ウィルグループ（6089） – [Delayed]Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2022

Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2022WILL GROUP, INC. (Tokyo Stock Exchange, First Section / Stock code: 6089)February 22,2022ContentsⅠ. 3Q FY3/22 HighlightsⅡ. FY3/22 Earnings and Dividend ForecastsⅢ. Medium-term management plan(WILL-being 2023) progressRegarding the accounting method for reportable business segments, we had previously adopted a method of reflecting certain adjustments under Japanese GAAP. After re-examining segment information to be reviewed regularly, the Group decided to align the accounting method with the accounting policies of the Group from the beginning of the first quarter of the fiscal year ending March 31, 2022. Accordingly, reportable segment information for the previous corresponding quarter has been restated.2Ⅰ. 3Q FY3/22 Highlights33Q FY3/22 Highlights123The full-year consolidated forecasts have been revised upward again to better-than expected 3Q results as it did in 1Q and 2Q. “WORK SHIFT Strategy,” the key approach of the Medium-Term Management Plan, exceeded the plan.The ratio of equity attributable to owners of parent to total assetsexceeded the Medium-term Management Plan target of 20%.43Q FY3/22 Financial HighlightsDouble-digit revenue backed by the Overseas WORK Business as the demand for people to perform a variety of jobs remained strong. Operating profit increased due to the growth in gross profit caused by higher permanent placement sales despite the contribution to earnings one year earlier of a one-time profit of about ¥900 million. Up-front investments of about ¥800 million in strategic investment domains (construction management, care support, startup company HR support) for the Perm SHIFT held down earnings somewhat.(Billions of yen)RevenueGross margin3Q FY3/2297.60Vs. 3Q FY3/21＋10.7％（＋9.46）21.8% ＋1.5ptOperating profit4.16＋28.4％（＋0.92）→“WORK SHIFT Strategy,” the key approach of the Medium-Term Management Plan, progressed as planned.5Consolidated Revenue(Billions of yen)25.26.223.15.718.917.429.327.4 27.36.97.19.031.3 31.030.129.529.9 30.128.49.28.98.78.29.49.39.633.632.331.511.412.212.7Overseas20.520.120.222.122.021.220.120.020.520.420.120.020.9Domestic1QFY3/192QFY3/193QFY3/194QFY3/191QFY3/202QFY3/203QFY3/204QFY3/201QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/22*The revenue in FY3/21 is based on adjusted figure that excludes overseas subsidy income. 3Q FY3/22 revenue was ¥1.3 billion higher than in the 2Q of FY3/22(Effects of foreign exchange rates: +¥0.0 billion)Overseas revenue continues to increase steadily and revenue in Japan is recovering.6Consolidated Gross Margin and SG&A Expense Ratio(Billions of yen)21.2%Segment breakdown20.8%19.2%20.7%20.9%20.7%23.3%20.5%22.3%20.2%22.1%20.6%19.9%20.0%19.6%20.2%20.1%17.4%20.8%18.0%20.5%20.4%19.9%20.7%21.7%22.0%21.5%（Consolidated）Gross profit margin*223.5%23.8%（Overseas WORK Business）22.7%Gross profit margin21.0%21.0%（Domestic WORK Business）21.7%Gross profit margin*16.25.16.46.45.45.36.25.45.75.05.94.95.85.16.05.46.85.87.17.25.65.7The consolidated gross margin improved from one year earlier due to the Perm SHIFT.Upfront investments¥0.37 billion3Q plan:3Q results: ¥0.26 billion1Q-3Q plan: ¥1.04 billion1Q-3Q results: ¥0.76 billionGross profit*2SG&A expenses *21QFY3/202QFY3/203QFY3/204QFY3/201QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/22*1 Intersegment consolidation adjustments are not included. The amounts for FY3/20 are based on the previous accounting policy. *2 The revenue in FY3/21 is based on adjusted figure that excludes overseas subsidy income.7Consolidated Segment ResultsDomestic WORK BusinessOverseas WORK BusinessOthers(Billions of yen)59.860.16.0%3.65.7%3.4RevenueSegment profit to net sales6.8%36.42.45.5%1.4Segment profit27.23QFY3/213QFY3/223QFY3/213QFY3/223QFY3/21-0.33QFY3/22-0.3➣The number of worker on assignments decreased in the factory sectors affected by the spread of COVID-19.➣Upfront investments (¥760 million) for nursing care personnel, construction engineers and HR support for startup firms.