you think will the productivity of those people riseafter the transition?
Seeing the profit effect on page six, they are probably reallocated in the current fiscal year, and they will showa growth in the middle of the next fiscal year, and I think they will become full-fledged workers around thefiscal year after next. I would like to ask you about reallocations and prospects for their growth.
Please tell us about these two points.
Seki: Thank you for your question. I would like to answer there two questions.
First, as for the reason of the timing, we have been constantly studying what we should do in the future forthe "an" business. In particular, we have begun examining this issue from the beginning of 2018, when themarket environment has undergone major changes. At that time, of course, we have made the decisions
described above, and we have comprehensively examined other options as well.
We started to consider the termination of this service specifically from last summer to autumn.
As for the reason for the timing, we are promoting our "an" business in our own "an" service and in the LINE
Baito service, which we are working in partnership with LINE.
Regarding the latter, it has an impact not only on us, but also of course operational impact on LINE. Therefore,
we have continued to negotiate with LINE regarding the termination of the "an" business. We have negotiateduntil this timing, which I believe is the reason.
Then, about the reallocation of employees engaged in "an" services. I would like to explain in large scale, how
to allocate them, and in particular, how many will be allocated to the sales department.
First of all, we have approximately 600 employees who were engaged in "an" service. They will be transferredto the Placement business within the Recruiting Segment, the Job advertising business for full-time employees,
or to Group companies.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
10

In terms of the number, about 200 staff will be transferred to the Placement business, about 300 people toJob advertising business for the job information website of "doda," and about 100 people to Group companies.
However, as for transfer to departments that directly contribute to sales, about 100 employees will beallocated to the Placement business of "doda," about 130 people will be allocated to the Job advertisementbusiness for full-time employees.
In addition, about the empowerment of employees who have been reallocated, as you pointed out, it will takea certain period of time for the empowerment of employees. We will focus on providing training,understanding various tools, and other activities in the current fiscal year.
Accordingly, we believe that their growth during the current fiscal year will be quite limited, and basically, we
believe that they will contribute to our business performance from the middle of the next fiscal year.
Oda: Understood. Thank you very much.
Seki: Thank you.
Moderator: Mr. Takeuchi of Jefferies Securities, asks the following questions. Please.
Takeuchi: Takeuchi of Jefferies.
I have two questions. Now, how many people are involved in "doda," and what is the breakdown of these?
Perhaps there are about 3,500 people in the Recruiting segment today. Would you tell us the composition of
the workforce for "doda"?
Seki: Thank you for your question. First, the total number of employees in the Recruiting Segment isapproximately 3,500, as you mentioned in the question. About 2,500 of these staff are engaged in thePlacement business. Approximately 1,000 employees are engaged in the Job advertisement business in "an"and "doda."
Takeuchi: Understood. Another question. I would like to ask how much sales are expected in FY2023. Whencalculating the cumulative earnings plan backward, I think the profits from the 600 people who will betransferred will probably be about 4.1 billion yen in FY2023.
How much is your expected sales revenue? And do you estimate the productivity of the 600 sales personnel
who will be transferred at the same level as the existing personnel? Or, do you estimate it more conservatively
on the assumption that their productivity will be lower than the existing personnel?
Please tell us about the assumptions for sales and productivity in the third year. Thank you very much.
Seki: First, the contribution to sales will be almost as you estimate. As shown on page six, the cumulative
contribution to profits will be 1.2 billion yen in the first year, 4.4 billion yen in the second year, and 8.5 billion
yen in the third year. I would like to refrain from disclosing further information.
You also asked us about the productivity of our sales staff. We estimate that they can achieve the same levelof productivity as our existing staff from the middle of the next fiscal year. We have restructured our businessplan based on the recognition that an education plan will be needed and it will take a considerable amount oftime for installation of such a plan. That's all.
Takeuchi: How much sales are expected at that time?

