Financial Results for
the Fiscal Year Ended in
September 2019CANDEAL CO., Ltd.
TSE Mothers :1446
November 14, 2019
Copyright (C) CANDEAL CO., Ltd. All Rights Reserved.

CONTENTS

1

FY9/19 Business Results2

FY9/20 Business Forecasts

3

Appendix

・Business Outline
・Service Outline and Strengths
・Growth Strategy
・Future Goal of the CANDEAL Group2

1
FY9/19 Business Results3

FY9/19 Summary of Consolidated Business Results

Both sales and profits increased YoY and achieved record highs.
(Million yen)

FY2018Results

FY2019Profit ratio

FY2019Plan

Results

13,50013,167

YoY
Profitratio

Vs. Plan
ChangeChangeratio+927 107.6%

▲332

97.5%

ChangeChange ratio

Net sales

12,239Gross profit

4,369

35.7%

ー

4,670

35.5%

+301 106.9%

ーーOperatingincome

403

3.3%

485

3.5%

+61 115.1%

▲19

95.9%

Ordinary
income

345

2.8%

440

3.4%

+108 131.3%+13 103.0%

Net income

171

1.4%

218

465
453
247

1.9%

+76 144.6%+29 113.7%

Net income
beforeamortization of
goodwill

363

3.0%

410

440

3.3%

+76 121.0%+29 107.3%*1※ 1 In FY9/19, the Company recorded an extraordinary gain of 48 million yen due to the sale of real estate in Sapporo owned by its subsidiary Candeal Design Co., Ltd.

4

Analysis of Changes in Consolidated Ordinary Income(Million yen)
Increase in personnel
Decrease in nonexpenses
operatingexpenses(SG&A)
Increase in nonIncrease in SG&A
operating income(Excluding personnel
expenses)
Increase in profits due
to sales increase

7

FY2018
Ordinary
income

345

39

101

138

301
Sales of main
business arestrongStrengthening
governancestructure andsales planningcapabilities

FY2019Ordinary
income453
5

FY9/19 Composition of Group sales(Million yen)

4,000

2,000

0,000

12,23913,167
5.8%

Merchandise
sales

30.4%

Commercial
environment

6.3%

28.4%

8,000

6,000

27.1%

25.3%

Livingenvironments

4,000

2,000

38.2%

38.6%

RepairFor commercial
facilities

About 1/3
For condominiums

About 2/3

0

FY2018FY20196

Sales by Service(Million yen)

FY2018Results

Compositi
on ratio

FY2019Results

Compositi
on ratio

YoY
ChangeChange ratio

Repair service

4,670

38.2%

5,080

38.6%

+410

108.8%

Construction
services for living
environments

3,320

27.1%

3,326

25.3%

+5

100.2%

Architectural
services forcommercial
environments

3,471

28.4%

4,000

30.4%

+528

115.2%

Merchandise
sales

776

6.3%

759

5.8%

▲16

97.8%

Total

12,239+927

107.6%

13,167

7

Status of Repair Service(Million yen)

FY2018Results

Compositio
n ratio

FY2019Results

YoY

Compositi
on ratio
ChangeChange
ratio

4,670

38.2%

5,080

38.6%

+410

108.8%

Repair for detachedhouses

3,576

29.2%

3,806

28.9%

+229

106.4%

Repair for
condominiums

1,093

8.9%

1,274

9.7%

+180

116.5%

Repair service

8

Status of Repair Service
Detached houses

28,64529,852,000

Condominiums
YoY
104.2%

YoY30,000
102.5%

30,000 100,000

,000

,000

,000

,000

124,865

127,500

YoY
80,000102.1%

22,24620,000,000

60,000

,000

件

,000

22,810

YoY20,000
113.7%
55,873,000
40,000,000

25,00015,00049,16010,000For both detached houses
and condominiums,

orders increased
as a result of capturing
demand for new houses.

10,000,000,000

20,000

5,000

,000

,000
0

0

FY2018
Unit price of orders
received (yen)FY2019Number of orders
received

00

FY2018
Profitability per worker(yen)

FY2019Number of workers

9Status of Construction Services for Living Environments(Million yen)

FY2018Results

Construction services
for living environments
Inspection

Maintenance,
construction, etc.

