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

November 16, 2016 (Wed)Temp Holdings Co., Ltd.
Q: How will you achieve the ¥45 billion in operating income that you target for thefinal year of your Mid-term Management Strategy (2020)?
A: Our core temporary staffing and recruitment businesses are doing well, andprofitability is gradually improving at both businesses. We hope to bring ouroperating income into the ¥35-39 billion range by expanding the volume of those
two businesses. We hope to get to ¥45 billion by additionally growing the highly
profitable BPO, ITO, and engineering businesses and by bolstering the earnings
power of our overseas businesses, which are currently not earnings contributors.
Q: Can we have an update on your efforts to improve temporary staffing
profitability?
A: Profitability is improving gradually from a cost perspective. We have just over
30 Group companies in the temporary staffing space, which has led toinefficiencies, including overlaps in some functions. Recently we merged thetemporary staffing portion of Intelligence, Ltd. with Tempstaff People, and areotherwise engaged in a phased consolidation effort to reduce costs. We are also
working to improve profitability by bolstering internal productivity via IT system
investments, for example.
Q: How are fees trending in the temporary staffing business?
A: Temporary staff are being better compensated, employers are being asked tocover more of social insurance premiums, and amendments to Japan’s Worker
Dispatch Act have added to training costs. As such, we are having to ask our clientcompanies to help with those cost increases within their means. Because of therecent structural labor shortage and a variety of societal demands, we have1

secured the understanding of our client companies to some extent and havetherefore been able to absorb the aforementioned cost increases.
Q: What is your outlook for the temporary staffing business in the next fiscal year
and beyond?
A: We look for the market to continue to benefit from a tailwind in the form of thestructural labor shortage. From an earnings perspective, we are facing cost
increases due to the aforementioned factors, but we intend to continue to work to
improve our profitability by consolidating Group companies and bolstering
productivity, while also fulfilling our role as a temporary staffing company in sucha way as to respond to societal demands.
Q: How do you foresee developing your operations overseas?
A: Our intention is to grow those operations with a focus on the ASEAN region,
which is expected to experience strong growth. Over the short term, we will build
up our business with Singapore and Malaysia as its pillars. We will also explore
potential initiatives for expanding our share of the large markets of China,
Indonesia, and Australia.
Q: Why have you cut full-year guidance for the Recruiting segment?
A: The cut owes primarily to sluggishness at the recruitment advertising businessand to deterioration in the external environment for our overseas operations. The
recruitment advertising business pulled out of print media in greater Tokyo in
November of last year, and since then we have worked to overhaul the structure ofthat business with a focus on online media. While our online products have been
performing well, our sales were hurt to some extent by pulling out of print media
in greater Tokyo, and competition has intensified. As such, sales have not met ourinitial expectations, so we have cut our sales and profit guidance for the business.
As of the latter half of the fiscal year, we will be building up our sales organization
so that we can increase our ad numbers.
Q: Can we have an update on synergies from the Intelligence acquisition?
A: Folding a portion of Intelligence’s recruitment services into our Group sales

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network will enable us to serve a greater number of customers. Our sales network
captures a great deal of information each month, and that information has started
to assist in supporting mid-career job changes. We hope to generate even moresynergies going forward.
Q: What sort of profitability improvements are you seeing at the recruitment
business?
A: We’ve improved profitability via an internal initiative we call “servicemulti-layering.” In addition to our traditional service offering whereby our career
consultants

providecounselingtomid-career

workerslookingfornew

opportunities and refer them to jobs, we are also providing a service called “DODAPlus,” which is not very labor intensive, and a direct recruiting service called“DODA Recruiters,” thus enabling us to offer services more in line with ourcustomers’ needs. We see these new services as contributors to overallprofitability improvement since they are more profitable than our traditional
services. Our commissions from our traditional services are also growing becauseof the rise in the annual income bracket of the customers we are serving.

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