➣Both Australia and Singapore enforced tighter restrictions to curb the spread of COVID-19. However, the demand for human resources remained solid, which contributed to a significant increase in permanent placement sales.➣Continued upfront investment in the exploratory domain (inbound services)8Domestic WORK Business (Business sector sales)Telecommunications, call center, care support/nursery schools and HR support for startups sectors performed well.0.61.10.20.32.82.83.00.40.92.61.60.73.2FactoryCall center lSaes support0.41.20.20.33.03.03.10.40.82.92.70.73.00.71.20.20.33.13.03.10.50.92.92.10.72.90.61.30.20.43.22.82.90.50.82.92.00.72.70.51.30.30.33.32.52.90.60.82.91.30.22.90.61.30.30.33.32.52.70.60.72.91.40.33.00.91.30.30.33.32.62.60.60.72.91.50.33.00.71.40.30.43.32.52.40.60.72.91.70.33.10.61.30.30.53.32.42.30.60.73.01.30.33.20.61.40.40.63.42.42.20.60.63.01.20.33.2(Billions of yen)0.81.50.40.5OthersConstruction management engineersIT engineersHR support for startups 3.5Care support/ nursery schoolsFactory except foodFood factoryFinanceOfficeCall center, etcOther sales supportApparelTelecommunications2.42.20.70.63.01.30.33.21QFY3/202QFY3/203QFY3/204QFY3/201QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/229Domestic WORK Business (Sales and operating profit by sector)3Q operating profit recovered to about the 3Q FY3/20 level (prior to the pandemic) despite expenses for up-front investments in strategic investment domains.-Sales by sector (Billions of yen) –Operating profit by sector (Billions of yen) -21.721.60.71.20.33.00.81.20.33.16.16.121.00.71.30.43.25.74.14.34.219.90.81.10.32.85.83.919.719.819.819.720.31.21.30.33.320.11.01.40.43.30.81.30.33.30.81.30.33.31.01.30.53.31.01.40.63.420.51.11.50.53.5OthersConstruction management engineersHR support for startups Care support/ nursery5.45.25.24.84.74.6Factory outsourcing4.64.24.24.24.24.24.2Call center outsourcing 4.36.45.45.85.64.54.74.85.14.84.64.9Sales outsourcing1QFY3/202QFY3/203QFY3/204QFY3/201QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/221.40.10.00.10.10.30.30.51.40.10.10.10.10.41.30.00.10.10.10.30.30.20.50.51.20.10.00.10.10.30.20.41.30.20.00.10.10.30.30.51.10.00.10.00.20.30.30.31.10.10.10.10.40.31.01.00.20.10.20.10.10.00.20.30.31.10.10.20.10.30.30.3-0.10.1Others1.30.10.10.3HR support for startups Care support/ nurseryFactory outsourcingCall center outsourcing 0.30.40.40.40.4Sales outsourcing-0.0-0.0-0.0-0.2-0.1Construction management engineers1QFY3/202QFY3/203QFY3/204QFY3/201QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/22*Intra-segment consolidation adjustments are not included10Overseas WORK Business (Sales by contract type, sector operating profit)3Q permanent placement revenue was lower than in the 2Q, partly due to seasonal factors, but the growth rate remains high. Total revenue in this business is consistently higher than the pre-pandemic level (FY3/20). -Sales by contract type (Billions of yen) –Operating profit by sector (Billions of yen) -9.11.29.21.1Permanent placement9.01.28.71.28.40.79.40.99.31.09.61.17.98.27.77.67.88.68.48.5Temporary staffing12.71.812.21.911.41.710.410.99.70.90.80.00.90.80.80.10.70.40.4Subsidy incomeBusinessearnings0.50.40.50.40.30.30.50.30.20.50.20.50.10.50.10.40.30.41QFY3/202QFY3/203QFY3/204QFY3/201QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/221QFY3/202QFY3/203QFY3/204QFY3/201QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/22113Q FY3/22 Highlights(Billions of yen)RevenueGross profit(Gross margin)Operating profit(Operating margin)Profit before taxProfit attributable to owners of parentEBITDA(Operating profit + Depreciation and amortization）3QFY3/213QFY3/22Vs. 3Q FY3/21Change% change88.1317.91（20.3％）3.24（3.7%）3.041.874.8097.6021.29（21.8%）4.16（4.3%）4.192.625.64+9.46+3.38（+1.5pt）+0.92（+0.6pt）+1.15+0.75+0.84+10.7%+18.9%+28.4%+37.8%+39.9%+17.5%Number of employees:5,255(+410 from the end of FY3/21)12Financial IndicatorsThe ratio of equity attributable to owners of parent to total assets at the end of 3Q was 24.6%, which exceeded the medium-term management plan target of 20%. Other financial indicators have also been on the improvement