Financial Results for
the Fiscal Year Endedin September 2018
CANDEAL Co., Ltd.
TSE Mothers :1446
November 27, 2018

Copyright (C) CANDEAL CO., Ltd. All Rights Reserved.

CONTENTS
1

Highlights

2

What is CANDEAL?

3

FY9/18 Business Results

4

FY9/19 Business Forecasts

5

Growth Strategy

6

Appendix and Business Outline
・ Strengths of the CANDEAL Group2

1Highlights
3

Highlights

Building Lifecycle Support Company
Group is a…

As a provider of reliable repair, renovation, maintenance and management services,
we eliminate sources of problems and dissatisfaction that create stress for people
who use buildings.

1. Full-year Results

Increase in sales and profits
Achieved record-high net sales, operating income,and net income!

2. Future Development

Expansion of services for building lifecycle support services
Establish a foundation for sustainable growth4

2
What is CANDEAL?

5

Core of the Group's businessWe aim to eliminate various
stresses associated with buildings,
as well as the stress of people,
6

Core of the Group's business

To provide peace of mind andcomfort.
7

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 buildings
8

Execution ofworks

Inspection

Lifecycle Support for buildings
Planning/
designing

Repair■ Rather than building construction, we specialize
in repairs, renovations, maintenance,
management and other services associated withexisting buildings.
■ Continuous and accumulation-typebusiness model

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

Renovation
Re-saleDelivery

Offer the full range of continuous services required by a building
Technology

Technical Staff

Inspection

Call center■ Our goal is to combine the human skills with IT
technologies in order to be a company that is
indispensable in the building lifecycle support

MaintenanceInterior
Reform9

Establish a firm position in the industry through expanding
business scale
No.1 in the Industry

Industry leader

No. 1 in units sold

Repair service

After-sales periodic
inspection service

Repairing material sales

Number of client companies: 20,112

Cumulative number of units undermanagement: 300,973

Number of locations:

Number of items sold

1,343,026 units/year

56 locations nationwide

In-house engineers: 1,056/ partner companies: About 430*1

Call centers supporting the network of engineers: Approx. 120 staffs at

3 locations*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.

*The above figures are as of the end of September 2018.

10

Business Model
CANDEAL’s BtoBtoC business model offers services in a range of fields from residential
housing to commercial facilities
Our services (Revenue Model)

Repair service(One-time-fee)

Construction services for(Subscription)living environments
Construction services for thecommercial environment (One-time-fee)

Merchandise sales

Customer
Housing Market(New and Existing)House Manufacturer/Power Builder
Building materials manufacturer/
Developer/Real Estate Agents/
General End-users

GeneralGeneralEnd
EndUseruser

Commercial Facilities Market(Commercial Facilities and Hotels)

Store interiors/chain stores
Commercial general contractor
11

3
FY9/18 Results
12Summary of Consolidated Business Results(Million yen)

FY9/17
ResultProfit ratio

FY9/18ResultProfit ratio

12,239YoY change

Net sales

11,959102.3%

Gross profit

4,293

35.9%

4,369

35.7%

101.8%

Operating income

334

2.8%

403

3.3%

120.7%

Ordinary income

285

2.4%

345

2.8%

120.7%Net income

112

0.9%

171

1.4%

152.7%Net income
before amortizationof goodwill

304

2.5%

363

3.0%

119.3%
13

FY9/18 Results
12,239Net sales(Million yen)

11,959Up 2%

10,491

FY9/16

FY9/17403

Operating income(Million yen)

FY9/18334

229

Increase in sales andprofits

Achieved record-high
net sales andoperating income

Up 20%

14

FY9/16

FY9/17

FY9/18Analysis of Changes in Consolidated Ordinary Income

Increase in profits
due to an increasein sales
FY9/17
Ordinary income

285

75

Reduction of SG&A
expenses(Excluding personnel
expenses)

Increase inpersonnel expenses(SG&A)

107

113(Million yen)

4

5

Decrease in
non-operating
incomeIncrease in
non-operating
expenses

FY9/18
Ordinary income

345

15

Sales by Service Category(Million yen)
FY9/17
ResultComposition
ratio

FY9/18ResultComposition
ratio

YoY change

4,653

38.9%

4,670

38.2%

100.4%

Repair for detached houses

3,446

28.8%

3,576

29.2%

103.8%

Repair for condominiums

1,206

10.1%

1,093

8.9%

90.6%

3,562

29.8%

3,320

27.1%

93.2%

839

7.0.%

929

7.6%

110.7%

Maintenance, construction, etc.

