Earnings Briefing Summary for theSecond Quarter of the Fiscal Year Ending March 2017

November 16, 2016 (Wed)Temp Holdings Co., Ltd.
Consolidated earnings highlights for the first half of the fiscal year ending
March 2017
Consolidated income statement: Structural labor shortage drives growthacross all segments and especially in our core businesses
Operating income grew 25.3% year on year on a 12.5% increase in sales. We
attribute this growth to the solid fundamentals underlying our core temporary
staffing and recruitment businesses.
We booked sales of ¥276.7 billion. Of the ¥30.6 billion in year-on-year growth,¥24 billion was organic, while ¥8.9 billion was the product of M&A activity1 .
Strong market fundamentals drove the organic growth, with Temporary
Staffing/BPO segment sales rising ¥16.1 billion, in part because of an increase in
the number of active placements, and Recruiting segment sales rising ¥3.7 billion
due in part to growth in the number of successful mid-career placements.
Our EBITDA was ¥21.5 billion. This represents a ¥4.3 billion year-on-yearincrease, most of which is the result of organic growth. Sales growth across all oursegments was a key contributor to the income growth.
Our operating income also grew ¥3.4 billion year on year, reaching ¥16.6 billion.
Consolidated balance sheet and cash flow statement: Financials remainstrongOur consolidated balance sheet for the most part saw no major changes.
One development of note is the increase in minority interests. This, as
previously announced, owes to the fact that we expanded what had been a North