Refit

Compositi
on ratio

FY2019Results

Compositi
on ratio

YoY
ChangeChange
ratio

3,320

27.1%

3,326

25.3%

+5

100.2%

929

7.6%

1,024

7.8%

+95

110.3%

1,890

15.4%

1,925

14.6%

+34

101.8%

500

4.1%

375

2.9%

▲125

75.0%

10

Status of Construction Services for Living Environments:

Periodic After-Sales Inspection
100,000

12,722

13,199YoY
103.7%

Unit price of orders received

90,00080,00070,00060,00073,05377,656

YoY
10,000106.3%

increased by 3.7%
through raising unit price50,00040,0005,000
30,00020,00010,0000

0FY2018
Unit price of orders
received (yen)FY2019Number of orders
received

Number of orders received
increased by 6.3%
with an increase in the number ofcustomer companies
11Periodic After-Sales Inspection Results
Industry leader

Sales exceeded 100 million yen
per month
Last 13 years
CGAR 36.91%

001,024 million
1,200,000

Sales

Cumulative number of units undermanagement
FY2018yen

300,973Units

346,809uni
ts

1,050,0000
900,000

0

FY2019750,000

0

0

Aroundthe door
Counting

YoY
115.2%

600,0000

450,000

Number of annual inspections

0
300,0000
150,000

00

FY2018

0

FY06

FY19
Number of annual
inspections

Cumulative number of units
under management

Sales (Million yen)

FY201974,66378,996

YoY
105.8%

12

Status of Construction Services for Housing Environments

,000

,000

21,77425,00020,695

YoY
95.0%

,000
20,000

,000

,000

,000

86,82393,033

YoY
107.2%

15,000,000,000

10,000Total number of workers
steadily increased

Up by 7.2%

,000

,000
5,000

,000

,000

0

Productivity per worker down by 5%
due to the large number ofsmall-scale projects

0

FY2018
Profitability per worker(yen)

FY2019Number of workers

13Status of Construction Services for Housing Environments

14,88160,000

YoY
120.5%
15,00012,35050,000

Unit price of orders received

40,00010,00040,561

30,00025,261

20,000

YoY
62.3%
5,000

20.5%

up by
with focusing on projects
with high unit prices

10,0000

0FY2018
Unit price of orders
received (yen)FY2019Number of orders
received

14

Overview of Refit Service
Changes in Sales (Million yen)
(Million yen)

1,003

Difficult to estimate orders as thisservice is for recall products

500

375

376

261

FY2016FY2017 FY2018

Only the CANDEAL Group can offer recall
service for centralized interior finishingmaterials in nationwide
Flexible approach as required foraccomplishing our social mission andcustomer support.

FY2019 FY2019
Plan Results

15

Status of Construction Services for Commercial
Environments and Merchandise Sales(Million yen)
FY2018Results

Composition
ratio

FY2019Results

Composition
ratio

YoY
ChangeChange ratio

Construction services forthe commercial environment

3,471

28.4%

4,000

30.4%

+528

115.2%

Commercial Facilities andHotel Interior

1,465

12.0%

1,985

15.1%

+520

135.5%

Office Interior

808

6.6%

773

5.9%

▲35

95.7%

Furniture assembly

610

5.0%

614

4.7%

+3

100.6%

Lifting, etc.

587

4.8%

627

4.8%

+40

106.8%

Merchandise
sales

776

6.3%

759

5.8%

▲16

97.8%

16

FY9/19 Top 20 Clients
Repair service

Hajime Construction Co., Ltd●

Construction
services forlivingenvironments

●
●
●
●

Yoshichu Mannequin Co. Ltd.
Aim Create Co., Ltd.

●●A Factory Co., Ltd.
Obayashi Corporation

Merchandise
sales

●

IKEA JAPAN CO., LTD.

Asahi Kasei Homes Corporation

Architectural
services for thecommercial
environment

●

●

●
●
●
●

Handy Crown Co., Ltd.
TEPCO HomeTech, Inc.
Daiwa House Industry Co., Ltd.

●
●

●
●

●

●

Top 11th-20th
Sumitomo Realty & Development Co., Ltd. / Dai Nippon Printing Co., Ltd / YKK AP Inc. / Daito Trust Construction Co., Ltd.
ALMETAX MANUFACTURING CO., LTD. / KOTOBUKI SEATING CO., LTD. / Jutakujohokan
Haseko Corporation / Panasonic Interior Building Products Co., Ltd.