trend.2.20.70.81.90.91.11.80.81.01.70.70.81.60.70.41.40.60.31.30.60.31.20.61.10.50.10.11.10.50.21.00.50.29.7%9.5%6.5%8.0%17.0%17.6%15.6%11.7%12.9%4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/19FY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/221.00.5-0.124.6%（times）EBITDAAdjusted interest-bearing debt to EBITDA ratioInterest-bearing debt (excluding short-term borrowings) / Forecast EBITDARatio of goodwill to adjusted equity attributable to owners of parentGoodwill outstanding /Adjusted equity attributable to owners of parentRatio of equity attributable to owners of parent22.1%19.1%Adjusted net debt to equity ratio(Interest-bearing debt – Cash and deposits) /Adjusted equity attributable to owners of parent*13Ⅱ. FY3/22 Earnings and Dividend Forecasts14FY3/22 Forecast（Billions of yen）RevenueDomestic WORK BusinessOverseas WORK BusinessOthersGross profit(Gross margin)Operating profit (Operating margin)Domestic WORK BusinessOverseas WORK BusinessOthersAdjustmentsEBITDAProfit attributable to owners of parentAUDSGDThe forecast for the fiscal year ending March 2022 has been revised upwards again to factor in the better-than-expected third quarter results.Vs. FY3/22(Forecast as of Nov. 9, 2021)FY3/21FY3/22(Forecast as of Nov. 9, 2021)FY3/22（Revised forecast）Change% change118.2480.0536.921.2824.05（20.3％）4.03（3.4％）4.721.94-0.39-2.242.366.25¥76¥78130.0081.1847.201.6128.22（21.7%）4.50（3.5%）4.502.51-0.32-2.202.516.23¥84¥82130.0081.0247.391.5728.39（21.8%）5.00（3.8％）4.502.85-0.34-2.012.987.02¥84¥820.00-0.16+0.19-0.03+0.17（+0.1pt）+0.50（0.4pt）-0.00+0.33-0.02+0.18+0.47+0.790.0%-0.2%+0.4%-2.1%+0.6％+11.1％-0.0%+13.3%–+18.7%+12.7%¥380mln¥90mln¥10mln¥0mln15FY3/21Forecast as of Nov. 9, 2021Revised forecastChange for ¥1 difference/yRevenueProfitAssumptions Used for the FY3/22 ForecastIn the revised FY3/22 forecast, there is no significant change in the 4Q forecast. Upfront investments in focus areas are expected to be ¥1 billion compared with the original plan of ¥1.3 billion. ■Revenue（Billions of yen）■Operating profit（Billions of yen）121.9 118.2 121.0 127.0 130.0 130.0 FY3/20FY3/21FY3/22FY3/22FY3/22FY3/22FY3/20FY3/21FY3/22FY3/22FY3/22FY3/22(Forecast as of(Forecast as of(Forecast as of(Revised forecast)May.12,2021)Aug.6,2021)Nov.9,2021)(Forecast as of(Forecast as of(Forecast as of(Revised forecast)May.12,2021)Aug.6,2021)Nov.9,2021)Original plan4.70Original plan5.351.30 Original plan5.801.30 4.14 4.030.95 One-timeitems3.08 1.30 3.40 4.05 4.50 Original plan6.00Upfront investments-1.01.00 5.00 16FY3/22 Forecasts (By Domestic WORK Business Sectors)SegmentsSectorsDomestic WORK BusinessSales supportFY3/21FY3/22(Forecast as of Nov. 9, 2021)FY3/22(Revised forecast)Vs. FY3/22(Forecast as of Nov. 9, 2021)Upper: Net salesUpper: Net salesUpper: Net salesUpper: Net salesLower: Operating profitLower: Operating profitLower: Operating profitLower: Operating profit(Billions of yen)Call center FactoryCare supportHR support for startups Construction management engineersOthers19.221.6416.861.1320.581.2513.210.381.270.155.270.053.610.5219.391.6516.971.1018.401.2814.100.452.200.455.80-0.564.300.3919.431.5417.051.1218.441.2913.800.352.300.605.78-0.594.190.41+0.04-0.11+0.08+0.01+0.04+0.01-0.29-0.10+0.10+0.15-0.02-0.03-0.11+0.02＊Intra-segment consolidation adjustments are not included.17FY3/22 Dividend ForecastThe shareholder return is based on a total return ratio of 30%.The dividend forecast has been unchanged.Year-end dividendTotal return ratio■Dividend per share and total return ratio25.1%¥23 FY3/20FY3/21¥24 per share22.9％22.9%¥24 FY3/21FY3/22Revised forecast¥34 per share25.8％25.8%¥34 Total return ratioDividend per shareFY3/22(Revised forecast)18No Risk of Impairment LossesThere is currently no expectation of impairment risk. Except for WILLOF CONSTRUCTION, in which the Will Group has made upfront investments, the Group’s companies are recovering from the impact of the spread of the COVID-19 pandemic.Primary locationBusiness activitiesInvestment*1*23QFY3/213QFY3/22YoY changeMetropolitan areas and TohokuSingaporeBrisbaneMelbourneConstruction management engineer temporary staffing and permanent placements mainly in the Tohoku region of Japan.A large number of highly skilled people