PERSOL HOLDINGS CO., LTD.
Held on Tuesday, July 2, 2024
Script of IR DAY: DAY2 Staffing SBU Business Description【Executive Officer Staffing SBU Lead Kimura】

Hello, I'm Kazunari Kimura from the Staffing SBU. Thank you for your time today.

I'd like to talk about the market environment surrounding Staffing SBU.

Since 1995 the working-age population has been in decline, and concern over labor
shortages has steadily grown as a result. In a changing labor landscape, I believe
staffing service companies will not only need to fulfill the role of an employment
adjustment valve, but also provide human resources procurement functions andlabor management agency functions.

However, look at this chart.
If you focus on the number of employees by type of employment, you can see thatthe percentage of people participating in the labor market is increasing each year
for types other than regular employees. More specifically, this corresponds togreater labor participation by women and the elderly. Particularly in recent years,
the demand for more flexible working styles has increased among both individuals
and companies. For individuals from the perspectives of work-life balance, personalgrowth, and skills improvement, and for companies from the perspective of securing
human resources with the necessary skills in a flexible manner, the rising need forflexible working styles among both individuals and companies is expected toincrease employment mobility even further in the future.

As for how trends have developed in our core business of worker dispatching, let'slook at the change in industry revenue. Since the Worker Dispatching Act took effectin 1986, legislation has been repeatedly revised and relaxed, creating anenvironment in which dispatch services can be used with greater flexibility. Progress
was made in the use of dispatching by companies to flexibly secure and improvethe efficiency of their workforces, enabling them to adapt to a changing economicenvironment and fluctuating market conditions.
Staffing service companies were also significantly impacted by the economicenvironment and repeated legislative changes, but they complied with these laws
and regulations while providing services suitably tailored to both individuals andcompanies, and the market expanded in size accordingly.

Next let's look at the actual market size of the dispatching industry and our own
market share. This is an excerpt of materials from Yano Research Institute.
If viewed in terms of the total workforce, the dispatch market accounts for only 3%of all workers, but the Japanese dispatch market is estimated to be worth around8.8 trillion yen. There are believed to be around 43,000 worker dispatch offices, but
the top ten companies command a combined share of only 21.3% on a revenue
basis. Among them, PERSOL's market share is 6.2%, top in the industry. If you lookat the pie graph on the right, you can see that PERSOL accounts for a significant
29% among the top ten players in the market.
With employment mobility continuing to rise, we think there is a lot of room to gain
market share.

Now I will explain about the external environment facing the Staffing SBU.

This figure shows a simplified view of the temporary staffing service model.
Temporary staffing is a business model characterized by how it separates theemployment of human resources and their use, where the associates employed bythe dispatching company provide labor to the client.
In this model we enter contracts with the associates and pay their salaries.
That is why this business model can be described as one that adjusts the demandand supply of labor.

Next, this figure shows the basic structure of the temporary staffing business.
Temporary staffing is a matching business for dual clients - working people andcorporations - where revenue increases through continuous employment. Thatmakes it a so-called "lifetime value business model." Unlike placement businesses,with the temporary staffing business model our role goes beyond matching, as
ongoing revenue is generated the more that employment continues.
Revenue is structured as shown in the vertical columns of this diagram. Revenue isinfluenced by various factors including matching fees, length of employment, billingrate and working hours. A major factor in increasing revenue is not only thenumber of people we have working, but how long they work for.

The figure on the left shows the general structure of temporary staffing fees
according to the Japan Staffing Services Association.
There is a very high weighting for wages paid to temporary staff, which corresponds
to variable costs. This is followed by social insurance premiums and paid leave
expenses, and then the operating expenses for us as a temporary staffing company.
In this way you could describe the temporary staffing business as one with small
marginal profit.
Generally, the operating margin is 1.2%, but our Staffing SBU achieves a margin of4.4%. Our strength is in expanding our perspective within the scale of the market,
leveraging economies of scale with our leading market share to secure an operating
profit nearly four times the industry standard.
However, under conditions where market growth is sluggish, in addition tomaintaining market share it is also crucial to reduce expenses.

Next, we have the FY2023 results and FY2024 forecast for the Staffing SBU.
We aim to grow top-line revenue by 5.4% year over year. We plan to maintain grossprofit margin while seeing a decrease in operating margin due to higher SG&A
expenses. The increase in SG&A expenses is mainly due to an increase in costs
associated with the employment of people with disabilities and investments in digitaltechnologies such as the migration of mission-critical systems to the cloud. I will
explain the specific initiatives we are employing later.

Next, I would like to explain the status of past M&A activities carried out in theStaffing SBU.
To date, we have scaled up as a company through strategic M&A aimed atexpanding the regions and job types we support. In a temporary staffing market
that is expected to be increasingly oligopolistic in the future, we intend to actively
take advantage of M&A opportunities. At the same time, we will continue to monitor
market growth potential and our own growth and profitability, forming anappropriate portfolio driving by management decisions including PMI and carveouts as the situation requires.

