Financial Results for
Q2 of the Fiscal YearEnding in September 2021
CANDEAL CO., Ltd.
TSE1 :1446
May 13, 2021

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

CONTENTS

Quarterly Executive Summary
FY9/21 Q2 Summary of Consolidated Results
Business Forecasts for FY9/21
Future Business Development

2

Quarterly Executive Summary

What is the
CANDEAL
Group?

CANDEAL Group provides services related to each phase of the building's life cycle(repairs, refurbishments, maintenance, and management)
Business model: B2B2C

・Consolidated results: Lower sales and profits.

Net sales 5,926 million yen (89.6% YoY), Operating income 168 million yen (52.0% YoY)

Performance
Highlights

・ The main reason was a decrease in orders for mainstay repair services andconstruction services for commercial environments due to the continued impact of
COVID-19.
・Sales of construction services for living environments remained at 99% YoY.
・Strengthened sales of new antiviral and antibacterial services, but there was asignificant delay in progress of this service.

Initiatives

・Promote recruitment of sales agents and franchisees3

FY9/21 Q2
Summary of Consolidated Results4FY9/21 Q2 Summary of Consolidated Results
Due to the remaining effects of COVID-19, sales and each profit declined.
FY21.Q2
Results(Million yen)

FY20.Q2
Results

Net sales

6,617

Gross profit

2,428

36.7%

2,222

SG&A

2,104

ー

Operatingincome324

Ordinary
incomeProfitratio

YoY

Profit
ratio

5,926

▲690

89.6%

37.5%

▲205

91.5%

2,054

ー

▲49

97.6%

4.9%

168

2.8%

▲155

52.0%

290

4.4%

161

2.7%

▲129

55.4%

Net income

148

2.2%

61

1.0%

▲86

41.7%

Net income before
amortization of
goodwill

244

3.7%

157

2.7%

▲86

64.6%

5

FY9/21 Q2 Summary of Consolidated Results(Million yen)
Net sales

Operatingincome

YoY

▲690

▲155

Situation and Major Factors

89.6%

・The number of orders received for repair services and construction services for commercial environments declined dueto the deteriorating market for new residential construction and new commercial facilities as a result of the ongoing
effects of COVID-19.
・In construction services for living environments, services for detached houses (occupied) remained steady.

52.0%

・Decrease in gross profit due to decrease in sales (-205 million yen YoY)
・Planning to close an office center in Okinawa in Q3 with a view to improving operational efficiency by introducing acore business system.
Closure-related expenses were recorded in Q2.
(personnel expenses +600 million yen YoY)
・Expenses related to advertising for antiviral services, R&D expenses, and ancillary insurance development expenses
increased.
(+3,200 million yen YoY)
・Decrease in SG&A expenses other than personnel expenses due to reduction efforts such as curbing transportation
costs by continuing remote work, reviewing expenses, and consolidating and eliminating offices.
(-5,600 million yen YoY)YoY ▲44.6%

Analysis of Changes in 400
Consolidated Ordinary Income(Million yen)

300
200

FY9/20 Q2
Ordinary
incomeDecrease inprofits due tolower sales

290

▲205

SG&A
Increase inpersonnel
cost

+56

100
0

SG&A
Decrease otherthan personnel
expenses

Increase innonoperating income+0

Decrease in
non-operating
expenses+25

FY9/21 Q2Ordinary
income161▲66Sales by Service

Repair services and construction services for the commercial environment were significantly affected by the market stagnation caused by
COVID-19.
Construction services for the living environment remained at 99.5% YoY, reflecting an increase in the number of orders for refit services
and response to periodic inspections, which had been postponed due to COVID-19.