17

Platform to Support Growth of Service
YoY

Number of in-houseengineers

111.1(Number of directly employed persons)

FY20181,056

1,178 1,173(Employee)

1,118 1,128 104.4 99.6(+117) Name

1,056
968

976

100.1%

100.8

+1

+8

FY18 Q1

FY18 Q2

FY2019

1,001
102.6

105.9

100.9

+62

+10

+50

-5

YoY

Partnercompanies

117.9%(+77 companies)

105.5

FY2019

+55

+25

507

1,173

companies
FY18 Q3

FY18 Q4

FY19 Q1

FY19 Q2

FY19 Q3

FY19 Q4*1 The number of partner companies is the sum of the three companies: Burn Repair Co., Ltd., Candeal Tec Co., Ltd.,and Candeal Design Co., Ltd.

Technician
training
program

Unique education program manual and teaching materials for humanresources development.
Focusing not only on developing technical skills but also on software
aspects, such as appearance, communication skills, manners, etc.
Technician training program
In-house training program

Basic training(2 weeks)

Practical
exercise(3 weeks)

On-sitetraining

Independent

On-site work
(1-2 months)

Completionof thetraining
Practice

Follow-up
training, etc.

Turnover ofengineers

Improved by
4.3%
FY2018FY2019

32.1%

27.8%

18

2

FY9/20Business Forecasts
19

FY9/20 Business Forecasts
Aiming for higher sales and profits by continuing strong performancein core businesses(Million yen)

FY2019Results

FY2020
Forecast

YoY change

13,167

14,010106.4

Operating income

465

524

112.7

Ordinary income

453

492

108.6

Net income

247

256

103.5

Net income before amortizationof goodwill

440

448

102.0

Net sales

20

Sales Forecasts by Service Category(Million yen)

FY2019Results
Repair service

Construction services forliving environments

Construction services forcommercial environments

Merchandise sales
Total

5,080

3,326

4,000

FY2020
Forecasts

YoY change

Point・ Capturing demand for new
housing

5,327

104.9

3,634

・ Win orders for correction
cases through periodic aftersales inspections
109.3 ・ Win orders for inspection
services・ Except project with highchance to close the deal

4,278

・ Expect special demand forinterior installation
106.9 ・ Win assembly projects forhotels to be opened by spring
2020

759

769

13,167

14,010・ Change of business model
101.2 Improve profitability throughselection and concentration

106.4

21

(FY2/20)
Revision todividend
forecast

Shareholder
Benefit
Program

中間InterimYear-end

Annual dividend

3 yen

3 yen

6 yen

For eligible shareholders, we present QUO Card according to the shares held.

Number of shares held

Shareholder Benefit Program

200 to less than 2,000 shares

QUO card (worth 3,000 yen)

2,000 to less than 6,000 shares

QUO card (worth 4,000 yen)

6,000 shares or more

QUO card (worth 5,000 yen)

*Eligible shareholders: Shareholders listed on the Shareholder Register as of September 30, 2019 will be eligible

22

3

Appendix23

What is CANDEAL?
Business Overview

24Core of the Group's businessWe aim to eliminate various stresses
associated with buildings, as well as thestress of people,
to provide peace of mind and comfort.

25

Group is a…

Building Lifecycle Support
Company
Through repairs, renovations, maintenance and management of buildings,
we eliminate sources of problems and dissatisfaction that create stress for people who
use buildings26

Outline of the Group

Outline of theServiceOur services include repairs, renovations,maintenance and management of buildings

Target of theService

We can provide services to various types ofbuildings, including houses (detached houses, condominiums),
commercial facilities, hotels and offices.

Business Model

BtoBtoC Business Model
Dispatch engineers to work sites to provide
services through orders from housemanufacturers, general contractors, etc.
27GroupCANDEAL CO., Ltd.

Representative

Akio Hayashi, President and Executive Director

Head Office

3rd Floor Ushigome Syokuryo Building, 1-11 Kitayamabushi-cho, Shinjuku-ku, Tokyo

Business
description

Control, management, and operation of corporate groups (pure holding company)

Capital stock

497.04 million yen

EstablishedAug, 2014

100%

BURN REPAIR INC.

100%

CANDEAL TECT Co., Ltd.

100%

CANDEAL DESIGN Co., Ltd.