1Additions to consolidated books include P&P Holdings Corporation as of June 2015 and ofCapita Pte. Ltd. as of January 2016.
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Asian joint venture with Kelly Services to cover the broader APAC (Asia-Pacific)
region. This reduced our shareholder equity ratio, which had stood at 53.8% at
the end of the previous business year, to 52.4%, but our financials remain healthy.
Our cash flow statement is also solid thanks in part to good progress across all
our business segments and to our healthy execution of investment and financialactivities.
Dividends: Raising annual dividend by ¥2 in reflection of brisk earnings
As previously announced, we are raising both our interim dividend and ourplanned year-end dividend by ¥1, bringing our total annual dividend per share to¥16. As such, we anticipate a full-year dividend payout ratio of 18.7%.
Progress update on our Mid-term Management Strategy
Our business environment: Labor shortage increasingly severe
A survey by our Group’s think tank, PERSOL RESEARCH AND CONSULTING CO.,LTD., indicates that Japan’s labor force will be short 5.83 million workers a decadefrom now. There has been an awareness for some time that a labor shortage isforthcoming, but lately we have begun to see actual impact on Japan’s realeconomy. While the manufacturing sector is poised to see excesses of labor, theservice sector and many other industries look likely to experience shortages.
Japan will likely need to tackle the issue of labor shortages from two angles: itwill need to Increase its labor supply by encouraging workforce participation by
women, seniors, and foreign workers, and it will need to bolster the productivity of
its existing workforce.
As Japan’s industrial structure, working styles, and outlooks on work change,
enabling a smooth transition of labor from mature industries to growth industries
and avoiding mismatches in labor allocation will be key, especially if Japan is tobolster its productivity. One goal of Prime Minister Shinzo Abe’s cabinet is toencourage such a transition without increasing unemployment. We likewise intend
to serve as part of Japan’s human resource service infrastructure so that we canreduce employment mismatches and contribute to greater productivity in Japan.
Meanwhile, foreign workers are feeling less incentivized to work in Japan as
deflation has resulted in sluggish wages there while those in other countries are2rising. We are hoping to do what we can to help to eventually increase the numberof non-Japanese working in Japan.
Japanese society is about to face a major turning point. We intend to continue to
do our utmost to play an essential role in that society, guided by our corporate
philosophy of "Creating jobs, adding value to the individual, and contributing tosociety” and our Group vision of "Creating social infrastructure for people andorganizations that catalyze growth and innovation," both of which reflect thevalues handed down to us by our founder, Yoshiko Shinohara.
Mid-term Management Strategy: "Creating social infrastructure for people
and organizations that catalyze growth and innovation"
As we announced in May, our Mid-Term Management Strategy that runs throughthe fiscal year ending March 2020 revolves around five strategies 2 . We next
discuss four initiatives we are undertaking in the current fiscal year.
The first is the establishment of the Group brand PERSOL. M&A activity has
grown our Group into a total human resources solution provider. However, while
the names of individual Group companies like Tempstaff and Intelligence are wellknown, we have struggled to gain awareness that those individual companies all
belong to the same Temp Group. With working styles poised to continue todiversify, we hope to come to be known by our new Group brand PERSOL so that
we may maximize on our Group’s comprehensive set of capabilities and help asmany working people and clients as we can.
The second initiative involves changes to our governance structure. Following
our June general shareholders’ meeting, we transitioned to the form of corporate
organization known as “Company with Supervisory Committee.” Our president
Masamichi Mizuta and our vice president Hirotoshi Takahashi have left thebusiness companies to focus on Group governance from the perspective of theholdings company, entrusting the leadership of the business companies to a newgeneration of leaders.
The third initiative involves the expansion of the scope of our joint venture with21) Brand building, 2) IT system investment and productivity improvements targeting further
business growth, 3) Generating Group synergies and advancing Group-wide management,
4) Enhancing our presence in APAC, and 5) Expanding our operational capabilities andservices lines via M&A
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Kelly Services, as announced in April 2016. We had been involved in a joint
venture with Kelly Services in North Asia, but this expansion has enabled us toprovide a variety of services across the major APAC regions.
We are still newcomers to overseas markets, and in some regions, we had been
unable to develop our businesses sufficiently due to licensing issues and otherhurdles. The expansion of our joint venture positions us to resolve such issues bycollaborating with Kelly, which boasts a long history and a wealth of experiences in
the relevant markets. Moreover, whereas our customer portfolio previously
primarily reflected the strength of our relationships with Japanese and Asiancompanies, the collaboration with Kelly also gives us access to the global Western
players with which we had not previously enjoyed significant relationships. We
intend to work to ensure that our joint venture is able to contribute as a key pieceof infrastructure in APAC, where workers are likely to enjoy greater freedom ofmovement going forward.
Fourthly and finally, we discuss an achievement we have made under our third
strategy of “Generating Group synergies and advancing Group-wide management.”
Intelligence, Ltd., which joined our Group in 2013, had been a human resources
services business focused on major metropolitan areas. However, joining ourGroup gave it access to a temporary staffing sales network that has enabled it toexpand into outlying areas as well. We see this as a success case whereby we wereable to make more effective use of Group assets without engaging in any new
investment, and we hope to further bolster such initiatives going forward.
Our outlook for the fiscal year ending March 2017
The current business environment is solid, underpinned by 1) a structural laborshortage, 2) efforts to reduce long working hours, and 3) steady and strong
demand for human resources from the manufacturing industry due toadvancements in technology.
Given this environment, we have upwardly revised the earnings forecasts wereleased in August. We have increased our sales forecast by ¥6 billion versus theAugust figure to ¥590 billion and our operating income figure by ¥800 million to¥32.5 billion. We generated operating income of ¥16.6 billion in the first half of thefiscal year, so a full-year forecast of ¥32.5 billion makes it look as though we are4

anticipating weaker profits in the second half. However, this outlook actuallyreflects our intention to leverage our brisk earnings to fund approximately ¥1.5
billion in additional growth investments across the Group, including on efforts toenhance our Group brand.
In closing
The logo for our new PERSOL brand is inspired by a camera’s viewfinder andreflects our desire to focus on each and every working person so that we canprovide the services that best serve their needs. Even now many different people
are working in many different places. We want to do what we can to support all of
those dedicated, hard workers. We intend to continue to grow so that we can best
serve you, and we hope that we can count on your continued support as well.

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