(Million yen)

FY9/20 Q2
Results

Profitratio

FY9/21 Q2Results

Profitratio

YoY

Repair service

2,616

39.5%

2,169

36.6%

▲446

82.9%

Construction services
for living environments

1,624

24.5%

1,615

27.3%

▲8

99.5%

Construction services
for commercial
environments

1,955

29.6%

1,673

28.2%

▲282

85.6%

Merchandise sales

420

6.4%

352

5.9%

▲68

83.6%

Antiviral andantibacterial services

ー

ー

116

2.0%

ー

ー

▲690

89.6%

Total

6,617

5,926

7

Status of Repair Service
The whole construction industry stagnated due to the continued impact of COVID-19.
For
detached housesFor
condominiums

Both the number of orders (86.7% YoY) and the unit price (96.6% YoY) fell YoY due to a decrease in new construction starts for detachedhouses*1 and the impact of COVID-19.
In sales activities, we aim to recover the number of orders by increasing the number of meetings with customers via online and other methods.
Total man-hours decreased (78.1% YoY) due to a decrease in the number of new condominium construction starts*1.
On the other hand, productivity increased (102.9% YoY) through focusing on acquiring high-priced projects to improve profitability.
We aim to recover from Q3 onward by improving sales efficiency and use partner companies to strengthen construction capabilities.

Changes in sales

Major KPI(Million yen)Repair for detached houses：Unit price / Number of orders received

35,000

Repair for condominiums
3,000

2,500

2,000

Repair for detached houses

2,407
599

2,588

2,616

657

631

YoY
82.9%

Unit price(Yen)
30,00070,000

Number of orders
received
25,00050,000

2,169
507

YoY
80.3%

1,500

1,000

1,807

1,931

1,985

FY19.Q2

FY20.Q2

1,662

YoY
83.7%

500

0

FY18.Q2

FY21.Q2※1 YoY comparison considering construction term of detached houses (6 months averaging from start to completion): 85.7% YoY
YoY comparison considering construction term of condominiums (12 months averaging from start to completion): 87.0% YoY (Source: Ministry of Land, Infrastructure, Transport and Tourism)

28,38963,66529,17530,796

66,19264,46129,757

YoY
96.6%

55,868YoY
86.7%

30,00020,00075,00010,00015,000FY18.Q2※2
FY19.Q2
FY20.Q2
FY21.Q2
65,000-10,000
35,00010,000for condominiums：Profitability / Number of workers
Repair
55,000
YoY
30,00025,954102.9%
25,22945,0005,000
22,41722,711
25,000(Yen)Profitability
35,0000
20,00025,00029,344
26,415
Number of workers
25,019YoY
15,00019,542
15,000

78.1%

5,000
10,000-5,000FY18.Q2 ※2

FY19.Q2

FY20.Q2

FY21.Q2

8

Status of Construction Services for Living Environments
Changes in Sales(Million yen)

Sales of construction services for living environments as a wholeremained at 99.5% YoY. This result was mainly attributable to anincrease in refit projects and periodic inspections, which had been
postponed due to COVID-19 and, despite a decline in the numberof inspections and small-scale repairs for condominiums.

Refit
Small-scale repairs, various construction and inspections
Periodic after-sales inspections

YoY
99.5%

2,000
1,800

1,712

1,728

1,600

267

252

1,624

1,615

171

230

1,400
1,200
1,000

986

992

907

807

800
600
400
200

458

483

FY18.Q2

FY19.Q2546

577

FY20.Q2

FY21.Q2

0

YoY
134.8%

Major KPI
Periodic after-sales inspections：Unit price / Number of orders received

15,00014,500
Unit price(Yen)
14,00013,50013,00012,50012,00040,00011,50011,00010,50010,00030,000
Number of orders
received
9,500
9,000
8,500
YoY
20,0008,000
7,500
105.7%
7,000
10,000
6,500
6,000
5,500
0
5,000
4,500
4,000
3,500
3,000
2,500

YoY
89.0%

12,60213,01536,37537,175

FY18.Q2

FY19.Q2

13,518

YoY
13,516 100.0%

40,40942,721

FY20.Q2

YoY
105.7%

FY21.Q2

9

Changes in after-sales periodic inspections and cumulative
number of units under management

Industry leader
500,000

Last 14 years
CAGR 31.3%

FY20 Sales

Cumulative number ofunits under management

FY21.Q2

1,076 million yen

1,200,000

417,282units

105.7%

from end of
previous term

The cumulative number of units under management remained
steady at 105.7% compared to the end of the previous fiscal year.