Representative

Yoshinori Fujimoto

Toshinari Abe

Kazuo Sato

Head Office

1-11 Kitayamabushi-cho, Shinjuku-ku, Tokyo

1-11 Kitayamabushi-cho, Shinjuku-ku, Tokyo

1-11 Kitayamabushi-cho, Shinjuku-ku, Tokyo

Business
description• Repair of damages and defects on wood,
aluminum building materials, etc.
• Housing after-sales service and construction
services• Maintenance of defects in building materials
necessary emergency response• Repair of damages and defects on wood,
aluminum building materials, etc.
• Interior finish work for offices• Interior finish work for commercial facilities andstores• Building materials lifting service• Planning, design, and construction of interior
decorations• Interior coordination• Sales of interior products• Import of repair and maintenance products
Sales

Capital stock

90 million yen

99 million yen

42.5 million yen

Established

August, 1995

Jul. 2008

February, 1984

History

Akio Hayashi founded in 1995

Acquired business in 2008 and made it a group. In
2016, the Company merged with Rayon Consulting
Co., Ltd. and changed its name to the current 1.

Made a group through M & A in 2002. In 2017,
the company merged with A-FIC Co., Ltd., whichbecame a Group in 2015, and changed its nameto its current name.

28Business Model
BtoBtoC model 【Construction services】are classified into 4 categories.
Customer (B)End-User (C)Construction Service
Housing Market(New and Existing)Repair service(One-timefee)Construction services forliving environments(Subscription)

Architectural services for(One-timethe commercial environment fee)

Merchandise sales

House Manufacturer/Power Builder
Building materials
manufacturer/Developer
Real Estate Agents/General Endusers

Commercial facilities
marketStore interiors/chain stores
Commercial general contractor

Provide services (repair, inspection, construction, etc.)

Private Houses(detached houses,
condominiums)

GeneralEnduser

Commercial
facility
Hotels
Offices29

Business Model

Execution ofworks

Inspection

Planning/
designing

RepairDismantling and reconstruction.
Extends a building
lifecycle

Supports finishingof buildings underconstruction

Lifecycle Support
for buildings-repairs, renovations,maintenance, management

Support for risingdemand for vacanthousesRenovation
Re-saleDeliveryTechnology

Technical Staff

Inspection

Call center

Aging, Replacement
Renovation

MaintenanceInterior

ReformRetain customers
through after-sales
service30

Founding Story (Group History)
2018Listed on TSE Mothers

56 bases
1,453 employees

Our founding was triggered by:

Mr. Hayashi said "I'm in trouble!"

2008-- Repair service

44 bases, 573 employees

Offer services for thecommercial environment

Restore aesthetics without replacing parts.
Low-cost and short-time delivery

2005-

Acquired 4companies under
the M&A strategy

19 bases, 414 employees

Commenced the industry’s first After-sales
Periodic Inspection service!

2000Repair services were established in theconstruction industry

1995
Established Japan's first specialized

repair company!

31

Changes in Group Sales (FY9/07-FY9/18)(Million yen)

Grow our performance through Strategic M&A

14,000Acquired Leyon Consulting(Merged with Spec in October 2016, changed name to Candeal Tec)
① The number of new housing starts were 780 thousand,lowest since the collapse of Lehman Brothers.
② SPEC closed its offices in order to turn a profitablebusiness

12,00010,0008,000

Acquired AFIC
(merged with the House Box in April 2017,changed name to Candeal Design)① Collapse of Lehman Brothers② Full-scale enforcement of therevised Building Standards Law③ Acquired SPEC

6,000

4,000

2,000

0
FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

Burn Repair Co., Ltd.

SPEC Co., Ltd.

Rayon Consulting Co., Ltd.

House Box Co., Ltd.

Construction services for living environments: For
detached houses(repair, inspection, call center, etc.)(Candeal Tec Co., Ltd.)(Candeal Tec Co., Ltd.)(Candeal Design Co., Ltd.)(Candeal Design Co., Ltd.)

Merchandise sales(maintenance merchandise)

Merchandise sales (interior products)
Construction services for living environments(Interior Design/Planning/Design)

Architectural services for the commercial
environment(Interior installation, furniture assembly, lifting, etc.)