are registered for assignments. Strong position in the market for temporary staffing of engineers for large building and civil engineering projects.Providing permanent placement and consulting services focused on HR primarily in Singapore, through wholly-owned subsidiaries in Hong Kong, Japan, U.S., China, Australia and UK.Providing temporary staffing and permanent placement services to government agencies and major corporations in AustraliaProviding temporary staffing and permanent placement services for office work and call center operations to agencies and companies in various sectors such as the government, telecommunications, resources and appliance manufacturing in Australia.Start of consolidationsince (WILL GROUP ownership)2018/6(100%)2019/1(76%)2019/4(90%)2018/1(100%)2.612.382.371.51SalesProfit*3SalesProfit*3SalesProfit*3SalesProfit*3(Billions of yen)4.22+8.0%-0.46-1.450.577.311.03+68.0%+119.3%+42.0%+108.3%-2.8%-3.0%3.910.070.860.265.150.5010.6510.350.270.26WILLOF CONSTRUCTION*1 The investment in each company includes goodwill and identifiable intangible assets.*2 Sales and profit are for the April-December consolidated fiscal year regardless of the timing of consolidated disclosures. Converted to yen at the rates of ¥80/SGD and ¥80/AUD in order to eliminate the effects of foreign exchange rate movements.*3 Profit is profit before tax after the amortization of identifiable intangible assets, internal transactions and one-time expenses.Investment balance (above 4 companies): ¥8.8 billion¥10.6 billionInvestment balance (consolidated):19III. Key Strategies Progress of Medium-term Management Plan (WILL-being 2023)20Medium-term Management Plan (WILL-being 2023) ProgressDespite some issues, the four key strategies are progressing as planned generallyKey strategiesProgress in 3Q FY3/22Strategy IImprove profitability through portfolio shift• In Japan, care support placements were below the plan. Orders and the number of people hired in the temp-to-hire category were lower than expected because awareness of the key temp-to-perm business is still low. Building a base in the 4Q to support growth in FY3/23. • Construction management engineers on assignment are increasing because of progress with recruiting people with work experience other fields. • Compared with the 1Q and 2Q, overseas operations in the 3Q have been recovering gradually from FY3/21 and permanent placements have been increasing rapidly.Strategy IIIncrease productivity through digital shift• Continued enhancement of the WILLOF smartphone app (for online applications).• Two main subsidiaries, WILLOF WORK and WILLOF FACTORY, merged on July 1, 2021, to consolidate their sales office networks and administrative operations.Strategy IIISearch for areas for next strategic investments• Performance of the inbound services of the foreign worker support services business (ENPORT, etc.) was below the plan because of the severe impact of pandemic restrictions on foreigners entering Japan. • In the Tech field, we are seeking opportunities in business sectors associated with our major businesses.Strategy IVFinancial strategy• The target for shareholder distributions is 30% of the earnings forecast at the beginning of the fiscal year. • The ratio of equity attributable to owners of the parent to total assets was 24.6%, exceeding the target of 20%.Based on this target, there is no change in the dividend forecast. Based on the revised forecast, shareholder distributions are expected to be 25.8% of earnings.21Business Portfolio Changes in Japan and OverseasIn the Domestic and Overseas WORK Businesses, gross margin was higher than the 3Q plan. Gross margin increased due to promotion of Perm SHIFT.