450,000
400,000
350,000

1,000,000

Future Initiatives

800,000

Amid declining new construction starts, we will strengthen
profitability in the stock housing domain, which consists ofexisting housing

300,000
250,000

600,000

200,000
150,000
100,000① Support services to maintain relationships between
homebuilders and owners (Owners' club*1, etc.)

400,000*1: Platform for housing owners providing information, housing maintenance services, andlifestyle convenience services to improve living quality

200,000② Strengthen acquisition of inspection orders for houses
that have been in existence for five or ten years

50,0000

0

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Number of annual
inspections

Cumulative number of units
under management

Sales (Million yen)

③ Acquiring maintenance orders after inspections

10

Status of Construction Services for Commercial Environment
Changes in sales

Greater-than-anticipated impact of COVID-19 led to a sharp decline ininterior construction projects at hotels, stores, and offices.
We had been working to acquire office interior construction and store
withdrawal work, but there were fewer restoration projects than expected,
and this has not yet compensated for the decline in the number of orders
received.

(Million yen)Lifting, etc.
Furniture assemblyInterior installation

2,129
2,000

1,801

312

302

294

1,955

YoY
85.6%

309

1,673

316

1,500

291

Activities will be implemented from Q3 onward to capture demand suchas the resumption of projects that had been postponed due to COVID-19.

259

YoY
83.6%

301

YoY
95.1%

1,000

1,522
500

1,207

1,329

1,113

YoY
83.7%

Sales by project size (YoY)
FY20.Q2
ResultsLarge

10 million yen or
more

MediumLess than 5 to 10
million yen

Small

Less than 5 million
yen
Total

0

FY18.Q2

FY19.Q2

FY20.Q2

FY21.Q2(Million yen)
FY21.Q2
Results

YoY

267

196

▲71

73.5%

167

92

▲75

55.2%

893

823

▲69

92.2%

1,329

1,113

▲216

83.7%

11

Status of antiviral services ① About services

Promotion of antiviral and antibacterial services
Supporting the creation of hygienic environments so that people can use buildings safely and with peace of mind
Helping companies that have been hit hard by the effect of COVID-19 to recover quickly
We will expand our product lineup and promote sales of services and products that increase added value
with building construction.
Antiviral and antibacterial coating

Air Refresh

Hybrid air purifier

Kirala Air

12

Status of antiviral and antibacterial services
Net sales for Q2: 116 million yen

Started recruiting franchised
stores in January, following
sales agents, in order to builda system to expand sales.

Orders for antiviral and antibacterial services were weak compared to the response, as many industries with strong
demand for this service experienced sluggish performance
Amid the unclear outlook for the containment of COVID-19, we will strengthen sales activities based on therecognition that it is a necessary service for society.

Antiviral and antibacterial coating
Launch of automatic insurance service(for residential and commercial
environments)

Advertising activities

予防対策

+
万が一
の
補償

13

FY9/21 Q2 Top 20 Clients

1
2
3
4
5
6
7
8
9
10

Hajime Construction Co., Ltd

Repair service

Construction
services forlivingenvironments●●

Construction
services forcommercial
environments

Merchandise
sales

Antiviral andantibacterial
services●

Major activities

Rank as of
Q1

Inspection/repair
Periodic Inspection/Maintenanceafter Inspection
Sales of maintenance kits

1

IKEA JAPAN CO., LTD.

●

Furniture Assembly (All Stores)

2

Aim Create Co., Ltd.

●Store interior work

4

SEKISUI CHEMICAL CO., LTD.

●●

Repair/Interior work

3

Panasonic Corporation●●

Repair/Interior work

5

Sale of repair products

6●

Handy Crown Co., Ltd.

●KOTOBUKI SEATING CO., LTD.
AI-KOUMUTEN Co., Ltd.