Construction services for living environments: For
condominiums(repairs, inspections, residential services, etc.)※ This graph is a simple monthly sum of the sales of each company from the time of consolidation in accordance with the fiscal year-end of Burn Repair Co., Ltd.
※ Our consolidated financial results are from August 7, 2014, to March 31, 2015, April 1, 2015, to September 30, 2015, and October 1, 2015, to September 30, 2016, which differ from our consolidated financial results.
※ House Box Co., Ltd. was consolidated in December 2002, SPEC Co., Ltd. in July 2008, Affect Co., Ltd. in March 2015, and Leyon Consulting Co., Ltd. in November 2015.

AFIC Co., Ltd.

32

Outline of Services andStrengths
33

Industry No.1

Repair service■ Service to repair the damages during housing construction andeveryday life

Before■ Providing services at pre-delivery period as the final stages of
housing construction and the time of maintenance of existinghouses■ Orders are mainly received by house manufacturers, powerbuilders and renovation companies■ One-time-fee business associated with the occurrence ofdamagesAfter
34

Need for repair services◼It is not uncommon to cause scratches on the floor during the construction of a new house. Our repair service restores the floor byrepair without replacement of parts.
◼Compared to the replacement of parts, it is possible to reduce costs, shorten the time, and prevent other defects by repairing only thedefective parts.

Image of defects

BeforeAfter

BeforeBeforeAfter

35

Cumulative number of units undermanagement exceeded 300,000!

Construction services forliving environments◼ Services provided primarily at the timing ofmaintenance after delivery.
The core service is “Periodic after-sales inspection”◼ Subscription business model for existing houses◼ We mostly focus on this service

36

Characteristics of Construction services for living environments■ Provide after-sales support on behalf of construction companies after homes are delivered.
A service lineup that supports the lifecycle of a building will lead to a comfortable living environment
and an increase in the asset value of housing.

[Service lineup]
Periodic after-sales inspections
Inspections are conducted at six months, one year, two years
and five years after delivery.

Maintenance
Maintenance services to maintain a comfortable living
environment

Call-center
Call center specialized for construction as a point of contact
for after-sales service

Renovation
Planning and designing to create comfortable living
environment and increase asset value

37

Architectural services for thecommercial environment◼ Strengths in simultaneous construction work for multiple
stores, including nationwide chain stores◼ Assume assembly services for major Scandinavian furniture
manufacturers operating around the world, at all stores in
Japan◼ In the future, we will introduce and develop a subscription
model for housing after-sales
Commercial facility

Office hotels

Furniture assemblyMulti-store construction, including chain stores,
Interior finish work at department stores

Interior finish work including the installationof fixtures and furniture

Assembly and installation of all furniture
including major furniture manufacturers’ products38

Merchandise sales◼ In the repair material sales, we offer repair and maintenance materials for professionals andgeneral use at home centers and mass retailers nationwide, and e-commerce websites◼ In the interior products sales, we offer lighting equipment and curtains with the interior advice
service.

Repair materials
Sales of easy-to-use kits to general users

Interior products
Sales of interior products for after-sales service

39

Four Strengths Supporting Our Growth1

2

Nationwide
services network

High-quality
service engneers3

Large customer
base nationwide

Maintenance
Customer

Inspection
Customer

RepairCustomer4

Six-month
Inspection

Subscription
business model
Six-month
Inspection

Six-month
Inspection

1-yearInspection

1-yearInspection

2-yearInspection

40

Strengths: 1. Nationwide service network
We can provide services in all prefectures
Service system extending to 56 locations nationwide
Our engineers nationwide:
Partner companies:

1,173 engineers
About

507 companies

Call center to support the network of engineers

3 locations with about 135 employees
41Strengths 2. High-quality service engineers
We have original training programs, manuals, and teaching materials to develop humanresources
Focus not only on technical capabilities, but also on education for intangible factors
such as personal appearance, language skills, and manners.
Technician training program
In-house training program

Basic training(2 weeks)

Practical exercise(3 weeks)

On-site training

Independent

On-site work
(1-2 months)

Completion of
the training
Practice

Training tools
Manuals by project and work

Abundant video
teaching materials

Exceed 500 times a year
training

Emphasis on on-the-job training andon-site guidance
Quality control through on-site visits

42

Strengths 3. Large customer base nationwide

Potential for next-generation services

Repair service customers
nationwide
20,112 companies

Customers for periodic
after-sales inspection
service

Customers for maintenanceand construction
service43

Strengths 4. Subscription business model◼Periodic after-sales inspection is a “Subscription type”, building a stock of annual inspection sales◼Basically, inspection is carried out three times in the first two years after delivery. Five-year, 10-year and 15-year
inspections are also increasing.
◼Specialize in minor reform services, costing less than ¥3 million. Establish a relationship of coexistence withhouse builders.