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
11Seki: On page six, the effects of the three-year increase in sales of Placement business and Job Advertisingbusiness are generally disclosed in the cumulative total. If roughly reversed at these ratios, we believe t hat
the approximate figures can be inferred.
Takeuchi: I understand, thank you.
Moderator: Mr. Arai of Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. So, please Arai.
Arai: Thanks.
I don't understand about the impact on your performance on page five.
In the case of "an," due to the decline in sales by 8.0 billion yen, profit will decline by 1.0 billion yen. However,since "an" has been in the red on an operating profit basis, it is not clear that the elimination of this will resultin a negative operating profit.
Sales of "doda" will decline by 2.0 billion yen as opportunity losses. Does the negative earnings forecast of 3.8 billion yen suggest that sales will decline by 2.0 billion yen and training costs will rise 1.8 billion yen?
Seki: I think you have asked two questions. First, profit impact.
The profitability of "an" on a non-consolidated basis was positive when headquarters expenses and various
overhead expenses were not allocated. With consideration of this, we calculated the profit impact.
In addition, regarding 2.0 billion yen in "doda," the topline decline will exceed 2.0 billion and the bottom line
decline will exceed 2.0 billion yen. The 1.8 billion yen are mainly related to increased personnel expenses. As
you mentioned, personnel expenses will increase and there will be additional training expenses.
Arai: I understand, thank you.
Seki: Thank you.
Moderator: Mr. Yoshida of Nomura securities. Mr. Yoshida, then, please.
Yoshida: Thank you for your explanation, I am Yoshida of Nomura Securities.
I understood that you had continued the "an" business, while preparing a variety of options with an eye on
what the human resources and human markets will be in the future, and based on the assumption that it
would be used as a brand in the future amid the situation that working styles diversify.
What are your thoughts on these aspects of the Company's medium-to long-term strategy, and what kind of
discussions were held at Board of Directors meetings regarding the reduction of the number of brands interms of the provision of services for various working styles?
Seki: Thank you for your question. As you have pointed out, the fact that we are facing the part -time
employment market, which is provided by "an," remains an extremely important strategic element for theGroup as a whole. Accordingly, we have also considered concrete ways to deal with them in the meetings ofthe Board of Directors and other discussions.
This time, however, we will withdraw from the "an" business, the so-called job advertisement business forpart-time workers. However, in this market area, we will continue our operation with two main pillars of thebusiness, i.e. provision of services through TEMPSTAFF for short-term staffing, and the new short-term
referral model Sharefull.
SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
12However, it is not possible to respond to all requests solely by these means, so we will continue to consider
the development of other new services or the provision of multi-layered services, and will also continue tomake business investments.
We believe that the value of "an" brand, which we have built up thus far, is extremely large. We will maintainthis brand and actively consider how to utilize it as well as developing services going forward.
That's all.
Yoshida: Thank you. When "an" disappeared, I was especially concerned that there would be a shortage ofreach for students and young people. But as you maintain the brand and various developments are being
considered, I am looking forward to it. Thank you very much.
Seki: Thank you.
Moderator: The following questions are from Mr. Oda of SMBC Nikko Securities. So, Mr. Oda, please.
Oda: Please explain the extraordinary losses of 3.5 billion yen, which include funding the transition to an agent
and software impairments.
And, due to impairment of software, for example, will fixed costs reduce from the next fiscal year onwards?
Seki: Thank you. Regarding the breakdown of extraordinary losses, we consider the operation transition
support fund to be more than 2.0 billion yen, and then the impairment and others losses to be more than 1.0
billion yen.
As for operation transition support funds, some distributors have provided services specialized in "an," andsome of them have used "an" in combination with other services. Naturally, we support the management ofthese distributors, including the conversion of the target from retail to, for example, corporations. Together
with support for migration and compensation, the total amount will be about 2.0 billion yen.
Oda: Out of remaining impairments losses of 1.0 billion yen, will there be anything in which fixed costs decline
from next fiscal year onward? How much amount is it?
Seki: Regarding the impact from next year onward, there are no fixed cost changes.
Oda: I understand. Thank you very much.
Moderator: No inquiries were made. Thank you.
Seki: Now, we end the question and answer session. Thank you for participating in today's meeting.
[END]______________
Document Notes
1.

SupportJapan
TollfreeThis document has been translated by SCRIPTS Asia

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
13

Disclaimer
SCRIPTS Asia reserves the right to edit or modify, at its sole discretion and at any time, the contents of thisdocument and any related materials, and in such case SCRIPTS Asia shall have no obligation to provide
notification of such edits or modifications to any party. This event transcript is based on sources SCRIPTS Asia
believes to be reliable, but the accuracy of this transcript is not guaranteed by us and this transcript does not
purport to be a complete or error-free statement or summary of the available data. Accordingly, SCRIPTS Asia
does not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of theinformation contained in this event transcript. This event transcript is published solely for information
purposes, and is not to be construed as financial or other advice or as an offer to sell or the solicitation of an
offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.
In the public meetings and conference calls upon which SCRIPTS Asia’s event transcripts are based, companies
may make projections or other forward-looking statements regarding a variety of matters. Such forwardlooking statements are based upon current expectations and involve risks and uncertainties. Actual results
may differ materially from those stated in any forward-looking statement based on a number of importantfactors and risks, which are more specifically identified in the applicable company’s most recent public
securities filings. Although the companies may indicate and believe that the assumptions underlying theforward-looking statements are accurate and reasonable, any of the assumptions could prove inaccurate orincorrect and, therefore, there can be no assurance that the anticipated outcome described in any forwardlooking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE
PUBLIC MEETING OR CONFERENCE CALL. ALTHOUGH SCRIPTS ASIA ENDEAVORS TO PROVIDE ACCURATE
TRANSCRIPTIONS, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE
TRANSCRIPTIONS. IN NO WAY DOES SCRIPTS ASIA OR THE APPLICABLE COMPANY ASSUME ANYRESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BY ANY PARTY BASED UPON ANY EVENT
TRANSCRIPT OR OTHER CONTENT PROVIDED BY SCRIPTS ASIA. USERS ARE ADVISED TO REVIEW THE
APPLICABLE COMPANY'S PUBLIC SECURITIES FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER
DECISIONS. THIS EVENT TRANSCRIPT IS PROVIDED ON AN "AS IS" BASIS. SCRIPTS ASIA DISCLAIMS ANY AND
ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWAREERRORS OR DEFECTS, AND ACCURACY, COMPLETENESS, AND NON-INFRINGEMENT.
None of SCRIPTS Asia’s content (including event transcript content) or any part thereof may be modified,
reproduced or distributed in any form by any means, or stored in a database or retrieval system, without theprior written permission of SCRIPTS Asia. SCRIPTS Asia’s content may not be used for any unlawful or
unauthorized purposes.
The content of this document may be edited or revised by SCRIPTS Asia at any time without notice.
Copyright © 2018 SCRIPTS Asia Inc. (“SCRIPTS Asia”), except where explicitly indicated otherwise. All rights
reserved.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
14