●●

Asahi Kasei Homes Corporation●●

ISETAN MITSUKOSHI PROPERTYDESIGN LTD.

Installation of furniture in thestadium●●●

Repair/Periodic Inspection/Antiviraland Antibacterial Services

8

Repair/Interior work
Sales of maintenance kits and repair
products

7Store interior work9

Top 11th-20th
TACT HOME CO.,LTD. / SOGO DESIGN Co., Ltd. / IRISCHITOSE.CO.,Ltd. / DAIWA HOUSE INDUSTRY CO., LTD. / YOSHICHU MANNEQUIN CO.,LTD. / Sumitomo Realty &Development Co., Ltd. / Sekisui Famis Kinki Co.,Ltd. / YKK AP Inc. / Haseko Corporation / Jutakujohokan Co., Ltd.

Newly top 10 clients for FY21 Q2

14

Policy of Construction Structure and Trends in the Number of In-House Skilled Workers andPartner Companies
PolicyTrends in number of in-house workers and partner companies①Secure labor force and improve utilization rate

In line with the policy and due to the temporary suspension of hiring activities due to
COVID-19, the number of in-house skilled workers in FY2021 Q2 was 94.8% comparedto the end of the previous fiscal year.
Among partner companies, sales were steady at 119.1% compared to the end of theprevious fiscal year.

Support the independence of in-house skilled workers andstrengthen the system of partner companies
Build a franchise system② Improve profitability by converting laborcosts to variable costs③ Develop in-house skilled workers as sitemanagers to maintain service quality

Number of in-house engineers

Number of partner companies

94.8% from the endof previous term (-54)

119.1% from the endof previous term

In-house engineers (person)

Partner companies (company)
1,300
1,100

1,118

1,178

1,128

(＋132)

976

1,173

823 companies(Excluding 6 franchisees)

1,125

1,070

1,095

1,030

1,000

900

Scenario for securing labor
force

Franchise

700
500

Independent Support and Partner Companies

300

Maintain a certain number of in-house workers as managers

100
-100

440

450

463

FY19.Q1

FY19.Q2

FY19.Q3

507

FY19.Q4649

651

FY20.Q2

FY20.Q3

691

771

976
823

575

FY20.Q1

FY20.Q4

FY21.Q1

FY21.Q2

15

Business Forecasts for FY9/21

16

Business Forecasts
We have made business forecasts based on our anticipation that COVID-19
will converge and economic activities will gradually recover.
As for COVID-19, while there are encouraging signs that vaccination has
begun, a third State of Emergency was declared due to the increase ofmutant strains of the virus in Japan and abroad.
Under such circumstances, future trends in the market environment are also
uncertain, making it difficult to reasonably calculate the forecasts for the 2H atthis time.
Therefore, we have withdrawn the consolidated business forecasts for the
fiscal year ending September 2021, which was announced on November 13,
2020. We will announce the forecast again when it becomes possible tocalculate it.

17

Shareholder Returns (FY9/21)
The dividend forecast and shareholder benefit program remain unchanged at this time.

Dividend

InterimYear-end forecast

Annual forecast

3 yen

6 yen

3 yen
Shareholder
benefit program

Each subject shareholder is presented with a QUO card in the following amount depending on the shares held
Number of shares held

Shareholder benefit program

200 shares or more, less than
2,000 shares

QUO Card worth 3,000 yen

2,000 shares or more, less than
6,000 shares

QUO Card worth 4,000 yen

6,000 shares or moreQUO Card worth 5,000 yen*There are no plans to change the shareholder benefit program at this time, but it may change depending on future operating results.