Image of Accumulation of After-Sales Periodic Inspections
CustomerD

5-yearInspection

6-monthInspection

1-yearInspection

6-monthInspection

1-yearInspection

2-yearInspection

1-yearInspection

2-yearInspection

CustomerC

Customer
B

CustomerA

6-monthInspection

5-yearInspection

2-yearInspection

Warranty against defects – Guarantee period5-yearInspection

5-yearInspection

10-yearInspection

10-yearInspection

10-yearInspection

10-yearInspection

15-yearInspection

15-yearInspection

15-yearInspection

Period of self-responsibility of owner for building
management

44

Growth Strategy

45

Growth Strategy
Reinforce services to the existing housing market
against the backdrop of our “nationwide construction
service network” not available with competitors.
1. Increasing number of new customers for the CANDEAL’s core repair
services service
2. Reinforcing and expanding maintenance and management service
menus for houses
3. Reinforcing and expanding maintenance and construction service forcommercial facilities
3. Enhancing profit margin (higher capacity utilization and cost reduction)46

Growth Strategy 2Measures ①

Business alliance with Sompo Warranty Inc.
Began development of our original "Inspection & Warranty Service"for housing equipment
Insurance underwriter

Sompo Warranty Inc.

Sompo Japan Nipponkoa Insurance Inc.

Cumulative number of inspections: 506,708!
Nationwide construction network
Offer inspections of facilities for existinghouses and after-sales inspections on anationwide scale

Largest provider of warranty products
Member of the SOMPO Holdings Group
Providing Peace of Mind and Reliability throughout Japan
with firm capital strength

Affiliated Subsidiaries:

Plans to announce detailed service menu in the near future!

47

Growth Strategy 1Measures ②

Business alliance with Domans,Inc.
Entered into a business alliance with Domans,Inc., a leader in the new erain the ordered furniture industry
Expand sales of newly developed mobile apps and provide furniture assembly
services

Sales &
Construction

Furniture can be assembled nationwide.
(Assemble, install, and construct)

Possess a nationwide customer
list in the construction industry

Systems &Manufacturing

Possess a system to provide
high-quality custom-madefurniture with inexpensive price

Enable nationwide sales and marketing activities
Affiliated subsidiary: Candeal Design Co., Ltd.
48

Growth strategy 2

Expansion and strengthening of "maintenance andconstruction" for commercial facilities

Expand services by leveraging strengths of nationwide
construction network

For building materials and housing
equipment manufacturers

For accommodation facilities

Construction players, such as
construction materials manufacturers, toreplace their existing construction
networks

Development of guest room
maintenance and management
services

Group

49

Growth Strategy 2-①

Construction (maintenance) player that replaces the conventional
construction network of a building materials manufacturer

Intentions of building materials and housing
equipment manufacturers

They want to shift to the “material andconstruction" services.
Commercial
material

Group+

Construction

On the other hand,...

Local retailers

Reduced due toabsence of successor

Building Material
Web shop

There is no construction
team, selling only
products

Our group will be a “new construction player”
that can offer both materials and construction
together, and will respond to the last-one mile.
50

Growth Strategy 2

Construction (maintenance) player that replaces the conventional
construction network of a building materials manufacturer

Undertake construction work by not only building material
manufacturers but also other various manufacturers
Examples of companies that do not have their own maintenance or construction units
Equipment
manufacturers for public
toilets, etc.

Training
machine manufacturers,
etc.

Baby chair
Baby seats, etc.

After the end-user purchase
MaintenanceOverseas
Housing equipment
manufacturers, etc.