-Domestic WORK Business Gross profit by Temp / Perm*(Billions of yen) –Overseas WORK Business Gross profit by Temp / Perm (Billions of yen) -20.1%20.8%20.5%20.7%21.0%21.0%（Plan）21.7%21.5%Gross margin17.4%18.0%23.5%23.8%22.7%（Plan）20.9%19.9%20.4%Gross margin2 2 2 2 2 2 2 2 Perm2 2 2 2 2 2 2 2 Temp1QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/22(Results)3QFY3/22(Plan)*Intra-segment consolidation adjustments are not included.Gross profit and gross margin in 1Q FY3/22 are based on adjusted figure that excludes overseas subsidy income.1 1 1 1 1 1 1 1 2 1 2 1 2 1 1 1 PermTemp1QFY3/212QFY3/213QFY3/214QFY3/211QFY3/222QFY3/223QFY3/22(Results)3QFY3/22(Plan)22Progress in the Construction Management Engineer Temporary Staffing BusinessRecruiting large numbers of people with work experience in other fields and the number of people on assignments is increasing steadilyQuarterly RevenueNumber of People HiredThe number of people on assignments increased because of new graduates hired in the 1Q and mid-career people with no applicable experience1.31.31.31.31.41.31.41.51.11.21.2(Billions of yen)(People)A large number of mid-career people with no applicable experiencewere hired 20457 62 77 76 61 62 146 92 95 97 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/221Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/22People on Assignments, Pct. of Workforce, Retention RateTemporary Placement Staff Working Time and RatesPct. of workforce remains high.We will increase the retention rate through trainings and follow-up systems.(People)99.0% 99.3% 99.5% 99.4% 99.4% 98.2% 98.7% 99.7% 97.5% 99.6% 99.7%Pct. of Workforce*76.0% 75.8% 76.4% 76.6% 72.9% 72.3% 71.7% 72.4% 71.2% 72.4%69098114729129117775184108Retention RateRetention rate = Total workforce divided by the sum of the workforce one year earlier and people hired during the past yearInexperienced mid-career StaffFresh graduatesExperienced staff People on assignments445476508547550546576613478483483The downturn in unit working rates caused by a reduction in overtime and an increase in the number of new graduates and inexperienced people on assignments has stopped.( Hours; thousands of yen)816 800 798 791 772 771 760 192.2 185.2 192.2 183.8 183.3 184.6 190.1 180.2 173.7 169.7 176.6730 667 643 634 Average working rateAverage working time1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/221Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/22*The pct. of workforce in 1Q FY3/22 is the percentage for June 2021, excluding the impact of the new graduate training period.The percentage of workforce in 1Q FY3/22 would be 90.4% when the impact of the new graduate training period is factored in.23Progress in the Care Support BusinessPerformance of the key temp-to-hire category is below expectations and activities are under way in the 4Q to build a base for growth. Quarterly RevenueTemporary staffing services performed well(Billions of yen)Temp-to-Hire Assignments and Permanent PlacementsOrders and people hired are below the plan because of low awareness of the temp-to-hire scheme. Rebuilding the framework for this business in the 4Q.(People)0.20.20.10.20.20.10.10.10.20.20.2Temp-to-hire assignments＋Permanent placement2.62.83.03.03.13.23.23.13.13.23.3Temporary staffing14 212 190 188 189 192 173 191 166 211 185 179 Permanent placements89 149 149 Temp-to-hire assignments1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/22Number of People on AssignmentsThe number of people on assignments increased because of the recovery in orders.(People)4,815 4,880 4,491 5,429 5,226 5,188 5,169 5,226 5,112 5,152 5,319 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/22Employees in the Temp-to-Hire and Permanent Placement BusinessWe plan to increase recruiting activities again following the reorganization of temp-to-hire operations. (People)49 42 35 42 37 38 36 40 53 46 43 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/221Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QFY3/20FY3/20FY3/20FY3/20FY3/21FY3/21FY3/21FY3/21FY3/22FY3/22FY3/2224Forecasts of future performance in this report are based on assumptions judged to be valid and information available to the Will Group’s management at the time the materials were prepared, but are not promises by the Will Group regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons.This report is an English translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between the original Japanese version and this translated version, the Japanese version shall prevail.■IR Contact:WILL GROUP, INC. Financial DepartmentTel: +81-3-6859-8880