1,720

14.4.%

1,890

15.4%

109.9%

Refit

1,003

8.4%

500

4.1%

49.9%

2,875

24.0%

3,471

28.4%

120.7%

Merchandise sales

867

7.3%

776

6.3%

89.5%

Total

11,959100.0%

12,239100.0%

102.3%

Repair service

Construction services forliving environments
Inspection

Construction services for thecommercial environment

16

Status of Repair Service
Repair service for condominiums

Repair service for detached houses
200,000

30,00027,09328,64580,00025,000150,000

25,00022,79822,21220,00060,00020,00015,000100,000

15,00040,00010,000127,740
50,000125,072

orders52,943

10,00020,000ordersemployees

50,090employees
5,000

5,000

0

0

FY9/17

FY9/1800

FY9/17

FY9/18

Number of orders received

employees
Total number of people

Unit price of orders received (yen)Productivity per employee (yen)17Status of Construction Services for
Housing Environments
Periodic after-sales
inspections

Refit service

Other

15,00019,281

20,921
20,00034,067100,000

12,15725,000100,000

12,722
10,00015,00050,00012,3500
10,00050,00050,00069,04173,053ordersorders

0

5,000

0

FY9/17

FY9/1829,45340,561ordersorders0(25,000)employees(50,000)

FY9/17

FY9/1889,48992,323

employees

employees
5,000

0

0

FY9/17

FY9/18

Number of orders received

Number of orders received

Total number of people
employees

Unit price of orders received (yen)Unit price of orders received (yen)Productivity per employee (yen)18Overview of Refit Service
Changes in Sales (Million yen)
1,003

Difficult to estimate orders
as this service is for recall products

500

Only the CANDEAL Group can offer
recall service for centralized interior
finishing materials in nationwide

376

Flexible approach as required foraccomplishing our social mission
and customer support.
FY9/16

FY9/17

FY9/1819

Last 12 years

Periodic After-Sales Inspection Results

CAGR

35.78%

Sales (Million yen)

Sales

0,000

929

1,000,000
900,000

0,000
800,000

Number of annual inspections

74,663

YoY change

105%

700,000

0,000
600,000

0,000

500,000

Cumulative number of inspections

506,708

400,000

0,000
300,000

Around thedoorCounting

YoY change

117%

Cumulative number of units undermanagement
100,000
200,000

0,000

0

0
06/9

07/9

08/9

09/9

10/9

Number of annual
inspections

11/9

12/9

13/9

14/9

Cumulative number ofinspections

15/9

16/9

17/9

Sales

18/9

300,973 units

YoY change

114%
20

FY9/18 Top 10 Clients

Hajime Construction Co., Ltd

RepairService

Construction
services for living
environments●●

Construction
services for thecommercial
environment

Merchandise
sales

●

IKEA JAPAN CO., LTD.

●

Aim Create Co., Ltd.

●

Asahi Kasei Homes Corporation

●

●

●

Daiwa House Industry Co., Ltd.

●

●

●

●

Dai Nippon Printing Co., Ltd
A Factory Co., Ltd.

●●●

Handy Crown Co., Ltd.
Daito Trust Construction Co., Ltd.

●●YKK AP Co., Ltd.

●

●

●

●
21

4
FY9/19Business Forecasts
22

FY9/19 Business Forecasts(Million yen)

FY9/17
ResultFY9/18ResultYoYchangeFY9/19Forecast

YoY change

Net sales

11,95912,239102.3%

13,500110.3%

Operatingincome334

403

120.7%

485

120.1%

Ordinary
income285

345

120.7%

440

127.5%Net income

112

171

152.7%

218

127.2%Net income
before amortizationof goodwill

304

363

119.3%

410

112.8%
23

Shareholder Return Policy

FY9/19 Dividend Forecast

End of 2Q: 5 yen
Year-end : 5 yen
Annual dividend

10 yen24

Sales Forecasts by Service Category(Million yen)
FY9/17
ResultFY9/18ResultYoY change

FY9/19Forecast

YoY change

4,653

4,670

100.4%

5,140

110.1%

Repair for detached houses

3,446

3,576

103.8%

3,886

108.7%

Repair for condominiums

1,206

1,093

90.6%

1,254

114.7%

Construction services for living
environments

3,562

3,320

93.2%

3,494

105.2%

839

929

110.7%

1,038

111.7%

Maintenance, construction, etc.

1,720

1,890

109.9%

2,194

116.1%

Refit

1,003

500

49.9%

261

52.2%

2,875

3,471

120.7%

4,025

116.0%

Merchandise sales

867

776

89.5%

839

108.0%

Total

11,95912,239102.3%

13,500110.3%

Repair service

Inspection

Architectural services for thecommercial environment

25

5Growth Strategy

26

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
3. Enhancing profit margin (higher capacity utilization and cost reduction)

27

Expand the service menu for existing houses andstrengthen asset accumulation capability
Vacanthouse
Management
supportRenovation

Residents
Housing owners live on theirown house(for detached houses)

Before-saleInspection forexisting houses

Before-salemaintenance forexisting houses

Consulting
Our Company
Original
Housing facilities
Guarantee

House owners
Business operator
House owner does not occupy
his house but rents it out, longand short term, or keeps it
vacantVacation
rentalsupport

Periodic
Inspection

MaintenanceCommercial facilities
Hotels, stores
offices, etc.