51

Growth Strategy 2

Development of guest room maintenance andmanagement services for accommodation facilities

Hotel market
Increase in hotel
occupancy rates
due to inbound demand

Be unable to respondsufficiently due to lack of
manpower

Be unable to keep pace
for the maintenance andmanagement of guest
rooms

In collaboration with our group and management companies

Development of "services to maintain and manage comfortable spaces" foraccommodation facilities
Expand periodic inspection for housing (stock-type model) to the commercial facility market

Group
Regular maintenance of accommodation facilities(repair/renovation)

×Management company foraccommodation facilities
Facility management, cleaning management,
and interior management52

Growth Strategy 3

Improve Profitability① Improve utilization rate and reduce costs by improving efficiency by linking the group's systems
Between services

Adjustment of supply-demand gap: Increase of capacity utilization rate

Between subsidiaries

Reduction of redundancy and waste: Cost reduction

Between regions

Under development
Plan to launch in thenext term- Current[Image]Techt

Designing

Repair Service

Shortages ofengineers

Surplus ofengineers／

Construction services
for living environments

Surplus ofengineers

Shortages ofengineers

Surplus ofengineers

Construction services
for the commercial
environment／

Appropriate
allocation／

Coordination ofgroup systems

Barn Repair- Future
Barn Repair

Techt

Designing

Appropriate
allocation

Appropriate
allocation／

Appropriate
allocation

Appropriate
allocation

Appropriate
allocation／

Appropriate
allocation／

Improvementof profit ratio② Use RPA, etc. to improve operational efficiency in SG&A
Utilizing 120 units of BizRobo, currently operating 100 units

53

Future Goal of the
CANDEAL Group54

“Lifecycle Support for buildings” as a core,
Consider expansion into businesses targeting vacant houses
expected to see an increase.
Execution ofworks【Shift focus from new construction to vacant houses
as the vacant house ratio rises to about 30%】

Inspection

Spin out

RepairPlanning/
designing

Demolish→Open space

Vacant house

Total number ofhousesNumber of
vacant house

Lifecycle Support
for buildings

71,560-repairs, renovations,maintenance, management

thousand units

63,770 thousand units

Renew as houses and stores

Renovation
Re-sale53,890

DeliveryTechnology

Call center

Technical Staff

thousand units

42,010Inspection

thousand units

Inspection

2033
Ratio of vacant
house
27.3%

thousand units

MaintenanceInterior
ReformMoving/installation/transport

19,5506,590

3,940 thousand units

thousand units

1988
Results and forecasts of total number of houses/number ofvacant houses/ratio of vacant houses

2003

10,260thousand units

2018

Source: Nomura Research Institute's 2018 Housing Market and Issues for 2030
*Processes by our company based on the graph by Nomura Research Institute

2033

55

Emergence of secondary market inbuildings and residential houses!

MaintenanceManagement
Cleaning

RepairExchange

Evolution of the
Sharing Economy

Insurance
Guarantee

Automation

56

Establishment of a platform for building lifecycle support
Create a system and get a revenue

Residential
construction
Business
Commercial
facility

Be compensated for the work

Operating platform

Interface

Technology platform

Management

Housewives

Group

Customermanagement

Arrangementof work
Planning and operation of
eventsEndUserContent
management

Elderlies

Burn Repair

Technology

IT

Foreigninvestor

Candeal Tec
Candeal Design

Point management
Call-center

Partner companies
Termite control company

Owner's club

GeneralEndUser

Web service to retain customers
For users throughout the building lifecycle
Services that can respond to problems
Have a menu

※ The management platform is an image of the future.

Exterior wall contractor

Development
of partnercompanies

House-cleaning
business
Etc.

57

Are the last point of contact in the building = “Last One-mile” human or technology?

CANDEAL resolves the last one-mile issues by fusing
human (engineer) skills and IT technology.
Light bulbs
need to be
replaced

Filters need tobe replaced

Lifecycle Support for buildings-repairs, renovations, maintenance, management

Last
One-mile
Cleaning ofshared spacerequiredTechnology

Clean-up before
a new tenantmoves inTechnical staff
58

By multiplying two technologies,
Becoming a company that is indispensable in the building
lifecycle support"CANDEAL" in all buildings

Manual & Technology
59

Disclaimer

This material has been prepared by CANDEAL CO., Ltd. (hereinafter referred to as "") for the purpose ofproviding corporate information, etc. to the Company and its group companies (hereinafter collectively
referred to as “the Group") and is not a solicitation to buy or sell shares or other securities issued by us,
whether in Japan or overseas.

This document contains forward-looking statements, including forecasts, plans and targets related to theCompany and the Group. These statements are based on certain assumptions and beliefs in light of theinformation currently available to the Company at the time of preparation of this document. These statements
or assumptions are objectively inaccurate or may not be realized in the future, and therefore, actual results
may differ materially from these forward-looking statements.

60