18

Future Business Development

19

In addition to the existing technology platform business (labor-intensive business),the planned operation of "earn by system" services and FC platform started operation
Receive compensation through a system
Homebuilders
Commercialfacilities

Service operation platform
Jan. 2021
Began releaseof beta version

Cloud services for residential
operators
Owner's Club

End-users

Receive compensation through people's work
Technology platform

IT
Group companies
Technology

Servicelaunched

Partner companies

Extended guarantee forhousing facilities

Generalend-users

CorporationGain compensation through the system and work
FC platform

Startedoffering

Sales agent

Started full-scale
recruitment fromJanuary 2021

Franchised stores

20

Initiatives: 1 Franchise system
Established a franchise system. Started full-scale recruitment in January 2021

Recruitment offranchisees

Franchise store name "Recona Coat Lab"

Recona Coat Lab

・Launched dedicated website
・Began posting on "Entre," a specialist site for
franchises

21Initiatives: 2 Cloud services for residential operators
Promote the creation of "Owner's Club," a cloud service for residential operators
Currently, the beta version has been released and trials are underway.
Home owners
A Owners’ Club

Housing company A

Owner's Club, a cloud service for residential
operators
Ｂ Owners’ Club

Providing information, housing maintenance services, andlifestyle convenience services to improve living quality

Housing company B

Examples of Content Provided

Ｃ Owners’ Club

Housing History

Rapid maintenanceservice

Reserve for inspection

Renovation
consultation

Maintenance request

Lifestyle services

Housing company C

Our Group supports "lifelong customer development" by providing a tool to strengthen the relationship between housingbusinesses and home owners

22Initiatives: 2 Cloud services for residential operators
Helping to realize "lifelong customers" by providing an owner's club andincreasing contact with homeowners

Home purchase

Inspection*Diagram is for reference only.

5-year
Maintenance

Termitecontrol
works

10-yearReplacement ofconsumables

Inspection

20-yearExterior
wall
construc
tion

Rapid
maintena
nce
service

Housing History Management/Response to Inquiries

Owners' Club supports long-term communication

35-yearRenovation

Create lifelong customers

2-year23

Aiming to build a solid earnings base with "recurring revenue" and "commission
business," which are less susceptible to social conditions and the environment
Now

FutureMainly developing a one-time-fee model, laborintensive business

Strengthen commission business to shift
one-time revenue to recurring revenue

Commissions

Facility extension guarantees, etc.

Recurring revenue

Recurring revenue

Power builder contracts for wholebuilding/periodic inspections, etc.

Power builder contracts for wholebuilding/periodic inspections, etc.

One-time revenue

One-time revenue

One-time projects such as repair
and interior work

Expanding recurring
revenue sources toensure stable andcontinuous orders,
including an
increase incontracts for wholebuildings

One-time projects such as repair
and interior work24Appendix：Market Forecast

This is our current forecast of the future market environment.
As the market environment is changing day by day, we will continue to be sensitive tofuture trends and update our forecasts to reflect them in our business operations.

Future Market Forecasts

Results
FY9/20
Q1-Q2

FY9/20
Q3-Q4

FY9/21
Q1-Q2

marketenvironment

↘

↘

↘

Net sales

2,616

2,046

2,169

marketenvironment

↗

↘

→

Net sales

1,624

1,447

1,615

marketenvironment

↘

↘

↘

Net sales

1,955

1,815

1,673

marketenvironment

↘

↘

↘

Net sales

420

337

352

marketenvironment

ー

ー

→

Net sales

ー

ー

116

(Million yen)Repair service

Construction
services for living
environments
Construction
services forcommercial
environments
Merchandise
sales
Antiviral andantibacterial
services

FY9/21
Q3-Q4

Forecast for the
next fiscal year
(FY2022) andbeyond

↘

→

→

↗

↘

→

↘

↗

→

→

*Figures for the 1H and 2H of FY9/20 and 1H of FY9/21 represents the market environment and sales at that time, and figures for 2H of FY9/21 and the next fiscal year and beyond represents the market environment forecast.
*All trends are compared to the previous half-year results.

25

Becoming a company that is indispensable in the building
lifecycle support"CANDEAL" in all buildings

Manual&Technology
26

Disclaimer
This material has been prepared by CANDEAL CO., Ltd. (hereinafter referred to as “the Company") for the
purpose of providing corporate information, etc. to the Company and its group companies (hereinaftercollectively 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.

27