As I mentioned before, the SBU is made up of a group of companies covering awide range of occupations through strategic M&A activities aimed at expanding ourregional and occupational coverage, and we have established a structure that canrespond at the national level.
One of core companies,Avanti Staff is focused on providing services to Mizuho

Bank and Marubeni Corporation. PERSOL EXCEL HR PARTNERS has received a thirdof its capital investment from Panasonic and serves the Panasonic Group as its
primary customer. Meanwhile PERSOL FACTORY PARTNERS also has Panasonic as a
one-third stakeholder and is mainly focused on the manufacturing sector. PERSOLMARKETING is mainly responsible for sales and marketing positions, while PERSOLFIELD STAFF deals with logistics and light work. From a regional perspective,PERSOL TEMPSTAFF KAMEI provides staffing mainly for clerical positions across thesix prefectures that comprise the Tohoku region.
The Staffing SBU has a total of 248 bases across 46 prefectures, employing
approximately 128,000 staff.

Next is the breakdown of revenue by occupation. Clerical work accounts for 89%,nearly nine-tenths of occupations provided by the Staffing SBU, mainly throughPERSOL TEMPSTAFF as the core company in the Staffing SBU. Looking at therevenue breakdown in more detail, manufacturing jobs make up 7% of staffing,
followed by sales and marketing at 3% and logistics and light work at 2%.

This graph shows the top 15 industries in which our clients operate.
Companies in the service industry have the highest weighting. That is followed byprecision machinery and consumer appliances at 11%, heavy industry andtransportation equipment and machinery at 10%, and chemicals at 7%,
demonstrating the wide range of industries our clients cover. As we have built awell-balanced portfolio that spans a wide range of industries, we have a solid
operating base that is less susceptible to economic factors.

Next, I would like to describe the strengths of the Staffing SBU.
The Staffing SBU has expanded its business by leveraging its extensive businessresources built up over a 50-year track record as a comprehensive human resources
service business.
Our first strength is our extensive business resources. We have a wide range ofbusiness resources, boasting the largest number of registered temporary staff inJapan, handling 250,000 job openings per year, and working with 25,000 clientcompanies. Second is our ability to provide a wide range of solutions with a service
lineup that draws on synergies of the PERSOL Group.
The third strength lies in our high-quality business operations established througha track record of continuous operation spanning five decades. Above all the spirit ofaltruism is deeply rooted in our corporate culture, which we have emphasized since
our founding. Since our founding, we have always acted in the interests of theindividuals who work for us and the companies we serve, and even our competitors
acknowledge our responsiveness that cannot be emulated.
The fourth strength is our sound operating system. We have of course obtained theP MARK as an appropriate system for the protection of information. We have also
maintained certification as an Excellent Worker Dispatching Business Operator from
the Ministry of Health, Labor and Welfare for nine years running.

Our strength comes from our ability to develop a service lineup based on situational
requirements and the needs of the times. For individual workers, we provide
services that enable diverse working styles, including temporary staffing from home,and shortened working hours. As a result, we have been ranked No. 1 overall in the"Working Dispatching Business Operator Satisfaction Ranking" conducted by theWorkplace Research Institute for five consecutive years.

Now I would like to describe some of the future initiatives the Staffing SBU will bepursuing.

First, I would like to take another look at forecasts of Japan's future labor population.
With the ongoing structural decline in the labor population, we expect that labor
participation by women and seniors will continue to advance, creating a growing
need to accommodate diverse work styles.

In terms of the overall outlook for the future temporary staffing market, we expect
the business growth rate to slow and stabilize, with the number of temporary
workers increasing. More specifically, it is expected that up to 2030 revenue in thetemporary staffing market will increase at a CAGR of around 3.4%.
The temporary staffing market is expected to enter a maturity phase with themarket's regular growth rate tapering off. Even under those conditions, I think akey point is in gaining a share of the current 1.56 million dispatched workers.

Looking at the outlook for the clerical temporary staffing market, which is our corefocus, its size is expected to decline slightly.
That is because as the working population declines securing human resources willitself become difficult, and we expect that technological advances will lead to theautomation of simple operational tasks and increased outsourcing. On the other
hand, new businesses will also emerge. For example, there will be an increasing
demand for human resources with high levels of IT literacy who can use tools suchas ChatGPT and Power BI. We also predict an increasing demand to utilize
temporary staffing for vacant positions amid the declining labor force and increased
difficulty of direct hiring.
We will properly treat these positive factors as new opportunities to be seized upon.

As I mentioned earlier, under our expectation that the temporary staffing market
will experience moderate growth and the clerical worker market will decline slightly,
our focus will be to increase our share in the area of temporary staff for clericalwork, our current mainstay. In addition to that, as the manufacturing sector is alarge market, we will work to expand the occupations we support in themanufacturing sector to gain more business.