ベースと forなるtheリcore
ペア repair
顧客 service
Customers
Handing
over
引き 渡し

年
2 2years

5５years
年

10
1 0years
年

5 年
151 years

28

Growth Strategy 1
Expand the number of new customers
for the core repair service

29Growth Strategy 1

Develop customers for repair services in areas that were not covered in the past

Real estate broker
for existing houses andrental housing

Real estate re-sell
agency(after renovation)

Vacation rental facility
management company

Expand the reach to theexisting housing market(for Inbound Demand)30

Growth Strategy 1Measures

Alliance with TEPCO HomeTech, Inc.
Strengthening sales capabilities for repair and installation services in the existing
housing market
Entered into a tie-up with TEPCO HomeTech, Inc., which has a broad customer base

TEPCO HomeTech, Inc.
Nationwide construction
network
Repair service throughout the TEPCO service area
Small-scale renovation and maintenance services

Provide comprehensive
energy-saving services
Expanded the service area of TEPCO Maintenance toTokyo, Kanagawa, Chiba and Saitama in September 2018

Affiliated Subsidiary:31

Growth Strategy 2
Deepen its lineup of services formaintenance and management32

Growth Strategy 2

Develop a service menu for buyers and sellers of existing houses

Real estate broker/reseller

Services for sellers

Services for buyers
・ After-sales follow-up

・ Pre-sales inspection

・ Initiatives to sustain selling price(Repair, maintenance and minor reforms)

・ Inspection of housing equipment

Existing house(Periodic Inspection, consultation center and ondemand service)・ Reform and renovation
・ Housing equipment warranty
・ Creating comfortable space/order-made furniture33

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.

Cumulative number of inspections: 506,708!

Nationwide construction network
Offer inspections of facilities for existinghouses and after-sales inspections on anationwide scale

Sompo Japan Nipponkoa Insurance Inc.

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!

34

Warranty service scheme (example)

Sales of existing houses with follow-up services

Buyer

Intermediary

Agreement
Guarantor

Housing facilities
Guarantee service

Example of Applicable
Equipment

Affiliated Subsidiaries:
24-hour ventilation
Systems

Air conditioner

Intercom

Multifunctional
toilet seat

Sompo Warranty Inc.
Stove (IH/gas)

Range hood

Water heater

Sompo Japan Nipponkoa Insurance Inc35

Growth Strategy 2Measures 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

Systems &Manufacturing

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

Possess a nationwide customer
list in the construction industry
Enable nationwide sales and marketing activities

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

Affiliated subsidiary: Candeal Design Co., Ltd.
36

About Dumans

Domans, which aims to create a new market in the furniture market
Mobile app service is scheduled to be launched soon!
Features of Custom-made Furniture Services

Target market

Low-price

Provide high-quality
furniture as desired byusers in inexpensive price

Simple, inexpensive, fast
services<Low-end furniture manufacturer>

Company A
Company B
Etc.

MassesCustomizing

Company C
Company D
Etc.
<Furniture Manufacturers in the Midand High-Price Range>

Our proprietary system (app)offersOverallcustom-madefurniture・ Order just by planning
Automatically generate furniture production
data
The system is independently developed.
・ With this system (app),Easy, high-quality orders for everyone
For furniture at low cost and quick delivery
You can provide.

High-price※ Image37

Growth Strategy 3
Improve our profitability(Improvement of utilization rate + Cost reduction)

38

Growth Strategy 4

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

Improvement of
profit ratio

Between subsidiaries
Between regions

Reduction of redundancy and waste
Cost reduction- Future- Current[Image]Techt

RepairService

Shortages
ofengineers

Surplus ofengineers/

Construction services forliving environments

Surplus ofengineers

Shortages ofengineers

Surplus ofengineers

Construction services forthe commercial
environment/

Appropriate
allocation/

Coordination of group systems

Designing

Barn Repair

Barn Repair

Techt

Designing

Appropriate
allocation

Appropriate
allocation/

Appropriate
allocation

Appropriate
allocation

Appropriate
allocation/

Appropriate
allocation/

39

Future Goal of the
CANDEAL Group40

Demand in the building market is increasing.
Emergence of secondary market in buildings and residential houses!

MaintenanceManagement
Cleaning

RepairExchange

Evolution of the
Sharing Economy

Insurance
Guarantee

Automation

41

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.

42

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
43

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

Manual & Technology
44

6

Appendix45Appendix-1

Business overview

46

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
47

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

48

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

49

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

50

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’ products

51

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

52Appendix-2

Strengths of the CANDEAL Group53

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

54

Strengths: 1. Nationwide service network
We can provide services in all prefectures
Service system extending to

56 locations nationwide

Our engineers nationwide:

1,128 engineers

Partner companies:

About

450 companies

Call center to support the network of engineers

3 locations with about 130 employees
55

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

56

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
service57

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

58

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.

59