Next, I would like to talk about future management strategies.
As I mentioned earlier, we have adopted a robust two-pillared strategy of expanding
market share and enhancing profitability.
In terms of expanding market share, we aim to become a company that is chosen
by workers because we offer diverse choices in occupations and ways to work andprovide growth opportunities including the development of individual awarenessand education. We also aim to be a partner that continues to be chosen and makes
working fun by delivering a stable supply of talented human resources to companies.
By increasing the number of workers, we employ and their length of work, andhaving them provide successful performance at the companies where they aredispatched, our billing rates will increase. Through a combination of these threefactors, we will increase revenue.
A major premise to this is the skills and salaries of working staff improving.
In terms of improved profitability, we will increasingly utilize digital technologies inour business processes to transform the business model.
We intend to transform into a business entity with higher productivity and increase
operating profit as a result.
This is the management strategy we envisage.

Regarding future competitive strategies, we will maintain our current strengths asa leading company while further refining and evolving them, thus ensuring ourdominant position in the market.
In the bottom half, we will adapt to the increasingly diverse needs of both individuals
and corporations and continue to leverage our strengths in two ways: effectively
capturing peripheral demand and providing full coverage across job categories andregions.
On top of that, in terms of the two differentiating strategies shown at the top, wehope to enhance and refine the value that workers experience during their postings.
As a homogenization strategy, we will drive the adoption of digital technologies andimprove efficiency beyond industry standards. By refining and evolving thesestrategies, we will ensure our competitive advantage.

The first future strategy pillar is a shift of our business to focus more on individualworkers.
As I have mentioned several times, in the future as the working population
decreases it will be important to continuously chosen by workers. In addition tobeing a matching business, we need to be a business whose revenue increases themore people work. An important requirement for that is not just increasing thenumber of workers, but getting them to work for longer. By enhancing the valuethat individual workers experience during their postings, they will remain in theirposts longer or return to the same post when their contracts end. By enhancing thisso-called "lifetime value," we will demonstrate our competitive advantage and gain
market share. At the same time, we will support career advancement and skills
improvement, improve billing rates and offer better compensation to workers.

To continue to be the choice of working individuals and to realize "Career Wellbeing," we will increase digital touch points to enhance convenience, and at times
provide more personalized support through human intervention to alleviate
concerns or dissatisfaction with work. We will pursue a range of initiatives tailoredto the career phases of individual workers. We will provide opportunities for inspiring
learning, offer career advice, and give workers a supportive push forward. This willnot only lead to self-actualization but result in extended working periods, improved
performance, and higher billing rates.
We will generate a positive cycle of improved salary conditions for staff.

Next, I'd like to talk about the second strategy pillar: improved profitability.
We will refine operations by deploying digital technology to the maximum extent.
By transforming business processes, we will improve the value that individual
workers experience. For individuals, we will enhance the user interface and user
experience during contact points from registration through to application, offeringenhanced convenience to achieve increases in the number of registered users andnumber of applications for open positions. We will also monitor the working
conditions of individuals who fill those positions and develop evaluation andfeedback mechanisms leading to improved motivation. We will recognize andresolve work-related concerns and dissatisfaction in a timely manner, thereby
improving lifetime value and enhancing profitability.

For corporations, we will enhance sales productivity and improve customer
convenience by employing digital tools, increase the number of orders for job
listings, and implement AI to streamline and speed up digital matching processes.
This is part of our efforts to increase the numbers and rates of confirmed contracts.
As a result, we will transform our business operations, therefore improving
productivity. We will convincingly boost profitability with a dual focus of DX toimprove experience value and DX to boost productivity.

We are among the first in the industry to deploy digital tools aimed at improving
the value that individuals experience.
Going forward we will try to enhance this even more. In addition, we will actively
invest in digital technologies for DX to improve efficiency and productivity,transforming into a highly profitable business model. In the center of the figure isthe core GENESIS system. GENESIS provides apps for individual staff, a platform
for corporate clients and an interface for our employees, linking interactive
information. In the future we will steadily update the system to enhance its
functions and convenience.

I'd like to explain about efforts to introduce digital technologies in a little more detail.
We will pursue a fusion of people and digital technologies by increasing digital touchpoints in the journeys of individual staff and corporate clients and optimizing
people's actions based on the real-time data we have acquired.
To further streamline this development, we will shift our IT infrastructure to thecloud. We will advance our business model transformation by fully utilizing digitaltechnologies, including the development of customer-exclusive website sections,industry-first tools for working staff, attachment apps and staff evaluation andmanagement functions, and the introduction of AI. Our aim is to achieve a uniquevalue chain.

Our vision is using our activities since 2020 to cultivate fans as a basis and embrace
the fusion of people and digital technologies to provide staff with choices andopportunities for inspiration that suit their wishes and aptitudes. This will enable us
to be a company that continues to be chosen by staff, and a partner that solves
staffing problems for clients by proposing the use of human resources based on anunderstanding of the client business and changes in the external environment. For
2026 we envision becoming a partner that continues to be chosen and makes
working fun, by becoming the choice of staff thanks to our services being
meaningful, appealing and a source of pride, and by being a partner that helps
corporate clients solve their staffing programs and supplies staff who will work
energetically.
In closing, please look at this video summarizing the world we envisage.
Thank you very much.